This morning, the United States Supreme Court opted to dismiss the case of Facebook v. Amalgamated Bank as “improvidently granted.” In doing so, the Court refrained from issuing a ruling on the merits of the case, effectively indicating that it was inappropriate to grant a review initially. This decision results in leaving intact a ruling by the U.S. Court of Appeals for the Ninth Circuit. The lower court’s decision permits a securities fraud class action against Meta, Facebook’s parent company, to proceed. Shareholders contend that Facebook’s risk disclosures inadequately addressed the immediate realities posed by data breaches, such as the widely publicized misuse of user data by Cambridge Analytica.
The Ninth Circuit ruling centers on the argument that Facebook’s communications understated the actual risks to shareholders, given that Cambridge Analytica had already accessed large volumes of user data. This alleged insufficient disclosure was said to contradict securities laws, since Facebook’s share price experienced a significant decline once the data misuse came to public attention.
During oral arguments, even the more conservative justices appeared dubious about Facebook’s arguments, which contributed to the anticipation that the Supreme Court might not overrule the lower court. Considering this dismissal, the legal proceedings will return to the lower courts, where the action against Meta will continue.
It is noteworthy that Tom Goldstein, the publisher of SCOTUSblog, represented the investors during the Court of Appeals phase, although he did not participate in the Supreme Court proceedings.