Look this is all pretty simple: Mike wants to get fired.

Last year, Mike decided to cash out. According to the AOL CEO there had been previous attempts to buy TechCrunch. So one day Mike, who largely covers Silicon Valley, decides to move from San Francisco to... Seattle [1]. His stated reason? Largely, to "mix things up in my life". Washington state, by some amazing coincidence also has no state income tax.

Around the same time Mike dissolves the partnership with Jason Calacanis for the TechCrunch50 conference [2], allegedly a huge part of TechCrunch's income.

Four months later, having established residency in a no state income tax state and having rid TechCrunch of an external party having a large stake in TechCrunch's income, AOL out of the blue (honest!) buys TechCrunch [3].

Two months later, Calacanis sues Arrington over TechCrunch50 [4], a suit I haven't heard anything about since. Honestly, as much as people here like to rag on Calacanis (and Mahalo, which is basically doomed IMHO), I honestly think he has a case here.

To quote Mike Arrington, himself a lawyer, regarding the scandalous clawback clause in the Skype contracts [5]:

> These employees should simply hire a lawyer to sue Skype. There’s a valid fraud claim based on what I’m seeing, and the “atmospherics” (how lawyers describe the legally irrelevant facts surrounding the story that can nonetheless influence a judge and jury) are terrible for Skype.

Honestly I think the "atmospherics" are terrible for Arrington too. The state of California could probably make a case that Mike changed residency simply to avoid tax so they could make a claim that the sale was still taxable too.

Of course, most reading HN will know that any acquisition will typically come with an earn-out over 2+ years. That earn-out, like many vesting schedules, will have a bunch of conditions on it, probably including an acceleration clause for getting fired (termination probably without cause).

Mike wants to get fired.

EDIT: to clarify the residency of California [5]:

> (1) California residents pays California tax on all their income.

> (2) California generally taxes California-source income, …

> So, who is a resident? In determining residency, California law provides two presumptions. The first presumption is that a taxpayer who, in the aggregate, spends more than 9 months of a taxable year in California will be presumed to be a California resident. The second presumption is that an individual whose presence in California does not exceed 6 months within a taxable year and who maintains a permanent home outside California is not considered a California resident provided the taxpayer does not engage in any activity or conduct within the State other than as a seasonal visitor, tourist, or guest.

The point is that there is a subjective test (the last point there). I'm sure Mike dotted all the i's and crossed all the t's (registering to vote in Washington, getting a Washington state driver's license, etc) but if he spends significant time in the Valley it is not clearcut.

[1]: http://techcrunch.com/2010/05/03/hi-seattle/

[2]: http://news.cnet.com/8301-1023_3-20004752-93.html

[3]: http://techcrunch.com/2010/09/28/tim-armstrong-we-got-techcr...

[4]: http://latimesblogs.latimes.com/technology/2010/11/jason-cal...

[5]: http://klapachlaw.com/blog/38-february-13-2010-.html