14 DAY TRIAL // The start date of a trial between Craigslist and eBay has been postponed by a Delaware court and the trial is now expected to begin in December. This is now the second delay in the trial between the online classifieds site and the ecommerce giant over the fact that two majority shareholders with Craigslist have worked to have Ebay's minority stake in the company diluted from 28.4 percent to just 24.85 percent. The judge also dismissed two of the seven claims Ebay made in the lawsuit.
Craigslist CEO James Buckmaster noted the minor victory in a post on the company's blog. “As to the remaining claims, the evidence at trial will show craigslist and its directors adopted reasonable governance measures to protect craigslist and its mission from, among other things, eBay’s exploitation of its position as stockholder to harm craigslist and obtain unfair commercial advantage,” he said.
EBay had bought a minority stake of 28.4 percent in the classifieds site in 2004 and is the only other investor besides the two named in the trial. However, eBay claims that Craigslist's founder Craig Newmark and James Buckmaster have put together a “coercive plan” to have the Internet giant's share diluted to 24.85 percent by changing the company's stock structure. This way, eBay would own just under 25 percent losing its right to select a board member. The company also claims that the move was intended to force it to sell its share in Craigslist. eBay filed a lawsuit in 2008 asking for the transactions to be reversed.
The judge has now approved a new start date set for December 7 but, importantly, he also dismissed two of the claims. The first one accused Craigslist's founder and CEO of breaking their fiduciary duty by approving indemnification agreements that would benefit them but the claim was rejected as it was based on a speculative move as the two hadn't actually signed the agreements. The second dismissed claim was related to the first one and said that the agreements were "a waste of corporate assets." The judge however found that no funds had been spent so far and decided that the claim was without merit.