Meta Platforms investors have formally asked a US appeals court to reinstate a proposed class action lawsuit accusing Facebook’s parent company of concealing a serious data breach that has allowed a political consulting firm to collect personal information from users.
The motion came during a hearing Wednesday in the US 9th Circuit Court of Appeals in San Francisco over the Cambridge Analytica scandal, which involved accessing data from up to 87 million users.
Investors have said so Facebookas the company was called, misled them in 2016 by calling data breaches a mere “risk” even though it knew Cambridge had accessed it user data.
Investors said they suffered losses in July 2018 when Facebook’s share price fell after the company said user growth had slowed after the extent of the breach was revealed.
US District Judge Edward Davila ruled in 2020 that Facebook’s statements were not false because Cambridge’s data usage was in the news in 2015.
At Wednesday’s hearing, the investors’ attorney, Tom Goldstein, told a three-judge panel that Davila’s judgment should be reversed because Facebook downplayed the news and failed to take vigorous action.
MetaJoshua Lipshutz’s attorney countered that the company had made adequate disclosures that cyberattacks had and would occur.
Circuit Judges Margaret McKeown and Jay Bybee were skeptical, calling the disclosures “boilerplate” and suggesting they may not be meaningful to investors.
“If you have a phishing incident from an 18-year-old sitting in his parents’ basement, it’s true,” Bybee said. “But it’s not helpful given the nature of the leak to Cambridge.”
Lipshutz responded that even if there were false statements, investors would still have to prove that Meta had improper intent.
“It’s not plausible that the company tried to mislead the public about something the public already knew,” he said.
Facebook paid more than US$5 billion (nearly Rs.41,270 billion) in penalties to US authorities over Cambridge Analytica. It agreed to pay US$725 million (nearly Rs.6,000 crore) to settle a lawsuit filed by Facebook users in December.
© Thomson Reuters 2023
