Supreme Court Rejects Google's Appeal In AdWords Battle

The Supreme Court on Monday refused to hear Google's appeal of a decision that granted pay-per-click marketers class-action status in a long-running AdWords battle.

The move means that Google must now face a class-action from marketers who say their ads were placed on "low quality" sites.

The dispute dates to 2009, when several pay-per-click marketers -- including law firm Pulaski & Middleman and retailer RK West -- alleged in a class-action lawsuit that ads on Google's AdSense for Domains and AdSense for Errors programs resulted in fewer purchases than ads on Google's search results pages. 

The marketers, who are seeking restitution, accused Google of violating California's unfair competition and fair advertising laws by misleading them about the nature of the sites where the ads would appear. The marketers also alleged that ads on parked domains "could damage their brands."

Google has revised its ad policies since the case was filed.



In 2012, U.S. District Court Judge Edward Davila in the Northern District of California rejected the marketers' bid for class-action status. Davila ruled that a class-action would be inappropriate because "individualized issues of restitution permeate the class claims."

Last year, a three-judge panel of the 9th Circuit reversed, ruling that the marketers had presented legitimate proposals for determining restitution on a class-wide basis. The appellate judges appeared to endorse at least one proposed methodology -- the "Smart Pricing" approach -- which the opinion describes as "the difference between the amount the advertiser actually paid and the amount paid reduced by the Smart Pricing discount ratio."

Google then asked the Supreme Court to hear the case, arguing that restitution can't be calculated by a one-size-fits-all formula.

The company said in its petition to the court that many advertisers, including RK West, "achieve higher conversion rates on parked domains and error pages than on the Smart Pricing benchmarks."

Google also argued that the 9th Circuit's ruling could result in "thousands" of advertisers suing Google for alleged violations of California's unfair competition laws.

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