In re Facebook, Inc., PPC Advertising Litigation
282 F.R.D. 446
N.D. Cal.2012Background
- Facebook operates CPC ads on vnvw.facebook.com; advertisers can use self-service or direct account management channels.
- Named plaintiffs (RootZoo, Price, Fox) contracted with Facebook for CPC ads; RootZoo later withdrew; Price and Fox used self-service channel.
- Contracts include CPC terms and various documents: Click-Through Agreement, SRR, Advertising Guidelines; ATCs for some advertisers; SRR contains a disclaimer about no liability for click fraud.
- Plaintiffs allege Facebook billed for invalid/illegitimate clicks despite promises to charge only for legitimate clicks and to maintain filters.
- Class proposed: all US CPC advertisers paying Facebook from May 2009 to present; court denied certification for lack of predominance and manageability.
- Court conducted a rigorous Rule 23 analysis and found issues with what constitutes the contract and how to measure classwide injury.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether common questions predominate under Rule 23(b)(3) | Common breach/ULC questions arise from uniform contract terms and common click-filtering failures. | Contract terms are not clearly uniform; individualized proof needed for injury and damages. | Common questions do not predominate; class certification denied. |
| Whether the contract at issue is a uniform written contract including Glossary terms | Glossary, SRR, and Click-Through Agreement form a uniform contract prohibiting invalid clicks. | Glossary is not clearly part of the contract; integration clause and website structure prevent uniform contract determination. | Glossary not proven part of the uniform contract; no classwide contract interpretation. |
| Whether named plaintiffs are adequate class representatives | Price and Fox share common interests with class and suffered similar injury. | Price and Fox have individualized defenses and differing interests; Fox lacks case knowledge. | Price and Fox not adequate representatives; class certification denied on this basis. |
| Whether restitution/damages can be calculated on a classwide basis | Expert can design a rule-based algorithm to allocate damages for invalid clicks across the class. | No uniform method; potential false positives; industry standards unclear; individualized injury. | Damages cannot be calculated on a classwide basis; predominance lacking. |
Key Cases Cited
- Maz da v. American Honda Motor Co., Inc., 666 F.3d 581 (9th Cir.2012) (rigorous Rule 23 analysis and burden on certification)
- Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (U.S. 2011) (class certification requires common questions and adequate class representatives)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (U.S. 1997) (predominance and manageability considerations in class actions)
- Dukes v. Wal-Mart Stores, Inc., 131 S. Ct. 2541 (U.S. 2011) (commonality and predominance under Rule 23)
- Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301 (9th Cir.1990) (manageability and damages considerations in class actions)
- Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087 (9th Cir.2010) (damages considerations in class actions)
- In re Vioxx Class Cases, 180 Cal.App.4th 116 (Cal. Ct. App. 2009) (restitution calculations tied to alleged misconduct)
- Campion v. Old Republic Home Protection Co., Inc., 272 F.R.D. 517 (S.D. Cal. 2011) (restoration/restitution in class actions)