Beruflich Dokumente
Kultur Dokumente
NA0427
Introduction—The Decision
James Buckmaster stared at the memo from outside counsel. It was April 2008 and
the inevitable had occurred. They were being sued by eBay. eBay had been a minority
shareholder in craigslist, Inc. for the past 6 years. Over the course of that time, the rela-
tionship had spiraled out of control. Against the wishes of Buckmaster and Newmark,
eBay had begun to directly compete with craigslist by launching their own online clas-
sifieds website and had been clear about its desire to acquire craigslist altogether.1 On
the advice of their attorneys, craigslist, Inc. owners James Buckmaster (“Buckmaster”)
and Craig Newmark (“Newmark”) had responded by implementing three strategic
defensive measures.2 The execution of that strategy had now resulted in a lawsuit.
Outside counsel, Ed Wes of Perkins, Coie, LLP had provided Buckmaster and
Newmark with a detailed memorandum of law outlining the details of the lawsuit
and the firm’s recommendations for defending the suit. In their complaint, eBay had
alleged that by implementing a staggered board, approving a stockholder rights plan,
and issuing dilutive stock, Buckmaster and Newmark had breached their fiduciary
duties to eBay, the minority shareholder.3 As such, Buckmaster and Newmark were
now faced with the decision of whether to defend themselves in court, or try to settle
the case without litigation.
Copyright © 2017 by the Case Research Journal and Sonia J. Toson. The author wishes to thank Black
Magic Writing Institute for their assistance in the review and editing of this case. The author also wishes
to thank John J. Lawrence and the anonymous CRJ reviewers for their helpful suggestions and thorough
review of this case. An earlier version of this case was presented at the 2014 Annual Meeting of the South-
east Case Research Association.
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 1
necessarily intending to, craigslist became a profitable business and later converted to
a for-profit corporation in 1999 (see Appendix 1).5 According to Buckmaster, “We
kept the dot-org internet address as kind of a symbol of our way of doing business, or
our philosophy if you will, where we are trying to maximize social good rather than
revenues or profits.”6 When specifically asked why craigslist chose to maximize social
good rather than profit, Buckmaster noted:
Well, for one thing, it’s more fun for us to do it that way. I should say that we do have
a healthy business and have had for many years now. It’s important for us to stay in
the black since we don’t want to borrow money or sell stock to the public. But beyond
having a healthy business, it’s not important to us to maximize those financial metrics,
it’s a lot more fun to try to make the site as useful as possible for as many people as
want or need it.7
When asked why they did not organize as a nonprofit corporation considering
their public service mission, Newmark stated,
Since we have never solicited or accepted charitable donations, and since our primary
activity does not qualify for tax-exempt status, it doesn’t make a lot of sense for craigslist
to operate as a nonprofit. Also, nonprofit vs. for-profit status has nothing whatsoever to
do with whether an organization is profitable.8
craigslist started as a small company and remained small over the years. The company
consisted of only three owners and about thirty employees (see Exhibit B). Its only
revenue stream came from apartment listings in San Francisco and New York and
online job postings in certain cities.9
The company was purposely kept small and service-oriented, and had purposely
avoided monetizing, or creating revenue through its website content. The most com-
mon method of monetizing a website was through advertisement sales.10 There were,
however, no ads or other monetization tools utilized anywhere on the craigslist site.
craigslist was approached about monetization early in the company’s history, how-
ever, Newmark made the decision to keep craigslist non-commercial. His reasoning
was that “some things should be about money, some shouldn’t.”11 In addition to not
wanting to have a commercial site, he felt no need to gain extra revenue through mon-
etization because he was making enough with contract programming.12 Newmark and
Buckmaster therefore crafted a mission that involved “restoring the human voice to
the internet in a humane, non-commercial environment,” “providing an alternative
to impersonal, big-media sites” and creating a “collection of communities.”13 Both
Buckmaster and Newmark attributed their success to this philosophy. According to
Buckmaster, craigslist’s service mission “is the basis upon which our business success
rests. Without that mission, I don’t think this company has the business success it
has.”14
History of eBay
Meanwhile, the story of eBay read much differently. eBay sought to take over the
online auction industry from the very start of the company. eBay began in 1995 as
AuctionWeb, a company designed to put sellers and buyers on equal footing in a true
marketplace on the internet.
According to founder, Pierre Omidyar:
I had really just created this site as an experiment, you know. I had a day job, did that
over Labor Day Weekend, put it out there. . . . I sat down at my computer and started
2 Case Research Journal • Volume 36 • Issue 3 • Summer 2016
writing a script, a Perl script to create a very basic auction mechanism. And the code
was really simple. It just, it allowed you to list an item for sale. It could have a title and
a description and a starting price. And you could also see a list of all the items that were
listed . . . It really just took a weekend of work. And I was working, you know, pretty
much all day and all that weekend. And I think it was Labor Day of 1995, September
4th or 5th, ’95, that I was able to, that morning to basically turn it on. I’d uploaded
to my internet service provider, so it was publicly available, turned it on and that was
Auction Web.15
eBay grew exponentially over the next several years. It went public three years later
in 199816 and by 2005, it had acquired several notable subsidiaries, such as PayPal,
Skype, Half.com, and Rent.com.17 By 2006, the company was grossing $3.7 billion in
revenues.18 eBay’s business model was centered on profit maximization and an integral
part of that model was aggressive monetization.19 Sellers who used eBay’s site paid eBay
a commission on each sale, which comprised its primary revenue stream. eBay also
actively advertised its service and actively sought to drive web traffic to its sites, which
created an additional revenue stream.20 eBay utilized a sizeable management team to
supervise over 16,000 employees who were spread out in multiple offices across the
world (see Exhibit B).21
A New Shareholder
By 2002, craigslist was owned by three shareholders: Newmark, Buckmaster, and
Phillip Knowlton (“Knowlton”), and was enjoying immense success with its simple,
streamlined website. Realizing the potential to substantially increase profits, Knowl-
ton began to push Buckmaster and Newmark to monetize the site.22 Buckmaster and
Newmark wanted to maintain the service-oriented nature of the company and stick
with just helping people find “stuff,” and therefore refused. Buckmaster summarized
their position by stating:
We’ve been told by salespeople that we could bring in many millions of dollars by
adding text ads, but our users aren’t asking us for text ads so we don’t have them. Paid
search can create a conflict of interest with site search. The better your site search is, the
less need there is for paid search.23
After going back and forth for the better part of a year, with Buckmaster and
Newmark continuing to refuse to monetize the site, Knowlton threatened to utilize
“non-friendly persuasion” and sell his shares to a competitor if they didn’t acquiesce.
According to craigslist attorney Ed Wes, Knowlton’s goal was to “sell to a competitor
who would ‘bleed craigslist and suck it dry.’”24 Based on their strong belief that it was
their service-oriented mission that made them so successful, Buckmaster and New-
mark maintained their refusal to monetize. As a result, in late 2003, Knowlton began
shopping his shares to potential buyers.25
At this point, it was clear that Knowlton was going to sell his shares and Buck-
master felt it was his duty as CEO to meet with potential buyers.26 In meeting with
potential buyers, Buckmaster and Newmark gave clear notice that while they would
agree to a sale of Knowlton’s shares, they would not be giving up their majority share.27
Around the same time craigslist was embroiled in a battle with Knowlton, eBay
was looking to enter the online classifieds market. They had recently made two major
acquisitions, iBazaar (a similar auction site in Europe) and PayPal (an online service
allowing customers to pay, send money and receive payments), and were looking to
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 3
add another strong company to their growing fleet.28 The success of craigslist had not
gone unnoticed. In discussing eBay’s desire to purchase the company with Newmark,
CEO Meg Whitman (“Whitman”) described craigslist as “the play in classifieds.”29
eBay recognized the potential of craigslist to be substantially more successful through
monetization.
In early 2004, eBay approached Knowlton and began negotiations to buy his
shares, hoping that this would be the first step in a later acquisition of craigslist.30 In
an effort to be transparent, Whitman made sure that Buckmaster and Newmark were
included in the negotiations. eBay executives repeatedly made it clear that they wanted
to buy the entire company, and not just Knowlton’s shares.31 Buckmaster and New-
mark, however, continually told eBay that they had no intention of selling their shares.
When eBay continued to push for a larger acquisition, Buckmaster and Newmark
broke off negotiations.32
Negotiations only resumed after Buckmaster and Newmark met with Whitman,
who assured them that eBay would be content with a minority stake in the company.
According to Newmark, Whitman convincingly stated that she shared their values and
would keep her word.33 After this conversation, Buckmaster and Newmark made the
decision to trust her.34 Going into the deal, eBay expected to capitalize on the “tre-
mendous untapped monetization potential” of craigslist. Newmark and Buckmaster,
on the other hand, expected to continue to grow their business by maintaining its
community oriented, public service style of doing business.35 The investment from
eBay provided revenue that would further that goal. However, negotiations stalled
once again when Buckmaster and Newmark learned that Knowlton was to receive $15
million for his shares. In an e-mail to outside counsel, Newmark stated that he was
“definitely not interested in seeing the dumb guy [Knowlton] get that figure.”36 Buck-
master and Newmark would not move forward unless they received the same amount
of money that Knowlton would be receiving.37 Eventually, in August 2004, Knowlton
sold his shares to eBay for $32 million with $16 million going to Knowlton, $8 mil-
lion going to Buckmaster and $8 million going to Newmark.38 The new corporate
ownership structure of craigslist was:
• Craig Newmark: 42.6 percent
• Jim Buckmaster: 39 percent
• eBay Holdings, Inc.: 28.4 percent39
With the lowest percentage of shares, eBay became the minority shareholder of
the corporation. A minority shareholder is defined as any shareholder owning less
than 50 percent of the outstanding shares in a corporation. Minority shareholders
therefore have no real voting power in the corporation.40 By definition, all three share-
holders were minority shareholders. However, Buckmaster and Newmark entered into
a voting agreement that combined their votes allowing them to become controlling
shareholders. This meant that eBay would never be able to outvote the combined
Buckmaster-Newmark vote, rendering them theoretically powerless and subject to
Buckmaster and Newmark’s control of the company. In light of their status as the
minority shareholder, they negotiated certain protections to give themselves more
power (as described later in this section).41 Buckmaster and Newmark were cautious in
agreeing to these protections. Even though they were the minority shareholder, eBay
was the larger company with greater resources and while they had ultimately agreed to
the minority stake, Buckmaster and Newmark knew that eBay remained interested in
acquiring all of craigslist.
4 Case Research Journal • Volume 36 • Issue 3 • Summer 2016
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 5
• the adoption of any agreement between craigslist and its officers or directors
providing for the issuance of stock and
• the declaration of dividends.
The consent right provision was intentionally designed to protect eBay as a minority
shareholder.50
The third important category in the Shareholder Agreement involved several trans-
fer restrictions on the craigslist shares owned by Newmark, Buckmaster, and eBay,
specifically preemptive rights and the right of first refusal. Preemptive rights allow a
shareholder to maintain their proportionate share of a corporation by purchasing a
proportionate share of any new stock issue. Typically, an existing shareholder has the
right to buy their proportionate share before others have the right to purchase shares of
the new issue.51 The agreement gave eBay, Buckmaster, and Newmark the right to pur-
chase enough shares in a new issuance of craigslist stock to maintain their respective
ownership percentages.52 The agreement also granted eBay, Buckmaster, and Newmark
the right of first refusal, which typically allows current shareholders the first opportu-
nity to buy shares before they are sold to a third party, at the same terms offered by the
third party.53 This meant that Buckmaster, Newmark, and eBay would each have the
first opportunity to purchase each other’s shares should one of them desire to sell to a
third party. The only condition was that they would be required to match the purchase
price and terms offered by the third party in order to exercise this right.54
The fourth major component of the Shareholder’s Agreement was eBay’s right to
compete with craigslist. During negotiations, eBay fought hard for and won the right
to compete against craigslist in the online classifieds market.55 According to eBay exec-
utive Garrett Price, “Buckmaster and Newmark understood that if they insisted eBay
sign a non-compete agreement, it would be a DefCon 5/deal breaker issue for eBay.”56
The fifth and final category of significance in the Shareholder’s Agreement con-
sisted of the contractual consequences that would result if eBay were to compete with
craigslist; specifically the loss of the minority protections granted in the agreement.57
Under the agreement, eBay was, in fact, allowed to compete with craigslist. However,
the penalties for competitive activity were severe.58 The agreement stated that if eBay
launched an online job posting site in the United States, craigslist would issue a notice
of competitive activity.59 Under the agreement, “competitive activity” was defined as
“the business of providing an Internet posting board containing specific categories for
the listing by employers and recruiters of available jobs and posting of resumes by job
seekers anywhere in the United States.”60 Upon notice of violating this section, eBay
would be given ninety days to cure or correct its competitive behavior. If it failed to
do so, eBay would lose 1) its consent rights, 2) its preemptive rights, and 3) its right of
first refusal over Buckmaster and Newmark’s shares.61
has successfully followed a strategy of working extremely closely with affiliates on their
path to becoming wholly-owned subsidiaries of eBay, Inc.”64 Omidyar made several
suggestions at the meeting designed to place craigslist on this path. Among them were
the suggestions that craigslist leverage eBay’s considerable resources to improve certain
features of its site and suggestions on how craigslist and eBay might enter the interna-
tional online classifieds market.65
These suggestions were met with a less than enthusiastic response on the part of
Newmark and Buckmaster, which left Omidyar feeling like eBay was more of an out-
sider than a true partner in the new craigslist.66 This prompted eBay executives to send
Buckmaster and Newmark an e-mail requesting an update on the business relation-
ship at the next board meeting on March 28, 2005. Sensing a problem, eBay was
determined to find out what motivated Buckmaster and Newmark to consent to the
investment in craigslist by eBay, what they hoped to gain from it, and where they saw
the relationship progressing from that point.67
Buckmaster and Newmark responded by letting eBay know that their expectations
were that:
1. eBay would show appreciation for their unique, service-oriented mission and
philosophy.
2. eBay would be content with a minority stake in the company and a 3-year
“getting to know you” period, during which there would be no discussion of
eBay acquiring a larger stake in the company.
3. craigslist was to be eBay’s primary interest in online classifieds, and that eBay
would not compete with craigslist in the online classifieds market.68
At this point, it was clear that Buckmaster and Newmark and eBay had vastly dif-
ferent visions of the direction in which craigslist should go. It was at this point that
eBay decided to move forward with its plans to enter the international online classi-
fieds market . . . with or without craigslist.
8 Case Research Journal • Volume 36 • Issue 3 • Summer 2016
Noting that Whitman appeared unwavering in her desire to acquire all of craigslist,
Newmark and Buckmaster began to strategize with their attorney to contemplate what
they might do if eBay could not be convinced to sell their shares in craigslist.80
After a lengthy six-month consultation with counsel, Buckmaster and Newmark
decided to execute a three-tiered strategy designed to force eBay to sell their shares.81
The strategy consisted of three strategic actions.
1. Implementation of a staggered board
A staggered board refers to a board of directors where each director has a
staggered term. The term of service would be the same, but terms begin in
different years.82 With this change, craigslist directors would no longer be
elected all at once in a single given year, but would be divided into one class,
only one of which would be elected in any given year. This change effectively
negated this purpose of the cumulative voting previously agreed on as a pro-
tection for eBay as the minority shareholder. While the cumulative voting
policy remained unchanged, it could not be effectively used with a staggered
board. Since there would never be more than one director elected in a given
year, the power to cumulate vote and votes them all for one candidate would
have no effect. eBay would therefore never be able to unilaterally elect a mem-
ber of the board.
2. Approval of a shareholder rights plan (the “poisonous pill”)
A shareholder rights plan was often used as a measure to stave off a hostile
takeover. The rights plan would allow shareholders of a company targeted in
a hostile takeover to purchase shares in the target company at a deeply dis-
counted price upon the activation of certain trigger or triggers.83 If the hostile
takeover was successful, the rights plan could then allow the same shareholders
to buy new additional shares at a price well below market value. The goal of a
shareholder rights plan was to devalue the investment in the target company
so greatly that it would become extremely expensive, and therefore dissuade
the acquiring company from going forward with the acquisition. For this
reason, it was often referred to as a “poison pill.” 84
The craigslist rights plan allowed the shareholder to buy two shares of
craigslist stock at $0.00005 per share upon the occurrence of either of two
triggers: 1) an acquisition by Buckmaster, Newmark or eBay making them
the beneficial owner of 0.01 percent of additional craigslist shares or 2) the
acquisition of shares by anyone other than Buckmaster, Newmark, or eBay,
causing that person to become a beneficial owner of 15 percent or more of
craigslist’s outstanding shares. Under the rights plan, a person was considered
a beneficial owner of:
• Shares they outright owned
• Shares owned by an affiliate or associate, and/or
• Shares owned by any person with whom one had an agreement, arrange-
ment, or understanding for the purpose of acquiring, holding, voting, or
disposing of shares.85
3. Right of First Refusal/Dilutive issuance
The final action in Buckmaster and Newmark’s three-part strategy was a new
right of first refusal signed by Buckmaster, Newmark, and craigslist, Inc. The
agreement would give Buckmaster and Newmark one newly issued craigslist
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 9
share for every five shares over which they granted a right of first refusal in favor
of craigslist.86 Since this would increase the number of outstanding craigslist
shares and also increase Buckmaster and Newmark’s individual shares without
increasing the shares of eBay in the same proportion, the effect would be to
dilute eBay’s shares. Dilution occurs when a company issues additional shares
of stock without increasing the shares of current shareholders in an amount
equal to their current proportion of ownership, which decreases the value
of ownership in a corporation.87 If exercised, this right of first refusal would
dilute eBay’s shares to 24.9 percent, just shy of the 25 percent eBay would
mathematically need to elect a board member through cumulative voting.88
The staggered board amendment had already been put in place to prevent
eBay from electing a board member; however, the right of first refusal agree-
ment provided an extra measure of protection against eBay ever being able to
elect a board member.89 This agreement was signed unilaterally and without
informing eBay by Buckmaster and Newmark individually and in their capac-
ity as majority shareholders on behalf of craigslist, Inc.90
craigslist moved forward with these actions on January 2, 2008.91 The combination of
these actions meant that eBay was now unable to unilaterally elect a member to the
craigslist board, rendering them essentially powerless to make any decisions at craig-
slist.92 craigslist informed eBay of their actions on January 3, 2008. eBay responded by
filing a lawsuit on April 22, 2008 against Buckmaster and Newmark personally in their
capacities as directors and majority shareholders.93
The Lawsuit
Since craigslist was incorporated in Delaware, eBay filed suit in the Delaware state
court system, specifically the Delaware Court of Chancery. The Delaware Court of
Chancery served as a court of equity, and heard matters related to corporate law, trusts,
estates, and other fiduciary matters. 94 The law on fiduciary duty that would apply to
the case was well settled.
10 Case Research Journal • Volume 36 • Issue 3 • Summer 2016
own personal interests.102 The case of Aronson v. Lewis established the principle that
“directors can neither appear on both sides of a transaction, nor expect to derive any
personal financial benefit from it in the sense of self-dealing, as opposed to a ben-
efit which devolves upon the corporation or all stockholders generally.”103 Self-dealing
consisted of any action taken by a fiduciary for personal gain rather than for the benefit
of the corporation.104
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 11
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 13
sued, arguing that the Unocal board of directors was acting not in the best interest of
the corporation, but in a last ditch effort to save their jobs.
Issue: Whether Unocal could exclude Mesa from the repurchase of its shares, given
that Mesa had initiated a hostile takeover, which may indicate that there was a legiti-
mate threat to Unocal’s existence.
Relevant Rule of Law: When the board of directors uses a takeover defense, there
is an enhanced duty to show that: 1) the actions are in response to a legitimate threat
to corporate policy and effectiveness and 2) that the actions are reasonably related to
the threat posed.
Holding: The Delaware Supreme Court reversed the decision, finding that Unocal’s
directors had reasonable grounds for believing that Mesa’s actions were a legitimate
threat to Unocal’s continued existence, and therefore allowed the exclusion of Mesa
from the repurchase of its shares.
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 15
Issue: Whether Signal breached their fiduciary duty by failing to disclose relevant
information to non-Signal directors and minority shareholders.
Relevant Rule of Law: The business judgment rule is the default rule regarding
board decisions, however, it only applies to decisions made by disinterested directors.
The entire fairness standard applies to transactions where the majority of the board has
a conflict of interest or stands to receive a material benefit, or an individual director or
stockholder has financial incentives adverse to the company or controls or dominates
the board as a whole. The entire fairness standard states that a transaction must consist
of 1) fair dealing, and 2) fair price.
Fair dealing relates to:
• the timing of the transaction,
• how it was initiated, structured, negotiated, and disclosed to the directors, and
• how the approvals of the directors and the stockholders were obtained.
Fair price relates to economic and financial considerations of the proposed merger,
including all relevant factors such as:
• assets,
• market value,
• earnings,
• future prospects, and
• any other elements that affect the intrinsic or inherent value of a company’s
stock.
Holding: The decision was reversed. The court found that the failure to disclose
key information constituted a lack of fair dealing and therefore a breach of fiduciary
duty on the part of Signal as the majority shareholder.
Notes
1. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 6 (Del. Ch. 2010).
2. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 3 (Del. Ch. 2010).
3. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 8 (Del. Ch. 2010).
4. Tweney, D. (2007, June 5). “How Craig Newmark built craigslist with ‘no
vision whatsoever,’” Retrieved from Wired. Retrieved from http://www.wired.
com/2007/06/no_vision_whats/.
5. craigslist.com. Retrieved October 4, 2016 from https://www.craigslist.org/
about/factsheet.
6. Ryssdal, K. (2008, April 21). “Service comes first for craigslist CEO.” Market-
place. Retrieved June 10 from http://www.marketplace.org/2008/04/21/tech/
corner-office/service-comes-first-craigslist-ceo.
7. Ibid.
8. Glaser, M. (2004, June 3). “‘Nerd Values’ help propel tiny craigslist into classi-
fieds threat.” Online Journalism Review. Retrieved June 24, 2016 from https://
www.craigslist.org/about/press/nerdvalues.
9. Ibid.
10. “Monetize.” Investopedia. Retrieved from: http://www.investopedia.com/terms/
m/monetize.asp.
16 Case Research Journal • Volume 36 • Issue 3 • Summer 2016
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 17
36. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-19
[e-mail sent by Newmark to Buckmaster and Ed Wes (May 25, 2004)].
37. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 15 (Del. Ch. 2010) citing e-mail
to eBay executives stating, “anything we pay to [Knowlton] we also have to pay
to [Newmark] and [Buckmaster].”
38. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 11 (Del. Ch. 2010).
39. Ibid.
40. “What is a Minority shareholder.” Retrieved from http://thelawdictionary.org/
minority-shareholder/.
41. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 15 (Del. Ch. 2010).
42. Ibid.
43. Ibid.
44. Noncumulative voting. (2006). In Black’s Law Dictionary. 3rd Pocket Ed. St.
Paul, MN: Thomson-West.
45. Cumulative voting. (2006). In Black’s Law Dictionary. 3rd Pocket Ed. St. Paul,
MN: Thomson-West.
46. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 19 (Del. Ch. 2010).
47. Ibid.
48. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 20 (Del. Ch. 2010).
49. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-73 (the
“Shareholders’ Agreement” (Aug. 9, 2004)) §4.3.
50. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-73 (the
“Shareholders’ Agreement” (Aug. 9, 2004)) §4.6.
51. Preemptive Right. (n.d.). West’s Encyclopedia of American Law, 2nd edition.
Retrieved June 25, 2016 from http://legal-dictionary.thefreedictionary.com/
Preemptive+Right.
52. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-73 (the
“Shareholders’ Agreement” (Aug. 9, 2004)) §5.1.
53. Walker, D.I. (August 1999). Rethinking Rights of First Refusal. Stanford Jour-
nal of Law, Business & Finance, 5. Retrieved June 25, 2016 from http://ssrn.
com/abstract=188208.
54. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-73 [the
“Shareholders’ Agreement” (Aug. 9, 2004)] §6.2, §7.2.
55. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 21 (Del. Ch. 2010).
56. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-30
[e-mail from Garrett Price to eBay executives (June 24, 2004)].
57. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 11–12 (Del. Ch. 2010).
58. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-73
[(the “Shareholders’ Agreement” (Aug. 9, 2004))] §8.3.
59. Ibid.
60. Ibid.
61. Ibid.
62. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 27 (Del. Ch. 2010).
18 Case Research Journal • Volume 36 • Issue 3 • Summer 2016
63. Ibid.
64. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, DX-087 (pre-
sentation materials for February 1, 2005 Craigslist board meeting at 8484.)
65. eBay Holdings Inc. v. Newmark, et. al. Civil Action No. 3705-CC, Tr. at 201:6
(testimony of Omidyar).
66. Ibid.
67. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-189
[e-mail sent by eBay executive Garrett Price to Buckmaster and Newmark
(March 21, 2005)].
68. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-197
(presentation materials for the materials for the March 28, 2005 Craigslist
board meeting) at 45859.
69. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 17 (Del. Ch. 2010).
70. Ibid.
71. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 18 (Del. Ch. 2010).
72. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, DX-488
[e-mail from eBay In-House Counsel Brian Levey to Ed Wes containing eBay’s
proposed changes to the previously negotiated Shareholders’ Agreement (June
22, 2007)].
73. Ibid.
74. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 19 (Del. Ch. 2010).
75. Ibid.
76. Ibid.
77. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-284
[e-mail sent by Buckmaster to eBay CEO Meg Whitman (July 12, 2007)].
78. Ibid.
79. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, DX-697
[e-mail from Meg Whitman to Buckmaster (July 23, 2007)].
80. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 46 (Del. Ch. 2010).
81. Ibid.
82. Staggered Terms. (n.d.). Farlex Financial Dictionary. Retrieved June 12, 2016
from http://financial-dictionary.thefreedictionary.com/staggered+board.
83. Poison pill (n.d.). West’s Encyclopedia of American Law, 2nd Ed. Retrieved June
12, 2016 from http://legal-dictionary.thefreedictionary.com/poison+pill.
84. Poison pill. (n.d.). Farlex Financial Dictionary. Retrieved June 12 from http://
financial-dictionary.thefreedictionary.com/Poison+Pill.
85. eBay Holdings, Inc. v. Newmark, 16 A.3d 1, 53, 54 (Del. Ch. 2010).
86. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-359
[Right of First Refusal Agreement (Jan. 2, 2008)].
87. Dilution. (n.d.) Dictionary of Financial Terms. Retrieved June 20, 2016 from
http://financial-dictionary.thefreedictionary.com/dilution.
88. eBay Holdings Inc. v. Newmark, et al. Civil Action No. 3705-CC, PTX-359
[Right of First Refusal Agreement (Jan. 2, 2008)].
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 19
20 Case Research Journal • Volume 36 • Issue 3 • Summer 2016
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 21
July 2007
Source: eBay Domestic Holdings, Inc. v. Newmark, 16 A.3d 1 (Del. Ch. 2010).
22 Case Research Journal • Volume 36 • Issue 3 • Summer 2016
craigslist eBay
Mission Statement
craigslist is about: At eBay, our mission is to provide a global
• Giving each other a break, getting the word online marketplace where practically anyone
out about every day, real-world stuff. can trade practically anything, enabling eco-
nomic opportunity around the world.
• Restoring the human voice to the Internet,
in a humane, non-commercial environment.
• Keeping things simple, common-sense,
down-to-earth, honest, and very real.
• Providing an alternative to impersonal, big-
media sites.
• Being inclusive, giving a voice to the disen-
franchised, democratizing . . .
• Being a collection of communities with simi-
lar spirit, not a single monolithic entity.
Size
• Number of Employees: 3 • Number of Employees: Approx. 16,000
• Number of Offices: 1 • Number of Offices: 76
• Location(s): San Francisco, CA • Location(s): North America (32), Europe
(27), Middle East (2), Africa (1), Asia
Pacific (13), Australia (1)
Financials
craigslist Estimated Revenue (2007–2008) eBay Revenue (2007–2008)
• 2007: $55 million • 2007: $7.7 billion
• 2008: $81 million • 2008: $8.5 billion
craigslist Net Profit (2007–2008) eBay Net Profit (2007–2008)
• 2007: $ unavailable • 2007: $348 million
• 2008: $ unavailable • 2008: $1.8 billion
Strange Bedfellows: eBay, craigslist and Profit versus Public Service 23