The Supreme Court threw out on Nov. 22 Facebook’s attempt to shut down a shareholder lawsuit over a major data privacy breach.
The ruling leaves in place a decision last year by the U.S. Court of Appeals for the Ninth Circuit that requires the company to face the lawsuit.
The new decision came in the form of a one-sentence unsigned order in Facebook Inc. v. Amalgamated Bank stating that the “writ of certiorari is dismissed as improvidently granted.”
A writ of certiorari is a court order that allows the justices to move forward with an appeal.
A court dismisses a case as “improvidently granted” when it later decides it should not have agreed in the first place to hear the case at all.
The court did not explain its reasoning. No justices dissented.
The ruling came after the justices seemed skeptical of Facebook parent Meta Platforms Inc.’s oral arguments on Nov. 6 asking the court to dismiss a lawsuit accusing it of deceiving investors regarding a data-harvesting controversy that involved political consulting company Cambridge Analytica.
The case involves a private securities fraud-related class action related to the now-defunct UK-based Cambridge Analytica’s “wrongful acquisition and misuse of Facebook user data,” according to Facebook’s filing with the nation’s highest court.
Meta agreed in December 2022 to pay out $725 million to settle a class-action proceeding that said the company permitted third parties, including Cambridge Analytica, to gain access to as many as 87 million users’ personal information.
Cambridge Analytica previously worked for then-candidate Donald Trump’s successful presidential campaign in 2016 and had access to personal data from millions of Facebook accounts for purposes of targeting and profiling voters. The account holders didn’t consent and had their data harvested through an app.
The scandal led to government investigations, and Meta CEO Mark Zuckerberg was called to testify before Congress.
Meta argued that the Ninth Circuit made a mistake in October 2023 when it allowed the multibillion-dollar lawsuit to proceed based on allegations that Facebook, as the company was previously known, inflated share prices by failing to provide adequate legally mandated public disclosure that its user data would be misused.
The investors claim that corporate actions contributed to two 2018 price drops that caused the company to lose more than $200 billion in market capitalization.
A federal district court threw out the shareholders’ claims three times, but the Ninth Circuit resurrected them. Meta said in its petition that the circuit court “adopted extreme outlier positions.”
“The Ninth Circuit’s decision will light a beacon for class-action lawsuits that would be dismissed in any other circuit,” the petition stated.
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