The Winklevoss twins (Cameron and Tyler), both dressed in dark blue suits, sat in the front row of the public gallery as their attorney cited case law and legal precepts before a three-judge panel as to why a lower court decision should be overturned -- a decision in which they failed to get a multi-million dollar settlement with Facebook invalidated.
The Winklevosses were upperclassmen at Harvard University when they hired a young Mark Zuckerberg to write the code to create a social network. They alleged that he stole their idea to create Facebook. The twins later negotiated a $65 million stock and cash settlement. However, they are trying to invalidate the deal on the basis that Facebook did not disclose material information, specifically the value of its privately held shares. According to statements made in court, the twins wanted shares representing 0.30 percent of the company's stock. They received just over 1.2 million shares, which represented 45 percent of the $65 million settlement. The rest was in cash.
Their attorney, Jerome Falk of San Francisco, argued that Facebook withheld lower evaluations of the company's private stock worth. Had those numbers been known and used in the settlement, the twins would have received more shares of stock. Given the high-flying nature of Facebook and recent investments by outside investors, a settlement with more shares would make the Winklevosses even richer as the shares rise in value.
Facebook's attorney, Joshua Rosenkranz of New York, said that the company was under no obligation to volunteer information and that it was the responsibility of the twins' legal team to ask the right questions. At one point, he called them "outright imbeciles."
The three judge panel is not under any deadline when to issue its opinion in this case. The longer it takes, the greater the likelihood the value of Facebook shares will grow, yielding more money for the Winklevosses if they prevail.
After the hearing, the twins tried to stonewall reporters, but we managed to get them to stop and talk to us briefly. We'll have more on this story online later today.