Facebook’s suit against Ceglia lawyers thrown out on appeal

Facebook Inc.’s malicious-prosecution lawsuit against lawyers and firms that represented Paul Ceglia in his claim to own half the social media giant was thrown out on appeal.

Facebook and Chief Executive Officer Mark Zuckerberg in 2014 sued a group that included former New York Attorney General Dennis Vacco, New York-based Milberg LLP and DLA Piper LLP, one of the biggest law firms in the U.S., claiming they conspired with Ceglia to advance a fraudulent claim based on a phony contract.

A New York appeals court dismissed Facebook’s claims Tuesday, ruling it failed to show the lawyers didn’t have probable cause to pursue the suit.

“We are disappointed with this decision," Vanessa Chan, a spokeswoman for Menlo Park, California-based Facebook, said in a statement. "DLA Piper and the other named law firms possessed evidence proving the case was based on forged documents and that Paul Ceglia’s claim was a fraud, but chose to pursue it anyway. We believe they should be held accountable. We are evaluating our options for appeal.”

Ceglia, 42, was charged with fraud in 2012. A federal judge in Buffalo threw out his claim to half of Facebook, ruling he’d faked the 2003 contract and fabricated e-mails between himself and Zuckerberg. Ceglia claimed that Zuckerberg, then a Harvard University freshman, agreed to give him half of Facebook in exchange for a $2,000 investment.

Zuckerberg agreed in a contract to do coding for a website set up by Ceglia but the document made no mention of Facebook, which didn’t exist at the time, the judge said.

In March, Ceglia removed an electronic ankle bracelet that he was required to wear under his bail conditions and fled with his wife, two sons and the family dog. He remains a fugitive.

Paul Argentieri, who represented Ceglia from the start of the contract claim, isn’t covered by Tuesday’s decision. Argentieri has denied Facebook’s malicious-prosecution claims and sued the company in California for defamation. He’s seeking to take testimony from Zuckerberg, said Joseph Alioto, who represents Ceglia in the contract claim and Argentieri in the defamation suit.

"We’re confident that we are going to be able to show that the contract is valid," Alioto said in a phone interview.

Chan said Facebook will continue to pursue the malicious- prosecution case against Argentieri.

The case is Facebook Inc. v. DLA Piper LLP, 653183/2014, New York State Supreme Court, Appellate Division, First Department (Manhattan)