The Facebook, Inc., et al v. ConnectU, Inc., et al

Filing 186

Filed (ECF) Appellees The Facebook, Inc. and Mark Zuckerberg in 08-16745 response opposing motion (,motion to stay the mandate). Date of service: 06/08/2011. [7779076] [08-16745, 08-16873] --[COURT UPDATE: Replaced PDF of Response and Declaration (to include correct case numbers.) Spread filing to case number 09-15021. Resent NDA. 06/09/2011 by DB] (EJR)

Case Nos. 08-16745, 08-16849, 08-16873
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
THE FACEBOOK, INC., et al.,
Plaintiffs-Appellees-Cross-Appellants,
v.
CONNECTU, INC. (formerly known as CONNECTU LLC),
CAMERON WINKLEVOSS, TYLER WINKLEVOSS,
DIVYA NARENDRA,
Defendants-Appellants-Cross-Appellees,
Appeal from the United States District Court Northern District of California,
Case No. CV 07-01389-JW, The Honorable James Ware

APPELLEES’ OPPOSITION
TO MOTION TO STAY ISSUANCE OF MANDATE

I. Neel Chatterjee
Monte Cooper
Theresa A. Sutton
ORRICK, HERRINGTON & SUTCLIFFE, LLP
1000 Marsh Road
Menlo Park, CA 94025
Telephone: [phone]
Facsimile: [phone]

E. Joshua Rosenkranz
ORRICK, HERRINGTON & SUTCLIFFE, LLP
51 West 52nd Street
New York, NY 10019-6142
Telephone: [phone]
Facsimile: [phone]

Theodore W. Ullyot
Colin S. Stretch
FACEBOOK, INC.
1601. California Avenue
Palo Alto, CA 94304
Attorneys for Appellees

CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rule of Appellate Procedure 26.1, Appellees-CrossAppellants state that Mark Zuckerberg is an individual. No parent corporation
owns 10% or more of the stock of Facebook, Inc. and there are no publicly held
corporations that own 10% or more of stock.

INTRODUCTION
This Court should deny the ConnectU Founders’ motion to stay the mandate.
The ConnectU Founders have not met their burden of demonstrating that the
mandate should be stayed just because they want to file a cert. petition. This case
does not present an issue worthy of Supreme Court review, and even if it did, the
ConnectU Founders have not shown the requisite good cause by arguing that they
would prefer to avoid the expense of filing a frivolous motion in Massachusetts
that has already been denied by the district court in California. There is little this
Court can do to prevent the ConnectU Founders from ignoring its admonition that
“[a]t some point, litigation must come to an end. That point has now been
reached.” Slip op. at 6292. But this Court should not encourage them by
preventing the courts below from tying up the loose ends and terminating this
litigation once and for all.
ARGUMENT
Back when the district court enforced the Settlement Agreement, the
ConnectU Founders twice moved this Court to stay the execution of the judgment
pending appeal. See August 11, 2008 Emergency Mot. to Stay Execution of July
2, 2008 Judgment, as Amended by Order of August 12, 2008; November 25, 2008
Emergency Mot. to Stay and Alternative Petition for Writ of Mandamus. This
Court denied both stay motions even though, at that point, it had not had the

-2-

opportunity to fully consider the merits of the appeal and even though the
ConnectU Founders could plausibly argue that enforcing the Settlement
Agreement—and particularly Facebook’s acquisition of ConnectU—would yield
results that could not be undone. See Dkt. Nos. 15 & 51. Now that this Court has
rejected the appeal as meritless, and denied rehearing en banc, the ConnectU
Founders’ concerns about uncertainty of outcome are even weaker than when the
district court first issued its judgment. And now that the acquisition has long-since
been consummated, and the ConnectU Founders’ only basis for a stay is the
interest in preserving resources on one last-ditch motion, the justification for a stay
of the mandate is vastly weaker.
This Court does not routinely grant motions to stay the mandate, see 9th Cir.
R. 41-1, and the ConnectU Founders have not come close to satisfying the requisite
elements.
First, the ConnectU Founders have not carried their burden of establishing
that their “certiorari petition would present a substantial question” that merits
Supreme Court review. Fed. R. App. Pro. 41(d)(2)(A). This Court merely applied
the age-old principle that an agreement is binding when sophisticated parties sit
down to negotiate a deal in the midst of acrimonious litigation, sign a deal, and say
it is binding and enforceable. And contrary to the ConnectU Founders’ assertion in
their Motion to Stay Issuance of Mandate that the Court’s opinion “conflicts with

-3-

decisions of other Circuits” giving rise to “substantial federal questions,” Mot.
at 71, no circuit has ever rejected this principle. Slip op. at 6287 (citing the cases of
other circuits). Similarly, the ConnectU Founders do not come close to
demonstrating that the circuits are split over the application of “a mediation
confidentiality agreement to bar evidence of securities fraud occurring in the
mediation.” Mot. at 6. These issues are no more worthy of Supreme Court review
than they were of en banc review.
Second, the ConnectU Founders have not established “good cause for a
stay” of the mandate. Fed. R. App. Pro. 41(d)(2)(A). The only basis they offer for
staying the mandate is that they want to avoid the expense of filing a motion in the
District of Massachusetts. Mot. at 2-3. To refresh the Court’s recollection, the
parties had been litigating parallel actions in California and Massachusetts. See
ConnectU v. Facebook, et al, No. 07-10593-DPW. The Settlement Agreement
resolved both cases. The Massachusetts court had stayed the action there pending
the outcome of this appeal. Accordingly, it terminated all outstanding motions
without prejudice to any party to reassert them within 30 days of the issuance of
this Court’s mandate. Once the mandate issues from this Court, the Settlement
Agreement will go into effect and the Massachusetts court will dismiss that case.
1

Appellants’ Motion to Stay the Mandate is cited as “Mot.” and their Excerpts of
Record are cited as “ER.” Facebook’s Supplemental Excerpts of Record are cited
as “SER.” This Court’s docket entries for the consolidated appeals are cited as
“Dkt.”

-4-

On April 20, 2011, the ConnectU Founders informed the Massachusetts
court of their intention to move to vacate any judgment in that action pursuant to
Rule 60(b). Request for Judicial Notice in Support of Appellants/Intervenors’
Motion to Stay Issuance of Mandate, Ex. B at 5. Their motion is based on
allegations of discovery fraud. They now argue that they would prefer to avoid the
expense of litigating that motion until after the Supreme Court rules on their cert.
petition.
What the ConnectU Founders fail to mention is that they (technically,
ConnectU) litigated these very same discovery allegations in the district court in
this case, lost, and waived any further relief by failing to appeal to this Court.
Shortly after Facebook moved to enforce the Settlement Agreement in April 2008
the ConnectU Founders presented the Massachusetts court with allegations of
discovery fraud. The Massachusetts court refused to address the allegations, in
deference to the California court, which has exclusive jurisdiction to enforce the
Settlement Agreement. Declaration of Theresa A. Sutton (“Sutton Decl.”), Ex. A
at 4.

The Massachusetts court directed that “[i]t is for Judge Ware to determine

what additional discovery, if any, is necessary to the resolution of any settlement
dispute.” Id. It added that “[f]rom all that appears, the parties were prepared to
settle their disputes [upon signing the Settlement Agreement], despite the fact that
aspects of discovery in this case . . . had not been completed and unresolved

-5-

discovery issues remained outstanding.” Id.
ConnectU presented the Massachusetts motion to the California district court
when it opposed the motion to enforce the Settlement Agreement. ER 780-781;
see also ER 58; Sutton Decl. Ex. B. ConnectU argued that the alleged discovery
fraud was an alternative basis for declining to enforce the Settlement Agreement.
ER 780-781. The California district court rejected the allegations of discovery
fraud. It held that “the parties elected to proceed with their settlement negotiations
knowing they lacked potentially relevant information. Without a showing by
Defendants of a material misrepresentation or omission in the negotiations, the
Court finds no basis to decline enforcement.” ER 57-58. The ConnectU Founders
never appealed that ruling to this Court.
The interest in saving the cost of having to litigate one last motion of any
sort while the cert. petition is pending is not good cause to justify a stay of the
mandate. But that is especially so where the motion is so plainly frivolous. Even
if the California court had not already rejected the motion, and even if the
ConnectU Founders have not waived the issue by declining to appeal it, the
ConnectU Founders have overlooked a fatal flaw on the merits of their motion: If
allegations of securities fraud could not overcome the definitive release they
agreed to in the Settlement Agreement, allegations of discovery violations do not
survive either.

-6-

The ConnectU Founders purport to be interested not just in saving
themselves the expense of litigating a motion, but also in “reliev[ing] [Facebook]
of the obligation to respond to the motions that will proceed in Massachusetts”
while their cert. petition is pending, Mot. at 3 n.2, and in “judicial efficiency,”
Mot. at 3. Facebook, for its part, finds the burden minimal, especially in light of
the fact that the motion has already been litigated and decided. No doubt, the
Massachusetts court, too, will be undaunted. That said, if the Massachusetts court
agrees with the ConnectU Founders that “it is sensible for the Massachusetts
proceedings to remain on hold until the Supreme Court rules on their anticipated
petition for certiorari,” Mot. 2, it is free to hold the motion in abeyance. It was,
after all, the Massachusetts court that decided, of its own accord, to put the case on
hold pending appeal in the first instance. The Massachusetts court does not need
this Court’s help in managing its own docket.
Facebook bargained for litigation peace. The district court enforced the
bargain and this Court affirmed. The time to end this litigation has long since
passed. A meritless cert. petition should not stand in the way of resolving the last
meritless motion that will end this case once and for all.
CONCLUSION
For these reasons, the ConnectU Founders’ motion should be denied.
///

-7-

Dated:

June 8, 2011

ORRICK, HERRINGTON & SUTCLIFFE LLP
/s/ E. Joshua Rosenkranz /s/
E. Joshua Rosenkranz
Attorneys for Plaintiffs-Appellees
THE FACEBOOK, INC., AND
MARK ZUCKERBERG

-8-

CERTIFICATE OF SERVICE
I hereby certify that on June 8, 2011, I electronically filed the foregoing
document FACEBOOK, INC.’S OPPOSITION TO MOTION TO STAY
MANDATE with the Clerk of the Court for the United States Court of Appeals for
the Ninth Circuit by using the appellate CM/ECF system.
Participants in the case are registered CM/ECF users and will be served by
the appellate CM/ECF system.

Dated:

June 8, 2011

/s/ E. Joshua Rosenkranz /s/
E. Joshua Rosenkranz

OHS WEST:261162605.2

-9-