Klein v. Meta Platforms, Inc.

Background

The Advertiser Plaintiffs and Consumer Plaintiffs asked the court to resolve their dispute with Facebook about the sufficiency of their initial disclosures concerning damages. Facebook argued that the plaintiffs had not disclosed the amount or method for computing damages, or the documents and evidence on which they intended to rely. The plaintiffs argued that they had made the required disclosures, that Facebook was demanding more than Federal Rule of Civil Procedure 26(a) required, and that a more precise damages calculation might require expert testimony and additional records.

Rule 26(a) Requirements

Rule 26(a)(1)(A)(iii) requires a party to provide a computation of each category of damages claimed and to identify or make available the documents or other evidence supporting each calculation. The court explained that the rule does not require a calculation to be perfectly precise, but it does require enough detail—based on the information currently available—to allow the opposing party to understand its potential exposure and make informed decisions about discovery. A party is not excused from making the disclosure merely because it has not completed its investigation. Parties must also timely supplement their disclosures as their damages theories develop.

Advertiser Plaintiffs

The Advertiser Plaintiffs disclosed that they sought compensatory damages for alleged advertising overcharges. Their disclosure described the damages methodology, provided an estimated amount, identified some supporting documents, and stated that other documents would be produced before September 10, 2021.

Facebook challenged the methodology and the support for the overcharge claim. The court rejected the challenge to the extent it disputed the merits or applicability of the methodology, explaining that Rule 26 required disclosure of the methodology rather than resolution of whether that methodology was correct. To the extent Facebook argued that supporting materials had not been identified, the court was not persuaded on the record presented, assuming the remaining documents were disclosed as the Advertiser Plaintiffs had represented. The court also stated that the possible need for expert testimony did not eliminate the Advertiser Plaintiffs’ duty to supplement as their theories developed. The Advertiser Plaintiffs did not need to supplement their disclosures at that time.

Consumer Plaintiffs

The Consumer Plaintiffs described their claimed damages as the difference between the value Facebook allegedly provided through competition-reducing conduct and the value that unrestricted competition allegedly would have required Facebook to provide, including compensation for user data. Their disclosure referred generally to publicly available documents and estimated damages at least in the tens of billions of dollars, but did not identify the documents or other evidence on which they relied or state that they would produce those materials to Facebook.

The court found that disclosure insufficient under Rule 26(a)(1)(A)(iii). If the Consumer Plaintiffs based their damages on uncompensated user data, they had to identify the data, estimate its value, describe the calculation method, and identify the supporting evidence. If they relied on a different basis for damages, they had to describe the harm, the calculation method, and the estimated amount more specifically, and identify or produce the supporting materials. The possible need for expert testimony did not excuse these disclosure obligations.

Disposition

The Consumer Plaintiffs were ordered to supplement their initial damages disclosures by November 3, 2021. The Advertiser Plaintiffs were not required to supplement their disclosures at that time.