SCOTUS Shouldn't Intervene In Meta Fraud Suit, Advertisers Say

Two Meta advertisers are asking the Supreme Court to leave in place a lower court decision requiring the company to face a class-action fraud suit on behalf of three million businesses that purchased ads on the platform.

In papers filed late last week, the advertisers DZ Reserve and Max Martialis argue that the lower court ruling was correct, and that hearing Meta's appeal would not be “a good use of this court's resources.”

The dispute dates to 2018, when business owner Danielle Singer alleged in a class-action complaint that Meta induced advertisers to purchase more ads, and pay more for them, by overstating the number of users who might see the ads. (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.)

Singer's complaint cited a report by the industry organization Video Advertising Bureau, which said Facebook's estimates of audience reach in every U.S. state were higher than the states' populations. The plaintiffs later amended the complaint to allege that Meta employees were aware of complaints about the potential reach metric since September 2015.

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Meta argued to U.S. District Court Judge James Donato in San Francisco that the case shouldn't proceed as a class-action because the advertisers lacked enough in common with each other.

Donato rejected that argument and certified a class 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.

Meta appealed to the 9th Circuit Court of Appeals, which upheld Donato's order in a 2-1 decision.

Earlier this year, Meta asked the Supreme Court to review the 9th Circuit's ruling, arguing that questions about how estimates of potential reach affected advertisers call for case-by-case determinations, making class-action treatment inappropriate.

The class certified by Donato includes “millions of diverse advertisers ranging from sole proprietors to Fortune 500 companies -- with a correspondingly wide range of advertising budgets,” Meta wrote, adding that the amount by which the potential reach was inflated varied by advertiser.

Meta also said many of its advertisers based decisions on factors other than the potential reach estimate -- such as whether web users clicked on ads or made purchases.

Attorneys for DZ Reserve and Max Martialis essentially counter in their new papers that class-action treatment is appropriate because Meta allegedly inflated potential reach metrics to all advertisers, even if the amount of inflation varied from advertiser to advertiser.

The Supreme Court is expected to consider the matter at its January 10 conference.

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