A Delaware judge has ruled that insurers don’t have a duty to defend the meta-platforms in thousands of child-harming lawsuits filed against Facebook and Instagram.
Superior Court Judge Sheldon K. Rainey ruled that Metta’s insurance companies were not obligated to provide a defense because the allegations against the company describe intentional and willful actions, rather than accidents or incidents that trigger coverage under commercial general liability policies.
The judge also found that Meta would not be prejudiced by the Delaware coverage decision at this time.
Thousands of suits have been filed by children who used Meta’s platform, as well as by more than a thousand school districts and 43 states. The cases in California have been consolidated into two actions. Known as social media lawsuits, the complaints allege that Meta intentionally designed addictive algorithms and features on Instagram and Facebook that allegedly predispose young users to mental health issues, including anxiety, depression and eating disorders.
Hartford, Chubb and more than 20 other insurers in Delaware, Meta’s state of incorporation, sought a declaration that they have no duty to defend Meta in social media litigation.
In Metta’s view, the design choices he made were accidents and thus covered by his insurance because he did not intend the resulting alleged harm, such as intoxication or depression.
However, the insurers successfully argued that the complaints need not allege that Meta intended to cause harm, only that Meta intended to engage in certain conduct, and that the conduct resulted in loss. Because the damage allegedly resulted directly from an intentional design choice, the insurers argued that the “accident” requirement of the insurance policies was not met.
Metta asked that any order regarding insurance coverage be rejected or postponed pending the conclusion of the litigation. It maintained that California law mandates that coverage litigation must be stayed pending resolution of the action when the coverage litigation alters the facts of the litigation in the underlying action.
The insurers argued that California law does not warrant a stay in this case because the court is not making a factual determination about Meta’s intent, causation, or knowledge.
Judge Rainey agreed with the insurers.
“The conduct alleged in social media litigation—even seen as negligent—is defined as intentional acts rather than accidents under the policies. Because a court’s determination of the intent of META is based strictly on the underlying complaint, it does not “overlap” with the factual reality in the court’s decision,” if decided by all the judges.
This provision applies only to the duty to defend, not to indemnification, which may require fact-finding. Meta has 30 days to appeal the case to the Delaware Supreme Court.
The court rejected Metta’s claim that it would suffer potential prejudice in the underlying litigation if the defense coverage was not injunctive. On the contrary, such a stay would prejudice the insurers, the court found.
“An insurer’s obligation to defend must be assessed early in the case. Just as the insurer is entitled to a prompt defense if coverage is possible, the insurer is entitled to a prompt exit when coverage is unlikely. Delaying that determination through a stay would force insurers to not legally fund the defense.”
“The insurers have correctly articulated the analytical framework,” Judge Rainey wrote. “Under the relevant policies, the insurer’s obligation to defend begins only with a lawsuit seeking damages caused by an ‘accident’.”
Under Section 230 of the Communications Decency Act, Internet companies are largely shielded from liability for content their users post on their sites. As part of their argument, the plaintiffs maintain that the 1996 law does not shield firms from liability for their designs and algorithms.
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