New Mexico judge reduces jury’s penalty against Meta to $25 billion

In September, a jury asked Meta to pay $219 billion — what would have been the nation’s largest civil penalty on record — for misleading the 1.4 million users of the platform who reside in the state.(CN) — A New Mexico judge on Wednesday ordered Meta to pay the state $25 billion in civil penalties after a jury found Facebook intentionally misled consumers about data privacy and control.“The harm in this matter is difficult to overstate and goes to the heart of Facebook’s basic business proposition. As Facebook admitted at trial, its primary asset is a network of users along with the personal data and content those users generate,” First Judicial District Judge Frances Mathew wrote in a 20-page opinion.In September, a jury found Facebook liable for 26 false or misleading statements about user privacy, including falsely promising to let users control how advertisers accessed their data including a broken vow to stop letting third parties access the data of friends.The concerns arose in the fall out of the Cambridge Analytica scandal, in which data harvested from a third-party personality quiz was sold to a political consulting firm that serviced the 2016 Donald Trump campaign.In the wake of the scandal, Facebook promised to investigate advertisers’ misuse of data sharing and to ban them from the platform. Despite knowing thousands of applications “exhibited suspicious activity,” the company conducted just 14 audits and failed to notify users of data misuse.To keep people on the platform, Facebook spread misleading statements about users’ data privacy on the platform, through its newsroom, on earnings calls and in media interviews.“Facebook’s misrepresentations about users’ control of their data were not isolated incidents, but rather a systemic pattern of deception at the core of Facebook’s business model,” Mathew wrote.In finding Facebook guilty, the jury asked the company to pay $219 billion, an amount that would have eclipsed the largest civil settlement in U.S. history to date — the $206 billion Tobacco Master Settlement Agreement of 1998.Securities filings indicate Meta generated a gross revenue of $200.9 trillion last year along with $217 billion in stockholders’ equity.To reach its verdict, the jury assigned 2.1 million violations — the population of New Mexico — to each statement that appeared in major news outlets. The jury then assigned Facebook 1.4 million violations to each statement made through direct company channels, reflecting the estimated number of New Mexicans with Facebook accounts in 2020.From there, the jury ordered Facebook to pay $5,000 per violation, which is the maximum penalty allowed by New Mexico’s Unfair Practices Act.In a Oct. 1 hearing, attorney Matt Nichols asked Mathew to grant Meta an 80% discount, calling the $219 billion penalty astronomical and unconstitutional, especially in light of the company’s 2019 $5 billion settlement with the Federal Trade Commission.Mathew found the trial record supported levying the maximum penalty of $5,000 per violation of the New Mexico Unfair Practices Act against Meta and affirmed the jury’s civil penalty before giving the company a steep discount. The judge did not explain his calculation in reducing Meta’s penalty to just $25 billion, but the state hailed the outcome as a win.“This is a historic day for New Mexico and for consumers across the country,” said Attorney General Raúl Torrez in a statement.“For too long, powerful technology companies have operated as though their size and influence put them beyond the reach of the law,” the Democrat added. “A New Mexico jury found nearly 44 million violations of our consumer protection statute, and this penalty order demonstrates that those violations carry real consequences.”Although the court ordered Meta to pay nearly 10% of the total penalty awarded, a spokesperson expressed disappointment at the outcome, and vowed to appeal.“This ruling, and the Attorney General’s approach to this enforcement, makes it all but impossible to do business in the state of New Mexico,” said C.J. Mahoney, Meta’s Chief legal officer over email. “At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online.”The Sept. 25 verdict is just the latest in a slew of legal losses for Meta this year.In March, a Santa Fe jury found Meta exposed children to predators and misled consumers about risks, ordering $375 million in penalties. In August, the judge in that case ordered Meta to pay an additional $567 million into a fund for youth mental health treatment and crisis prevention. An LA jury issued a similar verdict in March against Meta and Google, ordering another $6 million in fines.Also in August, Meta and other social media platforms agreed to pay $17 billion to settle a case with 47 states accusing the platforms of being intentionally designed to be addictive to children. It was the fourth largest civil settlement in U.S. history behind the tobacco settlement, the $26 billion national opioid settlement and the $20.8 billion Deepwater Horizon oil spill settlement.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads