Levelfields, Inc. v. Reddit, Inc. a California Corporation

Background

LevelFields, Inc. asserted one breach-of-contract claim against Reddit, Inc. based on the Reddit Ad Platform Agreement. LevelFields alleged that Reddit charged for clicks on its advertisements that did not generate traffic on LevelFields’s servers.

The amended complaint presented two theories. First, LevelFields alleged that Reddit charged for clicks that did not occur, were not initiated by users, or did not result in users reaching the linked landing page or comments page. In its opposition, LevelFields narrowed this theory to clicks that did not result in traffic measurable on its servers. Second, LevelFields alleged that Reddit failed to use reasonable means to ensure that the clicks were delivered according to LevelFields’s criteria.

Contract interpretation

The court held that both theories failed under the agreement’s plain and unambiguous language. Section 3 stated that Reddit would serve an advertisement when matching inventory became available, would use reasonable means to deliver it according to the advertiser’s criteria, and would not guarantee that the advertisement would reach selected users or produce a specific result. It also stated that the advertiser would pay after delivery based on Reddit’s calculation and measurement of billing metrics such as impressions, views, or clicks.

The court interpreted “deliver” to mean Reddit’s serving of an advertisement on Reddit’s site according to the advertiser’s selected criteria. It did not mean that a click was chargeable only when a user successfully reached the advertiser’s site and generated measurable traffic there. The court noted that LevelFields did not allege that Reddit failed to deliver its advertisements according to LevelFields’s selected criteria.

The court also found no contractual support for defining “clicks” as only clicks that produced measurable traffic on LevelFields’s servers. It read “clicks” as referring to a user’s, bot’s, or fraudster’s clicking on an advertisement. The agreement stated that Reddit’s ad server controlled the measurement used for billing and disclosed that third parties might generate fraudulent or improper clicks. For that conduct, the agreement provided a process for seeking advertising credit within 45 days of the applicable invoice date.

The court considered an email from a Reddit customer-service representative but found that it did not support LevelFields’s proposed definition or make the agreement ambiguous. The court also noted that it did not need to reach Reddit’s other arguments, including arguments concerning the exclusive claims process and standing.

Disposition

The court rejected both breach theories. It granted Reddit’s motion to dismiss, dismissed the sole breach-of-contract claim with prejudice, and dismissed the amended complaint without leave to amend because LevelFields had already amended its initial claim and could not plead around the agreement’s express terms. Judge William Orrick signed the order.