## Facts

- Paul D. Ceglia sued Mark Elliot Zuckerberg and Facebook, Inc., alleging an April 2003 “Work for Hire” agreement gave Ceglia a large ownership interest in what became Facebook in exchange for roughly $2,000 and other consideration.
- Zuckerberg acknowledged a 2003 contract for programming work related to Ceglia’s “StreetFax” project but denied any agreement granting Ceglia an ownership interest in Facebook.
- Defendants contended the purported “Work for Hire” document was forged by substituting a fabricated first page referencing “The Face Book” for an authentic StreetFax contract page and by creating or manipulating electronic artifacts to appear contemporaneous.
- The case was filed in New York state court and removed to the Western District of New York on diversity grounds; Ceglia sought remand, arguing Zuckerberg was domiciled in New York.
- The district court authorized expedited discovery targeted at authenticity, including forensic imaging of Ceglia’s devices and comparison to historical email records.
- After extensive forensic development, defendants moved to dismiss for fraud on the court, citing fabricated documents and emails, spoliation, and other litigation misconduct.
- The magistrate judge recommended dismissal with prejudice under a clear-and-convincing-evidence standard; the district judge adopted the recommendation and entered judgment for defendants.
- On appeal, the Second Circuit considered the civil dismissal (and a related action seeking to enjoin a criminal prosecution) and noted that Ceglia had absconded while under indictment.

## Issues

1. Whether removal based on diversity jurisdiction was proper, including whether Zuckerberg was domiciled in California rather than New York at the time of filing.
2. Whether the district court could dismiss the action with prejudice as a sanction for fraud on the court based on fabrication of key evidence and spoliation.
3. Whether the judgments should be affirmed on the merits notwithstanding Ceglia’s fugitive status during the appeal.

## Decision

- The district court denied remand, finding Zuckerberg was domiciled in California and complete diversity existed.
- The district court dismissed the action with prejudice, finding clear and convincing evidence that the Facebook-referencing “Work for Hire” contract and supporting emails were fraudulent and that Ceglia engaged in spoliation and bad-faith litigation conduct.
- The Second Circuit affirmed the district court’s judgments in a nonprecedential summary order.
- The Second Circuit stated it affirmed on the merits even without relying on fugitive disentitlement.

## Legal Principles

- For diversity jurisdiction, citizenship turns on domicile, which requires physical presence in the state and intent to remain indefinitely; courts assess intent through objective indicia (e.g., continuous residence, voter registration, taxes, driver’s license, and principal place of work and interests).
- A federal court may dismiss an action with prejudice for fraud on the court when clear and convincing evidence shows a deliberate scheme to corrupt the judicial process (including fabrication of central documents and false supporting electronic evidence).
- Spoliation and bad-faith litigation misconduct, particularly when tied to fabrication of key proof, can support severe sanctions up to dismissal to protect the integrity of the proceeding.
- Appellate affirmance may rest on the merits of the district court’s findings and sanctions even where fugitive disentitlement could independently justify dismissal of an appeal.

## Conclusion

The litigation ended with denial of remand on diversity-domicile grounds and dismissal with prejudice as a fraud-on-the-court sanction after forensic evidence showed fabrication of the contract and emails central to the ownership claim; the Second Circuit affirmed the judgments on the merits.


Ceglia v. Zuckerberg, 600 F. App’x 34 (2d Cir. 2015)