Facebook Spared Appeals Court Rehearing in Winklevoss Case
April 12 (Bloomberg) -- Facebook Inc. won a court decision enforcing the settlement of a lawsuit claiming company founder Mark Zuckerberg stole the idea for the world's largest social-networking site from former Harvard University classmates, twins Cameron and Tyler Winklevoss. Separately, e-mails allegedly written by Zuckerberg are cited in a new court filing by Paul Ceglia as proof of his claim that he’s entitled to 50 percent of the company under a 2003 contract. Bloomberg's Deirdre Bolton reports in today's Movers & Shakers. (Source: Bloomberg)
Facebook Inc. won’t have to face an appeals court rehearing on an effort by Cameron and Tyler Winklevoss to undo a settlement of their claims company founder Mark Zuckerberg stole the idea for the social networking site.
The Winklevoss twins, former Harvard University classmates of Zuckerberg’s, will appeal to the U.S. Supreme Court, according to the law firm representing them, Howard Rice in San Francisco. They had asked for an 11-judge panel at the U.S. Court of Appeals to review an April ruling by a three-judge panel that rejected their bid to reopen the settlement. That request was denied today by the court without explanation.
The brothers argued that the three-judge panel erred when it dismissed their claims that the 2008 settlement should be voided because it was procured through fraud. They alleged that Palo Alto, California-based Facebook didn’t disclose an accurate valuation of its shares before they agreed to the $65 million cash and stock settlement. The appeals court ruled that the accord barred future lawsuits and was “quite favorable” to the twins.
“Settlements should be based on honest dealing, and courts have wisely refused to enforce a settlement obtained by fraudulent means,” Jerome Falk, the Winklevosses lawyer, said in an e-mailed statement. “The court’s decision shut the courthouse door to a solid claim that Facebook obtained this settlement by committing securities fraud,” Falk said. “Our petition to the Supreme Court will ask the high court to decide whether that door should be reopened.”
Goldman Sachs
In a January interview, Falk said that the 2008 settlement is worth $100 million more than its original amount after Goldman Sachs Group Inc. (GS) invested $450 million in the social networking site, boosting the company’s valuation to $50 billion. The Goldman Sachs investment was first reported in January.
SharesPost Inc., an online marketplace for investment in companies that aren’t publicly traded, today values Facebook at $55 billion.
Andrew Noyes, a spokesman for Facebook, the world’s most popular social-networking service, said in an e-mail the company is pleased with today’s ruling.
The case is The Facebook Inc. v. ConnectU Inc., 08-16745, 9th U.S. Circuit Court of Appeals (San Francisco).
To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
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