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Shareholders seek $8 billion reimbursement from Meta

executives

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Trial focuses on decade-old events and board meetings

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Andreessen testimony follows his firm's criticism of

Delaware

courts

By Tom Hals

WILMINGTON, Delaware, July 17 (Reuters) - Famed investor

Marc Andreessen is scheduled to take the stand on Thursday to

defend his role on the Facebook board of directors when it was

hit with a $5 billion fine in 2019 for alleged violations of an

agreement with a U.S. regulator to protect user privacy.

Shareholders of Meta Platforms ( META ) hope to hold the

co-founder of the Andreessen Horowitz venture capital firm,

along with Meta's CEO Mark Zuckerberg and others, liable for

more than $8 billion in fines and legal costs the company paid

in recent years to resolve claims that it had violated a 2012

agreement with the U.S. Federal Trade Commission.

The FTC fined Facebook $5 billion in 2019 for failing to

comply with that agreement, which is central to the case.

Zuckerberg is expected to take the stand on Monday.

The shareholders want the 11 defendants to use their

personal wealth to reimburse the company. The defendants have

denied the allegations, which they have called "extreme claims."

Facebook changed its name to Meta in 2021. The company is not a

defendant and declined to comment.

The non-jury trial before Chancellor Kathaleen McCormick

that began on Wednesday is scheduled to run through the end of

next week in Delaware's Court of Chancery.

A ruling in the case, which will mostly focus on decade-old

events and board meetings, will likely take months after the

trial.

Andreessen's appearance comes after his firm last week said

it was changing its state of incorporation to Nevada from

Delaware, where the majority of U.S. publicly traded companies

are based. His firm cited the lack of certainty in Delaware

courts, pointing to two rulings, including one by McCormick last

year to rescind Elon Musk's $56 billion pay package from Tesla.

Most publicly traded U.S. companies are incorporated in

Delaware, whose state budget relies on fees from chartering

businesses. After his pay package was rescinded, Musk led his

companies to incorporate in Texas from Delaware and encouraged

others to follow, though only a handful have done so.

Delaware's lawmakers this year overhauled the state's

corporate law in a bid to prevent companies from leaving.

Joel Fleming, an attorney who represents Meta shareholders,

questioned if Andreessen's firm was trying to pressure the

court, which he said would fail.

"It's a ham-fisted attempt to do what Elon Musk did -- to

huff and puff and send a message to the Court of Chancery," said

Fleming.

A spokesperson for the Andreessen Horowitz firm did not

immediately respond to a request for comment.

The case will also feature testimony from former Facebook

board members Peter Thiel, Palantir Technologies ( PLTR )

co-founder, and Reed Hastings, co-founder of Netflix ( NFLX ).

Meta investors allege in the lawsuit that former and current

board members completely failed to oversee the company's

compliance with the 2012 FTC agreement and claim that Zuckerberg

and former Chief Operating Officer Sheryl Sandberg knowingly ran

Facebook as an illegal data harvesting operation.

The case followed 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. Those

revelations led to the FTC fine, which was a record at the time.

On Wednesday, an expert witness for the plaintiffs testified

about what he called "gaps and weaknesses" in Facebook's privacy

policies but would not say if the company violated the 2012

agreement that Facebook reached with the FTC.

Jeffrey Zients, a former board member, testified on

Wednesday that the company did not agree to the FTC fine to

spare Zuckerberg legal liability, as shareholders allege.

On its website, the company has said it has invested

billions of dollars into protecting user privacy since 2019.