U.S. Supreme Court to hear Facebook’s bid to invalidate shareholder lawsuit By Reuters
John Cruzel
WASHINGTON (Reuters) – The U.S. Supreme Court agreed on Monday to hear Mehta’s bid to dismiss Facebook (NASDAQ:) a private securities fraud lawsuit alleging the social media platform misused user data to mislead investors in 2017 and 2018. I did. Company and Third Parties.
The judges accepted Facebook’s appeal of a lower court decision allowing a shareholder lawsuit filed in California. merged bank (NASDAQ:). The court plans to hear the case on the next date starting in October.
The plaintiffs filed the class action lawsuit in 2018 after Facebook’s stock price fell following media reports that British political consulting firm Cambridge Analytica used improperly collected Facebook user data in connection with Donald Trump’s successful 2016 presidential campaign. The number of users reaches up to 87 million.
The plaintiffs amended their lawsuit in 2018, adding that Facebook had shared its data with dozens of third parties without users’ explicit consent, marking the second stock price drop that year. The lawsuit seeks unspecified monetary damages.
The plaintiffs accuse Facebook and the company’s top executives of violating the Securities Exchange Act of 1934 by making false and misleading statements in 2017 and 2018. This included that user data could be compromised when the company learned in 2015 that Cambridge Analytica had violated its privacy policies.
U.S. District Judge Edward Davila dismissed the shareholders’ lawsuit in 2021, but the San Francisco-based U.S. 9th Circuit Court of Appeals reinstated their claims in a 2-1 ruling.
“The problem is that Facebook has expressed the risk of improper access to or disclosure of Facebook user data as purely hypothetical, even though the exact risk has already occurred,” Justice Margaret McKeown wrote in the 9th Circuit decision.
Facebook urged the judges to appeal, saying the 9th Circuit ruling “will force public companies to disclose to investors past incidents that do not pose a known threat to the company.”
The Cambridge Analytica data breach led to government investigations into Facebook’s privacy practices, lawsuits, and the subpoena of Meta CEO Mark Zuckerberg by lawmakers. It prompted a U.S. Congressional hearing.
Facebook paid more than $5 billion in fines to U.S. authorities over the Cambridge Analytica scandal and $725 million to settle a separate class-action lawsuit filed by Facebook users.
