Facebook faced with massive penalties after New Mexico privacy verdict

In what could be the largest civil payout in U.S. history, Facebook may have to pay up to $40 billion for more than 43 million user privacy violations.(CN) — A New Mexico state judge will soon order civil penalties against Meta Platforms and Facebook for deceiving users about privacy protections in what could be the largest cash payout from a single civil jury verdict in U.S. history.State special prosecutor Randi McGinn asked Santa Fe County Judge Francis Mathew to order Meta to pay $35 to $40 billion in civil penalties, representing more than 43 million individual violations of New Mexico’s Unfair Practices Act.“Meta has not learned its lesson, and this court should speak to Meta in the only language that it understands,” McGinn said in a Thursday afternoon hearing. “The world is watching us. I think that somebody has to stand up to these tech titans who think they are bulletproof.”The hearing came one week after a jury found Facebook liable for 26 false or misleading statements about user privacy, mostly concerning a data breach stemming from a third-party personality quiz that harvested data from roughly 87 million profiles and sold it to a political consulting firm, Cambridge Analytica, to generate targeted ads. The now-defunct firm’s clients included the 2016 campaign for Donald Trump.“They lied to get us to give us our most intimate secrets and they sold everything but our name,” McGinn said.To reach its verdict, the jury assigned 2.1 million violations to each statement that appeared in major news outlets, roughly matching New Mexico’s total population, and 1.4 million violations to each statement made through direct company channels, reflecting the estimated number of New Mexicans with Facebook accounts in 2020.From there, it ordered Facebook to pay $5,000 per violation, which is the maximum penalty allowed by New Mexico’s Unfair Practices Act.The verdict ordered a whopping $219 billion, which would have eclipsed even the largest civil settlement in U.S. history — the $206 billion Tobacco Master Settlement Agreement of 1998.To satisfy due process and other constitutional concerns, McGinn asked the judge to reduce the penalty to just 20% of what the jury ordered.“Not only is that a fair amount, it would serve the purpose of deterrence not only for Meta but for any company that would lie to the people of New Mexico,” she said.Meta attorney Matt Nicholson said the figure is still unconstitutionally high.“It is an astronomical penalty that would obviously violate a host of constitutional provisions,” he said.Nicholson said the fine would violate the excessive fines clauses of both the New Mexico and U.S. Constitutions, as well as Eight Amendment, which forbids penalties that are “grossly disproportionate to the offense.”“This case was about 26 statements over 11 years,” he said. “The state made absolutely no showing that anyone in the state of New Mexico ever saw them, relied on them or were harmed by them in any way. That blows past any conceivably acceptable ratio that has ever been accepted by any court.”At trial, the state was not required to prove actual harm, but rather a likelihood of harm based on each violation. Nicholson said Facebook accepted those terms as far as liability, but cannot accept that level of punishment without any showing of actual harm.He added that of the 26 misleading or false statements Facebook was found to have made, many of them were duplicative, and simply “cobbled together” to make the state’s case seem bigger than it was. He accused the state of turning the case into a “quasi class action” by calculating offenses based on the number of people in the state and using Facebook rather than the number of statements made.McGinn said Nicholson’s arguments are the exact reason the massive payout is reasonable.“The one thing you didn’t hear from counsel is an apology,” she said. “He’s standing up before the court saying ‘there’s no harm in us lying and nothing we did was reprehensible.’“This company has lied and lied and lied to all New Mexicans,” she added, pointing a thumb over her shoulderThe Sept. 25 verdict is just the latest in a slew of legal losses for Meta this year.In March, a Santa Fe jury found Meta exposed children to predators and misled consumers about risks, ordering $375 million in penalties. In August, the judge in that case ordered Meta to pay an additional $567 million into a fund for youth mental health treatment and crisis prevention. An LA jury issued a similar verdict in March against Meta and Google, ordering another $6 million in fines.Also in August, Meta and other social media platforms agreed to pay $17 billion to settle a case with 47 states accusing the platforms of being intentionally designed to be addictive to children. It was the fourth largest civil settlement in U.S. history behind the tobacco settlement, the $26 billion national opioid settlement and the $20.8 billion Deepwater Horizon oil spill settlement.Mathew said he believes due process would call for a much smaller fine that McGinn is asking, especially comparing one state’s colossal ask to the smaller $17 billion split amongst 47 others.He said he will rule sometime in the next two weeks.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads