Zillow faces an expensive 2016 with mounting legal action. The Zillow Group recorded a pro forma net loss of $91.1 million in 2015. Zillow attributes much of that loss to legal expenses in its ongoing battle with Move (now owned by Rupert Murdoch’s News Corp).
The Zilllow Group, which owns Zillow, Trulia, StreetEasy, HotPads, Naked Apartments and other non-consumer brands, expects those legal costs to rise in 2016. Zillow’s chief financial officer, Kathleen Phillips, said (in a call with investors) that the costs Move’s claims are “projected to rise from $27.1 million in 2015 to $36 million in 2016”, reported HousingWire.
Move – the company operating NAR’s Realtor.com – filed suit against Zillow and two former Move employees, Errol Samuelson and Curt Beardsley (they joined Zillow in 2014). Move and the National Association of Realtors is seeking $1.77 billion in damages. “The damages claim is just over 40 percent of Zillow Group’s current market cap: $4.2 billion,” reports Inman.
Move and the National Association of Realtors is seeking $1.77 billion in damages
The allegation is that “Samuelson and Zillow stole trade secrets and proprietary information, and that they have made efforts since to cover that up. Move further alleged that Zillow was hiding or deleting evidence.” Zillow’s merger with Trulia, which foiled Move’s same merger plans, may account for some of the damages sought.
Although some parts of the case were dismissed this month, the suit is far from over. Verbal skirmishes between media mogul Rupert Murdoch and Zillow CEO Spencer Rascoff have fueled the fire. In addition, Zillow countersued Move last year for publishing a whistleblower letter that strained their relationship with agents.
Zillow was also sued by former employee Ian Freeman, who claimed hourly employees were not paid for overtime and missed lunch/rest periods. In February, U.S. District Judge Josephine L. Staton certified the case of Freeman, et al., v. Zillow Group Inc. as a class-action suit (this opened the case to 150 other affected employees).
While she agreed with Zillow’s labor violations for automatically recording employee hours, Judge Staton dismissed the majority of the unpaid hours case on March 17, according to Law360. Since the case was dismissed without prejudice, Freeman’s lawyers vow to amend the complaint. So likely Zillow will continue to be paying legal fees for this case as well.
Today, Zillow rolled out updated features for it’s Premier Agent (paid) program
Today, Zillow rolled out updated features for it’s Premier Agent (paid) program. Perhaps this incentive to join their paid program (which boosts visibility on the site) will help offset these mounting legal costs.