Answer this Questions.
1. Should the Winklevosses have had their claims of fraud decided by the court?
2. Did anyone act unethically in the case?
CASE 9.1 FEDERAL COURT CASE Contract Facebook, Inc. v. Winklevoss 640 F.3d 1034, 2011 U.S. App. Lexis 7430 (2011) United States Court of Appeals for the Ninth Circuit "At some point, litigation must come to an end. That agreement, the Winklevosses agreed to give up that point has now been reached." claims in exchange for cash and Facebook stock. The -Kozinski, Circuit Judge Winklevosses were to receive $20 million in cash and $45 million in Facebook stock, valued at $36 per share. Facts The parties stipulated that the settlement agree- Mark Zuckerberg, Cameron Winklevoss, Tyler ment was confidential and binding and "may be suh Winklevoss, and Divya Narendra were schoolmates mitted into evidence to enforce it." The agreement at Harvard University. The Winklevoss twins, along granted all parties mutual releases. The agreement with Narendra, started a company called ConnectU. stated that the Winklevosses represented and war- They alleged that Zuckerberg stole their idea and cre- ranted that "they have no further right to assert ated Facebook, and they filed a lawsuit against Face- against Facebook" and have "no further claims book and Zuckerberg. The court ordered the parties against Facebook and its related parties." Facebook to mediate their dispute. After a day of negotiations, became an extremely successful social networking the parties signed a handwritten, one-and-one-third- site, with its value exceeding over $30 billion at the page "Term Sheet & Settlement Agreement." In the time the next legal dispute arose.CHAPTER 9 Formation and Requirements of Contracts 193 Subsequently, in a lawsuit, the Winklevosses adversaries in a roughly equivalent bargain- brought claims against Facebook and Zuckerberg, ing position and with ready access to coun- alleging that Facebook and Zuckerberg had engaged sel sign an agreement to "establish a general in fraud at the time of forming the settlement agree- peace, " we enforce the clear terms of the ment. The Winklevosses alleged that Facebook and agreement. Zuckerberg had misled them into believing that Face- There are also very important policies that book shares were worth $36 per share at the time favor giving effect to agreements that put an end of settlement, when in fact an internal Facebook to the expensive and disruptive process of liti- document valued the stock at $8.88 per share for tax gation. For whatever reason, the Winklevosses code purposes. The Winklevosses sought to rescind now want to back out. Like the district court, the settlement agreement. The U.S. district court we see no basis for allowing them to do so. At enforced the settlement agreement. The Winkle- some point, litigation must come to an end. vosses appealed. That point has now been reached. Issue Decision Is the settlement agreement enforceable? The U.S. court of appeals upheld the decision of the U.S. district court that enforced the settlement Language of the Court agreement. The Winklevosses are sophisticated parties who were locked in a contentious struggle Critical Legal Thinking Questions over ownership rights in one of the world's Should the Winklevosses have had their claims of fraud fastest-growing companies. They brought decided by the court? Did anyone act unethically in this half-a-dozen lawyers to the mediation. When case
