The long-running dispute between Tinder’s founders and Barry Diller’s IAC Holdings appears primed for trial, with Diller adding Bill Carmody of Susman Godfrey a couple weeks back — a sign that the defendants see this case going the distance. One might have thought the summary judgment decision that tossed some of the bigger claims brought by the founders might force some negotiation, but apparently not.
Tinder’s founders feel cheated by Diller, who bought the company now nuzzled into the Match group portfolio of dating apps designed to cover the whole range of hookups from “one-night stands” to “grist for years of therapy.” According to the Tinder side, the company was undervalued in a strategy to deprive them of agreed upon awards. Except, putting aside that there’s no dispute that the banks acted independently, many of the founders’ claims boil down to “we got jobbed by a bad contract.”
Which… welcome to contract law.
It’s never pleasant to find yourself siding with billionaires, but it seems that whenever billionaires and millionaires get into a dispute all that money isn’t enough to overcome the basic truism that contracts generally can’t bind the richer party forever.
When Scarlett Johansson squared off against Disney, arguing that the decision to stream Black Widow robbed her of a portion of her promised take of the box office, all I could say is, “Yeah… probably should have put something in your contract about that.” Because contracts are great equalizers right up until the unexpected hits and at that point the more powerful party is almost always going to find themselves unchecked by whatever agreement they signed before. Is it fair to put the burden on Johansson’s legal team to have considered the possibility that an unprecedented pandemic and the meteoric rise of streaming subscriptions would combine to artificially depress opening weekend box office receipts? Check your “fairness” talk at the door 1L year — this is the deal and it’s why lawyers get paid big bucks to think of absurd contingencies.
Fortunately for Johansson, she was able to settle with a bigger actor who prized the idea of dispensing with bad blood more than a few extra million. Not every millionaire is so lucky and almost no one below that tax bracket gets that benefit.
Tinder’s founders argued that the Match group intentionally withheld the release of Tinder Gold to keep the value down. As the court said, “nothing in the parties’ agreements purported to control or regulate the timing of the release of new products or any other aspect of Tinder’s business.” They complain that the acquisition morphed the corporate structure in a way that robbed them of scheduled puts? The contract has language authorizing that. Just because the plaintiffs may not have contemplated it doesn’t mean it’s not allowed.
The plaintiffs still have claims that survived summary judgment and, it seems, everyone is convinced that they will pursue them. But whatever happens, in contractual disputes, there’s no perfect protection. You take some risks when you put yourself out there. You’d think the dating app people would understand that.
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
