Corporate Law News

Winklevoss Twins Defeat Counterclaims in Investment Spat

March 4, 2019, 7:14 PM

The Winklevoss twins won’t have to face fraud claims stemming from an investment dispute because the magazine publisher involved waited too long to file its claims, a Delaware judge said March 1.

Cameron and Tyler Winklevoss sued Treats! LLC, a publisher of fine arts and other magazines, and its founder, alleging they didn’t receive the promised return on their investment. In response, the company countersued, accusing the twins of not following through on a promotional agreement.

But Treats! can’t pursue its fraud and promissory estoppel claims against the Winklevosses because it didn’t bring them quickly enough, the Delaware Chancery Court said, dismissing the counterclaims.

The Winklevoss twins invested in Treats! in 2011, shortly after the movie “The Social Network,” in which the brothers are major characters, came out. Their portrayal in the film was “the main attraction” for the magazine company, which said the brothers agreed to publicly announce their investment and capitalize on their notoriety.

The announcement never came, and the Winklevosses accused the company’s founder of “mismanagement and failing to grow Treats! as promised,” the opinion said. Treats! filed counterclaims for fraud, fraudulent inducement, fraudulent misrepresentation, and promissory estoppel.

But Delaware’s statute of limitations for fraud and promissory estoppel claims is three years, the opinion said. The company’s claims accrued “no later than June 17, 2013,” but Treats! didn’t file the counterclaims until July 2018, according to the opinion.

Treats! said the statute of limitations should be tolled because it made repeated attempts to get the Winklevosses to follow through and announce their investment. But no unusual conditions or extraordinary circumstances existed that kept Treats! from filing on time, the opinion said.

Vice Chancellor Joseph R. Slights wrote the opinion.

Morris James LLP and Harder LLP represented the Winklevosses. Montgomery McCracken Walker & Rhoads LLP and Rimon PC represented represented Treats! and its founder.

The case is Winklevoss Capital Fund LLC v. Shaw, Del. Ch., No. 2018-0398, counterclaims dismissed 3/1/19.

To contact the reporter on this story: Jennifer Bennett in Washington at jbennett@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com