A Seattle judge has ordered senior Zillow employee Curt Beardsley and an expert witness hired by Zillow to sit for additional depositions this week as a result of growing concerns regarding evidence destruction in the ongoing legal dispute between Zillow, the National Association of REALTORS®, and Move Inc., which operates realtor.com®.
The lawsuit started shortly after former realtor.com® President Errol Samuelson and Beardsley resigned from Move in March 2014. The two reportedly communicated with senior Zillow personnel for more than four months in the midst of confidential events at Move and NAR, after which both accepted positions at Zillow. NAR and Move allege that Samuelson and Beardsley engaged in deceptive and unlawful conduct by passing highly sensitive information to Zillow CEO Spencer Rascoff and others at Zillow using cloud-based e-mail accounts, text messages, and telephone calls on a self-described “burner phone” mobile device. The information related to a then-confidential potential transaction between Trulia and Move, as well as multiple business initiatives being undertaken by Move in support of realtor.com®.
Move and NAR have repeatedly alleged in the lawsuit that Zillow and its personnel have hidden and destroyed evidence to cover up unlawful conduct. In its decision to enter a preliminary injunction in June 2014, the Court drew “negative inferences” against Samuelson, concluding that he deleted data from electronic devices as he left Move.
Recently, it was revealed that Beardsley disposed of a number of electronic storage devices that were connected to Move computers in the days before he and Samuelson left and that file erasure programs were run on Zillow and personal computers used by Beardsley during the course of the lawsuit.
The Seattle court has ordered Beardsley to refrain from any further file deletion or discarding of potential evidence. The court is evaluating a request from Move and NAR seeking permission to have their forensic expert participate in a court-ordered forensic review of certain Zillow computers and cloud storage accounts as a result of ongoing concerns about evidence destruction by Zillow personnel, including Samuelson and Beardsley.
In a whistleblower letter received by Move and NAR in April, former Zillow Vice President Chris Crocker stated, among other allegations, that Zillow had stolen realtor.com® databases and was hiding stolen intellectual property in cloud storage accounts. A database was thereafter located and produced in the case by the defendants. The metadata from the database confirmed it was indeed created and maintained by Move but was accessed by a user identified as “Curt” before and after the date Beardsley joined Zillow in March 2014.
After the whistleblower letter was made public, Zillow countersued Move and NAR, claiming that the letter contained falsehoods as well as trade secrets and that its release hurt Zillow’s reputation and its competitive position. NAR last week filed a motion to dismiss the counterclaims, citing both Washington law and common law privilege for fair and accurate reports of judicial proceedings.
The Zillow trial is scheduled for June 2016. The parties are currently engaged in the discovery process, and NAR attorneys say they expect a decision this month on the forensic protocol.