Facebook, Inc. v. MaxBounty, Inc, No. 5:2010cv04712 - Document 35 (N.D. Cal. 2011)
Court Description: ORDER GRANTING IN PART AND DENYING IN PART 11 MOTION TO DISMISS. Signed by Judge Jeremy Fogel on 3/28/2011. (jflc2, COURT STAFF) (Filed on 3/28/2011)
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Facebook, Inc. v. MaxBounty, Inc Doc. 35 1 2 3 ** E-filed 03-28-2011** 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION 11 12 FACEBOOK, INC., a Delaware corporation, Plaintiff, 13 v. 14 15 MAXBOUNTY, INC., a Canadian corporation, Case Number CV-10-4712-JF ORDER1 GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS [Re: Docket No. 11] Defendant . 16 17 18 19 20 21 22 23 24 25 Pursuant to Fed. R. Civ. Pro. 12(b)(6), Defendant MaxBounty Inc. (“MaxBounty”) moves to dismiss Claims One through Three asserted by Plaintiff Facebook, Inc. (“Facebook”) for failure to state a claim upon which relief may be granted. The complaint includes claims for: (1) violation of 15 U.S.C. § 7701 (“CAN-SPAM Act”); (2) violation of 18 U.S.C. § 1030 (“Computer Fraud and Abuse Act”); (3) fraud; (4) tortious interference with contract; (5) breach of contract; (6) violation of 15 U.S.C. § 1125(c) (federal trademark dilution); and (7) violation of 15 U.S.C. § 1125(a) (false designation of origin). Facebook seeks compensatory, statutory, and 26 27 28 1 This disposition is not designated for publication in the official reports. Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) Dockets.Justia.com 1 punitive damages. Facebook also requests disgorgement of profits, reasonable costs, and 2 attorney’s fees. 3 4 I. BACKGROUND Facebook is a popular social networking website with more than 500 million active users. 5 (Compl. ¶ 10.) It is designed to be “a network that helps people communicate more efficiently 6 and effectively with their friends, family, and co-workers.” (Id.) To become a Facebook user an 7 individual must provide his or her real identity. (Id. at ¶¶ 11-12.) Commercial, political, and 8 charitable organizations also may establish a presence on Facebook by creating “pages” to which 9 users can connect their profiles. (Id. at ¶ 14.) All users must agree to Facebook’s statement of 10 rights and responsibilities. Facebook’s advertising guidelines prohibit false, misleading, 11 fraudulent, and deceptive advertisements. (Id. at ¶ 37(c).) They also prohibit advertisements that 12 are “deceptive or fraudulent about any offer made,” (Id. at ¶ 37(d)), and any advertisement that 13 includes a “discount or free offer . . . must link to a page that clearly and accurately offers the 14 exact deal the advertisement has displayed . . . .” (Id. at ¶37(h).) Moreover, advertisements that 15 contain, facilitate or promote spam are prohibited, (Id. at ¶ 37(j)), and if obtaining the promoted 16 benefit requires user enrollment in a third-party subscription service then that requirement must 17 be stated both in the advertisement and on the Facebook page. (Id. at ¶ 37(k).) 18 MaxBounty is an advertising and marketing company that uses a network of publishers to 19 drive traffic to its customers’ websites. Its marketing program is based on a cost-per-action 20 model (“CPA”). As explained on MaxBounty’s website, “an advertiser under the CPA model 21 pays only when a specific action is taken on their website. The advertiser defines the action in 22 advance and only pays when the action is taken . . . [g]enerally speaking, the more involved the 23 action, the higher a publisher would expect to be paid for generating it.”2 MaxBounty acts as an 24 intermediary between its network of publishers (advertisement content creators) and its 25 customers (third-party advertisers). MaxBounty appears to generate revenue for its CPA 26 program through a shared compensation agreement with its network of publishers. 27 28 2 This information is available on http://www.maxbounty.com/faq.cfm. 2 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) 1 Facebook alleges that MaxBounty engaged and continues to engage in impermissible 2 advertising and commercial activity on Facebook.com. (Compl. ¶¶ 40-41.) It asserts that 3 MaxBounty misleads its affiliates “into believing that its campaigns are approved by Facebook . . 4 . .” (Id. at ¶ 44.) It claims that MaxBounty facilitates traffic to its contracting advertiser websites 5 by “provid[ing] technical support to its affiliates on how to create fake Facebook campaigns, and 6 [by] provid[ing] substantial advance payments to its affiliates that agree to participate in 7 [MaxBounty’s] Facebook campaigns.” (Id.)3 Facebook also claims that MaxBounty’s conduct 8 has caused it economic damage, has “tainted the Facebook experience,” resulting in economic 9 loss to many Facebook users, and has caused and continues to cause significant harm to 10 Facebook’s reputation and goodwill. (Id. at ¶¶ 53-54.) 11 A. The Alleged Fraudulent Scheme 12 Facebook alleges that MaxBounty, through its network of affiliates, creates fake 13 Facebook pages that are intended to re-direct unsuspecting Facebook users away from 14 Facebook.com to third-party commercial sites. (Compl. ¶¶ 46-52.) It provides examples of two 15 such pages in the complaint. (Id.) Both pages utilize a similarly structured, multi-step scheme: 16 in the first step, MaxBounty establishes a network of affiliates; in the second step, MaxBounty’s 17 affiliates create numerous Facebook pages that function like (and in effect are) advertisements; in 18 the third step, the page displays a message indicating that upon registration a user will be able to 19 take advantage of a “limited time offer,” such as receiving a gift card or becoming a product 20 tester for a high-end product (e.g. an Apple iPad); in the fourth step, the Facebook user is 21 induced by the page and begins the registration process. (Id.) The registration process requires 22 three discrete user actions: (1) to become a “fan” of the page, (2) to invite all of his or her 23 Facebook friends to join to the page, and (3) to complete additional administrative registration 24 requirements. (Id. at ¶¶ 46, 50.) Upon completion of these requirements, Facebook users are not 25 sent the promised item but instead are directed “to a domain registered to and managed by 26 27 28 3 Facebook alleges that MaxBounty’s technical support includes “content suggestions and other tools that help and encourage its affiliates create fraudulent and deceptive Facebook pages.” (Compl. ¶ 45.) 3 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) 1 Maxbounty that then redirects the user to a third-party commercial website . . . .” (Id. at ¶¶ 47, 2 50.) The third-party commercial site informs the user that he or she must complete still more 3 steps in order to obtain the promised item. (Id. at ¶¶ 48-52.) Such additional steps include 4 signing up for numerous “sponsor offers,” which typically are offers for memberships in 5 subscription services. (Id.) Facebook asserts that “[MaxBounty] receive[s] payment for the 6 traffic it delivers to [the third-party commercial sites] based on the [number of] users who 7 successfully complete[] the steps to receive a free gift.” (Id. at ¶¶ 48, 51.) 8 B. MaxBounty’s Motion to Dismiss 9 MaxBounty argues that Facebook’s claim under the CAN-SPAM Act is insufficient as a 10 matter of law because the “customer advertisements Facebook complains about . . . are not email 11 and therefore cannot give rise to a claim under the Act.” (Mot. to Dismiss, 1:7-11.) Facebook 12 contends that communications on its website come within the meaning of “electronic mail 13 messages” under the CAN-SPAM Act. It argues that any other conclusion would be against the 14 weight of the authority and run counter to “the plain language and legislative purpose of the act.” 15 (Pl.’s Opp. to MTD, 2:18-24.) 16 MaxBounty also contends that Facebook’s claim under the Computer Fraud and Abuse 17 Act (“CFAA”) fails to satisfy the heightened pleading standard of Fed. R. Civ. Pro. 9(b), arguing 18 that a plaintiff must plead with particularity “conduct which furthers the intended fraud.” (Reply 19 to Pl.’s Opp., 5:3-15.) Facebook asserts that “the majority of courts, and courts of this circuit, 20 have held that claims under the CFAA are subject only to the notice pleading requirements of 21 Rule 8(a).” (Pl.’s Opp., 6:9-12.) Even assuming arguendo that Rule 9(b) does apply, Facebook 22 contends that its pleading is sufficiently particular. (Id. at 7:4-7.) MaxBounty also argues that 23 Facebook has failed to plead adequately the elements of its state law claims for fraud, aiding and 24 abetting, and conspiracy. (MTD, 1:18-23; 6:23-7:13). Facebook contends that its pleading is 25 sufficiently particular as to those claims as well. 26 II. LEGAL STANDARD 27 “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a 28 cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. 4 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) 1 Centinela Hosp. Center, 521 F.3d 1097, 1104 (9th Cir. 2008). For purposes of a motion to 2 dismiss, “all allegations of material fact are taken as true and construed in the light most 3 favorable to the nonmoving party.” Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-338 (9th 4 Cir. 1996). However, “[w]hile a complaint attacked by Rule 12(b)(6) motion to dismiss does not 5 need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his 6 ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of 7 the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 8 (2007) (internal citations omitted). Leave to amend must be granted unless it is clear that the 9 complaint’s deficiencies cannot be cured by amendment. Lucas v. Department of Corrections, 66 10 F.3d 245, 248 (9th Cir. 1995). 11 III. DISCUSSION 12 A. Whether The Communications At Issue Are “Electronic Mail Messages” Under 13 CAN-SPAM Act. 14 The CAN-SPAM Act makes it “unlawful for any person to initiate the transmission, to a 15 protected computer, of a commercial electronic mail message, or a transaction or relationship 16 message, that contains, or is accompanied by, header information that is materially false or 17 materially misleading.” 15 U.S.C § 7704(a)(1). An “electronic mail message” is defined as “a 18 message that is sent to a unique electronic mail address,” (Id. at § 7702(6)), and an “electronic 19 mail address” means a “destination, commonly expressed as a string of characters, consisting of a 20 unique user name or mailbox and a reference to an Internet domain (commonly referred to as a 21 “domain part”), whether or not displayed, to which an electronic mail message can be sent or 22 delivered.” Id. at § 7702(5); MySpace v. Wallace, 498 F.Supp.2d 1293, 1300 (C.D. Cal. 2007). MaxBounty argues that the “customer advertisements Facebook complains about are not 23 24 e-mail and therefore cannot give rise to a claim under the CAN-SPAM Act.” (MTD, 1:23-24.) 25 MaxBounty attacks Facebook’s characterization of the messages at issue as “electronic 26 messages” and contends that strict adherence to the statutory definition of “electronic mail 27 message” is necessary in evaluating the sufficiency of a CAN-SPAM Act claim. (Id. at 3:21- 28 4:12.) 5 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) 1 No court in this circuit has addressed directly whether the CAN-SPAM Act applies to 2 social networking communications under circumstances in which an electronic message is not 3 delivered to an “inbox.” However, courts in the Central District of California have rejected 4 similar requests for a narrower construction of the Act in at least two cases. See MySpace v. 5 Wallace, 498 F.Supp.2d 1293, 1300 (C.D. Cal. 2007); see also Myspace v. The Globe.Com, Inc., 6 2007 WL 168696, at *4 (C.D. Cal. February 27, 2007). In Myspace v. The Globe.Com, the court 7 interpreted the provisions of the CAN-SPAM Act expansively, observing that, “[t]he overarching 8 intent of this legislation is to safeguard the convenience and efficiency of the electronic 9 messaging system, and to curtail overburdening of the system’s infrastructure . . . [l]imiting the 10 protection to only electronic mail that falls within the narrow confines set forth by [d]efendant 11 does little to promote the Congress’s overarching intent in enacting CAN-SPAM.” The 12 Globe.Com, Inc., 2007 WL at *4. 13 In MySpace v. Wallace, the court again acknowledged expressly that a broad 14 interpretation of the CAN-SPAM Act “supports the stated purpose of the Act, namely, curtailing 15 the rapid and detrimental growth of commercial electronic mail that has overburdened electronic 16 mail systems. Wallace, 498 F.Supp.2d at 1300. The court concluded that “[t]o interpret the Act 17 in the limited manner as advocated by [d]efendant would conflict with the express language of 18 the Act and would undercut the purpose for which it was passed.” Id. This Court agrees that the 19 Act should be interpreted expansively and in accordance with its broad legislative purpose. 20 Facebook argues that MySpace v. The Globe.com and MySpace v. Wallace support its 21 position that “messages sent and received within the Facebook site qualify as ‘electronic mail 22 messages’ under the Act.” (Pl.’s Opp., 2:23-24.) However, there are significant differences 23 between the MySpace cases and this one. First, both of the MySpace cases involved “phishing 24 schemes.” Here, Facebook claims that MaxBounty and its affiliates rely primarily on actions 25 taken by Facebook users themselves in order to further its alleged scheme. (Compl. ¶¶ 46-52.) 26 In addition, all of the MySpace.com e-messages were delivered to a MySpace.com user “inbox.” 27 The defendants’ arguments in those cases detailed the technical differences between e-messages 28 6 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) 1 and traditional e-mail. See MySpace v. Wallace, 498 F.Supp.2d 1293, 1300 (C.D. Cal. 2007); 2 Myspace v. The Globe.Com, Inc., 2007 WL 168696, at *4, (C.D. Cal. February 27, 2007)). 3 Notwithstanding these differences, in both MySpace cases the court rejected the argument 4 that an “electronic mail message” must be capable of characterization as “e-mail” or must be 5 directed to a traditional e-mail address or inbox. Instead, the court defined “electronic mail 6 address” as meaning nothing more specific than “a destination . . . to which an electronic mail 7 message can be sent, and the references to local part and domain part and all other descriptors set 8 off in the statute by commas represent only one possible way in which a destination can be 9 expressed.” MySpace v. Wallace, 498 F.Supp.2d 1293, 1300 (C.D. Cal. 2007) (internal 10 quotations omitted); see also Myspace v. The Globe.Com, Inc., 2007 WL 168696, at *4 fn 3 11 (C.D. Cal. February 27, 2007)). The court reasonably concluded that Congress was aware of 12 “various forms of electronic communications when it drafted the act” and thus the plain language 13 of “electronic mails address” includes “alternate forms while also recognizing that the most 14 commonly used form of electronic address was the traditional email with a local part and domain 15 part (i.e. user@domain.com).” Wallace, 498 F.Supp.2d at 1300. 16 Consistent with this approach, in order for the Facebook pages at issue to be considered 17 “electronic mail messages,” they must be “sent to a unique electronic mail address,” (15 U.S.C. § 18 7702(6)), that is, to “a destination . . . to which an electronic mail message can be sent . . . .” 19 (Id.) In MaxBounty’s alleged scheme, a user is instructed to effect transmission of Facebook 20 pages to all of his or her Facebook friends. (Compl. ¶¶ 46, 50.) Based on a number of factors, 21 including individual user account settings, the pages are transmitted to destinations including the 22 user’s “wall,” the “news feed” or “home” page of the user’s friends, the Facebook inbox of the 23 user’s friends, and to users’ external e-mail addresses. (Compl. ¶¶ 10-24; Pl.’s Opp., 4:24-5:3). 24 Significantly, these transmissions require at least some routing activity on part of 25 Facebook. “While the routing employed by [Facebook] may be less complex and elongated than 26 those employed by ISP’s, any routing necessarily implicates issues regarding volume and traffic 27 utilization of infrastructure-issues which CAN-SPAM seeks to address.” The Globe.Com, Inc., 28 2007 WL at *5. A determination that the communications at issue here are “electronic 7 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) 1 messages” thus is consistent with the intent of Congress to mitigate the number of misleading 2 commercial communications that overburden infrastructure of the internet. 15 U.S.C. § 7701(a); 3 see also MySpace v. Wallace, 498 F.Supp.2d 1293, 1300 (C.D. Cal. 2007)). Accordingly, the 4 Court concludes that Facebook’s CAN-SPAM Act claim is sufficiently pled. 5 B. Whether Rule 9(b) Applies to Facebook’s CFAA Claim. 6 Facebook alleges two violations of the CFAA. First, it claims that MaxBounty’s conduct 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 violates 18 U.S.C. § 1030(a)(4), which provides that: [w]hoever knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value, unless the object of the fraud and the thing obtained consists only of the use of the computer and the value of such use is not more than $5,000 in any 1 year period shall be punished as provided in subsection (c) of this section. 18 U.S.C. § 1030(a)(4). Second, it alleges a violation of 18 U.S.C. § 1030(b), which provides that “[w]hoever conspires to commit or attempts to commit an offense under subsection (a) of this section shall be punished as provided in subsection (c) of this section.” 18 U.S.C. § 1030(b). MaxBounty concedes that the element of scienter (“knowingly and with intent”) may be plead “generally,” (MTD, 6:18-22; Def’s Reply, 5:7-11),4 but it contends that the “the Act’s additional requirement of specific ‘conduct’ that ‘furthers the intended fraud’” is subject to the heightened pleading requirements of Rule 9(b). (MTD, 6:18-22; Def’s Reply, 5:7-26).5 This Court has held that fraud “under the CFAA only requires a showing of unlawful access; there is no need to plead the elements of common law fraud to state a claim under the Act.” eBay Inc. v. Digital Point Solutions, Inc., 608 F.Supp.2d 1156, 1164 (N.D. Cal. 2009) (citing Hanger Prosthetics & Orthotics, Inc. v. Capstone Orthopedic, Inc., 556 F.Supp.2d 1131 (E.D. Cal. 2008) (“The term ‘defraud’ for purposes of §1030(a)(4) simply means wrongdoing 23 24 25 26 27 28 4 MaxBounty contends that Facebook’s pleadings meet neither the heightened pleading standard under Rule 9(b) nor the lesser pleading standard under Twombly/Iqbal. (MTD, 7:1421.) 5 MaxBounty also argues that Rule 9(b) should apply to a claim brought pursuant to §1030(b) because the Ninth Circuit has applied a heightened pleading standard to claims of civil conspiracy to commit fraud. (MTD, 5:25-26) (citing Wasco Prods., Inc. v. Southwall Techs., Inc., 435 F.3d 989, 990-91 (9th Cir. 2006)). 8 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) 1 and does not require proof of common law fraud.”)). MaxBounty’s reliance on Motorola, Inc. v. 2 Lemko Corp., 609 F.Supp.2d 760, 765 (N.D. Ill. 2009), is unpersuasive. Although the court in 3 that case concluded that “Rule 9(b)’s requirement that ‘[i]n alleging fraud . . ., a party must state 4 with particularity the circumstances constituting fraud,’” and that it “quite plainly applies to 5 section 1030(a)(4)'s requirement that the defendant’s acts further the intended fraud,” (Id. at 6 765), the decision does not cite any authority for its conclusion. Indeed, approximately two 7 months after its decision in Motorola, Inc. the same court held that: 8 9 10 The heightened pleading standards of Rule 9(b) do not apply to the Computer Fraud and Abuse Act. Neither of the statutory provisions relied upon [1030(a)(2) & (a)(4)] by SKF require an allegation of fraud; intent to defraud is not the same and does not implicate the heightened standard. Motorola, 609 F.Supp.2d at 764-65 (holding that Rule 9(b) does not apply to a section 1030(g) claim alleging violations of sections 1030(a)(2) and (a)(4). . . . 11 SKF USA,Inc. v. Bjerkness, 636 F.Supp.2d 696, 719 fn 13 (N.D. Ill 2009). The Court sees no 12 reason to depart from its previous analysis.6 13 C. Whether Facebook Has Pled Common Law Fraud Sufficiently. 14 15 1. Rule 9(b) standard Under Fed. R. Civ. Pro. 9(b), “[i]n all averments of fraud or mistake, the circumstances 16 constituting fraud or mistake shall be stated with particularity.” However, intent, knowledge, and 17 other conditions of the mind may be averred generally. Fed. R. Civ. Pro. 9(b). A complaint 18 meets this standard if it alleges “‘the time, place, and content of the alleged fraudulent 19 misrepresentation or omission; the identity of the person engaged in the fraud; and the 20 circumstances indicating falseness’ or ‘the manner in which [the] representations [or omissions] 21 were false and misleading.’” Genna v. Digital Link Corp., 25 F.Supp.2d 1038 (N.D. Cal. 1997) 22 (brackets in original) (quoting In re GlenFed Sec. Litig., 42 F.3d 1541, 1547-58 n.7 (9th Cir. 23 1994)). Conclusory allegations that a defendant’s conduct was fraudulent is insufficient. In re 24 Worlds of Wonder Securities Litigation, 694 F. Supp. 1427, 1432 (N.D. Cal. 1988). 25 2. Common law fraud 26 27 28 6 Since a violation of §1030(b) simply involves a claim of conspiracy to violate §1030(a)(4), a determination that Rule 9(b) does not apply to §1030(a)(4) also applies to claims under §1030(b). 9 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) 1 The elements of a viable claim for fraud under California law, are: (1) a 2 misrepresentation; (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e. to induce 3 reliance; (4) justifiable reliance; and (5) resulting damage. Lazar v. Superior Ct., 12 Cal.4th 631, 4 638 (1996). Generally, fraud allegations may not be based solely on information and belief. 5 McFarland v. Memorex Corp., 493 F.Supp. 631, 638-39 (N.D. Cal. 1980). This general rule may 6 be relaxed when facts are peculiarly within the knowledge of the other party. Fong v. U.S., 300 7 F.2d 400, 409 (9th Cir. 1962) (holding that plaintiff’s allegations were sufficiently plead because 8 they stated facts primarily within the defendant’s knowledge); see also Russell v. Epic 9 Healthcare Mngmt. Group, 193 F.3d 304, 308 (5th Cir. 1999) (finding the 9(b) standard may be 10 relaxed when facts “relating to the alleged fraud are peculiarly within the perpetrator’s 11 knowledge . . . .”). Even under a more relaxed standard, a plaintiff “must still set forth the 12 factual basis for his belief,” and mere speculation and conclusory allegations are insufficient to 13 state a claim. Russell, 193 F.3d at 308. Here Facebook alleges no facts concerning who at 14 MaxBounty had knowledge of the alleged scheme, what those individuals knew, or how 15 MaxBounty contributed to the alleged fraud. Nor does Facebook identify any of the affiliates 16 responsible for creating the Facebook pages at issue. Facebook must provide significantly more 17 factual detail in order for the Court to make a reasoned evaluation as to the plausibility of its 18 claim. 19 20 3. Aiding and abetting the alleged fraud “A claim for aiding and abetting requires (1) the existence of an independent primary 21 wrong, (2) actual knowledge by the alleged aider and abettor of the wrong and his or her role in 22 furthering it, and (3) substantial assistance in the wrong.” In re 3Com Securities Litigation, 761 23 F. Supp. 1411, 1418 (N.D. Cal. 1990) (citing Harmsen v. Smith, 693 F.2d 932, 943 (9th Cir. 24 1982)). “Substantial assistance requires that the defendant’s actions be a ‘substantial factor’ in 25 causing the plaintiff’s injury.” Impac Warehouse Lending Group v. Credit Sussie First Boston 26 LLC, 270 Fed.Appx. 570, 572 (9th Cir. 2008) (internal citation omitted). Here Facebook has 27 specifically described the primary wrong, which is the creation of fake Facebook pages that are 28 intended to mislead Facebook users into spamming their friends and subsequently directing them 10 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2) 1 2 from Facebook’s site to a third-party commercial site. (Compl. ¶¶ 86-89.) However, neither the second or third element of aiding and abetting is adequately pled. 3 Facebook claims conclusorily that MaxBounty knows its affiliates are creating misleading 4 Facebook pages and aids and abets this activity by “providing technical support, suggestions for 5 Pages, and financial incentives to affiliates.” (Opp. to MTD, 8:18-21; see also Compl. ¶¶ 43-45, 6 85-88). These allegations merely provide a “formulaic recitation of a cause of action” and lack 7 factual support. Bell Atl.v. Twombly, 550 U.S. 544, 555 (2007). . 8 9 4. Conspiracy To state a claim for conspiracy, Facebook must plead “an agreement to participate in an 10 unlawful overt act that is performed in furtherance of an agreement. The existence of this 11 agreement may be either express or inferred from a defendant’s conduct. However, a conspiracy 12 to commit fraud must satisfy the particularity requirement of Rule 9(b).” In re 3Com Securities 13 Litigation, 761 F. Supp. 1411, 1418 (N.D. Cal. 1990). Facebook’s conclusory allegations that 14 MaxBounty induced certain unidentified affiliates to carry out the alleged fraudulent scheme are 15 inadequate to satisfy the heightened pleading standard. (Compl. ¶¶ 83-90). 16 17 IV. ORDER Good cause therefore appearing, the motion to dismiss is GRANTED IN PART (as to 18 Claim Three) and DENIED IN PART (as to Claims One and Two), WITH LEAVE TO AMEND. 19 Any amended complaint shall be filed within (30) days of the date of this order. 20 21 IT IS SO ORDERED 22 23 DATED: March 28, 2011 __________________________________ JEREMY FOGEL United States District Judge 24 25 26 27 28 11 Case No. CV-10-4712 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS (JFEX2)
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