MANHATTAN (CN) – Filing suit Tuesday against Match Group, 10 people who were on the ground floor of Tinder in 2012 say the dating app giant schemed to cheat them out of their stock options.
Represented by Gibson, Dunn & Crutcher in Manhattan Supreme Court, Tinder co-founders Sean Rad and Jonathan Badeen are joined in the suit by Tinder publicist Rosette Pambakian and seven other individuals who helped start the dating app.
The complaint explains that Tinder was always owned by Match’s parent IAC/Interactivecorp but always operated independently out of Los Angeles.
To compensate Tinder’s team for fostering the kind of success that has the app on track now to rake in revenues exceeding $800 million this year, the complaint says each of the plaintiffs signed contracts in 2014 with IAC and Match that said they were entitled to stock options representing more than 20 percent of the company’s value.
“The more valuable Tinder became,” the complaint states, “the more the Tinder plaintiffs’ stock options would cost defendants.”
Saying that IAC and Match thus had a incentive to “undervalue and eliminate” those options, the suit accuses the parent companies of running a disinformation campaign that valued the company at a “dramatically undervalued” $3 billion based on “bogus doom-and-gloom” numbers — essentially that Tinder had peaked early and its success would fizzle out.
The Tinder plaintiffs say that IAC and Match were able to seize control of the valuation by first installing their own people in top-management positions.
One Match executive who scooted over to become interim CEO of Tinder was Greg Blatt. Tuesday’s complaint notes that Blatt was “compromised” when plaintiff Pambakian accused him of groping and sexually harassing her at the 2016 holiday party.
To avert the attention that firing Blatt would draw, the plaintiffs say IAC and Match decided instead to keep “Blatt in place … long enough to complete the private valuation and secret merger of Tinder.”
Then they “publicly announced Blatt’s ‘retirement’ — rewarding him with a lucrative golden parachute and a glowing farewell message … praising Blatt’s ‘integrity,’” the complaint states.
IAC refuted the plaintiffs’ version of events in its statement.
“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 company said. “Sour grapes alone do not a lawsuit make.”
Match acquired a 51 percent ownership stake in another dating app, Hinge, in June. It also owns dating sites OkCupid, PlentyOfFish, and Match.com.
The plaintiffs are seeking at least $2 billion in damages.
Representatives for Tinder and Match did not immediately return requests for comment Tuesday. Orin Snyder also did not immediately return a request for comment.
“The allegations in the complaint are meritless, and IAC and Match Group intend to vigorously defend against them,” IAC said in a statement Tuesday.