US Supreme Court to hear Facebook bid to scuttle shareholder lawsuit (updated)

Amalgamated Financial

10/06/2024 14:57

(Adds details on case, paragraphs 3-10)
    By John Kruzel
       WASHINGTON, June 10 (Reuters) - The U.S. Supreme Court
agreed on Monday to hear a bid by Meta's  META.O  Facebook to
scuttle a private securities fraud lawsuit accusing the social
media platform of misleading investors in 2017 and 2018 about
the misuse of its user data by the company and third parties.
    The justices took up Facebook's appeal of a lower court's
decision allowing a shareholder lawsuit brought in California
and led by Amalgamated Bank  AMAL.O  to proceed. The court will
hear the case in its next term, which begins in October.
    The plaintiffs filed a class action lawsuit in 2018 after
Facebook's stock fell following media reports that the British
political consulting firm Cambridge Analytica had used
improperly harvested Facebook user data in connection with
Donald Trump's successful presidential campaign in 2016. The
Cambridge Analytica breach exposed the data of as many as 87
million users.
    The plaintiffs amended their lawsuit in 2018 to add a second
stock decline that year on reports that Facebook had shared data
with dozens of third parties without the express consent of
users. The suit seeks unspecified monetary damages.
    The plaintiffs accused Facebook and top company officials of
violating the Securities Exchange Act of 1934 by making false
and misleading statements in 2017 and 2018, including that user
data could be compromised when the company was aware in 2015
that Cambridge Analytica had violated its privacy policies.
    U.S. District Judge Edward Davila dismissed the lawsuit by
the shareholders in 2021 but the San Francisco-based 9th U.S.
Circuit Court of Appeals in a 2-1 ruling restored their claims.
    "The problem is that Facebook represented the risk of
improper access to or disclosure of Facebook user data as purely
hypothetical when that exact risk had already transpired," Judge
Margaret McKeown wrote in the 9th Circuit decision.
    Facebook urged the justices to take up its appeal, arguing
that the 9th Circuit's ruling would "force public companies to
inform investors of past incidents that pose no known threat to
the business."
    The Cambridge Analytica data breach fueled government
investigations into Facebook's privacy practices, lawsuits and a
U.S. congressional hearing where Meta Chief Executive Mark
Zuckerberg was grilled by lawmakers.
    Facebook paid more than $5 billion in penalties to U.S.
authorities over the Cambridge Analytica scandal and paid $725
million to settle a separate class action lawsuit by Facebook
users.
    

 (Reporting by John Kruzel; Editing by Will Dunham)
 ((John.Kruzel@thomsonreuters.com;))