Online dating is a messy business as far as court dockets across the U.S. are concerned. On the heels of initiating a billion dollar his-and-hers legal battle with rival Bumble, Tinder filed a similarly hard-hitting lawsuit on Tuesday against parent companies Match Group and IAC/InterActiveCorp, alleging that they manipulated financial information as part of an “illicit” and “dishonest” scheme to “steal” billions of dollars from Tinder’s executives, including the popular dating app’s co-founders, Sean Rad, Justin Mateen, and Jonathan Badeen.
According to the lawsuit that Rad, Mateen, Badeen, and several current Tinder executives filed in a Manhattan state court this week, Match Group and IAC, the American media holding company owned by billionaire Barry Diller, purposely falsified financial information, hid positive growth projections, and delayed new product releases in order to reduce valuation-based payments it would have to pay to the plaintiffs in connection with their stock options, which “represent more than 20 percent of the value of Tinder.”
In particular, the suit claims that the Tinder executive plaintiffs were given stock options that would become available to them in 2017, 2018, 2020 and 2021 in connection with a valuation of the company during each of those years. According to the complaint, “If the defendants could undermine Tinder’s valuation at their first opportunity in 2017 and then eliminate the future scheduled [valutiations] in 2018, 2010, and 2021, they could save themselves billion of dollars.”
And this is precisely what Match Group and IAC did, the plaintiffs argue. Match Group and IAC embarked on a “pattern of deception,” intentionally utilizing “misleading and incomplete financial information” to value Tinder at $3 billion in 2017, a “sham valuation.” Then, Match Group and IAC “extinguished Tinder stock options” by merging Tinder into Match. The merger, which had “no legitimate business justification,” according to the plaintiffs, enabling Match and IAC to hold on to funds that would have otherwise been owed to the plaintiff stock option holders.
The plaintiffs point to a number of other events – including the removal of Rad as CEO ahead of the 2017 valuation and the appointment of Greg Blatt, Match’s chairman and CEO, as interim CEO of Tinder to allow them to “control the valuation of Tinder” – as moves designed “to allow the defendants to control the valuation of Tinder and deprive Tinder options holders of their right to participate in the company’s future success.”
And still yet, the suit accuses Blatt – who is described as “a longtime lackey of IAC’s controlling shareholder Barry Diller,” who “had a well-earned reputation as a notorious bully with a volcanic temper and a habit of threatening to fire employees who contradicted him” – of groping and sexually harassing Tinder’s vice president of marketing and communications, Rosette Pambakian, who is one of the plaintiffs, during the company’s 2016 holiday party.
The plaintiffs claim that Match and IAC not only knew about the alleged sexual harassment by Blatt but covered it up “because a credible investigation, let alone a firing in public view, would have derailed their scheme, and so, they “whitewashed Blatt’s misconduct,” instead.
Blatt has not yet responded to the allegations, but Match and IAC released a statement, saying, “Since Tinder’s inception, Match Group has paid out in excess of a billion dollars in equity compensation to Tinder’s founders and employees. With respect to the matters alleged in the complaint, the facts are simple: Match Group and the plaintiffs went through a rigorous, contractually – defined valuation process involving two independent global investment banks, and Mr. Rad and his merry band of plaintiffs did not like the outcome.”
The statements continued on to note, “Mr. Rad (who was dismissed from the Company a year ago) and Mr. Mateen (who has not been with the Company in years) may not like the fact that Tinder has experienced enormous success following their respective departures, but sour grapes alone do not a lawsuit make.”
The suit at hand not only follows from the pending legal fight between Tinder/Match and Bumble, it comes four years after early Tinder employee Whitney Wolfe Herd, who has since founded Bumble, sued Tinder and IAC, claiming she was subjected to widespread sexual harassment and discrimination, stripped of her co-founder title, and pushed out of the company. Herd alleged that in addition to being harassed via text message, she was referred to as a “whore” and “gold digger” by Mateen in front of Rad on more than one occasion.
Tinder and IAC settled with Herd later that year “without an admission of wrongdoing.”* The case is Sean Rad, Jonathan Badeen, Paul Cafardo, Gareth Johnson, James Kim, Alexa Mateen, Justin Mateen, Joshua Metz, Ryan Ogle, and Rosette Pambakian, v. IAC/Interactive Corp and Match Group, Inc., 654038/2018 (N.Y. Sup.).