Facebook Includes Updates On Lawsuits In SEC Filing

By David Cohen 

Facebook provided an update on ongoing legal proceedings in the Form 10-Q it filed with the Securities and Exchange Commission Thursday, including the lawsuit filed against the company and Co-Founder and CEO Mark Zuckerberg by Paul Ceglia, and various actions related to its initial public offering.

The social network had nothing new to report on the Ceglia case, saying in its quarterly update to the SEC:

Paul D. Ceglia filed suit against us and Mark Zuckerberg on or about June 30, 2010, in the Supreme Court of the State of New York for the County of Allegheny, claiming substantial ownership of our company based on a purported contract between Mr. Ceglia and Mr. Zuckerberg, allegedly entered into in April 2003. We removed the case to the U.S. District Court for the Western District of New York, where the case is now pending.

In his first amended complaint, filed on April 11, 2011, Mr. Ceglia revised his claims to include an alleged partnership with Mr. Zuckerberg, he revised his claims for relief to seek a substantial share of Mr. Zuckerberg’s ownership in us, and he included quotations from supposed emails that he claims to have exchanged with Mr. Zuckerberg in 2003 and 2004.

On March 26, 2012, we filed a motion to dismiss Mr. Ceglia’s complaint and a motion for judgment on the pleadings. On March 26, 2013, the magistrate judge overseeing the matter issued a report recommending that the court grant our motion to dismiss and that it deny as moot our motion for judgment on the pleadings.

We continue to believe that Mr. Ceglia is attempting to perpetrate a fraud on the court, and we intend to continue to defend the case vigorously.

As for the host of IPO-related lawsuits, the company wrote in its SEC filing:

Beginning on May 22, 2012, multiple putative class actions, derivative actions, and individual actions were filed in state and federal courts in the U.S. and in other jurisdictions against us, our directors, and/or certain of our officers alleging violation of securities laws or breach of fiduciary duties in connection with our IPO and seeking unspecified damages. We believe these lawsuits are without merit, and we intend to continue to vigorously defend them.

On Oct. 4, 2012, on our motion, the vast majority of the cases in the U.S., along with multiple cases filed against Nasdaq OMX Group and Nasdaq (collectively referred to herein as Nasdaq), alleging technical and other trading-related errors by Nasdaq in connection with our IPO, were ordered centralized for coordinated or consolidated pre-trial proceedings in the U.S. District Court for the Southern District of New York.

On Feb. 13, 2013, the court granted our motion to dismiss four derivative actions against our directors and certain of our officers with leave to amend.

In September 2013, the court is scheduled to hear argument on our motion to dismiss the consolidated securities class action, as well as our motion to dismiss, and the plaintiffs’ motion to remand to state court, certain other derivative actions

In addition, the events surrounding our IPO have become the subject of various government inquiries, and we are cooperating with those inquiries.

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