Facebook shareholders seeking to block Mark Zuckerberg’s plan to create a new class of non-voting stock will have their day in court.
A trial for the lawsuit challenging the plan is on the calendar and is set to kick off on September 26, 2017, Facebook revealed on Thursday.
The class action lawsuit seeks to block Facebook’s plan to reclassify its stock structure and create a new class of non-voting shares. The new shares are designed to concentrate Zuckerberg’s majority voting rights even as he sells his shares to fund his philanthropic efforts.
If the shareholder plaintiffs prevail, Zuckerberg will have to find a different way to fund his commitment to give 99% of his fortune away before he dies. Facebook could also still choose to settle the case outside of court.
The September trial will take place in the Delaware Chancery Court, according to a form Facebook filed with the SEC on Thursday. Representatives for Facebook and the plaintiff’s lawyers didn’t immediately return a request for comment.
So far, the lawsuit’s discovery process has surfaced controversial text messages between Zuckerberg and Facebook board member Marc Andreessen, who the plaintiffs have accused of surreptitiously coaching Zuckerberg through a negotiation process to win board approval for the stock change. The texts also indicate that Zuckerberg has seriously considered holding some form of public office.
Another trial in June
Zuckerberg, who cofounded Facebook in his Harvard dorm room in 2004, already has complete control of the company, with roughly 60% of the voting power, according to Facebook’s most recent proxy filing. The new structure, with the non-voting shares, would allow Zuckerberg to continue to maintain control for the foreseeable future.
In the meantime, Zuckerberg’s desired stock reclassification is pending the outcome of the lawsuit.
Interestingly, the stock structure trial is only one of two big cases on the docket for Facebook this year. The company is also facing a lawsuit from Social Ranger LLC, which has sued Facebook for antitrust violations related to virtual currency services.
Facebook said in its 10Q filing Thursday that the case, which it believes is without merit, is schedule to go to trial on June 12, 2017.
Here’s what Facebook said about that case:
“The complaint was filed in the U.S. District Court for the District of Delaware and seeks treble damages and an injunction. The court denied our motion to dismiss; our motion for summary judgment is pending. We believe this lawsuit is without merit, and we intend to vigorously defend against all claims asserted. Trial is scheduled to begin on June 12, 2017. Because the outcome of litigation is inherently uncertain, we believe it is reasonably possible that we may incur a loss in connection with this matter. However, we do not believe a material loss is probable and we are unable to estimate a reasonable range of loss, if any, that could result were there to be an adverse final decision, and we therefore have not accrued a liability for this matter. If an unfavorable outcome were to occur in this case, it is possible that the impact could be material to our results in the period(s) in which any such outcome becomes probable and estimable.”