Facebook Lawsuit

Second Verse, Same as the First: Another Facebook Lawsuit

Not all lawsuits are created equal, unless you’re Facebook.  It seems that yet another litigant has come out of the woodwork claiming to own the lion’s share of social media cornerstone Facebook.  This time the claimant is Paul Ceglia, a businessman from upstate New York who alleges that he loaned $1,000 to thefacebook.com (the site’s original name) back in 2003, signing a contract that endowed him with 50% of the company.  Then he apparently forgot about it for seven years.  I don’t know about you, but if I had a claim to 50% of Facebook, I would have cashed in way sooner.  But wait, it gets better!

Ceglia also supposedly stipulated that he would get an additional 1% share in ownership for each day that Facebook went over its agreed-upon launch date (ultimately giving him 80% of the company).  The really amazing thing is that Ceglia claims he can back up his lawsuit with emails between himself and Mark Zuckerberg, in which the Facebook cofounder not only admits to having such a contract, but discusses details of the site’s launch.  Several emails have recently been released to the public, but there is simply no way to tell if they’re legitimate or not.  But wait, it gets better!

Paul Ceglia is a known felon.  He pleaded guilty to a felony drug charge in Texas years ago, and more recently he was arrested in New York (in 2009) and charged with defrauding customers of his current business, Allegany Pellets (which sells wood pellets), to the tune of over $200,000.  According to Fox News, the case was settled last year when Ceglia agreed to pay over $100,000 in restitution and $25,000 in penalties and fees.  So there’s that.  But wait, it gets better!  (I know, right?)

Sure this guy is a fraud, but does that mean he’s automatically guilty of trying to scam Facebook?  The jury is still out on this issue, but he must have some pretty compelling evidence in his corner because he was able to obtain the services of the prestigious law firm DLA Piper, which claims “there are more emails” than those that have made their way to the public eye.  Of course, Facebook’s legal representation (Gibson, Dunn & Crutcher) has cited this lawsuit as fraudulent and the emails as bogus, but there must be something there for DLA Piper to go up against the considerable forces backing Facebook co-founder Zuckerberg.  Or maybe they just smell a fat settlement.

In truth, it is unlikely that this case will ever see the inside of a courtroom.  Even a small settlement would be a big win for Ceglia, especially if his original investment of a thousand clams is legit.  And considering that Facebook has the funds to drag the proceedings out until the end of time, Ceglia and his lawyers are likely looking for little more than a pittance (say a few million).  Of course, if the emails are for real and they can somehow prove his claim, he stands to gain quite a bit more (like half ownership of the largest social networking site currently in operation).  Ceglia has definitely got the smoke, but does he have the smoking gun?

Shirley Simpson writes for Corboy &  Demetrio, a personal injury law firm based in Chicago, Illinois.  Corboy &  Demetrio is one of the nation’s premier practices.