Split Decision in Delaware
We are pleased with the Chancellor Chandler’s split decision, which he foreshadowed in his concluding remarks at trial. As the Chancellor opines in today’s ruling, “more fortunate than Goliath, eBay leaves this field with only a gash across its forehead; less fortunate than David, craigslist leaves this field with something less than total victory.”
He affirmed craigslist’s “Staggered Board Amendments,” finding they were approved “in good faith to prevent eBay, a business competitor, from having access to confidential craigslist board discussions.” He also provided valuable guidance to fiduciaries of closely-held private companies like craigslist, when carrying out their obligations to protect against conflicted, duplicitous, and/or predatory shareholders.
The Chancellor deferred to “the California judiciary” to decide “whether eBay’s use of craigslist’s non-public information or its competitive activity was unlawful.” These and craigslist’s other claims will now be taken up in San Francisco before Superior Court Judge Richard A. Kramer, in craigslist vs eBay, filed May 2008 but stayed pending today’s ruling.
September 9th, 2010 at 7:36 pm
I support your efforts to keep Craigslist info safe from ebay.
IMHO ebay should not even be allowed on the board
keep up the good work
chris
September 9th, 2010 at 10:01 pm
Maybe this will teach you guys, and your viewers reading this, not to EVER trust a corporation with ANYTHING.
Too bad I couldn’t get a campaign for governor going there in California. I’d have loved to have raked Meg Whitman through the coals about how her company screws everyone, including Craigslist users.
Don’t be apathetic people. The ONLY way to defeat Meg Whitman, the GOP, and the Fox News creation of the Tea Party is to get out there and actually vote.
I hope this court ruling doesn’t cause too much damage to Craigslist, but I fear the end is coming. Corporations will succeed in taking our internet away from us people.
September 10th, 2010 at 7:01 am
The judgment is one of the few rulings I’ve read that is quite gripping, in the manner of a good novel, you can’t put it down till you’ve found out who are the good guys and who are the bad guys. In the end, as in life, you find that neither party is perfect.
Whilst the judge kept issues to be tried in the next hearing as open as possible, the story he told seems to make it clear that he found eBay had performed actions that seemed like a series of “black-ops” against Craigslist.
Whichever side wins the next hearing, I only hope the next ruling is as interesting a read!
September 10th, 2010 at 9:44 am
It’s rather interesting and annoying how various “journalists” and media organizations are painting this as some sort of wholesale win for eBay. I read the whole decision and it certainly doesn’t look that way to me.
Rest assured that many of us long-time supporters are still pulling for ya amidst all the arrows being thrown these days by sleazy competitors and electioneering AG’s. Hang in there!
September 10th, 2010 at 10:04 am
Because I have used Ebay and Craigslist for so long I found it interesting to see a short blurb on ebay’s site about the lawsuit… which made me say-”Huh?” Always seems a bit fishy when a giant like Ebay proudly claims Victory against… Craigslist?? So I read the lawsuit from May 2008 and got a dose of the “uglies” that often go with large corporate egos.
I just wanted to say. ..I’m embarrassed for Ebay- and grateful that there are very tall people who support humanity and are out there standing up for what they believe in…By the way- it was mentioned in the lawsuit that you might have introduced the “wolf in sheep’s clothing” into craigslist–However- wolves are honorable creatures and speak the truth..even if it is to announce you are dinner. Perhaps the example might have been the lily beetle larvae that coats itself with it’s own excrement so no one wants to touch them- and then demolishes your beautiful lilies before they even get to bloom. And on that note–dance on.
September 10th, 2010 at 10:42 am
At some point eBay will have to realize that providing a public action and sales site doesn’t mean that they have the right to snoop in boardrooms, bedrooms, or anywhere else they “feel like” to gain some sort of “competitive edge”
September 11th, 2010 at 1:35 am
@Mark: The Chancellor that wrote the decision in this case is the head of the Delaware Chancery Court and apparently is widely revered for his interestingly-written opinions. For a hilarious example, take a look at the short WSJ article here:
http://preview.tinyurl.com/56bnab
The unusual (and infuriating to CL, I’m quite sure) thing about this case is the fact that someone was given a large block of shares in a very small (by headcount) company that basically turned around and used that ownership against them in a way that has become like a pernicious infection, haunting their management for years now.
None of that would have been a concern if CL had just followed the usual script and sold out for some obscene amount of money. But the interesting thing is how unique it is for an organization to *not* do that. (Yes, Craig/Jim did make a big chunk of money from the eBay investment - but I think I understand their rationale. If I were in their shoes and the CL traitor that sold off a chunk of the company to a predatory competitor made a boatload of money from it, while the real “keepers of the karma” - as Craig’s neighbors at Cole Hardware like to say - were still living as paupers, I’d be ticked-off and might want to see something from it too. Especially if that sale to an unfriendly party eventually contributed to the demise of my dream and assurance of a comfy retirement.)
And while CL is also a corporation, I also found one of the aspects of the decision to be a sad reminder of our US cultural and business values. While I’m inclined to assume the Chancellor was correct in his application of the relevant laws, the fact that CL can only consider a shareholder’s monetary gain when it comes to corporate decisions that they undertake is depressing. When we have those sorts of values codified deeply into corporate law, it’s not hard to understand why you have to have an iron resolve and the zeal of a missionary to buck the system and resist the temptation to sell out.
September 11th, 2010 at 11:18 am
Thank you Sharon Alworth for pointing out that wolves are honest. It always pains me (and makes my job harder) when I hear references to wolves that are designed to evoke negative thoughts.
Mankind is the only animal on earth capable of evil, or of dishonesty. Meg Whitman and her eBay and PayPal companies prove this. And if California voters are stupid enough to put that psychopath into office, then there truly is no hope for California.
Craigslist has been something of a forum for me to spread knowledge, the only means by which the growing “conservative” movement which is fostered by ignorance and it’s purveyors, the Fox News and other pundits. I’m glad that so many people use Craigslist that it has become something of a universal mechanism by which we can communicate, even in small ways, with each other. Craigslist represents what the internet was supposed to be, and eBay represents everything it wasn’t - and if you were to understand just how evil and wrong eBay and Paypal were, you would have no doubt of the strength of that statement. I hope that others can join in and use the appropriate forums to promote wisdom over ignorance. The very definition of conservatism, after all, is ignorance, as it is conservatives themselves who define their movement as “democracy of the dead.” And the fact is that liberals vastly outnumber conservatives. The ONLY reason conservatives EVER win in an election is because of liberal apathy. It seems it is easier to motivate the masses of ignorant fools to vote, than it is to motivate those who tire of their stupidity. Well, unless you want to continue to see a growing trend where large corporations have compete power over our lives, where sites like Craigslist will be replaced with corporate versions that dictate how we live; then you’ll get off your lazy butts and vote.
September 12th, 2010 at 2:07 am
Craig, Jim,
Congratulations on so much of this decision and the lesson on ethics Chancellor Chandler doled out to EBay. YOU guys have been one of the key keepers of the faith, along with Cole Hardware, the Red Vic Movie House, Rainbow Grocery, Other Avenues and a passel of other SF/Bay Area institutions, to honor decency, fairness and community in business practice.
We need to hold on to the values in order to have credible models for the long slog back down to a real, green, grass-roots economy.
With a huge dose of chagrin, we must thank the Whitman’s sampler of business leaders for their zealous effort to run the economy off a cliff, thus jump-starting the long decline into sustainability.
Keep up the great, generous work, don’t let the bastards get you down - especially grandstanding politicians who know better - we’re out here with ya!
Kevin
September 12th, 2010 at 3:47 am
[…] Craigslist’s blog says “we are pleased with the Chancellor Chandler’s split decision,” and promises that an unlawful competition suit against eBay will now go ahead. Meanwhile, Craigslist founder Craig Newmark said in his own blog post: “We’ll keep fighting the good fight in California.” This isn’t even nearly over. […]
September 12th, 2010 at 8:50 am
This is actually a BIG WIN for Craigslist in many way. Good job standing your ground Jim/Craig
T
September 12th, 2010 at 9:02 am
Well the PR pieces that were immediately used by the news media and wire services were prepared well in advance and generated by the well-paid PR firm and talking heads hired and employed by a corporation we know all too well by now. The fact of the matter is that eBay did NOT get what it so desperately wanted: the board seat + CONTROL and eventual vanquishing of Craig and Jim. eBay has it’s corporate legal wizards hands and minds quite full these days as more and more of the lawsuits that are piling up are beginning to reveal a distinct pattern of a corporation with execs who lack even the most basic moral compass. Besides Craigslist vs eBay still active case in CA there’s the0 FROZEN accounts class action coming up soon in CA and now the latest bombshell where eBay actually stole patented technology from the owners who disclosed and described it to eBay and then eBay tried to apply for the very same patents themselves only to be caught by the US Patent office with their greedy hands once again in someone elses cookie jar. More info about those cases and much more at http://www.paypalfreeze.squarespace.com Our press release would have been written along the lines of “the fat lady has not sung yet” — trust us on this one — there’s not just one fat lady there’s enough to fill a stage for their opera and are they going to really sing!!!
September 12th, 2010 at 9:07 am
Dear Jim,
Please bring back the “Adult Services” category after the general election in November. Because this is what this really is about, the election of attorneys general.
They should not be allowed to censor.
September 13th, 2010 at 3:11 pm
Jim/Craig:
Having read the entire judge’s opinion I am heartened by the quality of this judge’s thoughtful and insightful analysis of the complexity in your case. In the end, you won the most important battle. That one part, of the three you pursued, appears to insure that eBay’s ownership interest in craigslist will never entitle them to a board seat. Sadly, unless you can justify huge salaries, you may have to share some of your profits with your enemy.
Perhaps at some point eBay will realize they’re never going to get any value out of that investment and in the end you (and by extension WE) will win.
Thanks for all you do!
September 13th, 2010 at 5:38 pm
Screw Ebay and its cronies, the thieves that they are! Have they ever gottten enough of folk’s money? The Judge should have made a BETTER ruling-but I know Judges too-often times they have a hidden agenda or stakes under the table or bank account behind their black robes. They belong also like lawyers to the secret society-the ABA, where NO ONE can touch them, investigate them, sue them either=well protected! Another real example in this country=nothing is free here, our liberty and rights eroded daily by our OWN government! http://www.loosechange.com We are a facism country-google that one!
September 14th, 2010 at 12:58 am
Here’s a nice quote I ran across today, perfect for those grandstanding Attorneys General. It’s from someone I rarely quote (except ironically) but this one works quite well under the circumstances:
“It has been said that politics is the second oldest profession.
I have learned that it bears a striking resemblance to the first.”
–Ronald Reagan
September 14th, 2010 at 10:50 am
Hooray. If Craig’s list falls into the hands of the E-beam mercenaries, then the Internet will no longer belong to the people. Long live Craig’s List. long live freedom.
September 15th, 2010 at 6:57 pm
Congratuations to craigslist !
September 15th, 2010 at 11:37 pm
I say boycott E Bay-It sucks anyway. who needs it when craigslist is so much fun.
September 17th, 2010 at 1:37 am
By what I’ve seen, the attack on Craigslist is a desperate, manipulative undertaking by self-righteous people that couldn’t get there way through legal means, the courts. By over emphasizing the negatives that have occurred and misrepresenting the facts to the general public they are getting their way. I saw no evidence presented, in what I have read, proving the “Child Trafficking” is rampant and the number of violent encounters between the women advertising and the customers is ridiculously low in comparison to the number of smoothly occurring transactions were taking place. Prostitution has always been around and will always be around regardless of its legality. It only became illegal in the U.S. between 1910 and 1915 for the most part due to the Woman’s Christian Temperance Union. The same group that was played a major role in the Prohibition mistake. Bravo you self-righteous do gooders, your taking away arena that woman willingly in the business were afforded a degree of safety. I think the Green River Killer may have accomplished more heinous deeds than all that has occurred over the net to my knowledge. As for Douglas F. Gansler (D) comment, “For the most serious offenses, we hear about them afterward, when the virtual becomes real.” Since when hasn’t there had to be a crime committed before it’s considered a crime? Give me a break. Legalize Prostitution between consenting adults, which would make it safer for a both the Prostitutes and the Johns. Then you can focus on the Child Trafficking as well as other important issues.
September 17th, 2010 at 11:57 am
In response to the Sept 11 post by Phil Koenig: Yes, corporate law does need to change so that companies can have a purpose beyond the maximization of shareholder wealth. Luckily, this is in the works. Maryland and Vermont now have the “benefit corporation.” And, California may soon have a “flexible purpose corporation.” (See http://charitylawyerblog.com/2010/09/08/what-is-a-flexible-purpose-corporation-by-keren-raz/) Craigslist should follow the CA legislation and consider reincorporating when the new form becomes available!
September 18th, 2010 at 7:11 am
Bravo Craigslist!…and all who support it.
September 18th, 2010 at 11:54 pm
I wonder how this decision will play out. Clearly it leaves the staggered board scheme intact so eBay can be effectively shut out from forcing a director onto the board. Will either side appeal any part of the decision, or simply follow through with the opposing suit in CA? Does eBay have any course of action, any leverage?
September 20th, 2010 at 11:45 am
@Drew: Great news on those new corporate forms - heartening!
I also wonder if it might benefit CL to re-incorporate under one of those new forms. (Though I imagine the reason CL incorporated in Delaware are similiar to the reasons so many other companies do - because the corporate regulations in DE are much more lenient than they are in most other states.)
September 28th, 2010 at 1:46 am
After reading the “today’s ruling” and many news articles it seems so very clear that eBay was/is acting in Bad Faith. eBay should have disclosed their plans to compete “head-on”. But it sounds like the judge was fair in realizing that there is indeed a vast difference between CL and eBay’s history of monetization and culture and that allowing eBay a seat on the board would not be in the best interest for CL. In my opinion a long history of good core values is always better, and stronger, than a history mainly focused on monetization. Keep up the great work CL!