Main Content
eBay Domestic Holdings, Inc. v. Newmark
3/18/2024 pdw
In this hilarious case, Jim and Craig were the directors of craigslist and together owned a majority of the shares. eBay owned a minority interest in the company.
Jim and Craig cared more about community than profits. eBay was all about profits. eBay kept pushing Jim and Craig to monetize the site, but Jim and Craig just wanted to provide a good product that helped the community.
So eBay set up a competitor.
In response, Jim and Craig (acting as directors and as shareholders) adopted a Rights Plan. The details aren't essential for our purposes, but effectively it would dilute eBay's ownership in the company if eBay tried to gain more shares. Jim and Craig said it was necessary to prevent eBay from gaining control of the company and turning the lovey-dovey community culture of the company into a profit maximizing, capitalist juggernaut.
Will the court reject the Rights Plan or will it allow Jim and Craig (who are the directors and majority shareholders) to reject profit maximization? How do you square this with the law allowing corporations to donate to charity?
This book, and all H2O books, are Creative Commons licensed for sharing and re-use with the exception of certain excerpts. Any excerpts from the Restatements of the Law, Principles of the Law, and the Model Penal Code are copyright by The American Law Institute. Excerpts are reproduced with permission, not as part of a Creative Commons license.