Cross-posted at Forbes.com’s WLF contributor site
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The same day as its much ballyhooed initial public offering, Facebook was served with a rather rude greeting gift – a class action lawsuit complaint. For those thinking that Congress or federal agencies pose the greatest threat to Facebook’s stock value, don’t forget the courts.
The plaintiffs allege that Facebook’s tracking cookies violate federal wiretap laws, as well as other federal and California statutes and common law principles. As this morning’s ZDNet relates, the suit isn’t exactly new; it seeks consolidation of 21 separate suits filed throughout the country.
Plaintiffs haven’t found a great deal of success thus far advancing privacy-related claims in court, something we’ve touched upon here in the past. But that certainly won’t stop the plaintiffs’ bar from continuing to spin the lawsuit roulette wheel, especially against Facebook now that its sensitivity to lawsuits has multiplied by the number of its shareholders. And as it’s found in at least one privacy class action, some judges will be willing to allow suits to go beyond motions to dismiss.
Analyses such as this one at Politico posit that congressional and regulatory scrutiny will be the greatest impediment to Facebook’s ability to utilize its greatest asset: information on its users. But the plaintiffs’ bar and the judiciary certainly cannot be ignored, considering each entity’s respective desire and ability to play an obstructive (and lucrative) regulatory role. One lawyer involved in the $15 billion class action laid out that perspective, loud and clear, in ZDNet:
This is not just a damages action, but a groundbreaking digital-privacy rights case that could have wide and significant legal and business implications.”