EBay Inc. is accusing Craigslist's board of directors of secretly plotting to dilute eBay's investment in the online classified advertising site after the auction company developed a competing service, according to a lawsuit filed under seal by eBay last week and released today.
Some sections of the complaint (pdf format) have been removed to protect certain information about Craigslist, which is a private company and governed by confidentiality restrictions.
EBay filed the lawsuit against Craigslist, its founder Craig Newmark, and CEO Jim Buckmaster in the Delaware Court of Chancery on April 22. According to the lawsuit, Craigslist's board held a number of secret meetings beginning in October 2007 in an effort to dilute eBay's 28.4% stake in the company, which it acquired in August 2004.
Craigslist spokeswoman Susan MacTavish Best declined to comment on the unsealing of the lawsuit beyond what was posted on Craigslist's blog. She said the company would have more to say when it filed its formal response in the next few weeks.
"As those who know us best will recognize, every measure we have taken has been for the sake of protecting the long term well-being of the Craigslist community," the blog post states. "Sadly, we have an uncomfortably conflicted shareholder in our midst, one that is obsessed with dominating online classifieds for the purpose of maximizing its own profits. It's a conflict of interest worth keeping in mind if you decide to give this filing a read."
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