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Advertisers fail to sue Facebook in class action

Jonathan Stempel New York

Facebook, which runs the world’s largest social networking website, won a court ruling on Friday rejecting a bid by thousands of advertisers to sue the company as a group for overcharging them.

US District Judge Phyllis Hamilton in Oakland, California, denied the advertisers’ request for class-action status, saying they had failed to show they had enough in common to sue Facebook for breach of contract and violations of California’s unfair competition law.

“The court is persuaded by Facebook’s argument that plaintiffs have not shown that they have a viable method for proving each class member’s recovery,” Judge Hamilton wrote. “The need to determine both liability and damages on an individualised basis makes this case inappropriate for class treatment.”

Jonathan Shub, a lawyer for the advertisers, declined to comment.

Facebook spokesman Andrew Noyes said the firm was reviewing the ruling.

Class certification often leads to higher recoveries and allows plaintiffs to cut legal bills.

Facebook is expected this year to conduct the most anticipated US initial public offering. The company is valued at $95.8 billion (R757bn), according to SharesPost, which tracks private company valuations.

In their 2009 lawsuit, the advertisers accused Facebook of overcharging them on their “cost-per-click” contracts, under which they paid fees each time users clicked their ads.

But citing a 2011 US Supreme Court decision involving Wal-Mart Stores that limited class action litigation, Judge Hamilton said the advertisers showed neither a “systemic breach of contract” nor enough similarity among the claims raised. – Reuters

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