Singer et al v. Facebook, Inc.

Filing 255

ORDER RE MOTION TO DISMISS. Signed by Judge James Donato on 2/12/2021. (jdlc3S, COURT STAFF) (Filed on 2/12/2021)

Case 3:18-cv-04978-JD Document 255 Filed 02/12/21 Page 1 of 3

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DZ RESERVE AND CAIN MAXWELL
(D/B/A MAX MARTIALIS), individually
and on behalf of all others similarly situated,

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Plaintiffs,

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FACEBOOK, INC.,

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United States District Court
Northern District of California

ORDER RE MOTION TO DISMISS
Re: Dkt. No. 177

v.

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Case No. 3:18-cv-04978-JD

Defendant.

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This order follows two rulings on motions to dismiss prior iterations of the complaint. See

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Dkt. Nos. 83, 130. Facebook asks to dismiss the fraud and contract-related claims in the third

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amended complaint (TAC), Dkt. No. 1661, under Federal Rules of Civil Procedure 9(b) and

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12(b)(6). Dkt. No. 177. This third, and the Court expects last, pleadings motion is granted and

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denied in part.
The parties’ familiarity with the governing legal standards and the Court’s prior orders is

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assumed. Facebook’s request to dismiss the fraudulent misrepresentation and fraudulent

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concealment claims for lack of sufficient specificity under Rule 9(b) is denied. The Court has

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already sustained the adequacy of the fraud allegations for purposes of the California Unfair

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Competition Law claim, Cal. Bus. & Prof. Code § 17200 et seq., see Dkt. No. 83, and the

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amended fraud claims are based on the same facts and course of conduct. The allegations are

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“specific enough to give defendants notice of the particular misconduct…so that they can defend

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against the charge and not just deny that they have done anything wrong.” Kearns v. Ford Motor

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The TAC is subject to a pending motion to seal. Dkt. No. 254. Until that motion is decided, the
Court cites on an interim basis the redacted versions of the TAC and motion papers.

Case 3:18-cv-04978-JD Document 255 Filed 02/12/21 Page 2 of 3

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Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (internal citations and quotations omitted). The concrete

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and non-conclusory allegations supporting the fraud claims include statements that the Potential

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Reach metric is inflated (Dkt. No. 166 ¶¶ 39-52), the inflation was material to potential users (id.

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¶¶ 53-59), Facebook knew of problems with Potential Reach and tried to hide them (id. ¶¶ 61-90),

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and that plaintiffs relied upon the Potential Reach metric when purchasing ads (id. ¶¶ 97-99, 104-

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106). This is enough as a pleadings matter for the fraud claims to go forward.
The claim for breach of the implied covenant of good faith and fair dealing is dismissed

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with prejudice. In substance, the claim does not go beyond the breach of contract claim that the

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Court dismissed with prejudice in a prior order. See Dkt. No. 130. As a general proposition, the

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implied covenant does not exist “independent of its contractual underpinnings,” FormFactor, Inc.

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United States District Court
Northern District of California

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v. MarTek, Inc., No. 14-cv-01122-JD, 2015 WL 367653, at *6 (N.D. Cal. Jan. 28, 2015), and is

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not an avenue to re-plead a breach of contract claim that has been dismissed. While there are

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some rare situations when a breach of the covenant might be a plausible claim without a breach of

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the contract itself, this is not one of them.

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The quasi-contract claim is also dismissed with prejudice. Plaintiffs allege that they

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entered into a contract with Facebook for advertising services. See, e.g., Dkt. No. 166 ¶ 136. An

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“action based on an implied-in-fact or quasi-contract cannot lie where there exists between the

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parties a valid express contract covering the same subject matter.” Lance Camper Mfg. Corp. v.

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Republic Indem. Co., 44 Cal. App. 4th 194, 203 (1996). Plaintiffs have not shown that the quasi-

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contract claim is anything other than coterminous with the terms of the ad contract.

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With respect to the time bar issue Facebook raised, plaintiffs agree they will not pursue the

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fraud claims for events preceding August 15, 2015, which is three years prior to the filing of the

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original complaint. See Dkt. No. 182 at 15. Facebook accepts this date, Dkt. No. 186 at 10, and

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the claims will be so limited.

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At this point, after multiple rounds of complaint amendments and motions to dismiss, the

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pleadings are in final form. The next stop for the parties is trial or possibly summary judgement,

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if the requirements of Rule 56 can be satisfied. To that end, the parties are reminded to take into

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Case 3:18-cv-04978-JD Document 255 Filed 02/12/21 Page 3 of 3

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account the Court’s decision in FTC v. D-Link Systems, Inc., No. cv-17-00039-JD, 2018 WL

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6040192 (N.D. Cal. Nov. 5, 2018).

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IT IS SO ORDERED.
Dated: February 12, 2021

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JAMES DONATO
United States District Judge

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United States District Court
Northern District of California

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