Ceglia v. Zuckerberg returns, with a bang - biglaw representation, lots of email
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Original complaint: Cast primarily as a claim against Facebook seeking a court declaration and judgment that Ceglia was the 80% owner of FB. Claim founded on a breach of contract. In essence, a claim by an independent contractor that, for breach of a $1K contract, he is entitled to claim half of what a young kid promised to give him forever after relating to the subject matter of that contract. Result: an inherently flaky claim that can readily be ridiculed as opportunistic and defeated on a variety of legal grounds.
Amended complaint: Cast as a series of claims against Mark Zuckerberg only (the sole claim against FB as a company is a technical one that seeks to bind it concerning any judgment declaring that Ceglia has a 50% stake in anything granted or promised to Mr. Zuckerberg). Claim founded on the idea of a general partnership as an association of two or more persons to carry on business as co-owners for profit, with the theme being that one partner misappropriated for his own use and profit assets belonging to the partnership and must now account to the wronged partner for 50% of those assets, both as originally constituted and as enhanced over time. Result: a claim that may or may not be valid, depending on how the evidence eventually plays out, but which is potentially credible if the evidence of a true partnership sticks.
In switching the claim from one primarily against FB as a company to one against Mr. Zuckerberg alone, DLA Piper has put it on much firmer ground and has created possible winning chances for its client. How it will likely play out will no longer be determined by one knock-out punch from FB but, instead, in the trenches, with hand-to-hand fighting over every piece of evidence and every fine legal point. That is a decidedly bad turn for Mr. Zuckerberg.
The case remains problematic at several levels, not the least of which may be statutes of limitations grounds on the new theories (New York lawyers can assess this).
Before we cheer too loudly for Mr. Ceglia, I would note that I have seen many, many situations over the years in which a less-than-attractive "money guy" does indeed exploit founders at the formative stage and the contract here appears to fit within that mode - in essence, a lifetime claim against a founder concerning the subject matter of an engagement in exchange for a token money contribution. Whatever one may think of Mr. Zuckerberg, this is utterly repulsive and will serve as a drag on Mr. Ceglia's case throughout.
in essence, a lifetime claim against a founder concerning the subject matter of an engagement in exchange for a token money contribution
Which do you think is worse, from a court's point of view - the long and predatory-seeming delay in filing the suit, or the insultingly low initial 'investment' of only $1-2000? It would sure have a different feel if Ceglia had put up even $10,000, which most people would agree was 'real money.' $1,000 or $2,000 is such a puny sum that MZ can truthfully say it wasn't even enough to buy food for the lifetime of the relationship.
Even top lawyers can be duped by their earnest-seeming clients and plausible-looking fabrications.
Especially if Ceglia did engage in some real email with Zuckerberg (that said something else), it would be possible for him to create plausible-looking email records with alternate text.
Right now I think it's too early to judge whether that's likely or unlikely. The whole process will ultimately determine the relative credibility of the evidence and testimony.
Well, now that the Winkelvii* have had their claims rejected, Ceglia is back...and represented by DLA Piper, one of the largest and most solid law firms in the US. His amended complaint, filed yesterday, contains a large number of emails purported to be discussions between himself and Mark Zuckerberg about ownership of Z.'s stake in Facebook. Besides the (abundant) entertainment value, it seems this suit just might have legs after all. Back to the typewriter, Aaron Sorkin - looks like we might have a franchise here!
* I just love saying that.
http://www.businessinsider.com/facebook-lawsuit-paul-ceglia-...
During the recent Wisconsin union legislation fiasco, it took me 15 minutes to even find the name of the bill that was passed. Not a single journalist thought it fitting to include it. I eventually found it on a union web site, and then was able to read the text of the bill myself.
The vast majority of journalists are less than useless with respect to both law and science. 99% of them don't even read the original sources, they just copy some other journalist and add their own "research" which usually amounts to a Google search they did about other completely unrelated dirt on the parties involved.
You'd think organizations like WSJ or NYT would be better, but in my experience they're absolutely not.
Diluted to hell by subsequent rounds of investment, and ending up with .1-1%. That'd still be an ENORMOUS amount of money, but there's no way he has a claim on 50% of the currently issued shares.
The argument is that all of the material produced as a result of the agreement is property of the General Partnership, of which Ceglia owns 50%. Therefore, the entirety of Facebook, Inc. would be part of this partnership.
Eduardo Saverin only got a stake in Facebook, Inc., not the partnership, which it's unclear if he even knew existed.
This is all devil's advocate stuff mind you.
DLA Piper is one of the largest and most powerful law firms in the US, and routinely represents clients such as Wall Street securities firms in multi- billion dollar suits. I think you should click the link above and have a look at the existing resume before making such silly remarks...this is not an up-and-coming law firm in need of wider exposure.
pun intended
Not saying that this is the case, but it's possible.
Thinking that they would not get 50% or 84% of zucks shares - but 50% of $XXXXX millions of dollars is significant regardless.
They must have at least enough of a case to make facebook shit cash their way.
For all us watchers - it just reinforces the unscrupulous measures zuck took in building this company. Sadly, not too many can say they would have done much different in his shoes, given that he was at the right place at the right time and got boosted by others to the point of being able to run with it himself, he then used amoral tactics to protect what he had built from those who truly did have at least partial stake in it...
I see a lot of unscrupulous business people trying to abuse the one developer who can actually make things happen.
* You give me $1000 asking me to develop a site for you, in addition to the $1000 you want to split ownership 50/50.
* I agree. We sign a contract. I cash your check and start working.
* I need more money so you send me another $1000 with no strings attached.
* You whine that things are taking longer than expected. Things get a bit heated. Eventually you agree to waive a 30% ownership penalty we had agreed to for slow performance.
* When the site is done, I see it is successful.
* Wishing to cut you out I lie to you and tell you the site is not living up to expectations and offer to mail you your money back.
Certainly whether or not Mr. Zuckerberg did the above is open for debate. Can't we agree that if he did do the above, he wasn't acting honestly?
pretty interesting quote from zuckerberg. couldn't this have implications regarding the winklevoss case?
That DLA Piper has taken on the case doesn't mean that the claim is credible. It only means that they deemed the case credible enough that Facebook likely will try to kill the case with a big settlement and DLA Piper will get a large chunk of that because they probably represent Ceglia on contingency basis.
The bigger problem is that by taking on the case, DLA Piper has made the claim appear more credible not only because of their skillful lawyering, but also because of their reputation. But the fact still remains that this is a "troll" case. Zuckerberg built Facebook and implemented his idea to make it big, and it's rather unfortunate if the outdated "general partnership" business structure could be applied to an internet company in this way.
It appears that while DLA Piper can use its reputation to make the case more credible, the fact that the firm took on a "troll" case doesn't affect its reputation, though it should. When a small law firm that is struggling for its survival takes on questionable cases that is one thing, but DLA Piper has a choice even in a bad economy.
Now me? I'd say "Ok so $3B, we'll give one to the lawyers, one to the taxman, and the third one we'll just keep for ourselves. And we'll call it a day and put this nasty bit of business behind us."
But that's just me, a billion post-taxes and legal fees would pretty much cover any eventuality short of Armageddon :-). If the providence of the email chain can be validated well, I'm sure the DLA Piper's are thinking they are looking at a potential billion dollar payout so they may be willing to commit serious resources to insuring that level of rigor is done.
So it looks like Ceglia has a good claim on 50% of Zucks share of Facebook:
""By virtue of his 50% ownership interest in the General Partnership, Cegliais entitled to receive 50% of the total equity interest in Facebook, Inc. received by, and promisedto Zuckerberg, including, but not limited to, stock, stock options and restricted stock units.""
Cegila for his part must be really naive.