Insurers dodge social media addiction suit against Meta

OAKLAND, Calif. (CN) — Turns out, even giant tech companies have trouble getting their insurers to pay up.

A federal judge dismissed a lawsuit filed by Meta against its insurance companies, rejecting the tech giant’s claims that its insurers negotiated in bad faith when it came to funding its defense in a larger lawsuit, which accuses the company of designing its platforms specifically to get young users addicted.

In a brief 11-page order, U.S. District Judge Yvonne Gonzales Rogers dismissed the California-based action and remanded the lawsuit to Delaware, where the insurance companies first filed it.

Tuesday night’s decision is a significant development in Meta’s yearslong dispute with Hartford Casualty Insurance Company, Sentinel Insurance Company and Federal Insurance Company over whether the three firms are required to cover its defense costs in the wider social media addiction lawsuit.

“Meta cannot seriously argue that Hartford acted in bad faith in filing suit in Delaware, particularly where Meta was on notice that a suit could be looming,” the Barack Obama appointee ruled.

In February 2023, Meta approached its insurers about defense coverage in the social media addiction lawsuit. For months, Hartford denied that it had any duty to defend Meta or cover its legal expenses, but it did briefly backpedal in June 2023, conceding it would cover some of the hundreds of personal injury cases Meta was facing at the time.

In November 2024, Hartford sent a letter to Meta denying coverage.

Shortly after, Hartford filed a lawsuit against Meta in Delaware Superior Court, accusing it of “deliberate and intentional acts in designing and marketing products to encourage excessive use and/or addict children and adolescents.” Hartford sought a declaration from the court that it had no duty to defend or cover Meta’s legal expenses in connection with the multidistrict lawsuit.

The insurers argued that the policies Meta took out with them didn’t include events resulting from the tech company’s intentional conduct, which exempted them from covering the tech giant’s defense. Meta countered that they were wrongfully assuming it was already liable for intentional conduct, a fact the tech company contests.

Hartford later organized with the other insurance companies to join in its lawsuit.

Meta sued the insurance companies in December 2024, claiming both breach of contract and that Hartford acted in bad faith during their coverage negotiations. Later that month, Meta also removed the Delaware action to federal court and tagged it for inclusion in the larger social media addiction lawsuit.

In January, the insurers moved to remand the lawsuit to Delaware, and in March moved to dismiss Meta’s lawsuit, arguing it was an unnecessary duplicate of the previous Delaware lawsuit.

The judge held a hearing for oral arguments on the matter on April 23.

Rogers ultimately agreed with the insurers and dismissed the California-based lawsuit under the well-established first-to-file rule, stating it was a duplicate of the previously filed Delaware lawsuit. Despite Meta’s protests that the larger social media addiction lawsuit should be counted as the first lawsuit filed, the judge remained unconvinced.

“Meta’s argument does not persuade. Although the Social Media Cases were filed earlier and may address overlapping issues about Meta’s intentional conduct, the Insurers were not party to any case in, or related to, the MDL,” the judge ruled.

Rogers said that Meta’s “mix-and-match” arguments as to the lawsuit’s venue were equally unpersuasive to the court.

Meta previously argued that it should be “realigned” in the case and treated more as a plaintiff, which would give the tech company its choice of venue for the lawsuit.

The judge said Meta’s proposed realignment theories were “unprecedented” and a “transparent effort” to prevent the defendant insurers from picking the venue.

“The Court agrees that the Insurers have the better argument,” Rogers found.

Because it granted the insurers’ motion to dismiss under the first-to-file rule, the court did not address the actual merits of Meta’s claim.

The ruling is part of a multidistrict proceeding consolidating hundreds of personal injury lawsuits on behalf of children and adolescents by school districts, local governments and state attorneys general. These plaintiffs claim that Meta’s Facebook and Instagram, Google’s YouTube, ByteDance’s TikTok and Snap’s Snapchat are designed to foster compulsive use by minors.

In a joint lawsuit filed in late 2023, 33 states claimed that Meta built a business model that maximizes young users’ time on its platforms and employs psychologically manipulative platform features. They accused the tech behemoth of publishing misleading reports on user harm and continuing to downplay the negative consequences of its products.

This case was filed in the Northern District of California.