The twins Cameron and Tyler Winklevoss, along with their business partner Divya Narendra, are appealing a recent court ruling that says they have to abide by a previous settlement reached with Facebook.
The Winklevoss brothers and Narendra had accused Mark Zuckerberg, Facebook's CEO, of stealing their idea for a social networking site. They eventually settled with Zuckerberg and Facebook for a total of $65 million in cash and stock in 2008. The value of Facebook has gone up since then, and now the company is estimated to be worth $50 billion.
The Winklevosses appealed, and on April 11 a three-judge panel of the Ninth Circuit Court of Appeals said they had to abide by the settlement. In a scathing opinion the court Chief Judge Alex Kozinski said, The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace, he wrote in the opinion handed down by the court. With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity. At some point, litigation must come to an end. That point has now been reached.
This time the Winklevosses are appealing to the full 11-member Ninth Circuit. In the appeal, the Winklevoss brothers say that Facebook committed securities fraud, and that an agreement reached fraudulently can't be enforced. A settlement agreement, the suit says, doesn't preclude fraud.
In the appeal, Winklevoss Attorney Jerome Falk says the fraud was that Facebook had received a value of about $8.88 per share from experts at the same time the company was negotiating with the Winklevoss assuming a value of $35.90 per share. Falk says brothers would have challenged the valuation had they known of the expert's assessment.