September 29, 2020

Aereo as Bargaining Chip in Broadcast Fees Battle

The contract dispute between CBS and Time Warner Cable is the first to unfold in the New York metropolitan area since Aereo came to market there last year. Last week, the companies warned that if the dispute was not resolved by Wednesday, CBS could be taken away from three million of Time Warner Cable’s 12 million subscribers.

Enter Aereo. The service, backed by Barry Diller and a number of other venture capitalists, uses giant arrays of antennas to pick up freely available television signals and stream them to the phones, computers and other screens of paying subscribers. By relying on the antennas, Aereo does not pay the kinds of retransmission fees that distributors like Time Warner Cable pay to broadcasters like CBS — an approach that Aereo says is legal, but that the broadcasters say is not.

Analysts have theorized that distributors could exploit Aereo, or a service like it, to avoid paying increasingly steep retransmission fees. Such fees are at the heart of the current fight with CBS.

While Time Warner Cable does not seem ready or willing to deploy Aereo-like technology, a spokeswoman, Maureen Huff, said Sunday that it would recommend Aereo to its New York subscribers if CBS was blacked out. The distributor may also underline the fact that Aereo, which normally costs $8 a month, offers a 30-day free trial. (Ms. Huff also pointed out that many CBS shows are available online on a delayed basis, and that “all of CBS’s broadcast TV programming is available free over-the-air,” so subscribers can use antennas.)

Time Warner Cable is treading carefully because Aereo is the subject of several lawsuits filed by major media companies. In this case, its invocation of Aereo might be particularly corrosive because CBS has helped lead the charge against Aereo in the courts.

To date, the service has been upheld by the Court of Appeals for the Second Circuit in New York; last week, in its third victory there, the appeals court declined to hear the broadcasters’ appeal.

Emboldened by the rulings, Aereo, which is so small that it has not shared any New York subscriber data, recently expanded to Boston and Atlanta; its next market is Chicago, it says, with many more to come. But it has not announced any plans in the West Coast markets covered by the Ninth Circuit Court, where a service similar to Aereo was rejected in December. Given the uncertain state of play, Aereo is of limited use to Time Warner Cable currently; along with New York, the fight with CBS affects subscribers in Los Angeles, Dallas and several smaller markets.

David Bank, a media analyst for RBC Capital Markets, said he would not be shocked if the distributor somehow used Aereo to skirt the blackout, or encouraged subscribers to do so. But he wrote in an e-mail message: “I think it would be more of ‘negotiating tactic’ than a real business solution.”

A CBS spokesman declined to comment. In a statement last week about the potential blackout, the company, whose broadcast network is the highest-rated network in the United States, said it “remains committed to working towards a mutually agreeable contract.”

“This conflict just further highlights the importance of having alternatives in the marketplace,” Chet Kanojia, the chief of Aereo, said in a statement. “It’s also a great reminder that consumers have the right to watch over-the-air television using an antenna. Whether they use Aereo or some other type of antenna, it’s their choice. That’s the beauty of having alternatives.”

Article source: http://www.nytimes.com/2013/07/22/business/media/with-prospect-of-cbs-blackout-time-warner-cable-to-suggest-aereo-as-alternative.html?partner=rss&emc=rss

Fair Game: Clawbacks Without Claws in a Sarbanes-Oxley Tool

Under the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission was encouraged to hit executives where it hurts — in the wallet — if they certified financial results that turned out to be, in a word, bogus.

SarbOx was supposed to keep managers honest. They would have to hand back incentive pay like bonuses, even if they didn’t fudge the accounts themselves.

That, anyway, was the idea. The record suggests a bark decidedly worse than its bite. The S.E.C. brought its first case under Section 304 of SarbOx in 2007. Since then, it has filed cases demanding that only 31 executives at only 20 companies return some pay.

In 2007 and 2008, most of the cases involved shenanigans with stock options and produced some big recoveries. In the wake of the financial crisis, the dollars recouped have amounted to an asterisk. Since the beginning of 2009, the S.E.C. has pursued 18 executives at 10 companies. So far, it has recovered a total of $12.2 million from nine former executives at five. The other cases are pending.

“It seems like a dormant enforcement tool,” Jack T. Ciesielski, president of R. G. Associates and editor of The Analyst’s Accounting Observer, says of the SarbOx provision. “It was supposed to be a deterrent, but it’s only really a deterrent if they use it.”

How assiduously the S.E.C. enforces this aspect of Sarbanes-Oxley is important. Only the S.E.C. can bring cases under Section 304. Companies can’t. Nor, it appears, can shareholders. In 2009, the Court of Appeals for the Ninth Circuit ruled that there was no private cause of action for violations of Section 304.

Half the companies pursued by the S.E.C. during the past three years have been small and relatively obscure.

For example, the commission sued executives at SpongeTech Delivery Systems (2008 revenue: $5.6 million), contending that the company had booked $4.6 million in phony sales that year. NutraCea, a maker of dietary supplements with 2008 sales of $35 million, was sued along with Bradley D. Edson, its former chief executive, over what the S.E.C. called its recording of $2.6 million in false revenue. An executive at Isilon Systems, a data storage company, was pursued because, the S.E.C. maintained, the company had inflated sales by $4.8 million during 2007.

No money has been recovered in the SpongeTech or Isilon matters, which are still pending. Mr. Edson, who could not be reached for comment, returned his 2008 bonus of $350,000.

In all cases when executives have returned money, they have neither admitted nor denied allegations.

The S.E.C. typically recovers more money from executives at bigger companies. But top executives are rarely compelled to return all their incentive pay.

In a case brought last year against Navistar, for example, the S.E.C. contended that the company had overstated its income by $137 million from 2001 through 2005. Daniel C. Ustian, who is Navistar’s chief executive and who was not charged with wrongdoing, returned common stock worth $1.32 million. He had received $2.2 million in incentive pay and restricted stock during the time that the S.E.C. says Navistar inflated its accounting. A company spokeswoman said Mr. Ustian would not comment.

Robert C. Lannert, Navistar’s former chief financial officer, who also was not charged, gave back stock worth $1.05 million. His incentive pay consisted of only $828,555 during the years that the S.E.C. said the company misstated its results. He didn’t return a phone call seeking comment.  

ANOTHER case brought by the S.E.C. last year involved Diebold, a maker of automated teller machines. Contending that Diebold had overstated its results by $127 million between 2002 and 2007, the commission sued to recover money from three former executives. Walden W. O’Dell, who is a former C.E.O. and who was not charged, repaid $470,000 in cash, and 30,000 Diebold shares and 85,000 stock options. During the years that the S.E.C. alleged that results were overstated, he received bonuses totaling $1.9 million, in addition to restricted stock worth $261,000 and 295,000 stock options. Mr. O’Dell didn’t return a message seeking comment. The cases against the other Diebold executives are pending. A company spokesman said it had settled with regulators and declined to comment further.

Article source: http://feeds.nytimes.com/click.phdo?i=00b6bdbd32a8fbb9500da82b3d536448

Court Sides With Trustee Over Madoff Payouts

A federal appeals court has approved the method being used to calculate the losses incurred by the victims of Bernard L. Madoff’s global Ponzi scheme, saying the approach used by the trustee in the case is “legally sound in light of the circumstances of this case and the relevant statutory language.”

The ruling, by the United States Court of Appeals for the Second Circuit, is a significant victory for Irving H. Picard, the court-appointed trustee who is liquidating the Madoff firm in bankruptcy court in Manhattan. In the face of vocal opposition in the courts and among some in Congress, Mr. Picard had calculated victims’ losses under the “cash in, cash out” method, which relied on the difference between the cash invested and the cash withdrawn by investors, without giving any weight to the fictional profits shown on the victims’ account statements over the years.

The favorable ruling in the closely watched dispute probably will advance the day when claims for the eligible victims in the case can be paid from the $10 billion pool of assets already collected by Mr. Picard. Those payments had been held in abeyance by the legal dispute over Mr. Picard’s calculation method.

But the decision is a setback for the thousands of so-called “net winners” in the vast Madoff fraud, investors whose withdrawals from the Ponzi scheme over the years matched or exceeded the amount they originally invested.

Lawyers for those investors had urged the courts to throw out Mr. Picard’s method and order him to rely instead on the final account balances shown on the their statements in the weeks before the fraud collapsed with Mr. Madoff’s arrest on Dec. 11, 2008. Some members of Congress had supported their fight, proposing legislation that would take the dispute out of the courts by changing the laws governing Wall Street bankruptcies and Ponzi scheme loss calculations.

The ruling supports the trustee’s efforts to recover fictional profits that investors withdrew from the sceme before its collapse through so-called “clawback” lawsuits.

Amanda Remus, a spokeswoman for Mr. Picard, released a statement saying the decision “is an important step forward for customers with allowed claims. We have maintained all along that our definition of net equity — which is supported by longstanding precedents in bankruptcy and securities laws — is the fairest approach to the determination of claims, and we hope that the Court’s decision can be the final word on this issue.”

  One of the lawyers opposing Mr. Picard’s approach to calculating losses, Helen Davis Chaitman, predicted the appeals court ruling “will destroy investor confidence in the capital markets” because it does not require the Securities Investors Protection Corporation, the industry-supported organization that provides a limited safety net for customers of failed brokerage firms, to honor the Madoff investors’ final account statements.  

“The message to every American who invests in the stock market is clear: invest at your own risk and assume that S.I.P.C. insurance does not exist,” Ms. Chaitman said.

  An investor advocacy group initially formed by those opposing Mr. Picard’s loss calculation formula also criticized the ruling. Ron Stein, the president of the Network for Investor Action and Protection, said the ruling “is another blow to small investors who merely relied on the information their broker gave them.” Mr. Stein continued: “The court’s regrettable decision underscores the need for Congress to reinforce securities laws that were intended to protect the small investors harmed by this decision and the actions of the S.I.P.C. trustee.”

Article source: http://feeds.nytimes.com/click.phdo?i=c6976c4ae6a5a92bd62b863b8300d6be

DealBook: Wall Street Banks Lose Ruling on Research

Jin Lee/Bloomberg News

A federal appeals court has ruled that a breaking news Web site was not misappropriating stock research when it published headlines about upgrades and downgrades, dealing a blow to Wall Street banks and a victory to the investing public.

A panel of judges on the United States Court of Appeals for the Second Circuit in Manhattan ruled that Barclays, Morgan Stanley and Bank of America could not control who broke news regarding its stock research.

The decision, issued on Monday, reverses a controversial lower court decision last year that required theflyonthewall.com Web site to wait until 10 a.m. to publish news about Wall Street research that was issued before the 9:30 a.m. opening bell. The ruling effectively gave the banks’ clients a half-hour edge in seeing market-moving research before everyone else.

“A firm’s ability to make news — by issuing a recommendation that is likely to affect the market price of a security — does not give rise to a right for it to control who breaks that news and how,” wrote Judge Robert D. Sack in the court’s 71-page opinion.

The banks had argued that publishing headlines about a bank’s upgrade or downgrade of a company was tantamount to stealing intellectual property.

U.S. Court of Appeals for the Second Circuit ruling in Banks v. The Fly on the Wall

Article source: http://feeds.nytimes.com/click.phdo?i=9690ebe170156835eed3c52078f67387

DealBook: Madoff Victim Seeks Divorce Do-Over

After 33 years of marriage, Steven Simkin and Laura Blank divorced in 2006. They agreed to split their considerable wealth equally. She got the apartment on the Upper East Side; he got the house in Scarsdale, N.Y.

Afterward, they spoke infrequently, mostly concerning their two grown sons.

More than two years later, Ms. Blank received a voicemail message that stunned her: Mr. Simkin wanted to revise their settlement. She refused, and he sued.

While divorce agreements are generally ironclad and rarely rescinded, this challenge has now reached New York’s highest court. Deeply divided appellate justices requested what is considered an unusual review of settled law involving contracts.

What made Mr. Simkin’s call for a do-over even remotely possible has its roots in Bernard L. Madoff’s Ponzi scheme.

When the couple split their assets evenly, the largest chunk of money was invested with Mr. Madoff. Mr. Simkin kept much of his funds in the Madoff account, which was held in his name. Ms. Blank, who said she had no interest in investing with Mr. Madoff, received her settlement proceeds in cash.

Shortly after Mr. Madoff admitted wrongdoing in December 2008, Mr. Simkin, a lawyer at one of the country’s most powerful law firms, Paul, Weiss, Rifkind, Wharton Garrison, filed court papers to drastically alter the terms of his divorce settlement. Ms. Blank, he argued in the lawsuit, should be required to turn over millions of dollars that she had received in their settlement to make up for the substantial losses he had sustained in the fraud.

The Simkin-Blank dispute has riveted the state’s matrimonial bar, and splintered opinions among the six judges who have already weighed in on the case.

Some lawyers are predicting that if the Court of Appeals allows Mr. Simkin to try to revise the agreement, the ruling could affect not only divorce settlements but also other contracts.

“The decision could open the floodgates for people who want to challenge agreements after they go sour,” said Peter Bienstock, a divorce lawyer not involved in the case. “Deals are done every single day based on assumptions about what things are worth. If the court allows this lawsuit to go forward, how can we be certain that deals will hold up?”

Some lawyers also say that if judges allow this agreement to be rescinded, it could lead to more Madoff-related suits by destabilizing all types of contracts struck with the fraud victims. The case, which is expected to be decided later this year, has spawned at least one copycat action.

In January, a Madoff victim in Middlesex County, Mass., filed a similar complaint against his ex-wife to revise their separation agreement. A family court judge dismissed the lawsuit earlier this month, and the plaintiff’s lawyer is now weighing an appeal.

A ruling in the Blank-Simkin case would only have a direct effect on New York’s laws, but a decision by the influential court could influence how judges interpret laws in other states.

Mr. Simkin’s suit rests on the doctrine of “mutual mistake,” a well-established principle that allows for the cancellation of contracts, including divorce agreements, when both parties are innocently mistaken about an essential term. In a famous example, if a violinist sells another violinist what they believe to be a Stradivarius, and it turns out to be a cheap knockoff, they can void the contract.

In this case, Mr. Simkin, chairman of the real estate department at Paul Weiss, and Ms. Blank, a labor lawyer for the City University of New York, believed at the time of their divorce that $5.4 million of their $13.2 million in assets was in a Madoff account. To divvy up things, Mr. Simkin withdrew some money from his Madoff account and put it toward a $6.6 million cash payment to Ms. Blank. He continued to invest with Mr. Madoff.

But once the Madoff empire collapsed, Mr. Simkin began arguing that he and Ms. Blank were mistaken about the existence of the account. “There was in fact no account and no securities or other assets,” wrote Mr. Simkin’s lawyers in a recent filing. “There was only a Ponzi scheme of unprecedented size and duration.”

Richard Emery, a lawyer for Ms. Blank, counters that Mr. Simkin did have an account with Mr. Madoff. Any mistake, he contends, involved the account’s future value — not its existence. Under the law, an error about an account’s future value would not justify rewriting the agreement.

“Just like other Madoff investors, he was able to redeem his money until the scheme collapsed precisely because he had an account there,” Mr. Emery said. “To argue that he didn’t have a Madoff account is nothing more than a semantic trick.”

Last year, a trial judge dismissed Mr. Simkin’s suit. But in January, a sharply divided New York appellate court, in a 3-to-2 decision, ruled that Mr. Simkin could sue to revise the deal because of the fraud, citing their “mutual mistake” about the existence of the Madoff account.

In her dissent, Justice Karla Moskowitz sharply criticized the majority opinion, writing that it “undermines decades of established precedent favoring finality in divorce cases.”

She said the ruling could bring “chaos for not only for the court system but for litigants as well, who deserve finality and to move on.” Ms. Blank, the judge wrote, cannot be responsible for Mr. Simkin’s decision to invest with Mr. Madoff for two and a half years after their divorce.

“Just as she would not have benefited from any increase in the value of the account, she should not have to bear the burden of its loss,” she wrote. “Steven received exactly what he bargained for. He alone took on the risk that he might not be able to recoup his investment.”

Mr. Simkin’s lawyers — his colleagues at Paul Weiss — described their partner in court papers as “gravely damaged” and suffering “extreme hardship” as a result of the Madoff fraud.

The annual profits per partner at Paul Weiss are about $3 million, according to The American Lawyer magazine. Last October, Mr. Simkin sold his Scarsdale home for $5.7 million and bought another in nearby Mamaroneck for $4.1 million, according to state real estate records. Paul Weiss, a law firm renowned for its litigation department, is representing Mr. Simkin free of charge.

Mr. Simkin and his lawyers declined to comment.

The legal community is divided on the case. “On one hand, the contract law principle of mutual mistake makes a strong case to cancel this divorce agreement,” said Lawrence A. Cunningham, a law professor at George Washington University who has written about the dispute. “On the other, judges are reluctant to rescind these contracts because there is a strong interest in maintaining the finality of divorce. It’s a close call.”

Ms. Blank, who also declined to comment, plans to fight her former husband’s lawsuit if the court does not dismiss the case, said Mr. Emery, her lawyer.

“The finality of divorce is important for financial reasons and legal reasons, but it’s also important for emotional reasons,” he said. “Five years ago Laura thought she had moved on with her life, but it’s now been put on hold.”

Article source: http://feeds.nytimes.com/click.phdo?i=8928d2d59582cb78d416f31634416cff

N.F.L. in Limbo as Owners Try to Preserve Lockout

If the stay is not granted by Nelson or the United States Court of Appeals for the Eighth Circuit, the N.F.L. will have to put rules in place that would allow players to return to work and free agency to open within days.

If a stay is granted, the N.F.L. will remain dormant while owners appeal Nelson’s decision. That would probably keep the league shut down until at least mid-June and perhaps into early July, about a month before teams usually open training camps.

A final decision on the stay is likely to take no more than several days.

Late Monday night, e-mails were circulating among players  encouraging them to report to team facilities on Tuesday and informing them that if there is no stay, it would be a violation of Nelson’s ruling for them to be turned way.

It was unclear how many players would show up at team facilities. Ryan Clark, the player representative for the Pittsburgh Steelers, said in a text message Monday night that he was advising his teammates to report for work at the Steelers’ facilities Tuesday.

But team officials will probably be unable to have contact with players if they do show up.

Jim Quinn, who argued the players’ case before Nelson, said Monday night that teams were theoretically allowed to sign free agents now, but that players had to give the N.F.L. time to let the dust settle. If it takes too long to begin signing players without a stay in place, owners could be subject to collusion charges, he said.

One agent, Brad Blank, said Monday night that he had contacted several of his clients and told them that they should contact their player representatives and be prepared to report to their teams’ off-season training programs.

One legal analyst, Gabe Feldman of Tulane Law School, who has done work for NFL Network, said the league had to be given time to reopen business, adding that if players show up, they could be told that while they are no longer being locked out, owners need more time to get up and running.

In a telephone interview, Quinn said: “It’s one more loss in a long line of losses in court for them. From the players’ perspective, it wasn’t at all unexpected. It was a very well-reasoned decision. Therefore, we think it is upheld on appeal.”

In its filing to seek a stay, the N.F.L. said it could be subjected to further antitrust charges by players and it would be impossible to “unscramble the eggs” if business were to reopen, only to have the appeals court reinstate the lockout. It also said that by enjoining the lockout, the district court created new law on three issues that the Court of Appeals will review. 

“We believe that federal law bars injunctions in labor disputes,” the league said in a statement. “We are confident that the Eighth Circuit will agree.”

That premise, contained in the Norris-LaGuardia Act, was rejected by Nelson in her 89-page decision, in which she wrote that she did not believe the act applied to the N.F.L.’s dispute with players because the union has disbanded. She accepted that the union’s decertification, which the league contended was merely a negotiating ploy, was valid. She wrote that she had discretion to decide whether to cede jurisdiction to the National Labor Relations Board. The league filed a charge with the N.L.R.B. in February that the union had not negotiated in good faith and that its decertification was a sham, intended only as a bargaining tactic.

Nelson also wrote that players were already suffering the threat of irreparable harm from the lockout even though no games have been missed. She pointed especially to free agents like Peyton Manning and Logan Mankins, making the case that they are suffering because a lockout prevents them from negotiating with teams. Finally, Nelson said that the public interest, fans, does not favor a lockout.

“The public ramifications of this dispute exceed the abstract principles of the antitrust laws, ranging from broadcast revenues down to concession sales,” Nelson wrote. “And of course the public interest represented by the fans of professional football — who have a strong investment in the 2011 season — is an intangible interest that weighs against the lockout. In short, this particular employment dispute is far from a purely private argument over compensation.”

Nelson’s decision did not come as a surprise to either the players or the league after she made several comments from the bench during a hearing earlier this month that indicated some of her opinions. Now the N.F.L. will cast its lot with the Court of Appeals.

The N.F.L. has long thought it has a better chance for success at the appeals court level than at the district court. But legal experts are divided.

William Gould, a former chairman of the N.L.R.B., said in a telephone interview Monday night that the Eighth Circuit was the league’s best chance because he regards it as a very conservative court that is particularly management-friendly.

“They couldn’t have a better court in the country, the owners,” Gould said. “Even when I was chairman of the N.L.R.B., this was one of the most unreceptive courts for any order aimed at an employer.”

If the appeals court upholds the injunction, the league will be forced to open its doors for the first time since the lockout began March 12. That would give players considerable leverage over owners in negotiations to settle the antitrust litigation in which the sides have been engaged since talks broke off and the players union decertified.

But if the appeals court overturns Nelson’s decision, the lockout will be back in place, and players will lose much of their leverage. With players facing the prospect of missing paychecks when the season starts — most players are not losing money yet — the lawyers for the players would be under pressure to reach a settlement that would let the players return to work and the season to begin.

Article source: http://feeds.nytimes.com/click.phdo?i=da2b4ce3564b88e50ae44c1816c21596

Court Upholds Facebook Settlement With Twins

SAN FRANCISCO — Tyler and Cameron Winklevoss, the Olympic rowers and identical twins who claimed that they, not Mark Zuckerberg, had the original idea for Facebook, have lost the latest chapter in their six-year legal feud. But it’s a loss that comes with a pretty nice consolation prize. And it may not be the end of the case.

A three-judge panel of a federal appeals court here ruled Monday that the brothers, whose fight over Facebook’s origins was the narrative arc of the Hollywood hit The Social Network, cannot back out of a settlement they signed with the company in 2008. That settlement is now worth approximately $200 million, according to estimates by experts.

The twins had asked the court to undo the settlement so they could pursue their original case against Mr. Zuckerberg and Facebook, and presumably, win a richer payday.

They had argued that Facebook had deceived them about the original value of the settlement, and the court roundly rejected their claims. Yet the sharply worded decision, written by Alex Kozinski, the chief judge of the United States Court of Appeals for the Ninth Circuit, apparently, has not persuaded the twins to give up. They said through their lawyers that they plan to ask that their case be heard by the entire appeals court.

Judge Kozinski wrote: “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. 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.”

Judge Kozinski added: “For whatever reason, they now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached.”

The settlement, which included $20 million in cash and more than 1.2 million Facebook shares, was initially valued at $65 million. But shortly after signing it, the Winklevosses, and their partner, Divya Narendra, argued that Facebook had deceived them about the value of the shares, leaving them with much less than they had agreed. While they believed the shares to be worth $35.90 each, Facebook had conducted an internal valuation that priced the shares at $8.88, they claimed.

Whatever their value at the time, the shares have recently traded as high as $150, after adjusting for splits. That values the stock portion of the settlement at more than $180 million.

“The appeals court kept the Winklevosses from potentially throwing away many tens of millions of dollars each,” said Eric Goldman, a professor at Santa Clara University Law School and the director of its High-Tech Law Institute. “It’s hard to complain too much about a loss like that.”

But the twins are not giving up.

“In my judgment, the opinion raises extremely significant questions of federal law that merit review by the entire Ninth Circuit Court of Appeals,” Jerome B. Falk Jr., the lead appellate lawyer for the Winklevosses, said in a statement.

In a statement, Colin Stretch, Facebook’s deputy general counsel, said, “We appreciate the Ninth Circuit’s careful consideration of this case and are pleased the court has ruled in Facebook’s favor.”

The dispute dates back to 2003, when Mr. Zuckerberg, then a Harvard sophomore, agreed to help the Winklevosses and Mr. Narendra program a social Web site called Harvard Connection, and later renamed ConnectU.

But instead of following through on the verbal agreement, Mr. Zuckerberg delayed work on Harvard Connection and instead worked on his own project. When pressed for answers, he stalled, according to the Winklevosses. In February 2004, Mr. Zuckerberg released TheFacebook, which eventually became Facebook.

Later that year, the ConnectU founders sued him and Facebook. Facebook countersued a year later. The 2008 settlement was meant to resolve all the claims.

Article source: http://feeds.nytimes.com/click.phdo?i=b8706606697ee956a308c126b898f609