The Supreme Court threw out on Nov. 22 Facebook’s attempt to shut down a shareholder lawsuit over a major data privacy breach.
The ruling leaves in place a decision last year by the U.S. Court of Appeals for the Ninth Circuit that requires the company to face the lawsuit.
A writ of certiorari is a court order that allows the justices to move forward with an appeal.
A court dismisses a case as “improvidently granted” when it later decides it should not have agreed in the first place to hear the case at all.
The court did not explain its reasoning. No justices dissented.
The case involves a private securities fraud-related class action related to the now-defunct UK-based Cambridge Analytica’s “wrongful acquisition and misuse of Facebook user data,” according to Facebook’s filing with the nation’s highest court.
Meta agreed in December 2022 to pay out $725 million to settle a class-action proceeding that said the company permitted third parties, including Cambridge Analytica, to gain access to as many as 87 million users’ personal information.
Cambridge Analytica previously worked for then-candidate Donald Trump’s successful presidential campaign in 2016 and had access to personal data from millions of Facebook accounts for purposes of targeting and profiling voters. The account holders didn’t consent and had their data harvested through an app.
The scandal led to government investigations, and Meta CEO Mark Zuckerberg was called to testify before Congress.
Meta argued that the Ninth Circuit made a mistake in October 2023 when it allowed the multibillion-dollar lawsuit to proceed based on allegations that Facebook, as the company was previously known, inflated share prices by failing to provide adequate legally mandated public disclosure that its user data would be misused.
The investors claim that corporate actions contributed to two 2018 price drops that caused the company to lose more than $200 billion in market capitalization.
A federal district court threw out the shareholders’ claims three times, but the Ninth Circuit resurrected them. Meta said in its petition that the circuit court “adopted extreme outlier positions.”
During oral argument on Nov. 6, Meta attorney Kannon Shanmugam said the Ninth Circuit’s rule “threatens to create a sweeping regime of securities liability for omissions” when it held that “a risk disclosure can be misleading simply because a company does not disclose that the specified triggering event for the risk had occurred in the past.”
This approach could lead to “over-disclosure and fraud by hindsight, and this court should reject it.”
The shareholders’ attorney, Kevin Russell, argued at the time that there was no data breach in this case.
What actually happened was Facebook gave a developer access to user data but disclosed little information about the practice, he said.
“Reasonable investors would have thought that it never happened, and particularly on this scale,” Russell said.
“That’s why users were so angry when they found out about this.”
Meta spokesman Andy Stone said he was disappointed by the Supreme Court’s decision.
“The plaintiffs’ claims are baseless and we will continue to defend ourselves as this case is considered by the district court,” he said in a statement.
Russell declined to weigh in on the new ruling.
“We have no comment,” Russell said by email.
The Epoch Times reached out to the U.S. Department of Justice but no reply was received by publication time.
