Active Rain, as we all know by now, has sued Move, Inc. for $33 million for breaking its marriage proposal to them. Even though the promised wedding never happened, Active Rain says it still got screwed. A jury will examine the evidence to see if Active Rain was indeed violated by the Move and is now damaged goods.
The lawsuit, filed in U.S. District Court for the Central District of Washington, Western Division, alleges the following violations, in order of their occurrence in the complaint:
- Violation of California’s Trade Secrets Act
- Breach of Contract
- Unjust Enrichment
- Promissory/Equitable Estoppel
- Unfair Competition under Common Law
- Violation of Washington’s Unfair Business Practices Act
- Fraud and Deceit under California Common Law
Active Rain’s Complaint is here. Move’s Answer is here.
Some preliminary legal observations:
- The Breach of Contract claim is not for breach of an agreement to purchase Active Rain, but for breach of the Mutual Nondisclosure Agreement.
Contrary to popular belief, contracts NEED not be in writing and signed to be enforceable. If there was an offer and acceptance, consideration (which may be just a promise) and a “meeting of the minds”, there was a contract. And if so proven by acts, pacta sunt servanda (some folks can be swayed by a little Latin).
I would have claimed breach of the purchase contract, even though a signed writing did not exist. The only reason not to make the claim would be the terms of the Letter of Intent (which was not attached to the Complaint). If the Letter of Intent had contingencies (subject to blah blah blah) which were not met, no meeting of the minds could exist, and therefore no contract under law. (the Letter of Intent is a legally potent piece of evidence). Without a contract claim under law, counsel is left no choice but to argue equitable claims such as Unjust Enrichment and Promissory and Equitable Estoppel. Although principles of law and equity have been merged in most states, lawyers still make the distinctions, since any legal theory requires its own elements of proof under the common law of the state.
- The Fraud and Deceit claims are listed last
I don’t know how they do things on the left coast, but on the right coast we allege our strongest claims first and weaker ones last (the same goes for defenses). If they are higher in the batting order they appear more forceful (to judge and jury). If the jury does not buy the fraud, they may buy the lesser equitable claims. Sort of like coming in second place. Therefore, I am surprised to see the Fraud and Deceit claims batting in the pitcher’s spot (sorry for the baseball analogy but the Phillies just won the NL East). Although these claims are harder to prove, since they require “intent to deceive”, the Complaint recites several actions a jury could find deceitful, especially when taken together:
- the allegation, if untrue, that “Move’s Board of Directors had unanimously approved the acquisition of Active Rain” (paragraph 22). If you can prove this one lie, Move’s credibility in other places is jeopardized.
- Move statement, if untrue, that it planned the announcement at the NAR meeting
- the discovery of Board meeting minutes failing to reveal any votes or planned announcements is also a possible pinning move.
Couple those with:
- Move requests (demand) that AR cease pursuing any opportunities
- Move’s request (demand) that AR cancel its bank line of credit
- the notice of cancellation coming only hours after the delivery of sensitive material about AR’s platform (especially if that proves to be some “secret sauce”– though no patented information is alleged)
If these Move moves are persuasively presented to a jury, a good case can be made for a rigged game.
- A jury trial is a good move by Active Rain
When the law is on your side, bang on the law. When the facts are on your side, bang on the facts. When neither the law or the facts are on your side, bang on the table. — (citation unknown)
When arguing equity cases, a good lawyer will always want a jury trial. Juries are unpredictable and can be swayed by emotion and perception. All questions of fact and credibility of witnesses are within the jury’s exclusive domain. Besides, nobody understands the internet.
The next moves:
After discovery, i.e. production of documents, depositions of witnesses, etc, Move will make a Motion to Dismiss all claims. This motion is decided by the judge. There must exist no valid legal claim or proof of damages. There must be no material issues of fact, which, if decided in the nonmovant’s favor, would allow for a recovery. Since every presumption is given to the one who would be denied his day in court if the motion were granted, you must have a dog of a case to have it tossed out at this stage.
We will keep you posted on the latest comings and goings.
Legal Disclaimers: This above is not a legal opinion. It’s just a blog post written by a lawyer and he was not paid to give it. So don’t rely on what he says, or place any bets on the outcome of the case. Heck, what do lawyers know anyway, one is ALWAYS wrong in every case.
Postscript: Every Active Rainer knew it was possible the company could be sold. Heck, we blog about internet company buyouts all the time. Heck again, we’re in the buying and selling business, for Pete’s sake. And what apple-pie eating capitalist would find anything wrong with that.
What may have been lesser known is that any content you provide to another blog or website WILL build another’s brand and make it more attractive to buyers. This is true whether you write for Active Rain or a group blog. If it’s not your blog you may surrender some control of your content, whether it be by editing or deletion or even censoring of comments on your posts. The blog owner also has the power to boot you and delete your content from his or her site. And if you leave, will the blog owner let you take your content with you– or will they keep it for traffic? But there is a greater risk to your content on such sites — if that site ever closes (let’s say the blog owner gets out of the profession and closes shop), you loose it all (unless you backed it up). Eventually, you will no longer find it on Google. Blog post oblivion.
Related Post:
The Lights of Blogway, Deconstructing the Group Blog
Technorati Tags: Active Rain, Move, Inc., blogging
Sounds like the “screwees” might be those of us who posted on Active Rain?
I always kinda wondered why I was writing those posts and preaching to the choir anyway.
Wonder if anyone else has considered pulling their content (posts) from AR?
Yeah, I know ~ we all did it to get more GoogleJuice.
Just a thot.
It’s still nice to get flowers
Been giving this some thought this morning and have realized that contributing content to someone else’s (blog) site is similar to agents having a web page on their broker’s website or an e-mail address that is tied to their broker’s domain.
When you contribute content to someone else’s blog, it is logical to assume that that content is owned by the owner of the blog, isn’t it?
Which makes a person realize that it’s a pretty good idea to have control of your own content by having your own domain(s) for whatever you are doing.
If nothing is said about ownership of content, I believe the content belongs to the author and your contribution to the other person’s blog is merely a license to publish it.
Perhaps those contributing to other blogs should get these answers.
Copyright law automatically creates ownership of the work for the author, but I wonder what the Terms of Use are on some of these sites with multiple contributors.
How many people ever read the Terms of Use?
Wonder if there ARE any for sites like BHB, RCG, AR, etc.?
I can’t find the Terms of Use for Active Rain anywhere. Even had the CEO visit my blog and comment on a post that explicitly asked “where are the AR TOS?” and nada reply to it.
I have a Terms of Use on my own blog, though that pretty much acts as my all purpose legal defense for saying something particularly stupid or offensive and not much else.
I agree with the postscript too. Group blogs are very murky things. All it can take is a personal falling out and you can be well and truely firetrucked if you’re not the blog owner.
Yes, the Terms of Use should explain what rights you are giving up when you contribute your content. Agreed, most don’t read the TOU.
I do know that on AR & BHB the copyright stays with the authors (I would guess Dustin says the same)– so I guess if a writer leaves, they can take their blog posts with them— I know Jeff Turner left BHB– I wonder where his content went– interesting question.
Well the copyright is only part of the picture. Once something is out there, its out there. You can quit a group blog, upload your group blog posts to your own blog and have the group blog delete or keep your posts up.
But you won’t have the page rank, back links, or readership profile on your own blog that you would have if you had published everything on your own blog from the get go.
Plus should the group blog ever sell, you sure as hell aren’t an owner of anything apart your own posts. Which can be deleted, unpublished or edited on a whim by the blog owner who holds the 1st amendment rights. Group blogs typically have an extremely light editioral control, specially as contributors supply content for free, but push come to shove…
Athol,
I agree. It would take time to build up but it can be done. So get your own blog from the git go.
2 things about group blogs should be considered by contributors, aside from ownership and control of content:
1. Your content is building that brand, driving traffic and links to it. The contributors are giving that blog the juice. The payback is, hopefully, you become a dominant writer in the group and enhance your own brand– so if you do decide to go solo, you have a following. But you gots to keep up with the others or you can loose ground.
2. The group blog may go out of business. Once the blog is shut down, the content will eventually disappear from Google. That is a greater risk than sale, i think.
It amazes me that some people are offended that AR was planning to sell. It amazes me even more that people don’t realize that they benefit from Active Rain and its Google Juice. The truth is that I wouldn’t be leaving this comment here right now if it wasn’t for AR.
I hope they get something - I was never a big fan of Move.com
Ines,
Yes, AR did provide Google juice to its members. And networking possibilities. And a place to write if you didn’t have your own blog. And does everyone forget it is FREE?
I love your headline. Cracks me up. Can’t get past it. Had to write about Active Rain on the weenie, hope you don’t mind a link:
http://www.stpaulrealestateblog.com/weenie/2007/10/content-is-king.html
Love it!
This is why you need to have an outside blog and an Active Rain blog.. Never put everything in one place.. You can link the content from AR to your other blog..so the content will always remain yours…
Ines is right.. why would anyone think the guys would maintain AR for free forever…of course they were going to sell.
Quite right Kaye.
>>Ines is right.. why would anyone think the guys would maintain AR for free forever…of course they were going to sell.
Well no one thought Active Rain was going to stay free forever. Profitability was always a question. But because they had things up on their site saying that they had plans and ideas to move to an advertising model etc, and constantly spun the story of the love of community, only a small handful of people believed Active Rain would be simply straight up sold.
Plus the WTF kicker was to whom the sale was to be too. Agents generally all grudingly use Realtor.com, but hate the company for its profit gouging.
Athol
Yes, anyone who stops to think about it, knows the reality of business, especially online.
I see your WTF point. But would the community feel better if the new owner were Google? I’m not sure any buyer would make a comfortable fit. But keep in mind that the AR guys had planned to stay on in management— meaning to me, they were concerned about the community after the sale. It wasn’t a case of taking the money and running.