• by Wendy Davis , Yesterday

A dispute over Meta's liability for fake ads could have far-reaching consequences that would affect itself as well as numerous other online companies, the social platform argues in papers filed late last week with the 9th Circuit Court of Appeals.

"The fundamental question in this case is whether Meta can be held contractually liable for moderating (or not) content posted to Facebook by third parties," the company writes in a petition asking the 9th Circuit Court of Appeals to intervene in the dispute.

"Given that there are hundreds of millions of Facebook users in the United States and literally billions of pieces of content posted to the site every day the answer to that question will have profound implications," Meta says.

Those implications "will not be confined to Meta," the company adds, arguing that the outcome of the battle could affect all websites with content moderation policies.

The company is urging the 9th Circuit to review a decision issued by U.S. District Court Judge Jeffrey White, who ruled last year that the company must face a lawsuit over phony Facebook ads.

The legal battle dates to 2021, when Oregon resident Christopher Calise alleged in a class-action complaint that he was bilked out of around $49 after attempting to purchase a car-engine assembly kit advertised on the platform.

The complaint included claims that Meta failed to honor statements in its terms of service and community standards section. Meta allegedly promised in its terms of service to "take appropriate action" regarding harmful content, and allegedly said in the community standards section that it would remove fraudulent content.

White, who presides in the Northern District of California, ruled in September that the allegations in the complaint, if true, could support claims the company broke its contract with users and violated its duty of good faith.

Meta then asked White to authorize an immediate appeal to the 9th Circuit, arguing that appellate judges should decide whether terms of service and "community standards" create a "legally enforceable obligation to combat purported scam advertisements."

The tech group NetChoice backs that request, writing in a friend-of-the-court brief that an appellate court should decide whether "aspirational" statements in companies' terms of service give users grounds to sue.

White granted Meta's request, allowing the company to ask the 9th Circuit to review his ruling.

The social platform says in its new petition that a fast appeal is warranted because there is a "substantial ground for difference of opinion" regarding the key issue -- whether its terms of service require it to combat fraudulent ads.

"At least four district court decisions from within this circuit and one unpublished decision from this Court itself have expressly rejected the argument that the [terms of service] and community standards impose affirmative obligations on Meta," it argues.

Meta adds that a fast ruling by the appellate court is "far superior to the alternative -- deferring appeal of this central issue until after final judgment, which could render years of work by the district court and parties wasted."

The 9th Circuit hasn't indicated when it will rule on the petition.