Dealing a blow to IAC, a federal judge has decided that disgruntled online marketers can proceed with a class-action click-fraud lawsuit against the company.

U.S. District Court Judge Christina Snyder in Los Angeles ruled that the search marketers could be certified as a class because their complaints against IAC stemmed from the same type of alleged conduct.

"Plaintiffs advertised using Citysearch's pay-per-click advertising program and were allegedly charged by Citysearch for invalid clicks," Snyder wrote. "Notwithstanding any asserted differences between class members, plaintiffs' claims are based on an alleged common course of conduct."

The class includes all pay-per-click marketers on Citysearch who "experienced click fraud by reason of double clicks" -- clicks within a short period of time from the same IP address -- or from Citysearch's "failure to apply automatic filters to traffic from its syndication partners" before March 23, 2007.

Barry Diller's IAC had opposed the marketers' efforts to proceed as a class, arguing that "each advertiser's expectations of and experience with Citysearch are unique."

This decision appears to mark the first time a judge has ruled on a contested motion to certify a class in a click-fraud lawsuit stemming from pay-per-click ads. While Google and Yahoo have both faced class-action click-fraud lawsuits, those cases were resolved without litigation about whether a class should be certified, according to attorney Brian Kabateck. He represents the marketers in the lawsuit against IAC, and has also represented search marketers in class-actions against Google and Yahoo.

Whether a class can be certified is key in these types of cases because individual marketers' damages from click fraud are usually too small to justify the expense of suing, unless they can proceed as a class.

The two advertisers who brought the case, make-up services company Menagerie Productions and payroll company Redwolf, alleged that they were billed for clicks that were "invalid." They said that in some cases, Citysearch charged them for more than one click from the same IP address in a short period of time. They also alleged that IAC did not apply filters to screen out suspicious clicks.

Menagerie alleged that it shelled out $1,900 in a three-month period for pay-per-click ads on Citysearch without receiving any new clients. Redwolf said it paid $700 over a five-month period and also didn't see any new business as a result of the ads.

Kabateck said the case could go to trial next year, unless it settles. "Hopefully, Citysearch will make things right with their customers," he said.

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