The Lawsuits Haunting Snapchat
Snapchat filed for its IPO today.
As Snap Inc. opened its doors to the public, it gave us a glimpse into the world of disappearing messages and fleeting information. Under securities laws, however, Snapchat is legally obligated to give investors full, transparent and permanent disclosures. A company must disclose all material information about itself, good and bad. For legal matters, we get some pretty juicy details.
1. Reggie Brown vs. Snapchat (settled)
Reggie Brown and Evan Spiegel were pals at Stanford. But when Brown filed his lawsuit against Evan and Snapchat in 2013, Brown alleged they stole his idea and pushed him out of the company while he was working for a summer (sound familiar?). In 2015, Snapchat settled with Brown for, what at the time was, an “undisclosed amount.” Snapchat paid Brown $157.5 million.
2. The Turner Sisters vs. Spiegel/Snapchat (pending)
The Turner case was filed on September 23, 2014 — a little under 2–1/2 years ago. It’s slowly making its way through the labyrinth of the Santa Monica courthouse. What are the plaintiffs alleging?
Lawsuit Allegations
- The Turner sisters were acquaintances of Evan Spiegel back in the day. Their claims essentially boil down to this: The girls (one of whom was 18 at the time) signed a model release acknowledging they would receive no compensation for doing a photoshoot in LA. They would be releasing all their rights, name and likeness for the “Picaboo App on iPhone.”
- The Turner sister’s claim that they did not give Snapchat their authorization or consent to use their photographs, name and likeness for platforms outside of the iPhone, such as on Android.
- Here’s the release language:
“I, the undersigned, do hereby consent and agree that Future Freshman LLC [the predecessor-in-interest to Snapchat], its employees, and agents have the right to take photographs, videotape, or digital recordings of me on July 18, 2011 and to use these in any and all media, now or hereafter known, and exclusively for the purpose of promoting the Picaboo application for iPhone.”
- Here’s what the end product looked like:
- The sisters further allege the images were manipulated to make them look promiscuous (see photo above). Accordingly, because these images were promoted extensively used by Snapchat without their consent, they suffered damages (e.g., emotional distress, embarrassment, and loss of any monetary value in the images).
While the IPO statement says the lawsuit is “without merit,” based on the procedural stage of the case, the lawsuit is not a nuisance lawsuit — there’s some settlement value, and the plaintiffs seem ready, willing and able to try it.
The status of the case is that trial is set for October 30, 2017.
3. The Speed Filter Case (dismissed)
For those of you who do not know about the Snapchat/speed filter lawsuit filed in Georgia, it’s a chilling tale of a teenager crashing a Mercedes Benz into the back of an Uber driver while recording how fast she could go while using her “Speed Filter” on Snapchat.
Background
- In this complaint, plaintiff is a female teenager who was driving at speeds of over 100mph while taking Snapchats of her driving as she struck an Uber on the freeway. From the Complaint:
Over the objections of one of her passengers, who was pregnant, McGee increased accelerated the car to over 100 mph. The posted speed limit was 55 mph. Snapchat has a filter called “speed filter” that allows users to post their speed, and she wanted to see how fast she could go. As she reached speeds of up to 113 mph, a car merged onto the highway in front of her. It was an Uber driver who had just started his shift. McGee did not see the vehicle drift into her lane as she hit him going 107 miles per hour.
- The car crashed causing serious injuries to the driver of the Uber vehicle, and the passengers. Although the car driver was injured too, she Snaped a photo of herself in the ambulance, on a stretcher, in a neckbrace, blood trickling down her face, writing: “Lucky to be alive.”
- According to the lawsuit, the Uber driver suffered permanent brain injury and has been unable to return to work.
- The lawsuit was dismissed in January 2017 but the plaintiffs will most assuredly take the matter up on appeal.
Conclusion
These three lawsuits tell us different stories about Snapchat’s litigation strategy. They were smart to settle the Reggie Brown lawsuit quick — a prolonged battle would have undoubtedly delayed the IPO launch. In fact it was the settlement of that case that paved the way for over $1 billion in funding after 2015. It also tells us that they’re not afraid to continue to defend a lawsuit based on the merits. They don’t easily settle.
Chris Harvey is a startup lawyer for entrepreneurs in Los Angeles. Chris was selected in the class of Top Writers (2017) on Quora. For more information, please visit www.harveyesq.com
