Finding Commonality In A Uniform Click-Through Agreement

A recent California federal court decision denied certification to a putative class of Facebook "cost-per-click" advertisers who allegedly were charged by Facebook for fraudulent or invalid clicks on their advertisements.
United States Litigation, Mediation & Arbitration
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A recent California federal court decision denied certification to a putative class of Facebook "cost-per-click" advertisers who allegedly were charged by Facebook for fraudulent or invalid clicks on their advertisements. The decision, while illustrating the difficulty in obtaining class certification when litigating under a contract whose terms cannot be easily defined, arguably clouds the standards governing class certification in a uniform contract case.

In In re Facebook, Inc. PPC Advertising Litigation, the named plaintiffs entered into cost-per-click contracts with Facebook, in which the advertiser pays a fee to Facebook each time a user clicks on the advertisement. The plaintiffs claim that they were charged improperly for clicks in which the user attempted unsuccessfully to reach the advertisement, unintentional multiple clicks from a user in rapid succession, clicks made in a deliberate effort to drive up the cost of an advertisement, and various other types of "illegitimate" or "invalid" clicks. Plaintiffs allege that Facebook has an obligation under the "uniform contracts" it entered into with the advertisers to filter out invalid clicks and ensure that the advertisers were not charged for them.

The problem for the plaintiffs, the court found, lay in identifying precisely what constituted the "uniform contract' they alleged. The plaintiffs argued that the contracts incorporate not only the "click-through agreement" that advertisers are required to click prior to placing an advertising order, but also information contained in the "Help Center" on Facebook's website. There is an apparent conflict between the two documents: the "click-through agreement" incorporates the Facebook Statement of Rights and Responsibilities, in which Facebook disclaims responsibility for "click fraud or other improper actions that affect the cost of running ads," while the "Help Center" states that Facebook has "a variety of measures in place to ensure" that advertisers are charged only for "legitimate clicks."

The court held that the plaintiffs could not show the predominance of common questions for Rule 23(b)(3) certification. The court found that the "Help Center" was not part of the advertisers' contract with Facebook, and since the proposed class included not only advertisers who contracted with Facebook through the website but also those who worked directly a Facebook representative, many class members would be unlikely to have ever reviewed the "Help Center" material. In addition, the named plaintiffs' own experiences and understandings about what constituted the contract differed from each other as well as from their allegations. The court thus determined that "individual assessments will be required to determine the parties' intent" and that "plaintiffs have not established that these additional terms [in the Help Center] were part of what the advertisers and Facebook agreed to. . . . " Accordingly, common questions did not predominate.

The court also found that individualized questions predominated with respect to distinguishing among "valid," "invalid," and "fraudulent" clicks. While the plaintiffs argued that Facebook uses identical "algorithmic rules" in determining the legitimacy of a click, the court ruled that "there is no way to conduct this type of highly specialized and individualized analysis for each of the thousands of advertisers in the proposed class." Additionally, the court noted the "individualized assessment required to determine damages."

On its face, the court's reliance on the differing experiences of the various potential class members is difficult to reconcile with its finding that the "Help Center" was not part of any advertiser's contract. If the "Help Center" was not part of the contract at all, why did it matter whether all advertisers intended it to be? And if all advertisers clicked through the same agreement, why would it matter if different advertisers had different understandings of the contract they had executed?
The driving factor behind the court's decision appears to have been its skepticism that the "Help Center" language was part of the Facebook advertiser contract. In other words, the court found the plaintiffs' claim weak on the merits. In denying class certification on commonality grounds, however, the court may have inadvertently created confusion as to when classwide litigation is appropriate when a uniform contract, and particularly a multipart click-through agreement, is alleged.

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