PPC Advertisers Fight Dismissal of Facebook Class Action Lawsuit

Two pay-per-click advertisers who sued Facebook for allegedly charging them for invalid clicks are appealing a recent decision denying them class-action status.

U.S. District Judge Phyllis Hamilton shot down their Facebook PPC class action lawsuit last month, saying the advertisers failed to show they had enough in common to sue Facebook collectively for breach of contract and violating California’s unfair competition law.

Two of the Plaintiffs – Fox Test Prep and Steven Price – are trying to appeal the decision, arguing that Judge Hamilton was wrong to conclude that the advertisers must pursue their claims individually.

The advertisers sued Facebook in 2009 for allegedly charging them for invalid clicks, such as charging for nonexistent clicks, for clicked ads that never opened, for clicks caused by server problems, and for accidental multiple clicks by individual users. They sought to represent a class of thousands of PPC advertisers who suffered the same improper charges.

Judge Hamilton denied their request for class-action status, saying they had not shown “any uniform method for distinguishing, on a class-wide basis, between ‘invalid’ clicks and ‘fraudulent’ clicks.”

Fox Test Prep and Price are disputing her decision, arguing that that one of their experts had offered “to construct algorithms that would reflect the rules that Facebook should have employed,” according to court documents filed last week.

They also argue that that they had sufficient evidence showing that Facebook “abused” advertisers’ trust by developing standards that were “designed to enhance revenue rather than protect advertisers form paying for invalid clicks.”

The advertisers are asking the appellate court to grant them permission to appeal Hamilton’s order.

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