Posted in: Media Industry

Huffington Post Alleged Fraud, Idea Theft Lawsuit Goes Forward

Huffington Post fraud case to proceed to trial

The lawsuit against Arianna Huffington and others for allegedly stealing the idea for the Huffington Post appears headed to trial.

Peter Daou and James Boyce, two Democrat political operatives, claim they came up with the idea for the liberal content site and presented a business plan for it to Arianna Huffington and partner Kenneth Lerer in 2004. The duo evidently thought they were partnering with Huffington but she and her associates ran with the idea on their own in 2005. Daou and Boyce sued in November 2010.

In October 2011, New York Supreme Court Judge Charles E. Ramos threw out all but one of their legal claims against Huffington, Lerer, and the Huffington Post itself. On Thursday, however, he ruled that Daou and Boyce put forth viable additional claims for fraud and unjust enrichment as well as the original allegation for idea misappropriation to keep the case moving forward.

This ruling by the court doesn’t mean that Daou and Boyce wins their case by any means, only that they have compiled enough basic facts in dispute to get over the initial hurdle of avoiding a pre-trial dismissal.

In New York, the Supreme Court is actually the entry-level trial court.

According to The Wrap, “The judge said Daou and Boyce showed adequate grounds to allege fraud, saying Huffington and Lerer delayed a partnership with the duo to prevent them from launching a HuffPo-style site on their own.”

The judge denied their request, however, to subpoena AOL CEO Tim Armstrong for purposes of questioning him under oath about the case because he had no knowledge pertinent to their allegations.

In his 18-page decision, Judge Ramos wrote, in part, that the two plaintiffs established the basic elements of fraud under the law:

” … the defendants deliberately led plaintiffs to believe that they would be partners in the venture in order to delay, and ultimately prevent, plaintiffs from launching their own project based on the business plan …

“Plaintiffs have adequately alleged that defendants took the information the plaintiffs provided, secretly shared it with another person, camouflaged the origin to make it appear as if it came from that other person, and, in effect, stole the idea and developed it with that other person.”

Again, there is not yet a decision on the merits of the Huffington Post case, which will require the plaintiffs to presented solid evidence to support their claims in a full-blown trial (assuming there is no out-of-court settlement along the way). However, as Paid Content observes, “Instead, it means they have cleared a crucial procedural hearing and, thanks to the added claims, can proceed to a trial with a stronger hand.”

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