Meta ruling fuels debate over public nuisance threat to social media

A week before it is scheduled to face four states at trial in Oakland, Meta was hit with $567 million in damages from a New Mexico judge who ruled that the company's products constitute a public nuisance.

New Mexico First Judicial District Court Judge Bryan Biedscheid sided with the state, finding that Instagram and Facebook were designed to be addictive and constitute a public nuisance. The judge ordered the company to pay the damages into a fund to address social media addiction and take steps to prevent users under 13 from accessing its platforms. It was Biedscheid's second ruling against Meta this year, after he ordered the company to pay $375 million in penalties in the first part of the case, which revolved around the state's consumer protection claims.

UC Law San Francisco professor Robin Feldman, director of the school's Center for Innovation, said the ruling may be the first of its kind.

"Yesterday's decision against Meta is a landmark ruling," Feldman said. "I cannot think of any other case in which a technology company has been labeled a public nuisance."

The theory offers plaintiffs significant advantages, even if it stands on shaky ground when used to address consumer harms, said Joseph McNally, director of emerging litigation at McNicholas & McNicholas LLP.

"Nuisance actions have a lot of teeth because -- as we see with the New Mexico verdict -- a plaintiff can get injunctive relief and monetary damages," McNally said. "You also bypass strict rules like proof of specific product defects and direct causation."

Santa Clara University law professor Eric Goldman was hesitant to read too much into the ruling before it faces an appeal but said the nuisance theory could threaten the entire social media industry.

"The public nuisance theory is a relatively untested theory," Goldman said. "It has very little theoretical justification as applied online and very little court precedent approving it. If we get to the point where social media qualifies as a public nuisance, then, in fact, almost certainly the proper answer is that social media pays for all the harm it causes, which would be more than it's worth, or you shut down the nuisance entirely because it's harming society."

That concern is reflected in the amount Biedscheid awarded. Goldman said the nearly $1 billion awarded across Biedscheid's two rulings is significant for a relatively small state, even if the amount is unlikely to make Meta's operations in New Mexico unprofitable.

"But it starts to raise the question: Where is the break point from profitability and does this start to look like a market that is untenable?" Goldman said. "There's an economic driver underlying all of the litigation and a number of this magnitude start to put pressure on that engine."

The decision, however, could struggle to survive on appeal because appellate courts tend to be skeptical of public nuisance claims, McNally said.

"The law is far from settled that a nuisance action can be used to address harm to private individuals from a private company's product," McNally told the Daily Journal in an email. "Many appellate courts are skeptical that nuisance is a viable theory to address consumer harm.  They view as attempts to repackage products liability cases as nuisance cases -- the most recent example was in the opioids litigation."

Goldman also said he is skeptical of the theory, which has been discussed in the context of internet law for years but has never gained much traction.

"It's just a mixed metaphor that I cannot wrap my head around," Goldman said, adding that something typically needs a physical element to be considered a public nuisance.

But regardless of the specific legal theory, Goldman said the ongoing litigation will likely have significant consequences for the social media industry.

The four states taking Meta to trial in Oakland later this month rest their claims on two different legal theories: that Meta misrepresented the addictive nature of its products and that it violated various consumer protection laws. Yet, Goldman said, they are trying to make a similar point about the societal costs of social media as they seek more than $1 trillion in statutory penalties and damages.

"So, they've made it clear that they think that the overall scope of liability here could be as much as the companies are worth in market cap... It reiterates that the fate of social media is at issue in these trials. An adverse ruling could wipe out the industry entirely, make it unprofitable, because the harm that it's causing exceeds the value of the company," Goldman said.

Despite the differing theories, McNally said there is common ground among the New Mexico case, the upcoming trial in Oakland and a $6 million verdict against Meta and co-defendant YouTube rendered by a Los Angeles jury in March.

"The common thread in the Los Angeles, Oakland, and New Mexico cases is that the plaintiffs have strong evidence Meta has long known that its product can cause harm to children and has not taken basic steps to mitigate it," McNally said.

Goldman said each ruling should be viewed in the context of litigation against social media giants across the country, which collectively poses a greater threat to the industry than any single decision.

"Any particular ruling could be the one that leads to the definitive outcome, but it's unlikely to be that," Goldman said. "But the overall corpus of cases is filled with serious, significant threats to the social media industry. And it wouldn't take many rulings from that overall corpus to have dramatic impacts on the internet."

Feldman added that courts are playing an increasingly significant role in shaping the social media industry, as some states turn to litigation instead of legislation to regulate social media.

"More important, however, are [Biedscheid's] orders about how Meta does business. States are trying to reshape social media to make it safer for children, and they are using the courtroom as their hammer," Feldman said.

California has taken both approaches. The same day as Biedscheid's ruling, U.S. District Judge Edward J. Davila denied a group of social media giants' motion for a preliminary injunction against a California law that requires parental consent to activate certain features on a minor's social media feed. The state is also the named plaintiff in the Oakland trial, which starts Aug. 17 before U.S. District Judge Yvonne Gonzalez Rogers.

The implications go beyond social media, Goldman said, and could reshape internet law as a whole, potentially changing how 47 U.S.C. Section 230, which limits platforms' liability for third-party content, is applied and how the First Amendment is understood online.

"The same battles that are being waged over social media are also being waged over other parts of the internet, including generative AI, video games and social gaming," Goldman said. "So, we're not just resolving the legitimacy of social media, we might also be resolving other parts of the internet where people are talking to each other... The aggregate consequences of all of those could be internet-reshaping."

Goldman compared the litigation to a scene in "Star Wars: Episode III -- Revenge of the Sith" in which the Galactic Republic is transformed into an empire in the name of security as lawmakers applaud.

"Everyone gets excited when Meta gets a comeuppance: 'Screw Meta.' But I'm not celebrating, because I don't really care about Meta, but I care about our ability to talk to each other. And we should be very nervous when there's a circumscription of that ability."