Facebook ordered by U.S. judge to turn over data privacy records

(Reuters) – A U.S. judge ordered Facebook Inc to give
shareholders emails and other records concerning how the social
media company handles data privacy, after data for 87 million users
was accessed by the British political consulting firm Cambridge
Analytica.

In a 57-page decision on Thursday, which followed a one-day
trial in March, Vice Chancellor Joseph Slights of the Delaware
Chancery Court said shareholders demonstrated a “credible basis” to
believe Facebook board members may have committed wrongdoing
related to data privacy breaches.

Slights noted that Facebook had at the time of the 2015
Cambridge Analytica breach been subject to a U.S. Federal Trade
Commission consent decree that required it to bolster its data
security measures. The breach was not revealed until March
2018.

“Evidence presented at trial provides a credible basis to infer
the board and Facebook senior executives failed to oversee
Facebook’s compliance with the consent decree and its broader
efforts to protect the private data of its users,” Slights
wrote.

Shareholders sued Facebook last September to obtain records
related to Cambridge Analytica and other breaches, and said that
upon finding wrongdoing, they might sue company officers and
directors through a so-called derivative lawsuit.

Derivative lawsuits are brought on behalf of companies, with
money recovered from officers and directors, or their insurers,
going to the companies themselves.

Facebook declined to comment on Friday. Daniel Rehns, a lawyer
for the shareholders, also declined to comment.

Facebook’s share price sank 19%, wiping out $120 billion of
shareholder wealth, last July 26 after the Menlo Park, California
company posted disappointing results in the first full quarter
since the Cambridge Analytica breach was revealed, and said it was
spending more on security measures.

Cambridge Analytica, hired by U.S. President Donald Trump’s 2016
election campaign, used profiling techniques to predict and
influence voter behavior.

It shut down after the breach was disclosed, and several U.S.
and European regulatory probes into Facebook ensued.

Facebook Chief Executive Mark Zuckerberg told a U.S. Senate
panel in April 2018 that his company discovered the Cambridge
Analytica breach in 2015, but neither conducted an audit nor told
users and the FTC, Slights wrote.

Slights denied some of the shareholders’ record requests as over
broad.

In a footnote, he said his decision stopped “well short” of
concluding that Facebook officers or directors engaged in
wrongdoing, and any such determination “awaits another day.”

The case is In re Facebook Inc Section 220 Litigation, Delaware
Chancery Court, No. 2018-0661.

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