Scoop: BuzzFeed wants ex-employees to pay for arbitration
BuzzFeed and some former employees are fighting over who should pay for arbitration on claims over its IPO, according to letters obtained by Axios.
Why it matters: The cost of the arbitration fees would be more for some former employees than what they stand to win in the complaint, their lawyers argue.
- If the arbitrators side with BuzzFeed, claimants could ask their lawyers to cover some costs, or the cases could get dismissed if they can't come up with the cash.
State of play: BuzzFeed wants claimants to pay 50% of the fees associated with the arbitration process, according to a letter, obtained by Axios, from BuzzFeed's lawyers to the third-party arbitration group.
- Lawyers representing dozens of former employees argue BuzzFeed is required to pay in full under its own rules that are stated in employment contracts, per a separate letter filed to the same group on Monday.
Catch up quick: Last month, roughly 80 current and former BuzzFeed employees sued the media company via two different complaints, alleging its public listing process cost them millions, according to copies of the complaints obtained by Axios.
- Employees were unable to sell their shares when BuzzFeed first went public last year, due to an administrative error.
Details: Shortly after the claimants filed their initial suit with the American Arbitration Association (AAA) last March, the AAA sent BuzzFeed a letter asking the media giant to submit payment for a portion of the initial filing fees.
- In response, a lawyer on behalf of BuzzFeed argued AAA "incorrectly calculated the fees owed by BuzzFeed" and that different rules listed in its employment contracts should be used to evaluate who should pay for the arbitration.
- BuzzFeed declined a request for comment.
The big picture: BuzzFeed's stock has dropped by more than 40% after its December 2021 public debut, to $5.46 at yesterday's close, leaving the employees who bought their shares underwater. That includes gains of over 11% since reporting earnings last month that met analyst expectations.
- The fees, which total $100,000–$200,000, would impose a significant burden for the claimants, the former employees' lawyers argue.
- In addition to the botched IPO, the company is also experiencing tensions with some current employees of BuzzFeed News over recently announced buyouts.
What's next: The AAA should make a decision on the matter in the next few weeks.
Editor's note: This piece was updated to add that BuzzFeed's stock has risen since its last earnings report.