Google Loses Round In Lawsuit About AdWords Pricing


Siding against Google, a federal judge has denied the company's bid to dismiss a potential class-action lawsuit by an AdWords advertiser who says he was overcharged for his search campaign.

U.S. District Court Judge Edward Davila ruled this week that Rick Woods, a Fayetteville, Ark.-based attorney who used AdWords to market his legal practice, could proceed with claims that Google failed to give him a promised discount.

Woods says that he used AdWords from September of 2009 through early 2011 to market his legal practice. During that time, Google allegedly reneged on a promise to give Woods a “smart pricing” discount -- which was supposed to reduce his cost-per-click when ads were served on sites within Google's publisher network.



Specifically, Woods alleges that Google was supposed to discount ads by 9.31% when they appeared on IAC's His complaint lists six instances when Google allegedly did not apply that discount. Woods alleges that he was charged between 99 cents and $1.88 per click for those six ads, when by his calculations, he should only have been charged between 90 cents and $1.71 per click.

Woods also alleges that Google didn't apply the smart pricing discount to some ads served to mobile users. In addition, he says that Google failed to geotarget his ads as promised. Woods says he was charged for clicks originating in Pennsylvania, Texas and Japan -- despite Google's alleged representations that the ads would be targeted to users in Arkansas.

Woods, who is suing Google in the Northern District of California for breach of contract and other claims, is seeking class-action status.

Google filed papers asking Davila to dismiss the lawsuit in its entirety. Among other arguments, Google says that it never promised a “smart pricing” discount. “The words 'Smart Pricing' do not appear anywhere in the concise, two-page contract,” Google argues in court papers. “Instead, the contract provides that 'Google disclaims all guarantees regarding ... costs per click.' This is the opposite of a 'guarantee' to Smart Price all clicks on Google’s Display Network.”

This week, Davila rejected Google's motion to dismiss the lawsuit. Davila ruled that Woods alleged sufficient facts to proceed with his breach of contract claim, as well as several other counts. “Woods has sufficiently alleged that Google failed to Smart Price several clicks from ads located on the Display Network,” Davila wrote. “As such, Woods has stated a claim for breach of contract sufficient to withstand Google's motion.”

Google declined to comment on the case.

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