Editorial credit: Tada Images / Shutterstock.com
by Wendy Davis @wendyndavis
Source: www.mediapost.com, May 2024
The country’s largest trade group is backing Meta’s attempt to scuttle a class-action fraud lawsuit brought by advertisers over allegedly inflated metrics regarding the potential reach of ad campaigns.
In a friend-of-the-court brief filed Monday with the 9th Circuit Court of Appeals, the U.S. Chamber of Commerce says the advertisers were shown individualized metrics, and therefore don’t have enough in common to be able to proceed as a class.
“Deciding whether Meta made material misrepresentations to each class member and whether each class member relied on those alleged misrepresentations would thus require millions of individualized inquiries,” the Chamber of Commerce writes in a friend-of-the-court brief.
The group says such “particularized questions” preclude class certification.
The Chamber of Commerce is backing Meta’s request that the 9th Circuit reconsider a recent 2-1 ruling that allowed two advertisers — DZ Reserve and Max Martialis — to proceed with a fraud lawsuit on behalf of all U.S. advertisers who used Facebook’s Ad Manager or Power Editor to purchase ads on Facebook or Instagram after August 15, 2014.
The court battle dates to 2018, when business owner Danielle Singer alleged in a class-action complaint that Facebook induced advertisers to purchase more ads, and pay more for them, by overstating the number of users who might view the ads.
Singer’s initial complaint cited a report by the industry organization Video Advertising Bureau, which said in 2017 that Facebook’s estimates of audience reach in every U.S. state were higher than the states’ populations.
Singer later dropped out of the litigation, and DZ Reserve, which operated an e-commerce store, and Max Martialis, which sold weapons accessories, became the lead plaintiffs. They added in an amended complaint filed in 2020 that Facebook employees were aware of complaints about the potential reach metric since September 2015.
Meta opposed class certification, arguing to U.S. District Court Judge James Donato in San Francisco that the potential class members were differently situated.
Donato rejected that position, allowing the case to proceed as a class-action. Had he accepted Meta’s argument, advertisers that were shown incorrect metrics would have had to sue individually. Those kinds of individual lawsuits are often prohibitively expensive for many small businesses.
Meta then appealed to the 9th Circuit, arguing that the class certified by Donato included advertisers that range from “sole proprietors to multinational corporations to governments.”
The company contended that it would be impossible “to collectively adjudicate” how the allegedly inflated metrics affected advertisers.
In March, the panel majority rejected Meta’s argument, writing that fraud claims are “particularly well suited to class treatment.”
Meta recently asked the 9th Circuit for a new hearing in front of 11 of the circuit’s 29 judges. The company argued that the panel ruling will make it “virtually impossible” for defendants in other lawsuits over alleged fraud to oppose class-action certification.
The Chamber of Commerce likewise argues that the panel’s decision would make class-action certification “the norm” in fraud lawsuits.
That organization also contends that the panel decision could ultimately drive up ad prices, theorizing that Meta likely would pass along some of the cost of litigation to its advertisers.
The 9th Circuit hasn’t yet said whether it will reconsider the panel’s decision.
