(Bloomberg) -- IAC/Interactive Corp. claims Tinder co-founder Sean Rad paid former employees to back his allegations in a $2 billion lawsuit that he was shortchanged because IAC unfairly valued Tinder.
Rad promised “enormous payments” to two then-current Tinder employees in exchange for testimony supporting his claims, IAC said in a filing in New York Supreme Court.
IAC believes the payments were “millions of dollars,” according to a transcript of a court hearing. New York law forbids lawyers or plaintiffs to pay witnesses “beyond reasonable expenses,” according to the filing.
Both of the ex-Tinder employees made allegations against then-Tinder Chief Executive Officer Greg Blatt. One employee accused him in a lawsuit filed in Los Angeles last month of sexual harassment at a company holiday party. The other claimed Blatt “bullied” him into “lying to the banks to depress Tinder's value.”
Rad's lawyer said payments made to the employees were to partly compensate them for the losses they suffered from being fired for siding with Rad.
“After Tinder employees sued, IAC/Match retaliated by firing them and stripping away their hard-earned equity,” Orin Snyder, Rad's lawyer, said in an emailed statement. “The accusation that any payments were made in exchange for witness testimony is nonsense.”
Rad and other early Tinder employees alleged in 2018 that IAC cheated Tinder's early employees by purposefully suppressing Tinder's valuation in 2017. That meant their shares were worth less, they argued, and also meant IAC didn't have to pay them as much when they decided to cash out.
IAC says the employees are bitter because they cashed out too early.
New York State Supreme Court Justice Saliann Scarpulla in Manhattan in June denied IAC's request to dismiss the lawsuit, although she threw out some claims, including unjust enrichment and a merger-related breach of contract claim. She allowed claims of breach of contract and tortious interference, to go ahead.
The case is Rad v. IAC/InterActiveCorp, Supreme Court of the State of New York (Manhattan).
--With assistance from Edvard Pettersson.
To contact the reporter on this story: Kurt Wagner in San Francisco at kwagner71@bloomberg.net
To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Joe Schneider
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