On Monday a San Francisco federal appeals court ruled that Tyler and Cameron Winklevoss, former Harvard University schoolmates of Facebook founder Mark Zuckerberg, couldn’t undo their 2008 settlement over creation of the social networking site.
The 9th U.S. Circuit Court of Appeals said the twins were savvy enough to understand what they were agreeing to when they signed their agreement with Zuckerberg. The deal called for a $20 million cash payment and a partial ownership of Facebook. A third classmate, Divya Narendra, was also part of the 2008 settlement with the twins but did not pursue the second lawsuit seeking to undo the agreement.
Monday’s ruling upholds a lower court decision enforcing the settlement during the six years of litigation that grew so contentious that the dispute was dramatized in the Oscar-nominated film, “The Social Network. “The settlement is now worth more than $160 million because of Facebook’s increased valuation.
The twins alleged that an investment by Microsoft misled them into believing that Facebook was worth only $35.90 a share. But they argued that the company later valued the company at $8.88 for tax purposes. The twins argue they would have demanded more stock in the company based on the lower valuation. Lawyers for the Winklevoss twins said they are reviewing the decision and deciding on their next step.
Zuckerberg himself is currently being sued by Paul Ceglia, a New York City-based businessman who claims that he owns half of Facebook after having paid Zuckerberg $2,000 to fund the site.
Ceglia is offering up e-mails in pursuit of he says is rightfully his after agreements and understandings with Zuckerberg. The complaint now includes purported snippets of e-mails showing Zuckerberg using portions of the code he was paid to create for Ceglia’s venture “StreetFax” as part of what was then called “The Facebook.” After Ceglia relented on some contractual penalties that put his ownership at 80 percent, Zuckerberg finally launched the site on February 4, 2004.
Facebook says the suit is bogus, and that Ceglia’s e-mails are in fact fake. In fact, when Ceglia originally filed the suit in July 2010, Facebook also dismissed it out of hand. But now Ceglia, who was indicted in 2009 for allegedly defrauding people who prepaid him for heating supplies, is back and his suit also alleges that Zuckerberg hacked into and sabotaged Ceglia’s StreetFax site, as revenge for money he felt he was owed. Zuckerberg also allegedly hid from Ceglia that Facebook was taking off and that he was headed to Silicon Valley for the summer to work full time on Facebook.
Ceglia’s suit does not however explain why it took him so long to file suit, years after the statute of limitations expired. He has claimed that he hadn’t heard of Facebook’s success and only found the contracts when going through his papers.