Rosenman v. Facebook Inc.

Background

Shari Rosenman filed a putative class action against Facebook, Inc. in the California Superior Court for the County of San Mateo. She asserted claims under California’s Unfair Competition Law (UCL) and for unjust enrichment. The proposed class consisted of California citizens who maintained a Facebook profile during the four years before the lawsuit was filed.

Rosenman alleged that Facebook’s popularity and market position allowed it to reduce privacy protections. She claimed that Facebook collected and retained increasingly extensive user data, expanded how it could use that data, and effectively required consumers to accept those practices because they had few practical alternatives. She characterized the users’ time, attention, and personal data as what they exchanged for access to Facebook’s services.

Facebook removed the case to federal court based on federal-question jurisdiction. Rosenman moved to remand, which would have returned the case to state court.

Federal-question jurisdiction

The court explained that state-law claims can sometimes support federal-question jurisdiction when they necessarily raise a disputed and substantial federal issue, and when exercising jurisdiction would not upset the balance between federal and state judicial responsibilities. This test comes from Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing.

The court concluded that Rosenman’s UCL claim under the unfairness prong satisfied all four parts of that test. First, although a UCL unfairness claim does not always require a federal-law violation, the particular claim pleaded by Rosenman relied on Facebook’s alleged abuse of a monopoly position. The court reasoned that the alleged unilateral monopolistic conduct could be actionable only under federal antitrust law, particularly Section 2 of the Sherman Act, because California law does not expressly prohibit unilateral monopolization in the same way.

Second, the federal issue was disputed because Rosenman alleged that Facebook created and abused an unlawful monopoly, while Facebook denied those allegations. Third, the court found the issue substantial because federal antitrust policy promotes competition and resolving the issue could affect other cases involving Facebook’s alleged monopolistic conduct. Fourth, the court found that hearing the case would not disturb the federal-state balance because federal antitrust claims fall within the federal courts’ exclusive jurisdiction.

Other claims and ruling

The court held that it had federal-question jurisdiction over the UCL unfairness claim. It also exercised supplemental jurisdiction—authority to hear related state-law claims arising from the same case or controversy—over Rosenman’s UCL fraud claim and unjust-enrichment claim because they concerned the same alleged degradation of Facebook’s data practices.

The court therefore denied Rosenman’s motion to remand. The order addressed where the case could proceed; it did not decide whether Facebook actually violated the UCL, federal antitrust law, or any other law.