Supreme Court Rejects Meta’s Appeal in $7 Billion Advertiser Lawsuit

WASHINGTON, D.C. — The U.S. Supreme Court on Monday declined to hear Meta Platforms‘ appeal in a multi-billion dollar class action lawsuit filed by advertisers, who accuse the company of overcharging them by inflating the potential reach of ads on Facebook and Instagram. The decision leaves Meta to face claims that could exceed $7 billion in damages.

The lawsuit, led by former Meta advertisers DZ Reserve and Cain Maxwell, alleges that Meta misrepresented the “potential reach” of ads by focusing on the number of social media accounts rather than actual users. Plaintiffs claim the company overestimated potential viewers by as much as 400%, leading to inflated advertising costs.

In March 2024, a three-judge panel of the San Francisco-based 9th U.S. Circuit Court of Appeals ruled 2-1 against Meta, allowing advertisers to pursue damages as a group. The court found that Meta’s alleged misrepresentation applied uniformly across its platform, enabling a class action under the “common course of conduct” legal standard.

Meta argued in its appeal that the 9th Circuit’s decision ignored how some advertisers may not have relied on the company’s reach estimates or found them irrelevant. The tech giant also criticized the court for giving excessive deference to federal district judges who certify class actions.

The class action covers potentially millions of individuals and businesses that paid for ads on Facebook and Instagram since Aug. 15, 2014. Ads generate nearly all of Meta’s revenue, which totaled $116.1 billion in the first nine months of 2024.

Following the Supreme Court’s decision, Meta’s stock fell 1.22% to $608.33, underperforming the S&P 500, which gained 0.2% on the same day. The lawsuit highlights Meta’s reliance on advertising revenue, which accounts for the majority of its income.

Randi Zuckerberg, a former Facebook executive and sister to Meta CEO Mark Zuckerberg, serves on the board of directors for The Motley Fool, which holds positions in Meta Platforms.