Klein v. Meta Platforms, Inc.
- James Donato
- 3:20-cv-08570
- U.S. District Court · Northern District of California
- 4
In Klein v. Meta Platforms, Inc., Judge Donato denied Meta’s motion to dismiss advertisers’ antitrust claims, allowing the case to proceed.
The advertiser plaintiffs’ Sherman Act claims may proceed against Meta. The court treated the amended allegations as timely through relation back and found the alleged anticompetitive conduct and injury sufficiently plausible, but it did not decide whether certain plaintiffs had constitutional standing to challenge the Google agreement.
What happened
In Klein v. Meta Platforms, Inc., advertisers alleged that Facebook, now operated by Meta, monopolized social advertising and charged artificially high advertising prices. They brought claims under Sections 1 and 2 of the Sherman Act.
Meta argued that some allegations were too old, that the amended complaint added new claims too late, and that the advertisers had not plausibly shown anticompetitive effects or injury. Meta also questioned whether several plaintiffs had constitutional standing to challenge a 2018 agreement with Google.
The court denied Meta’s motion to dismiss. Judge Donato held that the amended allegations related back to the original complaint and plausibly described anticompetitive conduct and resulting injury; he left the standing issue open for possible reconsideration after a fuller factual record.
The detailed version
- Klein v. Meta Platforms, Inc. · No. 3:20-cv-08570
- James Donato
- Dec. 6, 2022
Background
The opinion concerns a group of individuals and entities that purchased advertising on Facebook. They alleged that Facebook illegally monopolized the market for social advertising and caused them to pay artificially inflated prices. Their amended consolidated complaint asserted three antitrust claims: monopolization and attempted monopolization under Section 2 of the Sherman Act, and unlawful restraint of trade under Section 1.
A prior district judge had granted and denied in part an earlier motion to dismiss the advertiser and consumer complaints, giving each group an opportunity to amend. Only the advertiser group filed an amended complaint. Meta moved to dismiss that amended complaint under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legal claim.
Timeliness and relation back
The parties resolved most disputes about whether the Section 2 claims were filed on time. The advertisers represented that they would not seek damages or otherwise base those claims on conduct before the applicable limitations period, and the court stated that they would be held to that representation.
Meta argued that allegations added in the amended complaint did not relate back to the original complaint and that conduct before February 28, 2018, should therefore be disregarded or dismissed. The court rejected that argument. It found that the amended complaint responded to deficiencies identified in the earlier dismissal order, added detail to the original allegations, and concerned the same conduct rather than entirely new topics. The court also found that Meta had not shown unfair prejudice. The amended allegations therefore related back to the filing date of the original complaint for limitations purposes.
Plausibility of the Section 2 claims
Meta argued that the advertisers had not plausibly alleged an anticompetitive effect or antitrust injury. The court disagreed. It relied on the “monopoly broth” theory previously accepted in the litigation, under which a Section 2 claim may be based on a series of allegedly anticompetitive practices even if some practices would be lawful when viewed separately.
The alleged conduct included targeting competitors through whitelist and data-sharing agreements backed by threatened denial of access to Facebook’s platform and application programming interfaces; alleged unlawful data and market-division agreements with Netflix, eBay, and Foursquare; use of data obtained through the Onavo app to surveil and target competition; integration of artificial-intelligence and machine-learning models from Facebook, Instagram, and WhatsApp; and an agreement with Google intended to reinforce Facebook’s position in social advertising.
The court held that these allegations plausibly described predatory and exclusionary conduct that made the social advertising market less competitive. The advertisers also alleged that the conduct reduced their choices and caused them to pay supracompetitive prices. The court said Meta’s contrary arguments raised factual disputes that could not be resolved on a motion to dismiss.
Standing
Meta argued that Affilious, Inc., Jessyca Frederick, and 406 Property Services, PLLC lacked Article III standing—a constitutional requirement that a plaintiff show a legally sufficient injury—to assert the claim based on Facebook’s September 2018 agreement with Google, known as “Jedi Blue.” The advertisers’ class definition excluded the named plaintiffs who bought Facebook advertising only between December 1, 2016, and April 3, 2018, and not afterward. The court declined to resolve the standing issue at that stage and said Meta could seek to revisit it if a fully developed record warranted doing so. The court made the same statement regarding Mark Young.
Disposition
The court denied Meta’s motion to dismiss. The advertiser antitrust claims were allowed to proceed, subject to the advertisers’ representation concerning pre-limitations-period conduct and possible later consideration of the standing issue.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.