Judge mulls residence issue in Facebook case
NEW YORK (Reuters) - A U.S. judge reserved decision in a legal tussle over whether Facebook founder Mark Zuckerberg is an official resident of New York or California, part of a lawsuit by a businessman who claims he is entitled to majority ownership of the world's leading social networking site.
The parties said a lawyer for businessman Paul Ceglia on Wednesday asked a federal judge in Buffalo, New York, to consider in his deliberations Zuckerberg's $100 million gift last month to troubled public schools in Newark, New Jersey.
The town is about 27 miles from Dobbs Ferry, New York, where Zuckerberg grew up. But lawyers for Zuckerberg and Facebook argue that Palo Alto, California is his permanent home and asked the judge to deny Ceglia's bid to move the case to a state court in Allegany County, New York.
Ceglia of Wellsville, New York, sued Zuckerberg in June to claim that a 2003 contract with Zuckerberg to develop and design a website entitled him to an 84 percent stake in the privately held company.
Facebook says the lawsuit is frivolous and fraudulent.
Federal courts hear cases between residents of different states where the claims exceed $75,000. In general, state courts have larger caseloads and plaintiffs such as Ceglia might have more opportunities to negotiate a settlement than in the federal court system.
"We maintained that Zuckerberg's recent donation was a further indication that he had some roots still in this area," Ceglia's lawyer Terrence Connors said by telephone after a hearing on Wednesday.
U.S. District Judge Richard Arcara did not indicate when he would rule, Connors and a Facebook spokesman said.
The argument to move the case to state court is based largely on the grounds that Zuckerberg had stated in a previous challenge to the origins of Facebook in Massachusetts that he was domiciled in New York.
A Facebook spokesman, Andrew Noyes, said on Wednesday that Ceglia had "a well documented track record of scamming and defrauding honest people. This case is his latest scam."
Facebook's court papers noted that last December a state prosecutor accused a wood-pellet fuel company that Ceglia owned with his wife of taking $200,000 from customers and failing to deliver products or refunds.
The case is Paul Ceglia v Zuckerberg & Facebook, U.S. District Court for the Western District of New York, No. 10-00569.
(Reporting by Grant McCool; Editing by Richard Chang)
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