eBay and Craigslist Go After Each Other in Court

Ecommerce giant eBay Inc. (EBAY) said Thursday it had proven its case against online classified-ads site Craigslist, saying Craigslist made claims it couldn’t prove during a two-week trial about the relationship between the two companies.

“Throughout the trial, Craigslist lawyers and their witnesses repeatedly attempted to divert attention from Craiglist’s unlawful actions by slinging mud at eBay’s witnesses, raising irrelevant information about eBay’s business activities, and claiming that eBay made undocumented promises, promises that Craigslist admitted in testimony could never be enforced in any court,” eBay deputy general counsel Mary Huser said in a statement.

Craigslist representatives did not immediately respond to requests for comment for this story.

Huser made her comments after the companies wrapped up testimony in a Delaware Chancery Court trial over the size of eBay’s investment in the online classified-ads leader. A ruling is not expected until the spring, Huser said.

EBay has alleged in its lawsuit that Craigslist unfairly diluted eBay’s 28% stake in the classified-ads company to less than 25% through a “self-dealing” and secret scheme to issue more stock. EBay, which says the dilution caused it to lose its right to elect a Craigslist board member, has asked the court to restore its interest in Craigslist to the terms of their 2004 agreement.

“We believe the evidence shows that Craigslist’s board and controlling shareholders improperly diluted eBay’s holding in Craigslist when they adopted measures–including a poison pill, staggered board, and right of first refusal–that diluted eBay’s stockholdings,” Huser said.

Craigslist argued, and has charged in a separate lawsuit in California, that eBay improperly used confidential data to launch a competing Web site called Kijiji.com. Top executives from both companies, including former eBay Chief Executive Meg Whitman, as well as Craigslist founder Craig Newmark, sparred over the extent to which eBay made Craigslist aware of its intentions.

In early afternoon trading Thursday, eBay shares were down 0.6% at $22.75.

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