Meta, Insurers Clash Over Forum for Social Media Addiction Case

Meta Platforms Inc. and its insurers, including units of Hartford Financial Services Group Inc. and Chubb Ltd., are digging in their heels in a fight over where to litigate a high-stakes coverage dispute sparked by suits claiming the tech giant got kids hooked on social media.

The parties’ respective approaches, laid out in briefs they filed in recent weeks, are a departure from the usual playbook on forum-jockeying, insurance attorneys and scholars say.

Meta wants its fight with insurers pulled into the underlying multidistrict litigation, which encompasses hundreds of suits against the Facebook and Instagram owner and other social media companies alleging they deployed platforms with defectively designed features that maximized adolescents’ screen time.

Several of Meta’s insurers, on the other hand, are pushing to resolve the case in Delaware state court, where two Hartford units first sued the social media powerhouse seeking to avoid paying its defense costs.

In most cases, policyholders want to remain in state court, and insurers are the ones to remove litigation to the federal side, according to Michael Young, a partner at Reichardt Noce & Young who represents insurers.

But here, attorneys say the carriers stand to benefit from an insurance-friendly ruling Delaware’s high court issued several years ago finding Chubb didn’t have to cover Rite Aid Corp.'s legal costs stemming from opioid litigation, with some parallels to the underlying social media claims. Meanwhile, conventional wisdom around how MDL judges handle coverage disputes could be a deterrent to insurers—and a boon to Meta.

Meta’s forum clash with the carriers is drawing widespread attention.

“This is a battle of the titans,” said Tom Baker, a law professor at the University of Pennsylvania who studies insurance law and policy.

Public Nuisance Parallels

Hartford and Chubb last month asked the US District Court for the District of Delaware to send the coverage dispute with Meta back to state court. Both insurers also notified the Judicial Panel on Multidistrict Litigation that they opposed transferring the case to the MDL.

Their preference for Delaware likely stems from a 2022 high court ruling that Chubb was off the hook for opioid-related suits against Rite Aid brought by two Ohio counties because they sought economic damages rather than damages due to bodily injury, which insurance is typically intended to cover.

Forum disputes like this one usually arise “when one side or the other feels they can get a more certain result in one jurisdiction,” said Bryce Friedman, a partner with Simpson Thacher & Bartlett LLP who represents insurers.

The suits against Meta brought by state attorneys general, school districts, and local governments bear some resemblance to the opioid cases, falling under the umbrella of public nuisance litigation.

Also, like in Rite Aid, the insurance litigation with Meta concerns coverage under general liability policies, which often rely on standardized or similar language to define what constitutes a covered “occurrence.”

Carriers may view the case as a pure question of law that could be resolved in Delaware state court based on Rite Aid, but the fights over forum are likely to complicate and draw out the coverage litigation, said Jonathan Schwartz, a partner at Freeman Mathis & Gary LLP and co-chair of the firm’s insurance coverage and extra-contractual liability national practice section.

Meta is opposing the insurers’ bid to remand the case to Delaware state court, and it asked the Delaware federal court to pause proceedings until the JPML determines whether the case should be transferred to the MDL.

MDL ‘Efficiencies’

The insurers’ resistance to the MDL transfer likely runs deeper than just a preference for Delaware case law.

In seeking remand to Delaware state court, Hartford said Meta’s efforts to remove the coverage dispute to federal court and the underlying MDL are an effort to prevent adjudication of the coverage questions. Meta’s actions “smack of forum shopping—indeed, judge shopping—and should not be rewarded,” the insurer said.

There is a common perception that MDL judges are likely to rule on coverage issues with an eye to speeding up resolution of the underlying cases—in other words, finding funds for settlements, said Jeffrey Stempel, a professor of law at the University of Nevada, Las Vegas who teaches insurance law.

“I wouldn’t want to be in an MDL,” Schwartz said, noting they are intended to create “efficiencies” for claims arising out of a similar nexus of issues and facts. Insurance coverage, while related, is tangential to the dispute between Meta and the MDL plaintiffs, he added.

Meta might prefer the MDL for the same reasons.

The social media giant in a brief last month said the “‘forum shopping’ label would more appropriately be attached to Hartford’s actions, which prematurely seek to have the coverage issues decided by a remote court with no connection whatsoever to the issues and cases already under intense litigation.”

Meta’s parallel suit against its insurers, filed in the US District Court for the Northern District of California in December, has already been transferred to the MDL, and the JPML set a briefing schedule on transferring the Delaware case. A motion from insurers to vacate the transfer and accompanying briefs are due on Feb. 7.

“I view this as Meta’s effort to have maximum control over what’s going on in the coverage litigation,” Baker, the Penn professor, said.