OHIO — A judge has selected Ohio to lead a class-action lawsuit against social media giant Facebook, which claims the company, now called Meta, misled users and investors about how its algorithm promoted dangerous content to users, resulting in a $3 million loss for an Ohio retirement system.
Judge Jon S. Tigar of the U.S. District Court of Northern California ruled Ohio to lead the lawsuit due to having the largest financial interest in the case.
Attorney General Dave Yost—who will represent the state, Ohio Public Employees Retirement System and Facebook investors—claims in the lawsuit that through April 21 to Oct. 21 of last year, Facebook and its executives "violated federal securities laws by purposely misleading the public about the negative effects its products have on the health and well-being of children and the steps the company has taken to protect the public. Those misrepresentations boosted the price of Facebook stock, harming investors," according to Yost's office.
The Wall Street Journal released a story on Facebook's strategy in September 2021, and a month later, a former Facebook employee released internal documents, accusing the company of choosing profits over safety.
The details caused Facebook's stock to plummet, draining OPERS of around $3 million. In the lawsuit, OPERS said it purchased stock in 2021, and claims it suffered damages due to Facebook violating federal security laws.
Yost hopes to recover the losses, but also hopes to create change in Facebook's internal framework.
"The magic of free markets doesn't happen if the marketplace is filled with false information," Yost said in a statement. "Markets, including the stock market, are the most efficient means of allocating capital. But the rational, free flow of capital by millions of individual decisions is distorted by false information, especially deliberately false information. This lawsuit will serve to protect investors and the market as a whole."
The lawsuit is against Facebook, founder Mark Zuckerberg, Chief Financial Officer David Wehner and Vice President of Global Affairs Nick Clegg.
Yost said "if a recovery is obtained in the class action suit, other retirement systems and Facebook investors can file claims to participate in the recovery."