Zillow's motion to dismiss an investor lawsuit against itself has been rejected, which means the portal giant now faces a legal battle to determine whether Zillow shareholders' rights were abused by the ill-fated "Zillow Offers" iBuying business.
Zillow shareholders filed a lawsuit against the company in July amid claims that the portal lost upwards of $1.2bn on its iBuying program—with investors keen to point out that Zillow had both A) hid the risk associated with its iBuying business and B) made "materially false and misleading statements" regarding Zillow Offers.
The original claim went on to say that:
"Zillow CEO Richard Barton should have known that Zillow Offers was creating significant losses for the Company. He either did not investigate and knew or failed to investigate the damages Zillow Offers caused the Company.”
The complaint, brought by shareholder rights firm Robbins LLP—filed on behalf of shareholders who purchased Zillow securities between February-November 2021—alleges that Zillow saddled itself with excess inventory when Zillow bought up real estate stock as part of its iBuying strategy—putting shareholders' investments at undue risk.
The complaint seeks unspecified damages.
Now Zillow will need to defend itself in court—with shareholders' own money at risk if the courts rule against Zillow.
Zillow has been embroiled in many legal battles recently, including a patent lawsuit against IBM and a (slightly bizarre) "wiretapping" case. A federal court judge has also ordered Zillow to hand over FSBO data to REX.