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Class Action Against Meta to Proceed
Ninth Circuit Says Class Seeking Damages for Fraud Properly Certified
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday affirmed a District Court’s judge’s order certifying a class of advertisers seeking damages against Meta—formerly known as Facebook—claiming they paid for placement of advertisements on its platforms and were cheated because the potential reach of those ads was misrepresented.
However, the panel vacated an order by Judge James Donato of the Northern District of California certifying another class of advertisers—those seeking injunctive relief—remanding for a determination as to whether a named plaintiff has standing.
Senior Judge Sidney R. Thomas wrote the opinion, in which Senior Judge J. Clifford Wallace joined. Judge Danielle J. Forrest wrote a partial dissent.
Class of Advertisers
In 2018, a nationwide class of advertisers filed suit against Meta Platforms, Inc. it had misrepresented the potential reach of advertisements by telling advertisers that “Potential Reach estimates how many people your ad could potentially reach depending on the targeting and ad placement options you select while creating an ad.”
Each time an advertiser designed a campaign, Meta’s self-service advertisement creation interface displayed the campaign’s purported potential reach.
The named plaintiffs were former Meta advertisers DZ Reserve, an e-commerce business that spent over more than $1 million on 740 Meta advertising campaigns, and Cain Maxwell, an online firearm mount store that spent approximately $379 on 11 Meta advertising campaigns.
The plaintiffs moved to certify a class, with certain exceptions, of United States residents who purchased at least one advertisement on Meta’s platforms during the specified time-period. Donato certified the class under Federal Rules of Civil Procedure 23(b)(3) for damages for fraudulent misrepresentation and concealment and under Rule 23(b)(2) for injunctive relief under California’s Unfair Competition Law.
Common Issues Predominance
Meta argued that the requisite for certification under Rule 23(a)—that questions of law and fact common to class members predominate over any questions affecting only individual members—was not met. Thomas said:
“Given that all class members encountered the same misrepresentation about Potential Reach—the nucleus of the fraud—the slight variations in the other information available on the Ads Manager do not defeat the commonality of the misrepresentation.”
He went on to say:
“Because Meta communicated the same misrepresentation to all class members—that Potential Reach measures people when it really measures accounts—the class is entitled to an inference of reliance. Meta’s argument to the contrary rests on its theory that Plaintiffs were not exposed to a uniform misrepresentation, which we have rejected.”
Injunction Class
Thomas did find issue with the certification of the injunction class under Rule 23(b)(2) due to standing concerns with the named plaintiffs. As to DZ Reserve, he declared:
“[T]he owner of DZ Reserve simply testified that he would have spent less on Meta advertisements in the past had he known the truth about Potential Reach. He did not testify about his desire to purchase Meta advertisements in the future. Further,…DZ Reserve is no longer operating as a business. Thus, DZ Reserve lacks standing to assert a claim of injunctive relief.”
He remanded the question of whether Maxwell adequately plead an injury sufficient to confer standing to seek injunctive relief, explaining that he did testify that he “think[s] [he] would” purchase Meta advertisements in the future, but Maxwell’s business ceased operating sometime in 2019.
Forrest’s Partial Dissent
Forrest agreed with majority that the “certification of Plaintiffs’ Rule 23(b)(2) injunction class must be vacated and remanded” but disagreed that the damages class was properly certified and said:
“Plaintiffs cannot satisfy the predominance requirement where there are individual questions that must be answered related to multiple elements of Plaintiffs’ fraud-based claims.”
She noted that potential-reach estimates were tailored to each advertiser’s choices which created variations in the degree of accuracy as to the estimates. As a result, she reasoned, that the plaintiffs had not established that Meta made a uniform, material misrepresentation and “the presumption of reliance does not apply where uniformity of representation is lacking, or at least does not predominate.”
The case is DZ Reserve v. Meta Platforms, Inc., 22-15916.
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