Facebook Defeats Lawsuit Over Discriminatory Housing Ads–Vargas v. Facebook

This lawsuit alleges that Facebook is liable for Fair Housing Act discrimination purportedly enabled by its self-service advertising tools. The court grants Facebook’s motion to dismiss the Third Amended Complaint. I believe this case is now ready for a Ninth Circuit appeal, where anything could happen.

Standing. “plaintiffs do not attempt to allege that housing was generally available in their desired markets – much less that housing Ads satisfying those criteria were being placed in Facebook – under the criteria that any of the plaintiffs were using during the times they were using Facebook to search for housing. That is fatal to plaintiffs’ standing.”

One Latina plaintiff alleged that she got different search results than a Caucasian Facebook user when they conducted searches side-by-side. However, the court says this allegation doesn’t distinguish between consumer-placed ads (which were not alleged to use discriminatory targeting criteria) from paid ads. The complaint also doesn’t provide sufficient details about the search results and how they differed.

The court concludes:

In sum, what the plaintiffs have alleged is that they each used Facebook to search for housing based on identified criteria and that no results were returned that met their criteria. They assume (but plead no facts to support) that no results were returned because unidentified advertisers theoretically used Facebook’s Targeting Ad tools to exclude them based on their protected class statuses from seeing paid Ads for housing that they assume (again, with no facts alleged in support) were available and would have otherwise met their criteria. Plaintiffs’ claim that Facebook denied them access to unidentified Ads is the sort of generalized grievance that is insufficient to support standing.

Section 230. The plaintiffs allege Facebook had a role in “creating, promoting use of, and profiting from paid advertisers’ use of the Targeting Ad tools.” The court distinguishes Roommates.com: “Unlike in Roommates where use of the discriminatory criteria was mandated, here use of the tools was neither mandated nor inherently discriminatory given the design of the tools for use by a wide variety of advertisers.” Plus, citing Dyroff, the court says Facebook’s ad tools were “neutral.”

Some points to reinforce:

• This is another example of how Section 230 can preempt federal anti-discrimination claims. That’s not a new principle–I teach the Noah v. AOL case from 2003, which reached the same result–but it’s still worth reiterating.
• Section 230 applies even when plaintiffs allege that the service used targeting algorithms.
• I still have no idea what “neutrality” means in this context.
• Facebook has deprecated the functionality that would permit housing ad targeting based on protected categories.
• Anyone rolling out self-service ad tools really ought to anticipate the potential discriminatory uses before launching the tools.

Case citation: Vargas v. Facebook, Inc., 2021 WL 3709083 (N.D. Cal. Aug. 20, 2021). The initial complaint. Links to some of the other rulings in this case.