A New York judge has ruled that Quinn Emanuel Urquhart Oliver & Hedges is entitled to arbitration of its claim for $13 million in unpaid legal fees from social networking company ConnectU, which the law firm represented in a high-profile trade secrets suit against rival Facebook.
That suit, which alleged Facebook founder Mark Zuckerberg stole the idea for his Web site from ConnectU founders Divya Narendra and Tyler and Cameron Winklevoss when they were all Harvard undergraduates, settled in February.
The settlement terms were confidential, but the $13 million contingent fee sought by Quinn Emanuel, disclosed Thursday in the decision by Manhattan Supreme Court Justice Richard Lowe, offers some clue to how much ConnectU founders got. A typical 30 percent contingent-fee agreement would suggest a settlement of around $43 million.
Neither Quinn Emanuel nor ConnectU's lawyer, Sean F. O'Shea, would comment on the settlement or any other aspect of the matter Thursday.
Whatever the settlement amount, Narendra and the Winklevosses quickly expressed unhappiness with it and fired Quinn Emanuel.
In April, the firm initiated arbitration over its unpaid fee before the American Arbitration Association in New York, citing an arbitration provision of its retainer agreement with ConnectU. The arbitration was stayed while ConnectU challenged the enforceability of the deal with Facebook in federal court in California.
A San Jose federal judge upheld the settlement in July, but ConnectU has fought reinstatement of the arbitration with Quinn Emanuel on the grounds that it did not knowingly consent to arbitration when it signed the retainer agreement. The company also argued that enforcement of the arbitration provision would violate court rules and the public policy of the state of New York.
But Justice Lowe ruled in ConnectU Inc. v. Quinn Emanuel Urquhart Oliver & Hedges, 602082/08, that the arbitration provision of the retainer agreement was "enforceable and valid on its face."
The judge said ConnectU and its founders had made no showing that they had been subject to fraud, misrepresentation or duress when they signed the retainer agreement.
"Accordingly, the court rejects petitioners' assertion that the arbitration clause was obtained without their consent or as a result of some overreaching or other improper action on Quinn Emanuel's part.