Facebook sues lawyers for pursuing dubious Ceglia lawsuit
Reuters
Published Oct 20, 2014 06:21PM ET
Updated Oct 20, 2014 06:41PM ET
Facebook sues lawyers for pursuing dubious Ceglia lawsuit
By Jonathan Stempel NEW YORK (Reuters) - Facebook Inc and Chief Executive Mark Zuckerberg have sued several lawyers who represented Paul Ceglia, claiming they helped the upstate New York entrepreneur pursue a fraudulent lawsuit to extort a 50 percent stake in the social networking company.
Monday's lawsuit was filed seven months after a federal judge dismissed Ceglia's civil case and two years after federal prosecutors in Manhattan charged Ceglia with criminal mail and wire fraud for alleged document forgery. Facebook's market value is now about $200 billion.
Ceglia, a wood pellet salesman from Wellsville, New York, is not a defendant in Facebook's lawsuit, which was filed with the New York state court in Manhattan.
The 13 defendants include DLA Piper, one of the world's largest law firms; Paul Argentieri, Ceglia's original lawyer; the law firms Milberg LLP and Lippes Mathias Wexler Friedman; and Dennis Vacco, a Lippes Mathias partner and former New York attorney general.
Facebook seeks unspecified damages for harm to its reputation and business, which it wants tripled because of the lawyers' alleged misconduct, plus punitive damages.
"We said from the beginning that Paul Ceglia's claim was a fraud and that we would seek to hold those responsible accountable," Facebook general counsel Colin Stretch said in a statement.
Peter Pantaleo, DLA Piper's general counsel, in a statement said Facebook sued "to intimidate lawyers" to refrain from suing the Menlo Park, California-based company. "We will defend this meritless litigation aggressively and we will prevail."
Vacco made similar claims in another statement, and said his firm's lawyers "operated completely within the rule of law and at the highest ethical standards at all times."
The other defendants did not respond to requests for comment.
Ceglia claimed in his June 2010 lawsuit that an April 2003 contract he signed with Zuckerberg, who was then a Harvard University freshman who had done programming work for Ceglia's StreetFax.com, entitled him to a Facebook stake as high as 84 percent.
Facebook said Ceglia's lawyers knew or should have known this lawsuit was a fraud, having been "based on an implausible story and obviously forged documents," but plowed ahead "for the purpose of extorting a lucrative and unwarranted settlement."
It also said those lawyers stayed with the case even after Aaron Marks, a lawyer at Kasowitz Benson Torres & Friedman who also represented Ceglia, warned that he had found "smoking-gun" evidence of fraud.
While the Kasowitz firm withdrew from the case, Marks agreed not to report the "misconduct" he had found to the court at the request of another of Ceglia's law firms, the complaint said. The Kasowitz firm and Marks were not named as defendants.
Get The News You Want
Ceglia's criminal trial is scheduled for May 4, 2015. He has pleaded not guilty.
The case is Facebook Inc et al v. DLA Piper LLP (US) et al, New York State Supreme Court, New York County, No. 653183/2014.
(Reporting by Jonathan Stempel in New York; editing by Andrew Hay and Cynthia Osterman)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.