PUTIAN AUTHENTIC ENTERPRISE MANAGEMENT CO., LTD v. Meta Platforms, Inc.

Background

The plaintiffs—Putian Authentic Enterprise Management Co., Ltd., Fuzhou Haina Hongyi Network Technology Co., Ltd., Fuzhou Baidai Network Technology Co., Ltd., Nanchang Huimeng Network Technology Co., Ltd., and Suzhou Chenghe Network Technology Co., Ltd.—operate social-media marketing businesses. They purchase advertising space connected to Meta's Facebook platform and resell it to e-commerce vendors. The plaintiffs said their businesses depended heavily on Meta's advertising platform.

The parties agreed that Meta's Terms of Service governed their relationship. Those terms, along with Meta's Commercial Terms, Advertising Policies, and Self-Serve Ad Terms, prohibited misleading, fraudulent, or deceptive conduct and allowed Meta to restrict or terminate accounts for clear, serious, or repeated violations. The policies also made the plaintiffs responsible for advertisers whose ads they placed or managed.

Meta notified the plaintiffs in March 2022 that its investigation found violations involving deceptive and misleading advertisements. Meta then shut down the plaintiffs' Facebook Business Manager accounts. The court had previously denied the plaintiffs' first request for emergency relief because they had not shown irreparable harm. The plaintiffs filed the renewed motion addressed in this order.

Legal standard

A temporary restraining order uses the same standard as a preliminary injunction. The party seeking relief must show a likelihood of success on the merits, likely irreparable harm without relief, a favorable balance of hardships, and that an injunction would serve the public interest. Because the plaintiffs sought a mandatory injunction requiring Meta to restore access, the court stated that they faced a higher burden.

Court's analysis

The court assumed, for purposes of its decision, that the plaintiffs' new evidence might sufficiently show irreparable harm. It nevertheless concluded that the plaintiffs had not shown a likelihood of success on any claim.

For intentional interference with a contract, the plaintiffs did not provide formal contracts with customers or enough evidence identifying the relevant contractual relationships. The court also found that Meta's governing terms gave it the right to terminate accounts when plaintiffs or their clients violated the terms and policies. Meta presented evidence of potentially fraudulent or misleading advertisements and the disabling of more than 1,400 accounts managed by the plaintiffs since December 2019. The court therefore found no likelihood of success on this claim.

For intentional interference with prospective economic advantage, the plaintiffs did not identify a specific future business deal or relationship that Meta's account shutdown had disrupted. The court found that general descriptions of past or current customers were insufficient.

For promissory estoppel, the plaintiffs argued that Meta's past handling of deactivation notices led them to expect review before their Business Manager accounts were restricted. The court found that the notices on which the plaintiffs relied concerned vendor accounts, not the plaintiffs' Business Manager accounts. It also held that Meta's written terms governed the same subject matter, so the alternative promissory-estoppel theory could not succeed.

For breach of contract, the court found that Meta's terms incorporated the advertising and self-serve advertising policies, which expressly allowed account termination. The evidence tended to show that the plaintiffs' customers had repeatedly violated those terms and that the plaintiffs were responsible for those violations. The court therefore found that the evidence apparently showed the plaintiffs, rather than Meta, had breached the contract.

For breach of the implied covenant of good faith and fair dealing, the court relied on its contract analysis. It found that the plaintiffs did not appear to have fulfilled their contractual obligations and that account termination was expressly contemplated by the agreement. It also noted that the implied-covenant claim could be disregarded as duplicative if it rested on the same conduct and sought the same relief as the contract claim.

For the California Unfair Competition Law claim, the court addressed the plaintiffs' theories under the unlawful and unfair prongs. The unlawful-prong theory depended on the plaintiffs' other claims, which the court found unlikely to succeed. The unfair-prong theory alleged that Meta used its market position to control data and deactivate accounts for its own benefit, but the plaintiffs provided no evidence supporting their antitrust allegations. The court found that the relevant statements in a declaration were unsupported opinion and speculation.

For negligence, the plaintiffs argued that Meta owed them a duty of ordinary care because of a special relationship created by Meta's control over Facebook and the Business Manager accounts. The court found no supporting authority or evidence for that special relationship. It further found that, even if Meta owed a duty beyond the contract, the plaintiffs offered no evidence of a breach beyond unsupported opinion and conjecture.

The court also considered the plaintiffs' declaratory-judgment claim, although the plaintiffs had not addressed it in their motion. The plaintiffs sought a declaration that they had not violated Meta's terms or advertising guidelines. Because the record contained evidence suggesting that the plaintiffs had breached the agreement, the court found that they had not shown a likelihood of success on that claim either.

Disposition

The court concluded that the plaintiffs had not shown a likelihood of success on the merits of any claim. Because that required denial of emergency relief, the court did not consider the remaining requirements for a temporary restraining order. Judge Edward J. Davila denied the renewed motion for a temporary restraining order with prejudice.