Earlier this month, a California Superior Court judge ruled that the legal battle between popular online marketplaces EBay and Craigslist will continue in California, despite EBay's claims that an earlier ruling in Delaware resolved all of the legal issues between the two companies. The judge disagreed, stating that the Delaware judge clearly expressed his intention to leave the claims of fraud, breach of contract, breach of fiduciary duty, and other related issues to the California courts.

Craigslist filed the lawsuit against EBay back in 2008, alleging that the defendant stole confidential business information while the two companies were working out a deal in which EBay would purchase a stake in Craigslist. That purchase occurred in 2004, when EBay bought a 28 percent minority share in Craigslist.

In 2007, following the purchase, EBay launched an online classifieds website called Kijiji, which it later renamed EBayClassifieds.com. Following the site launch, Craigslist executives filed the lawsuit, seeking to enact takeover defenses and remove EBay from its board of directors. EBay countersued in Delaware and won.

EBay then sought to have the Delaware ruling extended to the still-pending California case, arguing that the verdict covered the issues in the Craigslist lawsuit. California Judge Richard Kramer disagreed, finding that the Delaware judge's actions in throwing out Craigslist's claims in Delaware did not extend to the pending claims in California.

Therefore, it appears that Craigslist's claims of breach of contract, breach of fiduciary duty, negligent misrepresentation and violations of California security laws will be heard in the state in the coming months, as the judge scheduled the first hearing in the case for September.

Source: Bloomberg, "EBay Loses Bid to Avoid Craigslist Fraud Suit in California," Karen Gullo, 14 July 2011