Tom Letizia et al v. Facebook Inc.

Filing 53

ORDER Denying 35 Plaintiffs' Motion for Appointment of Interim Class Counsel. Signed by Judge Thelton E. Henderson on 4/25/17. (tehlc2, COURT STAFF) (Filed on 4/25/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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THOMAS LETIZIA, et al.,
Plaintiffs,

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v.
FACEBOOK INC.,

Case No. 16-cv-06232-TEH
ORDER DENYING PLAINTIFFS'
MOTION FOR APPOINTMENT OF
INTERIM CLASS COUNSEL

Defendant.

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On March 13, 2017, Plaintiffs filed a Motion for Appointment of Interim Class

United States District Court
Northern District of California

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Counsel. ECF No. 35 (“Mot.”). Defendant Facebook (“Facebook”) timely opposed the

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motion, ECF No. 43 (“Opp’n”), and Plaintiffs timely replied, ECF No. 44 (“Reply”). The

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Court heard oral arguments on Plaintiffs’ motion on April 17, 2017, and also granted

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Plaintiffs a post-hearing opportunity to address In re Nest Labs Litigation, Case No. 14-cv-

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01363-BLF, 2014 U.S. Dist. LEXIS 115596 (N.D. Cal. Aug. 18, 2014), through a two-

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page brief. After carefully considering the parties’ written and oral arguments, the Court

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DENIES Plaintiffs’ motion for the reasons set forth below.

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I. FACTUAL BACKGROUND

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Facebook is a social media company that, rather than charge its account holders to

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access its site, makes over 95% of its overall revenue by selling advertising services.

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Compl. ¶ 15. One type of advertising service that Facebook offers is video advertisements,

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where advertisers can pay money to have video displayed to Facebook users. Id. ¶ 16.

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Facebook’s video advertising services include marketing analytics, which allow advertisers

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to monitor the effectiveness of their video ads. Id. ¶ 18. Advertisers rely on these tools to

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determine where to spend advertising dollars and the effectiveness of the dollars spent on

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the video ads. Id.

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In May 2014, Facebook began providing video advertising purchasers with more
marketing analytics metrics. Id. ¶ 20. These included the “Average Duration of Video

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Viewed,” which measured the average amount of time that users watched a video.

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Plaintiffs allege this metric is particularly important because “the longer people watch an

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advertisement, the greater the advertisement’s impact on the viewer.” Id. ¶ 21.

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Advertisement purchasers were told this metric was calculated by dividing the total time

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spent watching the video by all users by the total number of users who spent any time

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watching the video. Id. ¶ 26. However, in August 2016, Facebook disclosed its “Average

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Duration of Video Viewed” metric had been improperly calculated as it was dividing the

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total time spent watching the video by all users by the total number of users who spent

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three or more seconds watching the video. Id. ¶ 27.
Plaintiffs filed this putative class action suit seeking to represent the following

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United States District Court
Northern District of California

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class: “All persons or entities who, from May 4, 2014 to September 23, 2016 (“Class

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Period”), had an account with Facebook, Inc. and who paid for placement of video

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advertisements on a Facebook-owned website.” Id. ¶ 43. Plaintiffs allege three claims for

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relief: (1) Violation of the California Unfair Competition Law; (2) Breach of Implied Duty

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to Perform with Reasonable Care; and (3) Quasi-contract claim for Restitution. Id. ¶¶ 54–

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77.

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II. PROCEDURAL BACKGROUND

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On October 27, 2016, the Plaintiffs in Letizia v. Facebook, Case No. 3:16-cv-

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06232-TEH, filed suit. In January 2017, the Plaintiffs in Quirky v. Facebook, Case No.

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3:17-cv-00233-TEH, filed suit. Both of these lawsuits involved a putative class action

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against Facebook alleging the same claims, on behalf of similar classes, for the same

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conduct. On January 24, 2017, the Plaintiffs in the Quirky case filed an administrative

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motion to relate their case to the Letizia case. Letizia, ECF No. 25. The Letizia Plaintiffs

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filed an opposition to this motion arguing the Quirky case was a “copycat” lawsuit subject

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to dismissal or stay under the “first to file” doctrine and that the Quirky Plaintiffs’ pending

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bankruptcy proceedings could unnecessarily complicate or delay resolution of the Letizia

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action. Letizia, ECF No. 27 at 2:21–27. In addition, on January 30, 2017, the Letizia

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Plaintiffs filed a Motion to Intervene in the Quirky case in an attempt to dismiss or stay the
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case. Quirky, ECF No. 10. One week later, on February 6, 2017, the Court issued an order

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relating the two cases. Letizia, ECF No. 29. Shortly thereafter, the Letizia Plaintiffs

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withdrew their motion to intervene in the Quirky case, see Quirky, ECF No. 29, and the

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Plaintiffs from both cases, along with Defendant Facebook, filed a joint stipulation seeking

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to consolidate both cases, see Letizia, ECF No. 31, which the Court granted, see Letizia,

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ECF No. 32.

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III. LEGAL STANDARD

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The Court is provided broad authority in making class counsel appointments. 7B

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CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE §
1802.3 (3d ed. 2017). Federal Rule of Civil Procedure 23(g)(3) allows the Court to

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United States District Court
Northern District of California

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“designate interim counsel to act on behalf of the putative class before determining

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whether to certify the action as a class action.” While Rule 23(g)(3) does not provide a

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standard for courts to use in appointing interim class counsel, courts in this district

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typically consider the factors set forth in Federal Rule of Civil Procedure 23(g)(1).

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Gallagher v. Bayer AG, Case No. 14-cv-04601-WHO, 2015 WL 4932292 (N.D. Cal. Aug.

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18, 2015). These factors include: (1) the work counsel has done in identifying or

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investigating the potential claims in the action; (2) counsel’s experience in handling class

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actions, complex litigation, and the types of claim asserted in the action; (3) counsel’s

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knowledge of the applicable law; and (4) the resources that counsel will commit to

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representing the class. Fed. R. Civ. P. 23(g)(1)(A).

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IV. DISCUSSION

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While the parties do not dispute whether the three firms, either collectively or

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individually, can adequately represent the class, the parties dispute whether an

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appointment of interim class counsel is warranted. In support of their motion, Plaintiffs

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argue appointing interim class counsel will render many benefits, including avoiding future

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delays and conflicts over case leadership, simplified recordkeeping of attorney billing, and

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increased certainty for Facebook regarding what counsel to deal with. Mot. at 3–4.

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Plaintiffs also cite several cases in which courts have granted a motion to appoint interim
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class counsel. See, e.g., Corcoran v. CVS Health Corp., 169 F. Supp. 3d 970, 994 (N.D.

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Cal. 2016); In re Hyundai Sonata Engine Litig., No. 5:15-cv-1685-BLF, ECF No. 35 (N.D.

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Cal. Sept. 8, 2015). However, the motions to appoint interim class counsel in these cases

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went unopposed. Plaintiff also cites to Gallagher v. Bayer AG, No. 14-cv-04601-WHO,

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2015 WL 4932292, at *8 (N.D. Cal. Aug. 18, 2015), where the court stated that the

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plaintiffs in that case had “pointed to several cases in which courts have appointed interim

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class counsel in the absence of other class suits.” While the Gallagher court’s statement

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was true, a closer examination of the cases the court relied on in making the statement

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illustrate that those cases, too, involved unopposed motions to appoint interim class
counsel.1 At the same time, the Gallagher court did grant an opposed motion to appoint

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United States District Court
Northern District of California

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interim class counsel because the plaintiffs satisfied the Rule 23(g)(1) factors, and also

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because the defendants did not present a compelling reason to deny the motion, nor did

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they show how they would be prejudiced. Gallagher, 2015 WL 4932292, at *8.
Facebook, on the other hand, argues there is no need for appointment of interim

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lead counsel because this action involves a single, consolidated suit, with no rival suits or

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firms on the horizon; and also because Plaintiffs’ counsel are already cooperating with

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each other and Facebook. Opp’n at 1. And “[w]here there are no competing lawsuits or

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firms, courts in this district have been unwilling to appoint interim class counsel.” See In

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re Seagate Tech. LLC Litig., Case No. 16-cv-00523-RMW, 2016 WL 3401989 (N.D. Cal.

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June 21, 2016) (collecting cases).
The Court finds this case is analogous to In re Nest Labs Litigation, Case No. 14-

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cv-01363-BLF, 2014 U.S. Dist. LEXIS 115596 (N.D. Cal. Aug. 18, 2014), where the court

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rejected the appointment of interim class counsel. As in this case, that case arose from two

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separate cases with similar complaints that were later related and then consolidated by the

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See Paraggua v. LinkedIn Corp., Case No. 5:12-cv-03088 EJD, 2012 WL 3763889 (N.D.
Cal. Aug. 29, 2012) (granting an unopposed motion to appoint interim class counsel);
Melgar v. Zicam, LLC, Case No. 2:14-cv-00160-MCE-AC, 2014 WL 5486676 (N.D. Cal.
Oct. 29, 2014) (same); Valdez v. Saxon Mortg. Servs., Inc., Case No. 2:14-cv-03595CAS(MANx), 2015 WL 99387 (C.D. Cal. Jan. 6, 2015) (recognizing approval of prior
unopposed motion to appoint interim class counsel).
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parties’ stipulation. Id. at *3. In deciding to deny Plaintiffs motion to appoint interim

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class counsel, the court noted that Plaintiffs had not identified any “tag-along” suits on the

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horizon, nor did there appear to be any rivalry between the two firms or uncertainty as to

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their respective roles. Id. at *4. In fact, the Court recognized that the plaintiffs had

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already been coordinating and collaborating efficiently. Id. In closing, the Court

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recognized it was “not necessary to appoint interim class counsel merely to maintain the

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status quo.” Id. at *5. Here, like the plaintiffs in In re Nest, the separate plaintiffs’

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counsel are presently collaborating and the parties have not shown any signs that a rivalry

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exists. And while Plaintiffs attempt to demonstrate a rivalry does indeed exist, they also

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concede that the Letizia counsel and Quirky counsel “were at odds,” that they “competed

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United States District Court
Northern District of California

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for control,” and that the “rivalry has been suspended.” ECF No. 49 at 2:3–5 (emphasis

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added). Also, like the plaintiffs in In re Nest, Plaintiffs’ counsel admitted during oral

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arguments that they cannot presently identify any looming rival suits or law firms.

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For these reasons, the Court, like the court in In re Nest, finds appointment of

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interim class counsel is not necessary to maintain the status quo. In the event a rival law

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firm does seek to jump in and take the reins at a later time, the parties may file a renewed

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motion at that time.

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V. CONCLUSION

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For the reasons stated above, the Court DENIES Plaintiffs’ motion WITHOUT
PREJUDICE.

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IT IS SO ORDERED.

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Dated: 4/25/17

_____________________________________
THELTON E. HENDERSON
United States District Judge

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