SAN FRANCISCO — The founder and former CEO of right-leaning social media site Parler is suing the company he created and its controlling owner, political megadonor Rebekah Mercer, alleging his ownership stake was taken from him.
John Matze, who founded Parler in 2018 with funding from Mercer, filed the suit in Nevada District Court on Monday. Matze has said he was forced out of the company in early February, just weeks after Parler became embroiled in controversy surrounding the Jan. 6 attack on the U.S. Capitol, resulting in the site being knocked offline for more than a month.
The suit, which was announced in a news release by Matze’s attorneys and uploaded online by the Las Vegas Sun, names Parler, Mercer, interim CEO Mark Meckler and investors Jeffrey Wernick and Dan Bongino as defendants, as well as a corporation believed to be controlled by Mercer.
In the complaint, Matze alleges that Mercer and others plotted to steal Matze’s 40 percent stake in the company, later saying the fair market value for his stake was worth only $3. The “outlandish and arrogant theft” is “the product of a conspiratorial agreement,” the suit says.
Mercer, who backed Donald Trump during his successful 2016 presidential bid, owns the controlling stake in the company, and has now installed her allies to run Parler, according to people familiar with the matter who spoke on the condition of anonymity to candidly discuss private matters.
Parler executives, including Meckler and Wernick, did not respond to requests for comment. Mercer and Bongino did not respond to requests for comment. Law firm Pisanelli Bice said in a statement that Matze would not have any further comment.
Matze says in the suit that Parler is being “hijacked” away from being the free expression site he first imagined. The suit alleges that Mercer “sought to co-opt” Parler to encourage her political views.
“It became apparent to Matze that Meckler’s efforts were not to grow Parler as a free expression platform, but instead to redirect it into what Meckler called as the ‘tip of the conservative spear’ for a brand of conservatism in keeping with Mercer’s preferences,” the lawsuit alleges.
Parler grew from a niche social media site to a relatively mainstream option in 2020 when prominent conservative politicians and pundits began joining and promoting the site, many saying they were fed up with so-called “censorship” on Twitter and Facebook. Twitter had started labeling Trump’s tweets with fact checks, and Parler positioned itself as the “free-speech” alternative site.
After the election, Parler’s user base boomed to more than 10 million, bolstered by people seeking alternative social media sites as Trump and his allies spread false narratives about the veracity of the election.
Parler had about 15 million users before it was knocked offline in January, following reports that people had used the site to encourage the attack on the Capitol. Amazon, Apple and Google pulled their technical support for Parler, saying it was not moderating content robustly enough, effectively turning off the lights for the service.
Parler came back online more than a month later with a new cloud computing provider, Los Angeles-based SkySilk. In his suit, Matze claims he was the one who secured the new hosting provider and set up a version of the moderating system Parler is now using.
“However, as Meckler lacked the technical know-how to actually run such a social media platform — and his real role was to simply push a political agenda — the implementation was beyond lacking,” according to the suit.
Matze is seeking an unspecified amount in damages.
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John Matze, a Henderson resident and one of the founders of alternative social media site Parler, is suing the company for wrongful termination after being dismissed from his role as CEO earlier this year.
In a lawsuit filed Monday in Clark County District Court, Matze seeks “millions in compensatory” damages for an “orchestrated theft” of his 40% ownership stake in the Henderson company.
Matze and Jared Thomson co-founded Parler in 2018 as an alternative to Twitter and Facebook, which ban people for certain kinds of extreme or intentionally misleading expression not allowed under their terms of service.
A hotbed of far right activists, Parler went dark after the Jan. 6 deadly attacks on the U.S. Capitol by extremist supporters of then President Donald Trump. The events caused Apple and Google to remove Parler from their app stores and Amazon Web Services to decline hosting the site.
The lawsuit alleges that deplatforming led to Matze’s dismissal by Rebekah Mercer, another co-founder who funded Parler during its launch in 2018. She’s the daughter of Republican billionaire donor Robert Mercer.
The Mercers were also financial backers of Steven Bannon’s activities with Breitbart and Cambridge Analytica as well as early Trump supporters. They are believed to have withdrawn support for both Bannon and Trump in the early years of the Trump administration.
The lawsuit alleges that Matze “was abruptly ousted in violation of the law and public policy for endeavoring to preserve Parler’s commitment to free expression while combating any misuse by violent extremists and domestic terrorists in the wake of the January 6, 2021, attack at the U.S. Capitol. Rather than protect Parler, its other owner, Rebekah Mercer, sought to co-opt it as a symbol or as the ‘tip of the spear’ for her brand of conservatism, and plotted to force Matze out as CEO, manager, and member, and steal his forty percent (40%) ownership interest.”
Parler in January said it had more than 12 million users when it was forced offline. Many came to the site after Trump was banned from Twitter for advancing lies about election fraud and encouraging the Capitol insurrection.
The lawsuit estimates the site was worth upwards of a billion dollars, of which Matze no longer has a stake.
“This outlandish and arrogant theft, which occurred in Nevada, is the product of a conspiratorial agreement and actions taken both inside and outside of Nevada, that include intimidating threats and defamatory accusations of misconduct all designed to bully and deprive Matze of his valuable personal property and legal rights,” the suit alleges. “This scheme is epitomized by oppression, fraud and malice, for which Matze is entitled to punitive damages trebling (at a minimum) the millions that he is owed in compensatory damages.”
Matze, through his attorney James Pisanelli, wasn’t available to comment. Matze “looks forward to presenting his claims in court and being vindicated,” the attorney wrote in a statement.
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Litigation comes naturally to Jordan Smith. “I’m from a family of lawyers, including my grandfather, father, mother, two uncles, aunt, brother and my wife,” Smith said. Having served as Deputy Solicitor General of Nevada, Smith is now a partner at Pisanelli Bice, one of the most prestigious law firms in the state.
“I’ve been a part of some of the most significant recent cases in Nevada. With Pisanelli Bice, I am lead counsel in the State’s litigation against the Department of Energy related to a secret plutonium shipment to the Nevada National Security Site and part of the team contesting the Yucca Mountain nuclear repository,” Smith said. While previously working at the Nevada Attorney General’s Office, Smith contributed to numerous other high-profile cases but considers being promoted to partner of Pisanelli Bice his greatest professional accomplishment to date.
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LAS VEGAS (AP) — A Nevada judge has upheld an arbitrator’s finding in an ongoing legal battle over one of the few remaining U.S. newspaper joint-operating agreements, ruling that the dominant Las Vegas Review-Journal has to submit to an audit and pay profits and expenses that its crosstown rival Las Vegas Sun claims have been improperly deducted in recent years.
Clark County District Court Judge Timothy Williams acknowledged during a Wednesday hearing that, with appeals expected and a separate federal lawsuit pending, his decision won’t settle an increasingly bitter fight over an operations pact entered in 1989 with an end date of 2040.
The judge put a hold on the state breach-of-contract case to allow a separate federal antitrust and unfair trade practices action filed by the Sun against the Review-Journal to be heard. He allowed the arbitration finding to remain sealed.
Williams’ written decision did not specify a dollar amount at stake, and attorneys and executives on both sides declined to disclose the amount. It is expected to be in the millions of dollars.
“The court will not reassess and weigh the evidence that the arbitrator relied on to make his decision,” the judge wrote. “The arbitrator noted that while the Review-Journal has done just about everything possible to blunt, avoid, deter and postpone an audit … the arbitrator simply ordered that an audit be conducted and this decision is affirmed.”
Sun publisher and chief executive Brian Greenspun on Thursday called the ruling a victory in what he and Sun lawyers say is an attempt by the Review-Journal to kill the Sun.
“One of the ways they do that is through vexatious litigation,” Sun attorney James Pisanelli told Williams on Wednesday. “Another way they have done it … is to starve the Las Vegas Sun.”
Benjamin Lipman, Review-Journal legal counsel, focused on the stay that Williams put on the state case. Lipman denied Review-Journal owners want to eliminate the Sun.
“Nothing has been resolved,” he said. “The state court action is on hold. The federal case could have a significant effect. We’re not seeking to shut the Sun down. We’re saying they should stand on their own two feet.”
The Sun, formerly an afternoon daily, is printed and delivered as one section within the morning Review-Journal, which owns the printing presses. Their joint-operating agreement was amended in 2005 to require each newspaper to bear its own editorial costs and the Review-Journal to share an agreed-upon percentage of profits with the Sun.
The Sun argued in 2016 that it was due at least $6 million amassed during 10 years of business with former Review-Journal owner Stephens Media. That matter was settled after arbitration for an amount that was not made public.
The Review-Journal is now owned by the family of billionaire casino mogul and conservative Republican political donor Sheldon Adelson. He’s the 86-year-old founder, chairman and chief executive of Las Vegas Sands Corp., which owns the Venetian and Palazzo resorts on the Las Vegas Strip and casino-hotels in the Chinese gambling enclave of Macau.
Adelson’s family bought the Review-Journal in December 2015 and owns it through a limited liability corporation called News + Media Capital Group. The Review-Journal was one of few U.S. newspapers to endorse Donald Trump for president in 2016.
Greenspun’s newspaper characterizes itself as “a left-leaning editorial voice” and maintains a robust internet presence.
Pisanelli suggested in court Wednesday that the Review-Journal has violated federal antitrust law and declared that collecting the arbitrator’s judgment was a matter of survival for the Sun.
“The weaker party, the Las Vegas Sun … has been at the mercy of the good faith of the R-J for all these decades,” the attorney said. “It’s only since Sheldon Adelson bought the paper that the good faith came to an end and the new strategy of starvation came into play.”
Newspaper joint operating agreements stem from the Newspaper Preservation Act of 1970, passed by Congress to exempt newspapers from some antitrust laws to allow them to combine business functions while remaining editorially independent.
Las Vegas is one of a handful of U.S. cities with newspapers still operating under such an agreement, according to the News Media Alliance trade association. Others include York, Pennsylvania, Fort Wayne, Indiana, and Detroit. A joint-operating agreement between the Salt Lake Tribune and Deseret News could expire next year.
Williams observed that the agreement in Las Vegas has not quieted what he termed “rolling disputes” between the two papers. The two sides have sued each other several times over the years in state and federal courts. The Review-Journal on Aug. 30 published a front-page editorial titled, “Why we want to stop printing the Sun.”
It called the joint-operating agreement a “relic” and argued the Sun doesn’t meet contractual obligations to produce a “high-quality metropolitan print newspaper.”
The Sun in September filed the separate federal civil antitrust and unfair trade practices complaint.
Review-Journal attorney Randall Jones on Wednesday urged Williams to delay his decision, keep the arbitration findings sealed, and stop state court proceedings until the federal case is heard.
Hearings before U.S. District Judge Richard Boulware have not yet been scheduled.
“It is practically creating a quagmire,” Jones told Williams, “because we don’t know what the federal court is going to do.”
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A Clark County judge imposed a partial stay in a battle between Las Vegas’ two daily newspapers, citing serious concerns over whether a state court had jurisdiction in several matters also being litigated in federal courts.
Judge Timothy Williams issued the pause of one disputed matter, pending a ruling from the federal court over whether it will hear a case filed by the Las Vegas Sun against the Las Vegas Review-Journal.
In late September, the R-J announced its plans to try to dissolve the joint operating agreement under which the R-J and the Sun have operated since 1989 and which was amended in 2005. The R-J filed this action as a counterclaim to a pending state court action by the Sun accusing the R-J of changing its front page and diminishing the Sun’s presence on it in a manner not allowed under the contract.
When the R-J announced its plans, the Sun went to federal court and filed suit saying this effort and other R-J actions constituted an attempt to create an illegal monopoly in Clark County.
In Wednesday’s hearing, Williams expressed serious concerns — echoed by the Sun attorneys — about whether a state court has jurisdiction over antitrust issues raised by the R-J’s counterclaim, while reserving final judgment.
“I’m going to take a cautious approach,” Williams said at the end of a two-hour hearing. “I’m not going to rule for dismissal outright, but I’m going to stay this matter pending resolution to the Sun’s action in federal court.”
Williams stressed he wasn’t ruling that his court did not have jurisdiction in the matter, just that he wanted to see what happened in federal court. No date for hearing the case in federal court has been set.
“We have the utmost respect for the court, though we respectfully disagree with the decision,” said Benjamin Lipman, general counsel for the R-J. “It is a shame the Sun continues to waste the parties’ and court’s time and money in ongoing efforts to avoid its day of reckoning for failing to live up to the promises it made and continues to fight against allowing our justice system to rule on the Review-Journal’s claims.”
The Sun filed a lawsuit against Sheldon Adelson and the ownership group of the R-J in September in U.S. District Court in Las Vegas, alleging Adelson is trying to stop the Sun from publishing in order to silence an alternative editorial voice in Las Vegas.
The goal, as alleged by the Sun, is for Adelson — a billionaire casino owner and megadonor to the Republican Party — to muffle his local media critics, monopolize the local newspaper industry and squelch dissent to his newspaper’s right-leaning editorial views.
In federal court, the Sun seeks to force the R-J to cease its “abusive, unlawful and anticompetitive practices,” and a judgment ordering the R-J’s owners to either divest themselves of the newspaper or to at least turn over the newspaper’s non-editorial business operations to an independent agency or trustee.
“Today was a very important day,” Sun attorney James Pisanelli said. “While the court reserved its ruling on whether to dismiss the R-J’s counterclaims, which are designed to put the Sun out of business, the court expressed serious concerns over whether it had subject matter jurisdiction over those claims due to the preemptive effect of the Newspaper Preservation Act (NPA) and federal antitrust laws.”
The JOA structure was created under the act, which was approved by Congress and signed into law in the 1970s. The legislation provides limited antitrust protection for newspapers to combine business functions while remaining editorially independent.
The Sun and the Review-Journal have several distinct matters before Williams that will remain in state court. He promised a pre-Thanksgiving ruling on one of them, whether to affirm an arbitration award that found the Adelson-owned R-J engaged in improper accounting practices that deprived the Sun of profit payments.
Sun lawyers have asked Williams to affirm most of what the arbitrator ruled. R-J attorneys have argued to keep the arbitrator’s findings out of public view.
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