Facebook, Inc. v. Gajjar

Background

Meta Platforms, Inc., formerly known as Facebook, Inc., and Instagram, LLC sued Basant D. Gajjar, doing business as LeadCloak, for breach of contract. The plaintiffs alleged that, since May 2016, Gajjar enabled and assisted fraudulent advertisers in bypassing their advertising review process through “cloaking.” According to the complaint, cloaking hid the actual content of an advertising website from the plaintiffs while showing different content to people who clicked the advertisement. The plaintiffs alleged that Gajjar’s conduct violated contractual terms and policies governing their platforms.

After his attorneys withdrew, Gajjar proceeded without a lawyer. He filed an answer asserting 32 affirmative defenses and a separate pleading asserting 13 counterclaims, including claims involving prospective economic advantage, defamation, negligent interference, civil conspiracy, declaratory relief, misrepresentation, business disparagement, tortious interference, extreme harassment, and attorney’s fees.

Counterclaims

The plaintiffs moved to dismiss the counterclaims under California’s litigation privilege and alternatively moved to strike them under California’s anti-SLAPP statute. The court granted the motion to dismiss. It held that the counterclaims were based on the filing of the lawsuit, a press release about the lawsuit, or efforts to serve process. California Civil Code section 47(b)’s litigation privilege generally protects communications made in connection with judicial proceedings from tort liability when they are made by authorized participants, to achieve the purposes of the proceeding, and have a logical connection to it. The court described the privilege as absolute, including when the challenged publication is allegedly malicious.

Gajjar argued that the privilege did not protect tortious acts and asserted that the plaintiffs had contacted financial institutions to cause them to close his accounts. The court found that those allegations were not included in his counterclaims and that the letters he submitted did not show that the plaintiffs had contacted the financial institutions. The court also found that the counterclaims concerned conduct during the litigation, including alleged business disruption from the lawsuit, statements in the lawsuit and press release, and efforts to locate and serve Gajjar. The court characterized his allegations about tracking his location and listening through his phone as speculation.

The court stated that all current counterclaims based on the alleged facts were dismissed with prejudice, while allowing Gajjar to file a motion for leave to amend if he discovered new facts supporting those or other counterclaims. It stated that the counterclaims for “unfair and frivolous lawsuit,” “extreme harassment,” and “attorney’s fees” were dismissed with prejudice in their entirety because they were not proper tort claims. Because the counterclaims were dismissed, the motion to strike them under the anti-SLAPP statute was denied as moot.

Affirmative defenses

The plaintiffs also moved under Federal Rule of Civil Procedure 12(f) to strike all 32 affirmative defenses. An affirmative defense accepts, for purposes of argument, that the complaint’s allegations are true but asserts that the plaintiff still cannot recover. The court explained that defenses must provide fair notice of their factual and legal basis and cannot be redundant, immaterial, impertinent, or scandalous.

The court struck without leave to amend defenses that merely denied elements of the plaintiffs’ breach-of-contract claim, including failure to state a claim, no breach, no damages, and lack of disclosure of a material fact. It also struck without leave to amend defenses that did not relate to the contract claim: the Communications Decency Act defense, no reasonable reliance, good faith, defamation or character assassination, and the attempt to reserve unspecified additional defenses.

The court struck the fraudulent-conduct and fraud-and-illegality defenses with leave to amend. It found that those defenses did not satisfy Federal Rule of Civil Procedure 9(b), which requires fraud allegations to identify the who, what, when, where, and how of the alleged misconduct, and it directed that any amended defenses must state facts supporting a valid defense to the contract claim. The court also struck the remaining defenses with leave to amend because they consisted largely of legal conclusions or did not explain why they applied to the contract claim.

Disposition

Judge Kandis Westmore granted the plaintiffs’ motion to dismiss Gajjar’s counterclaims. The court granted the motion to strike as to the affirmative defenses and denied the motion to strike the counterclaims under the anti-SLAPP statute as moot. Gajjar was ordered to file an amended answer within 21 days and could include only affirmative defenses for which the court had granted leave to amend.