Chip Meyers, founder of SciFi-based entertainment community Mania.com, has filed suit against Demand Media surrounding the company’s acquisition of his site back in 2007, paidContent has learned. Meyers is suing Demand for a laundry-list of offenses — breach of contract, fraud, negligent misrepresentation and unjust enrichment — for “damages” worth at least $6.2 million, as well as his legal fees.
Worth noting is that Meyers is aiming for “millions” more — citing Demand’s “anticipated IPO” — and arguing that the acquisition of his site contributed to the company’s value to potential shareholders. A Demand spokesperson said that the company does not comment on “pending litigation;” Meyers also declined to comment.
Per the filing, Meyers sold Mania.com to Demand in a deal worth $1.5 million up front, with $2.7 million in stock (including earn-out), a $4.1 million acquisition budget, and a full-time gig in-house. Meyers took the cash payment, then says he got to work building up Mania.com’s community, making two acquisitions worth $300,000 each within three months. But that’s when he alleges that things turned shady.
The suit says Meyers was denied access to the remaining $3.5 million for any other acquisitions; the company purchased content syndication platform Pluck for $75 million and raised $35 million more in funding in the meantime. He also claims that Demand created an “intolerable situation” by devoting resources and assets to “properties not even owned” — like Brooke Burke’s ModernMom.com — in lieu of supporting Mania.com.
Meyers also alleges that Demand tried to cut him out of a deal to sell the Mania.com community to Warner Bros. (NYSE: TWX) Lastly, he says he tried to buy back the site for $2.1 million — the cash Demand provided up front, plus the acquisition cost of the two sites — but that the company refused. The suit accuses Demand of soap opera-style “egregious and despicable conduct;” the $6.2 million he’s suing for includes the original amount of the stock compensation and the remaining acquisition money.