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Trial centers on alleged data privacy violations by Meta

leaders

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Meta shareholders seek $8 billion in damages

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Defendants say they took steps to protect user privacy

By Tom Hals

WILMINGTON, Delaware, July 16 (Reuters) - An $8 billion

trial by Meta Platforms ( META ) shareholders against Mark

Zuckerberg and other current and former company leaders kicks

off on Wednesday over claims that they illegally harvested the

data of Facebook users in violation of a 2012 agreement with the

U.S. Federal Trade Commission.

Jeffrey Zients, White House chief of staff under President

Joe Biden and a Meta director for two years starting in

May 2018, is expected to be one of the first witnesses to take

the stand in the non-jury trial before Kathaleen McCormick,

chief judge of the Delaware Chancery Court.

The case will feature testimony from Zuckerberg and

other billionaire defendants including former Chief Operating

Officer Sheryl Sandberg, venture capitalist and board member

Marc Andreessen, and former board members Peter Thiel, Palantir

Technologies ( PLTR ) co-founder, and Reed Hastings, co-founder

of Netflix ( NFLX ).

A lawyer for the defendants, who have denied the

allegations, declined to comment.

The case began in 2018, following revelations that data from

millions of Facebook users was accessed by Cambridge

Analytica, a now-defunct political consulting firm that worked

for Donald Trump's successful U.S. presidential campaign in

2016.

The FTC fined Facebook $5 billion in the wake of the

Cambridge Analytica scandal, saying the company had violated a

2012 agreement with the FTC to protect user data.

Shareholders want the defendants to reimburse Meta for

the FTC fine and other legal costs, which the plaintiffs

estimate total more than $8 billion.

In court filings, the defendants described the

allegations as "extreme" and said the evidence at trial will

show Facebook hired an outside consulting firm to ensure

compliance with the FTC agreement and that Facebook was a victim

of Cambridge Analytica's deceit.

Meta, which is not a defendant, declined to comment. On

its website, the company has said it has invested billions of

dollars into protecting user privacy since 2019.

The lawsuit is considered the first of its kind to go to

trial which alleges board members consciously failed to oversee

their company. This is often described as the hardest claim to

prove in Delaware corporate law.

Boeing's ( BA ) current and former board members settled a case

with similar claims in 2021 for $237.5 million, the largest ever

in an alleged breach of oversight lawsuit. The Boeing ( BA ) directors

did not admit to wrongdoing.

In addition to privacy claims at the heart of the Meta case,

plaintiffs allege that Zuckerberg anticipated that the Cambridge

Analytica scandal would send the company's stock lower and sold

his Facebook shares as a result, pocketing at least $1 billion.

Defendants said evidence will show that Zuckerberg did not

trade on inside information and that he used a stock-trading

plan that removes his control over sales and is designed to

guard against insider trading.

McCormick is expected to rule on liability and damages

months after the trial concludes.