Meta settlement could reshape social media addiction litigation

Four days into trial, Meta settled with the states suing it for allegedly misleading the public about the risks of excessive social media use by teens.

The settlement could reach $16.7 billion -- with 30% of the total contingent on actions by its competitors -- and requires the company to implement a series of new teen safety measures, including daily time limits on its platforms, Instagram and Facebook.

"This is a groundbreaking settlement for social media litigation, and it changes the shape of the conversation ahead," UC Law San Francisco professor Robin Feldman said in an email.

Under the settlement, Meta will implement age verification software to prevent users under 13 from accessing its platforms. It will also cap teens' time on its apps at two hours a day for the first five years of the agreement and one hour a day for the following five years. Parents can override the limits.

Teens will be barred from the platforms at night, will not receive notifications during the school day and will not see how many likes or views a given post has, with parents able to override each setting.

The settlement also addresses the possibility that teens could simply turn to other platforms with fewer restrictions. Thirty percent of Meta's payment figure is contingent on other major social media companies adopting similar features.

"This was strategic," Joseph McNally of McNicholas & McNicholas LLP said. "Meta wants to ensure that the settlement does not put it at a business disadvantage after it adopts safety changes to its Facebook and Instagram platforms. This incentivizes the state attorneys general and other regulators to aggressively hold other companies, including TikTok and YouTube, to the same safety standards."

Withers partner Jessica K. Nall said the settlement lets Meta curb its financial risk while positioning itself as the industry leader on youth safety.

"I think it was a pretty wise move on their part to settle this at this stage to cabin the risk of the damages figure being much higher and also to try to seize the narrative a little bit," Nall told the Daily Journal.

People of the State of California, et al. v. Meta Platforms Inc., et al., 4:23-cv-05448 (N.D. Cal.), is part of In re: Social Media Adolescent Addiction/Personal Injury Products Liability Litigation, 4:22-md-03047 (N.D. Cal., filed Oct. 6, 2022).

One potentially significant question is what the settlement means for social media companies' reliance on Section 230 of the Communications Decency Act.

"Referencing Section 230 of the Communications Decency Act, social media companies have essentially said, 'We're not responsible for anything.' And it has worked, up until [Wednesday]," Feldman said.

Kabateck LLP managing partner Shant A. Karnikian said the settlement signals that Meta wasn't willing to bet on that defense.

"They're acknowledging that we can't bet on this anymore," Karnikian said. "It doesn't fall squarely into the content moderation type of protection. This isn't necessarily about the content anymore."

Stanford Law School professor Robert L. Rabin also said Section 230 faces significant limitations in the cases.

"It's got real problems as a defense," Rabin said.

The immunity granted by the statute "depends upon the content being independent content from the third-party user," Rabin explained.

"First of all, the argument can be that this is a case involving product and product design, not speech communication," Rabin said. "And secondly, the related argument is that the information that's being channeled is information that's being impacted and designed by the internet service provider."

Social media companies often compare Section 230 protections to those afforded a newspaper editor choosing which articles to publish, Feldman said.

"But designing a feed to deliberately addict teens isn't the kind of editorial activity that Section 230 was designed to protect," Feldman said. "[Wednesday's] settlement is like holding newspaper editors accountable for printing with toxic ink."

Nall said the settlement leaves unresolved both the viability of Section 230 and First Amendment defenses and whether social media companies can be held liable for harms caused by their products in the same way as purveyors of physical products. A state court judgment in New Mexico over similar claims could give Meta a chance to obtain an appellate ruling on the issue.

"I think it's still very live," Nall said. "And the First Amendment issues are real."

"Some appellate court is going to have to make a definitive ruling on that in order to see how this product liability theory, if it has legs in tech," Nall said.

Unlike the $206 billion 1998 Tobacco Master Settlement Agreement -- a common comparison point for the ongoing social media litigation -- Rabin said the alleged harms of social media are less readily measurable than the physical harms associated with tobacco.

"Here, of course, the harm is somewhat more elusive," Rabin said.

But Wednesday's settlement could signal to plaintiffs that the alleged harms are sufficiently established to bring Meta to the negotiating table, Rabin said.

"The harm is substantial enough on the record to create real pressures to get the cases settled," Rabin said.

Another difference is that relatively few individual claims were pending when the states reached the tobacco settlement, Rabin said.

"The tobacco industry was really able to buy peace through that settlement because there were very few individual cases," Rabin said.

Meta, along with YouTube, Snap and TikTok, still faces claims from hundreds of school districts and individual plaintiffs in the same multidistrict litigation. The companies also face coordinated proceedings in Los Angeles County Superior Court, where the first bellwether trial resulted in a $6 million verdict in March.

Rabin said Wednesday's agreement could signal that Meta is more likely to settle those claims as well.

"It sends the signal that the defenses that Meta and the other social media for that matter are relying on, those defenses are not likely to fare all that well if the cases get litigated rather than settling," Rabin said.

Karnikian pointed out that the company did not admit liability in the settlement, which could limit its potential impact on the other pending cases.

"So, it's not like this conclusively establishes that what they were doing was wrong," Karnikian said.

Settlements in the hundreds of remaining cases could become costly, Nall said, but she does not expect them to change the math on whether Meta's business model is viable.

"They will probably be on a settlement spree now trying to cabin the risk for ongoing fights. And then the plaintiffs will be saying, 'Well obviously they opened the wallet, so why don't they open the wallet for us?" Nall said.

More consequential than the payments are the changes Meta agreed to make to its platforms, Feldman said.

"The simple fact that Meta has agreed to change its business model is groundbreaking," Feldman said. "Business happens in the shadow of the law. Other social media companies may try to revise their own business models accordingly, to fend off legal attacks.

But Karnikian pointed out that the measures will not help people already harmed by excessive social media use.

"It's almost too little, too late," Karnikian said. "I applaud the states for putting up the fight and it's a good thing, but it shouldn't be heralded as the problem has been solved."

Nall said she is skeptical the measures can be implemented effectively.

"I have not met yet a 16- or 17-year-old digital native that couldn't figure out a way around what I understand these limitations to be," Nall said.

Nall said the competitor provision also offers Meta a reputational advantage because the company can position itself as the industry leader in teen safety and point out if competitors have not adopted similar measures. In announcing the settlement, Meta called on TikTok and YouTube to implement similar teen safety settings.

Nall said she suspected the company also had its public image in mind when it decided to settle.

"It's really about the comms here, I have to think," Nall said. "A judgment or a verdict of that size, and this is a bellwether case, I think would have been a news cycle that the company couldn't really afford to risk."

Feldman said the settlement also prevents CEO Mark Zuckerberg from taking the stand and eliminates the risk of sending a difficult case to the jury.

"It's tough to defend a case about harm to children when your own, internal document is titled, 'The Young Ones Are the Best Ones,'" Feldman said, alluding to an internal research document the plaintiffs displayed during their opening statement.