Section 230 Helps Facebook Defeat Lawsuit Over Scam Ads–Calise v. Meta
The plaintiffs allege that Facebook runs third-party ads for scammy third-party merchant websites. One plaintiff claims a merchant didn’t send the ordered goods as described. Another plaintiff claimed that a merchant never sent any goods at all. The plaintiffs sued Facebook for (1) negligence; (2) breach of contract; (3) breach of the covenant of good faith and fair dealing; (4) violations of California’s Unfair Competition Law, Cal. Bus. & Prof. Code section 17200, et seq. (“UCL”); and (5) unjust enrichment. Facebook defended on Section 230 grounds. The judge doesn’t see this as a hard case.
ICS Provider. Not disputed.
Third-Party Content. Also not disputed.
Publisher/Speaker Claims. The plaintiffs claimed that Facebook solicited and encouraged the bad ads. The court disagrees (emphasis added):
As in Dyroff, Plaintiffs’ allegations here do not establish that Meta materially contributed to the illegality of the specific advertisements in question. Plaintiffs do not plead that Meta required advertisers to post specific content, made suggestions about the content of the ads, or played a role in creating the unlawful ads. Nor do Plaintiffs allege that Meta directly participated in the allegedly fraudulent purchase transactions, which took place on third-party websites. Thus, the allegations do not show Meta is responsible for the actionable content. At most, Plaintiffs’ allegations establish that Meta encouraged and solicited third parties to advertise on its platform. But the fact that Meta cultivates relationships with advertisers and encourages them to post on its platform does not transform Meta into the creator of the allegedly illegal ad content. Plaintiffs fail to allege facts that show Meta contributed to the illegality of the challenged advertisements, and thus Meta is entitled to Section 230 immunity [cite to Goddard v. Google]
To get around Section 230, the plaintiffs argued that Facebook failed to remove scammy ads in accordance with its ad policies. The court responds that “Meta cannot be held liable under Section 230 for its decisions not to remove third-party content….numerous courts have rejected the argument that an interactive service provider loses Section 230 immunity if it fails to adequately enforce its ad policies” [cites to Goddard, Roommates.com, and Ripple v. YouTube].
The plaintiffs also argued that at least the contract breach claim should get around Section 230, but it doesn’t: “Plaintiffs’ contract claim is based on Meta’s alleged solicitation and publication of deceptive third-party advertisements and therefore stems from Meta’s role as publisher.” The court could have cited Murphy v. Twitter for this intersection of Section 230 and contract breach claims.
The court gives the plaintiffs a chance to try to plead around Section 230, but I doubt the plaintiffs can do so without making factually unsupported allegations that don’t clear the Rule 11 bar. So I expect an amended complaint and another quick dismissal before the case goes to the Ninth Circuit.
Though this ruling is good news for Facebook and other ad-supported services, it’s easy to see the danger signs for defendants. First, the HomeAway and Amazon precedents apply to marketplace listings, so this ruling only helps with non-marketplace ads. Second, numerous bills have proposed to cut back Section 230’s applicability to ads (e.g., the SAFE TECH bill), so this ruling wades into dicey policy discussions. Third, scammy ads are not a formula for long-term user satisfaction, so I hope Facebook and other ad-supported services are taking all appropriate steps to protect its users.
Case citation: Calise v. Meta Platforms, Inc., 2022 WL 1240860 (N.D. Cal. April 27, 2022). The complaint.