Eisner v. Meta Platforms, Inc.

Background

Matt Eisner, a current shareholder of Meta Platforms, Inc., moved for a preliminary injunction against Meta and Mark Zuckerberg. He relied on Section 14(a) of the Securities Exchange Act of 1934 and alleged that Meta’s 2024 proxy statement contained materially false or misleading statements and omissions about child exploitation on Meta’s platforms and the risks of failing to address it.

Eisner requested two forms of relief: additional disclosures in the proxy statement about Meta’s efforts to safeguard children, and postponement of Meta’s annual shareholder meeting so shareholders could review those disclosures. The opinion states that the meeting occurred on May 29, 2024, before the court issued this order, making the postponement request moot. The proxy statement discussed two advisory, nonbinding shareholder proposals concerning child-safety performance targets, reporting, and the risks and benefits of a higher minimum user age. Meta’s board recommended voting against both proposals.

Legal standard

Under Federal Rule of Civil Procedure 65(a), a preliminary injunction requires a showing that the plaintiff is likely to succeed on the merits, likely to suffer irreparable harm without preliminary relief, that the balance of equities favors an injunction, and that an injunction is in the public interest. The Ninth Circuit uses a sliding-scale approach in balancing these factors.

For a Section 14(a) claim, the plaintiff must show a material misrepresentation or omission in a proxy statement, injury, and that the proxy solicitation was an essential link in the transaction. The Private Securities Litigation Reform Act also requires particularized allegations explaining why each challenged statement was misleading, as well as loss causation—the connection between the alleged misstatement and an actual economic loss.

Court’s analysis

The court held that Eisner was not likely to succeed on his Section 14(a) claim for two independent reasons.

First, the court found that Eisner had not shown a material misrepresentation or omission. The challenged policy statements—such as statements that Meta’s policies prohibit harmful content and that Meta seeks to prevent child exploitation—were broad commitments or aspirations. The court held that such statements were not actionable because they did not claim that Meta’s safeguards were completely effective or that Meta had flawlessly enforced its policies.

The court also found that Eisner did not provide sufficiently specific facts showing that Meta’s objective statements, including figures about disabled accounts and enforcement measures, were false or misleading. The articles and internal materials Eisner cited described serious problems but did not directly contradict the statements in the proxy statement.

As to alleged omissions, the court held that Meta’s disclosures did not create a materially misleading impression. Meta acknowledged the seriousness of child exploitation and described its efforts to address it. The court also stated that securities law did not require Meta to repeat information about those risks that was already publicly available.

Second, the court held that Eisner had not shown loss causation. He did not identify an actual economic loss or connect the alleged proxy statements to such a loss. His assertions that Meta faced financial risk, government action, or fines were too speculative. The proposals were advisory and nonbinding, and Eisner did not connect the votes on those proposals or board reelection to a specific economic harm.

The court separately rejected Eisner’s showing of irreparable harm. It concluded that an uninformed shareholder vote is not automatically irreparable harm and that, in any event, shareholders had access to information about the child-exploitation concerns. The court further reasoned that any harm could be remedied later by voiding the votes and holding another vote with amended disclosures.

The balance of the equities favored Meta. Delaying and rescheduling the annual meeting would have significantly disrupted Meta, while Eisner was not a sponsor of either proposal and had not proposed an alternative slate of directors. The court also found that asking to enjoin the entire meeting when only three shareholder votes were at issue was overbroad.

Finally, the court found that an injunction was not in the public interest because Eisner was unlikely to succeed and had not shown that Meta omitted material facts or made material misrepresentations. The court stated that requiring Meta to reproduce information already available publicly would not serve the public interest.

Disposition

Judge Charles R. Breyer denied Eisner’s motion for a preliminary injunction. The order did not finally decide the underlying Section 14(a) claim; it decided only whether the requested preliminary relief should issue.