Seattle Court Unseals Evidence in Move v. Zillow

January 25, 2016

A large volume of evidence has been made public in the lawsuit brought by NAR and Move Inc. against Zillow Inc., Errol Samuelson, and Curt Beardsley. The defendants filed a series of motions to have evidence sealed, saying the documents were confidential and personal, but the King County Superior Court in Seattle, Wash., disagreed, saying a vast majority of the evidence did not reveal trade secrets or brand strategy.

Samuelson and Beardsley had been long-time Move executives before resigning in March 2014 to take industry relations positions within Zillow. After their departure, Move, NAR, and two subsidiary companies sued them and their employer alleging, among other things, that Zillow, Samuelson, and Beardsley stole valuable confidential information and then hid and destroyed evidence to cover their unlawful conduct. The defendants have strongly denied wrongdoing.

Since then the case has been through nearly two years of depositions and fact-finding—including a forensic review to recover documents deleted from the computers of Samuelson and Beardsley.

Lawsuit pleadings are usually made public, says NAR General Counsel Katie Johnson, whose legal team argued for unsealing the documents. “Ultimately, the public interest of open court proceedings outweighed any reason the defendants gave for keeping these documents sealed.”

Among the documents made public are these:

  • Text messages from Samuelson to Zillow CEO Spencer Rascoff, written two months before Samuelson’s departure from Move. The text references a “burner phone,” a term commonly used to describe a prepaid mobile phone that’s purchased for one purpose and then disposed of. NAR and Move say Samuelson set up the phone “so he could talk to the CEO of Zillow at night while he was in the middle of negotiating a potential multi-billion dollar Move-Trulia merger transaction by day.” That transaction never went through, and in 2014, Zillow announced plans to acquire Trulia, an acquisition completed in early 2015.
  • To-do list from Errol Samuelson, written before his departure from Move and recovered from his computer, that includes among the tasks “wipe hard drives and phone.”
  • Excerpts from Samuelson’s deposition testimony, in which he says he engaged a vendor for advice on how to securely delete personal data from a Move-owned computer in preparation for returning the computer to his former employer. Move and NAR contend that Samuelson was destroying evidence.
  • Excerpts from Beardsley’s deposition testimony, in which he explains why he deleted evidence and physically destroyed a hard drive.

Also made public was the deposition of Chris Crocker, the former Zillow executive who wrote a so-called “whistleblower letter” to counsel for Move and NAR. In the anonymous letter, Crocker offered clues about where to find evidence of improper actions by Samuelson, Beardsley, and Zillow, including evidence that Samuelson was actively engaged in industry development during a time when a court order temporarily blocked him from doing that work. After Crocker’s identity was revealed, Zillow’s attorneys called him a “disgruntled former employee” who misstated facts.

In his testimony, Crocker stood by his allegations, including a claim that Zillow was improperly using data from IDX feeds. Included in the court record are data license agreements between Zillow and two REALTOR® association-owned MLSs, purportedly restricting use of the MLSs’ data for any purpose other than IDX. Crocker also reiterated his statement that Beardsley had accessed a proprietary Move database to get information about REALTOR.com® listing counts, information Zillow doesn’t have, according to Crocker.

In 2015, Beardsley was admonished by King County Superior Court Judge Sean O’Donnell, for interfering with a court-ordered forensics investigation into the defendants’ computers and cloud accounts. In the admonishment order, O’Donnell was affirming a recommendation by the Discovery Master (retired King County Judge Bruce Hilyer, who was appointed to manage the discovery process).

During the discovery process, Beardsley had changed a cloud-account password, later saying he did so to protect personal information. “We have elaborate protections built into this case to protect privacy,” Hilyer said. Beardsley’s conduct was inconsistent with the forensic protocol ordered by the court, he said, adding, “Mr. Beardsley is admonished not to take unilateral actions to impede or delay or interfere with the investigation of the neutral forensic expert.”

The departure of Samuelson and Beardsley from Move was considered a betrayal by many in the real estate industry. Whether their actions violated the law will be decided this year. The case is scheduled for trial in June 2016.

—REALTOR® Magazine