Months before leaving Move Inc., Zillow exec Curt Beardsley drafted a plan of attack to undermine his then-employer’s widely-used listing distribution platform, ListHub.

  • While he was still an employee at Move, Zillow exec Curt Beardsley drew up a document outlining how to undermine Move's listing syndicator, ListHub.
  • Move says Zillow thwarted its plans for a "ListHub 2.0" strategy.
  • A Washington state court has ordered both Move and Zillow to turn over their direct feed agreements with MLSs.

Before jumping ship to Zillow, former Move Inc. executive Curt Beardsley quailed at the idea of having to execute a plan to “save” Move’s listing syndicator ListHub.

Now, a court has released two versions of a document that the Move legal team says is a plan to attack ListHub. The company claims Beardsley drafted the plan months before leaving his then-employer in order to undermine Move’s widely used listing distribution platform.

Curt Beardsley

Curt Beardsley

According to metadata, Beardsley prepared or edited this memo — which Zillow says is titled “How Z might challenge M” —  on a Friday morning two days after Christmas in 2013. Just over a year later, Zillow announced it was launching a competing product and its agreement with ListHub would expire in April 2015. ListHub would no longer feed broker listings from MLSs to the most highly-trafficked real estate website on the Web.

A King County superior court judge in Washington state has ordered both Move and Zillow to turn over their agreements with MLSs for direct listing feeds, among other documents, as part of trade secret litigation between the two rivals.

The judge’s orders underline what is at stake for the two players: competition for real estate listings, the goodwill and dollars of the agents and brokers that provide them and the consumers that love them so much.

‘Attack’ plan

At the time Beardsley drafted the “How Z might challenge M” document, he was Move’s executive vice president of industry development and had been with the company for about eight years. His multistep outline did indeed call for an “Attack” and included:

  • Undermining the revenue ListHub receives from its analytics reports to brokers by encouraging the adoption of a data standard for reporting and pressuring realtor.com, industry startups and MLS vendors to conform to the standard
  • Getting MLSs to switch their automatic opt-in direct feeds to realtor.com to “broker choice”
  • Working with MLS vendors to build a syndication dashboard
  • Co-opting Move’s relationship with the National Association of Realtors in regards to housing policy and political advocacy
  • Creating back-end systems and APIs (application programming interfaces) to help power systems for brokers, franchisors and, potentially, MLSs
  • Providing “free leads” to listing agents with credit for brokers and MLSs and “make brokers dependent on lead flow”

See the entire document.

Beardsley also included his compensation demands for “[w]hat it would take” to implement the plan (or at least, leave Move for Zillow), including a $286,000 salary, a minimum four-year employment agreement and a minimum number of stock options.

It is not clear whether Beardsley ever put any elements of this memo into action.

Response to allegations

In a legal filing, Beardsley’s attorney referenced what appears to be an earlier draft of the document, saying its contents were “personal and private notes of Mr. Beardsley written to himself [as] he pondered about a potential move to Zillow — he didn’t want to  make such a significant jump only to fail or be marginalized in a new company.”

“There is no evidence that Beardsley shared this document with anyone or that he acted contrary to Move’s interests before his departure,” the attorney said.

“Nor is there evidence that Beardsley accessed this document after joining Zillow; to the contrary, the evidence shows that he deleted its content before leaving Move. Further, and importantly, it reflects not deep knowledge about Move’s business, but rather general knowledge of what was going on in the real estate business.”

In another filing, Beardsley’s attorney argues that “Memorializing one’s thoughts is not a breach of fiduciary duty” and that the memo “was Beardsley’s effort to organize his thoughts about whether he wanted to leave Move and what Zillow might do to further compete against Move if he were to join Zillow.”

In an emailed statement, Zillow Group spokeswoman Amanda Woolley said of the draft, “Curt created this document prior to his employment with Zillow. Zillow had no involvement in its creation.”

In a deposition, Beardsley’s other co-defendant, Samuelson, said he had never seen or discussed the document with Beardsley or discussed undermining ListHub’s reporting revenue with Beardsley.

Beardsley and Samuelson directed all questions from Inman to Woolley. She declined to comment further.

Move and its co-plaintiff, the National Association of Realtors, declined to comment for this story.

ListHub 2.0 thwarted

Move claims Zillow, Beardsley and Samuelson thwarted Move’s industry platform strategy, also referred to as “ListHub 2.0,” and therefore the strategy was never implemented.

Meanwhile, Zillow’s position is that the strategy was unsuccessful in part because neither Zillow nor other online publishers “were willing to grant Plaintiffs the access to their data that ListHub 2.0 would require,” the court noted.

Move declined to provide details about the strategy, but a deposition of former Move CEO Steve Berkowitz provides some clues.

Steve Berkowitz

Steve Berkowitz

The deposition indicated that Move was planning a real estate platform with APIs (application programming interfaces) to allow third parties “to create software applications that can help members of the real estate industry access and use information on listings, leads, agents, and consumer behavior.”

Berkowitz deemed the information in a Move database Beardsley allegedly stole trade secrets because the database included Move’s MLS partners, their active agent counts, active office counts, active listing counts and terms of their agreements for Move’s “Find” tool.

Each of the latter was “personally negotiated” by Samuelson and Beardsley and spelled out what data fields Move could or could not use in its APIs, such as sold data, open house data, commercial real estate data, and foreclosure and short sale data, Berkowitz said.

Knowing what rights Move had to that data means that any competitor planning to destroy ListHub — and by extension, Move — can “walk into an MLS and say, ‘Well, you’ve already given these rights to Move, give them to us.’ Or they know what rights they will go and maybe they don’t piss off an MLS by asking for something that they won’t give,” Berkowitz said.

See Steve Berkowitz deposition.

Move lost a bid to provide a ListHub-powered platform to broker project Upstream last year. The company blames the loss on alleged misappropriation of Move’s trade secrets by Zillow, Samuelson and Beardsley.

In a separate legal filing, attorneys for Zillow said Upstream’s founders had rejected Move twice in favor of partnering with NAR, which they said was the true “death knell” for Move’s platform strategy.

“NAR (and Upstream) beat Move to the punch, which is fatal to Move’s allegations because if NAR is building what Move wanted to build, then Zillow cannot be blamed for Move’s setbacks, or be on the hook for Move’s damages,” Zillow’s attorneys said.

Hand over those MLS listing agreements

As part of the discovery process in this litigation, the court ordered both Zillow and Move to turn over their listing agreements.

Specifically, Zillow must produce all MLS direct feed agreements to which Zillow was a party between June 2013 and the present.

Zillow must also state how many direct feed agreements it had as of March 5, 2014 (the date Samuelson left Move to work at Zillow); March 17, 2015; and in each month from June 2013 to the present. (The “2015” in that March 17 date may be an error — Beardsley joined Zillow on March 17, 2014.)

“Under Plaintiffs’ theories, the direct listing agreements are needed to show that the reason Zillow improved so dramatically in obtaining direct-feed agreements was because of the misuse of Plaintiffs’ trade secrets allegedly misappropriated by Beardsley and Samuelson,” the court said.

Move must produce “draft and executed copies” of all direct feed agreements between Move and an MLS that were or are in effect from 2013 to present.

“The competition between Plaintiffs and Zillow to obtain direct feed agreements for real estate listings is hotly contested in the marketplace and in this litigation,” the court said.

“And this subject has evolved during the litigation as Zillow, and its more recent acquisition Trulia, no longer contract with Plaintiff Move’s business ListHub to obtain listings.

“Plaintiffs contend that Zillow has only been successful in obtaining listings without relying on ListHub because it used trade secret information obtained from Move when Beardsley and Samuelson worked for Move and oversaw ListHub.

“Zillow contends that the MLSs and real estate brokers generally flocked to provide direct feed to Zillow as an alternative to ListHub because Zillow offered better terms than Move and ListHub.”

The court continued: “Since the competition for direct feed listing agreements is part of this litigation from several different angles, then it follows that the related third party documents which may provide information about the concerns and assessments from the perspective of the ‘customers’ (the MLSs and real estate brokers and agents) is reasonably calculated to lead to discoverable evidence.”

Email Andrea V. Brambila.

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