Meta Urges Dismissal of Investors’ ‘Facebook Files’ Securities Fraud Suit

Late last week, Meta Platforms moved to dismiss a consolidated securities fraud complaint, a collection of cases filed after the so-called “Facebook Files” came to light in 2021 when Frances Haugen, a former Meta data scientist, came forward as a whistleblower. The motion says that the investor plaintiffs’ claims do not meet the heightened pleading requirements for fraud and fail to demonstrate intent or that they suffered losses.

The plaintiffs’ 200-page amended consolidated complaint contends that contrary to its representations, Meta’s Facebook and Instagram products harm children and teens, Metas content-moderation policies are unevenly applied, resulting in favorable treatment for some users, and its news feed algorithm and moderation practices promote toxic content and misinformation. As previously reported, the action also targets statements misleading investors about the size of Meta user bases. 

When the news came to light, investors holding Meta shares lost money in a succession of price drops, the suit alleges.

Meta’s motion to dismiss contends that statements challenging aspects of Meta’s business operations are unactionable. Meta urges that the documents underlying the plaintiffs’ claims are “largely unsourced and unattributed and often lacking any meaningful context,” and are thereby unsupportive of their contention that the company misled investors about its policies and practices.

Lacking the requisite specificity, Meta urges that “general statements of this kind cannot be subject to charges of falsity, because they simply are not actionable as a matter of law.” The social media titan adds that publicly traded companies “are not legally obligated to detail all information that might bear on their affairs.”

Meta further says the plaintiffs fail to allege facts signifying an intent to deceive investors, calling the scienter-focused allegations “conclusory” and “cherry-pick[ed].” The motion says there are no “particularized” contentions of personal benefit, that Meta was acting contrary to its expressed commitments, or that it suppressed information that the plaintiffs claim should have been disclosed.

The dismissal hearing is scheduled for June 8 before Judge Jon S. Tigar.

Counsel for lead plaintiffs is Bernstein Litowitz Berger & Grossmann LLP. The Office of the Attorney General of the State of Ohio is additional counsel for co-lead plaintiff The Ohio Public Employees Retirement System. Meta and its executives are represented by Davis Polk & Wardwell LLP.