Meta Settles $8 Billion Privacy Lawsuit * SciTechTimes.com

Meta Platforms (formerly Facebook) has reached a settlement in an $8 billion lawsuit, avoiding a trial over alleged privacy violations.
The agreement involves Mark Zuckerberg and current and former directors, concluding claims they caused the company financial damage.
This development prevents high-profile testimony, including from Zuckerberg himself.

Settlement Details Remain Undisclosed

Mark Zuckerberg and past and present directors of Meta Platforms reached an agreement to resolve claims totaling $8 billion. This sum was sought for alleged damages incurred by the company due to repeated violations of Facebook user privacy. The specific terms of this settlement were not disclosed by either party involved in the case. Kathaleen McCormick, the Delaware Court of Chancery judge, adjourned the trial as it was set to continue its proceedings. Plaintiffs’ lawyer Sam Closic indicated the agreement was reached swiftly.

Shareholder Allegations and Denials

Shareholders of Meta had initiated legal action against Zuckerberg, Marc Andreessen, and other former company officials, including Sheryl Sandberg. They sought to hold these individuals personally accountable for billions of dollars in fines and legal expenses incurred by Meta in recent years. This included a $5 billion fine levied by the Federal Trade Commission (FTC) in 2019 for failing to comply with a 2012 agreement to protect user data. The defendants consistently denied these allegations, labeling them as “extreme claims” throughout the legal process.

Strategic Avoidance of Testimony

The settlement effectively prevents Zuckerberg and other defendants from providing sworn testimony. Sheryl Sandberg, for instance, had been sanctioned during the litigation for deleting what were deemed sensitive emails, potentially hindering her ability to present her side in court. Furthermore, this resolution spares the plaintiffs the challenge of litigating a complex “Caremark” claim, considered exceptionally difficult to prove under Delaware corporate law. This type of claim asserts a complete failure by board members to oversee company compliance.

Broader Implications and Past Events

This case originated from revelations that data from millions of Facebook users were accessed by Cambridge Analytica, a now-defunct political consulting firm. That firm had worked on Donald Trump’s 2016 U.S. presidential campaign, and these revelations led directly to the record-setting FTC fine. Jeffrey Zients, a former board member, testified that the company did not agree to the FTC fine to shield Zuckerberg from legal liability, countering a key shareholder assertion. This marks the second instance where Zuckerberg has avoided court testimony, following a 2017 decision to abandon a stock plan that would have extended his control over the company.

The Difficulties of Caremark Claims

Caremark claims, which allege a complete failure by a corporate board to oversee a company’s compliance or operations, are notoriously difficult to prove in Delaware courts. The legal standard requires plaintiffs to demonstrate that directors either knew they were not monitoring or that they utterly failed to implement any reporting or information system. This trial marked the first time such claims had proceeded to trial, highlighting the significant legal hurdle plaintiffs faced. Even if a judgment had been in the shareholders’ favor, it would likely have been appealed to the Delaware Supreme Court, which has a history of reversing major shareholder victories in recent years. This inherent difficulty likely played a role in both parties’ willingness to settle.