                 FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

THE FACEBOOK, INC.; MARK              
ZUCKERBERG,
              Plaintiffs-Appellees,
DIVYA NARENDRA; CAMERON
WINKLEVOSS; TYLER WINKLEVOSS,               No. 08-16745
                       Intervenors,          D.C. No.
               v.                         5:07-cv-01389-JW
PACIFIC NORTHWEST SOFTWARE,
INC.; WAYNE CHANG; WINSTON
WILLIAMS,
                       Defendants.
                                      




                           4895
4896             FACEBOOK v. CONNECTU, INC.



THE FACEBOOK, INC.; MARK               
ZUCKERBERG,
               Plaintiffs-Appellees,
                v.
CONNECTU, INC., FKA ConnectU,
LLC,

              Defendant-Appellee,            No. 08-16873
              and                             D.C. No.
CAMERON WINKLEVOSS; TYLER                  5:07-cv-01389-JW
WINKLEVOSS; DIVYA NARENDRA,
           Defendants-Appellants,
              and
PACIFIC NORTHWEST SOFTWARE,
INC.; WAYNE CHANG; WINSTON
WILLIAMS,
                     Defendants.
                                       
                 FACEBOOK v. CONNECTU, INC.             4897



THE FACEBOOK, INC.; MARK               
ZUCKERBERG,
               Plaintiffs-Appellees,
                v.
CONNECTU, INC., FKA ConnectU,
LLC,
                                             No. 09-15021
              Defendant-Appellee,
              and                             D.C. No.
                                           5:07-cv-01389-JW
CAMERON WINKLEVOSS; TYLER
                                               OPINION
WINKLEVOSS; DIVYA NARENDRA,
           Defendants-Appellants,
              and
PACIFIC NORTHWEST SOFTWARE,
INC.; WAYNE CHANG; WINSTON
WILLIAMS,
                     Defendants.
                                       
        Appeal from the United States District Court
          for the Northern District of California
          James Ware, District Judge, Presiding

                   Argued and Submitted
        January 11, 2011—San Francisco, California

                    Filed April 11, 2011

Before: Alex Kozinski, Chief Judge, J. Clifford Wallace and
            Barry G. Silverman, Circuit Judges.

             Opinion by Chief Judge Kozinski
                FACEBOOK v. CONNECTU, INC.            4901




                       COUNSEL

Jerome B. Falk (argued), Sean M. SeLegue, John P.
Duchemin, Shaudy Danaye-Elmi and Noah S. Rosenthal,
Howard Rice Nemerovski Canady Falk & Rabkin, San Fran-
cisco, California, for the defendants-appellants-cross-
appellees.

E. Joshua Rosenkranz (argued), Orrick, Herrington & Sut-
cliffe LLP, New York, NY; I. Neel Chatterjee, Monte Cooper
and Theresa A. Sutton, Orrick, Herrington & Sutcliffe LLP,
Menlo Park, California; and Theodore W. Ullyot and Colin S.
Stretch, Facebook, Inc., Palo Alto, California, for the
plaintiffs-appellees.

James E. Towery, Alison P. Buchanan and Jill E. Fox, Hoge,
Fenton, Jones & Appel, Inc., San Jose, California, for the
defendant-appellee.
4902              FACEBOOK v. CONNECTU, INC.
                          OPINION

KOZINSKI, Chief Judge:

   Cameron Winklevoss, Tyler Winklevoss and Divya Naren-
dra (the Winklevosses) claim that Mark Zuckerberg stole the
idea for Facebook (the social networking site) from them.
They sued Facebook and Zuckerberg (Facebook) in Massa-
chusetts. Facebook countersued them and their competing
social networking site, ConnectU, in California, alleging that
the Winklevosses and ConnectU hacked into Facebook to pur-
loin user data, and tried to steal users by spamming them. The
ensuing litigation involved several other parties and gave
bread to many lawyers, but the details are not particularly rel-
evant here.

   The district court in California eventually dismissed the
Winklevosses from that case for lack of personal jurisdiction.
It then ordered the parties to mediate their dispute. The medi-
ation session included ConnectU, Facebook and the Wink-
levosses so that the parties could reach a global settlement.
Before mediation began, the participants signed a Confidenti-
ality Agreement stipulating that all statements made during
mediation were privileged, non-discoverable and inadmissible
“in any arbitral, judicial, or other proceeding.”

   After a day of negotiations, ConnectU, Facebook and the
Winklevosses signed a handwritten, one-and-a-third page
“Term Sheet & Settlement Agreement” (the Settlement
Agreement). The Winklevosses agreed to give up ConnectU
in exchange for cash and a piece of Facebook. The parties
stipulated that the Settlement Agreement was “confidential,”
“binding” and “may be submitted into evidence to enforce
[it].” The Settlement Agreement also purported to end all dis-
putes between the parties.

   The settlement fell apart during negotiations over the form
of the final deal documents, and Facebook filed a motion with
                  FACEBOOK v. CONNECTU, INC.              4903
the district court seeking to enforce it. ConnectU argued that
the Settlement Agreement was unenforceable because it
lacked material terms and had been procured by fraud. The
district court found the Settlement Agreement enforceable and
ordered the Winklevosses to transfer all ConnectU shares to
Facebook. This had the effect of moving ConnectU from the
Winklevosses’ to Facebook’s side of the case.

  The Winklevosses appeal.

   A. Because ConnectU switched sides, it no longer had any
interest in appealing the district court’s order. The Wink-
levosses sought to intervene after the district court entered
judgment enforcing the Settlement Agreement. The court
denied the motion as unnecessary, holding that they were “al-
ready parties to the[ ] proceedings to enforce the Settlement
Agreement” and “may appeal that Judgment.” In fact, the
Winklevosses had earlier been dismissed from the case. But,
by ruling that they were “already” parties, the district court
implicitly granted them intervention nunc pro tunc. See Beck-
man Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 474-75 (9th
Cir. 1992). They therefore have standing to appeal. See
Marino v. Ortiz, 484 U.S. 301, 304 (1988) (“[T]hose [litigants
who] properly become parties[ ] may appeal an adverse judg-
ment . . . .”).

   B. The Settlement Agreement envisioned that Facebook
would acquire all of ConnectU’s shares in exchange for cash
and a percentage of Facebook’s common stock. The parties
also agreed to grant each other “mutual releases as broad as
possible,” and the Winklevosses represented and warranted
that “[t]hey have no further right to assert against Facebook”
and “no further claims against Facebook & its related parties.”

   Facebook moved to enforce the Settlement Agreement, and
also asked the district court to order ConnectU and the Wink-
levosses to sign more than 130 pages of documents, including
a Stock Purchase Agreement, a ConnectU Stockholders
4904              FACEBOOK v. CONNECTU, INC.
Agreement and a Confidential Mutual Release Agreement.
Facebook’s deal lawyers claimed that the terms in these docu-
ments were “required to finalize” the Settlement Agreement,
and its expert dutifully opined that they were “typical of
acquisition documents.”

   [1] The Winklevosses argue that if these terms really are
“required” and “typical,” then they must be material, and their
absence from the Settlement Agreement renders it unenforce-
able. See Weddington Prods., Inc. v. Flick, 71 Cal. Rptr. 2d
265, 279-80 (Cal. Ct. App. 1998). But a term may be “materi-
al” in one of two ways: It may be a necessary term, without
which there can be no contract; or, it may be an important
term that affects the value of the bargain. Obviously, omission
of the former would render the contract a nullity. See Citizens
Utils. Co. v. Wheeler, 319 P.2d 763, 769-70 (Cal. Dist. Ct.
App. 1958) (arms-length acquisition of a private company’s
shares couldn’t proceed because price was omitted from the
contract). But a contract that omits terms of the latter type is
enforceable under California law, so long as the terms it does
include are sufficiently definite for a court to determine
whether a breach has occurred, order specific performance or
award damages. See Elite Show Servs., Inc. v. Staffpro, Inc.,
14 Cal. Rptr. 3d 184, 188 (Cal. Ct. App. 2004); 1 B.E. Witkin,
Summary of California Law, Contracts § 137 (10th ed. 2005)
[hereinafter Witkin on Contracts]; cf. Terry v. Conlan, 33 Cal.
Rptr. 3d 603, 612-13 (Cal. Ct. App. 2005). This is not a very
demanding test, and the Settlement Agreement easily passes
it: The parties agreed that Facebook would swallow up Con-
nectU, the Winklevosses would get cash and a small piece of
Facebook, and both sides would stop fighting and get on with
their lives.

   [2] The Settlement Agreement even specifies how to fill in
the “material” terms that the Winklevosses claim are missing
from the deal:

    Facebook will determine the form & documentation
    of the acquisition of ConnectU’s shares [ ] consistent
                  FACEBOOK v. CONNECTU, INC.                 4905
    with a stock and cash for stock acquisition. (empha-
    sis added).

California allows parties to delegate choices over terms, so
long as the delegation is constrained by the rest of the contract
and subject to the implied covenant of good faith and fair
dealing. See Cal. Lettuce Growers, Inc. v. Union Sugar Co.,
289 P.2d 785, 791 (Cal. 1955); see also 1 Witkin on Contracts
§ 139. Delegation isn’t necessary for a contract like the Settle-
ment Agreement to be enforceable, as the court may fill in
missing terms by reference to the rest of the contract, extrinsic
evidence and industry practice. See 1 Witkin on Contracts
§ 139; Sterling v. Taylor, 152 P.3d 420, 428-29 (Cal. 2007).
But the clause quoted above leaves no doubt that the Wink-
levosses and Facebook meant to bind themselves and each
other, even though everyone understood that some material
aspects of the deal would be papered later.

   [3] The Winklevosses’ contractual delegation is valid
because the Settlement Agreement obligates Facebook to
draw up documents “consistent with a stock and cash for
stock acquisition.” And, if Facebook should draft terms that
are unfair or oppressive, or that deprive the Winklevosses of
the benefit of their bargain, the district court could reject them
as a breach of the implied covenant of good faith and fair
dealing. See 1 Witkin on Contracts § 798. The district court
got it exactly right when it found the Settlement Agreement
enforceable but refused to add the stack of documents drafted
by Facebook’s deal lawyers.

   C. After signing the Settlement Agreement, Facebook noti-
fied the Winklevosses that an internal valuation prepared to
comply with Section 409A of the tax code put the value of its
common stock at $8.88 per share. The Winklevosses argue
that Facebook misled them into believing its shares were
worth four times as much. Had they known about this valua-
tion during the mediation, they claim, they would never have
signed the Settlement Agreement. The Winklevosses charge
4906              FACEBOOK v. CONNECTU, INC.
Facebook with violating Rule 10b-5, and they seek rescission
of the Settlement Agreement under Section 29(b) of the
Securities Exchange Act of 1934 (the Exchange Act).

   [4] Rule 10b-5 prohibits fraud, whether by commission or
omission, “in connection with the purchase or sale of any
security.” 17 C.F.R. § 240.10b-5. We assume, without decid-
ing, that a party negotiating an exchange of shares to settle a
lawsuit could violate Rule 10b-5 by misstating or hiding
information that would materially change the other side’s
evaluation of the settlement. Cf. Green v. Ancora-Citronelle
Corp., 577 F.2d 1380, 1382-83 (9th Cir. 1978); Foster v. Fin.
Tech., Inc., 517 F.2d 1068, 1071-72 (9th Cir. 1975).

   [5] Section 29(b) renders voidable “[e]very contract made
in violation of any provision of [the securities laws] or of any
rule or regulation thereunder, and every contract . . . the per-
formance of which involves [such a] violation.” 15 U.S.C.
§ 78cc(b); see Mills v. Elec. Auto-Lite Co., 396 U.S. 375,
387-88 (1970). If Facebook violated Rule 10b-5, the Wink-
levosses would be entitled to rescission of the Settlement
Agreement. See Mills, 396 U.S. at 387-88; Royal Air Props.,
Inc. v. Smith, 312 F.2d 210, 213 (9th Cir. 1962).

   [6] The Winklevosses are sophisticated parties who were
locked in a contentious struggle over ownership rights in one
of the world’s fastest-growing companies. They engaged in
discovery, which gave them access to a good deal of informa-
tion about their opponents. They brought half-a-dozen law-
yers to the mediation. Howard Winklevoss—father of
Cameron and Tyler, former accounting professor at Wharton
School of Business and an expert in valuation—also partici-
pated. A party seeking to rescind a settlement agreement by
claiming a Rule 10b-5 violation under these circumstances
faces a steep uphill battle. See Petro-Ventures, Inc. v. Takes-
sian, 967 F.2d 1337, 1341-42 (9th Cir. 1992); see also Harsco
Corp. v. Segui, 91 F.3d 337, 343-44 (2d Cir. 1996); Loca-
france U.S. Corp. v. Intermodal Sys. Leasing, Inc., 558 F.2d
                  FACEBOOK v. CONNECTU, INC.                4907
1113, 1115 (2d Cir. 1977); cf. Mergens v. Dreyfoos, 166 F.3d
1114, 1117-18 (11th Cir. 1999) (applying Florida law).

   In Petro-Ventures, we distinguished between buyers of
securities in the context of “an exclusively business relation-
ship,” 967 F.2d at 1341, and those “acting in the adversarial
setting that is characteristic of litigation,” id. at 1342. When
adversaries “in a roughly equivalent bargaining position and
with ready access to counsel” sign an agreement to “estab-
lish[ ] a general peace,” we enforce the clear terms of the
agreement. Id. (citing Locafrance, 558 F.2d at 1115). Parties
involved in litigation know that they are locked in combat
with an adversary and thus have every reason to be skeptical
of each other’s claims and representations. See Mergens, 166
F.3d at 1118; cf. Goodman v. Epstein, 582 F.2d 388, 403-04
(7th Cir. 1978) (holding that parties signing a release of
claims have a “duty of inquiry”); Moseman v. Van Leer, 263
F.3d 129, 133-34 & n.3 (4th Cir. 2001) (same). They can use
discovery to ferret out a great deal of information before even
commencing settlement negotiations. They can further protect
themselves by requiring that the adverse party supply the
needed information, or provide specific representations and
warranties as a condition of signing the settlement agreement.
See Harsco, 91 F.3d at 344. Such parties stand on a very dif-
ferent footing from those who enter into an investment rela-
tionship in the open market, where it’s reasonable to presume
candor and fair dealing, and access to inside information is
often limited. There are also very important policies that favor
giving effect to agreements that put an end to the expensive
and disruptive process of litigation. See, e.g., Franklin v. Kay-
pro Corp., 884 F.2d 1222, 1229 (9th Cir. 1989) (“[I]t hardly
seems necessary to point out that there is an overriding public
interest in settling and quieting litigation.”). We analyze the
Winklevosses’ securities claims in light of these inhospitable
principles.

  Release of claims. The Settlement Agreement grants “all
parties” “mutual releases as broad as possible”; the Wink-
4908              FACEBOOK v. CONNECTU, INC.
levosses “represent and warrant” that “[t]hey have no further
right to assert against Facebook” and “no further claims
against Facebook & its related parties.” The Winklevosses
maintain that they didn’t discover the facts giving rise to their
Rule 10b-5 claims until after they signed these releases. They
argue that the releases don’t foreclose their challenge to the
Settlement Agreement because Section 29(a) of the Exchange
Act precludes a mutual release of unknown securities fraud
claims arising out of negotiations to settle a pending lawsuit.
See 15 U.S.C. § 78cc(a) (voiding “[a]ny condition, stipula-
tion, or provision binding any person to waive compliance
with” the securities laws).

   [7] Petro-Ventures dealt with just such a settlement agree-
ment. 967 F.2d at 1338-39. We held that parties possessing
roughly equivalent bargaining strength could release all
claims arising out of the transaction that gave rise to the liti-
gation, even though they hadn’t yet discovered some of the
securities claims when they signed the settlement. Id. at 1342.
Such a release is valid if it “is unambiguous in conveying the
intent of the parties to release all unknown claims.” Id. The
Settlement Agreement the parties negotiated granted “releases
as broad as possible.” As sophisticated litigants, the Wink-
levosses or their counsel should have been familiar with
Petro-Ventures and understood that the broadest possible
release includes both known and unknown securities claims.
An agreement meant to end a dispute between sophisticated
parties cannot reasonably be interpreted as leaving open the
door to litigation about the settlement negotiation process. See
Petro-Ventures, 967 F.2d at 1342 (discussing the parties’ “in-
tent to end their various disputes . . . once and for all” (ellip-
ses in original)). A release in such an agreement would be
useless to end litigation if it couldn’t include claims arising
from the settlement negotiations. Cf. Sander v. Weyerhaeuser,
966 F.2d 501, 503 (9th Cir. 1992).

  [8] The Winklevosses point out that Facebook’s alleged
securities law violations took place in connection with the set-
                  FACEBOOK v. CONNECTU, INC.                4909
tlement itself, whereas the unknown securities claim in Petro-
Ventures arose out of facts that occurred prior to the settle-
ment. This is a distinction without a difference: Both here and
in Petro-Ventures the parties gave up securities law claims
they didn’t know they had. If the release is effective in the
one case, there’s no principled reason it shouldn’t be effective
in the other. The district court correctly concluded that the
Settlement Agreement meant to release claims arising out of
the settlement negotiations, and that the release was valid
under section 29(a).

   Securities fraud claims. In any event, the Winklevosses’
securities fraud claims fail on the merits. The Winklevosses
make two related claims: that Facebook led them to believe
during the settlement negotiations that its shares were worth
$35.90, even though Facebook knew that its shares were, in
fact, worth only $8.88; and that Facebook failed to disclose
material information, namely the $8.88 tax valuation, during
the negotiations.

   In support of these claims, the Winklevosses proffered evi-
dence of what was said and not said during the mediation. The
district court excluded this evidence under its Alternative Dis-
pute Resolution (ADR) Local Rule 6-11, which it read to
create a “privilege” for “evidence regarding the details of the
parties’ negotiations in their mediation.” But privileges are
created by federal common law. See Fed. R. Evid. 501. It’s
doubtful that a district court can augment the list of privileges
by local rule. Cf. In re Grand Jury Subpoena Dated Dec. 17,
1996, 148 F.3d 487, 491-93 (5th Cir. 1998) (examining
whether a federal statute created an evidentiary privilege). In
any event, the parties used a private mediator rather than a
court-appointed one. See N.D. Cal. ADR L.R. 3-4(b) (“A pri-
vate ADR procedure may be substituted for a Court program
if the parties so stipulate and the assigned Judge approves.”).
Their mediation was thus “not subject to the . . . ADR Local
Rules,” including Local Rule 6-11. Id.
4910              FACEBOOK v. CONNECTU, INC.
   [9] Nevertheless, the district court was right to exclude the
proffered evidence. The Confidentiality Agreement, which
everyone signed before commencing the mediation, provides
that:

    All statements made during the course of the media-
    tion or in mediator follow-up thereafter at any time
    prior to complete settlement of this matter are privi-
    leged settlement discussions . . . and are non-
    discoverable and inadmissible for any purpose
    including in any legal proceeding. . . . No aspect of
    the mediation shall be relied upon or introduced as
    evidence in any arbitral, judicial, or other proceed-
    ing. (emphasis added).

This agreement precludes the Winklevosses from introducing
in support of their securities claims any evidence of what
Facebook said, or did not say, during the mediation. See John-
son v. Am. Online, Inc., 280 F. Supp. 2d 1018, 1027 (N.D.
Cal. 2003) (enforcing a similar agreement). The Winklevosses
can’t show that Facebook misled them about the value of its
shares or that disclosure of the tax valuation would have sig-
nificantly altered the mix of information available to them
during settlement negotiations. Without such evidence, their
securities claims must fail. See In re Daou Sys., Inc., 411 F.3d
1006, 1014 (9th Cir. 2005); see also McCormick v. Fund Am.
Cos., 26 F.3d 869, 876 (9th Cir. 1994).

   The Winklevosses argue that if the Confidentiality Agree-
ment is construed to defeat their Rule 10b-5 claims, it is void
under section 29(a) of the Exchange Act as an invalid waiver.
But section 29(a) “applie[s] only to express waivers of non-
compliance,” Levy v. Southbrook Int’l Invs., Ltd., 263 F.3d
10, 14, 18 (2d Cir. 2001), with the “substantive obligations
imposed by the Exchange Act,” Shearson/Am. Express, Inc.
v. McMahon, 482 U.S. 220, 228 (1987). The Confidentiality
Agreement merely precludes both parties from introducing
evidence of a certain kind. Although this frustrates the securi-
                  FACEBOOK v. CONNECTU, INC.                4911
ties claims the Winklevosses chose to bring, the Confidential-
ity Agreement doesn’t purport to limit or waive their right to
sue, Facebook’s obligation not to violate Rule 10b-5 or Face-
book’s liability under any provision of the securities laws. See
McMahon, 482 U.S. at 230.

    [10] Even if we were to construe the Confidentiality
Agreement as a waiver of the Winklevosses’ 10b-5 claims, it
wouldn’t violate section 29(a). Petro-Ventures expressly con-
sidered a section 29(a) argument in the context of a global set-
tlement agreement between sophisticated parties engaged in
litigation. 967 F.2d at 1341-43. The court distinguished an
earlier case, Burgess v. Premier Corp., 727 F.2d 826 (9th Cir.
1984), which had applied section 29(a) to preclude the waiver
of unknown claims by plaintiffs who were “not acting in the
adversarial setting that is characteristic of litigation.” Petro-
Ventures, 967 F.2d at 1342. Petro-Ventures held that “a
totally different situation occurs where a plaintiff has affirma-
tively acted to release another party from any possible liabil-
ity in connection with a transaction in securities.” Id. In such
situations, the parties are “not so concerned with protecting
their rights as investors as they [are] with establishing a gen-
eral peace.” Id. We are bound by Petro-Ventures to conclude
that the Confidentiality Agreement did not violate section
29(a). Cf. Locafrance, 558 F.2d at 1115.

                             ***

   The Winklevosses are not the first parties bested by a com-
petitor who then seek to gain through litigation what they
were unable to achieve in the marketplace. And the courts
might have obliged, had the Winklevosses not settled their
dispute and signed a release of all claims against Facebook.
With the help of a team of lawyers and a financial advisor,
they made a deal that appears quite favorable in light of recent
market activity. See Geoffrey A. Fowler & Liz Rappaport,
Facebook Deal Raises $1 Billion, Wall St. J., Jan. 22, 2011,
at B4 (reporting that investors valued Facebook at $50 billion
4912              FACEBOOK v. CONNECTU, INC.
—3.33 times the value the Winklevosses claim they thought
Facebook’s shares were worth at the mediation). For whatever
reason, they now want to back out. Like the district court, we
see no basis for allowing them to do so. At some point, litiga-
tion must come to an end. That point has now been reached.

  AFFIRMED.
