A high-profile non-jury trial has begun in Delaware, where a group of Meta shareholders is demanding over $8 billion in damages, claiming the company’s board failed to properly oversee leadership decisions following the 2019 privacy scandal tied to Facebook’s handling of user data.
The trial, presided over by Chief Judge Kathaleen McCormick of the Delaware Chancery Court, opened on Wednesday and is scheduled to run through July 25.
Jeffrey Zients, former Meta board member and current White House Chief of Staff, was the first to testify. Zients served on Facebook’s board from May 2018 to 2020 and defended the decision to settle with the Federal Trade Commission (FTC) for $5 billion, stating it was necessary to avoid further legal complications.
“There was no indication he did anything wrong,” Zients told the court, referring to CEO Mark Zuckerberg. He added that Zuckerberg was a “driving force” at the company and that “it was important he continued in that role.”
Zients said the FTC had initially sought “tens of billions of dollars,” but ultimately accepted $5 billion in a deal that did not name Zuckerberg personally.
The shareholder plaintiffs—primarily union pension funds—allege that Zuckerberg and former COO Sheryl Sandberg ran Facebook as an illegal data-harvesting operation and that the board turned a blind eye to their actions. They’re seeking to hold 11 current and former board members liable for the cost of the settlement and related legal expenses.
The lawsuit stems from the fallout of the Cambridge Analytica scandal, where the now-defunct political consulting firm accessed data from millions of Facebook users and used it in support of Donald Trump’s 2016 presidential campaign.
Among the defendants are some of Silicon Valley’s most prominent figures, including Marc Andreessen, Peter Thiel, and Reed Hastings. Andreessen is expected to testify on Thursday. A lawyer representing the defendants declined to comment, though court filings argue that Facebook was a “victim” of Cambridge Analytica’s deceit.
On the first day of the trial, Neil Richards, a law professor at Washington University and expert for the plaintiffs, testified about “gaps and weaknesses” in Meta’s privacy protocols. However, during cross-examination, Richards admitted he could not confirm whether Facebook had violated the 2012 FTC consent decree, which is a core element of the case.
While Meta itself is not a defendant, the case directly targets the board’s oversight practices. The company has stated on its website that it has invested billions in user privacy since 2019 but declined to comment further.
The suit is widely seen as a landmark Caremark claim, a notoriously difficult legal standard in Delaware corporate law that requires proof that directors knowingly failed to monitor the company’s compliance and risk practices.
The trial comes amid broader scrutiny of Delaware’s corporate governance environment. Four months ago, the state passed legislation making it harder to sue controlling shareholders like Zuckerberg over self-dealing. While that bill does not affect Caremark claims, it was drafted following a meeting between Meta representatives and the state’s governor.
In a related move, Andreessen Horowitz—the VC firm co-founded by Andreessen—announced this month that it would move its corporate registration from Delaware to Nevada, citing legal uncertainty after Judge McCormick’s decision to void Elon Musk’s $56 billion Tesla pay package earlier this year.
The outcome of the trial could set a critical precedent for future board accountability cases in the tech sector.
