Pulaski & Middleman, LLC v. Google, Inc.
802 F.3d 979
9th Cir.2015Background
- Between 2004–2008 advertisers used Google AdWords (auction-based); advertisers selected Search Feed or Content Network but were not told ads could appear on parked domains and error pages.
- Advertisers paid per click; Google applied a proprietary "Smart Pricing" adjustment based on conversion rates to discount prices on lower-quality sites.
- Putative class: U.S. AdWords customers charged for clicks on parked domains/error pages (July 11, 2004–March 31, 2008); plaintiffs brought claims under California UCL (§ 17200) and FAL (§ 17500) seeking restitution only.
- Plaintiffs proposed three restitution methods: (1) Smart Pricing ratio-based adjustment, (2) Content Pricing (using Content Network prices as but-for), and (3) Full Refund for clicks on parked/error pages.
- District court found Rule 23(a) satisfied but denied class certification under Rule 23(b)(3) predominance, concluding individual issues (entitlement and amount of restitution) predominated and that plaintiffs’ damages methods were not workable.
- Ninth Circuit reversed: district court erred by (1) requiring individualized entitlement inquiries for UCL/FAL restitution and (2) rejecting Yokoyama; Smart Pricing and other proposed methods are not arbitrary on their face.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether entitlement to restitution requires individualized proof of deception/reliance | Pulaski: entitlement is classwide once liability under UCL/FAL is shown; no individual reliance proof required | Google: many advertisers benefited from parked/error pages, so entitlement requires individualized inquiries | Court: Entitlement is a common inquiry; individualized proofs of reliance not required under UCL/FAL; district court erred |
| Whether damages/ restitution calculations alone can defeat predominance | Pulaski: damages differences don’t defeat predominance; proposed methods (Smart Pricing, Content Pricing, Full Refund) provide workable classwide measures | Google: proposed methods are arbitrary/ cannot account for auction complexity and individual benefits, so damages questions predominate | Court: Following Yokoyama, damages calculations alone do not defeat certification; Smart Pricing targets the alleged harm and is not arbitrary |
| Applicability of Yokoyama after Comcast | Pulaski: Yokoyama remains controlling Ninth Circuit precedent; Comcast does not nullify it | Google: Comcast undermines Yokoyama; requires an exact classwide damages model tied to legal theory | Court: Yokoyama remains good law in Ninth Circuit; Comcast requires damages model tie to theory but does not bar class certification where model measures harm from the theory |
| Whether Comcast requires rejection of plaintiffs’ damages methods as arbitrary | Pulaski: Smart Pricing measures but-for payments at purchase time and is appropriately tied to alleged omission | Google: Smart Pricing and other methods don’t isolate compensable loss and ignore individual post-purchase benefits | Court: Smart Pricing is a targeted, non-arbitrary method consistent with restitution law and Comcast’s requirements; remand for certification proceedings |
Key Cases Cited
- Yokoyama v. Midland Nat. Life Ins. Co., 594 F.3d 1087 (9th Cir. 2010) (damages calculations alone cannot defeat class certification)
- Comcast Corp. v. Behrend, 133 S. Ct. 1426 (U.S. 2013) (a damages model must measure damages attributable to the asserted theory)
- Levya v. Medline Industries, Inc., 716 F.3d 510 (9th Cir. 2013) (reaffirming that damages differences do not necessarily defeat certification post-Comcast)
- Jimenez v. Allstate Ins. Co., 765 F.3d 1161 (9th Cir. 2014) (continued application of Yokoyama/Levya principles)
- Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (Cal. 2011) (scope of UCL/FAL standing and economic injury analysis)
- Cortez v. Purolator Air Filtration Prods. Co., 23 Cal.4th 163 (Cal. 2000) (restitution under UCL/FAL and court discretion to order restitution)