Meta Platforms and its executives, including Mark Zuckerberg, are petitioning a Delaware judge to dismiss a shareholder lawsuit alleging the company’s failure to address human trafficking on its social media platforms.
Allegations of Negligence
The lawsuit, filed by investment funds, accuses Meta’s directors and senior executives of knowingly neglecting to protect users from human trafficking and child sexual exploitation on Facebook and Instagram. Plaintiffs argue that despite awareness of these activities, Meta’s leadership failed to implement effective oversight and controls to mitigate the harm.
Legal Arguments
Meta’s attorneys argue for dismissal, contending that the alleged conduct hasn’t caused the company “corporate trauma” as required by Delaware law. Additionally, they refute claims of harm, citing speculative future losses and assert that the plaintiffs didn’t demand board action before filing the lawsuit, a typical requirement for derivative complaints.
Challenges to Demand Requirement
Plaintiffs argue that demanding board action would have been futile, as directors, many of whom are linked to Zuckerberg, face potential liability. They highlight the board’s alleged negligence in addressing warning signs, such as lawsuits and media reports, related to human trafficking and child exploitation on Meta’s platforms.
Debate on Director Oversight
Under Delaware law, directors can be held accountable for oversight failures related to legal compliance. However, there’s a legal debate on whether this extends to business risks. Judge Laster, considering the case, acknowledged the severity of the issue and indicated he would rule on the matter in due course.
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