Vargas v. Facebook, Inc.

Background

The plaintiffs challenged Facebook’s former advertising platform for housing. They alleged that Facebook allowed housing advertisers to use “Exclude People,” “Include People,” and “Multicultural Affinity” tools to target or steer housing advertisements away from users based on characteristics including race, ethnicity, gender, disability, and family status. They asserted claims under the federal Fair Housing Act and comparable California and New York laws.

Rosemarie Vargas alleged that she periodically searched for housing on Facebook, filtering searches by location and cost. She also alleged that searches using the same parameters as a white male friend produced fewer results for her, and that searches including her use of a Section 8 voucher and veteran status produced no results. The opinion states that the other five named plaintiffs identified only their ethnicities and gender and that they used Facebook’s housing-search function.

The plaintiffs sought damages for people allegedly injured by Facebook’s practices and an order preventing Facebook from restarting use of the challenged tools. The opinion states that Facebook asserted it stopped using those tools by December 2019.

Facebook’s Arguments

Facebook moved to dismiss, arguing that the plaintiffs lacked Article III standing, that its publishing conduct was protected by Section 230 of the Communications Decency Act, and that the complaint failed to state claims under the federal, California, and New York laws.

Article III standing is the requirement that a plaintiff show a concrete injury, a connection between that injury and the defendant’s conduct, and a likelihood that a favorable court decision would remedy the injury. Facebook made a facial challenge under Federal Rule of Civil Procedure 12(b)(1), meaning it argued that the complaint itself did not allege enough facts to establish the court’s jurisdiction.

Court’s Analysis

The court held that the plaintiffs had not plausibly alleged an injury in fact. Although Vargas alleged that she searched for housing and received fewer results than a white male friend, the complaint did not specify when or how often the searches occurred, what search criteria were used, what advertisements the searches returned, or how many advertisements were returned.

The plaintiffs also did not identify a specific housing advertisement that they were prevented from seeing or allege that they were ready, willing, and able to pursue housing advertised in an unavailable advertisement. The court described the alleged injury as speculative because it depended on possible use of Facebook’s tools by unidentified housing advertisers, for housing in areas the plaintiffs may have searched, and for homes the plaintiffs might have been able and willing to pursue.

The court rejected the plaintiffs’ argument that the Fair Housing Act gave them broader standing based on cases involving testers, nonprofit organizations, cities, or tenants who alleged concrete injuries. According to the court, those cases involved specific injuries such as receiving false housing information, spending money to combat discrimination, losing tax revenue, or being denied the ability to live in integrated housing. The plaintiffs’ allegations did not identify a comparable personal injury.

The court also concluded that the allegations were insufficient to establish statutory standing under the California Unruh Act, California’s Unfair Competition Law, or New York law. The plaintiffs had not alleged plausible facts showing that they personally experienced discrimination at a particular time or in a particular way, or that they suffered a non-speculative economic loss.

The court did not decide whether the plaintiffs would need to identify specific advertisements shown to comparable users. Instead, it required them to allege facts within their own knowledge about how they used Facebook to search for housing, how they knew a white comparator saw different advertisements, and whether they had the intent and ability to obtain housing they would have pursued. The court also declined to provide jurisdictional discovery before the plaintiffs made a plausible showing of injury based on those facts.

Disposition

Judge William H. Orrick granted Facebook’s motion to dismiss the Second Amended Complaint with leave to amend. The plaintiffs were ordered to file a Third Amended Complaint within 20 days if they could cure the identified deficiencies. Because the standing issue resolved the motion, the court did not reach Facebook’s Section 230 or failure-to-state-a-claim arguments.