Ceglia v. Zuckerberg et al

Filing 199

MEMORANDUM IN SUPPORT re 198 MOTION for Sanctions NOTICE OF MOTION FOR SANCTIONS FOR SPOLIATION OF EMAIL BY DEFENDANT ZUCKERBERG byPaul D. Ceglia. (Attachments: # 1 Exhibit A - LITIGATION HOLD LETTER, # 2 Exhibit B - TRANSCRIPT OF TESTIMONY OF MARK ZUCKERBERG, JUNE 22, 2006, # 3 Exhibit C - DEPOSITION OF ALAN GREENSPAN, # 4 Exhibit D - FTC COMPLAINT OF UNFAIR BUSINESS PRACTICES AGAINST DEFENDANT FACEBOOK, # 5 Exhibit E - BRIEF DETAILING PATENT INFRINGEMENT FINDING AGAINST FACEBOOK)(Boland, Dean)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
PAUL D. CEGLIA,

Civil Action No. : 1:10-cv-00569-RJA

Plaintiff,
v.
MARK ELLIOT ZUCKERBERG, Individually, and
FACEBOOK, INC.

MEMORANDUM OF LAW IN
SUPPORT OF MOTION FOR
SANCTIONS AGAINST
DEFENDANT MARK
ZUCKERBERG FOR
SPOLIATION OF EVIDENCE

Defendants.

MEMORANDUM
RELEVANT FACTS AND EVIDENCE
The complaint in this matter was filed on June 30, 2010.

Doc. No. 1.

A

litigation hold letter was sent by Plaintiff’s counsel to then Defense counsel for
Zuckerberg and Facebook. Exhibit A.
DEFENSE COUNSEL’S CHARACTERIZATION OF PLAINTIFF’S EMAILS
Defense Counsel Oren Snyder has repeatedly claimed the emails Mr. Ceglia
exchanged with Defendant Zuckerberg are not authentic.

“[F]abricated emails.”

Transcript of June 30, 2011 hearing at 5. “The emails are outright fabrications.”
Id. at 15. “[S]upposed emails.” Id. at 16. “[S]o called emails exist.” Id. at 17.
“[F]ake emails.” Id. at 19. “[T]he emails are fake.” Id. at 72. [B]ogus emails.” Id.
at 108. “Fraudulent emails.” Id. at 111. “[T]hese emails are bogus.” Id. at 115.
“[F]raudulent emails.” Id. at 127 and 135. “[T]hose emails were concocted.” Id. at

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135. “[A]lleged emails in the complaint, in addition to be fraudulent….” Id. at 136.
“[B]ogus emails.” Id. at 138. “[H]is fraud on the court based on these emails….” Id.
at 149. “[H]is so-called emails.” August 17, 2011 Transcript at 42. “[S]o called
emails.” Id. at 44, 63. “[M]ade-up emails.” Id. at 49. “[P]urported emails.” Id at
63. “[T]he so-called emails.” Id. at 108, 109.
Plaintiff sought a computer forensics examination of Zuckerberg’s Harvard
email account from the time of the formation of the Facebook Contract to the
current time. Snyder countered with “the plaintiff has not demonstrated good cause
to justify his broad discovery requests.” June 30, 2011 Transcript at 47. He further
resisted allowing access to Zuckerberg’s email account by his fear the court
characterized as “you think he can lay his hands on software that will enable him to
fabricate yet new emails?” Id. “Yes, your Honor,” Snyder replied. Id.
DEFENSE COUNSEL’S CHARACTERIZATION OF THE IMPORTANCE OF
EMAILS IN THIS CASE
Defense counsel Snyder has made clear throughout this case that the
Facebook Contract and the emails are the central items of evidence.
“[The emails are] central to the extent that they confirm the fraud.”
Transcript of June 30, 2011 hearing at 21. “[F]undamental to that story was the
email part of the story.” Id. Snyder stated that “the threshold question in this case,
your Honor, is the authenticity of the contract and the emails.” Id. at 50.
EVIDENCE OF SPOLIATION OF EMAILS IS UNDISPUTED
The emails Ceglia exchanged with Defendant Zuckerberg occurred while

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Zuckerberg was a Harvard University student. Zuckerberg used his Harvard
University email account to exchange those emails with Ceglia.
Defendants’ own computer forensic expert offered a sworn declaration in this
case that contained the following:
“On April 15, 2011...Stroz Friedberg preserved the contents of a Harvard
University email account assigned to and used by Mr. Zuckerberg. This
preservation work involved making a complete and accurate copy of the entire
contents of Mr. Zuckerberg’s Harvard email account as it resided on Harvard’s
server at the time of collection, including both sent and received email.” Doc. No. 47
at ¶4.
“In addition, Harvard University provided Stroz Friedberg with a copy of Mr.
Zuckerberg’s Harvard email account as it resided on Harvard’s server in October
2010.” Doc. No. 47 at ¶5.
Stroz Friedberg then compared these two records of the contents of
Defendant Zuckerberg’s Harvard email account and discovered that emails present
in Defendant Zuckerberg’s Harvard email account in October 2010 had been deleted
between that time and April 2011. Id.
Zuckerberg’s deletion of emails after receiving a litigation hold and after the
filing of the complaint in this matter is a breach of his discovery obligations.
So, while defense counsel persuaded this court, holding off a full examination
of Zuckerberg’s emails, Zuckerberg set about destroying relevant evidence in this
case. The time the court afforded Zuckerberg he used to spoil evidence.
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While we now know that Defendant Zuckerberg deleted emails sometime
after October 2010 and before April 2011, we do not know what emails he added,
edited, manipulated or deleted from the date of the complaint filing until October
2010. We do not know what emails he deleted or attempted to delete from his email
account from 2004 to the date of the filing of the complaint. We also do not know
how many emails he added, edited, manipulated or deleted from his Harvard email
account since April 2011 up to the present day.
The proof of the authenticity of Ceglia’s emails is their presence in the inbox
of Zuckerberg’s Harvard email account. Zuckerberg could well have deleted that
authenticating evidence in violation of the litigation hold. Therefore, Defendants
can continue with impunity challenging the authenticity of Ceglia’s emails while
Defendant Zuckerberg deletes emails with no sanction.
Defendant Zuckerberg’s admitted history of dishonesty leaves no room for a
conclusion that his conduct in this regard is unintentional. He also does not deserve
credit for any declaration he may submit assuring the court that he has not deleted
other emails from the Harvard email account.
LEGAL ANALYSIS
THE SPOLIATION RULE IN THE SECOND CIRCUIT
There is definitive guidance from the Second Circuit on the standard to apply
to spoliation claims. That case is Residential Funding Corporation v. DeGeorge
Financial Corp., 306 F.3d 99. In DeGeorge the court held “[T]he sanction of an
adverse inference may be appropriate in some cases involving the negligent

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destruction of evidence because each party should bear the risk of its own
negligence.” Id. at 108.
“[The] sanction [of an adverse inference] should be available even for the
negligent destruction of documents if that is necessary to further the remedial
purpose of the inference. It makes little difference to the party victimized by the
destruction of evidence whether that act was done willfully or negligently. The
adverse inference provides the necessary mechanism for restoring the evidentiary
balance. The inference is adverse to the destroyer not because of any finding of
moral culpability, but because the risk that the evidence would have been
detrimental rather than favorable should fall on the party responsible for its loss.”
Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 75 (S.D.N.Y.1991). See
generally Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998) (stating that an
adverse inference instruction serves the remedial purpose, “insofar as possible, of
restoring the prejudiced party to the same position he would have been in absent
the wrongful destruction of evidence by the opposing party”).
Both the Federal Rules of Civil Procedure and this Court's inherent power
allow sanctions to be issued when a party destroys evidence that it could reasonably
foresee would be relevant to litigation. Jones v. Bremen High Sch. Dist. 228, No. 08C-3548, 2010 U.S. Dist. LEXIS 51312, at *14 (N.D. Ill. May 25, 2010). The
Defendants cannot sincerely argue that they could not foresee the Facebook
Contract would be “relevant to to the litigation.”
SANCTIONS
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Once spoliation of evidence, especially the key evidence in this case, has been
established, appropriate sanctions for spoliation of evidence may include the issuing
of a default judgment or an adverse jury instruction against the spoliating party.
Bryant v. Gardner, 587 F. Supp. 2d 951, 958 (N.D. Ill. 2008); Fed. R. Civ. P. 37(b)(2).
Default judgment may be entered against a spoliating party when there is "clear
and convincing evidence of willfulness, bad faith or fault by the noncomplying
party." Krumwiede v. Brighton Assocs., No. 05-C-3003, 2006 U.S. Dist. LEXIS
31669, at *25 (N.D. Ill. May 8, 2006).
A federal court may impose sanctions upon a party who engages in spoliation
in derogation of court order. See Fed.R.Civ.P. 37(b)(2); John B. Hull, Inc. v.
Waterbury Petroleum Prods., Inc., 845 F.2d 1172, 1176 (2d Cir.1988). However, this
court is empowered to impose sanctions absent a specific court order.
SPECIFIC DISCOVERY ORDER
NOT NECESSARY TO IMPOSE SANCTIONS
Even without a discovery order, the court “may impose sanctions for
spoliation, exercising its inherent power to control litigation.” Chambers v..
NASCO, Inc., 501 U.S. 32, 43–45, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991); Sassower
v. Field, 973 F.2d 75, 80–81 (2d Cir.1992), cert. denied, 507 U.S. 1043, 113 S.Ct.
1879, 123 L.Ed.2d 497 (1993). The court's authority to impose sanctions will only be
reversed for abuse of discretion.
DISTRICT COURT HAS WIDE DISCRETION TO SANCTION PARTIES

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Sanctions for spoliation, including dismissal, are reviewed by the Circuit for abuse
of discretion. Complaint of Consolidation Coal Co., 123 F.3d 126, 131 (3d Cir.1997),
cert. denied, 523 U.S. 1054, 118 S.Ct. 1380, 140 L.Ed.2d 526 (1998)); Sieck v. Russo,
869 F.2d 131, 134 (2d Cir.1989).
The Circuit “will reject the district court's factual findings in support of its
imposition of sanctions only if they are clearly erroneous.” Friends of Animals, Inc.
v. United States Surgical Corp., 131 F.3d 332, 334 (2d Cir.1997) (per curiam)).
The district court possesses “broad discretion in crafting a proper sanction for
spoliation” but such sanction is to “serve the prophylactic, punitive, and remedial
rationales underlying the spoliation doctrine.” Id.
PURPOSE OF THE SANCTIONS
The spoliation sanction is fashioned to: “(1) deter parties from engaging in
spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully
created the risk; and (3) restore ‘the prejudiced party to the same position he would
have been in absent the wrongful destruction of evidence by the opposing party.”
Kronisch v. United States, 150 F.3d 112, 126 (2d Cir.1998)).
Here, as another spoliation motion filed simultaneous with this one reveals,
Facebook is engaged in a multi-pronged campaign to damage evidence. It acts with
no concern for the authority of this court, flouting the Plaintiff's rights, personally
castigating him in the media, all the while seemingly unconcerned with the paucity
of its own evidence. The Facebook Contract, the key evidence in the case, about

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which Defendants have repeated questioned as to authenticity, now appears as if
someone altered it.
THE MOST SERIOUS SANCTION IS
NOT LIMITED TO A FINDING OF BAD FAITH
Although the facts demonstrate bad faith, purposeful over-exposure to UV by
Defendants’ experts, convincing the court of bad faith is unnecessary to obtain the
most severe sanction.
For Plaintiff's engaging in spoliation on par with Defendants in this case,
dismissal is not limited only to matters where the a Plaintiff has acted with bad
faith or willful intent, but is permitted where there is any fault of the sanctioned
party. See Bobal v. Rensselaer Polytechnic Institute, 916 F.2d 759, 764 (2d Cir.1990).
A default judgment in favor of Plaintiff is the corollary here to punish the
intentional spoliation of the Plaintiff's evidence.
Courts have held that negligent wrongs, like intentional wrongs, are proper
subjects for general deterrence. See Penthouse Int'l, Ltd. v. Playboy Enters., Inc.,
663 F.2d 371, 387 (2d Cir.1981) (citing G. Calabresi, The Cost of Accidents, 133–173
(1970)). Not only have negligent wrongs been found proper subjects for deterrence,
but federal courts have dismissed under Rule 37 as punishment for negligence. See
Thiele v. Oddy's Auto and Marine Inc., 906 F.Supp. 158, 162–63 (W.D.N.Y.1995)
(evidence negligently lost by plaintiff necessitated dismissal under Fed.R.Civ.P. 37);
Brancaccio v. Mitsubishi Motors Co., Inc., 1992 WL 189937, at *2 (S.D.N.Y.1992)

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(plaintiff's negligent loss of the defective product, after her expert had examined it,
but where defendant had not, made necessary dismissal under Rule 37.
SPOLIATION BY EXPERTS IS APPLICABLE
TO PARTIES RETAINING THAT EXPERT
Gross negligence by Defendant's experts is a sufficient act to impose a default
judgment against Defendants. “[G]ross professional incompetence no less than
deliberate tactical intransigence may be responsible for the interminable delays and
costs that plague modern complex law suits.” Penthouse, 663 F.2d at 387.
While the sanction of a directed verdict is a drastic remedy that should be
applied only when the spoliation was willful and there is no other adequate remedy
to restore the wronged party to the position it would be in if the evidence had not
been destroyed, this is an appropriate case to apply that sanction. Chambers v.
NASCO, 501 U.S. 32, 42–45, 111 S.Ct. 2123, 2131–2133 (1991); West v. Goodyear
Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999); Valentine v. Museum of Modern
Art, 29 F.3d 47, 49 (2d Cir.1994); John B. Hull Inc. v. Waterbury Petrol, Prods., Inc.,
845 F.2d 1172, 1176 (2d Cir.1988).
WHY DETERRENCE IS RELEVANT
TO DEFENDANTS‘ CURRENT AND PAST BEHAVIOR
A severe sanction is warranted for Zuckerberg’s spoliation of evidence based,
in part, on his history of similar behavior. This court must issue a severe enough
sanction to stop if not deter Zuckerberg’s dishonest conduct.
Zuckerberg has admitted forgery in backdating corporate documents, i.e. a
fraud, in the handling of corporate affairs for Facebook while in litigation.
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“Q. So sometime after you moved to [your current address] you signed this
document, you filled in [your current address] and you backdated it to July 29th of
2004, correct?
“A. I would assume so.
“Q. Why did you do that?
“A. I don’t know.” June 22, 2006 Transcript of proceedings in Civil Action No.
04-11923-DFW, Connectu LLC v. Mark Zuckerberg, et al at p. 82. Attached as
Exhibit B.
“Q. Well, you filled in the date though, correct?
“A. Yes….
“Q. Okay. So did you say is it right for me, is it okay for me to backdate this
document.
“A. I don’t know. I probably did.” Id. at 83. Emphasis added. It is not a stretch to
justify the most severe sanction is applicable to a person whose demonstrates they
do not believe the typical rules of honesty apply to them.
Mr. Zuckerberg then went on in that case to admit to knowingly signing
documents with false information nine more occasions. Id. at 88, 89, 90, 91, 93, 94,
95.
Mr. Zuckerberg admitted signing corporate documents submitted to the IRS
attesting to their accuracy knowing they contained false information. Id. at 97. He
admitted forgery in backdating Facebook corporate documents submitted to the
IRS. Id. at 98.
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Persons who knew Mr. Zuckerberg during 2003-2004 at Harvard have
testified that they knew Mr. Zuckerberg to be dishonest.
“Q. Did you tell Mr. O’Brien words to the effect of ‘I know Mark Zuckerberg as
dishonest”?
“A. Yes
“Q. And did you tell Mr. O’Brien words to the effect, “I’ve seen him”; meaning
Zuckerberg, “lie”?
“A. Yes.” Exhibit C, November 29, 2007, Deposition of Alan Greenspan as part of
Case No. 1:07-CV-10593-DFW, ConnectU, Inc., et al v. Facebook, Inc., Mark
Zuckerberg, et al.
More pointedly, Defendant Zuckerberg admitted signing documents he refers
to as “Facebook agreements” knowing they contained false information. Id. at
93-94. This case, of course, involves a Facebook agreement.
DEFENDANT FACEBOOK’S CORPORATE PHILOSOPHY MIRRORS
DEFENDANT ZUCKERBERG’S
Defendant Zuckerberg is the CEO of Defendant Facebook. He is the largest
single shareholder of Defendant Facebook. Without question, he has ultimate
authority over any aspect of Facebook’s operation. In 2009 at an event for would-be
Internet entrepreneurs he told the audience, “We’ve got this whole ethos that we
want to build a hacker culture.” http://www.wired.com/magazine/2010/04/
ff_hackers/5/.
Defendant Zuckerberg went on to say, “[o]ne good hacker can be as good as

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10 or 20 engineers, and we try to embrace that. We want to be the place where the
best hackers want to work, because our culture is set up so they can build stuff
quickly and do crazy stuff and be recognized for standout brilliance.” Id.
Defendant Facebook recently hired a renowned hacker who illegally hacked
into Sony’s playstation network causing Sony 25 million dollars in damages. http://
abcnews.go.com/Technology/facebook-hires-sonys-hacker/story?id=13948623. The
new hire hacker, Hotz, was sued by Sony for hacking their Play Station 3 video
game console and accessing 100 million credit card records. Id.
Likewise, Defendant Facebook has been caught on numerous occasions
publishing terms of service for their website and blatantly violating them. The
Facebook corporate ethos appears to be a descendant of Defendant Zuckerberg’s
personal hacking no-rules-apply-to-me philosophy.
Defendant Facebook and Defendant Zuckerberg have never denied reports
that Defendant Zuckerberg gained unauthorized access to Facebook users’ accounts
using that information to access emails of reporters at the Harvard Crimson
newspaper who had written a story critical of both Defendants in this case. http://
articles.businessinsider.com/2010-03-05/tech/29973321_1_tyler-winklevossthefacebook-com-cameron-winklevoss.
In May 2010, a complaint was filed before the Federal Trade Commission
identifying Defendant Facebook’s history of “Unfair and Deceptive Trade Practices”,
“disclosing users’ personal information without their consent”, “making user
information publicly available without the users’ consent”, “mislead[ing] users into
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believ[ing] that users can still maintain control over their personal information,”
designating information that users’ label as “friends only” to the public including
third party advertisers, etc. The complaint goes on for 38 pages. Exhibit D.
Just this year, Defendant Facebook claims to have “inadvertently” placed a
“cookie” on its users computers that sent computer usage data back to Facebook,
including websites that users visited, even after the user had logged off of
Facebook’s service. http://www.theblaze.com/stories/facebook-caughtinadvertently-tracking-you-once-you-log-off/. “Earlier this year it stopped gathering
browser data from users who had never even been to Facebook.com after it was
exposed by a Dutch researcher.” http://www.yesfans.com/archive/index.php/
t-69497.html?s=324a2aa5cab2519fd032af3feaf1b1fd.
In 2010 patent infringement suit, a jury found that Facebook had “directly
and literally infringed all of the asserted patent claims [of the Plaintiff company]
and that the claims were neither anticipated nor obvious in light of the prior art.”
See Exhibit D at p. 3-4. The jury rejected the overall claim by the Plaintiff on
unrelated grounds. Id.
Because of this past dishonest behavior by both Defendants in this case, any
declaration by Defendant Zuckerberg justifying, explaining or claiming to have no
knowledge of the email deletions from his Harvard email account should be given no
weight.
The bargain here seems to have been, accept a spoliation sanction in
exchange for deleting emails confirming the existence and authenticity of the
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Facebook Contract. That brazen calculation is an insult to the ideals that make
justice work. Once litigants can destroy evidence, falsify corporate and IRS
documents and operate a business that misleads its users without consequence, no
justice system can contain the damage that causes. The time has come for a court
to attempt to deter Mr. Zuckerberg’s behavior and that of Defendant Facebook in
this regard.
THE MOST SERIOUS SANCTION IS
NOT LIMITED TO FINDING OF BAD FAITH
Although the facts demonstrate bad faith, intentional deletion of emails after
receipt of a litigation hold letter, convincing the court of bad faith is unnecessary to
obtain the most severe sanction.
For Plaintiff's engaging in spoliation on par with Defendants in this case,
dismissal is not limited only to matters where the a Plaintiff has acted with bad
faith or willful intent, but is permitted where there is any fault of the sanctioned
party. See Bobal v. Rensselaer Polytechnic Institute, 916 F.2d 759, 764 (2d Cir.1990).
APPROPRIATE REMEDIES UNDER THE LAW FOR
ZUCKERBERG’S INTENTIONAL SPOLIATION OF EMAIL EVIDENCE
As a result of Defendant Zuckerberg’s intentional spoliation of email
evidence, the law entitles Plaintiff to the most severe sanction appropriate. No
hearing is necessary on this issue as a showing of bad faith or intent because bad
faith is not required to be shown for Mr. Ceglia to obtain the most severe sanction.
And, in any event, the term bad faith has no definition if it does not fit the conduct
Zuckerberg has engaged in here.
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1. An order prohibiting Facebook or Zuckerberg from disputing the authenticity of
the Ceglia emails excerpted in the complaint; and
2. An order permitting discovery of all emails from Zuckerberg’s Harvard email
account wherever copies of those emails may reside, including on the record of
other lawsuits in which Zuckerberg was involved even if those records are
currently sealed in those cases; and
3. An adverse instruction to the jury that the emails deleted by Zuckerberg from
his Harvard email account after the date the complaint was filed and he received
a litigation hold letter would have been helpful in proving all of Ceglia’s claims;
and
4. Attorney's Fees, Expert Witness Fees and any other relief the court deems
proper that was expended in investigating, preparing this motion and
conducting any scheduled hearing on the spoliation conduct of Mark Zuckerberg.

Respectfully submitted,
/s/Dean Boland
Paul A. Argentieri
188 Main Street
Hornell, NY 14843
607-324-3232 phone
607-324-6188
[e-mail]

Dean Boland
18123 Sloane Avenue
Lakewood, Ohio 44107
216-236-8080 phone
866-455-1267 fax
[e-mail]

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