Meta Platforms investors formally asked a US appeals court to revive a proposed class action accusing the Facebook parent of concealing a serious privacy breach that let a political consulting firm harvest users' personal information.
The request came during oral arguments on Wednesday before
the 9th US Circuit Court of Appeals in San Francisco over the Cambridge
Analytica scandal, where data for up to 87 million users was accessed.
Investors claimed that Facebook, as the company was known,
misled them in 2016 by describing data breaches as a mere "risk,"
when it knew that Cambridge had accessed user data.
The investors said they incurred losses in July 2018 when
Facebook's share price fell after the company said user growth slowed after the
magnitude of the breach became public.
US District Judge Edward Davila ruled in 2020 that
Facebook's statements were not false because Cambridge's data use had been in
the news in 2015.
In Wednesday's hearing, the investors' lawyer Tom Goldstein
told a three-judge panel that Davila's ruling should be reversed because
Facebook had downplayed the news reports and not taken strong action.
Meta's lawyer Joshua Lipshutz countered that the company had
adequately disclosed that cyberattacks had occurred and would occur in the
future.
Circuit Judges Margaret McKeown and Jay Bybee appeared
skeptical, calling those disclosures "boilerplate" and suggesting
they might not be meaningful to investors.
"If they have one incident of phishing by some
18-year-old sitting in his parent's basement it's true," Bybee said.
"But it's not helpful considering the nature of the leak to
Cambridge."
Lipshutz replied that even if there were misstatements,
investors must still show Meta had wrongful intent.
"It's not plausible that the company was trying to
mislead the public about something the public already knew," he said.
Facebook paid more than $5 billion in penalties to US
authorities over Cambridge Analytica. It agreed to pay $725 million to settle a
lawsuit by Facebook users in December. © Reuters
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