Barry Diller’s media empire used “lies, deception, bullying and cheating” to stiff the creators of Tinder out of billions of dollars, attorneys for the dating app’s founders argued Monday during the opening of a high-stakes jury trial.
Tinder co-founder Sean Rad and other early employees claim that Diller’s companies — Match and IAC — shared “doom-and-gloom” information about Tinder’s finances and growth potential during conversations with investment banks in 2017 as part of an effort to cheat the founders out of billions of dollars when Diller’s companies acquired the app.
The banks — Deustche Bank and Barclays — then ended up valuing Tinder at $3 billion when the hookup app should have been worth at least $13 billion, attorney Josh Dubin argued during opening remarks for Rad’s camp. He said the lower valuation dramatically cut payouts payouts to the founders who are seeking $2 billion in damages.
“They claimed for the first time that Tinder was a business whose best days had come and gone — that it was facing major problems all of a sudden, that its historic growth was going to somehow flatline,” Dubin told New York State Supreme Court jurors during a blistering opening statement. “None of it was true.”
The defense has argued that the valuation process was fair and is expected to fight Rad’s claims when defense attorney Bill Carmody’s makes opening statements on Tuesday afternoon. Match spokeswoman Justine Sacco declined to comment on the plaintiffs’ opening arguments, saying the company will speak for itself on Tuesday.
Rad’s attorneys’ emphasized a so-called “shadow valuation” that Match and IAC management reportedly conducted with JPMorgan behind the backs of Tinder’s founders in early 2017, shortly after Rad was pushed out of the company.
They say the purpose of the test run was to figure out how to produce a lower number in the real valuation process later that year so they could swindle founders including Rad and former chief marketing officer Justin Mateen.
“We need to get the JPM process moving ASAP,” Greg Blatt, who was then CEO of both Tinder and Match Group, wrote in a February email 2017 email to fellow Match executives. “I’d like an analysis done that shows at valuations of $1.8 b, $2.0 b, $2.2 b, and $2.8 b, what is the total spread on exercisable options held by Sean [Rad], by Justin [Mateen], by all other employees, and by all former employees.”
JPMorgan spokesperson Tasha X. Pelio declined to comment on the alleged shadow valuation process, which was detailed as part of Rad’s attorneys’ opening arguments.
Deutsche, Barclays and JPMorgan aren’t named defendants and aren’t being accused of doing anything illegal.
Rad’s camp also accused Match executives of delaying profitable Tinder features in order to secure a lower valuation figure.
During the valuation process, Match had reportedly told Deustche Bank and Barclays that a forthcoming “likes you” feature — which allows Tinder users to see which other people have “swiped right” on their profiles — might be free. But immediately after the valuation process was complete, Tinder launched “likes you” as a paid feature, according to Rad’s attorneys.
The chain of events serves as further evidence that executives at Diller’s companies misled banks about Tinder’s value, Rad’s attorneys argued.
“It was a scheme to lie to the banks,” said Orin Snyder, an attorney for Rad.
All the financial talk was apparently too dull for one juror, who appeared to fall asleep as he shut his eyes and lowered his head at one point before the court took a break for lunch. An officer had to tap him awake.
Unless Match and the founders reach a settlement outside of court, the trial is expected to drag on for several weeks. It’s set to feature testimony from Rad, Blatt, Diller and slate of experts on company valuations.
Susquehanna litigation analyst Thomas Claps has predicted a potential settlement could see Match paying out $300 million to $700 million.
Match Group shares tanked 3 percent to $155.91 as the trial opened on Monday but are still up 4 percent since the beginning of 2021.
In a statement to The Post, Snyder said he’s eager to see the trial through.
“We are looking forward to showing the jury the overwhelming evidence of how IAC and Match cheated Tinder’s founders and employees out of more than $2 billion,” he said. “The evidence of how these companies corrupted the valuation of Tinder is shocking. Defendants have tried every trick in the book to avoid a jury for over three years. It is now time for them to be held accountable for their misconduct.”
Additional reporting by Alec Tabak