Meta Investors Settle Suit With Zuckerberg, Other Officials (2)

Meta Platforms Inc. investors say they have reached a settlement with current and former directors at the company to end a multibillion-dollar case in Delaware.

Terms of the settlement, which were reached one day after the trial started, weren’t immediately disclosed. Representatives from Meta declined to comment.

The deal would end a legal fight over the way company leaders handled the Cambridge Analytica data privacy scandal, including claims that the company overpaid in a 2019 Federal Trade Commission settlement in order to personally protect Chief Executive Officer Mark Zuckerberg.

The litigation in Delaware Chancery Court focused on the $5 billion that Meta, then known as Facebook, paid to settle with the FTC over privacy issues. The case followed disclosures that an outside developer collected personal data from millions of Facebook users without their consent. Cambridge Analytica used the information when it was hired by Donald Trump’s 2016 election campaign.

Meta shareholders accused the company’s top executives of turning a blind eye to red flags over Cambridge Analytica’s data practices, then pushing the company to overpay the FTC so that Zuckerberg would not be held personally liable. Shareholders were seeking at least $7 billion in damages to be repaid back to the company.

The trial opened Wednesday with testimony from a director at the time of the FTC deal, Jeffrey Zients, who was later former President Joe Biden’s chief of staff. He said the board asked its lawyers to approach the FTC with a proposal that it was willing to pay billions of dollars to settle allegations but would not accept any agreement that held founder Zuckerberg personally responsible.

Board members “felt it was important to get this behind us so we could focus on growth,” Zients said. They believed Zuckerberg, as CEO, was essential to the business and “there wasn’t any indication” he personally had anything to do with the privacy missteps related to political consulting firm Cambridge Analytica, he said.

Zuckerberg, former Chief Operating Officer Sheryl Sandberg, and prominent venture capital investors Marc Andreessen and Peter Thiel were expected to testify during the eight-day trial. Andreessen, who still sits on the company’s board, was expected on the witness stand Thursday.

A spokesperson for Sandberg declined to comment.

Because it is a derivative case — one that allows investors to sue company executives or board members on behalf of the company itself — the proposed settlement must be approved by Delaware Chancery Judge Kathaleen S.J. McCormick. She’ll review whether the terms of the deal reasonably balance the benefit to Meta with any money paid back into the company’s coffers or changes to its internal compliance and monitoring mechanisms. Shareholders will have the opportunity to object to the settlement at a future hearing.

A settlement eliminates the need to explore the evidence through trial, said Paul Regan, a Widener University Delaware Law School professor. “If they can wrap this thing up for a number they like, it’s basically a pretty cool math calculation,” Regan said.

The agreement also means company officials and directors won’t have to testify. “This 11th hour settlement — or even past the 11th hour, as the clock was striking midnight — is certainly convenient timing in allowing the board members to forgo having to testify at trial,” said Eric Talley, a Columbia University law professor. “There’s nothing like settling to avoid having to put your board members on the stand.”

McCormick is the same judge who rejected Tesla Inc. CEO Elon Musk’s $55 billion pay package. That ruling and a handful of others — part of a court crackdown on insider conflicts of interest — prompted several companies to shift their states of incorporation to Nevada and Texas, including Tesla and Bill Ackman’s Pershing Capital. They cited alleged judicial bias against tech leaders such as Musk and Zuckerberg.

The wave of exits from Delaware, which funds more than a quarter of its budget with billions in corporate fees, led to a major overhaul of the state’s best-in-class corporate laws earlier this year. The changes were drafted by an expert panel that included former judges now practicing law at firms linked to Musk and Zuckerberg, including one involved in the Cambridge Analytica case.

Meta officials have publicly said they are weighing whether to yank their incorporation papers out of Delaware, which is the corporate home to more than 60% of Fortune 500 companies.

McCormick took over the case in March, without explanation, from the Chancery Court judge who allowed the investor claims against Meta to advance toward trial.

A settlement is “probably best for all involved,” said Charles Elson, a retired University of Delaware law professor. “You have this whole brouhaha that has developed around Meta’s role in the changes to Delaware corporate law, the changing of the judge in this case. These issues may not have come out in the trial, but they certainly would have come out in the commentary on the trial. It didn’t look good for the company.”

The case is Facebook Derivative Litigation, 2018-0307, Delaware Chancery Court.

(Updates with outside comment about settlement.)

--With assistance from Mike Leonard.

To contact the reporters on this story:
Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net;
Jennifer Kay in Arlington at jkay39@bloomberg.net;
Kurt Wagner in San Francisco at kwagner71@bloomberg.net

To contact the editors responsible for this story:
Elizabeth Wasserman at ewasserman2@bloomberg.net

Steve Stroth

© 2025 Bloomberg L.P. All rights reserved. Used with permission.