U.S. judge in photo app's case against Facebook broaches settlement talks

3 minute read

Small toy figures are seen in front of displayed Facebook's new rebrand logo Meta in this illustration taken, October 28, 2021. REUTERS/Dado Ruvic/Illustration

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  • Brooklyn federal judge also raised questions about whether antitrust claims were time-barred
  • Plaintiff Phhhoto Inc alleged Facebook set out to 'crush' the photo-sharing app

(Reuters) - A Brooklyn federal judge on Thursday said she would consider directing settlement talks to resolve a defunct photo application's claim that Meta Platforms' Facebook broke antitrust laws in a scheme to drive the startup out of business.

At a hearing, U.S. District Judge Kiyo Matsumoto asked lawyers for plaintiff Phhhoto Inc and for Facebook whether they had talked about resolving the November 2021 lawsuit through a settlement. Phhhoto has alleged Facebook targeted and aimed to "crush" the photo-sharing application, ultimately depriving it of "access to hundreds of millions of dollars of capital." The company denies any anticompetitive conduct.

"This may be a long litigation and maybe the defendant has staying power, but I don't think that's a good excuse to not settle a case," Matsumoto said. "So maybe you'll think about it."

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When asked by the judge, Facebook's lawyer, Aaron Panner of Kellogg, Hansen, Todd, Figel & Frederick, declined to tell Matsumoto whether a settlement was even in the realm of possibility.

The judge asked Panner to check with Facebook about "how open they are to resolving this case."

Facebook did not immediately comment to Reuters.

Phhhoto's attorney, Scott Martin of Hausfeld, told Matsumoto that the two sides had discussed a settlement but no formal demand had been made.

Martin after the hearing did not immediately return messages seeking comment.

Matsumoto at the outset of Thursday's hearing questioned whether the lawsuit's claims were filed beyond an allowed four-year window.

Martin defended the timing of the lawsuit, arguing that certain changes Facebook made to its "newsfeed" algorithm — allegedly suppressing Phhhoto's posts — were not immediately known to Phhhoto.

Facebook's lawyers earlier this week pointed Matsumoto to a 9th U.S. Circuit Court of Appeals ruling that rejected a trio of applications' antitrust claims against Facebook as being filed out of time.

The judge said she wanted to hear from Phhhoto by March 14 whether it will file an amended complaint to address Facebook's arguments about the lawsuit being time-barred.

"Absent the statute of limitations, it seems that the plaintiff has a pretty good claim," Matsumoto said.

The case is Phhhoto Inc v Meta Platforms, U.S. District Court for the Eastern District of New York, No. 1:21-cv-06159.

For Phhhoto: Scott Martin of Hausfeld

For Meta: Aaron Panner of Kellogg Hansen

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