Posted by Gail Weinstein, Philip Richter, and Steven Epstein, Fried, Frank, Harris, Shriver & Jacobson LLP, on
Thursday, April 17, 2025
Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner, at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven J. Steinman, Michael P. Sternheim, and Maxwell Yim, and is part of the Delaware law series; links to other posts in the series are available here.
In In re Facebook, Inc. (Jan. 21, 2025), the Court of Chancery ordered sanctions against a Facebook Inc. director for discovery violations in connection with derivative litigation relating to the so-called Cambridge Analytica Sandal. (The scandal involved claims that Facebook had deceived its users by telling them that their information on Facebook could be kept private but then allowing the information to be shared with third parties and making the information public). When the scandal first surfaced, Facebook issued a broad “legal hold,” instructing its executives and others to preserve and not destroy potential evidence. Shortly after the litigation was filed in 2018, the company sent a reminder to the recipients of the legal hold and had discussion with them about document preservation and collection.
In 2023, litigation discovery commenced. Discovery was extensive—with the defendants producing over 8.9 million pages from over 1.7 million documents. During the discovery process, the plaintiffs learned that the company’s COO-director and an outside director both had a practice of at least sometimes using their personal email accounts for Facebook business matters relevant to the lawsuit, and that their email accounts had auto-deleted all emails older than 30 days (for the COO) or 180 days (for the other director). The defendants undertook an extensive investigation to see if the emails could be obtained from other sources, but determined that they could not.
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