Legal Team Requests Dismissal of Shareholder Lawsuit Against Meta over Human Trafficking Allegations – Sky Bulletin
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In a recent development at a Delaware court, Meta Platforms’ legal representatives, including those advocating for CEO Mark Zuckerberg and other current and past executives, are pushing for the dismissal of a lawsuit brought forward by shareholders. These shareholders allege that Meta has an ongoing issue of not adequately dealing with human trafficking and the sexual exploitation of children on its social media platforms such as Facebook and Instagram.
Filed by several investment funds last year, the lawsuit accuses Meta’s leadership of being aware of the extensive improper use of its platforms for human trafficking and child sexual exploitation, yet failing to curtail these illicit activities effectively.
During a hearing with Vice Chancellor J. Travis Laster, the plaintiff’s attorney, Christine Mackintosh, emphasized the gravity of these allegations. “Meta’s directors have been cognizant that their platforms have become grounds for human traffickers and pedophiles yet have not instituted the necessary board-level oversight to eradicate these vile activities,” she argued.
Meta’s defense counsel, David Ross, is advocating for the lawsuit’s dismissal, stating that the company’s leaders have not inflicted “corporate trauma” on Meta, a condition required under Delaware law for the case to proceed. He suggested that the litigation is based on conjecture regarding potential future damages.
Contrary to Ross’s argument, the plaintiffs assert that Meta has already encountered significant harm. They cite steep declines in stock price and market valuation following media revelations about connections between its platforms and trafficking or abuse cases. They point to the hefty costs incurred defending related lawsuits and the reputational damage they believe Meta has sustained.
Furthermore, Meta contends that the lawsuit should be dismissed as the plaintiffs failed to make a formal demand on the board to resolve the issues prior to filing the suit, which is usually a prerequisite for bringing a derivative complaint on the corporation’s behalf. However, the plaintiffs counter that making such a demand would have been an exercise in futility given the defendants’ positions on the board and their likely liabilities.
Mackintosh has claimed the board has neglected numerous warning signs, such as lawsuits, media reports, shareholder resolutions, and increased regulatory scrutiny. She states that the evidence indicates there have been few discussions, if any, by the board concerning these concerns of human trafficking and child sexual exploitation.
Delaware law does hold corporate directors accountable for failing in their duty of oversight in legal compliance. Vice Chancellor Laster admitted to ongoing legal debates about applying this oversight doctrine to business risks versus legal compliance. Laster recognized the severity of the risks involved, stating, “If there was ever a business risk that might warrant enacting oversight obligations, Meta’s alleged child exploitation issues could indeed be such a case.” He deferred his ruling to a later date.
The current proceedings of the Meta shareholder lawsuit highlight the intricate balance between corporate governance and responsibility to address serious societal issues like human trafficking and child exploitation. As the plaintiffs and Meta engage in a legal battle, the outcomes of this case could set a significant precedent for how corporations are held accountable for activities that occur on their platforms. Vice Chancellor Laster’s impending decision will not only impact Meta’s legal standing but also potentially influence the broader landscape of corporate responsibility in the digital age. Stakeholders from various sectors will be watching closely as the Delaware court deliberates on the complexities of this pivotal case.
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