On Monday, October 20th Facebook filed charges against DLA Piper along with several other firms and attorneys that had represented Paul Ceglia in an earlier suit opposing Facebook. The October 20 lawsuit, filed in the New York Supreme Court, is based largely on facts pertaining to a 2010 action in which Ceglia sued Facebook.
In his 2010 case, Ceglia had claimed partial ownership of Facebook. The complaint justified the assertions by stating that in 2003 Facebook founder Mark Zuckerburg made a deal with Ceglia that granted him a fifty percent share of Facebook. Facebook responded by saying that no such promise had ever been made. In its most recent claim Facebook posits that Zuckerburg’s only contact with Ceglia was in “a two-page contract” that had “nothing to do with Facebook.” The federal court agreed by dismissing the case after holding that Ceglia’s case was most likely fraudulent. In doing so the court allowed the criminal action against Ceglia to proceed.
The federal prosecutors responsible for the case against Ceglia found his claims and the evidence supporting them to be entirely false, resulting in Ceglia’s 2012 arrest for a scheme to defraud Facebook for billions. Facebook’s civil suit follows the pending criminal case, which maintains that Ceglia was guilty of fraud in his action against Facebook. The social media giant, who had long maintained that Ceglia’s claims were entirely baseless, then turned its attention to the lawyers that managed to keep Ceglia’s case going for nearly two years. Facebook remained incredulous that Ceglia’s attorneys could have been ignorant of his fraud in light of the breadth and severity of the fabrication.
Accordingly, Facebook’s October 20th complaint contends that, during the course of Ceglia’s action, his lawyers continued to “pursue the case” against Facebook for the sake of profit. As such, Facebook is seeking damages from the defendants for malicious prosecution. Facebook corroborates its claim by arguing that Ceglia’s lawyers “knew or should have known that the lawsuit was a fraud” since “it was brought by a convicted felon with a history of fraudulent scams, and it was based on an implausible story and obviously forged documents.” Finally, Facebook insists that the “Defendant’s own co-counsel discovered the fraud, informed the other lawyers, and withdrew.”
Facebook’s last argument against the defendants references the firm of Kasowitz Benson Friedman & Torres, which withdrew after telling its co-counsels that it believed Ceglia’s claims were fraudulent. Moreover, Facebook holds that Kasowitz Benson intended to inform the court of the fraud before being stopped by another of Ceglia’s attorneys. Although Ceglia’s other lawyers also left not long after Kasowitz Benson, they too neglected to disclose the fraud. Consequently, Facebook needed to continue expending resources to defend itself from Ceglia’s allegations until the court dismissed the case.
DLA Piper countered Facebook’s contentions by claiming that they were without merit. It further stated that it had only been involved in litigation lasting 78 days and that Facebook’s suit was part of a strategy to intimidate litigators considering legal action against Facebook. Other defendants echoed the sentiments of DLA Piper, saying that they had conducted the case in an entirely ethical manner and Facebook’s claims were merely an intimidation tactic to deter future litigation.
When asked why they had filed the suit so long after Ceglia’s claims had been thoroughly disproved, Facebook claimed it was a matter of principle. They further insisted that DLA Piper and other targets of the suit had knowingly perpetuated fraud and should be held responsible for their actions.
Facebook Aims to Retaliate Against DLA Piper and Other Firms (PDF)