Levelfields, Inc. v. Reddit, Inc. a California Corporation
3:24-cv-02760
N.D. Cal.Aug 27, 2024Background
- LevelFields, Inc. (“LevelFields”), a Virginia corporation, contracted with Reddit, Inc. (“Reddit”) to run ads on Reddit’s platform and was billed for user clicks on its ads.
- LevelFields alleges Reddit charged it for “fraudulent clicks”—clicks purportedly not from real users—and that Reddit failed to provide adequate data (e.g., click logs including IP addresses) to verify the legitimacy of those clicks.
- The contract between LevelFields and Reddit incorporated Reddit’s IAB Standard Terms and an Ad Platform agreement, both of which disclosed the possibility of click fraud and set out metrics and billing processes.
- LevelFields filed this putative class action asserting breach of contract and violations of California’s Unfair Competition Law (UCL), seeking injunctive and monetary relief.
- Reddit moved to dismiss, arguing LevelFields lacked standing, failed to identify breached contract provisions, and was barred from relief under the UCL based on its status as a sophisticated corporate plaintiff.
- The court granted Reddit’s motion to dismiss, but permitted LevelFields to amend its complaint to address the identified deficiencies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing | Charged for clicks not corresponding to real traffic | Insufficient facts to show injury traceable to Reddit | Dismissed; barely pled but other defects prevail |
| Breach of Contract | Reddit charged for fraudulent clicks, failed to deliver ads as defined by plaintiff | No specific breached provision; disclosure of click fraud risk | Dismissed, leave to amend for specificity and contract provisions |
| UCL Claim – Applicability | Practices are unfair, unlawful, and deceptive | Corporate plaintiff not representing public or consumers | Dismissed, leave to amend to address Linear Tech bar |
| UCL Claim – Sufficiency | Deceptive practices and insufficient fraud protection | Disclosure of click fraud, process for credits provided | Dismissed, leave to amend for more detailed allegations |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (sets plausibility standard for pleadings).
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (facts must support plausible inference of liability).
- Linear Tech. Corp. v. Applied Materials, Inc., 152 Cal. App. 4th 115 (2007) (corporate plaintiffs’ standing under UCL; contract-based UCL claims not for sophisticated entities).
- Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035 (9th Cir. 2010) (breach of contract not sufficient for UCL unlawful prong).