Antitrust suit against Facebook may be time barred, judge says

A federal judge questioned Thursday why she shouldn't throw out an antitrust lawsuit seeking to represent all of Facebook's users and advertisers because it was brought too late.

Pointing to the dismissals of other lawsuits similarly claiming that Facebook holds a monopoly on social networking, U.S. District Judge Lucy H. Koh in San Jose said the case she's overseeing faces the same issues challenging conduct that happened years ago beyond the window to sue.

Front and center are accusations that Facebook violated antitrust laws by deceiving users on how it harvests and uses their data to create and further a monopoly, magnifying the anticompetitive impact of its acquisitions of emerging rivals. This allowed it to identify competitors, including Instagram, Snapchat and WhatsApp, and "eliminate them through a strategy of copy, acquire or kill," the lawsuit claimed.

The company has maintained that there's robust competition in the social networking market, including from new rivals such as Snapchat and TikTok, and that its services, which are largely free, don't harm consumers.

Facebook has centered its legal defense in antitrust lawsuits around the theory that it's too late to sue for conduct that started in 2007 and lasted until 2015. Last month, a federal judge for the District of Columbia dismissed lawsuits from the Federal Trade Commission and more than 40 states based on the argument, as did another federal judge for the Northern District of California. They also found that there wasn't enough proof that Facebook has a monopoly over social networking.

At the start of the hearing on whether to dismiss the lawsuit, Koh asked why she should come to a different conclusion than judges in other cases. Klein v. Facebook, 20-cv-08570 (N.D. Cal., filed Dec. 3, 2020).

"The fundamental claim of anticompetitive conduct is different," responded plaintiffs' attorney Stephen Swedlow, a partner at Quinn Emanuel Urquhart & Sullivan. He said this case concerns Facebook deceiving users on how it would collect and utilize their data, unlike regulators' case, which challenges its acquisitions of up-and-coming rivals to stifle competition.

The judge replied by asking why the lawsuit was not filed earlier since it includes widely reported news about Facebook, like an investigation into the company by the FTC and scrutiny about its data collection practices that go back nearly a decade.

The public, Swedlow said, was first notified of vast data privacy violations by Facebook in the wake of revelations in March 2018 that it illegally shared the data of 87 million users with political consulting firm Cambridge Analytica. He noted that the FTC only figured out that Facebook was deceiving users about their ability to control the privacy of their personal information in 2018.

"To say that class should've figured it out before the government sued Facebook doesn't make any sense," he said. "Facebook was actively deceiving and lying to users about what it was doing with their data and they had no way to know that."

Private parties alleging violations of Section 2 of the Sherman Act are subject to a four-year statute of limitations, but it doesn't start if the defendant lied to conceal misconduct.

Facebook attorney Sonal N. Mehta countered that the window to sue started in 2011 when the FTC first sued Facebook over its data practices. She argued that the lawsuit is attempting to recast privacy violations for an antitrust case.

"Just the FTC consent decree which they say they were aware of and relied upon is sufficient," the partner at Wilmer Cutler Pickering Hale and Dorr LLP said. "Whatever happened with respect to Cambridge Analytica in 2018 is irrelevant."

Swedlow shot back that Facebook denied any wrongdoing in its 2011 settlement with the FTC and continued to successfully lie about how it used peoples' data.

Koh took the matter under submission.

On Tuesday, the judge disqualified Keller Lenkner from the case. She sided with Facebook that the firm failed to timely screen a lawyer it hired from Kellogg Hansen Todd Figel & Frederick who had spent more than 800 hours over the previous six months representing it in government antitrust investigations and preparing to defend it in another antitrust case.

Keller Lenkner, which is also representing a Texas-led coalition of states in an antitrust lawsuit against Google, claimed that the attorney played a minor role in the probe and that it promptly notified Facebook of the potential conflict of interest. Warren Postman, a partner at the firm that filed the first complaint in the litigation with Quinn Emanuel Urquhart & Sullivan, was a lead attorney in the case.