Vargas v. Facebook, Inc.

Background

Plaintiffs’ Third Amended Complaint reasserted claims under the federal Fair Housing Act, the California Fair Employment and Housing Act, the California Unfair Competition Law, and analogous New York laws. They challenged Facebook’s former advertising platform, which allowed advertisers to select target audiences for paid housing advertisements and allegedly exclude protected groups from seeing particular ads.

In January 2021, the court dismissed the Second Amended Complaint with leave to amend. It required plaintiffs to plead specific facts within their knowledge about the housing searches they performed on Facebook, including the housing sought, the search periods, the results returned, and facts showing that they could and intended to pursue housing opportunities they allegedly did not see.

Standing

Facebook moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which challenges the court’s subject-matter jurisdiction. The court treated the motion as a facial challenge, meaning it assessed whether the complaint’s allegations, accepted as true where reasonable, were legally sufficient to invoke jurisdiction.

The court held that the new allegations did not plausibly establish injury in fact, a concrete and personal harm required for standing. Plaintiffs alleged that they searched Facebook for housing using specified criteria and did not receive ads matching those criteria. But they did not allege that suitable housing was generally available in the markets they searched or that qualifying housing advertisements had actually been placed on Facebook during the relevant periods.

Rosemarie Vargas alleged that she and a Caucasian friend searched Facebook Marketplace side by side using the same criteria, and that the friend received more ads in preferable locations. The court found this allegation insufficient because Vargas did not identify the ads, show that they were paid advertisements covered by the lawsuit, or allege that they met her other criteria, such as cost and size. The court concluded that all plaintiffs failed to plead a plausible personal injury and that their claims under the California and New York laws also lacked the required injury allegations.

Communications Decency Act

The court separately held that the claims would be barred by Section 230 of the Communications Decency Act even if plaintiffs had adequately alleged injury. Section 230 generally protects providers of interactive computer services from liability when plaintiffs seek to treat them as the publisher or speaker of information supplied by another content provider.

Plaintiffs argued that Facebook lost this protection by creating, promoting, and profiting from advertisers’ use of the targeting tools. The court distinguished a Ninth Circuit decision involving a website that required users to answer discriminatory questions. Here, the court found, Facebook’s targeting tools were optional, available for many types of advertisements, and not inherently discriminatory. Advertisers selected the content and ultimately used the tools for their own purposes. The court therefore concluded that the tools provided a neutral framework and did not make Facebook responsible as the content creator.

Disposition

The court granted Facebook’s motion to dismiss with prejudice and dismissed the Third Amended Complaint with prejudice. Having found two independent bases for dismissal—lack of standing and Communications Decency Act protection—the court did not reach Facebook’s additional arguments concerning the required elements of the Fair Housing Act and state-law claims.

The opinion is signed by Hiam H. Orrick, United States District Judge.