Advertisers Denied Class-Action Status in Facebook PPC Lawsuit

Facebook advertisers hoping to hold Facebook accountable for overcharging them for pay-per-click (PPC) ads had their bid to sue the social network as a group rejected last week.

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

The 2009 Facebook PPC class action lawsuit sought to represent thousands of advertisers who claimed Facebook overcharged them on their PPC contracts, under which they paid fees each time users clicked their ads.

According to the advertisers’ proposed class action lawsuit, Facebook improperly imposed charges for nonexistent clicks, for clicked ads that never opened, for clicks caused by server problems, and for accidental multiple clicks by individual users, among other claims.

Judge Hamilton cited a 2011 U.S. Supreme Court decision in Dukes v. Wal-Mart in her ruling to reject the advertisers’ bid for class action status, saying they showed neither a “systematic breach of contract” nor enough similarity among their claims.

“There is no way to conduct this type of highly specialized and individualized analysis for each of the thousands of advertisers in the proposed class,” Hamilton wrote.

“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,” she said. “The need to determine both liability and damages on an individualized basis makes this case inappropriate for class treatment.”

A May 17 conference has been scheduled to discuss how best the case should proceed.

The case is In re: Facebook, Inc. PPC Advertising Litigation, Case No. 09-3043, U.S. District Court, Northern District of California.