Zillow moves to strike ‘poison pen’ letter alleging theft of agent data

Court grants portal giant's motion to redact letter, citing trade secrets

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Zillow has filed a motion asking a court to disregard what a Zillow exec described as a “poison pen letter” alleging that Zillow steals listing data from agent websites and scrapes data from realtor.com for its own listing-quality purposes.

The anonymous letter, which Zillow says was written by a “bitter, terminated employee,” was filed in court on Friday and claimed knowledge of illegal actions at Zillow, pointing realtor.com operator Move Inc. to specific people, documents, keywords and locations to search for evidence of those actions.

Zillow’s motion to strike, filed yesterday in Washington’s King County Superior Court, said the letter was “an inadmissible piece of evidence that serves only to inflame and distract” and was improperly included as part of Move’s motion calling for the court to grant third-party discovery in the high-profile trade secrets case.

“Plaintiffs’ apparent objective was simply to get this venomous letter in front of the Court — and
the public — as quickly and in whatever manner possible,” Zillow’s attorneys said in the filing. [Emphasis original.]

“The pending motions were the easiest avenue for doing so. This filing was entirely outside the scope of proper procedure.”

Move has yet to file a response to the motion and declined to comment for this story.

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Today, the court granted a separate motion filed by Zillow to seal part of the letter in the court record.

At this point, it is unclear which part of the letter was redacted, but Zillow had asked the court to seal the last three full paragraphs of the letter, claiming that, although containing inaccuracies, the paragraphs included trade secrets.

That part of the letter included allegations that Zillow scrapes the realtor.com website and illegally accesses Internet data exchange (IDX) listing data from agent websites through its Diverse Solutions subsidiary.

In the motion to seal, Zillow’s attorneys said the letter was sent to Move by “a bitter, terminated employee who had confidentiality obligations to Zillow” and was “full of gross mischaracterizations and false and misleading statements about Zillow’s operations.”

“[T]he writer did not have a full understanding of Zillow’s technical operations and either intentionally or mistakenly misrepresented them. Regardless, the document seeks to reveal Zillow’s highly confidential and proprietary information,” Zillow’s attorneys said.

They argued that, although the letter was “riddled with inaccuracies,” the letter contained enough “confidential and sensitive information” that Zillow’s interest in avoiding competitive harm from its disclosure outweighed the public interest in access to the document.

In a separate filing opposing the motion to seal, Move’s attorneys argued that what was contained in the letter “may be Zillow’s dirty secrets, but they are not trade secrets.”

“The manner in which Zillow has been unfairly competing with plaintiffs, and evidence that corroborates plaintiffs’ allegations, cannot possibly be treated as some sort of ‘trade secret’ any more than a burglar’s methods for picking a lock,” they said.

“In short, the only thing defendants seek to hide from the public’s view is how they have been violating the rights of plaintiffs’ and their business partners.”

“If most of the statements in the whistleblower letter are false, then, by definition, they are not trade secrets,” they added.

Moreover, Move contended that sealing the letter “would interfere with unfettered news reporting about this case” and “undermine the public interest in encouraging more whistleblowers to come forward.”

Nonetheless, the court agreed that the letter contained trade secrets and ordered they be redacted. In an emailed statement to Inman, Zillow said it “has and will continue to act with the utmost integrity in conducting its business and in defending against this litigation” and that the filing containing the letter “was a clear attempt to discredit, disparage and damage Zillow publicly and competitively.”

“We have taken swift and appropriate legal action and will be addressing these matters in the courts based on the facts, not unsubstantiated claims,” Zillow said.

“We are pleased that, following the court’s review of the facts, they have ruled in favor of Zillow’s motion to seal information about proprietary systems and data released by our competitor.”

Although the court has decided to redact part of the letter in its own electronic records website, the unsealed letter was widely circulated online in the past few days. Zillow did not respond to a question asking why the company sought to have part of the letter sealed when the letter was publicly available elsewhere.

In the motion to strike, Zillow’s attorneys said the company was not saying the letter was unimportant.

“Zillow takes any allegation of wrongdoing very seriously, including those in the anonymous letter and by Plaintiffs, and are taking immediate steps to internally investigate whether there is any truth to the accusations and the credibility of the anonymous author,” they said.

Zillow pointed out that the letter is “hearsay” and has not been authenticated. But even if every word were true — which Zillow said it wasn’t — the letter did not discuss what is at issue in the discovery motion pending before the court, the company said: the merger between Trulia and Zillow and what Zillow exec and former Move employee Errol Samuelson did or did not disclose about the merger.

In a separate filing, Samuelson said the “anonymous poison pen letter” had “nothing to do with the Trulia issue.”

He also disputed Move’s claims that he tipped Zillow off to merger discussions between Move and Trulia, saying that what Move claims is a specific “tip” was actually a more general discussion about how the industry and large online players in real estate, rentals and finance would “behave and respond differently” in 2014 and 2015.

See Zillow Group’s motion to strike, followed by Zillow Group’s motion to seal and Move’s opposition to that motion, below.

MOTIONOFDEFENDANTZILLOWINC.REOBJECTIONANDMOTIONTO_041315

Motionofdefendantzillowinc.remotiontosealsingerde 1 041315

OBJECTIONOPPOSITION_041315

Email Andrea V. Brambila.