Is This Lawsuit Haunting Facebook Shares?
Friday may have been Facebook’s (NASDAQ:FB) big day in the market, but a party-pooper lawsuit filed on Friday is accusing the social network of invading user privacy and is seeking $15 billion in damages. The suit accuses Facebook of improperly tracking users even after they logged out of their accounts.
The lawsuit, filed in the Federal Court in San Jose, California, combines 21 court cases from across the country into one class-action case. A way to add non-U.S. residents to the suit is also being evaluated.
“This is not just a damages action, but a groundbreaking digital-privacy rights case that could have wide and significant legal and business implications,” David Straite from Stewarts Law, one of the firms leading the claim, wrote in an e-mailed statement to Bloomberg.
The U.S. Wiretap Act “provides statutory damages of the greater of $100 per violation per day, up to $10,000, per Facebook user,” according to the lawsuit. The plaintiffs are therefore “each entitled to the greater of $100 of statutory damages per day, or $10,000 each for the ongoing violations” or $15 billion for all of Facebook’s more than 800 million members.
Facebook (NASDAQ:FB), which has repeatedly been scrutinized by regulators over user privacy, sold 421.2 million shares at $38 each to raise $16 billion in its initial public offering on Thursday, valuing the company at $104.2 billion then. In Monday morning trading, shares of Facebook are trading lower over 13% at $33.14 per share, or a $90.8 billion market cap.