The Delaware Court of Chancery approved a $190 million settlement resolving shareholder claims that Meta’s board failed to properly handle Facebook users’ data by implementing data protections, resulting in the Cambridge Analytica scandal in which the personal data of millions of users was misused for political consulting purposes.
The case, initiated in 2018, alleged Meta failed to protect data that was collected by Cambridge Analytica and holds the distinction of being the first in Delaware history to bring a Caremark oversight claim to trial (A Caremark oversight claim is a type of shareholder lawsuit that argues a company’s board of directors failed to properly oversee the business, especially around major risks like compliance, data privacy, or regulatory obligations). This development represents a landmark moment in corporate governance litigation, signaling a shift in how board accountability is addressed within the legal framework.
Although the settlement was reached mid-trial (before testimony from CEO Mark Zuckerberg), it remains one of the largest oversight-related settlements in Delaware. The agreement requires Meta’s directors to pay the settlement amount back to the company and mandates key governance reforms, including enhanced whistleblower protections, a formal director code of conduct, and stricter conflict-of-interest policies removing Zuckerberg’s authority over certain board-level decisions.
The court also awarded plaintiffs’ counsel approximately $53.6 million in fees and $4.4 million in expenses from the settlement fund. While the case stops short of a post-trial ruling on Caremark liability, it sends a clear signal: boards are expected to actively oversee risk especially in areas like data privacy and regulatory compliance.
