*

Trial stems from the Cambridge Analytica scandal in 2018

over

privacy of Facebook data

*

Shareholders are seeking to recoup from Zuckerberg and

others

around $8 billion that Meta paid in fines

*

Defendants include Sheryl Sandberg, Marc Andreessen and

Peter

Thiel

By Tom Hals

WILMINGTON, Delaware, July 14 (Reuters) - Mark

Zuckerberg is expected to appear as a star witness in an unusual

$8 billion trial that kicks off this week at which the Meta CEO

is accused of operating Facebook as an illegal enterprise that

allowed users' data to be harvested without their consent.

Shareholders of Meta Platforms ( META ), the parent company

of Facebook, Instagram and WhatsApp, sued Zuckerberg and other

current and former company leaders, saying they continually

violated a 2012 agreement between Facebook and the Federal Trade

Commission to protect users' data.

The case dates back to 2018, after it emerged 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 campaign for U.S. president in

2016.

Shareholders want Zuckerberg and the other defendants to

reimburse the company for more than $8 billion in fines and

other costs paid by Meta after the Cambridge Analytica scandal

came to light, including a record $5 billion fine imposed on

Facebook by the FTC in 2019 for violating the 2012 agreement.

Defendants in the case include former Chief Operating

Officer Sheryl Sandberg, venture capitalist and board member

Marc Andreessen, as well as former board members Peter Thiel,

the Palantir Technologies ( PLTR ) co-founder, and Reed

Hastings, the co-founder of Netflix ( NFLX ).

Zuckerberg and the other defendants, who declined to

comment, have dismissed the allegations in court filings as

"extreme claims." Meta, which is not a defendant, also declined

to comment.

The non-jury trial in Wilmington, Delaware, is scheduled to

last eight days. It will mostly focus on decade-old events and

board meetings to determine how Facebook leaders implemented the

2012 agreement.

While the trial will cover long-ago policies, it comes as

privacy concerns continue to dog Meta, which is under scrutiny

for its training of AI models. The company says it has invested

billions of dollars since 2019 in its program to safeguard

users' privacy.

Jason Kint, the head of Digital Content Next, a trade group

for content providers, said the case will fill in details about

what the board knew - and when - regarding the data of users,

who now total more than 3 billion daily across Meta's platforms.

"There's an argument we can't avoid Facebook and Instagram in

our lives," he said. "Can we trust Mark Zuckerberg?"

MOST DIFFICULT CLAIMS

Two years ago, the defendants sought to dismiss the case

before trial, which the judge declined. "This is a case

involving alleged wrongdoing on a truly colossal scale," said

Travis Laster, the judge handling the case at the time. The

trial in the Court of Chancery will be overseen by Kathaleen

McCormick.

Now the plaintiffs, individual investors and union pension

funds including California's State Teachers' Retirement System,

must prove what is often described as the most difficult claim

in corporate law - showing that directors utterly failed in

their duty of oversight. Legal experts said it appears to be the

first trial on such a claim.

Zuckerberg and Sandberg are alleged to have knowingly caused

the company to violate the law. While Delaware law protects

directors and officers for bad business decisions, it does not

protect them from illegal ones, even if they are profitable.

Defendants said in court filings that plaintiffs cannot

deliver the evidence.

The shareholders in pretrial court papers said they can

prove that after the 2012 agreement, Facebook continued

deceptive privacy practices, at the direction of Zuckerberg. The

defendants said the evidence will show that the company built a

team to oversee privacy and hired an outside compliance firm and

that Facebook was a victim of Cambridge Analytica's "studied

deceit."

In addition to the central privacy claims, plaintiffs also

allege that when Zuckerberg could see that the Cambridge

Analytica scandal was about break and send company stock lower,

he was motivated to offload his stock and reaped at least $1

billion in profit. Defendants said evidence will show he used a

stock-trading plan that can protect against insider-trading

allegations. They also said the motivation was to benefit his

charitable pursuits.