New Mexico wants Meta to pay up to $40 billion in penalties after data privacy trial

By Diana Novak Jones

Oct 1 (Reuters) - The state of New Mexico asked a judge on Thursday to order Meta Platforms META.O to pay between $35 billion and $40 billion in penalties after a jury found the company had misled consumers about the privacy of their data on Facebook in a case that came out of the Cambridge Analytica scandal.

Attorneys for New Mexico made the request at a hearing in a lawsuit brought following revelations that the British political consulting firm, which worked on Donald Trump's 2016 presidential campaign, harvested personal data from as many as 87 million Facebook users through a third-party app without their consent.

The jury returned its verdict on September 25. Judge Francis Mathew, who oversaw the trial in Santa Fe, will decide how much Meta must pay in financial penalties.

Attorneys for Meta and New Mexico clashed at the hearing over how much was appropriate to order, with Meta arguing that the penalties the state was seeking don't match the conduct the state focused its case on at trial.

"Well, when the parties go to trial, they roll the dice," said Mathew. "They have to accept the consequences of their decision to go to trial, do they not?"

TRIAL FOCUSED ON MISSTATEMENTS

The lawsuit, filed in 2021, accused Meta of lying to Facebook users in the state about who had access to their data, how the company handles hate speech and misinformation posted on the platform and other internal policies. The company knew that third parties had broad access to users' personal data, and it tolerated hate speech or other harmful content when it benefited the company's bottom line, the state said.

Jurors examined 29 statements made by the company and its leadership on those issues and found 26 of them misleading. They said the company had committed more than 43 million violations of New Mexico’s consumer protection laws, based on the number of Facebook users or New Mexico residents who were the audience for each misleading statement.

Attorneys for Meta had argued at trial that the statements were cherry-picked snippets, and the company had repeatedly acknowledged its handling of misinformation or privacy issues was not perfect.

State law allows the judge to decide how much to fine Meta per violation, up to $5,000.

At the hearing on Thursday, Randi McGinn, a lawyer for New Mexico, said applying the full $5,000 penalty to the number of violations would create too large of a penalty under the US Constitution’s protections on due process.

But the judge should order a significant payment that will impact the company, McGinn said.

"This court should speak to Meta in the only language it understands, which is money, and the value of its stock price," McGinn said. She said $35 billion to $40 billion, which represents about 20% of the possible penalties that could be awarded under state law from the verdict, would impact the stock price while complying with Meta's right to due process under the Constitution.

At the hearing on Thursday, Matt Nicholson, a lawyer for Meta, called the state's request an "astronomical penalty that would obviously violate a host of constitutional provisions."

In court filings, Meta urged Mathew to cap the penalties at $3.45 billion. The jury may have said it found Meta’s statements misleading, but the evidence shows that Meta does not sell user data and New Mexico did not prove that any consumer had actually been misled, the company said in court filings.

The judge said he expected to issue a ruling later this month.

The case is State of New Mexico, et. al., v. Meta Platforms, Inc., case number D-101-CV-2021-00132 in the First Judicial District Court of New Mexico.

For New Mexico: Randi McGinn of McGinn Montoya Love Curry & Sievers

For Meta: Matt Nicholson of Williams & Connolly