IP Law Daily, PUBLICITY RIGHTS—N.D. Cal.: Meta sanctioned for failing to preserve Facebook scam-ad optimization data in Australian businessman’s lawsuit, (Aug 12, 2026)

By Ravindra Kumar Singh, B.L.

Meta failed to preserve data showing how its systems modified the disputed ads, depriving an Australian businessman of evidence relevant to establishing the company’s role in their content.

A federal district court in California has partly granted Australian businessman Andrew Forrest’s motion for sanctions against Meta Platforms, Inc., finding that the social media company spoliated electronically stored information concerning Facebook advertisements falsely depicting Forrest as endorsing fraudulent cryptocurrency and investment products. The court imposed curative sanctions under Federal Rule of Civil Procedure 37(e)(1) and awarded Forrest fees and costs stemming from the spoliation. However, it declined for now to impose harsher Rule 37(e)(2) sanctions requiring intent to deprive, leaving that issue for the jury (Forrest v. Meta Platforms, Inc., No. 5:22-cv-03699-PCP (N.D. Cal. Aug. 10, 2026)).

The lawsuit. Forrest sued Meta, the operator of Facebook, for misappropriation and negligence arising from approximately 28,000 advertisements that allegedly used his likeness to promote fraudulent investments. Forrest began pursuing claims in August 2019, when his counsel notified Meta of potential litigation and expressly demanded preservation of data concerning the advertisements, their viewership, advertisers, and related information. Meta asserted immunity under Section 230 of the Communications Decency Act, contending that third-party advertisers, not Meta, were responsible for the challenged content. The parties, therefore, initially limited discovery to that defense.

Preservation duty. The dispute centered on data showing how Meta’s systems altered advertisements before they were displayed to Facebook users. Although Meta preserved advertisers’ original inputs and data showing potential optimizations, it failed to preserve much of the data showing which optimizations were actually applied. Those optimizations could include cropping or zooming images, selecting overlay text, and splicing videos to determine the thumbnails presented to users.

Meta began retaining a dataset documenting actual optimizations for all rendered impressions only in 2025, even though the dataset had existed since 2023. By then, automatic deletion had left only about 14% of the relevant information. Meta also failed to preserve post-impression tables containing information about sampled rendered advertisements and the complete packages of components used to render them.

The court held that Meta’s preservation duty arose in August 2019. Citing In re Napster, Inc. Copyright Litigation, 462 F. Supp. 2d 1060, 1068 (N.D. Cal. 2006), and Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y. 2003), it explained that the duty arises when litigation becomes probable and encompasses evidence a party knows or should know is relevant.

Meta argued that it was not obligated to preserve optimization information until Forrest specifically focused on that evidence in 2023. The court disagreed. Under Apple Inc. v. Samsung Electronics Co., 881 F. Supp. 2d 1132, 1145 (N.D. Cal. 2012), and Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311, 1320 (Fed. Cir. 2011), preservation extends to evidence whose relevance is reasonably foreseeable, regardless of whether an opponent specifically requests it. Meta should have foreseen that its own alterations to advertisements would be central to whether Section 230 insulated it from liability.

Spoliation found. The court rejected Meta’s explanation that it did not discover the relevant datasets until its renewed investigation beginning in 2024. While new outside counsel might have needed time to understand Meta’s advertising systems, the court found it unreasonable to suggest that Meta itself needed years to learn what data its own systems generated. As a large, sophisticated company employing numerous in-house attorneys, Meta should have investigated its systems and suspended applicable automatic-deletion practices.

The lost evidence also could not be adequately replaced. Potential-optimization data showed only the changes Meta could have made, not the ones it actually made. Similarly, preserved interim outputs covered only some advertisements and optimizations and could not establish how final advertisements appeared to users. The loss, therefore, deprived Forrest of evidence potentially showing Meta’s contribution to the allegedly unlawful content.

Curative sanctions. Finding prejudice under Rule 37(e)(1), the court barred Meta from using Forrest’s inability to make factual showings that the missing evidence could have supported. It also adopted an inference, applicable at summary judgment and trial, generally treating potential optimizations as having been used for advertisements where complete delivery data no longer exists and treating specified interim outputs as appearing in rendered advertisements.

The court declined Forrest’s request to automatically find a genuine factual dispute precluding summary judgment on Meta’s Section 230 defense. It also denied, without prejudice, sanctions under Rule 37(e)(2). Although Meta’s conduct amounted to gross negligence, the court concluded that intent to deprive was a close factual question. Under Gregory v. Montana, 118 F.4th 1069, 1080 (9th Cir. 2024), Rule 37(e)(2) requires willful destruction undertaken to prevent an adversary from using the evidence. The jury may therefore determine whether Meta possessed the necessary intent and, if so, infer that the lost evidence was unfavorable to Meta.

Finally, because the spoliation prejudiced Forrest and necessitated additional discovery and sanctions litigation, the court awarded him compensatory attorney fees and costs attributable to Meta’s conduct.

The Case is No. 5:22-cv-03699-PCP.

Judge: Pitts, P.

Attorneys: Brian Remlinger (Hecker Fink LLP) for Dr. Andrew Forrest. Jacob Marcus Heath (Orrick, Herrington & Sutcliffe, LLP) for Meta Platforms, Inc.

Companies: Meta Platforms, Inc.

Cases: PublicityRights TechnologyInternet CaliforniaNews