(Bloomberg) -- BuzzFeed Inc. wants to block arbitration of claims that the company botched its initial-public offering and improperly denied employees the opportunity to sell their shares before the stock took a nosedive.
New York-based BuzzFeed, which went public in December, filed a lawsuit in Delaware Chancery Court late Thursday seeking to bar workers from proceeding with claims before the American Arbitration Association. The suit was filed under seal, but required public disclosures clearly identify arbitration as the issue in the suit.
Matthew Mittenthal, a BuzzFeed spokesman, declined to comment on the suit Friday.
BuzzFeed, founded in 2006, had a turbulent IPO, and the shares plummeted by more than 20% the following week. In March, its top news editor resigned in the wake of staff cuts and a first-quarter earnings loss of $20 million. The same month, a union representing the company's news staff voted to authorize a strike over contract disputes.
The company's lawyers are targeting arbitration claims by more than 70 employees, who allege that BuzzFeed leadership failed to properly instruct them on how to trade shares immediately after the IPO, according to the New York Times.
Many of the employees joined the digital media firm when it was a startup and worked for low pay because they were granted stock options, the Times reported. The IPO snafu led to some workers being completely unable to sell those shares. The employees are asking for $8.7 million in damages, the Times said.
The case is BuzzFeed Inc. v. Hannah Anderson, Delaware Chancery Court (Wilmington).
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