dotStrategy Co. v. Facebook Inc. - Northern District

Unfair Competition, False Advertising

Northern District

U.S. District Judge William H. Alsup

Defense Attorneys: Covington & Burling Llp, Ashley M. Simonsen, Kathryn E. Cahoy, Simon J. Frankel, Kanu Song, Andrew J. Vaden, Sylvia Huang, Sean F. Howell, Ellen Y. Choi

Plaintiffs Attorneys: Cera Llp, Thomas C. Bright, Solomon B. Cera; The David Hodges Law Firm, David A. Hodges

Ashley M. Simonsen

Covington & Burling LLP and lead partner Ashley M. Simonsen secured a summary judgment victory for Facebook Inc. in a class action alleging unfair competition and false advertising.

Cera LLP and the David Hodges Law Office represented dotStrategy Co., an Arkansas company that operated the .buzz domain name, accused Facebook of misrepresenting that advertisers won't be charged for clicks from fake accounts.

The company sought refunds of all charges through a 2020 lawsuit filed on behalf of a putative class of all U.S. Facebook advertisers since 2013.

According to dotStrategy, there were 1,398,329,000 impressions during the class period that resulted from invalid clicks.

In November, Alsup granted Facebook's summary judgment motion, concluding "there was nothing in the record indicating that Facebook had charged plaintiff for a click by a fake account." dotStrategy Co. v. Facebook Inc., 20-CV-00170 (N.D. Cal., filled Jan. 8, 2020).

"The court held as a matter of law that reasonable advertisers understand that online advertising involves some amount of 'fake' account activity," Simonsen said. "Hence, statements like 'ads help you reach the right people' and instructing users to 'use the same name that you use in everyday life' do not lead reasonable advertisers to believe otherwise."

"Judge Alsup... granted summary judgment because there was no evidence the plaintiff was charged for any clicks on the site by allegedly fake accounts," Simonsen added.

Cera LLP attorney Thomas C. Bright is appealing Facebook's victory.

In his appeal, Bright cited statements on the company's platform that "misled reasonable Facebook advertisers to believe they would not be charged for interactions with fake accounts," and that his client would not have paid for any advertising if the company knew that would happen.

Bright could not be reached for comment on the ruling or pending appeal, and co-counsel David A. Hodges of the David Hodges Law Office declined to comment.

Simonsen said the ruling affirmed a key 9th U.S. Circuit Court of Appeals precedent that a plaintiff seeking to certify [unfair competition] misrepresentation claims must prove that class members were actually exposed to the statements in question.

"Our strategy was to narrow the number of statements at issue through pleadings challenges, from over 40 to just three," Simonsen said. "We then took a multipronged approach to opposing class certification."

"First, Covington argued that the plaintiff could not prove that class members were exposed to the three statements remaining, because those appeared on online resource pages that advertisers did not necessarily see before placing ads," she explained.

"Second, Covington determined that there was no evidence that dotStrategy was charged for a click from a fake account. We argued in opposition to class certification that the plaintiff was not an adequate or typical class representative."

"The court agreed with Covington on the second point and dismissed the case. The outcome underscores the importance of early strategic focus on narrowing claims in paving the way for later total victories," Simonsen said.

She said the ruling will have important consequences for other technology companies facing UCL misrepresentation claims, particularly regarding invalid ad traffic. It already has been cited by technology companies in at least five other cases, including Google, LinkedIn, and Nintendo.

- Federico Lo Giudice

Kathryn E. Cahoy

Kanu Song