Marketers Suing Facebook Can't Bring Class-Action


In a victory for Facebook, a federal judge has ruled that pay-per-click marketers that filed a click-fraud lawsuit against the company aren't eligible for class-action status.

While the marketers bringing the case -- including the sports site RootZoo, Fox Test Prep, and Web site operator Steven Price -- can still pursue their claims individually, the ruling significantly limits Facebook's potential liability for damages.

U.S. District Court Judge Phyllis Hamilton said in her order that class-action status wasn't appropriate due to "the existence of numerous matters requiring individualized inquiry."

Hamilton added that damages likely would be different in every case. "Plaintiffs fail to show that common questions predominate," she wrote in the order, issued Friday.

The litigation dates to 2009, when several pay-per-click marketers alleged in a federal lawsuit that they were wrongly charged for clicks. For instance, Price, who operated the car site, alleged in court papers that Facebook billed him $500 for ads that appeared May 26 and June 21, 2009, but that analytics programs from Google and showed that two-thirds of the clicks he was charged for didn't take place.

He said that Facebook acknowledged it had charged him for invalid clicks and gave him $105.01 in credits that could be used to purchase other ads, but argued he was entitled to a refund.

Likewise, RootZoo alleged that it found discrepancies between data provided by its own analytics programs and Facebook's numbers. For example, RootZoo alleged that on one day in June, its software programs showed that 300 clicks had been generated by Facebook, but the company was charged for 804 clicks.

Facebook contended that its contract with advertisers disclaimed liability for click fraud. U.S. District Court Judge Jeremy Fogel in San Jose, Calif. ruled in 2010 that Facebook's disclaimer applied to clicks that were "fraudulent" in the sense that the clicker had dubious intentions. But Fogel ruled that the disclaimer didn't apply to clicks that were "invalid" -- such as when technical problems prevented users from reaching a landing page.

The marketers argued that Facebook doesn't follow industry standards aimed at ensuring that advertisers are billed only for "legitimate" clicks. The marketers said that Facebook violates industry guidelines -- including the Interactive Advertising Bureau's 2009 recommendations -- in several ways. Among others, the service allegedly does not permit independent audits or publish a description of its methodology for counting clicks.

Hamilton said in her ruling that the marketers had not shown "any uniform method for distinguishing, on a classwide basis, between 'invalid' clicks and 'fraudulent' clicks."

Google also recently defeated pay-per-click marketers' attempt to proceed as a class-action in a lawsuit about the "parked domains" and "errors" program. In that case, U.S. District Court Judge Edward Davila ruled that class-action status was inappropriate because “individualized issues of restitution permeate the class claims.”

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