A significant $8 billion trial is set to begin on Wednesday, as shareholders of Meta Platforms take legal action against Mark Zuckerberg and other current and former executives. The lawsuit alleges that they unlawfully collected data from Facebook users, breaching a 2012 agreement with the US Federal Trade Commission.
Jeffrey Zients, who served as White House chief of staff under President Joe Biden and held a director position at Meta for two years beginning in May 2018, is anticipated to be among the initial witnesses to testify in the non-jury trial presided over by Kathaleen McCormick, the chief judge of the Delaware Chancery Court.
The upcoming case is set to include testimony from notable figures, including Mark Zuckerberg and several other billionaire defendants. Among them are former Chief Operating Officer Sheryl Sandberg, venture capitalist and board member Marc Andreessen, as well as former board members Peter Thiel, co-founder of Palantir Technologies, and Reed Hastings, co-founder of Netflix.
The attorney representing the defendants, who have refuted the claims, chose not to provide a statement.
The case originated in 2018, sparked by disclosures that data from millions of Facebook users had been accessed by Cambridge Analytica, a now-defunct political consulting firm that was involved in Donald Trump’s 2016 US presidential campaign.
The Federal Trade Commission imposed a $5 billion fine on Facebook following the Cambridge Analytica scandal, citing the company’s breach of a 2012 agreement intended to safeguard user data.
Shareholders are demanding that the defendants cover the costs incurred by Meta, including the FTC fine and additional legal expenses, which plaintiffs estimate exceed $8 billion.
In recent court filings, the defendants characterised the allegations as “extreme,” asserting that the evidence presented at trial will demonstrate that Facebook engaged an external consulting firm to guarantee adherence to the FTC agreement, portraying Facebook as a victim of Cambridge Analytica’s deception.
Meta, not a party to the case, has opted to refrain from commenting. The company has stated on its website that it has allocated billions of dollars towards safeguarding user privacy since 2019.
The lawsuit marks a groundbreaking case as it heads to trial, alleging that board members deliberately neglected their oversight responsibilities for the company. This claim is frequently characterised as the most challenging to substantiate within the realm of Delaware corporate law.
Boeing’s board members, both current and former, reached a settlement in 2021 regarding similar allegations, amounting to $237.5 million. This figure marks the largest settlement in a lawsuit concerning alleged breaches of oversight. The directors of Boeing have denied any allegations of misconduct.
Alongside the privacy allegations central to the Meta case, plaintiffs contend that Zuckerberg foresaw the potential impact of the Cambridge Analytica scandal on the company’s stock value, leading him to sell his Facebook shares and reportedly gain at least $1 billion in the process.
Defendants assert that the evidence will demonstrate that Zuckerberg did not engage in insider trading, emphasizing that he utilized a stock-trading plan intended to eliminate his control over sales and protect against such practices.
McCormick is expected to decide regarding liability and damages several months after the trial concludes.
