Updated | Added comment from Dennis C. Vacco, a lawyer who was named as a defendant.
The last thing we do, let’s sue all the lawyers.
That, in essence, is what Facebook’s chief executive and principal founder, Mark Zuckerberg, has decided to do in the dormant case of Paul Ceglia, an upstate New York entrepreneur who claimed in 2010 that Mr. Zuckerberg had struck an agreement with him in Facebook’s early days to give him a substantial stake in the company. Mr. Ceglia’s lawsuit seeking a multibillion-dollar stake in Facebook was dismissed by a federal judge amid substantial evidence that he had fabricated the documents purportedly supporting his claim, and prosecutors filed criminal fraud charges against him in 2012 that were still pending.
Facebook had insisted that the evidence was bogus and was suing many of Mr. Ceglia’s lawyers, including DLA Piper, one of the world’s largest law firms, saying that they knew his claims were false but pursued the case in hopes of extracting a hefty settlement from Facebook.
In its suit, filed Monday in New York State Supreme Court in Manhattan, Facebook and Mr. Zuckerberg said that Mr. Ceglia’s multifirm legal team continued to press the case even after one of the law firms discovered evidence on Mr. Ceglia’s computer that indicated his claims were false and informed all of his other lawyers. The social networking company and Mr. Zuckerberg are seeking unspecified damages in the case.
“The lawyers representing Ceglia knew or should have known that the lawsuit was a fraud — 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. In fact, Defendants’ own co-counsel discovered the fraud, informed the other lawyers, and withdrew. Despite all this, Defendants vigorously pursued the case in state and federal courts and in the media,” Facebook said in its suit.
The law firm that discovered the fraud, Kasowitz, Benson, Torres & Friedman, initially planned to tell the court of the fraud, Facebook said, but one of Mr. Ceglia’s other firms persuaded it to keep silent on the reasons for its withdrawal.
Eventually, the other firms withdrew but never disclosed why. Facebook said this forced it to continue defending against Mr. Ceglia’s claims until this March, when a federal court dismissed Mr. Ceglia’s case against Facebook and allowed the criminal prosecution against him to proceed. Mr. Ceglia’s criminal trial is scheduled for May, and he has appealed the dismissal of his claims.
DLA Piper quickly responded to Facebook’s lawsuit, calling the claims meritless and saying that the law firm was involved in the litigation for just 78 days. “This is an entirely baseless lawsuit that has been filed as a tactic to intimidate lawyers from bringing litigation against Facebook,” the firm’s general counsel, Peter S. Pantaleo, said in a statement.
In addition to DLA Piper and lawyers at the firm, Facebook is seeking damages from Paul Argentieri, Mr. Ceglia’s original lawyer, and lawyers at Lippes Mathias Wexler Friedman and Milberg L.L.P. One of the lawyers named as a defendant is Dennis C. Vacco, a former New York attorney general.
In a statement, Mr. Vacco defended his conduct and that of the Lippes firm. “Throughout our involvement in the matter set forth in the complaint, our attorneys operated completely within the rule of law and at the highest ethical standards at all times,” he said. “Any claim of malicious prosecution on the part of the plaintiff is not only false, but is, in and of itself, a malicious prosecution directed, I believe, at the legal community as a whole, to discourage them from taking on Facebook in any future legal matters.”
Why did Facebook and Mr. Zuckerberg file this case when the underlying claims by Mr. Ceglia have been thoroughly discredited and the whole matter has faded into a distant memory? The company said it’s a matter of principle.
“We said from the beginning that Paul Ceglia’s claim was a fraud and that we would seek to hold those responsible accountable,” Facebook’s general counsel, Colin Stretch, said in a statement. “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.”