When's a Deal a Deal?
It seems lately that more and more people who settle disputes want a do over. But, when is a deal a deal? And, since when is it okay to make a deal and then later sue saying I made the deal, but I didn't mean it?
In 2008, the Winklevoss twins and Divya Narendra settled with Facebook for $65 million after alleging that Zuckerberg stole their idea for Facebook. After reaching a settlement, the trio tried to rescind it arguing that Facebook misrepresented the value of its stock, but an appeals court refused to undo it.
In reaching his decision, the judge stated that "the Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their dispute and signed a release of all claims against Facebook. With the help of a team of lawyers, and a financial advisor, they made a deal that appears quite favorable."
Several weeks ago, the Winklevoss twins and Divya Narendra, after stating that they wouldn't take their case against Facebook and its CEO Mark Zuckerberg to the Supreme Court, have now filed another lawsuit against Facebook alleging that Facebook "intentionally or inadvertently suppressed evidence" during the 2008 settlement proceedings. While this suit appears to be based on a different legal argument, there is little doubt that many of the same arguments that were raised before will be argued again.
The Winklevosses are certainly not the first to try to undo a deal and they certainly won't be the last. Steven Simkin, a New York lawyer and Madoff victim, is another making headlines for the very same reason. Simkin divorced his wife, Laura Blank after 33 years of marriage. He and his wife reached a settlement whereby they split their assets, a large percentage of which was invested with Bernard Madoff.
Obviously, we know how that ended, but Simkin is now trying to undo the settlement agreement arguing that the intention of the settlement agreement was to split their assets. He argues that they thought that when they divided their $13.2 million in assets, she would be getting a $6.6 million cash payment, a portion of which was taken from their account with Madoff. He claims that he and his wife were mistaken about the existence of the account and now wants a do over claiming mutual mistake.
Generally, when parties reach a settlement, that settlement means something and the parties are going to be bound by it. This is especially true when both parties are represented by counsel and even more so when there is a release of claims. Sour grapes is not a reason to undo a settlement agreement. The bottom line is sometimes you make bad deals. Sometimes, there are valid reasons to run back to the court and ask for relief from the agreement, but this will be the exception and not the rule.
