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Commitments and Contigencies
3 Months Ended
Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contigencies

Note 17 - Commitments and Contingencies

 

The Company has entered into indemnification agreements with the Company’s officers and directors for certain events or occurrences. The Company maintains a directors and officers insurance policy to provide coverage in the event of a claim against an officer or director. Historically, the Company has not been obligated to make any payments for indemnification obligations, and no liabilities have been recorded for these obligations as of March 31, 2022.

 

The Company is involved in certain lawsuits, claims and proceedings that arise from time to time. The Company records a liability for these when it is believed to be probable that the Company has incurred a loss and the amount can be reasonably estimated. The Company regularly evaluates current information to determine whether it should adjust a recorded liability or record a new one. If the Company determines that there is a reasonable possibility that a loss may be incurred and the loss or range of loss can be estimated, the possible loss is disclosed in the accompanying notes to the condensed consolidated financial statements to the extent material.

 

Litigation

 

On May 29, 2018, a plaintiff filed a class action complaint against Bumble Trading Inc. alleging that the Bumble app’s “women message first” feature discriminates against men and is therefore unlawful under California’s Unruh Civil Rights Act (the “Unruh Act”) and Cal. Bus & Prof. Code Section 17200. The parties held a mediation on June 23, 2020 and signed a settlement agreement on November 20, 2020, which received final approval by the court on January 28, 2022. The Company recorded an accrual for the loss contingency in relation to this litigation.

 

In late 2021 and early 2022, four putative class action lawsuits were filed against the Company in Illinois alleging that certain features of the Badoo or Bumble apps violate the Illinois Biometric Privacy Act (“BIPA”). These lawsuits allege that the apps used facial geometry scans in violation of BIPA’s authorization, consent, and data retention policy provisions. A fifth putative class action was also filed against the Company in late 2021 in California alleging that Bumble app users’ information was collected, used, and

disseminated in violation of California’s consumer protection and privacy laws. Plaintiffs in these lawsuits seek statutory damages, compensatory damages, attorneys’ fees, injunctive relief, and (in the California action) punitive damages. These cases are still in early stages and at this time the Company cannot reasonably estimate a range of potential liability, if any, which may arise therefrom.

 

Since January 2022, a purported class action complaint has been filed in the United States District Court for the Southern District of New York naming, among others, the Company, our Chief Executive Officer, our Chief Financial Officer, our board of directors and Blackstone, as defendants. The class action complaint asserts claims under the U.S. federal securities laws, purportedly brought on behalf of a class of purchasers of shares of Class A common stock in in Bumble’s secondary public stock offering which took place in September 2021 (the “SPO”), that the SPO Registration Statement and prospectus contained false and misleading statements or omissions by failing to disclose certain information concerning Bumble and Badoo app paying users and related trends and issues with the Badoo app payment platform, and that as a result of the foregoing, Bumble’s business metrics and financial prospects were not as strong as represented in the SPO Registration Statement and prospectus. The class action complaint seeks unspecified damages and an award of costs and expenses, including reasonable attorneys’ fees, as well as equitable relief. The Company believes that the allegations contained in the complaint are without merit and intend to defend the complaint vigorously.

 

A shareholder derivative complaint was subsequently filed in the United States District Court for the Southern District of New York against the Company and certain directors and officers. The derivative complaint alleges a breach of fiduciary duty against management and our board of directors based on the same allegations and events described in the class action complaint. The complaint seeks unspecified damages, an award of costs and disbursements, including reasonable attorneys’ fees, and that the Company be directed to take action to reform its corporate governance and internal procedures. The Company cannot predict at this point the length of time that these actions will be ongoing or the liability, if any, which may arise therefrom.

 

From time to time, the Company is subject to patent litigations asserted by non-practicing entities. Two such matters were settled during the three months ended March 31, 2022.

 

As of March 31, 2022 and December 31, 2021, the Company determined that provisions of $7.8 million and $8.8 million, respectively, reflect our best estimate of any probable future obligation, including legal costs incurred to date and expected to be incurred up to completion, for the Company’s litigations. During the three months ended March 31, 2022, the Company paid $0.8 million to settle litigation matters. Legal expenses are included within general and administrative expense in the accompanying condensed consolidated statements of operations.