A judge dismissed counterclaims against online entrepreneurs Cameron and Tyler Winklevoss over allegations they failed to publicly promote their $1.3 million investment in an adult magazine venture.
Delaware Court of Chancery Vice Chancellor Joseph R. Slights III ruled Friday in Winklevoss Capital Fund’s 2018 lawsuit accusing one-time partner Stephen Shaw of mismanaging Treats!, a Delaware limited liability company operating a print and digital magazine depicting nude and semi-nude photographs of models and celebrities.
Miami attorney Carlos F. Gonzalez of Alvarez | Gonzalez | Menezes responded for Shaw by filing counterclaims for fraud and promissory estoppel, claiming the twins refused to honor a 2012 agreement in 2012 to promote the magazine following their depiction in the film “The Social Network,” which portrayed the early days of Facebook.
Instead, Shaw said the Winklevosses strung Treats! along for months to gain access to his social circles for their own purposes and later demanded a buyout.
Shaw grew frustrated with the twins’ involvement by December 2012 after he turned down Tyler’s request to arrange a “special casting” with models so that he could “shag” them, according to court documents. Shaw said they also pressed him and his team to promote Hukkster, an online e-commerce company the twins had invested in.
Slights concluded Shaw’s allegations were time-barred by Delaware’s three-year statute of limitations on claims for fraud and promissory estoppel, and the case fit the rare conditions for applying the equitable doctrine of laches at the pleading stage.
Shaw privately accused the Winklevoss twins as early as June 2013 of breaking their promise to promote the Treats! brand but didn’t pursue his claims for nearly five years, the opinion said.
“Defendants had every opportunity to do just that, but they inexplicably chose not to until after plaintiffs filed this lawsuit well beyond the expiration of the statute of limitations on the counterclaims,” Slights wrote in the 29-page memorandum opinion.
While Delaware case law allows late-filed claims to proceed under unusual or extraordinary circumstances, Slights said none of those factors applied.
“Defendants have not carried their burden under any of the tolling theories they have proffered for the simple reason that facts giving rise to their counterclaims were never hidden from them,” he said. ”Defendants were well aware of these potential claims; they simply failed to file them on time.”
Slights has yet to rule on Winklevoss Capital Fund’s claims against Shaw and Treats!
Attorneys in the case had no comment by deadline.
The Winklevoss twins are represented by Charles J. Harder of Harder in Beverly Hills, California, and P. Clarkson Collins Jr. and Albert J. Carroll of Morris James in Wilmington, Delaware.
Richard G. Placey of Montgomery McCracken Walker & Rhoads in Wilmington is acting as local counsel for Shaw and Treats!
The case is captioned Winklevoss Capital Fund v. Shaw.