Zillow's Legal Battles Pile Up as Shareholder Suits Reach Federal Court

Executives at the U.S. portal giant Zillow are facing no fewer than four lawsuits from disgruntled shareholders with the latest to be filed claiming that the company's board of directors:

“utterly failed to implement and maintain adequate internal controls and corporate governance practices critical to the Company’s success in pivoting from operating as a pure digital platform to competing in the highly competitive iBuying space.”

All four lawsuits from shareholders are stockholder derivative complaints, whereby shareholders can sue on behalf of the company whose stock they own. In these cases the shareholder complaints name members of Zillow's board including CEO Rich Barton and seek damages to be awarded to the company (and by implication the shareholders as well) due to the loss of value following Zillow's dramatic exit from iBuying in the autumn.

The company's legal department is not short of work at the moment. In addition to the stockholder derivative suits, Zillow is fighting an ongoing battle with IBM over patent claims dating from 2020.

IBM sued Zillow two years ago, alleging that the Seattle-based company infringed on five patents used to improve searches by ranking results, simplifying content design and more. The matter is ongoing, but last week Zillow's lawyers succeeded in having a judge trim the suit to just one patent but failed to get the suit invalidated entirely.

Company lawyers are also on standby to deal with the conclusion of the lawsuit brought by discount brokerage REX against Zillow and the National Association of Realtors which claims that the two colluded to exclude discount brokerages from Zillow's primary results pages. The case is still very much ongoing with claims and countersuits flying between REX and the NAR.

The latest news of Zillow's travails in the courts comes six weeks after the portal company was ordered to pay $1.9m in a copyright infringement case dating back to 2014 - an outcome described by Zillow as "favorable".