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DLA Piper and the Facebook ownership case

6/3/2011 COMMENTS (0)

Gibson, Dunn & Crutcher has a history of ruthless efficiency when it goes on the attack. Just ask the Ecuadorians suing Chevron for environmental contamination or the Nicaraguans who tried to hit Dole for using pesticides on its banana plantations. Or you could ask the plaintiffs lawyers in those cases, some of whom have been left bruised and bloody by the Gibson blitzkrieg. 

Gibson’s June 2 motion to expedite discovery against an upstate New York wood pellet salesman named Paul Ceglia, who claims that Mark Zuckerberg signed a 2003 contract granting him 50 percent ownership of the then-inchoate Facebook, is a classic example of the firm’s style. It’s a powerfully-written document, replete with sound-bite denunciations of Ceglia and his purported proof. But it’s also backed by deep forensic analysis of the Ceglia contract and e-mails, as well as an intensive background check on Ceglia by the Kroll investigative agency. (Here’s the Reuters story on the filing.) 

There are some pretty devastating assertions in the Gibson brief. Facebook’s lawyers went back to Harvard to retrieve Zuckerberg’s e-mails from the university’s servers. None of the e-mails Ceglia quotes in his amended complaint appear on the Harvard servers, but 175 other e-mails between Zuckerberg and Ceglia did turn up. And while Ceglia’s purported e-mails show him collaborating with and advising Zuckerberg in the creation of Facebook, the e-mails retrieved from Harvard offer a very different. In those exchanges, Ceglia comes across as cringing and apologetic, unable to afford to pay Zuckerberg for the coding work he hired Zuckerberg to do.  

The Kroll investigators, meanwhile, found that Ceglia had tangled with law enforcement several times in Florida, where he allegedly engaged in “a wide-ranging criminal land scam involving the fraudulent sale of land in New York and Florida.” That’s in addition to an old drug arrest in Texas and a 2009 arrest by the New York attorney general for allegedly defrauding wood pellet customers. 

"Ceglia,” the filing said, “is a professional con artist.” 

Now, you might be wondering whether a heretofore anonymous ne’er-do-well who, by his own admission to Bloomberg last August, unearthed the contract supposedly granting him ownership of Facebook when he was scrounging through old files after his 2009 arrest for fraud, really merits the nuclear-bomb treatment he gets in the June 2 filing. The answer, from Facebook’s perspective, is that he does because Ceglia is backed by the resources of DLA Piper, one of the biggest international law firms in the world.    

DLA publicly entered the case on April 11, at the same time Ceglia’s lawyers at the Buffalo firm Connors & Villardo withdrew. (Name partner Terrence Connors declined to comment on why his firm exited Ceglia’s case.) That day, DLA Piper partners Christopher “Kip” Hall, John Allcock, Robert Brownlie, and Gerard Trippitelli filed Ceglia’s amended complaint in Buffalo federal district court.    

The amended complaint reinvigorated a case that had slipped from attention after Facebook succeeded in keeping it in federal court.  It cited, for the first time, the purported e-mails between Ceglia and Zuckerberg. (The e-mails were quoted in the body of the complaint, but, unlike the contract between Ceglia and Zuckerberg, printouts were not attached as exhibits.)The DLA lawyers also put forward a revised theory of the case. Ceglia had previously said he was due 84 percent of Facebook under his contract with Zuckerberg; in the amended complaint, he asked for only 50 percent, asserting that he ceded the extra 34 percent in his 2003 e-mails with Zuckerberg.    

The newly-revealed e-mails between Ceglia and Zuckerberg got quite a bit of press attention when DLA filed the amended complaint, as did DLA’s appearance. (The legal team Ceglia unveiled in the amended complaint also includes former New York state attorney general Dennis Vacco of Lippes Mathias Wexler Friedman.)    

At the time, DLA Piper partner Brownlie told The Wall Street Journal that he had initially been “skeptical of Mr. Ceglia’s claims,” but after investigating the claims and documents and hiring an outside expert to “examine the computer filed used to create the contract and verify when it was first created,” he had gained “absolutely 100 percent confidence” that Ceglia’s agreement with Zuckerberg is authentic. (Brownlie did tell the Journal, however, that he had not personally seen the original contract.) DLA also surely knew of Ceglia’s arrests on drug and fraud charges, which Gibson’s Snyder has been trumpeting for months.    

But did DLA know that Ceglia’s supposed e-mail exchanges with Zuckerberg aren’t on Harvard’s servers, even though 175 other e-mails between them are? Or that, according to Kroll, Ceglia has engaged in document forgery? After Thursday’s Facebook motion, OTC reached out to DLA partners Hall, Brownlie, Allcock, and Trippitelli, as well as former state AG Vacco, to ask more questions about the due diligence they conducted on Ceglia and his evidence before filing the amended complaint. None of the lawyers responded, but we received an e-mail from DLA’s public relations agency, Greentarget, on behalf of DLA and Lippes Mathias.    

“Mr. Ceglia welcomes the opportunity to expedite discovery in this case and disagrees with the opinions within the [Facebook] filing, which have been made by those who have not examined the actual contract at issue in this case or any of the other relevant evidence,” the statement says. “There will be no further comments at this time.”    

For what it’s worth, OTC is also rooting for expedited discovery. Can’t wait to see where this one goes.    

(Reporting by Alison Frankel) 

 


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