Hearsay Winklevoss Twins Prevail on Summary Judgment in Facebook Suit

MASSACHUSETTS www.masslawyersweekly.com January 19, 2015 Hearsay Winklevoss twins prevail on summary judgment in Facebook suit Internet entrepreneurs Cameron and sion on the defendants’ motion to dismiss, change in ownership, become a claim against Tyler Winklevoss have won a motion for however, Judge Peter M. Lauriat notes that its former shareholders.” summary judgment in a multi-million-dol - “because ConnectU is now wholly owned by Billings’ reversal of Lauriat on that point lar Facebook-related lawsuit resulting from Facebook, Chang cannot recover from Con - knocked out Chang’s “option claim” against a soured collaboration. nectU. Rather, he would have to recover from the Winklevoss defendants. Billings also dis - To reach the decision, Superior Court the Winklevoss defendants a percentage of missed Chang’s “partnership claim,” largely Judge Thomas P. Billings created a small rift the settlement proceeds in proportion to his on the basis of an online chat between of his own with his colleagues on the Busi - interest in ConnectU, as determined by a fact Chang and Tyler Winklevoss. ness Litigation Session bench. finder.” “What comes through most clearly in the Just as the Winklevoss twins famously At a hearing in February 2013, Judge May 25[, 2005] chat is both sides’ eagerness to claim that Facebook founder Mark Zucker - Mitchell H. Kaplan encouraged Chang to extract themselves from one another and berg ripped off their ConnectU social net - dismiss ConnectU from the suit based on their shared business venture,” Billings writes. work, plaintiff Wayne Chang alleges that the Lauriat’s finding. “While they agreed on little else (who was at Winklevosses cheated him out of a stake in “It would appear that the proceeds — that the fault, who owed what to whom, etc.), they ConnectU — and a $65 million settlement only asset of ConnectU were the proceeds of the clearly agreed that the venture was over, and the twins ultimately reached with Zucker - settlement,” Kaplan said at the hearing, accord - their conduct thereafter confirmed it. Given berg and Facebook. ing to a transcript. “And this lawsuit is about the informality with which this partnership Chang is an accomplished entrepreneur, that, and ConnectU doesn’t assert any right in - (if it was one) was administered and account - too, most famous for founding Crashlytics, dependently to those proceeds; correct?” ed for, it should come as no surprise that both which was acquired by Twitter in 2013 for Chang subsequently dismissed ConnectU sides decided, eventually, simply to walk away more than $100 million. His 2009 lawsuit from the suit voluntarily. At the summary — at least, until the Facebook settlement.” stems from a plan five years earlier to inte - judgment phase, Chang argued that Lauriat’s Chang’s lawyer, Alan D. Rose Jr. of grate the Winklevosses’ ConnectU with finding that any recovery would have to come Boston’s Rose, Chinitz & Rose , says “we re - Chang’s file-sharing service i2hub — a plan from the Winklevoss defendants was “law of spectfully disagree with the decision and that was aborted the following year. the case.” Billings, however, accepted the de - will appeal.” The twins’ father, Howard Winklevoss, and fendants’ characterization of the finding as Winklevoss lawyer Tyler Meade of Cali - ConnectU co-founder Divya Narendra also mere “footnoted dictum.” fornia’s Meade & Schrag declines to com - are named as defendants in the suit. Chang al - “Respectfully, I disagree with my col - ment. leges that he formed a partnership with the league, the motion judge, on this point,” The defendants opened their memorandum defendants and is entitled to 50 percent of the Billings writes in the Dec. 24 order granting in support of their motion for summary judg - Facebook settlement. Alternatively, Chang as - the Winklevosses summary judgment. “… ment by stating that it was “based on the prin - serts that he is at least entitled to 15 percent of Under the law of Delaware, where ConnectU ciple … that a party may not disavow a part - the proceeds based on a November 2004 LLC was organized, members of an LLC are nership when the changes of profit seem memorandum of understanding that gave him not obligated personally on the debts of the remote and then, four and a half years later, the option to exercise a 15 percent stake in LLC ‘solely by reason of being a member or take the opposition position after his former ConnectU if conditions were met. acting as manager of the limited liability associates have obtained a recovery exclusively ConnectU itself also was originally named company.’ … It follows that a contract claim from their own efforts.” a defendant in the suit. In an April 2011 deci - against a corporation does not, upon a — B RANDON GEE Reprinted with permission from The Dolan Co., 10 Milk Street, Boston, MA 02108. (800) 444-5297 © 2015 #02032vw.

Load more