Full Breakdown
Zillow to Pay $212.5 Million to Resolve Shareholder Lawsuit Over Failed iBuyer Program
By Drooid · · How we work
In this breakdown
01
Settlement Announcement
On October 28, Zillow Group Inc. disclosed that it will pay $212.5 million in cash to settle a securities class action alleging the company misled investors about its Zillow Offers iBuyer venture. The settlement, pending judicial approval in the U.S. District Court for the Western District of Washington, does not include an admission of wrongdoing. Zillow said insurance will cover roughly $48 million of the payout, with the remainder allocated to plaintiffs’ counsel.
02
Background of Zillow Offers
Zillow Offers, launched to buy, renovate, and resell homes, expanded rapidly in 2021. In early November 2021 the company announced a $304 million writedown on inventory purchased in the third quarter and a 25 % workforce reduction as it prepared to wind down the program. The announcement triggered a 32 % plunge in Zillow’s stock price over two days, prompting investors to claim the company had overstated the program’s performance and forecasting reliability.
03
Legal Proceedings
The lawsuit, Jaeger v. Zillow Group Inc. et al, was filed in November 2021 and alleges material misrepresentations regarding purchasing volume, pricing accuracy, and operational improvements. After the district court and the Ninth Circuit affirmed class certification, the U.S. Supreme Court declined to review the certification, allowing the case to move forward. Hagens Berman served as court-appointed class counsel.
04
Financial and Class Details
The settlement covers investors who bought Zillow’s Class A or Class C shares between August and November 2021. Excluded are Zillow’s directors, officers, and their immediate families. The settlement fund will be funded within 20 business days after the court grants preliminary approval, after which class members may opt out or object.
05
Verbatim Quotes
- “We are incredibly pleased to obtain this result for investors, what we believe to be the largest single securities settlement in Western District of Washington history,” — Steve Berman, a lawyer for the shareholders
The settlement represents what counsel describes as the largest single securities settlement in the Western District of Washington’s history. The court’s forthcoming review will determine final approval and the distribution timeline for affected shareholders.