By Jody Godoy
(Reuters) – Meta Platforms Inc investors formally asked a U.S. 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 U.S. 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.
U.S. 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 U.S. authorities over Cambridge Analytica. It agreed to pay $725 million to settle a lawsuit by Facebook users in December.
(Reporting by Jody Godoy)