Facebook Legal Fees Demand Is ‘Stratospheric,’ Ceglia Claims

Paul Ceglia, who was fined for failing to turn over evidence in his ownership suit against Facebook Inc., said he shouldn’t also have to reimburse the company for legal fees of as much as $716 an hour that he called “stratospheric.”

U.S. Magistrate Judge Leslie Foschio on Jan. 10 fined Ceglia $5,000 after ruling the New York man had ignored a court order requiring him to give Facebook access to his e-mail accounts. The judge also ordered Ceglia to reimburse the company for the legal fees it incurred in pursuing the issue.

Ceglia’s lawyer, Dean Boland of Lakewood, Ohio, objected to the size of the fees in court papers filed Jan. 30 in federal court in Buffalo, New York, saying they’re not justified by the “garden-variety” issues presented by the case.

In the suit, Ceglia claims he has a 2003 contract signed by Facebook co-founder Mark Zuckerberg that gave him half-ownership of the company, now worth an estimated $74.3 billion, according to Sharespost.com, which tracks nonpublic companies. Facebook, based in Menlo Park, California, operates the most popular social-networking site in the world.

Boland also argued that Facebook’s lawyers, from Gibson, Dunn & Crutcher LLP, shouldn’t charge New York City prices for Buffalo work.

‘Many Firms’

“Defendants make no showing that a firm in the Western District could not handle this case,” Boland wrote, referring to the federal judicial district that includes Buffalo. “Within this district, there are many firms that routinely handle large contract dispute cases.”

Among the Buffalo firms named by Boland was Connors & Villardo LP, which represented Ceglia in the case before quitting in April. Ceglia then switched to a team led by DLA Piper LLP, one of the biggest law firms in the world, with 4,200 attorneys in 30 countries. DLA Piper quit less than three months later. Ceglia was then represented by a San Diego lawyer who was replaced by Boland in October.

Orin Snyder, the lead Gibson Dunn partner on the case, had a billing rate of $955 an hour in 2011, according to papers filed by Facebook. Two other Gibson Dunn partners cost their clients $850 and $825 an hour. They were assisted by two associates, at $670 and $450 an hour.

Facebook asked Foschio to order Ceglia to pay 75 percent of those rates. The five lawyers said they had spent a combined 177 hours on work related to the e-mail issue.

Snyder declined to comment on the firm’s fee request.

Gibson Dunn was named in January as “Litigation Department of the Year” by The American Lawyer, a trade magazine, for the second time in a row. American Lawyer based the distinction in part on Gibson Dunn’s work in the Ceglia case.

The case is Ceglia v. Zuckerberg, 1:10-cv-00569, U.S. District Court, Western District of New York (Buffalo).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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