Federal Appellate Court Revives Privacy-Based Shareholder Lawsuit Against Meta
According to a report from Reuters, the Ninth Circuit Court of Appeals has revived a shareholder lawsuit filed against Meta. The tech giant that owns Facebook and Instagram is facing a complaint from shareholders for harm related to alleged data privacy violations. In this article, our Miami shareholder litigation attorney discusses the dispute in more detail.
Background: Meta Accused of Data Privacy Violations (Cambridge Analytica Case)
The Meta Cambridge Analytica scandal is a significant data breach controversy that erupted in 2018. Cambridge Analytica—a political consulting firm—stood accused of improperly accessing the personal data of approximately 87 million Facebook users without their consent. The exposed data was reportedly used for political advertising, including in the 2016 U.S. presidential election. Serious questions were raised about how Meta—specifically on the Facebook platform—allowed third parties to access sensitive user data. For reference, Meta has already paid approximately $5 billion in penalties related to the matter.
Shareholders Alleged that Meta Executives Knowingly Misrepresented Risks
The Cambridge Analytica scandal was more than just a consumer and public relations issue for Meta. It also resulted in shareholder litigation. A group of shareholders filed a class action claim against the corporation alleging that its leadership falsely represented the risk of user data compromise as hypothetical—despite being aware of the privacy violations. However, that shareholder lawsuit was initially dismissed by a trial court.
Court of Appeals: Shareholder Lawsuit Against Meta Was Improperly Dismissed
On October 18, 2023, a federal appellate court in California determined that a class action shareholder lawsuit against Meta was wrongfully dismissed in 2020. In a 2 to 1 ruling, a judicial panel from the Ninth Circuit Court of Appeals found that shareholders had pleaded sufficient allegations to move forward with their class action claim.
Key 2020 Ruling: Ninth Circuit Found Alphabet (Google) Could Be Sued for Similar Matter
The class action shareholder lawsuit against Meta was dismissed by a trial court in early 2020. That dismissal came before a Ninth Circuit Court of Appeals ruling in a shareholder dispute involving Alphabet—the parent company of Google. In that case, Google executives issue warnings to shareholders indicating some financial risks based on the fact that data privacy breaches “could” occur. However, leadership at the company was aware that privacy violations had already happened when that hypothetical warning was issued.
The Ninth Circuit Court of Appeals determined that those statements by Alphabet were sufficiently materially misleading to allow shareholders to file a lawsuit. The Meta Cambridge Analytica has relatively similar facts. Indeed, the majority 2-1 judicial panel that revived the shareholder lawsuit cited the 2020 ruling in the Alphabet data privacy violation case.
Speak to a South Florida Shareholder Litigation Attorney Today
At Pike & Lustig, LLP, our Florida shareholder lawyers are diligent and reliable advocates for clients. If you are locked in a shareholder dispute, we are more than ready to help. Contact our law firm today to arrange your strictly confidential initial appointment. From our Miami office or West Palm Beach, we can help you determine the best path forward.