Meta Platforms Inc. META is set to face a multibillion-dollar lawsuit following the dismissal of its appeal by the U.S. Supreme Court over the Cambridge Analytica data scandal.
What Happened: The Supreme Court, which heard arguments on Meta's appeal on Nov. 6, gave no explanation for the dismissal.
It only stated that the case was being "dismissed as improvidently granted," reported Bloomberg.
This dismissal increases the likelihood of Mark Zuckerberg's Meta facing a costly settlement, potentially as large as $2 billion, according to Bloomberg Intelligence analyst Matthew Schettenhelm.
In a statement, Meta has expressed disappointment and maintained that the plaintiff’s claims are baseless. "We will continue to defend ourselves as this case is considered by the district court."
Meta is accused of misleading shareholders about the risks associated with the 2018 Cambridge Analytica scandal, involving the unauthorized use of personal data from over 30 million users.
The shareholders argue that revelations about the breach eventually led to two 2018 price drops that cost the company more than $200 billion in market value.
Meta did not immediately respond to Benzinga’s request for a statement.
Why It Matters: Meta faced another legal setback in October when a U.S. District Judge rejected the company's attempt to dismiss claims made in two separate lawsuits filed by U.S. states.
The lawsuits accused Meta of contributing to mental health issues among teenagers by making its platforms addictive.
Moreover, shareholder lawsuits have been a common occurrence in the tech industry. For instance, In October Alibaba Group BABA agreed to a $433.5 million settlement in a class-action lawsuit filed by its shareholders.
Similarly, Tilray Brands Inc. TLRY also faced a shareholder lawsuit accusing the company of misleading voting practices.
Currently, the Supreme Court is also reviewing an appeal by Nvidia Corporation NVDA, which faces a lawsuit alleging it misled shareholders about its dependence on crypto-mining revenue ahead of a market crash.
Price Action: Meta’s shares dropped 0.7% on Friday, ending the day at $559.14. In after-hours trading, the stock gained 0.098%, reaching $559.69 as of this writing, according to data from Benzinga Pro.
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