Shared.com v. Meta Platforms, Inc., No. 3:2022cv02366 - Document 31 (N.D. Cal. 2022)
Court Description: ORDER GRANTING IN PART AND DENYING IN PART 24 DEFENDANT'S MOTION TO DISMISS FIRST AMENDED COMPLAINT. Signed by Chief Judge Richard Seeborg on September 21, 2022. (rslc3, COURT STAFF) (Filed on 9/21/2022)
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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 SHARED.COM, 10 Case No. 22-cv-02366-RS Plaintiff, 11 United States District Court Northern District of California v. 12 META PLATFORMS, INC., 13 Defendant. ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 14 15 I. INTRODUCTION 16 Plaintiff Shared.com (“Shared”) is an online content creator that was, for many years, 17 18 deeply engaged in the Facebook advertising ecosystem. This suit arose following a series of 19 alleged incidents that effectively barred Shared from using, advertising on, and monetizing from 20 the social media platform. The operative First Amended Complaint (“FAC”) avers breach of 21 contract, misrepresentation, and several other acts of misconduct by Defendant Meta Platforms, 22 Inc. (“Meta”). Meta now moves to dismiss the FAC for failure to state a claim. The motion is granted in part and denied in part. Some of Plaintiff’s claims are barred by 23 24 section 230(c)(1) of the Communications Decency Act. The remaining claims, however, have 25 been adequately pleaded. II. BACKGROUND1 26 27 28 As this Court must “accept all factual allegations in the complaint as true” when evaluating a Rule 12(b)(6) motion to dismiss, Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005), all facts 1 United States District Court Northern District of California 1 Shared is a partnership based out of Ontario, Canada that “creates and publishes original, 2 timely, and entertaining [online] content.” Dkt. 21 ¶ 9. In addition to its own website, Plaintiff also 3 operated a series of Facebook pages from 2006 to 2020. During this period, Shared avers that its 4 pages amassed approximately 25 million Facebook followers, helped in part by its substantial 5 engagement with Facebook’s “advertising ecosystem.” This engagement occurred in two ways. 6 First, Shared directly purchased “self-serve ads,” which helped drive traffic to Shared.com and 7 Shared’s Facebook pages. Second, Shared participated in a monetization program called “Instant 8 Articles,” in which articles from Shared.com would be embedded into and operate within the 9 Facebook news feed; Facebook would then embed ads from other businesses into those articles 10 and give Shared a portion of the ad revenue. Shared “invested heavily in content creation” and 11 retained personnel and software specifically to help it maximize its impact on the social media 12 platform. Id. ¶ 19. 13 Friction between Shared and Facebook began in 2018. Shared states that it lost access to 14 Instant Articles on at least three occasions between April and November of that year. Importantly, 15 Shared received no advance notice that it would lose access. This was contrary to Shared’s averred 16 understanding of the Facebook Audience Network Terms (“the FAN Terms”), which provide that 17 “[Facebook] may change, withdraw, or discontinue [access to Instant Articles] in its sole 18 discretion and [Facebook] will use good faith efforts to provide Publisher with notice of the 19 same.” Id. ¶ 22; accord Dkt. 21-5. Shared asserts that “notice,” as provided in the FAN Terms, 20 obliges Facebook to provide advance notice of a forthcoming loss of access, rather than after-the- 21 fact notice. 22 During this same timeframe, Facebook also failed to make a timely payment from Instant 23 Articles ad revenue. Another clause in the FAN Terms (“the FAN payment term”) provides that 24 Facebook would forward money earned through Instant Articles “approximately 21 days 25 following the end of the calendar month in which the transaction occurred.” Dkt. 21 ¶ 26; accord 26 27 in this section are taken from the FAC, unless otherwise noted. ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 2 1 Dkt. 21-5. Facebook delayed paying Shared its portion of April 2018 ad revenue until September 2 2018, roughly four months beyond the timeframe noted in the FAN payment term. This delay led 3 to a critical shortage in Shared’s operating capital, ultimately resulting in its decision to lay off 4 eighteen employees. United States District Court Northern District of California 5 Meanwhile, all was not well with Shared’s self-serve ad buys. Shared notes that, “[o]ver 6 the course of its relationship with Facebook, Shared had numerous ads arbitrarily and incorrectly 7 rejected without explanation.” Dkt. 21 ¶ 47. Facebook’s Advertising Policies, which governed the 8 self-serve ad program, had provided that if an ad was rejected, Facebook would send the publisher 9 “an email with details that explain why. Using the information in [the] disapproval email, you can 10 edit your ad and create a compliant one.” Id. ¶ 45; accord Dkt. 21-4, at 2. Shared expected to 11 receive specific explanations when its ads were rejected, but each time it instead received a 12 “circular” explanation simply stating that the ad had been rejected for failing to comply with the 13 Advertising Policies. Dkt. 21 ¶ 102. 14 All of these tensions were brought to a head in October 2020 when Facebook “unpublished 15 the Shared Facebook pages, suspended Shared’s ability to advertise,” and disabled Shared’s ad 16 accounts as well as the personal Facebook profiles of several Shared employees. Id. ¶ 42. While 17 the Facebook Terms of Service stated that accounts could be suspended only after “clearly, 18 seriously or repeatedly” breaching Facebook’s policies, id. ¶ 49, Shared states that, to its 19 knowledge, it had not violated any such policies. These actions “effectively gave Shared a death 20 sentence within the Facebook system,” resulting in its business and its multimillion-dollar 21 valuation “cratering.” Id. ¶¶ 43, 51. 22 Shared sued Meta, Facebook’s parent company, in July 2022. The FAC raises six claims 23 for relief, some of which have multiple factual bases. First, Shared avers that Meta committed 24 conversion (Claim 1), breach of contract (Claim 3), and breach of the implied covenant of good 25 faith and fair dealing (Claim 4) in suspending access to Shared’s Facebook pages, contrary to the 26 Facebook Terms of Service. Second, Shared avers that Meta committed breach of contract (Claim 27 3), breach of the implied covenant of good faith and fair dealing (Claim 4), and intentional ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 3 1 misrepresentation (Claim 5) or negligent misrepresentation (Claim 6) for failing to provide 2 advance notice of suspension from Instant Articles, contrary to the FAN Terms. Third, Shared 3 avers that Meta committed breach of contract (Claim 3), intentional misrepresentation (Claim 5) or 4 negligent misrepresentation (Claim 6), and violated California’s Unfair Competition Law (“UCL”) 5 (Claim 2), see Cal. Bus. & Prof. Cod § 17200, for failing to provide sufficient details regarding ad 6 rejections in violation of the Advertising Policies. Fourth, Shared avers that Meta committed 7 breach of contract (Claim 3) for failing to deliver the April 2018 payment on time in violation of 8 the FAN payment term. Meta now moves to dismiss the FAC in its entirety. III. LEGAL STANDARD 9 United States District Court Northern District of California 10 Federal Rule of Civil Procedure 12(b)(6) governs motions to dismiss for failure to state a 11 claim. A complaint must include “a short and plain statement of the claim showing that the pleader 12 is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While “detailed factual allegations” are not required, a 13 complaint must have sufficient factual allegations to “state a claim to relief that is plausible on its 14 face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 15 544, 570 (2007)). When evaluating such a motion, courts generally “accept all factual allegations 16 in the complaint as true and construe the pleadings in the light most favorable to the nonmoving 17 party.” Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). However, “[t]hreadbare recitals of 18 the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 19 556 U.S. at 678. 20 For actions sounding in fraud, the complaint “must state with particularity the 21 circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Such averments “must be 22 accompanied by ‘the who, what, when, where, and how’ of the misconduct charged,” such that 23 they are “specific enough to give defendants notice of the particular misconduct.” Kearns v. Ford 24 Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (first quoting Vess v. Ciba-Geigy Corp. USA, 317 25 F.3d 1097, 1106 (9th Cir. 2003); and then quoting Bly-Magee v. California, 236 F.3d 1014, 1019 26 (9th Cir. 2001)). Knowledge may be pleaded generally under Rule 9(b), but the complaint “must 27 set out sufficient factual matter from which a defendant’s knowledge of a fraud might reasonably ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 4 1 be inferred.” United States ex rel. Anita Silingo v. WellPoint, Inc., 904 F.3d 667, 679–80 (9th Cir. 2 2018). IV. ANALYSIS 3 4 To survive Defendants’ motion to dismiss, each of Plaintiff’s claims must overcome three 5 hurdles: first, they must not be barred by section 230(c)(1) of the Communications Decency Act; 6 second, they must not be barred by the Limits on Liability within the Facebook Terms of Service; 7 and third, they must be sufficiently pled. After reviewing the FAC, not every claim can overcome 8 all three, so each hurdle is addressed in turn. 9 United States District Court Northern District of California 10 A. Section 230(c)(1) Immunity Congress passed the Communications Decency Act in an effort to create and promote a 11 vibrant digital communications landscape. Among other things, section 230(c)(1) of the Act 12 generally exempts “information content providers” from liability for information provided by third 13 parties. See, e.g., Barnes v. Yahoo!, Inc., 570 F.3d 1096, 1099–100 (9th Cir. 2009). The section 14 states that “[n]o provider or user of an interactive computer service shall be treated as the 15 publisher or speaker of any information provided by another information content provider.” 47 16 U.S.C. § 230(c)(1). While this immunity is broad, it is not absolute. As the Ninth Circuit clarified 17 in Barnes v. Yahoo!, Inc., the relevant inquiry is not how plaintiffs style their claims for relief, but 18 rather “whether the duty that the plaintiff alleges the defendant violated derives from the 19 defendant’s status or conduct as a ‘publisher or speaker.’” 570 F.3d at 1102. If the plaintiff alleges 20 that liability arises from the defendant’s “manifest intention to be legally obligated to do 21 something,” rather than from the defendant’s “status or conduct as a ‘publisher or speaker,’” 22 section 230(c)(1) does not apply. Id. at 1107; see In re Zoom Video Commc’ns. Inc. Privacy 23 Litigation, 525 F. Supp. 3d 1017, 1034 (N.D. Cal. 2021). 24 Defendant argues that all of Plaintiff’s claims are barred by section 230(c)(1). It asserts, 25 and Plaintiff does not contest, that Meta is a “provider . . . of an interactive computer service” 26 under the Act’s definition, and that the relevant information at issue was “provided by another 27 information content provider.” 47 U.S.C. § 230(c)(1); see Dkt. 24, at 22. Defendant further argues ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 5 1 that each of Plaintiff’s claims seek to treat Meta as a “publisher or speaker,” and that the suit must 2 therefore fail in its entirety. United States District Court Northern District of California 3 Defendant is only partially correct. Plaintiff raises three claims involving Defendant’s 4 decision to suspend Plaintiff’s access to its Facebook accounts and thus “terminate [its] ability to 5 reach its followers”: one for conversion, one for breach of contract, and one for breach of the 6 implied covenant of good faith and fair dealing. See Dkt. 21, ¶¶ 54–63, 110–12, 119. Shared 7 claims that, contrary to the Facebook Terms of Service, Defendant suspended Shared’s access to 8 its Facebook pages without first determining whether it had “clearly, seriously or repeatedly 9 breached [Facebook’s] Terms or Policies.” At bottom, these claims seek to hold Defendant liable 10 for its decision to remove third-party content from Facebook. This is a quintessential editorial 11 decision of the type that is “perforce immune under section 230.” Barnes, 570 F.3d at 1102 12 (quoting Fair Housing Council of San Fernando Valley v. Roommates.com, 521 F.3d 1157, 1170– 13 71 (9th Cir. 2008) (en banc)). Ninth Circuit courts have reached this conclusion on numerous 14 occasions. See, e.g., King v. Facebook, Inc., 572 F. Supp. 3d 776, 795 (N.D. Cal. 2021); Atkinson 15 v. Facebook Inc., 20-cv-05546-RS (N.D. Cal. Dec. 7, 2020); Fed. Agency of News LLC v. 16 Facebook, Inc., 395 F. Supp. 3d 1295, 1306–07 (N.D. Cal. 2019). To the extent Facebook’s Terms 17 of Service outline a set of criteria for suspending accounts (i.e., when accounts have “clearly, 18 seriously, or repeatedly” breached Facebook’s policies), this simply restates Meta’s ability to 19 exercise editorial discretion. Such a restatement does not, thereby, waive Defendant’s section 20 230(c)(1) immunity. See King, 572 F. Supp. 3d at 795. Allowing Plaintiff to reframe the harm as 21 one of lost data, rather than suspended access, would simply authorize a convenient shortcut 22 through section 230’s robust liability limitations by way of clever pleading. Surely this cannot be 23 what Congress would have intended. As such, these claims must be dismissed. 24 The remaining claims, however, do not seek to treat Defendant as a publisher or speaker. 25 They arise instead out of promises that Plaintiff argues Defendant made to its advertising partners. 26 With respect to the FAN Terms, Plaintiff’s claims are rooted in Defendant’s averred violation of 27 its promise to provide “notice.” Plaintiff similarly seeks to hold Defendant liable for its averred ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 6 United States District Court Northern District of California 1 violation of its promise to provide “details that explain why” Plaintiff’s ads were rejected. In both 2 cases, Plaintiff does not question Defendant’s right or ability to limit access to the Facebook ad 3 platform or to remove the ads; rather, Plaintiff objects to what it argues were deficiencies in the 4 procedure described in Facebook’s contracts. Cf. id. (“That Facebook has the editorial discretion 5 to post or remove content has little do to with the implied promise to explain why content was 6 removed.”). Additionally, Plaintiff’s breach of contract claim involving the FAN payment term 7 clearly has nothing to do with Facebook’s editorial capabilities, but rather involves its obligations 8 to pay ad partners in a timely fashion. These claims, therefore, are not subject to section 230(c)(1) 9 immunity. 10 B. Facebook’s Limits on Liability 11 Defendant next argues that many of Plaintiff’s claims for damages are barred under the 12 Limits on Liability (“the limitations provision”) included in Facebook’s Terms of Service. In 13 relevant part, the Terms state the following: 14 [Facebook’s] liability shall be limited to the fullest extent permitted by applicable law, and under no circumstance will we be liable to you for any lost profits, revenues, information, or data, or consequential, special, indirect, exemplary, punitive, or incidental damages arising out of or related to these Terms or the Facebook Products, even if we have been advised of the possibility of such damages. 15 16 17 18 Dkt. 21, Ex. 11 § 3. Courts have generally enforced such limitations provisions, so long as they 19 are not unconscionable.2 See, e.g., Food Safety Net Servs. v. Eco Safe Sys. USA, Inc., 147 Cal. 20 Rptr. 3d 634, 641–42 (Ct. App. 2012). However, as Plaintiff correctly observes, California law 21 renders limitations provisions unenforceable against claims for fraud or willful injury. See Cal. 22 Civ. Code § 1668. The limitations provision therefore cannot stand in the way of Claims 2, 5, and 23 6, as they all aver some form of fraud by Defendant. 24 25 26 27 2 Plaintiff summarily avers in the FAC that the limitations provision is unconscionable. Dkt. 21 ¶ 113. Plaintiff further states in its Opposition that it “reserves to argue unconscionability as the case progresses.” Dkt. 25, at 21 n.6. Since Plaintiff has thus far not meaningfully argued that the limitations provision is, in fact, unconscionable, this Order assumes the provision is enforceable. ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 7 1 2 limits Plaintiff’s potential relief. Plaintiff argues it would be more appropriate to defer resolving 3 this question until a later stage in the litigation, given that the distinction between general (or 4 direct) damages and consequential (or indirect) damages is “relative not absolute.” While the 5 distinction between these two forms of damages might not be quite as nebulous as Plaintiff 6 suggests, the point is well taken. Given that each of the claims plausibly avers that Shared was 7 harmed as a result of Defendant’s conduct, the discovery process would aid in determining more 8 concretely whether each claim avers direct or indirect damages. The limitations provision will 9 therefore not mandate dismissal of any of Plaintiff’s claims, though Defendant can always reassert 10 United States District Court Northern District of California For the remaining claims, the limitations provision presents a possible obstacle, because it the limitations provision in, for example, a motion for summary judgment. 11 C. Sufficient Pleadings 12 Finally, every claim must make a minimum showing of plausibility in order to survive a 13 motion to dismiss, and Rule 9(b) further requires claims sounding in fraud to be pleaded with 14 particularity. The surviving portions of Claims 3 and 4 are discussed first; Claim 2 is discussed 15 second; and Claims 5 and 6 are discussed third. 16 1. Breach of Contract & Implied Covenant Claims: FAN Terms 17 Plaintiff claims that Defendant breached the FAN Terms by failing to provide Shared with 18 advance notice that its access to Instant Articles would be suspended. Plaintiff further argues that, 19 to the extent the FAN Terms did not necessarily require Defendant to provide advance notice, 20 Facebook’s failure to do so would still constitute a breach of the implied covenant of good faith 21 and fair dealing. Defendant, in response, contests Plaintiff’s interpretation of the FAN Terms and 22 argues that no breach occurred because (a) it was not required to offer “advance” notice at all and 23 (b) it did, in fact, offer after-the-fact notice. 24 The main dispute, then, turns largely on the interpretation of the FAN Terms themselves. 25 Contrary to Defendant’s contention, the FAN Terms are not self-evidently clear: “notice” is 26 susceptible to both interpretations (i.e., “advance” notice and “after-the-fact” notice). See, e.g., 27 Notice, MERRIAM-WEBSTER, https://www.merriam-webster.com/dictionary/notice (defining ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 8 1 “notice” as both “the announcement of a party’s intention to quit an agreement or relation at a 2 specified time” and “the condition of being warned or notified . . .”). Accepting Plaintiff’s 3 contentions as true, as the law requires, Plaintiff has adequately pleaded these criteria. Plaintiff has 4 also adequately pleaded proximate causation between the averred breach and the damages that 5 ensued — namely by precluding Shared’s ability to pivot to other forms of content creation. The 6 motion is therefore denied as to these portions of Claims 3 and 4. 7 8 United States District Court Northern District of California 9 2. Breach of Contract: Advertising Policies Plaintiff similarly avers, in Claim 3, that Defendant breached the terms of the Advertising Policies by not providing sufficient “details that explain[ed] why” Plaintiff’s ads were rejected 10 from Facebook. As with the averred breach of the FAN Terms, Defendant moves to dismiss 11 primarily on the grounds that the clear terms of the Advertising Policies did not require 12 explanations “sufficient for Shared to bring its ads into compliance” and that Defendant did, in 13 fact, provide details — the details being that the ads were suspended for violating the Advertising 14 Policies. This dispute, once more, turns largely on contract interpretation, and again, Plaintiff’s 15 interpretation is plausible. Plaintiff has also adequately pleaded proximate causation between the 16 averred breach and damages — namely, that Plaintiff wasted money on ads it would otherwise not 17 have purchased. The motion is therefore denied as to this portion of Claim 3. 18 3. California UCL Claim 19 Plaintiff avers, in Claim 2, that Defendant violated the UCL, which prohibits “unlawful, 20 unfair or fraudulent business practices.” Cal. Bus. & Prof. Code § 17200. Specifically, Plaintiff 21 contends that Defendant’s failure to provide “details that explain why” ads were rejected violated 22 both the “fraudulent” and “unfair” prongs of the UCL. “Because the statute is written in the 23 disjunctive, . . . [e]ach prong of the UCL is a separate and distinct theory of liability.” Lozano v. 24 AT&T Wireless Servs., Inc., 504 F.3d 718, 731 (9th Cir. 2007). 25 26 27 a. “Fraudulent” Prong In order to prevail on a UCL claim under the “fraudulent” prong, Plaintiff must satisfy the “reasonable consumer” standard: it must show that “members of the public are likely to be ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 9 United States District Court Northern District of California 1 deceived.” I.B. ex rel. Fife v. Facebook, Inc., 905 F. Supp. 2d 989, 1011 (N.D. Cal. 2012). Since 2 this claim sounds in fraud, Rule 9(b) requires that the claim be stated with particularity. Here, 3 Plaintiff has met its burden. Shared argues that the Advertising Policies themselves contained a 4 fraudulent statement — i.e., that ad partners would be provided with sufficient details to bring 5 their rejected ads into conformity with Facebook’s policies. It is plausible that a reasonable 6 consumer would concur with Shared’s interpretation of the Policies, notwithstanding Defendant’s 7 contrary interpretation. Indeed, Plaintiff supports this interpretation by offering examples of 8 numerous other ad partners that faced similar frustration in using Facebook’s self-serve ads. See 9 Dkt. 21, ¶¶ 75–86. It is similarly plausible, at the very least, that Defendant knew or should have 10 known that it could not comply with this expectation due to its averred reliance on artificial 11 intelligence. While Plaintiff does not state who specifically at Shared read the Policies, or on what 12 particular dates they read them, the FAC states that Plaintiff did read the Advertising Policies 13 “[p]rior to deciding to advertise and/or continue advertising on Facebook.” In combination, this 14 suffices to satisfy Rule 9(b)’s heightened pleading standards. Plaintiff has therefore stated a claim 15 under the “fraudulent” prong of the UCL, and the motion is denied in this respect. 16 b. “Unfair” Prong 17 At present, California courts have “adopt[ed] three different tests for determining 18 unfairness in the consumer context.” Nationwide Biweekly Admin., Inc. v. Super. Ct. of Alameda 19 Cnty., 462 P.3d 461, 472 (Cal. 2020). Under the “balancing test,” the court must examine the 20 impact of an alleged unfair practice on its victim, “balanced against the reasons, justifications and 21 motives of the alleged wrongdoer.” Id. at 472 n.10; see also In re Anthem, Inc. Data Breach 22 Litigation, 162 F. Supp. 3d 953, 990 (N.D. Cal. 2016) (balancing test involves considering 23 whether plaintiff “alleg[ed] immoral, unethical, oppressive, unscrupulous, or substantially 24 injurious conduct by Defendant[]”). Some courts apply a different, three-part balancing test, under 25 which “(1) [t]he consumer injury must be substantial; (2) the injury must not be outweighed by 26 any countervailing benefits to consumers or competition; and (3) it must be an injury that 27 consumers themselves could not reasonably have avoided.” Nationwide, 462 P.3d at 472 n.10. ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 10 1 Finally, the “tethering test” requires the plaintiff to show that “the public policy which is a 2 predicate to a consumer unfair competition action under the ‘unfair’ prong of the UCL [is] 3 tethered to specific constitutional, statutory, or regulatory provisions.” In re Adobe Sys., Inc. 4 Privacy Litigation, 66 F. Supp. 3d 1197, 1226 (N.D. Cal. 2014). Here, Plaintiff argues that Defendant’s conduct is unfair because, by failing to provide United States District Court Northern District of California 5 6 satisfactory explanations for ad rejections, Defendant “provide[d] advertising services at a lower 7 cost, and . . . made those advertising services appear to be more valuable than they were.” Dkt. 21 8 ¶ 74. Plaintiff suggests this was due to Defendant’s “over-reliance on artificial intelligence” in ad 9 regulation, which allowed Facebook to “maximize its profits” rather than provide adequate 10 explanations. Id. ¶¶ 71, 74. Plaintiff also argues Defendant’s conduct was “contrary to legislatively 11 declared public policies that seek to protect consumers from misleading statements.” Id. ¶ 72. 12 Plaintiff has made an adequate showing that Defendant’s conduct was “unfair” under the 13 tethering test. While this claim essentially overlaps with Plaintiff’s claim under the “fraudulent” 14 prong, Defendant is incorrect in arguing that this would require dismissal: “unfair” prong claims 15 that overlap with claims under another UCL prong need only be dismissed “if the claims under the 16 other . . . prongs of the UCL do not survive.” Hadley v. Kellogg Sales Co., 243 F. Supp. 3d 1074, 17 1104–05 (N.D. Cal. 2017) (emphasis added); see also Punian v. Gillette Co., 2016 WL 1029607, 18 at *17 (N.D. Cal. Mar. 15, 2016). As noted above, Plaintiff has stated a valid claim under the 19 “fraudulent” prong, so its claim under the “unfair” prong may proceed since it has articulated a 20 specific state policy that Defendant has allegedly violated.3 The motion to dismiss the UCL claim 21 under the “unfair” prong is therefore denied. 22 4. Misrepresentation Claims 23 Finally, Plaintiff avers, in Claims 5 and 6, that Defendant misrepresented to Plaintiff that it 24 would receive both “advance notice” that it would lose access to Instant Articles, and that it would 25 26 27 Plaintiff’s “unfair” prong claim therefore rises and falls with its “fraudulent” prong claim. This Order expresses no opinion as to whether Plaintiff has adequately pleaded a claim under the “unfair” prong for reasons other than Defendant’s allegedly misleading conduct. 3 ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 11 1 receive sufficient “details that explain why” its ads were rejected. The latter argument overlaps 2 almost entirely with Claim 2, and these two claims must therefore rise or fall together. Given that 3 Plaintiff satisfactorily stated a claim under the “fraudulent” prong of the UCL, it has also stated a 4 plausible claim for misrepresentation with respect to the Advertising Policies. As to the FAN Terms and the lack of adequate notice, the reasoning above applies here as United States District Court Northern District of California 5 6 well. Although Plaintiff does not state who at Shared actually read the FAN Terms, the FAC 7 nevertheless states that Shared “reasonably relied on [the FAN Terms] in connection with its 8 decision” to invest in and utilize Instant Articles. Dkt. 21 ¶ 131. The FAC therefore avers 9 Defendant’s wrongful conduct with sufficient particularity to satisfy Rule 9(b), and Defendant’s 10 motion is therefore denied with respect to Claims 5 and 6.4 11 V. CONCLUSION 12 Based on the foregoing analysis, the motion to dismiss is granted in part and otherwise 13 denied. Claim 1 is dismissed without leave to amend; Claim 3 is dismissed with respect to the 14 Terms of Service, without leave to amend; and Claim 4 is dismissed with respect to the Terms of 15 Service, without leave to amend. The motion is denied in all other respects. 16 17 IT IS SO ORDERED. 18 19 Dated: September 21, 2022 ______________________________________ RICHARD SEEBORG Chief United States District Judge 20 21 22 23 24 25 26 27 4 Plaintiff pleads Claim 5 and 6 in the alternative, as it must, because it is impossible to be liable for intentional and negligent misrepresentation simultaneously for the same conduct. The distinction turns on Defendant’s knowledge, but since knowledge may be alleged generally under Rule 9(b), Plaintiff has met this requirement. ORDER ON MOTION TO DISMISS CASE NO. 22-cv-02366-RS 28 12
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