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Snopes, the internet’s foremost fact-checking website, may die in a messy legal battle

Snopes's fate is up to a court ruling over a complicated contract dispute — not your crowdfunding donation.

For as long as the internet has proliferated viral chain letters, fearmongering urban legends, too-good-to-be-true morality tales, scams from Nigerian princes, and false conspiracy theories, one website has done more than almost any other to stem the tide of misinformation: Snopes.com.

Launched in 1994, Snopes is the internet’s most thorough and reliable site dedicated to debunking hoaxes, myths, and fake news. It’s so trustworthy that last year, when Facebook began enlisting fact-checking organizations to help it weed out fake news stories from its news feeds, Snopes was one of the five entities entrusted with the task, along with the Associated Press and other news outlets.

But now Snopes’s future is very much in doubt.

According to a short note posted to the Snopes website on July 24 (which links to a new website called Save Snopes), the site is in danger of shutting down completely, due to a complicated legal battle with “an outside vendor.” Snopes’s owners claim the vendor is “essentially hold[ing] the Snopes.com web site hostage” by refusing to relinquish control of the Snopes.com domain and denying them any access to advertising revenue.

“Although we maintain editorial control (for now) ... we cannot modify the site, develop it, or — most crucially — place advertising on it. The vendor continues to insert their own ads and has been withholding the advertising revenue from us,” the site’s owners wrote. “Our legal team is fighting hard for us, but, having been cut off from all revenue, we are facing the prospect of having no financial means to continue operating the site and paying our staff (not to mention covering our legal fees) in the meanwhile.”

The legal fees in question relate to three different lawsuits with several complicated, overlapping factors, as well as some very tricky distinctions between individuals and companies.

The first lawsuit has been brought against Snopes’s parent company, Bardav, by the “vendor” — a company called Proper Media, whose owners also have ownership stakes in Bardav. Proper Media is attempting to oust Snopes founder David Mikkelson from Bardav even though Mikkelson owns 50 percent of the company, due to what Proper Media alleges is grievous mismanagement.

The second lawsuit is a countersuit brought against Proper Media by Mikkelson (via Bardav) in an attempt to recoup advertising revenue from Snopes that Proper Media controls and that Bardav claims it is owed. More critically, the countersuit is an attempt to prevent Proper Media from continuing to exercise any further control over Snopes.com — control that Mikkelson claims is based on Proper Media’s attempt to combine its individual owners’ stakes in Bardav so that Proper Media can claim 50 percent ownership of the website.

In essence, both companies are trying to legally maneuver one another out of having any control over Snopes.

The third and final lawsuit concerns one of Proper Media’s own former co-owners, a man who has essentially shifted his allegiance and may now hold the key to deciding who — if anyone — legally controls Snopes.

With these ongoing disputes awaiting resolution — the competing motions will all be heard in court this Friday, August 4 — Mikkelson has set up a GoFundMe campaign with a goal of raising $500,000 in an effort to ensure Snopes’s survival. The campaign has already been tremendously successful, with more than 23,000 supporters donating more than $665,000. But even with this infusion of cash, the website’s future remains murky — so murky, in fact, that Snopes might be facing a shutdown after more than two decades online.

Two different companies are fighting for control over all of Snopes.com’s advertising revenue

Here’s what we know about the conflict based on the claims made in each of the three public court filings:

Snopes was founded in 1994 by a husband-and-wife team, David and Barbara Mikkelson. The Mikkelsons eventually started a parent company for the site, which they named Bardav.

The Mikkelsons divorced in 2015, and David and Barbara each received 50 percent of the company. That same year, Bardav entered into a partnership with a tech startup called Proper Media. According to the Atlantic, the partnership agreement dictated that Proper Media — whose CEO is Chris Richmond, founder of the beloved wiki TV Tropes — would “provide content and website development services as well as advertising sales and trafficking” to Snopes.

The next year, in 2016, Barbara Mikkelson sold her half of Bardav to Proper Media, dividing it among Proper Media’s five individual shareholders. (As the Atlantic explains, because Bardav was an S corporation, its shareholders had to be people and could not be other companies.) This left Richmond and company president Drew Schoentrup each with 20 percent ownership of Bardav, and Proper Media’s three other shareholders evenly splitting the remaining 10 percent.

The result was that David Mikkelson suddenly shared ownership of Bardav with five other people, instead of just one. All five of those co-owners were also co-owners of Proper Media, and were, according to Proper Media’s lawsuit, obligated to uphold their “fiduciary duties” to Proper Media while dealing with Bardav. The suit states that “These fiduciary duties include duties of loyalty, care, and good faith, and any actions taken adversely to Proper Media are expressly prohibited.”

It’s not terribly clear whether the conflict between Proper Media and Bardav developed before or after Barbara Mikkelson’s sale of her half of Bardav. The Atlantic reports that in February of this year, when the San Diego Union-Tribune visited the Proper Media office to write a story about Snopes, tensions were high; the Proper Media staff apparently felt the 2015 development agreement between Bardav and Proper Media had saved Snopes from technical obscurity, while the Snopes staff felt “worried that the co-owners didn’t understand what Snopes was, and that they only wanted to juice its revenues, so they could sell it.”

Shortly after the Union-Tribune article was published, a falling-out occurred between one of the co-owners of both companies, Vincent Green, and his four fellow co-owners at Proper Media. Green had been working with Mikkelson on the Snopes website since Proper Media first became involved with Bardav in 2015. Proper Media’s lawsuit against Bardav, filed in May, alleges that in February 2017, “Mikkelson conspired with Green to block Proper Media’s access to the personnel, accounts, tools, and data necessary to manage Snopes.”

A few weeks later, in March, Mikkelson officially canceled Bardav’s 2015 contract with Proper Media. Or rather, he tried to — but Proper Media is disputing whether he had the right to do so (more on that below).

And in April, after allegedly spending the previous two months essentially working for Mikkelson instead of Proper Media, Green formally resigned from Proper Media and went to work formally for Bardav — a move that left his ownership stakes in both companies up in the air.

Are Snopes’s owners individuals or part of a company? This is the main question that will decide Snopes’s fate.

You may be wondering why Vincent Green’s seemingly tiny 3.33 percent share in Bardav matters, but in fact it matters a great deal.

This is because the Bardav and Proper Media are warring over whether, when the five Proper Media co-owners bought ownership in Bardav, they did so as individual shareholders or as representatives of Proper Media. If Green is an individual shareholder, he could take his meager slice of the Bardav pie and join it with Mikkelson’s 50 percent stake, effectively giving Mikkelson the controlling interest in the company.

But now that Green has left the company, if Proper Media’s co-owners are obligated to represent Proper Media in its dispute with Bardav because they acquired their Bardav shares while doing business as Proper Media, Proper Media may have the right to reclaim Green’s share, allowing the company to retain its collective 50 percent ownership of Bardav.

Essentially, Proper Media believes it owns a full 50 percent stake in Bardav (and thus a 50 percent stake in Snopes.com), despite Green’s departure. But Bardav believes that Mikkelson’s 50 percent stake, combined with Green’s 3.33 percent, gives Mikkelson the controlling interest in the company.

Which means the question of ownership is essentially a he-said, she-said issue that the courts must decide. As things currently stand, without a court ruling, Mikkelson/Bardav will have to keep paying Snopes’s staffing and operation costs while Proper Media controls the site’s ad revenue. (And some have speculated that Proper Media might ultimately try to sell its stake in Snopes for a profit, with little care for potential buyers’ intentions — thus further endangering Snopes’s mission and future.)

In order for Proper Media to win its lawsuit against Bardav, it must successfully argue that Vincent Green’s 3.33 percent share in Bardav is still part of the Proper Media collective now that Green has quit working for Proper.

Conversely, in order for Bardav to win its lawsuit against Proper Media, it must successfully argue that the shares Barbara Mikkelson sold to Proper Media were sold to its co-owners as individuals, according to the terms of the original sale contract.

Both lawsuits are asking for the court to clarify and confirm the details of the original transfer of Bardav shares to Proper Media via Proper Media’s five co-owners. (That contract, though available to the court, can’t be made public for reasons of confidentiality.)

The court’s decision could hinge, in part, on an odd wrinkle about Bardav’s board of directors

As part of Bardav’s suit against Proper Media, David Mikkelson is claiming that Proper Media is “wrongfully withholding money owed” to Bardav, refusing to pay Bardav any advertising revenue or to let him have complete control of Snopes.com, even though he canceled Bardav’s contract with Proper Media. He’s currently seeking an injunction against Proper Media that would force the company to turn over to Bardav all advertising revenue accrued from Snopes since April, and relinquish its hold on the Snopes.com domain.

Proper Media, for its part, is disputing the validity of Bardav’s contract cancellation by claiming that its president, Schoentrup, is on Bardav’s board of directors, and thus should have been consulted before the contract was canceled. Proper Media is further seeking damages against Bardav for what it alleges is Mikkelson’s “gross financial, technical, and corporate mismanagement.”

In Bardav’s lawsuit, Mikkelson accuses Schoentrup of essentially pretending to be a director on a nonexistent board of directors. The implication is that Bardav’s “board” of two people evaporated when Barbara sold her half of the company.

But both companies appear to have had Mikkelson and Schoentrup sign, as “directors,” an amendment to Bardav’s nonexistent bylaws. In Proper Media’s lawsuit, Schoentrup argues that this document is proof that he’s on Bardav’s board, while Bardav argues that such an amendment, even if the company had bylaws to amend, would have been invalid anyway due to the language of the original sale contract between Barbara Mikkelson and Proper Media/its five co-owners.

Clearly, there’s quite a bit of messiness here (to say nothing of a snake eating its own tail). Stacey Lantagne, a law professor at the University of Mississippi who writes for the Contracts Prof law blog, told Vox that this type of situation usually arises from building a business without clear documentation in place. Lantagne pointed out that while normally the details of a company’s governance are outlined in its corporate bylaws, according to Proper Media’s suit, Bardav doesn’t appear to have ever had bylaws.

The conflict over the question of who is on Bardav’s board of directors is a perfect example of the type of confusion that can result.

“This seems like the type of complex mess that can often result when transactions involve close personal relationships, like significant others, and the chain of events is less than fully documented,” Lantagne said, pointing to Barbara and David Mikkelson’s apparent failure to establish bylaws when they first formed Bardav. “As these warring allegations prove, executing all the documents you can to memorialize your organizational structure can help eliminate ambiguity going forward.”

Proper Media likely can’t oust Mikkelson from his own company, but that doesn’t mean Snopes’s survival is guaranteed

According to the San Diego Union-Tribune, Proper Media is arguing that “Mikkelson is unfit to serve as a director” of Bardav and wants to effectively oust him from his own company. But Lantagne told Vox that since Proper Media won’t be able to command more than a 50 percent share of Bardav, such an outcome doesn’t seem likely.

“It seems like Proper Media can't gain a controlling interest [in Bardav],” she told Vox. “At best, it can get to 50 percent and one board member, which could deadlock corporate decision-making.”

But no matter what the court decides, Snopes’s editors — in addition to Mikkelson, the site employs a staff of 15 people — are reportedly fearful of what Proper Media’s continued involvement in Snopes could mean for the website, and unconvinced that Proper Media fully understands Snopes’s unique and increasingly vital function on the internet.

When reached by email, a Snopes representative pointed to a press release issued July 25 by the law firm representing Baldav. "We've argued in court that the public will be harmed if Snopes.com is forced to shut down,” attorney Paul Tyrell said in the release. “The outpouring of support in response to the GoFundMe campaign makes it undeniable that the survival of Snopes.com is a matter of public interest." Representatives for Proper Media did not respond to a request for comment.

But the site’s operating costs are reportedly as high as $100,00 per month. Without advertising revenue to help pay staffers and conduct site maintenance, readers’ generosity can only go so far.

Proper Media and Bardav’s respective lawsuits will be heard in court on August 4. Until then, Snopes’s fate, like so many of the urban legends the website has set out to debunk over the years, remains in dispute.

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