Daily Dicta: Tinder Founders Swipe Right on Gibson Dunn's Orin Snyder in $2B Suit
In a New York State Supreme Court lawsuit, Tinder co-founders and key employees allege that the parent companies manipulated financial information to undercut the value of their stock options.
August 15, 2018 at 11:22 AM
9 minute read
If there's one thing you'd expect from the minds behind Tinder it's this: They know how to pick themselves a lawyer.
In their new $2 billion lawsuit against the dating app's parent companies, Tinder's three co-founders plus seven current and former executives swiped right on Gibson, Dunn & Crutcher star litigator Orin Snyder.
In some ways, matching with a lawyer isn't so different than finding a love interest. Is he available? Smart? Does he get me? How have his past relationships worked out? Does he like pina coladas?
Snyder certainly seems to check all the boxes. The Verge once called him “the deadliest trial lawyer in tech,” and he's represented clients including Apple in the e-books trial and Facebook in the ongoing Cambridge Analytica data scandal.
Co-chair of Gibson Dunn's media, entertainment and technology practice, Snyder doesn't just represent companies. According to his law firm bio, his individual clients include Anderson Cooper, Bob Dylan, LeBron James, Lady Gaga, David Letterman, the Rolling Stones and Bruce Springsteen. (This list alone would make me want to hire him.)
On behalf of the Tinder execs, Snyder is now taking on Barry Diller's IAC/ InterActiveCorp and its subsidiary, Match Group Inc.
In an email, Snyder said he was hired after he was introduced to Tinder co-founder Sean Rad “by mutual friends in the technology industry.” Rad was CEO, president and chairman of Tinder from February 2012 to September 2017.
On Tuesday, Snyder plus Gibson Dunn partner Matthew Benjamin and associates Laura Raposo, Connor Sullivan and Christine Demana filed a 55-page complaint in New York State Supreme Court, alleging that Tinder's parent companies manipulated financial information to undermine Tinder's valuation. As a result, the Tinder plaintiffs say they were shortchanged on stock options.
It's a complaint that appears to be written for mass consumption, with sentences like “Founders and early employees of startup companies often receive equity in the companies they create, giving them an incentive to build the company's success long into the future,” which is probably not something a judge needs to have explained.
Indeed, the suit (accompanied by a snappy press release about “deception, bullying, and outright lies”) got massive media coverage on Tuesday—featured everywhere from Fox News to The New York Times.
Adding fuel to the fire, the complaint also includes allegations that Match Group's chairman and CEO Greg Blatt groped and sexually harassed Tinder's VP of marketing and communications during and after Tinder's December 2016 holiday party in Los Angeles.
But the crux of the complaint concerns the value of the company. Because Tinder is privately held, the plaintiffs' stock options were scheduled to be independently valued at four specific dates in 2017, 2018, 2020 and 2021.
“[I]f defendants could undermine Tinder's valuation at their first opportunity in 2017 and then eliminate the future Scheduled Puts…they could save themselves billions of dollars,” Snyder wrote. “Because the Scheduled Puts occurred in private—beyond the view of public investors and regulators—defendants could lie about Tinder's financial projections and undermine the value of Tinder without hurting their stock prices or the public perception of Tinder's value.”
According to the Tinder execs, the defendants arrived at a $3 billion valuation “based on their bogus numbers. … They created false financial projections, inflating Tinder's expenses and inventing an alternate universe in which Tinder was stagnating toward freefall.”
The complaint is especially harsh in discussing Blatt (“a longtime lackey” and “notorious bully with a volcanic temper”), who was installed as Tinder's interim CEO during the valuation process. The plaintiffs allege that Blatt's sexual misconduct was “whitewashed” to keep him in place during the valuation and Tinder's subsequent merger into Match—only to announce his retirement two weeks after it was done.
The plaintiffs' Tinder options were then converted in Match options, and the future scheduled valuations were eliminated.
IAC and Match in a statement said they've already paid out more than a billion dollars in equity compensation to Tinder's founders and employees.
“With respect to the matters alleged in the complaint, the facts are simple: Match Group and the plaintiffs went through a rigorous, contractually-defined valuation process involving two independent global investment banks, and Mr. Rad and his merry band of plaintiffs did not like the outcome,” the statement said.
“Mr. Rad (who was dismissed from the company a year ago) and Mr. Mateen (who has not been with the company in years) may not like the fact that Tinder has experienced enormous success following their respective departures, but sour grapes alone do not a lawsuit make.”
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Class Cert Granted—Again—in Goldman Sachs Securities Suit
A federal judge in the Southern District of New York on Tuesday granted class certification in a securities lawsuit against Goldman Sachs, a victory for plaintiffs lawyers from Robbins Geller Rudman & Dowd.
The complaint alleges Goldman Sachs failed to disclose conflicts of interest in connection with certain collateralized debt obligations transactions, including the infamous Abacus transaction that resulted in Goldman paying a $550 million fine to the SEC.
U.S. District Judge Paul Crotty originally certified the class of investors in 2015. But on an interlocutory appeal, the U.S. Court of Appeals for the Second Circuit reversed and remanded the decision, ruling that he may have imposed too high a burden on Goldman.
On remand, Crotty on Tuesday wrote, “The question for the court then is rather simple and straight forward: Have defendants demonstrated, by a preponderance of the evidence, that the alleged misstatements had no price impact?” His conclusion” “Defendants have not rebutted the Basic presumption by a preponderance of evidence.”
Robbins Geller partner Spencer Burkholz said, “The plaintiffs appreciate the time and consideration given by the court to this decision, and look forward to heading towards trial on behalf of all investors.”
The plaintiffs are also represented by Labaton Sucharow.
Goldman Sachs is represented by Sullivan & Cromwell lawyers including Robert Giuffra Jr.
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Dow Chemical Wins $1B in Canadian Contract Fight
I don't usually cover litigation outside the United States, but a recent win by Canada's Bennett Jones is too big to ignore.
A team led partner Blair Yorke-Slader won more than $1.06 billion for Dow Chemical in a breach of contract claim against Nova Chemicals, the co-owner and operator of Dow and Nova's ethylene manufacturing plant in Alberta, Canada.
Yorke-Slader, who is vice-chair of the 400-lawyer firm, said in an email that since 2001, Nova “had been running the plant only hard enough to meet its own needs, and had been taking part of Dow's share of product for itself besides.”
Ethylene is an essential element in many plastic and petrochemical products.
After a seven-month trial, trial judge Barbara Romaine earlier this summer issued a 334-page ruling. She found Nova had concocted a scheme “to deceive and mislead Dow…to satisfy its own requirements and a strategic plan to control a competitor.”
The billion-dollar damage award only covers 2001 until the end of 2012. Another $300 to $400 million is likely to be tacked on for 2013-2018, the plaintiffs said.
The judge also dismissed Nova's counterclaims against Dow.
In addition to Bennett Jones, Dow was represented by Burnett Duckworth Palmer and Blake Cassels & Graydon.
Nova, which is appealing the decision, was represented by Miller Thomson; Osler, Hoskin & Harcourt and Norton Rose Canada.
In their dialogue with Judge Ellis, the special counsel prosecutors have picked their battles but defended themselves when they felt it was necessary.
The 72-year-old founder of Mayer Brown's U.S. Supreme Court practice was shot on Monday in his suburban Chicago home and died of his wounds.
The judge acknowledged that while the allegations against Weinstein weren't the “archetypal sex trafficking action,” they were nonetheless plausibly established.
The judge ordered the victim jailed in order to secure her testimony at trial—a move which led to the woman being attacked by an inmate while in custody.
The new grand jury report reveals that thousands of children were sexually assaulted at Catholic dioceses across Pennsylvania by more than 300 predatory priests for decades.
Sessions, meanwhile, has nothing but praise for his boss.
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