The information made public by a Delaware judge who gleaned
it from a "white paper" prepared by a law firm advising Facebook's
board of directors as they debated a proposed $5 billion settlement with the
Federal Trade Commission. That agreement also protected Chief Executive Officer
Mark Zuckerberg.
Vice Chancellor Joseph Slights of the Court of Chancery
cited the paper by Gibson Dunn attorneys in his ruling directing Facebook to
turn over documents to shareholders who are trying to determine if Facebook
overpaid to protect Zuckerberg.
"The documents already produced provide no insight into
why Facebook would pay more than its (apparently) maximum exposure to settle a
claim," said Slights in the ruling. Shareholders, he said, were
"right to question whether internal communications among Facebook
fiduciaries might shed light on the Board’s thinking in this regard."
Facebook did not immediately respond to a request for
comment.
The July 2019 deal resolved allegations Facebook mishandled
user privacy. The company did not admit wrongdoing.
Slights said Facebook faced a maximum penalty of about $104
million, according to the Gibson Dunn paper.
The FTC did not immediately respond to an emailed request
for comment.
Joel Fleming, an attorney for the Facebook shareholders,
told Slights during a hearing last year that before they sue over the FTC
settlement they wanted to know: "Did anyone say, 'Go ask the FTC, would
you take less money if Mr. Zuckerberg is personally liable'?"
Slights refused to order the company to turn over documents
that Facebook said were protected by attorney-client privilege, in part because
the judge said shareholders could gain insights from non-privileged electronic
communications he was ordering to be disclosed. -Reuters
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