Several Tinder co-founders and early employees are suing the dating app’s parent company, accusing it of a “scheme to cheat” them out of billions of dollars by artificially suppressing the app’s valuation, according to a lawsuit filed on Tuesday.
Co-founders Sean Rad, Justin Mateen and Jonathan Badeen, along with several other current and former executives, filed the suit, obtained by TheWrap, in state court in New York. They are seeking to receive $2 billion from IAC and its subsidiary, Match Group. The plaintiffs argue IAC/Match Group used a “pattern of deception” to undervalue Tinder — allowing the parent company to avoid paying them expensive stock options.
The plaintiffs received a plan in 2014 outlining four dates they could exercise their options, according to the filing, with the first coming in 2017. But, according to plaintiffs, ahead of the first exercise date, IAC/Match used “bogus numbers” to value Tinder at $3 billion — severely limiting the plaintiffs’ payouts. IAC then merged Tinder with Match, forcing the plaintiffs to accept less valuable options in Match, the lawsuit alleges.
“The reason for these management changes was clear: to allow defendants to control the valuation of Tinder and deprive Tinder optionholders of their right to participate in the company’s future success,” the legal filing stated.
“The allegations in the complaint are meritless, and IAC and Match Group intend to vigorously defend against them,” IAC said in a statement to TheWrap. “Since Tinder’s inception, Match Group has paid out in excess of a billion dollars in equity compensation to Tinder’s founders and employees.”
The statement continued: “With respect to the matters alleged in the complaint, 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. Mr. Rad (who was dismissed from the Company a year ago) and Mr. Mateen (who has not been with the Company in years) may not like the fact that Tinder has experienced enormous success following their respective departures, but sour grapes alone do not a lawsuit make. Mr. Rad has a rich history of outlandish public statements, and this lawsuit contains just another series of them. We look forward to defending our position in court.”
The plaintiffs have accused IAC/Match of putting former Tinder CEO Greg Blatt in place to help “finish the job” of undermining the company’s value. The lawsuit also alleges Blatt “groped and sexually harassed” plaintiff Rosette Pambakian, Tinder’s VP of marketing and communications, at its holiday party in 2016. Removing Blatt would have “derailed their scheme,” according to the claim, so IAC/Match “whitewashed Blatt’s misconduct.”
The Tinder co-founders and employees are represented by Orin Snyder of the Gibson, Dunn and Crutcher, a firm that has represented several of the biggest names in tech, including Facebook and Apple.