News is sued by an online retailer owned by three former employees

March 5, 2014 04:22 PM

Web-only discount brand shoe retailer Gotham City Online has filed suit against wall décor e-retailer Inc. for allegedly hacking into Gotham City’s computer servers and then altering and stealing information.

The suit, filed in the U.S. District Court in San Francisco, stems from’s 2012 purchase of a division of Gotham City’s business called Poster Revolution. As part of the deal, three Gotham City employees joined, while at the same time running Gotham City.

Even after the deal, Gotham City hosted the web site and software for Poster Revolution on the servers it leases from Rackspace Hosting Inc., according to the suit. The suit says Gotham City invoiced for those hosting fees.

The suit alleges that on Jan. 27, the day that the three Gotham City employees who also worked for were set to receive a “multimillion dollar payment performance payment,” two of them were taken into separate offices “told not to leave and interrogated by in-house counsel and two separate sets of outside counsel regarding certain [] trade practices.” They were also handed a letter that said their performance payment was “rescinded,” and that they were suspended. The other Gotham City principal was on paternity leave, and was “interrogated” and suspended over the telephone, according to the suit. The following day, all three were fired. The three are not named in the suit.

Two days later, Gotham City notified that it had breached its agreement and asked to migrate its Poster Revolution site and software off Gotham City’s servers.

The suit alleges that then accessed Gotham City's servers and changed several security passwords and administrative credentials to prevent Gotham City employees from retrieving their e-mails and company files. The suit also alleges that copied and altered Gotham City files, including its customer information.

“We have been asking to desist from these practices for quite some time,” says Jonathan Garriss, Gotham City’s CEO. “Hopefully the lawsuit will help spur that change and get the company to clean up its act.” 

An spokeswoman says the allegations are “without merit” and that it is planning a “vigorous” defense. is No. 130 in the 2013 Top 500 Guide.




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