SAN FRANCISCO (CN) – A three-judge appellate panel tossed a defamation lawsuit against Facebook by an attorney who once represented Paul Ceglia, the man accused of fabricating a contract that gave him an 84 percent stake in the then-fledgling social media company in 2004.
Paul Argentieri sued Facebook, its founder Mark Zuckerberg and general counsel Colin Stretch in October 2015, claiming Stretch tarnished his legal reputation went he sent an email to reporters saying Argentieri and other lawyers representing Ceglia “knew [Ceglia’s lawsuit] was based on forged documents yet they pursued it anyway.”
Federal prosecutors deemed Ceglia’s contract with Zuckerberg a forgery and indicted him on fraud charges in 2012. He fled house arrest in March 2015, along with his wife, children and dog.
Ceglia had hired Zuckerberg – then a Harvard freshman – in 2003 to do some website development work for a company called StreetFax. In his 2010 lawsuit against Zuckerberg, Ceglia claimed Zuckerberg signed a written contract giving him an interest in “The Face Book” for $1,000. Ceglia attached Zuckerberg’s StreetFax work-for-hire contract as an exhibit to the complaint.
Facebook and Zuckerberg sued Argentieri and several other law firms who represented Ceglia in New York for malicious prosecution and deceit. The other firms won on a motion to dismiss at the appellate level, but Argentieri chose to respond to Facebook’s claims.
Argentieri’s lawyer Joseph Alioto said his client chose to fight back, and still maintains that the contract Ceglia says he had with Zuckerberg is authentic.
“We had some of the best experts in the world whose credentials were impeccable and each of whom had determined the contract was valid,” Alioto said in an interview. “They had Mr. Ceglia take a lie detector test, which he passed, and which Mr. Zuckerberg refused to take.”
He said he hopes Ceglia is found so Argentieri can be vindicated. “This guy left right before the criminal case when they would have had to put Zuckerberg on the stand and we would have nailed him,” Alioto said, adding that should Ceglia return, “We’ll be able to without a doubt prove that contract is a valid contract.”
A trial court in San Francisco ruled last February that Stretch’s email statement was protected under the anti-SLAPP statute since it was made in connection with an issue “under consideration by a judicial body,” and that Argentieri had failed to prove a likelihood of prevailing on his defamation claim in court.
On Thursday, the First Appellate District upheld the lower court’s ruling, which was based on the “fair and true” reporting privilege.
Argentieri argued that this violated his due process rights, but the panel disagreed.
Writing for the panel that included Judge Terence Bruiniers and Presiding Judge Barbara Jones, Judge Henry E. Needham said, “[I]n context, Stretch’s statement was a ‘fair and true’ report of that proceeding. It essentially asserted that respondents sought to hold accountable the named lawyers for Ceglia because they knew Ceglia’s case was based on the forged Work for Hire Contract. And that was the gist of their malicious prosecution action as well. Argentieri’s arguments to the contrary are unavailing.”
Alioto said, “I’m just really very, very disappointed about it. Whether or not the statement was defamatory is really a question for the jury, not the court.”
The appellate court found no material issue of fact as to the content of Stretch’s email that a jury need hear.
But Alioto said there’s a big difference between Facebook’s legal complaint, which says Argentieri and the other lawyers “knew or should have known” that Ceglia’s lawsuit was a fraud, and what Stretch said, which was that they knew.
“This guy said it as if it was a fact,” Alioto said.
The panel recognized the legal distinction, but said Stretch was merely summarizing the case for the media and that it wasn’t “so great a distortion as to render it unfair or untrue” under the fair and true reporting privilege.
The judges also said the New York court’s dismissal of Facebook’s malicious prosecution lawsuit against the other law firms has no bearing on whether Stretch’s statement was a fair and true report of the case.
Alioto said he will definitely appeal the ruling to the California Supreme Court and that Facebook filed its lawsuit to deliberately intimidate Argentieri, whose professional good name is now in tatters.
“He’s a small-town lawyer. Everybody knows him and now this thing comes out that he files fraudulent documents in the court,” Alioto said. “Who’s going to go to this lawyer? His reputation was demolished. This was for one purpose, and one purpose only; to threaten lawyers and say they’d better not sue Facebook.”