Facebook Claimant Ceglia Hires Milberg for Zuckerberg Case

Paul Ceglia, who claims that a 2003 contract with Facebook Inc. (FB) co-founder Mark Zuckerberg gave him half the company, hired Milberg LLP (1401L) to represent him in his federal lawsuit against the world’s biggest social network.

The move, made public in filings today in federal court in Buffalo, New York, follows the hiring and departure of several firms from Ceglia’s legal team since he sued in June 2010. Ceglia’s new lawyers said they want access to the computers Zuckerberg used at the time of the contract.

“We took a good hard look at all of the information available, including evidence in Mr. Ceglia’s favor, and we believe he deserves to have his day in court,” said Sanford P. Dumain, chairman of Milberg’s executive committee. “We look forward to examining records from computers that Mr. Zuckerberg used when he was a freshman at Harvard and other records that will help answer questions about the ownership of Facebook.”

Milberg, a 71-lawyer firm based in New York, is known for representing investors and consumers in class-action lawsuits. Since its founding in 1965, Milberg has recovered billions of dollars in settlements for its clients.

2004 Split

Formerly Milberg Weiss Bershad Hynes & Lerach LLP, it was the biggest firm representing shareholders in securities fraud suits against companies before it split in two in 2004 amid a U.S. investigation that sent four former partners to prison.

In 2010, Milberg lawyers won a verdict against Vivendi SA (VIV) in one of just a handful of securities fraud class actions ever tried to completion. The National Law Journal, a legal newspaper, named Milberg to its 2011 “Plaintiffs’ Hot List.” Dumain was one of the lead lawyers in a suit that resulted in a $3.2 billion settlement with Tyco International Ltd. (TYC) in 2007 and was lead counsel in a case against Nortel Networks Corp. that settled for $1 billion in 2006.

Milberg recovered $137.5 million in shareholder suit settlements in 2010, the most recent year for which data are available, according to Institutional Shareholder Services Inc., which tracks the settlements.

“Their participation speaks to the strength of Paul’s case, now that defendants will not be able to dismiss it on their empty claims of fraud,” Dean M. Boland, a Lakewood, Ohio, lawyer who represents Ceglia, said today in a text message.

‘Fabricated Contract’

Facebook, based in Menlo Park, California, accuses Ceglia of fabricating the contract and has called his suit a fraud.

Orin Snyder, a Facebook lawyer, didn’t immediately return a phone message seeking comment on the hiring.

Three Milberg lawyers, led by Dumain, filed notices today in federal court in Buffalo saying they joined Ceglia’s legal team. Two other lawyers, Robert B. Calihan of Rochester, New York, and Peter K. Skivington of Geneseo, New York, also told the court they represent Ceglia.

Firms including DLA Piper LLP represented Ceglia and left the case. U.S. Magistrate Judge Leslie Foschio in Buffalo fined Ceglia $5,000 in January for ignoring a court order to give Facebook access to his e-mail accounts. Foschio later said Ceglia must pay Facebook $75,777 to reimburse the company for its legal fees in the matter.

Former Milberg partners Melvyn I. Weiss, William S. Lerach, David J. Bershad and Steven G. Schulman pleaded guilty in 2007 and 2008 to criminal charges in connection with paying kickbacks to firm clients who agreed to sue companies. The four were disbarred and served prison sentences.

Facebook filed papers with the U.S. Securities and Exchange Commission last month to raise $5 billion in an initial public offering. The company is worth an estimated $93.1 billion, according to SharesPost.com, which tracks nonpublic companies.

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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