Facebook Sues Prestigious Law Firm for Fraud

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Summary: Facebook has sued several law firms and attorneys, claiming that they filed a fraudulent lawsuit against it.

According to the State Journal, Facebook has filed a lawsuit against several firms that represented a client who claimed he owned half of the online network and that he was owed billions of dollars in compensation from both Facebook and its CEO, Mark Zuckerberg.

  

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The plaintiff, Paul Ceglia, is now facing criminal charges related to the suit, which was dismissed in April of this year. On Monday, Facebook and Zuckerberg filed a lawsuit against world-renowned law firm DLA Piper and named several other law firms and lawyers in the legal documents. Facebook claims that the firms and attorneys conspired to file and prosecute a fraudulent lawsuit.

The original lawsuit, which Ceglia filed in 2010, claimed that he signed a 2003 software development contract with Zuckerberg. The contract allegedly delineated that Ceglia would be entitled to half-ownership of Facebook in return for $1,000 in startup cash for the then-new company. Attorneys for Facebook claimed that the individuals did have a contract, but that any references to Facebook were added in the lawsuit paperwork.

Now, Facebook claims in its lawsuit, filed in New York State Supreme Court, that the attorneys representing Ceglia “knew or should have known” that the lawsuit was fraudulent and “based on an implausible story and obviously forged documents.” Facebook seeks unspecified damages, as well as reimbursement of its legal expenses for having to defend itself against Ceglia’s claims.

Colin Stretch, general counsel for Facebook, commented, “We said from the beginning that Paul Ceglia’s claim was a fraud and that we would seek to hold those responsible accountable. DLA Piper and the other named law firms knew the case was based on forged documents yet they pursued it anyway, and they should be held to account.”

In response, DLA Piper claimed that the current suit is “baseless” and that it was filed to scare other attorneys away from suing Facebook. Peter Pantaleo, general counsel for DLA Piper, stated, “DLA Piper, which was not part of this case at its outset or its conclusion, was involved for 78 days. Facebook and Mr. Zuckerberg claim that they were damaged in those 78 days, yet a mere 10 months after DLA withdrew from the case and while the litigation was still pending, Facebook went to market with an initial public offering that valued the company at $100 billion.”

Ceglia’s criminal charges include fraud based upon allegations that he doctored and destroyed evidence to support his claims in the initial lawsuit. He has pleaded not guilty. In Facebook’s suit, it states Zuckerberg and Ceglia signed a two-page contract in April of 2003, which was “months before Zuckerberg had even conceived of the idea that became Facebook.” In addition, the suit claims, “That contract had nothing to do with Facebook or any other social networking service.” Facebook maintains that Ceglia and Zuckerberg had not been in contact since 2004.

Facebook, previously called Thefacebook.com, was created in Zuckerberg’s dorm room at Harvard in February 2004. At first, the network was exclusive to Harvard students. However, its growth exploded and it now boasts over 1.3 billion users. Facebook went public in 2012 and has a market value of roughly $200 billion.

Photo credit: pcworld.com