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Snapchat Seeks to Seal Portions of Ex-Employee’s Lawsuit

Variety logo Variety 1/30/2017 Gene Maddaus
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As it prepares for an IPO, Snap Inc. is seeking to seal portions of a lawsuit filed by a former employee who claims the company has faked its growth metrics, arguing that public disclosure could damage its business.

The employee, Anthony Pompliano, filed suit on Jan. 4, alleging he was fired from his job as the head of user growth and engagement for blowing the whistle on Snapchat’s inflated numbers. A significant portion of the complaint, which appears to lay out Pompliano’s allegations in detail, was redacted from the public document.

Snap Inc., the parent company of Snapchat, is now seeking to keep those portions of the complaint under seal. The company, which has denied each of Pompliano’s allegations, also filed a motion to force him to resolve his claims in private arbitration. The sealing motion accuses Pompliano of filing the complaint as a tactic to pressure the company into a settlement.

“In short, Pompliano went public, in plain violation of his contractual agreement, in the apparent hopes that publicizing his false attacks against Snap would cause it to throw in the towel and settle,” the motion states.

A hearing on the motion is currently scheduled for April 17 in Los Angeles Superior Court, meaning that Pompliano’s detailed allegations will remain sealed at least until then. Snap is expected to file for an IPO this week and to go public sometime in March.

In his lawsuit, Pompliano accuses Snapchat of trying to inflate its IPO valuation with bogus user statistics. The complaint also alleges that Snapchat lured him from Facebook in 2015 in hopes of obtaining Facebook’s trade secrets. Pompliano was fired him after just three weeks on the job, and in the suit accuses the company of “widespread incompetence.” He also claims that Snapchat executives badmouthed him to other potential employers after his departure.

Snap’s motion states that the redacted portions of the suit contain “highly confidential” information that would damage the company’s business if disclosed.

“The redacted paragraphs address Pompliano’s understanding (or misunderstanding) of data and information related to Snap’s business, including its research and development, trade secrets, internal processes, programs, structure, and plans for growth,” the motion states.

The complaint also includes information about programs that Snap has identified as not having value, according to the motion, which “would constitute valuable information to Snap’s competitors.”

Snap also argues that it has spent considerable time and money developing growth metrics. “Giving Snap’s competitors and would-be competitors insight into Snap’s confidential information could permit them to avoid this expenditure of time and resources and to refine their thinking and methods, thus benefiting them to Snap’s prejudice,” the motion states.

The motion contends that Pompliano’s complaint contains false information, and information that is “old or stale.” Disclosure of that information would force Snap to respond by releasing the correct information, the motion states.

Snap also accuses Pompliano of harassment, and of engaging in the “abusive litigation tactic” of filling his complaint with attention-grabbing information that is irrelevant to his underlying claims.

In the motion to compel arbitration, Snap alleges that “Pompliano was a disgruntled employee who was fired for poor performance.” The motion contends that Pompliano concocted “preposterous allegations” against the company to “rationalize his firing.”

“Pompliano alleges that Snap was telling investors in mid-2015 that it had obtained a certain number of users, when its own internal metrics were showing a slightly lower figure,” the motion states, adding that those allegations are both “badly dated” and “wrong.” The motion states that Pompliano was not on the executive team and did not interact with investors.

The motion also notes that Pompliano has also sued a subsequent employer, Brighten Labs, alleging fraud and wrongful termination.

Pompliano’s attorney did not respond to a request for comment.

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