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E-Commerce Law - Former ConnectU Partner Sues Over Facebook Settlement

 

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Former ConnectU Partner Sues Over Facebook Settlement

Wayne Chang, a former partner of ConnectU, Facebook's social networking rival, brought suit against his former ConnectU partners (the "Winklevoss Defendants") and their attorneys over a settlement reached with Facebook in separate litigation.  Chang v. Winklevoss, No. 09-5397-BLS1, 2011 WL 1758963 (Super. Ct. Mass. May 3, 2011).  The Superior Court of Massachusetts held that the Chang lacked standing to assert claims against the attorneys but found that Chang had asserted valid claims against his former partners.

The dispute between Chang and the Winklevoss Defendants arose from a partnership between the two parties whereby Chang, the creator a i2hub, a peer-to-peer file sharing software, would integrate his software with the ConnectU interface in order to increase ConnectU's user base.  The parties agreed to form a partnership called the Winklevoss Chang Group (WCG) and after Chang's completion of the integration, he would acquire a 15% ownership of ConnectU.  Thereafter, the parties executed a Memorandum of Understanding (the "Memorandum") to reflect their agreement.  After Chang successfully integrated i2hub and ConnectU, his relationship with the Winklevoss Defendants began to deteriorate and ultimately terminated at the urging of the Defendants. 

Meanwhile, ConnectU and Facebook became entagled litigation arising out of their rivalry.  Chang, though not a party to the litigation was subpoena and subsequently added as a to the action against ConnectU.  The attorneys retained to defend the Winklevoss Defendants in the Facebook litigation, Mosko and Finnegan, become subsequently retained by Chang.  The Facebook litigation culminated in a mediation and subsequent settlement agreement, though Chang alleges that he was never informed of the mediation or terms of the settlement. 

Chang filed the instant action against the Winklevoss Defendants, ConnectU, and Mosko and Finnegan.  His claims against the Winkelvoss Defendants stemmed from his partnership interest in ConnectU and entitled to the settlement amount acquired from the Facebook litigation.  Additionally, Chang alleged that Mosko and Finnegan intentionally excluded him from settlement discussions and conspired with the Winklevoss Defendants to deprive him of his interest in the settlement proceeds. 

 

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