dotStrategy Co. v. Facebook Inc
- William Alsup
- 3:20-cv-00170
- U.S. District Court · Northern District of California
- 16
In dotStrategy v. Facebook, Judge Alsup denied class certification because advertisers lacked evidence that class members saw Facebook’s allegedly misleading statements.
dotStrategy, Co., Facebook, Inc., and the proposed class of advertisers described in the motion.
What happened
dotStrategy, Co. v. Facebook, Inc. concerned a proposed class action by an advertiser that alleged Facebook charged for clicks or other activity from fake accounts despite statements that invalid clicks would not be charged. dotStrategy claimed this violated California’s unfair-competition law and sought to represent advertisers who paid Facebook for advertising connected to fake accounts.
The court explained that class certification requires proof that the proposed class meets the requirements of Federal Rule of Civil Procedure 23. For this type of misleading-advertising claim, a class cannot proceed unless members were exposed to the statements at issue. The court found that the statements appeared on only a few Facebook webpages and that advertisers were not required to view those pages when placing or managing ads. Advertisers instead had to find the pages among thousands of others.
The court rejected dotStrategy’s attempt to shift its theory to Facebook’s broader policy requiring users to use their real names. The court held that the relevant statements were the promises about invalid clicks, reaching the right people, and users’ everyday names, and denied class certification. Judge William Alsup signed the order.
The detailed version
- dotStrategy Co. v. Facebook Inc · No. 3:20-cv-00170
- William Alsup
- June 22, 2021
Background
This putative class action arose under Section 17200 of California’s Unfair Competition Law, which prohibits unlawful, unfair, fraudulent, deceptive, untrue, or misleading business practices and advertising. dotStrategy, a for-profit corporation, alleged that Facebook represented that advertisers would not be charged for clicks determined to be invalid, including clicks generated by fake accounts. dotStrategy alleged that Facebook nevertheless charged it for clicks by fake accounts during 55 advertising campaigns promoting its .buzz domain-name registry business. The opinion states that Facebook billed dotStrategy approximately $8,000 in total.
The proposed class consisted of all persons or entities within the United States who, from December 1, 2013, to the present, paid Facebook for advertising based on impressions delivered to or actions generated through fake Facebook accounts.
The three statements the court identified as still at issue were:
- “If we detect or are alerted to suspicious or potentially invalid click activity, a manual review is performed to determine the nature of the activity. You will not be charged for clicks that are determined to be invalid.”
- “On Facebook, you’ll only pay to reach the right people who’ll love your business.”
- “Facebook is a community where everyone uses the name they go by in everyday life. This makes it so that you always know who you’re connecting with.”
Class-Certification Standard
Federal Rule of Civil Procedure 23 requires a plaintiff seeking class certification to establish four prerequisites: the class is numerous enough that individual lawsuits would be impractical; common legal or factual questions exist; the representative’s claims are typical of the class’s claims; and the representative will fairly and adequately protect the class’s interests. The plaintiff must also satisfy one of Rule 23’s additional requirements. dotStrategy relied on Rule 23(b)(3), which requires common questions to predominate over individual questions and a class action to be the superior method for resolving the dispute.
The court stated that it must conduct a rigorous analysis of these requirements, including considerations that may overlap with the underlying claim. For a California misleading-advertising claim, a private plaintiff must show economic injury caused by the deceptive advertising, including actual reliance. In a class action, absent class members may not need to prove individual reliance if the other class requirements are met, but the class must still be exposed to the alleged misrepresentations. A presumption of class-wide exposure may arise from an extensive and long-term advertising campaign that was pervasive enough that all class members likely encountered the statements.
The Court’s Analysis
The court first rejected dotStrategy’s effort to expand the case beyond the theory allowed in an earlier order. The earlier order had treated the invalid-click statement as the central statement and had allowed the case to proceed based on the invalid-click, right-people, and real-names statements. The court concluded that dotStrategy could not now rely generally on Facebook’s “authenticity policy” as the representation underlying the claims.
The court also rejected dotStrategy’s argument that Facebook’s statement that users must use their real names was equivalent to Facebook’s statement that everyone on the platform uses the name they use in everyday life. The first was a command or term directed to users. It did not guarantee that every user complied with the requirement or that Facebook guaranteed enforcement. The second was a categorical statement about the people using Facebook and could reasonably be understood as representing that there were no fake accounts. The court therefore treated the statements as different.
The court then held that dotStrategy had not shown class-wide exposure to the statements. The invalid-click statement appeared in Facebook’s Business Help Center, the right-people statement appeared on a “grow your business online” webpage, and the real-names statement appeared on a help-center page about permitted names. Advertisers used Facebook’s terms of service, advertising terms, commercial terms, advertising policies, and advertising-management tools, but those interfaces did not automatically display text from the relevant help-center or business webpages.
According to the court, advertisers who wanted to see those pages had to search for or otherwise navigate to them among thousands of other webpages. None of the relevant pages was required viewing before, during, or after placing advertisements. The court found this insufficient to justify a presumption that all or most members of the proposed class had seen the allegedly misleading statements. The court relied on Ninth Circuit precedent holding that even a website containing the alleged misrepresentations, together with other advertising, may not establish class-wide exposure.
Because dotStrategy failed to establish the required exposure to the alleged misrepresentations, the court did not consider Facebook’s remaining arguments against certification.
Disposition
The court denied dotStrategy’s motion to certify the proposed class. Judge William Alsup entered the order on June 22, 2021.
Read the full 16-page opinion on CourtListener, the free public archive maintained by the Free Law Project.