WASHINGTON (Reuters) – The U.S. Supreme Court will soon review requests from tech giants Meta’s Facebook and Nvidia to avoid federal securities fraud lawsuits. These separate cases could raise the bar for private litigants attempting to hold corporations accountable. #FacebookNvidiaLawsuits
Following three Supreme Court decisions in June that reduced the authority of federal regulators, including the Securities and Exchange Commission, the justices now appear ready to limit the influence of private plaintiffs in enforcing federal rules targeting corporate misconduct.
This shift could reshape the landscape of securities fraud enforcement, potentially impacting the way private parties pursue corporate accountability in the tech industry and beyond.
Andrew Feller, a former SEC attorney now practicing privately, noted that the Supreme Court’s recent trend of pro-business rulings, which limited federal regulators’ authority, indicates that Facebook and Nvidia might find “a receptive audience” among the justices.
The Supreme Court has a 6-3 conservative majority.
“I think business interests will continue their recent pattern of aggressively challenging rules intended to hold them accountable, including by challenging the remaining private rights of action,” Feller said.
A private right of action allows individuals or groups to file lawsuits for alleged harm.
Facebook and Nvidia appealed to the Supreme Court regarding ongoing legal challenges. The San Francisco-based 9th U.S. Circuit Court allowed these cases to continue. Both companies are facing separate class action securities fraud lawsuits.
On Wednesday, the Supreme Court will hear Facebook’s request to dismiss a lawsuit. This lawsuit alleges that Facebook misled investors regarding business risks. The case claims a violation of the Securities Exchange Act of 1934.
In 2018, a group of Facebook investors, led by Amalgamated Bank, filed a class action lawsuit. They accused Facebook of withholding information about a significant data breach. This breach, involving Cambridge Analytica, affected over 30 million users. #FacebookNvidiaLawsuits
Implications of Supreme Court’s Decision on Facebook Nvidia Lawsuits and Corporate Litigation
Meanwhile, the Supreme Court recently restricted federal regulators’ powers, including the SEC, in securities fraud cases. With this trend in mind, Facebook and Nvidia see an opportunity to argue that the same restrictive approach should apply to private lawsuits. Thus, this decision could impact future corporate litigation.
