Metropolitan News-Enterprise


Monday, June 26, 2023


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Court Reinstates Discrimination Suit Against Facebook

Majority of Three-Judge Panel Says Plaintiffs Have Standing to Pursue Action Alleging That Advertisers of

Housing Are Able to Exclude From Access to Ads, Through Targeting Options, Users in Protected Classes


By a MetNews Staff Writer


The Ninth U.S. Circuit Court of Appeals on Friday reinstated an action against Facebook alleging that its ad platform is set up in such a way that paid advertisers of housing can, and do, discriminate against persons in protected classes.

Five women brought the action under the federal Fair Housing Act, California’s Fair Employment and Housing Act and the Unfair Competition Law, and the New York State Human Rights Law.

A memorandum opinion—signed by Ninth Circuit Judge Susan P. Graber and by Tenth Circuit Judge Michael R. Murphy, sitting by designation—reverses a dismissal with prejudice by District Court Judge William Horsley Orrick of the Northern District of California. Ninth Circuit Judge John B. Owens dissented.

Orrick held on Aug. 20, 2021, that the five plaintiffs “failed to plead facts supporting a plausible injury in fact sufficient to confer standing on any plaintiff.”

Allegations of Pleading

The third amended complaint says, with reference to lead plaintiff Rosemarie Vargas:

“On or about February or March 2019. Plaintiff Vargas was with a Caucasian friend. Chet Marcello. Plaintiff Vargas and Ms. Marcello sat side-by-side and conducted a search for housing through Facebook’s Marketplace, both using the same search criteria Plaintiff Vargas had been using. Ms. Marcello received more ads for housing in locations that were preferable to Plaintiff Vargas. Plaintiff Vargas did not receive the ads that Ms. Marcello received.”

The pleading continues (with paragraph numbering omitted):

“Based upon information and belief, including Facebook’s well-known amassing of detailed demographic data about each user. Plaintiff Vargas’s status as a single parent, disabled female of Hispanic descent was known to Facebook.

“Facebook’s Ad Platform and its targeting methods provide tools to exclude women of color, single parents, persons with disabilities and other protected attributes, and as a result of Facebook’s actions. Plaintiff Vargas, and others similarly situated, were prevented from having the same opportunity to view ads for housing that other Facebook users, not in protected classes received.”

Majority’s Opinion

The memorandum opinion sets forth:

“[The district court faulted the complaint for not identifying specific ads that Plaintiff Vargas did not see. But Plaintiffs’ very claim is that Facebook’s practices concealed information from housing-seekers in protected classes. And nothing in the case law requires that a plaintiff identify specific ads that she could not see when she alleges that an ad-delivery algorithm restricted her access to housing ads in the first place.

“The district court also relied on the fact that only paid ads used Facebook’s targeting methods, and Plaintiffs do not specify whether the ads that Plaintiff Vargas’s Caucasian friend saw (and that Plaintiff Vargas did not) were paid ads. The operative complaint alleges that Facebook hosts a vast amount of paid advertising but does not allege that all ads on the Marketplace are paid ads. Nonetheless, given the allegations concerning the magnitude of paid advertising, it is plausible to infer that one or more of the ads that Plaintiff Vargas could not access because of Facebook’s methods was paid. If Plaintiff Vargas cannot prove that she was denied access to one or more paid ads. then her claims will fail on the merits—but they do not fail for lack of standing.”

Immunity Statute

Orrick also ruled that Facebook is immune from liability under Section 230 of the Communications Decency Act. That section affords immunity to providers of interactive computer services based on content posted by third parties.

The Ninth Circuit opinion declares:

“We agree with Plaintiffs that, taking the allegations in the complaint as true, Plaintiffs’ claims challenge Facebook’s conduct as a co-developer of content and not merely as a publisher of information provided by another information content provider.”

Facebook, it notes, devised the system for placing users in categories which advertisers can target.

Owens’s Dissent

Owens said in his dissent:

“Each of Plaintiffs’ theories of injury—denial of truthful information, denial of the opportunity to obtain a benefit, denial of the social benefit of living in an integrated community, and stigmatic injury—depends on Plaintiffs having been personally discriminated against by at least one housing advertiser that used Facebook’s Ad Platform. Thus, to survive a motion to dismiss. Plaintiffs would need to plausibly allege that a housing ad that would otherwise have appeared in their News Feeds or in their search results on Facebook Marketplace did not appear because the advertiser used Facebook’s Ad Platform to exclude then protected class….

“As to each named plaintiff, the Third Amended Complaint…does not identify any such ad or advertiser. Nor does it allege facts supporting an inference that housing discrimination (even if the identities of the ads and advertisers are unknown) is plausibly the reason Plaintiffs failed to find housing ads meeting their respective search criteria. Plaintiffs have alleged nothing to exclude the possibility that suitable housing was not available or not advertised on Facebook.”

The case is Vargas v. Facebook, Inc., 21-16499.


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