In re Facebook Privacy Litigation
Re: Dkt. No. 243, 293
Plaintiffs Katherine Pohl and Wendy Marféo bring this putative class action against Facebook, Inc. for breach of contract and fraud. Facebook moves to dismiss for lack of Article III standing. Dkt. No. 243. Plaintiffs oppose the motion. Dkt. No. 270. Facebook filed a reply, and plaintiffs filed a surreply.
I. BACKGROUND
Facebook provides social networking services to its users free of charge. Dkt. No. 227, TAC ¶¶10, 11. Facebook users must register on the website using their real names. Id. ¶12. After registering, users may then post other personal information to a Facebook profile page. Id. ¶ 13. Facebook generates revenue through advertising. Id. ¶ 18. Facebook is able to target ads to particular demographics using the personal information provided by
According to plaintiffs, Facebook’s business model represents a bargain between Facebook and its users: “Facebook users provide their valuable PII to Facebook in exchange for access to facebook.com and for Facebook’s promises not to disclose their PII to third parties without consent.” Id. ¶¶ 16, 62, 67. Named plaintiffs Katherine Pohl and Wendy Marfeo have been registered Facebook users since at least 2008. Id. ¶¶ 4-5. Ms. Pohl and Ms. Marfeo claim that Facebook violated its own policies and promises by disclosing their “sensitive personally identifiable information” to advertisers. Id. ¶¶ 1-5. Specifically, plaintiffs allege that when they clicked on Facebook ads, Facebook sent “referer headers” to the advertisers that would allow the advertiser to identify the user who clicked the ad. Id. ¶¶ 34-39.
When an Internet user navigates to a website by clicking a link, the user’s browser may send a “referer header” to the destination website’s server. Dkt. No. 245, Jones Decl. ¶2. A “referer header” typically contains the URL of the website the user was visiting when he or she clicked the link. Id. Each Facebook user account is tied to a unique user ID number or username. TAC ¶ 14. Before July 2010, “if a Facebook user navigated the Face-book website in a particular way and clicked on -a- third-party advertisement linked to an external page, the resulting referer header may have included a user’s Facebook username or user ID.” Jones Decl. ¶ 5. A referer header containing a user ID or username from a referring Facebook profile page is not enough to identify the Facebook user who clicked on the ad; the same referer header would be generated for any user visiting that particular profile page, not just a user visiting his or her own profile page. Id. ¶ 5.
During the same timeframe, however, Facebook may have “included a particular string of characters in users’ profile page URLs (‘ref=profile’)” if a “user took certain steps to navigate to his or her own profile page.” Id. ¶ 6 (emphasis added). As a result, some referer headers sent to external advertisers included “both the ‘ref=profile’ string and the user ID or username of the user who clicked the ad.” Id. ¶ 7; see also TAC ¶¶ 35-39. Facebook acknowledges that “in theory,” a recipient of both the “ref=profile” string and a user ID or username would be "able to identify the Facebook user who clicked on the ad. Id. ¶ 7; see also TAC ¶ 14. Plaintiffs assert two causes of action based on the transmission of these referer headers—breach of contract and fraud. TAC ¶¶ 58-73.
Several separate actions were originally filed against Facebook, and the cases were consolidated on August 10, 2010 under the caption In re Facebook Privacy Litigation. Dkt. No. 23. The consolidated class action complaint named David Gould and Mike Robertson as putative class representatives. Dkt. No. 36. The court dismissed plaintiffs’ federal and state law claims and entered final judgment on November 22, 2011. Dkt. No. 106, 107. Plaintiff Mike Robertson appealed the, dismissal. Dkt. No. 116. The Ninth Circuit reversed on two of the eight dismissed claims, finding plaintiffs’ damages allegations sufficient to
Mr. Robertson moved for leave to amend the FAC to add Katherine Pohl as named plaintiff and to seek nominal damages and disgorgement. Dkt. No. 138, The court granted leave to amend on February 13, 2015. See Dkt. No. 142. The parties then stipulated to Mr. Robertson’s voluntary dismissal on March 20, 2015. Dkt No. 146. On March 27, 2015, Ms. Pohl moved for leave to file a third amended complaint adding Wendy Marfeo as a named plaintiff. Dkt. No. 148. The court granted leave to add Ms. Marfeo on May 22, 2015, treating the motion as a request for substitution of a named plaintiff following the mooting of a prior plaintiff’s claims. See Dkt. No. 226.
Facebook moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1), arguing that Ms. Pohl and Ms. Marfeo lack Article III standing to bring this suit because they are unable to demonstrate that they have suffered injury in fact. Facebook further argues that the court should dismiss this case for lack of standing because neither Mr. Robertson nor Ms. Pohl had standing at the time Ms. Marfeo was added as a named plaintiff.
II. ANALYSIS
Plaintiffs have the burden to' establish standing. See WildEarth Guardians v. U.S. Dep’t of Agric.,
To establish injury in fact, a plaintiff must show that he or she suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” Lujan,
Because standing is “an indispensable part” of a plaintiffs case, “each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Lujan,
A. Plaintiff Katherine Pohl
Ms. Pohl’s claims are dismissed for lack of standing. Plaintiffs’ breach of contract and fraud claims both rely on allegations that Facebook disclosed plaintiffs’ personal information to third party advertisers. See TAC ¶¶66, 71, Facebook’s ad-click data shows that Ms. Pohl’s only ad click during the class period directed Ms. Pohl to the advertiser’s Facebook page, rather than the advertiser’s external website. Therefore, the referer header associated with Ms. Pohl’s ad click would have been sent to a Facebook server, rather than any third party advertiser’s server. Plaintiffs concede that “the information Facebook has produced to date indicates that Pohl’s personal information was not transmitted to an advertiser’s external website.” Ms. Pohl, therefore, lacks standing and cannot represent the putative class in this case. See Lierboe, 350 F,3d at 1022 (plaintiff without standing to bring claim “cannot represent others who may have such a claim, and her bid to serve as a class representative must fail”).
B. Plaintiff Wendy Marfeo
Plaintiffs submit three theories for Ms. Marfeo’s injury in fact: 1) there is a credible threat that Ms. Marfeo will be harmed in the future by the release of her personal information, 2) Ms. Marfeo was denied the benefit of the bargain she made with Face-book, and 3) Ms. Marfeo is entitled to seek nominal damages for breach of contract.
1. Threat of Future Harm
Plaintiffs have not established injury in fact through threat of future harm. At the hearing, plaintiffs alleged injury via a “credible threat of futúre harm by releasing this information and making it available.” Dkt. No. 321 at 13:23-25; 19:12-13. Allegations of “possible future injury” are riot sufficient to establish injury in fact; the “threatened injury must be certainly impending.” Clapper v. Amnesty Inti USA, — U.S. —,
2. Benefit of the Bargain
Plaintiffs allege that Ms. Marfeo suffered injury in fact because she did not receive the promised confidentiality for which she bargained. Facebook challenges plaintiffs’ benefit of the bargain theory on three grounds: 1) Facebook never agreed to pay users in exchange for consent to disclose information, 2) plaintiffs cannot establish harm without evidence of receipt or use by a third party, and 3) plaintiffs cannot establish breach without evidence of receipt by a third party. The court is not persuaded by Facebook’s arguments. Although Ms. Marfeo may have significant difficulty proving damages under the benefit of the bargain theory, she has. established standing.
Nor is the court is persuaded that plaintiffs must establish third party receipt or use under a benefit of the bargain theory. While plaintiff must establish that Ms. Marfeo was denied a “benefit” of the bargain, there is no requirement that the benefit relate to third party receipt or use. See, e.g., Cain v. Redbox Automated Retail, LLC, 981 F,Supp.2d 674, 687 (E.D.Mich.2013) (plaintiffs sufficiently alleged benefit of the bargain damages by alleging that they suffered monetary harm because “a portion of the price of each Redbox rental paid for by Plaintiffs .., was intended to ensure the confidentiality of Plaintiffs’ ... Personal Viewing Information”). Plaintiffs allege that Ms. Marfeo did not receive the full benefit of her bargain because Facebook transmitted her personal information to advertisers and that the value of the benefit she was denied can be ascertained by measuring the value of her personal information. See TAC ¶ 67. The cases cited by Facebook for the proposition that actual receipt or use is required for injury are inapposite because they do not address allegations of harm under a benefit of the bargain theory. See Fitzhenry v. ADT Corp., No, 14-80180,
Similarly, the court is not convinced that plaintiffs” theory of harm is disconnected from Facebook’s alleged breach. Facebook argues that a promise not to “share” cannot be breached unless the information reaches' a third party. However, Facebook notes in its- reply brief that “it is impossible for [Facebook] to speak to whether advertisers received any referer headers.” Dkt. No. 281 at 5. By the same reasoning, it is impossible for Facebook to make promises about whether advertisers receive referer headers; Facebook can only promise not to transmit the information. For purposes • of this motion,.. Facebook does not challenge plaintiffs’ evidence of
3. Nominal Damages for Breach of Contract
Plaintiffs also argue that Ms. Mar-feo has standing because “failure to perform a contractual duty is, in itself, a legal wrong that is fully distinct from the actual damages,” for which Ms. Marfeo seeks nominal damages. Sweet v. Johnson,
Facebook argues- that nominal damages cannot satisfy the injury in fact requirement because actual damages are a required element for any California breach of contract claim. Facebook cites decisions from the Ninth Circuit, as well as a decision from this court. See Ruiz v. Gap, Inc.,
Plaintiffs, on the other hand, argue that the Ninth Circuit misinterpreted dicta from Aguilera in deciding Ruiz, which is an unpublished decision.
California case law reveals some uncertainty about whether actual damages are a necessary element for a breach of contract claim. Compare Patent Scaffolding Co. v. William Simpson Const. Co.,
While the court continues to find the issue “somewhat troubling,” In re eBay Litig.,
The injury alleged is “concrete” in that plaintiffs specify the contractual terms to which Ms. Marfeo agreed and the manner of breach by Facebook. The breach is “particularized” in that it involves disclosure of Ms. Marfeo’s own personal information and “actual” in that plaintiffs claim the breach has already occurred. Facebook does not challenge plaintiffs’ evidence that Facebook had a contractual duty hot' to share plaintiffs’ personal information, at least for purposes of this motion. See TAC ¶¶ 27-32 (citing Facebook representations). Nor does Facebook challenge plaintiffs’ evidence that Ms. Marfeo’s personal information was transmitted to third parties. See Dkt. No. 243 at 5 n.5. Therefore, plaintiffs have established injury in fact through Ms. Marfeo’s breach of contract claim for nominal damages.
C. Plaintiffs Mike Robertson and Katherine Pohl at Time of Substitution
Facebook argues that this court lacked jurisdiction to allow the substitution of Ms. Marfeo as a named plaintiff on May 22, 2015. Facebook’s motion to dismiss for lack of standing at the time of Ms. Mar-feo’s substitution is denied.
Facebook’s assertion that both Ms. Pohl and Mr. Robertson lacked standing one year ago does not provide a basis for dismissal at this juncture. The court now determines that Ms. Pohl lacks standing, but that Ms. Marfeo has standing. The court is not .aware of any authority permitting retroactive dismissal for lack of standing where a currently named plaintiff— Ms. Marfeo—has standing. Such a dismissal would conflict with the Supreme Court’s guidance that standing should be evaluated in accordance “with the manner and degree of evidence required at the successive stages of the litigation.” Lujan,
The court also declines to reconsider its previous order granting leave to amend to add Ms. Marfeo as a named plaintiff. Face-book argues that, even if Mr. Robertson previously had standing, the court lacked jurisdiction to permit Ms. Marfeo’s substitution once Mr. Robertson mooted his own claims by voluntarily dismissing with prejudice. Facebook made the same argument in supplemental briefing in opposition to Ms. Pohl’s motion for leave to amend. See Dkt. No. 221 at 1 (“Finally, even if Robertson’s standing were accepted, his voluntary dismissal with prejudice mooted his claim, eliminating any subject-matter jurisdiction the Court previously had.”). The court found that “the case need not be dismissed on this basis” because Mr. Robertson’s “voluntary dismissal rendered his claims moot,” and treated Ms. Pohl’s mo
III. CONCLUSION
For these reasons, Facebook’s motion to dismiss for lack of standing as to Ms. Pohl is granted. Facebook’s motion to dismiss for lack of standing as to Ms. Marfeo is denied. Facebook’s motion to dismiss for lack of standing as to Ms. Pohl and Mr. Robertson at the time of substitution is denied.
IT IS SO ORDERED.
Notes
. Plaintiffs’ motion for leave to file a surreply addressing nominal damages is granted. Fa-cebook is correct that plaintiffs do not cite California Civil Code Section 3360 in the Third Amended Complaint, but plaintiffs do seek "nominal damages based on Facebook’s breach" in the TAC. Dkt. No. 227 ¶ 67. Therefore, Facebook could have addressed the issue nominal damages in its motion to dismiss.
. At the hearing, plaintiffs also noted that the Ruiz court reached the damages element of the contract claim only after determining that plaintiff had alleged a credible threat of future identity theft sufficient to support Article III standing. Dkt. No. 321 at 13:12-20. Whether or not Ruiz was correctly decided, it does not hold that a plaintiff must prove actual contract damages in order to establish Article III standing.
. Facebook’s motion to dismiss Mr. Robertson's claims for lack of standing at the pleading stage was denied. Dkt. No. 91. Facebook did not move to dismiss Ms. Pohl’s claims for lack of standing until filing the instant motion. In opposition to Ms. Pohl’s motion for leave to amend, Facebook argued that this case should be dismissed based on Ms. Pohl’s lack of standing and Mr. Robertson's failure to establish his standing before his voluntary dismissal. See generally Dkt. Nos. 219 (hearing transcript), 221 (Facebook’s supplemental briefing). The court, however, explicitly declined to address standing, treating Ms. Pohl’s motion for leave to amend as a motion to substitute Ms. Marfeo as a named plaintiff following the mooting of Mr. Robertson’s claims. See Dkt. No. 226 at 7.