By Sharon Hill

SAN FRANCISCO — A California judge today ruled that Craigslist Inc. is entitled to a full trial in its claims against EBay, its part-owner and long-time friend turned direct competitor.

Superior Court Judge Richard Kramer ruled that a Delaware case decided last September did not close out Craigslist’s claims in the California case, which was filed before EBay took Craigslist to court in Delaware (where EBay is incorporated). Kramer said that Delaware Chancery Court judge William Chandler III specifically declined to rule on Craigslist’s claims against EBay in the California case, so his court would retain jurisdiction in this lawsuit, and it would go to trial.

A case management conference was scheduled two months hence, Sept. 15 in San Francisco.

“Clearly, the matter was not decided on the merits. Onward,” was the only comment at the courthouse from EBay attorney Michael Rhodes.

“I have nothing to say except we are going to do what the judge told us to,” Michael Clyde, attorney for Craigslist Inc., responded after Kramer’s ruling.

EBay owns more than 28 percent of Craigslist, which eliminated EBay’s board seat at Craigslist Inc. after EBay jumped into direct competition with Craigslist in the classified field. EBay and Craigslist filed a wide range of claims and counter-claims, with Craigslist accusing EBay of competing unfairly and violating contractual agreements. Among the disputes: Whether EBay was precluded from competing directly with Craigslist due to an agreement they signed shortly after EBay bought its shares in Craigslist Inc. from Philip Knowlton; whether Craigslist could adopt a “poison pill” measure that diluted the value of EBay’s shares in Craigslist Inc., and whether EBay breached its fiduciary responsibility to Craigslist Inc. when it opened its competitive site, then known as Kijiji.com (now called EBayClassifieds.com) in the United States.

EBay had argued before Kramer on Tuesday that the case was essentially decided once, in Delaware, where Craigslist CEO Jim Buckmaster, founder Craig Newmark, former EBay Chairman / CEO Meg Whitman and others all testified. However, the California judge, Kramer, said the Delaware judge had punted the ball across the country on the claims involving California law.

Kramer referred to a footnote in Chandler’s ruling last Sept. 9 that specified the Delaware ruling was not applicable to the California claims. “I believe that Footnote 2 is a crystal-clear message from Chancellor Chandler that he had no intention to have a preclusive effect in the California matter whatever.”

Footnote 2 says:

          In telling this story, I discuss eBay’s alleged misuse of craigslist’s nonpublic information and some of eBay’s allegedly unfair competitive activities. Whether eBay’s use of craigslist’s nonpublic information or its competitive activity was unlawful does not affect my decision in this case. Accordingly, I make no legal conclusion as to whether eBay is liable for unfair competition, misappropriation of trade secrets, trademark infringement, or the like. Craigslist has filed suit against eBay in California asserting such claims, and I leave it to the California  judiciary to resolve them. In this Opinion, I discuss EBay’s use of Craigslist’s nonpublic information and EBay’s competitive activities simply to tell the story of this dispute more completely. [We've added the emphasis.]

(The full Delaware opinion is here.)

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Update: EBay said it may appeal. In a statement emailed to Bloomberg News, Michelle Fang, associate general counsel for EBay, wrote: “EBay is considering its options for appeal.” … ”This litigation is still in its early stages. In its decision today, the court did not address the actual merits of the case, and we remain confident that we will ultimately prevail.”

In a separate statement emailed to the AIM Group, Fang said: “EBay is asking the Court to dismiss this case because a judge in Delaware issued a final judgment in this dispute and, therefore, the claims should not be re-litigated in California. Craigslist is trying to take a second bite at the apple, after its attempts to divest eBay of its equity holding in the company were rejected in Delaware.”

       … now that sure doesn’t seem to square with Footnote 2, at least in Kramer’s opinion. Nor in ours. Not that we’re lawyers, but Chandler’s language is plain and blunt, and Fang’s comments certainly seem to sidestep (at best — perhaps “ignore” would be the better word) the clear language from Chandler’s ruling.

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We’ve covered this case ad infinitum, quite probably ad nauseum. If you’re not of the ad nauseum view and you really, truly want to read more about the case, click here to go to yesterday’s blog post, which includes five links to our earlier coverage and will lead you to about two dozen more.