Facebook Asks Federal Judge to Block State Court Document Hunt in Shareholder Derivative Suit
The motion asks U.S. District Judge Haywood Gilliam Jr. to dismiss a complaint in the Superior Court of the State of California on the same grounds that he threw out claims in a district court case earlier this year.
August 02, 2019 at 07:07 PM
3 minute read
Facebook has made moves to tighten its grip on documents regarding Cambridge Analytica that plaintiffs lawyers are seeking to help build their shareholder derivative lawsuit in district court.
Attorneys at Gibson, Dunn & Crutcher filed a motion for a permanent injunction Thursday in the U.S. District Court for the Northern District of California on behalf of the tech company. In March, U.S. District Judge Haywood Gilliam Jr. of the Northern District of California tossed out most claims in a shareholder derivative suit against Facebook, ruling that shareholders would have to make their state law claims through the designated Delaware Court of Chancery. The motion asks the judge to dismiss a 143-page complaint in the Superior Court of the State of California on the same grounds.
“This Court already has ruled that the Delaware exclusive forum provision in Facebook’s charter is enforceable and applies to shareholder derivative claims brought under the California Corporations Code,” wrote Gibson Dunn lawyers Orin Snyder, Kristin Linsley, Brian Lutz, Joshua Lipshutz and Paul Collins. “In a transparent attempt to obtain a different result on this identical issue, another Facebook shareholder represented by lawyers closely aligned with lead counsel in this action filed a substantially similar derivative lawsuit in San Mateo County Superior Court, seeking a declaration that Facebook’s exclusive forum provision is invalid and does not apply to California Corporations Code claims.”
An injunction in the state court would make it more difficult for plaintiffs attorneys in the district court case to dig up details revealing which Facebook board members knew about and were involved in the alleged misconduct. Joseph Cotchett and Mark Molumphy of Cotchett, Pitre & McCarthy in Burlingame had planned to enforce a state court writ for Facebook’s corporate books and record.
“We believe that’s going to be a treasure trove of insider information about board knowledge of this conduct—who was involved and when they knew,” Molumphy told The Recorder earlier this year.
Facebook’s representatives are asking the court to enjoin the case under the relitigation exception to the Anti-Injunction Act. “The Court should issue an injunction because the State Court Action seeks to undo this Court’s Dismissal Order, force Facebook to relitigate issues that already have been decided by this Court, and waste the San Mateo County Superior Court’s time adjudicating disputes that have already been resolved. This wasteful relitigation of the Court’s ruling constitutes irreparable harm and warrants an injunction.”
Representatives from Gibson Dunn and Cotchett Pitre did not immediately respond to a request for comment.
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