Move and the National Association of REALTORS® (NAR) filed additional court documents Friday following receipt of a letter from an anonymous whistleblower, presumably a Zillow employee, who alleges widespread misappropriation of trade secrets and data theft by Errol Samuelson, the former Move chief strategy officer, who left the company amid controversy last year to become Zillow’s chief industry development officer.
Move and NAR state in a court filing obtained by RISMedia that the letter, also obtained by RISMedia, “appears to confirm” their belief that Samuelson “stole multiple documents and entire databases, are using the stolen information, and are hiding evidence on non-Zillow electronic services.
“The plaintiffs have complained for months that the defendants are systematically hiding evidence in secret non-Zillow email accounts and file-sharing services. The defendants have denied the claims, deriding them as ‘silly’ conspiracy theories and claim they have produced everything.”
The filing continues, “The whistleblower’s letter appears to confirm, however, the plaintiffs’ worst fears. The whistleblower identifies specific individuals, specific documents, and specific locations to search for evidence of the defendants’ unlawful conduct.
“The anonymous letter appears to have been written by a whistleblower at Zillow with knowledge of its internal practices as well as the behavior of its CEO and other high-level executives. The letter thoroughly confirms several points that the plaintiffs have maintained for months, including the defendants’ brazen violations of the Court’s Preliminary Injunction.”
That injunction was issued last July following a lawsuit filed by Move and NAR against Zillow and Samuelson for breach of contract, breach of fiduciary duty, and misappropriation of trade secrets among other actions. The lawsuit alleged that Samuelson’s knowledge of Move’s trade secrets and strategies would make it impossible for him to function in his new job at Zillow without divulging those secrets.
Among the many restrictions imposed by the injunction at the time, Samuelson was prevented from engaging in “efforts to sell leads or to develop or market products that gather and sell leads to real estate agents, brokers, or franchisors” and from “developing products that create websites for real estate agents” for a period of six months. Samuelson was also prevented from participating in “efforts to obtain direct feeds of listing data from Multiple Listing Services, real estate brokers, franchisors, or associations.”
In the two-page letter, the anonymous writer says: “Was he working while on injunction? yes, absolutely. Was he careful so you couldn’t catch him, yes, absolutely.”
The letter goes on to outline several sources of evidence and potential witnesses who could corroborate the letter writer’s statements.
The whistleblower also stated that “Curt [Beardsley, former VP of Product Marketing for Move, who also left the company to become VP of Industry Development at Zillow] has copies of Move’s private MLS contact database, listing count database and other databases stolen from Move. He uses a google docs account to keep them off of his work computer. He has accessed it from work and Many (sic) other employees have witnessed him using this database and he is using it to benefit Zillow’s efforts as Zillow’s database is inferior.”
“This statement,” Move said in the court filing, “which is entirely consistent with the plaintiffs’ assertions in this case – reveals profoundly unlawful conduct. It is a worst-case scenario for the plaintiffs, who have for more than a year feared that the defendants stole key information for Zillow. It appears the information, including entire databases, were indeed stolen and are still being used by the defendants and stored in a Google docs application that is being used ‘for work’ at Zillow.”
The whistleblower also alleges that “Zillow illegally uses the realtor.com website to benchmark their listing count and figure out what listings are missing…”
Move calls for third-party discovery in the lawsuit, saying that the letter “supports the inference that the defendants continue to hide evidence from the plaintiffs and this court about their unlawful activities.”
Move said in the filing that it is concerned about “lengths to which (Zillow and Samuelson) will go” to conceal their alleged conduct.
“The whistleblower letter is further evidence that the defendants have been systematically engaged in an ongoing misappropriation of Move’s trade secret information. The letter also supports the inference that the defendants continue to hide evidence from the plaintiffs and this Court about their unlawful activities. The details in the letter concerning the use of Google Docs to store and use Move’s own databases reveals the lengths to which the defendants will go to conceal their illegal activities. Indeed, the plaintiffs are very concerned about the real possibility that the whistleblower letter will result in yet more spoliation of evidence and have sought an emergency preservation order from the Special Master. This is not an ordinary case with ordinary defendants. After all, the Court has already held they destroyed evidence and experts have confirmed their evidence destruction.”
“The defendants simply cannot be trusted to be the sole source of evidence in this case regarding their conduct,” Move stated. “Nor should the defendants be permitted to limit the scope of discovery sought by the plaintiffs from third parties. Unfortunately, third parties may prove to be the only reliable sources of discovery available to the plaintiffs regarding the defendants’ misconduct.”
Move did not name a third party.
When contacted by RISMedia about the letter and the court filing, Zillow said the letter is “unsubstantiated” with false information. They issued the following statement:
“Zillow has acted and will continue to act with the utmost integrity in conducting its business and in defending this litigation,” Zillow said in a statement. “This letter is unsigned and unsubstantiated with a mix of mischaracterized facts and false information.”
Move Senior Communications Manger Lexie Puckett told RISMedia that the allegations are concerning.
“This whistleblower letter raises extremely serious allegations about destruction of documents, theft and misuse of databases, violations of a court injunction and other illegal behavior,” Puckett said in a statement. “We hope that Zillow takes no steps to retaliate against the whistleblower, and that no further destruction of evidence in this case occurs.”
Puckett continued. “We find it especially troubling that confidential industry data and agent websites may have been illegally accessed and used by Zillow for its own purposes. That is a matter of great concern to our partners in the industry.”
Stay tuned to RISMedia for continuing developments.