BuzzFeed can block worker arbitration claims over IPO snafu
Add BT as a preferred source
A JUDGE said BuzzFeed can block arbitration demands from employees who claim the company bungled its initial public offering (IPO) and wrongfully denied workers the chance to sell their shares before the stock crashed in value.
New York-based BuzzFeed, which went public last year, has the legal right to bar workers from having their allegations reviewed by American Arbitration Association (AAA) officials, Delaware Chancery Court judge Morgan Zurn ruled Friday (Oct 28).
Current and former BuzzFeed workers can’t force the company “to arbitrate under a provision to which they are not bound without inflicting irreparable harm upon” the company, Zurn said in her 51-page ruling.
“We are pleased with the decision,” Carole Robinson, a BuzzFeed spokeswoman, said in an emailed statement. “We sought an order enjoining the arbitration, which the court awarded.”
The media company, founded in 2006, had a turbulent IPO. The shares plummeted by more than 20 per cent after it merged with 890 Fifth Avenue Partners, a special purpose acquisition company, or SPAC. The company had once been valued at more than US$1 billion.
More than 70 current and ex-BuzzFeed employees filed arbitration claims with the AAA, alleging top managers failed to properly instruct them on how to trade shares immediately after the IPO at higher valuations. They sought almost US$9 million in damages.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
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, according to arbitration filings. The IPO snafu led to some workers being unable to sell those shares.
BuzzFeed officials sued in Delaware in April seeking to block employees from proceeding with arbitrations, saying they weren’t bound by arbitration clauses in employees’ contracts that gave them that option. Zurn agreed with that position and threw out the bid by worker to have the BuzzFeed’s challenge to the arbitrations dismissed. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
