IntegrityMessageBoards.com v. Facebook, Inc.

Background

IntegrityMessageBoards.com brought a proposed class action against Facebook, Inc. The complaint alleged that Facebook knowingly misrepresented to businesses buying advertisements the nature and scope of the users who would receive those advertisements. The first amended complaint kept that theory and added a second theory that Facebook misled advertisers about the quality of the data used to target users.

The first amended complaint asserted a claim under California’s Unfair Competition Law, California Business and Professions Code § 17200, and added claims for deceit and common-law fraud. The deceit and fraud claims sought money damages for past harm. The complaint also sought restitution, disgorgement, declaratory relief, and an injunction concerning Facebook’s alleged misrepresentations about advertising-targeting accuracy.

Facebook moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. Facebook argued that federal law bars equitable relief when the plaintiff has an adequate remedy through money damages. Facebook also moved to seal portions of the first amended complaint and the opposition to the dismissal motion.

Motion to Dismiss

The court held that the federal courts’ equitable powers are limited by the requirement that a plaintiff lack a plain, adequate, and complete remedy at law. The court concluded that this requirement applied at the pleading stage and to the equitable relief sought here. It rejected IntegrityMessageBoards.com’s arguments that California’s rule allowing cumulative remedies, alternative pleading under Rule 8, or the distinction between past and future harm eliminated that requirement.

For past harm, the court found that IntegrityMessageBoards.com had not shown why money damages were inadequate. The court treated the plaintiff’s focus on the lack of an adequate remedy for future harm as an implicit waiver of any argument that it lacked an adequate remedy for past harm. Because Facebook was the only defendant and the plaintiff directed all requests against Facebook, the court found that the reasoning supporting amendment in another case did not apply here. It dismissed the requests for restitution and disgorgement with prejudice.

For future harm, the court reached a different conclusion. The complaint alleged that Facebook continued to misrepresent the accuracy of its advertising targeting and that the plaintiff could not resume advertising because it could not rely on Facebook’s representations. The court found it reasonably inferable that future damages could not be quantified because the number and cost of future advertisements were unknown, and because no class had yet been certified. The court therefore denied the motion to dismiss the equitable claims for injunctive and declaratory relief to the extent those claims were based on future harm.

Sealing Motions

The court applied the “compelling reasons” standard, which requires specific factual support for keeping judicial records from public view and requires balancing confidentiality interests against the public’s interest in access.

For the first amended complaint, the court denied sealing for the requested portions concerning Facebook’s internal analyses of its product, internal analyses of third-party data, and Nielsen Company data analysis. The court found Facebook’s asserted competitive harms speculative or insufficiently supported. The court also denied sealing for most portions concerning internal testing and assessments of product features, but granted sealing for one paragraph, paragraph 83, because its specific study findings might qualify as trade-secret information and the confidentiality interest outweighed the public interest for that limited material.

The court granted sealing for portions concerning Facebook’s revenue streams, finding that the information revealed revenue and profit-margin details and could provide insight into Facebook’s strategic decisions. The court also granted sealing for a footnote describing the technical operation of a pricing mechanism for certain advertisements.

The court denied sealing for the portions of the plaintiff’s opposition reflecting the first and second categories of information. It granted sealing for the portion relying on paragraph 83.

Disposition

The court’s conclusion stated that it granted Facebook’s motion to dismiss the § 17200 claim and all requests for equitable relief with prejudice to the extent they relied on past harm, and denied the motion to the extent those requests relied on future harm.

The court also granted Facebook’s motion to seal only specified portions of the first amended complaint: portions of paragraphs 10, 83, 116, 117, 118, and 123, and footnote 6, subject to limits on which highlighted material could be redacted. It denied the motion to seal the remaining portions of the first amended complaint. It granted the motion to seal page two, lines 21–23, of the plaintiff’s opposition and denied the motion as to the rest. The court ordered Facebook to provide redacted versions within ten days, after which the plaintiff was required to file them publicly within fourteen days.