Brief Fact Summary of Paul Ceglia vs. Mark Zuckerberg
In Paul Ceglia vs. Mark Zuckerberg (772 F. Supp. 2d 453, W.D.N.Y. 2011), the plaintiff, Paul Ceglia, filed a lawsuit in New York state court on June 30, 2010, claiming that he owned 84 percent of Facebook and was entitled to monetary damages. Ceglia argued that he and Mark Zuckerberg, then a Harvard undergraduate, had entered into a contract in 2003 that gave him a significant ownership stake in Facebook. Zuckerberg and Facebook removed the case to federal court based on diversity jurisdiction. Ceglia sought to have the matter sent back to state court, arguing that both parties were residents of New York. The court had to determine Zuckerberg’s true domicile to decide whether diversity jurisdiction existed.
Rule of Law
For purposes of federal diversity jurisdiction, a person’s domicile changes only when there is residence in a new state combined with intent to remain there indefinitely. Both elements—physical presence and intent—must be proven to establish a new domicile.
Background of Paul Ceglia vs. Mark Zuckerberg Case
The dispute between the two men began years before the lawsuit. In 2003, Paul Ceglia posted a Craigslist advertisement seeking help with his online project StreetFax, a website designed to provide photographs of street intersections for insurance adjusters and attorneys. Mark Zuckerberg responded to that advertisement. The parties then entered into a written agreement in April 2003.
According to Ceglia, that contract entitled him to pay Zuckerberg $1,000 for work on StreetFax and an additional $1,000 for another project described as PageBook. The contract also allegedly included a clause concerning an expanded project called The Face Book, to be completed by January 2004. It provided that Ceglia would receive 50 percent of the revenue from that website, plus an additional 1 percent interest in the business for each day after January 1, 2004, that the project was delayed. Ceglia later produced a $1,000 check from his personal records, dated six months after the contract, as evidence that he had paid Zuckerberg for his work.
Zuckerberg admitted to having worked with Ceglia on StreetFax.com but denied that Facebook had any connection to that earlier project. He claimed that the idea for Facebook was entirely separate and that Ceglia’s assertions were baseless.
When Paul Ceglia vs. Mark Zuckerberg reached the courts, it became one of the most publicized technology-related legal battles of its time. The ownership claim, if proven, would have made Ceglia one of the largest stakeholders in Facebook. The initial issue before the federal court, however, was not ownership but jurisdiction—whether the lawsuit could remain in federal court or had to be remanded to state court.
Facts of Paul Ceglia vs. Mark Zuckerberg
Ceglia filed his complaint in New York state court. Zuckerberg and Facebook sought to remove the case to the United States District Court for the Western District of New York on the basis of diversity jurisdiction, which allows federal courts to hear cases between citizens of different states. Ceglia moved to remand the case back to state court, arguing that both he and Zuckerberg were residents of New York, eliminating diversity of citizenship.
Zuckerberg had previously been identified as a New York domiciliary in 2004, around the time he was attending Harvard University. However, by 2010, he asserted that his domicile had changed to California. To support that claim, Zuckerberg presented evidence showing his continuous residence in California, voter registration, tax filings, and strong personal and professional ties to the state. He also pointed out that Facebook’s headquarters and his primary place of work were in California.
Ceglia countered by arguing that Zuckerberg had not sufficiently demonstrated the intent to remain in California indefinitely and that his earlier representation of a New York domicile should control. The question of Zuckerberg’s domicile was therefore central to whether the federal court could retain jurisdiction.
Issue
The main issue in Paul Ceglia vs. Mark Zuckerberg was whether Zuckerberg’s domicile had shifted from New York to California. The court needed to decide:
Does changing domicile for diversity jurisdiction purposes require both residence in a new state and intent to remain there indefinitely?
Paul Ceglia vs. Mark Zuckerberg Judgment
The United States District Court for the Western District of New York held that Zuckerberg’s domicile had changed to California. The court ruled that the evidence showed Zuckerberg was both residing in California and intended to remain there indefinitely. Therefore, complete diversity existed between the parties, and federal jurisdiction was proper. The court denied Ceglia’s motion to remand the case to state court.
Reasoning in Paul Ceglia vs. Mark Zuckerberg
In Paul Ceglia vs. Mark Zuckerberg, the court carefully examined the two requirements for establishing domicile: (1) physical presence and (2) intent to remain indefinitely.
The court observed that Zuckerberg’s situation had changed substantially since 2004. By 2010, he was living in California, running Facebook from its headquarters there, and had integrated both his professional and personal life into the state. He was registered to vote in California, paid taxes there, and owned property. These facts supported the conclusion that he intended to make California his permanent home.
Although Zuckerberg had once listed New York as his domicile, the court found that domicile is not fixed permanently and may change when both residence and intent coincide. The evidence presented demonstrated that Zuckerberg’s move to California was not temporary or transient. Because Ceglia remained domiciled in New York and Zuckerberg was domiciled in California, the diversity requirement under 28 U.S.C. § 1332 was satisfied.
The court therefore concluded that it had subject-matter jurisdiction and that Ceglia’s motion to remand lacked merit.
Subsequent Developments
While the jurisdictional ruling resolved the immediate procedural issue, the broader conflict between the parties continued. As Paul Ceglia vs. Mark Zuckerberg progressed, questions arose regarding the authenticity of the contract that Ceglia had presented as evidence.
Several law firms initially represented Ceglia, including Lippes Mathias Wexler Friedman LLP, Connors & Vilardo LLP, and DLA Piper LLP. However, as the case developed, these firms withdrew after concluding that the contract appeared to be forged. By early 2011, Ceglia’s legal representation had changed multiple times. San Diego attorney Jeffrey Lake took over temporarily after earlier counsel withdrew, but he too later stepped away from the case.
The controversy deepened when Facebook and Zuckerberg alleged that Ceglia’s evidence had been fabricated. They claimed that the purported 2003 contract linking Ceglia to Facebook was not genuine. Ceglia, on the other hand, argued that Facebook had planted false documents on his computer to discredit him. Eventually, forensic examinations determined that the evidence produced by Ceglia was indeed falsified.
In 2012, federal authorities arrested Ceglia and charged him with fabricating evidence in connection with the lawsuit. These criminal charges marked a turning point in the long-running legal saga. Ceglia was released on bond but later removed his GPS tracking device and fled. In 2015, a warrant was issued for his arrest. He was eventually located and arrested in Ecuador in August 2018.
Ecuador’s National Court of Justice initially ordered his extradition to the United States, but in 2019, President Lenín Moreno reversed that decision. Moreno cited that Ceglia’s newborn son, a citizen of Ecuador, was subject to child-support orders, and therefore Ceglia could not be forced to leave the country. As of 2021, Ceglia remained in Ecuador, reportedly seeking asylum and eventual citizenship there.
Facebook later filed a malicious prosecution lawsuit in New York state court in 2014 against DLA Piper, Milberg LLP, and Lippes Mathias Wexler Friedman, alleging that those law firms should have known that Ceglia’s claims were based on forged documents. That case was dismissed in 2015.
Conclusion
In Paul Ceglia vs. Mark Zuckerberg, the federal court concluded that Zuckerberg was domiciled in California, not New York, satisfying the diversity-of-citizenship requirement for federal jurisdiction. The court therefore denied Ceglia’s request to return the case to state court. The ruling emphasized that changing domicile depends on both physical residence and intent to remain indefinitely.
The later phases of the case—spanning accusations of forgery, multiple attorney withdrawals, criminal charges, and Ceglia’s eventual flight to Ecuador—transformed the lawsuit into one of the most unusual and closely watched legal disputes in the history of U.S. technology litigation.
Key Takeaway
Paul Ceglia vs. Mark Zuckerberg illustrates that in determining federal diversity jurisdiction, courts examine both residence and intent to remain indefinitely when assessing a party’s domicile. The case also demonstrates how a civil ownership dispute can evolve into a complex legal and criminal controversy when evidence is later found to be fabricated.