Meta Ordered to Pay $567 Million Fund for New Mexico Youth Mental Health Harms, Plans Appeal

A New Mexico judge ruled Thursday that Meta must establish a $567 million fund to address mental health harms tied to its Instagram and Facebook platforms, the latest blow in a lawsuit the state attorney general filed against the company in December 2023.

Chief Judge Bryan Biedscheid of the First Judicial District Court in Santa Fe wrote that "New Mexico is in the midst of a teen mental health crisis affecting public health and public safety in and throughout the state, and Meta's platforms are a significant contributing cause to the crisis," according to techpolicy.press, which reviewed the ruling.

Of the $567 million, $420 million is earmarked for treatment services for young people harmed by the platforms, according to PBS. The remainder covers awareness and prevention campaigns, screening and assessment programs, referral coordination, and ongoing monitoring over the next five years.

A Second Hit After March's Jury Verdict

This isn't Meta's first loss in the case. A Santa Fe jury already found Meta liable in March for violating New Mexico's Unfair Practices Act, ordering $375 million in civil penalties after less than a day of deliberation following a nearly seven-week trial, according to techpolicy.press.

That verdict found Meta knowingly harmed children's mental health and concealed internal knowledge about child sexual exploitation occurring on its platforms, according to PBS. Thursday's ruling stems from the case's second phase, a bench trial focused on whether Meta's conduct amounted to a public nuisance under New Mexico law, and what remedy would fix it.

Combined, Meta now owes $942 million tied to this single case. According to PBS, that figure is a small fraction of Meta's roughly $60 billion in 2025 annual profit. Investors barely reacted. PBS reported Meta shares fell less than half a percent in after-hours trading Thursday.

What the Ruling Actually Requires

Prosecutors had pushed the judge to order structural changes at Meta, including reining in addictive features, improving age verification, and preventing child sexual exploitation through default privacy settings, according to PBS.

The judge stopped short of mandating changes to specific product features like infinite scroll or autoplay, noting those kinds of industry-wide fixes require action from the legislature or executive branch, not the courts, according to techpolicy.press. The ruling also acknowledged it had to walk a careful line to avoid conflicting with Section 230 protections or the First Amendment.

Instead, the court ordered Facebook and Instagram to build banner and informational screens explaining their existing protection features and best practices, and to display them regularly, according to PBS. Those changes, along with an educational campaign in New Mexico, will be subject to state review.

Notably, the court found that federal law ties its own hands on age verification. The Children's Online Privacy Protection Act (COPPA) prevents Meta from collecting personal data or tracking children under 13, even for verification purposes, according to PBS. The judge also flagged that ordering age verification for Meta alone, while leaving other social media companies untouched, raised its own problems.

Meta's Defense and What's Unproven

Meta disputes the ruling entirely. A company spokesperson said Meta has "been transparent about the challenges of identifying and removing bad actors and harmful content" and remains "confident in our record of protecting teens online," adding it will "continue to defend ourselves against claims that misrepresent the facts," according to both PBS and CNBC.

Meta has said it plans to appeal Thursday's decision, just as it appealed the March jury verdict, according to techpolicy.press. That means neither the $375 million penalty nor the $567 million fund is final. Both remain subject to New Mexico's appellate courts.

Meta argues the case rests on a legal theory, public nuisance, that has historically applied to physical-world harms like pollution or noise, not online platforms. Plaintiffs bore the burden of proving a causal link between its apps and New Mexico's youth mental health crisis specifically. Judge Biedscheid found that link was established by "substantial evidence," according to CNBC, but that finding itself is now what Meta intends to challenge on appeal.

The Bigger Number Looming

The stakes go well beyond $942 million. Meta disclosed in its second-quarter financial filing that New Mexico's attorney general has indicated he intends to seek up to $62.85 billion in penalties in this case, according to CNBC. That figure hasn't been awarded or litigated yet. It's the number the state has signaled it may pursue.

Attorney General Raúl Torrez called Thursday's ruling a win for accountability, saying it "forces real changes to how Meta operates in New Mexico," according to CNBC. Analysts and legal observers have compared the wave of state suits against Meta and other platforms to the 1990s tobacco litigation that reshaped that industry's legal exposure for a generation.

Meta faces what CNBC describes as an avalanche of additional lawsuits from families nationwide alleging social media harms to children. New Mexico's case, still not finalized pending appeal, is now a test of whether that comparison holds up in court.