Delaware’s Chancery Court on Tuesday paused a derivative suit seeking potentially massive damages from Meta Platforms Inc.’s leaders for failing to eliminate pedophilia, human trafficking, and child exploitation content from its social media sites, pending resolution of direct damages suits in Texas and California.
Vice Chancellor J. Travis cited past rulings for pausing the Delaware case, noting former Chief Justice Leo E. Strine said in a 2011 ruling that “one cannot even rationally determine what the potential derivative liability is until the direct liability the corporation faces is determined.”
Delayed for now are “caremark” claims seeking damages from corporate directors and key officers for harm suffered by a corporation because of failures of duties, including oversight, loyalty, and care.
In Meta’s case, the vice chancellor observed further harm to the company is threatened in Jane Doe v. Facebook Inc. in Harris County District Court, Texas, and portions of the multidistrict case In re: Social Media Adolescent Addiction/Personal Injury Products Liability Litigation in the U.S. District Court for the Northern District of California.
