US judge orders Meta to pay $25 billion in New Mexico consumer protection case

The case relates to the collection of personal information from millions of Facebook users without their consent by Cambridge Analytica, a political consulting firm that worked on Donald Trump's successful 2016 presidential campaign.

New Mexico Attorney General Raúl Torrez described the award as one of the largest single-state verdicts against a company in US history, potentially the largest.

In his order following the verdict, Judge Francis Mathew said Meta had engaged in misleading practices over several years, affecting the company's core business operations.

The judge determined that state law could justify a penalty exceeding $219 billion but reduced the amount to $25 billion.

Meta's chief legal officer, CJ Mahoney, said the company was confident it would overturn the ruling on appeal. He argued that the decision and the state's approach to enforcement could make it difficult for businesses to operate in New Mexico.

Mahoney also described the lawsuit as an attempt to impose financial penalties on online speech through new rules governing what people can say on the internet.

Meta had previously argued that penalties worth billions of dollars could violate its constitutional rights to due process and protection against excessive fines.

The $25 billion penalty is the largest imposed on Meta in connection with the Cambridge Analytica scandal. In 2019, the US Federal Trade Commission fined the company $5 billion over the same controversy.

Six other states also settled lawsuits related to Cambridge Analytica for $459.2 million as part of a wider $17.1 billion multistate settlement reached by Meta in August. The broader settlement addressed claims that the company's platforms had harmed teenagers' mental health.

New Mexico filed its lawsuit against Meta in 2021 after revelations that Cambridge Analytica had obtained personal data from as many as 87 million Facebook users through a third-party application.

The state accused Meta of misleading users about who could access their personal information, how the company handled hate speech and misinformation, and its internal policies.

According to the state, Meta knew that third parties had extensive access to users' personal data and tolerated harmful content when doing so benefited its business interests.

Cambridge Analytica, which has since shut down, obtained information from millions of Facebook accounts through a researcher who had been permitted to operate an application on the platform. The data was used to develop voter profiles and target audiences during political campaigns, including Trump's 2016 presidential campaign.

Speaking after Wednesday's ruling in Albuquerque, Torrez said the decision marked a shift in efforts to hold major technology companies accountable and warned that his office would continue protecting consumers.

However, technology analyst Gil Luria of DA Davidson & Co said the penalty was unlikely to significantly affect Meta's overall valuation, given the company's market value of nearly $2 trillion. He also expected the company to continue appealing the case.

Legal experts and financial analysts anticipate a lengthy legal battle over the ruling.

On September 25, jurors found that 26 of 29 statements made by Meta and its leadership about the issues raised in the lawsuit were misleading. They also determined that the company had committed more than 43 million violations of New Mexico's consumer protection laws.

The violations were calculated based on the number of Facebook users or New Mexico residents exposed to each misleading statement. State law allows penalties of up to $5,000 for each violation, with the money directed to New Mexico's school system.

During a hearing on October 1, Randi McGinn, a lawyer representing the state, asked the judge to award between $35 billion and $40 billion. She argued that such a penalty would be consistent with constitutional protections for due process and the jury's findings.

Meta, however, urged the court to limit the penalties to $3.45 billion, arguing that a higher amount could discourage businesses from operating in the state. The company also maintained that it did not sell users' personal data and that the state had failed to prove any consumer was actually misled.

Daryl Lim, an associate dean at Penn State Dickinson Law, said the size of the penalty alone would not necessarily be sufficient grounds for overturning it, given the way New Mexico's law is written.

The latest ruling marks the second time in six months that a Santa Fe jury has found against Meta in a lawsuit brought by New Mexico.

In the first trial, which concluded in March, jurors found that Meta had misled users about the safety of young people on Facebook, Instagram and WhatsApp. The company was ordered to pay $375 million in civil penalties.

Following a second phase of that trial, a judge directed Meta to pay another $567 million into a New Mexico fund for teenage mental health and ordered the company to introduce measures to improve protections for teenage users of Facebook and Instagram in the state.