Facebook was hit with a $15bn privacy lawsuit hours before its initial public offering (IPO), which valued the firm at more than $100bn.
The suit, filed in the Northern California District Court, alleged that the company knowingly infringed on user privacy when it used browser cookies to track activity. The suit included more than 20 complainants.
The privacy issue first came to light in September of last year when researcher Nic Cubrilovic discovered that the site was tracking browser activity even after users had logged out of the social networking site.
Shortly after the report surfaced, Facebook issued an update to correct the issue and prevent the site from tracking activity when users log out of their accounts.
Facebook told Bloomberg that the claims were without merit and the social network would be contesting the case in court.
The suit arrives as Facebook looks to begin life as a publicly-traded company. The social networking giant on Friday kicked off its IPO in New York on the Nasdaq stock exchange.
While the offering set records for trade volume, Facebook stock failed to live up to early expectations as the day progressed and the company's financial backers were forced to step in and prevent the stock from falling below its starting price.
Analysts have suggested that the company set its sights too high with its asking price and left the company open to a disappointing public debut.
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A survey of local authorities has found that they face challenges in the areas of data, compliance and mobility.
More than 800,000 home users could be affected