On Tuesday, Cal Law reported that ConnectU’s former lawyers at Quinn Emanuel accidentally published the value of the settlement — $65 million — in a marketing brochure.
Then, last night the Associated Press took advantage of a court-hearing transcript that wasn’t redacted properly. The AP was able copy the text from under the black lines in the electronic version of the transcript and discovered that the settlement was equal to $20 million in cash and 1,253,326 shares of Facebook common stock.
The value of that stock has been at the center of the bitter dispute over the settlement. With Quinn Emanuel at the negotiating table last February, ConnectU thought it was getting $20 million plus Facebook stock worth $35.90 a share, which was based on Facebook’s $15 billion valuation. That would’ve made the stock portion of the settlement worth $45 million and the whole thing worth $65 million, as Quinn crowed in its marketing piece.
But it turned out that Facebook had actually valued itself at $3.75 billion, making those shares worth just $8.88. That would make the stock portion worth just $11 million and the whole settlement worth $31 million. ConnectU founders Cameron and Tyler Winkelvoss were pretty unhappy, and they fired Quinn Emanuel and tried to get Judge James Ware to toss the settlement, but to no avail.
This latest revelation makes Quinn’s advertising the $65 million settlement even more interesting and also seems to explain the firm’s fee fight with ConnectU. Now in arbitration, Quinn claims that it’s owed $13 million by ConnectU. If the settlement was worth $65 million, then a $13 million fee is modest as these things go, but if the deal was only worth $31 million it would amount to a cut of just over 40 percent. That’s probably more than ConnectU wanted to pay.
— Zusha Elinson