In (temporarily) defeating the Winklevoss bid to over-turn their mediated settlement agreement with Facebook, Chief Judge Alex Kozinski, writing for the Ninth Circuit, observed: 

The Winklevosses are sophisticated parties who were locked in a contentious struggle over ownership rights in one of the world’s fastest-growing companies. They engaged in discovery, which gave them access to a good deal of information about their opponents. They brought half-a-dozen lawyers to the mediation. Howard Winklevoss—father of Cameron and Tyler, former accounting professor at Wharton School of Business and an expert in valuation—also participated.

In specific response to the claim that Facebook misled the Winklevosses during the mediation leading to their execution of a skeletal “deal point” settlement agreement, the Court had several responses:

• the mediation confidentiality agreement signed by all parties prohibited them introducing into evidence “in any arbitral [or] judicial. . . proceeding” any statements made during the mediation;
• the skeletal deal point agreement provided for the execution of the broadest possible release of claims by all parties, which clearly encompassed the Securities Fraud cause of action the Winklevosses were attempting to pursue; and,
• people engaged in litigation with one another have little reason to believe anything their adversary says when pursuing the settlement of a claim – a fact of life with which the Winklevosses and their stable of high-priced lawyers were well acquainted.

For lawyers and litigants, the central lesson of this case is far more important than the fate of a few billionaires. If you’re in federal court in the Ninth Circuit's hood (Alaska, California, Arizona, Hawaii, Idaho, Montana, Nevada, or Washington)  you cannot rely on mediation confidentiality provisions contained in the District Court’s rules nor upon state law protections.

The evidence the Winklevosses asked the lower court to consider would have been admissible even though made in the course of a mediation if the parties had not entered into a written agreement to the contrary.If you're not thinking out all of the ramifications of the absence or presence of a bullet-proof confidentiality clause in your mediations, you might as well put your malpractice insurance carrier on notice right now.

So, Is It Over Yet?

Not on your life or the life of future Winklevoss generations. If those Olympic rowers had their way, this would be the internet’s Bleak House. When you’re already rich and insatiable, it’s never over brother. This from the Wall Street Journal:

Jerome Falk of Howard Ross in San Francisco, lawyer for the Winklevosses [said]: “I respectfully disagree with the Ninth Circuit’s conclusions.  In my judgment, the opinion raises extremely significant questions of federal law that merit review by the entire Ninth Circuit Court of Appeals. For that reason, my colleagues and I will file a Petition For Rehearing En Banc within the next fifteen days.”

For a few ways to Winklevoss-proof your mediated settlement agreement (and avoid malpractice for having failed to do so) read on here. Hat tip to intellectual property lawyer Jackie Hutter for the new legal term. Jackie left this comment, appropriately on my Facebook page, this morning:

Working on a settlement now with a founder–lawyer said he is striving to make it “Winkelvoss-Proof.” They spent alot of money to lose this litigation, but at least they got a legal term named after them.

For my full article on the Winklevoss loss at ForbesWoman, They're Handsome, They're Rich and They Didn't Invent Facebook, click here.