Facebook Beats Class Certification in Click Fraud Case

By Eric Goldman

In re Facebook, Inc., PPC Advertising Litigation, 2012 WL 1253182 (N.D.Cal. April 13, 2012)

I don’t know what I like less: click fraud, or bogus lawsuits over click fraud. This three-year-old case (see my initial blog post on filing) was questionable from day 1. The advertisers signed up to a contract that clearly told them they had no claim for click fraud. To get around this, the plaintiff canvassed every corner of Facebook’s site for innocuous language that could be twisted around tendentiously, and the plaintiffs argued that they weren’t suing for bad clicks but instead for invalid “phantom” clicks that never occurred. Judge Fogel, bless his heart, didn’t kill the case when he had the chance; instead, he gave the plaintiffs another chance. No matter, as Judge Fogel handed the case off to Judge Hamilton when Judge Fogel relocated to DC, and Judge Hamilton properly shut down the nonsense and denied class certification. The case might still continue individually, but I can’t imagine why it would.

The plaintiffs sail through the standard class action analysis on numerosity, commonality and typicality. The plaintiffs hit a small but curable bump on adequacy of representation, but it’s embarrassing when the named class representatives admit that the lawyers are the real prime movers in the case (as is far too typical in class actions). The court says:

Fox is also not an adequate class representative for the additional reason that he testified in his deposition that he knows essentially nothing about the case, and indicated that he would defer to counsel in prosecuting this action.

Clients guiding lawyers, or lawyers guiding clients? The legal system assumes the former; the latter is the reality in class actions.

Despite the hiccup on adequacy of representation, the case runs into real trouble on the predominance of common issues. On the contract breach claim, the court summarizes its concerns:

plaintiffs have failed to establish that the terms of the contract that were allegedly breached by Facebook are part of any contract between CPC advertisers and Facebook; have failed to establish that there is any uniform method for distinguishing, on a classwide basis, between “invalid” clicks (at issue in the case) and “fraudulent” clicks (not at issue in the case); and have failed to establish that damages can be calculated on a classwide basis.

Particularly noteworthy is the court’s rejection of the plaintiffs’ efforts to stitch together various site text to tell the story it wants to tell. This passage about the plaintiffs’ efforts to incorporate language from the Glossary into the “contract’ is representative of the court’s discussion:

Because the Glossary is not referenced in or linked to the “Place Order” page or to the SRR, it is not clear how it can reasonably be considered part of a “uniform written contract.” Not only is it unnecessary for an advertiser to review any material on the Glossary page in order to place an ad, it is also impossible to link directly to the Glossary from the “Click Agreement” or “Place Order” page, or even from the SRR.

Stepping back from the case specifics, the rulings demonstrates that publishers, guided by the right lawyers, should fight back against advertiser class action lawsuits rather than take quick settlements. Recall that both Google and Yahoo settled their click fraud lawsuits before reaching the class certification stage. They may have done so because they wanted class-wide resolution of the issues; but more likely, they were skittish about fighting to the end. Here, unlike Google and Yahoo, Facebook fought class certification rather than settling, and the ruling validates Facebook’s decision. Perhaps this ruling will embolden other publishers to stick to their guns when the click fraud lawyers come a-callin’.

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