In July, a report from Eli Sherman, an investigative reporter at Rhode Island broadcaster WPRI, detailed that “Rhode Island’s employee retirement system is suing Facebook CEO Mark Zuckerberg and other top executives over the Cambridge Analytica data-privacy scandal, alleging their actions caused ‘significant damage’ to the company and long-term shareholders.”
The legal challenge was under seal until this month. As Gizmodo’s Whitney Kimball reports, the Rhode Island complaint was consolidated with that of other plaintiffs, including other pension funds:
The plaintiffs in the suits, which were filed publicly in the Delaware Court of Chancery in August, are Facebook shareholders, including pension funds for teachers, firefighters, police, nurses, judges, as well as a construction workers’ union. They accuse Zuckerberg, Facebook COO Sheryl Sandberg, and Facebook board members Marc Andreessen and Peter Thiel of counts related to breach of fiduciary duty. They also accuse Thiel’s data analytics firm, Palantir Technologies, of unfair competition.
Politico‘s Leah Nylen summarized the key contention of the suit:
Facebook conditioned its $5 billion payment to the Federal Trade Commission to resolve the Cambridge Analytica data leak probe on the agency dropping plans to sue Facebook CEO Mark Zuckerberg individually, shareholders allege in a lawsuit.
The FTC also said in court that Facebook’s fine would have been closer to $106 million, but the company agreed to the $5 billion penalty to avoid having Zuckerberg or Chief Operating Officer Sheryl Sandberg deposed and any liability for the CEO, the suit alleged.
The condition that Zuckerberg not be named personally was previously unknown.
The central allegation kicking this off is the FTC's draft settlement named Zuckerberg personally which would have caused all sorts of issues for him. The board, entirely controlled by Zuckerberg, refused and paid $5B to protect him so FTC didn't name him personally. /5 pic.twitter.com/Xu9l5sBF2v— Jason Kint (@jason_kint) September 21, 2021
The Real Facebook Oversight Board, an activist group that advocates for accountability of the social media firm and whose name is a play on the quasi-independent Oversight Board that Facebook established to handle questions dealing with its content moderation policies, published the documents related to the suit this week, adding that the “plaintiff’s submission to the lawsuit serves as a record that documents the multitude of false claims, misleading statements, and lies that Facebook and its executives made dating back to the 2012 FTC Consent Decree.” It urged the Securities and Exchange Commission (SEC) to consider whether it should reopen its investigation into the company.372b91_d52609662545424aaa74c3b37a4edf65
Justin Hendrix is CEO and Editor of Tech Policy Press, a new nonprofit media venture concerned with the intersection of technology and democracy. Previously, he was Executive Director of NYC Media Lab. He spent over a decade at The Economist in roles including Vice President, Business Development & Innovation. He is an associate research scientist and adjunct professor at NYU Tandon School of Engineering. Opinions expressed here are his own.