Small victory for Brad Greenspan in ongoing MySpace spat

A federal court ruled Thursday that a lawsuit against the executives who sold social network MySpace to News Corp. can go forward, as Judge George King in the Central District of California rejected a motion to dismiss the case.

The case was brought forth by Brad Greenspan, who founded a digital-entertainment company called eUniverse in 1998. Greenspan served as CEO and chairman of the publicly traded eUniverse until late 2003, when he resigned amid financial woes that saw the company's stock delisted from the Nasdaq index.

While Greenspan was at the helm of eUniverse, he oversaw the creation of MySpace, but it wasn't until after his successor, Richard Rosenblatt, had taken over that MySpace gained mass appeal. Greenspan remained a shareholder, strongly opposed MySpace's 2005 sale to News Corp. for $580 million, and has been targeting News Corp. and the Intermix executives who sold the company with legal action since 2006.

The current class action shareholder suit, Jim Brown vs. Brett C. Brewer et al., targets Rosenblatt, former Intermix President Brett Brewer, and venture backer VantagePoint Venture Partners as defendants (among others), with "Jim Brown" a representation of Intermix common-stock shareholders whom Greenspan claims were defrauded of billions. The real value of MySpace, Greenspan argues, was much higher than $580 million and not all of the requisite financial information was disclosed.

"It has been three years since I worked around the clock pleading with other MySpace-Intermix shareholders to vote against the sale of MySpace to News Corp. in 2005," Greenspan said in a statement. "I knew that the value of the company was billions of dollars, however the deceptive practice of hiding MySpace financials by Intermix management robbed shareholders of their opportunity to adequately gauge the company's value."

Critics will likely say it's a cry for attention and money, quasi-analogous to how they perceived the legal action that the founders of ConnectU brought against social network Facebook, claiming that founder Mark Zuckerberg had stolen code and trade secrets from them. That suit appears to have finally petered out last month. As for the MySpace suit, the decision is in the judge's hands now.

Greenspan is now at the helm of Live Universe, an entertainment holdings company that has acquired struggling dot-coms like Revver, whose troubles he blamed on policy at MySpace that blocked its ad-supported videos.