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.

Attorneys for Meta argued in March that the vice chancellor should toss or pause a derivative suit in Delaware by the Employees' Retirement System of the State of Rhode Island, two funds of Kiwi Investment Management, and Cleveland Bakers and Teamsters Pension Fund.

The four funds' March 2023 suit accused the company's leadership and board of allowing "rampant and systemic" sex trafficking, human trafficking, and child exploitation to flourish on Facebook and Instagram. According to the company, those sued failed to take the necessary steps to root out the "predatory criminal activity" thriving on the social media platform.

"This court 'routinely stays caremark claims that seek to shift losses from the corporation to the defendant fiduciaries' when the losses are tied to underlying litigation," Vice Chancellor Laster said.

As a condition of the stay, the vice chancellor ordered Meta to provide an update on the Texas and California cases every 90 days and when any "significant" case development or change occurs, including dismissal of claims or cases.

Additionally, documents produced by those sued in Texas and California must be relayed by Meta to the stockholders in the Delaware case.

In March, attorneys for Meta argued during a dismissal hearing that the stockholder suit failed to show the social media enterprise "utterly failed" to address pedophilia, human trafficking, and child sexual exploitation and had failed to show corporate harm.

Acknowledging that the allegations focus on "horrible situations," the company's counsel pointed to Meta's removal of 16,000 "problematic" groups and millions of issues, with a team of 40,000 working on user safety and security.

Ohio Public Employees Retirement System and PFA Pension Forsikringsaktieselskab, which serves clients in Denmark, entered the case on Tuesday as interested parties.

The shareholders are represented by Christine M. Mackintosh, Rebecca A. Musarra, Edward M. Lilly, and Barbara J. Hart of Grant & Eisenhofer PA and William S. Norton, Meredith B. Weatherby, and Serena Hallowell of Motley Rice LLC.

Interested parties Ohio Public Employees Retirement System and PFA Pension Forsikringsaktieselskab are represented by Gregory V. Varallo, John Rizio-Hamilton, Hannah Ross, Jeroen van Kwawegen, and Caitlin C. Bozman of Bernstein Litowitz Berger & Grossmann LLP.

Meta and its executives are represented by Charles S. Duggan and Paulina Perlin of Davis Polk & Wardwell LLP and David E. Ross, R. Garrett Rice, Holly E. Newell, and Thomas C. Mandracchia of Ross Aronstam & Moritz LLP.

The case is Employees' Retirement System of the State of Rhode Island et al. v. Mark Zuckerberg et al., case number 2023-0304, in the Court of Chancery of the State of Delaware.