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Facebook Wins Bid to Toss Shareholder’s Lawsuit Over Diversity (1)

March 22, 2021, 2:52 PM; Updated: March 22, 2021, 3:45 PM

Facebook Inc. has fought off an investor’s lawsuit claiming the company lost advertisers over concerns about its commitment to diversity.

Magistrate Judge Laurel Beeler of the U.S. District Court for the Northern District of California on March 19 approved Facebook’s request to dismiss shareholder Natalie Ocegueda’s case.

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 they viewed as hate speech. She highlighted 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.

The investor claimed that the board fostered conditions, such as insufficient internal controls, that led to a lack of diversity among its directors and company executives, discriminatory pay practices, biased advertising, and the advertiser boycott.

The lawsuit was “wrong on the facts and has no basis in the law,” Facebook said in a court filing. The company has said it takes its position in the country’s dialogue about race seriously, citing diversity on its board, among other factors.

“The plaintiff did not plead plausible facts about discriminatory practices in advertising, hiring, and pay that render the statements misleading,” Beeler wrote in her order.

Ocegueda can file a case in the Delaware Court of Chancery if she still wants to pursue claims against Facebook, Beeler wrote.

Lawyers for Ocegueda and Facebook didn’t immediately respond to a request for comment.

The case is Ocegueda v. Zuckerberg, N.D. Cal., No. 3:20-cv-04444, order issued 3/19/21.

(Updates with additional background throughout)

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

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com

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