eBay Sues Craigslist

SAN FRANCISCO - Auction site eBay(EBAY - Cramer's Take - Stockpickr) is suing Craigslist, claiming that the company is trying to dilute its stake.

At issue is eBay's 28% minority interest in craiglist, a popular site for online classifieds. In its lawsuit, filed in Delaware's Chancery Court, eBay claims that in January, Craiglist's board of directors, including founder Craig Newmark and Chief Executive Jim Buckmaster, adopted measures that "unfairly diluted eBay's economic interest in Craigslist by more than 10%."

eBay maintains that by taking these measures, Newmark and Buckmaster breached their fiduciary duties.

"The recent actions by the craigslist directors have disadvantaged eBay and its investment in Craigslist," said Mike Jacobson, an attorney for eBay, in a statement.

"Since negotiating our investment with craigslist's board in 2004, we have acted openly and in good faith as a minority shareholder, so we were surprised by these recent unilateral actions. We are asking the Delaware court to rescind these recent actions in order to protect eBay's stockholders and preserve our investment."

A spokesperson for craigslist could not immediately be reached for comment.

eBay's complaint is currently under seal. Shares for the company were up less than 1%, or 23 cents, to $30.86 in afternoon trading.