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Zillow to pay $130M to settle lawsuit with Move over alleged trade secret theft

Settles one of most contentious battles in history of online real estate

[Update: This article is updated with a statement from the National Association of Realtors.]

One of the most contentious battles in history of online real estate is now over, as Zillow announced Monday that it reached a settlement with Move over allegations of trade secret theft levied against two high-level executives at Zillow who once plied their craft at Move.

According to a Securities and Exchange Commission filing, Zillow will pay Move, which operates Realtor.com for the National Association of Realtors and owned by News Corp, a total of $130 million to settle allegations that Errol Samuelson, who was once Move's chief strategy officer, stole trade secrets and proprietary information from Move before joining Zillow in 2013.

The settlement amount is far less than Move initially wanted, as Move originally claimed that Zillow owed the company $2 billion in damages.

According to a News Corp SEC filing, Zillow will pay $130 million to Move, the National Association of Realtors, and other “related entities,” to settle the lawsuit, which began when Move sued Zillow after Samuelson resigned from Move on March 5, 2014, and joined Zillow as the company's second-highest paid executive on the same day.

News Corp’s SEC filing also says that the pending litigation will be dismissed.

According to the terms of settlement, NAR is entitled to 10% of the settlement proceeds after deduction of Move's litigation-related costs and fees, with the remainder being paid to Move.

Per a separate SEC filing from Zillow, the parties agreed to dismiss all claims and counterclaims “with prejudice.”

Zillow’s SEC filing states that the settlement agreement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties.

The settlement agreement, included in Zillow’s SEC filing, expands on the stipulation that Zillow is not admitting liability in the settlement.

“It is understood and agreed that this is a compromise settlement of disputed claims and counterclaims and potential disputed claims and counterclaims,” the settlement agreement states. “This settlement agreement is solely the result of a good faith compromise and settlement between the parties. Nothing contained herein is or is to be construed as an admission by any of the parties of liability, wrongdoing, or responsibility, and the parties deny any such liability or wrongdoing and continue to disclaim such responsibility.”

In statements, both Zillow and Move said that they were pleased to have the litigation behind them.

“Today, we reached an amicable resolution to settle our lawsuit with News Corp and the National Association of Realtors,” Zillow said in a statement. “The agreement allows us to put this litigation behind us, and continue our focus on innovation and the huge opportunity in front of us as the consumer-focused market leader.”

Move shared similar sentiments.

“We are pleased to have reached an amicable resolution of this litigation,” Move said in a statement. “We look forward to putting the matter to rest and returning our full focus to simplifying the real estate process for consumers and the real estate professionals who serve them.”

Tom Salomone, the president of the National Association of Realtors, said that the organization is also pleased by the settlement, and hopes that Move will put the settlement money towards improving Realtor.com.

“We are pleased that Zillow has agreed to a settlement amount of $130 million in damages instead of going to trial, and that the parties have reached an amicable resolution,” Salomone said.

“NAR’s relationship with Move and realtor.com is based on a mutual respect for Realtors and their efforts to bring online home buying and selling resources to consumers,” Salomone continued.

“Move will receive the bulk of these funds; it is NAR’s hope that they will invest this money in initiatives that enhance the consumer experience on realtor.com and benefit our members in support of the Realtor brand,” Salomone added.

“NAR will receive 10% of the settlement payment after Move deducts its legal fees; Move covered the costs of the lawsuit,” Salomone concluded. “After this amount is determined, NAR’s leadership team will consider how best to apply those funds in service of NAR’s Realtor members; we will share that information as soon as a decision is made.”

The battle began in 2013 when Move filed suit against Zillow after Samuelson left, alleging that Samuelson, and by extension Zillow, stole trade secrets and proprietary information. Further, Move alleged efforts to cover up the claimed theft.

The original lawsuit alleged breach of contract, breach of fiduciary duty and misappropriation of trade secrets and accused Samuelson of misappropriating trade secret information by acquiring it using improper means, and by copying it without authorization.

The lawsuit eventually expanded to include Curt Beardsley, who is also a former Move employee. Beardsley is now vice president of industry development at Zillow.

A recent ruling in the lawsuit led some observers to believe that Move would triumph, at least in some form, when the case went trial, which was scheduled to begin soon.

Last month, the judge overseeing the lawsuit handed down a ruling on a “spoliation” hearing that took place in April.

At issue in that six-day hearing that included testimony from Zillow Group CEO Spencer Rascoff, Samuelson, Beardsley and more, was whether Zillow, Samuelson and/or Beardsley destroyed evidence related to the lawsuit that would have negatively impacted Move’s ability to receive what it felt would be a fair trial.

Specifically, Move claimed that Zillow, Samuelson and Beardsley destroyed evidence stored on various devices (hard drives, other portable storage devices, computers) after the initial lawsuit was filed, in clear violation of the court’s instruction to the contrary.

The judge ruled neither Zillow nor Samuelson acted “in bad faith” with respect to any evidence that may have been destroyed. Beardsley, on the other hand, was “unclean” in the eyes of the judge.

“With respect to his handling of certain devices and information, Mr. Beardsley’s conduct was willful and in bad faith and is sufficiently prejudicial to warrant the provision of a jury instruction or instructions related to the lost or missing evidence,” the judge wrote.

But the likelihood of Move securing the full $2 billion was weakened significantly by the ruling and subsequent summary judgment rulings.

And with the two sides due in court soon for the beginning of the trial, cooler heads prevailed and the two biggest players in online real estate reached a settlement rather than having their dirty laundry aired out in a trial that was expected to last a number of weeks.

And all it took was $130 million.

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