Mark Zuckerberg and other
The 138-page lawsuit, made public late Thursday in Delaware Chancery Court, stems partly from a pair of antitrust lawsuits facing the company, which was accused of monopolizing social media in December in parallel cases brought by the Federal Trade Commission and nearly every state.
Those suits and a series of parallel class actions claim Facebook exploited user data to identify potential competitive threats that it could acquire, copy, or kill.
The Delaware suit, filed by the Southeastern Pennsylvania Transportation Authority, also focuses on a pattern of allegedly inflated advertising metrics that the same pension fund previously investigated in a lawsuit seeking the company’s internal files.
Andy Stone, a Facebook spokesman, said the company believes “this case is without merit, and we will defend ourselves vigorously.” He referred to language from the judge’s ruling in the records case indicating there was “no credible basis” to suspect wrongdoing connected to the ad stats.
SEPTA’s new complaint targets Zuckerberg and other members of Facebook’s board and senior management.
In an echo of the records case, the partly redacted derivative suit claims the company’s leaders breached their fiduciary duties by inflating advertising metrics. It also accuses them of steering Facebook into the antitrust woes it now faces.
They “knowingly implemented the monopolistic business model” and “flouted the material risks associated with pursuing such anti-competitive efforts,” in violation of their fiduciary duties to shareholders, the suit says.
The company’s “error-prone reputation” has caused “public and advertiser trust” in it to disintegrate, according to the complaint.
The suit also voices suspicions “that the company overpaid its FTC settlement by $4.9 billion to protect Zuckerberg from substantial personal liability” after the agency imposed its largest-ever fine in response to privacy violations stemming from the Cambridge Analytica data harvesting scandal.
That allegation forms the basis of a different records lawsuit by Rhode Island’s public employee pension fund.
SEPTA’s complaint was originally filed under seal March 15.
Cause of Action: Breach of fiduciary duty.
Relief: Damages, costs, fees, interest, and an order mandating corporate governance reforms.
Attorneys: SEPTA is represented by Chimicles Schwartz Kriner & Donaldson-Smith LP.
The case is Se. Pa. Transp. Auth. v. Zuckerberg, Del. Ch., No. 2021-0218, complaint unsealed 3/18/21.