Facebook Investor’s Diversity Lawsuit Faces Skeptical Judge (1)

March 18, 2021, 8:33 PMUpdated: March 18, 2021, 10:32 PM

A federal judge questioned a Facebook investor’s claims about whether an indifference to diversity issues caused an advertiser exodus at the company.

Shareholder Natalie Ocegueda’s allegations that Facebook Inc. ignored red flags about diversity seem to contradict facts about the company, such as its diverse board, Magistrate Judge Laurel Beeler of the U.S. District Court for the Northern District of California said Thursday.

Beeler heard arguments from Facebook and Ocegueda over the social media giant’s request to dismiss the investor’s case.

“You can’t plead your way around facts that are judicially noticeable or that the court can consider,” Beeler said.

Ocegueda’s suit alleged Facebook’s board was at fault for losing more than 180 advertisers, including Unilever PLC and North Face Inc., over the company’s handling of what the advertisers deemed hate speech. She pointed to Facebook’s decision not to censor President Donald Trump’s “When the looting starts, the shooting starts” post during Black Lives Matter protests last year, court documents show.

The board fostered conditions, such as insufficient internal controls, that led to a lack of diversity among its directors and Facebook’s executives, biased advertising, and the boycott, Ocegueda claimed in court filings.

“There is a causation here,” said Francis Bottini, a Bottini & Bottini Inc. attorney representing Ocegueda.

Facebook has said in court documents it takes its position in the country’s dialogue about race seriously.

Ocegueda’s claims about red flags are “insufficient” and sometimes contradict the record, said B.J. Trach, a Latham & Watkins LLP partner representing Facebook.

The case is Ocegueda v. Zuckerberg, N.D. Cal., No. 3:20-cv-04444, hearing held 3/18/21.

(Updates with additional background throughout)

To contact the reporter on this story: Andrew Ramonas in Washington at aramonas@bloomberglaw.com

To contact the editors responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com; Roger Yu at ryu@bloomberglaw.com

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