Campbell et al v. Facebook Inc.

Filing 167

REPLY (re 138 MOTION to Certify Class ) filed byMatthew Campbell, Michael Hurley. (Attachments: # 1 Declaration of David Slade, # 2 Declaration Supplemental Declaration of Melissa Gardner)(Sobol, Michael) (Filed on 2/19/2016)

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Michael W. Sobol (State Bar No. 194857)
[e-mail]
David T. Rudolph (State Bar No. 233457)
[e-mail]
Melissa Gardner (State Bar No. 289096)
[e-mail]
LIEFF CABRASER HEIMANN & BERNSTEIN, LLP
275 Battery Street, 29th Floor
San Francisco, CA 94111-3339
Telephone: [phone]
Facsimile: 415.956.1008

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Hank Bates (State Bar No. 167688)
[e-mail]
Allen Carney
[e-mail]
David Slade
[e-mail]
CARNEY BATES & PULLIAM, PLLC
11311 Arcade Drive
Little Rock, AR 72212
Telephone: [phone]
Facsimile: 501.312.8505

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Attorneys for Plaintiffs and the Proposed Class

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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OAKLAND DIVISION
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MATTHEW CAMPBELL and MICHAEL
HURLEY, on behalf of themselves and all
others similarly situated,

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Plaintiff,

Case No. C 13-05996 PJH (MEJ)
DECLARATION OF DAVID SLADE IN
SUPPORT OF PLAINTIFFS’ MOTION
FOR CLASS CERTIFICATION

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v.
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FACEBOOK, INC.,
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Date:
Time:
Judge:
Place:

March 16, 2016
9:00 a.m.
Hon. Phyllis J. Hamilton
Courtroom 3, 3rd Floor

Defendant.
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DECLARATION OF DAVID SLADE IN SUPPORT OF
MOTION FOR CLASS CERTIFICATION
CASE NO. 13-CV-05996-PJH (MEJ)

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I, David Slade, declare:

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1.

I am an attorney in the law firm Carney, Bates and Pulliam, PLLC, a member of

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the State Bar of Arkansas, and am admitted pro hac vice to practice before this Court. I am one

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of the counsel for Plaintiffs in this action. I make this declaration based on my own personal

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knowledge. If called upon to testify, I could and would testify competently to the truth of the

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matters stated herein.

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2.

I submit this Declaration in support of Plaintiffs’ Motion for Class Certification.

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3.

A true and correct copy of the Rebuttal Report of Jennifer Golbeck in Support of

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Plaintiffs’ Motion for Class Certification is attached hereto as Exhibit 1.
4.

A true and correct copy of excerpts from the May 19, 2015 deposition of Matthew

Campbell is attached as Exhibit 2.
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A true and correct copy of excerpts from the July 9, 2015 deposition of Michael

Hurley is attached hereto as Exhibit 3.
6.

A true and correct copy of an article entitled, Matt Campbell of the Blue Hog

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Report Keeps on Digging, by Jan Cottingham of Arkansas Business News (Jun. 8, 2015) is

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attached hereto as Exhibit 4.

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A true and correct copy of an article entitled, Matt Campbell’s Greatest Hits: A

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Timeline of the Blue Hog Report, by Jan Cottingham of Arkansas Business News (Jun. 8, 2015) is

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attached hereto as Exhibit 5.

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8.

A true and correct copy of excerpts from the October 1, 2015 deposition of David

Shadpour is attached Exhibit 6.
9.

A copy of the document bearing Bates stamp FB000005575, which was produced

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by Facebook in this action, is attached hereto as Exhibit 7. The copy of this document attached

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as Exhibit 7 bears highlighting from Plaintiffs’ counsel to illustrate certain facts for the Court.

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10.

A true and correct copy of excerpts from the February 4, 2016 deposition of Alex

Himel is attached hereto as Exhibit 8.
11.

A true and correct copy of the Updated Report of Fernando Torres in Support of

Plaintiffs’ Motion for Class Certification is attached hereto as Exhibit 9.
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DECLARATION OF DAVID SLADE IN SUPPORT OF
MOTION FOR CLASS CERTIFICATION
CASE NO. 13-CV-05996-PJH (MEJ)

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12.

A true and correct copy of excerpts from the December 18, 2015 deposition of

Fernando Torres is attached hereto as Exhibit 10.
13.

A true and correct copy of excerpts from the January 26, 2016 deposition of Dr.

Catherine Tucker is attached hereto as Exhibit 11.
14.

A true and correct copy of excerpts from the February 2, 2016 deposition of Dr.

Benjamin Goldberg is attached hereto as Exhibit 12.
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A true and correct copy of Google News Search for the term “Volkswagen

‘software device,’” which returned about 37,400 results, is attached hereto as Exhibit 13.
16.

A true and correct copy of the document bearing Bates stamp FB000005577,

which was produced by Facebook in this action, is attached hereto as Exhibit 14.
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A true and correct copy of the document bearing Bates stamp FB000005800,

which was produced by Facebook in this action, is attached hereto as Exhibit 15.
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A true and correct copy of the document bearing Bates stamp FB000005882,

which was produced by Facebook in this action, is attached hereto as Exhibit 16.
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A true and correct copy of the document bearing Bates stamp FB000006007,

which was produced by Facebook in this action, is attached hereto as Exhibit 17.
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A true and correct copy of the document bearing Bates stamp FB000006088,

which was produced by Facebook in this action, is attached hereto as Exhibit 18.
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A true and correct copy of the document bearing Bates stamp FB000012006,

which was produced by Facebook in this action, is attached hereto as Exhibit 19.
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A true and correct copy of the document bearing Bates stamp FB000012557,

which was produced by Facebook in this action, is attached hereto as Exhibit 20.
I declare under penalty of perjury that the foregoing is true and correct and that this
Declaration was signed in Little Rock Arkansas, on February 19, 2016.

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CARNEY BATES AND PULLIAM, PLLC

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By:

/s/David Slade
David Slade
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DECLARATION OF DAVID SLADE IN SUPPORT OF
MOTION FOR CLASS CERTIFICATION
CASE NO. 13-CV-05996-PJH (MEJ)

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ATTESTATION

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I, Michael W. Sobol, am the ECF user whose identification and password are being used
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to file this document. I hereby attest that David Slade has concurred in this filing.
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DATED: February 19, 2016

/s/ Michael W. Sobol
Michael W. Sobol

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DECLARATION OF DAVID SLADE IN SUPPORT OF
MOTION FOR CLASS CERTIFICATION
CASE NO. 13-CV-05996-PJH (MEJ)

EXHIBIT 1

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Michael W. Sobol (State Bar No. 194857)
[e-mail]
David T. Rudolph (State Bar No. 233457)
[e-mail]
Melissa Gardner (State Bar No. 289096)
[e-mail]
LIEFF CABRASER HEIMANN & BERNSTEIN, LLP
275 Battery Street, 29th Floor
San Francisco, CA 94111-3339
Telephone: [phone]
Facsimile: 415.956.1008

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Hank Bates (State Bar No. 167688)
[e-mail]
Allen Carney
[e-mail]
David Slade
[e-mail]
CARNEY BATES & PULLIAM, PLLC
11311 Arcade Drive
Little Rock, AR 72212
Telephone: [phone]
Facsimile: 501.312.8505

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Attorneys for Plaintiffs and the Proposed Class

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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MATTHEW CAMPBELL and MICHAEL
HURLEY, on behalf of themselves and all
others similarly situated,

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Plaintiffs,

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FACEBOOK, INC.,

REBUTTAL REPORT OF DR. JENNIFER
GOLBECK IN SUPPORT OF
PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION
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v.

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Case No. C 13-05996 PJH (MEJ)

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Defendant.

HEARING
Date: March 16, 2016
Time: 9:00 a.m.
Place: Courtroom 3, 3rd Floor
|
The Honorable Phyllis J. Hamilton

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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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TABLE OF CONTENTS

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Page

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I.
II.
III.

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IV.

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V.
VI.

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VII.

SCOPE OF ENGAGEMENT ................................................................................. 1
METHODOLOGY.................................................................................................. 1
ASCERTAINABILITY .......................................................................................... 2
A.
Class Members are Ascertainable from Facebook’s Records ..................... 2
FACEBOOK’S INTERCEPTION OF PRIVATE MESSAGE CONTENT........... 9
A.
Are not Necessary for Message Delivery .................................. 9
B.
.............................................................................. 11
ALLEGED “VARIABILITY” .............................................................................. 13
WHETHER PRIVATE MESSAGE CONTENT WAS INTERCEPTED IN
TRANSIT OR IN STORAGE............................................................................... 15
FACEBOOK’S USE OF PRIVATE MESSAGE CONTENT IN THE
SOCIAL GRAPH AND TARGETED ADVERTISING ...................................... 15

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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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I.

SCOPE OF ENGAGEMENT
1.

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I have been asked by the Plaintiffs through their counsel to respond to the

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conclusions expressed in the Expert Report of Dr. Benjamin Goldberg submitted with Defendant

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Facebook Inc.’s Opposition to Plaintiffs’ Motion for Class Certification (“Goldberg Report”),

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statements made by Facebook Engineering Manager Alex Himel in his declaration submitted in

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support of Facebook’s Opposition, and characterizations of my testimony made by Facebook in

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its Opposition to Plaintiffs’ Motion for Class Certification.

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II.

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METHODOLOGY
2.

My rebuttal opinions, as well as the evidence I rely upon to support them, are set

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forth in detail in this rebuttal report. The contents of the various exhibits that I identify by name

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are meant to be incorporated, in their entirety, by such reference.

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3.

As with my opening report submitted in connection with Plaintiffs’ Motion for

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Class Certification (“Golbeck Opening Report”), in preparing this report, I have employed

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methods and analyses of a type reasonably relied upon by experts in my field in forming opinions

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or inferences on the subject. The opinions expressed are based upon a reasonable degree of

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computer science certainty.

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4.

Between now and such time that I may be asked to testify before the Court, I

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expect to continue my review, evaluation, and analysis of information generated during

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discovery, as well as of relevant evidence presented before and/or at trial. I also expect to review

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any further reports submitted by Facebook’s experts. I reserve the right to amend or supplement

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this rebuttal report, as necessary and as acceptable to the Court. I also reserve the right to develop

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materials and exhibits as appropriate for use in helping to demonstrate and explain my opinions in

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the event that I am asked to testify at trial.

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5.

In forming my opinions, I have reviewed source code which I understand was

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provided by Facebook’s counsel and which was represented as containing the relevant source

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code between some time in 2009 and December 2012.

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6.

Additionally I have reviewed internal Facebook documents produced in this

litigation, the Goldberg Report, the transcript of the deposition of Dr. Goldberg, the declarations
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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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of various Facebook employees submitted in in support of Facebook’s Opposition to Plaintiffs’

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Motion for Class Certification, the deposition transcripts of those employees, as well as certain

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public materials. The list of documents I have considered in forming my opinions in this rebuttal

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report is attached to this report as Appendix A.

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III.

ASCERTAINABILITY

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A.

Class Members are Ascertainable from Facebook’s Records

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7.

Facebook has a database called

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. I understand that Facebook produced the

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Exhibit A to

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Facebook’s Second Supplemental Responses and Objections to Plaintiffs’ Narrowed Second Set

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of Interrogatories

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.

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8.

The contents of the page include

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The

, including:

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can be used to access information about Class members. The

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could be written that would identify the senders and
recipients of Private Messages sent during the Class Period with URL attachments

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by doing the following:

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Facebook Appendix (“App.”) at 1534-1555.
Ex. 7 to the Declaration of David Slade (“Slade Decl.”)
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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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10.

Specifically, the query would involve identifying the following information related

to the Class Definition:

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a.

Private Messages within the Class Period based upon

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(highlighted in yellow in Slade Decl. Ex. 7);

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b.

Within that time period, Private Messages that

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(highlighted in red in Slade Decl. Ex. 7);

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c.

Sender of each Class-qualifying message based upon

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(highlighted in blue in Slade Decl. Ex. 7); and

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d.

Recipient(s) of each Class-qualifying message based upon

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(highlighted in green in Slade
Decl. Ex. 7).

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11.

Focusing on the above-described fields also addresses an issue raised by Facebook

in its brief: the fact that
.3 In discovery, I understand that Facebook was able to produce the

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, marked
as FB000005577, FB000005800, FB000005882, FB000006007, FB000006088, FB000012006,

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Opp. at 12:11.
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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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and FB000012557.4 Reviewing each of these

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:

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a.

FB0000055775 shows that

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in the course of the transmission of this Private
Message, and the above-describe query I articulate would exclude such a message, accordingly.

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b.

FB0000058006 presents a similar case in that,

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this
message would be between Facebook users who were outside of the proposed Class.

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c.

FB000005882,7 like FB000005577, shows that

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.

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d.

FB000006007,8 like FB000005577, shows that

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.

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e.

FB000006088,9 like FB000005577, shows that

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.

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f.

FB000012006,10 like FB000005577, shows that

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.
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This understanding is based upon the table represented in Exhibit A To Defendant Facebook,
Inc.’s Second Supplemental Responses And Objections To Plaintiffs’ Narrowed Second Set Of
Interrogatories (App. 1534-1555).
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Slade Decl. Ex. 14.
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Slade Decl. Ex. 15.
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Slade Decl. Ex. 16.
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Slade Decl. Ex. 17.
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Slade Decl. Ex. 18.
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Slade Decl. Ex. 19.
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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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g.

FB00001255711 displays a

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, as this message would be between Facebook users who
were outside of the proposed Class.

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12.

The above query identifies the relevant fields within

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. As I describe in paragraphs 98-105 of my Opening Report,

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, Class members can be readily identified.

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The above query addresses what I understand to be the relevant inquiry for identifying Class

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members: that is, whether or not

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URL attachment.

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will separate Class members from non-Class members .

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13.

If the names of

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have subsequently changed, this query could be modified
accordingly to address any changes

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a Private Message sent with a

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It appears that Dr. Goldberg’s and Facebook’s criticism of my methods described

in my opening report and my deposition are based on an assumption that

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. Although I did not

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to make these identifications, even offering an example query
(though it may need some tweaking after I have the opportunity to test it in practice).

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15.

As I state in my Opening Report, the queries I offered were not intended to

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retrieve a final list of Class members. As a preface to the sample code, I stated, “[a] database

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query could be used

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(¶ 103). I never suggested that everyone

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was equivalent to the complete list of the Class members.
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Slade Decl. Ex. 20.
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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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16.

Dr. Goldberg and Mr. Himel both argue my example code will be both under- and

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over- inclusive of Class members, without acknowledging that the parameters necessary to

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identify the Class are readily available.

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17.

At ¶¶ 66-77 of his report Dr. Goldberg argues that the method that I propose would

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(id. ¶

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67). However, the examples that he provides are cases which either 1) take the user out of Class

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definition or, 2) are due to system failures, the frequency of which is likely very low. I respond to

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each of these cases below:

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a.

¶ 68: “This query will be under-inclusive in that it will not reflect recipients

of messages

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.
b.

¶ 69: “This query will be under-inclusive in that it will not identify

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I have not seen any
evidence or documentation supporting Dr. Goldberg’s underlying assumption that if

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c.

¶ 70: “This query will be under-inclusive in that it will not identify senders

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and recipients whose accounts were deleted.” I have not seen any evidence or documentation

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supporting Dr. Goldberg’s underlying assumption that

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d.

¶ 71: “This query will be under-inclusive in that it will not identify

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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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.

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e.

¶ 72: “This query will be under-inclusive in that it will not identify

f.

¶ 73: “This query will be under-inclusive in that it will not identify

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.

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.

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g.

¶ 74: “This query will be over-inclusive in that it will include senders

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whose messages did not contain URLs in their text.” This appears to be referencing a scenario

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where

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h.

¶ 75: “This query will be over-inclusive in that it will include

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¶ 76: “This query will be over-inclusive in that it will include senders and

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recipients outside the United States.” Facebook knows if users are within the United States and

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could check this for senders and recipients whose messages were intercepted. Facebook states on
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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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its website that this data is collected for advertising purposes.12

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.

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j.

¶ 77: “This query will be over-inclusive in that it will include senders of

messages outside the Class Period.” As explained above,

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.

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18.

At ¶¶ 78-86 of his report, Dr. Goldberg argues that my proposed methods are

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“overbroad in that [they] will identify senders that were not subject to the challenged ‘uses.’”

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However, the Facebook code is written such that

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.

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19.

At ¶ 78 of his report, Dr. Goldberg states: “Dr. Golbeck’s query is overbroad in

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that it will identify senders that were not subject to the challenged ‘uses.’ In her deposition, Dr.

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Golbeck conceded each of these flaws in her proposed query and said that identifying those that

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were subject to the challenged ‘uses’ would be ‘case-specific.’” This is a misstatement of my

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deposition testimony. I was asked specifically if

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not if it was possible to
identify senders subject to uses.14

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See https://www.facebook.com/business/help/133609753380850 (“How does Facebook know
when people are in the locations I’m targeting? Facebook uses information from multiple
sources such as current city from profile, IP address, data from mobile devices if location services
are enabled, and aggregated information about the location of friends.”).
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FB000027191.
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App. 1337 (Golbeck Depo. 344:7-19).
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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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20.

At ¶ 79 of his report, Dr. Goldberg states: “This query cannot identify senders

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.

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21.

Similarly, the “uses” Dr. Goldberg identifies at ¶¶ 80-8615 of his report are all

instances where

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.
IV.

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FACEBOOK’S INTERCEPTION OF PRIVATE MESSAGE CONTENT
A.

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Are not Necessary for Message Delivery
1.

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22.

Dr. Goldberg argues that creating objects in object-oriented programming

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languages is common practice. This is true. However, objects are not side effects of object16
oriented programming. They are data structures that people create and that are explicitly
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programmed to record information. Thus, if data is stored in an object, it is because a programmer
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made an explicit decision to record that information. If a system intercepts content from
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communications, it is not part of the ordinary course of business simply because the intercepted
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content is stored in an object.
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23.

Dr. Goldberg argues that

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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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Information stored in a

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database is not part of the code. While the stored data may map to what is implemented in objects

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in the code, it is not an object-oriented programming object itself.

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2.

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24.

Alternative methods

There are alternative methods for

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.

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a.

For example, rather than

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.

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b.

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Additionally,
.

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c.

The fact that these alternative methods of

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3.

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25.

Code-Based Devices

Dr. Goldberg argues that he has never heard the term "code-based device" before

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(¶ 8). However, code-based or software devices are quite common, and just because Dr. Goldberg

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has not heard the term does not mean they cannot exist.

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See, e.g. section “Dissection of an Object” in Hasin Hayder, Object-Oriented Programming
with PHP5(Packt Publishing Ltd, 2007) .
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See App. 1522-23 (Himel Decl. ¶ 44); App. 1697-98, 1699-1700, 1702 (Fechete Decl. ¶¶ 1314, 18, 26).
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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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26.

For example, one domain where the public is hearing a lot about code-based

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devices now is in the Volkswagen emissions controversy.18 Indeed, a Google News search for

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“Volkswagen 'software device'” returned about 37,400 results.19 I understand that the

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Environmental Protection Agency has stated that software can constitute a “device” as that term

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is used in government regulations. 20

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27.

The term "software device" has also appeared in US patents21 and publications

from NASA.22

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B.

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28.

I understand that Mr. Himel claims that

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I analyzed

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.

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30.

Based upon

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.

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31.

In

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:
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See Slade Decl. Ex 12 (Goldberg Depo. Tr. at 171:10-177:22.)
Slade Decl. Ex 13.
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See id.; see also “EPA, California Notify Volkswagen of Clean Air Act Violations / Carmaker
allegedly used software that circumvents emissions testing for certain air pollutants,” available at
http://yosemite.epa.gov/opa/admpress.nsf/a883dc3da7094f97852572a00065d7d8/dfc8e33b5ab16
2b985257ec40057813b!OpenDocument (“As described in the [Notice of Violation], a
sophisticated software algorithm on certain Volkswagen vehicles detects when the car is
undergoing official emissions testing, and turns full emissions controls on only during the test . . .
The software produced by Volkswagen is a “defeat device,” as defined by the Clean Air Act.”)
21
See, e.g. , U.S Patent No. 6,032,223.
22
See, e.g., V. Kreinovich, A. Bernat, E. Villa, Y. Mariscal, “Parallel computers estimate errors
caused by imprecise data,” Interval Computations, 1991, No. 2, pp. 31–46. (available at
http://ntrs.nasa.gov/search.jsp?R=19930068753).
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See App. 1522-23 (Himel Decl. ¶ 44).
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See, e.g., FB000014213; FB000027011; FB000027015; FB000027018.
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REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

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32.

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33.

These show

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34.

Even if this information is not

35.

Dr. Goldberg stated in his deposition that he

.

14
15
16
17
18
19
20
21
22
27

23
24

36.

I note that, in the context of Facebook’s

25
26
27
28

25

.

26

Slade Decl. Ex. 12 (Goldberg Depo. Tr. at 139:10-143:6).
27
FB000027190.
- 12 -

REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

1
2
3
4
5

37.

Indeed, the only

6
29

7
8

V.

9

ALLEGED “VARIABILITY”
38.

At paragraphs 60 and 63 of his report, Dr. Goldberg argues that alleged

10

“variability” in what he calls “interceptions” and “uses” of Private Message content would require

11

a “a message-by-message analysis” to determine “whether such alleged interceptions” or “uses”

12

occurred. Mr. Himel addresses these same “variabilities” in his declaration.30 However, most of

13

these “variabilities” simply track the same scenarios that Dr. Goldberg incorrectly argues makes

14

identification of Class members impossible. As I explain in Section III of the this rebuttal report,

15
16

.

17

39.

I note that while Dr. Goldberg claims that

18
19
20
21
.32

22
23
24
25
26
27
28

28

App. 1943 (Goldberg Report, ¶ 9).
See App. 1964 (Goldberg Report ¶ 44); App. 1697-98, 1699-70, 1702 (Fechete Decl. ¶¶ 13-14,
18, 26); Golbeck Opening Report ¶¶ 44-54.
30
See, generally App. 1508-33 (Himel Decl.)
31
Slade Decl. Ex. 12 (Goldberg Depo. Tr. at 80:21-23)
.
Slade Decl. Ex. 12 (Goldberg Depo. Tr. at 81:8-86:17).
29

- 13 -

REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

1

40.

Several of these additional variabilities do not overlap with the scenarios Dr.

2

Goldberg incorrectly argues makes identification of Class members impossible. I address each as

3

follows:

4

a.

5
6
7
8
9

and therefore the message would not be within the Class
definition.
b.

10
11
12
13

and therefore the message would not be within the Class definition.
c.

14
15
16

and therefore the message would not be within the

17

Class definition.

18

d.

19
20
21
22

and
are not relevant to this action.
e.

In summary,

23

. Also, Dr. Goldberg and Mr.

24

Himel are correct that not all Private Messages, or even all Private Messages that include URLs,

25

are included within the Class. However, these “variabilities” do not cause any complexities

26

related to identifying Class members or resolving issues related to Class members because each

27

of these “variabilities”

28

.
- 14 -

REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

1

VI.

2

WHETHER PRIVATE MESSAGE CONTENT WAS INTERCEPTED IN
TRANSIT OR IN STORAGE
41.

Messages are in transit when they are intercepted. They are delivered

3
4
5

.33 Dr.
Goldberg argues that messages that are in memory are in “storage” and that he has never heard of
the two being distinguished in any context. However, the distinction is commonly made.

6
7
8
9

42.

does PC Magazine35 and numerous other websites.36 Page 370 of the textbook, “Discovering
Computers,” by Misty E. Vermaat, et al. distinguishes them.37 While Dr. Goldberg may be
unaware that these are treated differently, such a distinction does in fact exist.

10
11
12

As a few examples, Microsoft distinguishes the two on their Windows website34 as

43.

Indeed, if Dr. Goldberg's position were correct, it would be impossible for a

computer-based violation of wiretap law, since computers must have data in memory in order to
operate on it.

13
14

VII.

FACEBOOK’S USE OF PRIVATE MESSAGE CONTENT IN THE SOCIAL
GRAPH AND TARGETED ADVERTISING

15

44.

I note that Facebook states the following concerning my deposition testimony:

16
17
.”38

18
19
20
21
22
23
24
25
26
27
28

33

See Golbeck Opening Report ¶¶ 30-31.
See “Memory and storage,” available at http://windows.microsoft.com/enus/windows7/memory-and-storage.
35
See “Definition of: storage vs. memory,”
http://www.pcmag.com/encyclopedia/term/63352/storage-vs-memory (“The difference between
storage and memory is that non-volatile storage is used to hold programs and data until purposely
changed or removed by the user, while volatile memory is a temporary workspace for retrieving
programs and processing data. Storage consists of drives (hard, optical, USB, solid state).
Memory consists of RAM chips that lose their content when power is removed.”)
36
See, e.g., “THE DIFFERENCE BETWEEN MEMORY AND STORAGE” available at
http://www.technick.net/public/code/cp_dpage.php?aiocp_dp=guide_umg_01_003 (“People often
confuse the terms memory and storage, especially when describing the amount they have of each.
The term memory refers to the amount of RAM installed in the computer, whereas the term
storage refers to the capacity of the computer’s hard disk.”); “What's the Difference Between
Memory and Storage?,” available at http://www.tucows.com/article/593.
37
Vermaat, M., Sebok, S., Freund, S., Campbell, J. and Frydenberg, M., “Discovering
Computers” Cengage Learning (2016).
38
Opp. at 25:2-4.
34

- 15 -

REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

1

45.

2

stated that

My testimony cited is taken grossly out of context in two ways. First, I never

3
It was never clarified.39 It is my opinion that

4
5

.

6

46.

Secondly, I opined that

7
8
9
10
42

11
12
13
14

Dated: February 19, 2016

15
16

__________________

17

Jennifer Golbeck

18
19
20
21
22
23
24
25

39
40

App. 1096–1101 (Golbeck Depo. Tr. at 103:13-108:16).
App. 1209-1210 (Golbeck Depo. Tr. at 216:7-217:5)

42

App. 1210-1216 (Golbeck Depo. Tr. at 217:6-223:6).
App. 1209-1212 (Golbeck Depo. Tr. at 216:7-219:3).

26
27
28

- 16 -

REBUTTAL REPORT OF DR. GOLBECK IN SUPPORT
OF PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION C 13-05996 PJH (MEJ)

Appendix A: List of Materials Relied On
I relied on the following documents and materials in forming my opinions:
Documents from Campbell et al. v. Facebook, Inc.:
Facebook’s Second Supplemental Responses and Objections to Plaintiffs’ Narrowed Second Set
of Interrogatories, and Exhibit A thereto
Expert Report of Dr. Benjamin Goldberg submitted with Defendant Facebook Inc.’s Opposition
to Plaintiff’s Motion for Class Certification
Declaration of Alex Himel in Support of Defendant Facebook, Inc.’s Opposition to Plaintiffs’
Motion for Class Certification
Declaration of Dan Fechete in Support of Defendant Facebook, Inc.’s Opposition to Plaintiffs’
Motion for Class Certification
Defendant Facebook, Inc.’s Opposition to Plaintiffs’ Motion for Class Certification
Deposition of Dr. Jennifer Golbeck (Dec. 16, 2015)
Deposition of Dr. Benjamin Goldberg (Feb. 2, 2016)
Report of Dr. Jennifer Golbeck in Support of Plaintiffs’ Motion for Class Certification
Plaintiffs’ Motion for Class Certification
FB000005575
FB000005577
FB000005800
FB000005882
FB000006007
FB000006088
FB000012006
FB000012557
FB000014213
FB000027011
FB000027015
FB000027018
FB000027190
FB000027191
Source Code Produced by Facebook

Other Materials:
https://www.facebook.com/business/help/133609753380850
Hasin Hayder, Object-Oriented Programming with PHP5 (Packt Publishing Ltd, 2007)
www.google.com (search for “Volkswagen ‘software device’”)
“EPA, California Notify Volkswagen of Clean Air Act Violations / Carmaker allegedly used
software that circumvents emissions testing for certain air pollutants,” available at
http://yosemite.epa.gov/opa/admpress.nsf/a883dc3da7094f97852572a00065d7d8/dfc8e33b5ab16
2b985257ec40057813b!OpenDocument
U.S Patent No. 6,032,223
V. Kreinovich, A. Bernat, E. Villa, Y. Mariscal, “Parallel computers estimate errors caused by
imprecise data,” Interval Computations, 1991, No. 2, pp. 31–46. (available at
http://ntrs.nasa.gov/search.jsp?R=19930068753)
http://windows.microsoft.com/en-us/windows7/memory-and-storage
http://www.pcmag.com/encyclopedia/term/63352/storage-vs-memory
http://www.technick.net/public/code/cp_dpage.php?aiocp_dp=guide_umg_01_003
http://www.tucows.com/article/593
Vermaat, M., Sebok, S., Freund, S., Campbell, J. and Frydenberg, M., “Discovering Computers”
Cengage Learning (2016).

EXHIBIT 2

1
2

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

3

OAKLAND DIVISION

4
5

MATTHEW CAMPBELL, MICHAEL HURLEY, )
and DAVID SHADPOUR,

)

6

)
Plaintiffs,

7

) Case No.
vs.

) C 13-05996 PJH

8

)
FACEBOOK, INC.,

)

9

)
Defendant.

10

)

)

__________________________________)

11
12
13
14
15
16

VIDEOTAPED DEPOSITION OF MATTHEW D. CAMPBELL

17

San Francisco, California

18

May 19, 2015

19

Volume I

20
21
22

Reported by:
CARLA SOARES

23

CSR No. 5908

24

Job No. 2067810

25

Pages 1 - 294
Page 1
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866 299-5127

1

teleconference last week, when was the last time you

2

spoke with any of your attorneys in that case?

3

A

09:11:43

I've been in contact with Mr. Slade

4

roughly once a month for the last -- well, since the

5

suit was filed; more frequently than that over the

6

last month or so as we've prepared for this and

7

through discovery.

8
9
10

Q
session.

Okay.

09:11:55

And let's focus on yesterday's prep

Approximately how long did that meeting

last?

09:12:15

11

A

Five hours.

12

Q

Did you discuss your deposition today with

13

Somewhere in that ballpark.

anyone other than your attorneys and/or their staff?

14

A

Not substantively, no.

15

Q

Put aside substantively.

16

Did you

09:12:33

discuss --

19

Q

Okay.

Anybody else?

20

A

No.

21

Q

Did you review any documents in preparing

09:12:40

22

for this deposition, either at the prep meeting last

23

week or your meeting yesterday?

24

A

Yes.

25

Q

Did your review of any documents refresh

09:12:59
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A

I do.

10:41:10

2

Q

What is it?

3

A

These are the corrected objections and

4

responses to the interrogatories that were directed

5

to me.

6
7

10:41:17
Q

And did you review these responses before

they were provided to Facebook?

8

A

I did.

9

Q

Did you make corrections?

10

A

Nothing specific that I can think of.

11
12

I

10:41:34

reviewed them and discussed with my attorneys.
Q

And did you take care to make sure the

13

responses were accurate to the best of your

14

recollection?

15

A

16
17

Yes.

Yes, I did.

I'm just trying to

10:41:48

think if there was anything beyond that.
Q

And, Mr. Campbell, if you could look at

18

Interrogatory No. 1, and specifically your response

19

which is found on page 3 of the document, I'll just

20

read the second-to-last sentence.

21

account" -- with Facebook -- "was established on

22

January 7th, 2009."

23
24
25

"Plaintiff's

10:42:10

Is that your best recollection as to when
you signed up for Facebook?
A

Yes.

10:42:21
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Q

I don't need to probe your international

5

travel habits, fortunately, unless you're claiming

6

to represent an international class.

7

have another depo.

8
9
10

12:02:15

Then we'll

So, Mr. Campbell, do you have an
understanding of what your duties and obligations
would be as a class representative in this case?

11

A

Yes.

12

Q

What are they?

13

A

12:02:25

To act in the best interest of the class,

14

observe my fiduciary duty to the rest of the class,

15

work with counsel, again, in the best interest of

16

the class as far as any decisions, any decisions on

17

pleadings or the content of pleadings, et cetera.

18
19
20

Q

And what do you mean by "decisions on

pleadings"?
A

12:02:45

What role in that respect?

Reviewing the complaint before it was

21

filed, reviewing interrogatory responses, providing

22

12:03:07

documents to counsel for purposes of discovery.

23
24
25

Q

Do you know what class you're seeking to

represent in this case?
A

To my understanding, it is the subset of

12:03:31
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2
3

identification and are attached hereto.)

16:48:10

BY MR. CHORBA:
Q

Mr. Campbell, the reporter has handed you

4

two documents.

5

Exhibits 9 and 10.

6

We've marked them in sequence
12:07:56

Exhibit 9 is a document captioned "Class

7

Action Complaint."

It's file-stamped at the top

8

December 30, 2013.

I'll represent to you that's

9

your original complaint against Facebook in this

10

action.

11

12:08:10
Exhibit 10 is filed April 25th, 2014,

12

titled "Consolidated Amended Class Action

13

Complaint."

14
15

Let's start with Exhibit No. 9.

Do you

recognize this document?

12:08:30

16

A

Yes.

17

Q

Is this your original complaint against

18

Facebook in this action?

19

A

Yes.

20

Q

And you reviewed this document before it

21

12:08:35

was filed?

22

A

Yes.

23

Q

Did you -- do you recall whether or not,

24

yes or no, you made any changes to this before it

25

was filed?

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2
3
4

A

That was a decision by one of the

12:17:18

attorneys involved or all of the attorneys involved.
Q

Did you review the initial disclosures

served on behalf of the plaintiffs in this case?

5

A

Yes.

6

Q

Did you review the supplemental initial

7

12:17:30

disclosures?

8

A

Yes.

9

Q

Did you review the responses served on

10

your behalf to Facebook's interrogatories?

11

A

Yes.

12

Q

12:17:39

And did you review a set of corrected

13

responses to Facebook's interrogatories?

14

A

Yes.

15

Q

How about the document requests, responses

16

to the document requests?

17

12:17:49

Did you review those

before they were filed?

18

A

Yes.

19

Q

Did you sign any of these documents?

20

A

I don't recall one way or the other.

21

Q

Do you remember reviewing all these

22

12:18:03

responses for accuracy?

23

A

Yes.

24

Q

Did you make every effort to make sure

25

they were correct?

12:18:12
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A

Partly.

I'm referring to any of the

2

actions that qualify as a breach of my privacy.

3

It's not necessarily limited to just the instances

4

14:32:07

where the "Like" count increased.

5

Q

Okay.

Then I'm confused.

What other

6

breaches of your privacy other than the conduct I

7

thought we were talking about, which is the

8

14:32:19

transmission of a URL through a private message?

9

A

That's distinct from the increased "Like"

10

count.

I understood your previous question to be

11

limiting my harms to only when the "Like" count

12

increased.

13

Q

14

that precise.

15

A

Okay.

16

Q

Let me maybe restart.

17

Fair enough.

14:32:33

I wasn't intending to be

14:32:42

I asked you if you've suffered any harm

18

from your continued use of Facebook.

19

because you understand that conduct had ceased.

20

You said no

By "that conduct" in that response, you're

21

referring to the transmission of the URL through a

22

14:32:54

message?

23
24
25

A

I'm referring to Facebook's interception

of a URL sent in the message, yes.
Q

An interception for the purpose of

14:33:11
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2
3
4
5
6

increasing the "Like" count on that page?
A

14:33:13

No, the interception itself is the breach

of privacy.
Q

And do you believe that Facebook is

continuing to intercept URLs through messages?
A

14:33:24

My understanding is that they are not, at

7

least not in the -- my understanding is that they're

8

not continuing the same behavior, which is why I've

9

continued to use the messaging service.

10

Q

What's the -- when you say "same

11

behavior," I'm just trying to understand.

12

14:33:38

the specific behavior you're talking about?

13

A

What is

The interception -- the access of the

14

content of the messages and the related interception

15

of any URLs that are contained therein.

16
17
18

Q

14:33:53

In a way that increases the "Like" count

of that URL?
A

No.

Again, that's a separate issue

19

whether there's an increase.

I'm saying from the

20

moment when I hit "Send," my understanding is that

21

Facebook is no longer intercepting that URL in any

22

form, regardless of whether Facebook is still going

23

and increasing the "Like" count officially as a

24

result.

25

Q

We discussed earlier how -- and you

14:34:11

14:34:26
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before I hit "Send."

I assume that until I hit

2

"Send," Facebook isn't doing anything with it.

3

BY MR. CHORBA:

4

Q

Not even rendering a URL preview?

5

A

Obviously I don't assume that they don't

14:36:49

6

do that since we've discussed it.

7

14:37:00

I know that they

do that.

8

Q

So they're doing something.

9

A

Again, my understanding was that was just

10

a function of the software.

11

something that the user could choose to include or

12

not include.

13

Q

It was -- and it was

14:37:08

On what basis do you base your testimony

14

that there were no more interceptions of messages

15

containing URLs after October 2012?

16

A

It's my understanding that's what Facebook

18

Q

Where?

19

A

14:37:21

I believe it was discussed in The Wall

17

said.

20

Street Journal article.

If not, it might have been

21

information or assurances I received maybe from

22

somebody else.

23

Journal article.

24

Facebook had already said, "We're not doing that

25

anymore."

14:37:34

I assumed it was in The Wall Street
That was my understanding, is that

14:37:56
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Q

And by "doing that," do you mean just

2

intercepting generally or incrementing the "Like"

3

14:37:57

count through URLs shared over private message?

4

A

Both.

5

Q

Have you done anything to verify whether

6

or not Facebook is continuing to engage in the

7

14:38:13

conduct that you challenge in the complaint?

8

MR. CARNEY:

9

THE WITNESS:

10

Object to form.
No.

I assume that -- no.

BY MR. CHORBA:

11

Q

14:38:37

Mr. Campbell, do you have any information

12

or any basis of any kind that Facebook has targeted

13

an ad to you based on something that you put in a

14

message on Facebook?

15

A

That Facebook itself has targeted an ad to

17

Q

Yes.

18

A

Online ads or --

19

Q

Any type of advertising.

20

A

As I testified earlier, I don't see ads on

16

14:38:51

me?

21

pretty much any website.

22

14:39:01

that.

23

Q

So, no, I haven't seen

You mentioned that some websites, they

24

sometimes sneak through.

In those instances -- I'm

25

trying to figure out if you have any basis for

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the actual messages downloaded.

But if you could

2

just look quickly at those pages, make sure I have

3

the stack correctly.

4

A

Yes.

5

Q

And again, I know that we're carving out

14:42:43

6

the Blue Hog Report page and

7

are these all of the Facebook messages that you've

8

14:42:55

sent, or are these just the ones containing URLs?

9
10
11
12
13
14
15

A

but

They appear to be just the ones containing

URLs.

14:43:13
Q

But again, that wasn't something you

culled from the full list; someone else did that?
A

Correct.

I provided all of them to

counsel.
Q

Is it your claim in this case that

16

Facebook unlawfully scanned or intercepted all of

17

14:43:26

these messages or just some?

18

A

All of them that fall within the time

19

frame up to the date where Facebook stopped scanning

20

and intercepting the messages.

21

Q

So that October 2012 time frame?

22

A

Somewhere in there.

23

Q

14:43:41

And do you know the information that's

24
25

blocked out here or redacted?
MR. CARNEY:

Object to form.

14:43:59
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I, the undersigned, a Certified Shorthand

2

Reporter of the State of California, do hereby

3

certify:

4

That the foregoing proceedings were taken

5

before me at the time and place herein set forth;

6

that any witnesses in the foregoing proceedings,

7

prior to testifying, were administered an oath; that

8

a record of the proceedings was made by me using

9

machine shorthand which was thereafter transcribed

10

under my direction; that the foregoing transcript is

11

a true record of the testimony given.

12

Further, that if the foregoing pertains to

13

the original transcript of a deposition in a Federal

14

Case, before completion of the proceedings, review

15

of the transcript [X] was [ ] was not requested.

16

I further certify I am neither financially

17

interested in the action nor a relative or employee

18

of any attorney or any party to this action.

19
20

IN WITNESS WHEREOF, I have this date
subscribed my name.

21
22

Dated: 05/29/2015

23
24

<%signature%>

25

CARLA SOARES
CSR No. 5908
Page 294
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EXHIBIT 3

CONFIDENTIAL

1
2

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

3

OAKLAND DIVISION

4
5

MATTHEW CAMPBELL, MICHAEL HURLEY, )
and DAVID SHADPOUR,

)

6

)
Plaintiffs,

7

) Case No.
vs.

) C 13-05996 PJH

8

)
FACEBOOK, INC.,

)

9

)
Defendant.

10

)

)

__________________________________)

11
12
13
14
15
16

VIDEOTAPED DEPOSITION OF MICHAEL HURLEY

17

San Francisco, California

18

Thursday, July 9, 2015

19

Volume I

20

*** CONFIDENTIAL ***

21
22

Reported by:
CARLA SOARES

23

CSR No. 5908

24

Job No. 2082438

25

Pages 1 - 193
Page 1
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CONFIDENTIAL
1

if that URL -- if that website had a "Like" button

2

social plug-in, that Facebook was scanning the URL

3

and then increasing the number that appeared next to

4

the "Like" button social plug-in on that website?

5
6

MR. RUDOLPH:

Objection.

Form.

10:10:44

Calls for

10:11:03

Do you have an understanding as to whether

10:11:41

a legal conclusion.

7

THE WITNESS:

8

understanding.

9

Yes, that's my

BY MR. JESSEN:

10
11

Q

or not Facebook has stopped that alleged conduct?

12

A

I don't.

13

Q

Do you understand that when you send a

14

Facebook message, Facebook has certain electronic

15

processes in place in order to process that message?

16

MR. RUDOLPH:

Objection.

17

THE WITNESS:

10:12:05

Could you define "process"?

18
19
20

Form.

BY MR. JESSEN:
Q

Yeah.

Let me go through some examples.

So you understand that when you send a

21

Facebook message, Facebook has electronic processes

22

in place in order to ensure that your message is

23

10:12:34

delivered to the intended recipient?

24
25

MR. RUDOLPH:

Objection.

Form.

Vague as

to "electronic processes."

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1

A

Yes.

2

Q

That's what you're saying?

3

A

The number went up.

4

Q

Understood.

5
6

10:36:55

There are two other plaintiffs in this

10:37:01

case, Matthew Campbell and Mr. David Shadpour.

7

Do you know either of those gentlemen?

8

A

No.

9

Q

You've never met them?

10

A

No.

11

Q

Have you ever communicated with either of

13

A

No.

14

Q

And again, and forgive me if I asked this

12

10:37:12

them?

15

earlier, but besides your attorneys, have you

16

discussed this lawsuit with anyone else?

17

A

No.

18

Q

10:37:23

Do you have an understanding of what your

19

duties and obligations would be as a class

20

representative in this case?

21

A

Yes.

22

Q

What's your understanding?

23

A

10:37:47

My understanding is that I need to

24

represent the class members as best I can, keep up

25

to date and involved in the actual case, complaint,

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1

and pursue it vigorously.

2
3

Q

10:38:07

What is the class that you're seeking to

represent in this case?

4

A

All U.S. citizens with Facebook accounts

5

that sent messages -- sent or received private

6

messages with a URL in the time period listed on the

7

complaint.

8
9

Q

10:38:22

I think you've testified earlier, but your

understanding of the time period is starting two

10

years before the suit was filed and going up to the

11

time that the conduct you're complaining about

12

stopped?

13

A

Correct.

14

Q

10:38:43

That is my understanding.

So in your view, a Facebook user who sent

15

or received a Facebook message with a URL in it

16

would be a member of the class that you're proposing

17

to represent?

18

A

Yes.

19

Q

What about someone who sent or received a

20

Facebook message that did not contain a URL?

21

they within the scope of your proposed class?

22
23

MR. RUDOLPH:

10:39:19

Calls for a

legal conclusion.

24
25

Objection.

Are

10:39:08

THE WITNESS:

Not as I understand the

class.

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2

Q

And then did you have a -- was Mr. Slade

10:43:59

on that -- strike that.

3

Was that a telephone conversation?

4

A

Yes, that was a telephone conversation.

5

Q

And was that just a telephone conversation

6

10:44:10

between you and Ms. Gardner?

7

A

Yes.

8

Q

And then subsequent to that, you had a

9

phone conversation with Ms. Gardner and Mr. Slade?

10

A

Yes.

10:44:20

11

Q

Were there other conversations you had

12

with Ms. Gardner or Mr. Slade or any of the other

13

attorneys before filing suit?

14

A

Not that I recall.

15

Q

And other than what we've already been

16

discussing, you don't recall any other telephone

17

10:44:34

conversations with counsel since you filed suit?

18

A

Not other than Melissa Gardner, no.

19

Q

How often do you communicate with your

20

attorneys about the case regarding -- strike that.

21
22

10:44:53

How often do you and your attorneys
contact each other by email about the case?

23

A

I don't know the exact dates or times, but

24

fairly often, usually for document delivery and

25

such.

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1

Q

What do you mean by "document delivery"?

2

A

Like copies for review of the complaints

3

10:45:16

and proceedings basically.

4

Q

Before the lawsuit was filed on

5

December 30th, 2013, did you have any written

6

communications with Ms. Gardner regarding the case?

7

A

Do you mean other than the complaint or --

8

Q

Sure.

10:45:30

9

We can exclude -- I understand you

reviewed the complaint --

10

A

Yeah.

11

Q

-- prior to its filing on December 30th,

12

2013.

10:45:59

Was that emailed to you?

13

A

Yes.

14

Q

Other than that, communications relating

15

to the complaint, are there other written

16

communications with Ms. Gardner or any of the

17

attorneys who now represent you about the lawsuit?

18

A

From before the lawsuit?

19

Q

Correct.

20

A

Not that I can recall.

21

Q

10:46:10

How many emails were exchanged between you

22

and Ms. Gardner before the lawsuit was filed

23

10:46:21

regarding the complaint itself?

24

A

I can't recall the exact number.

25

Q

Did she email you a copy of the complaint?

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1

A

Yes.

2

Q

And then you reviewed it?

3

A

Correct.

4

Q

And did you respond to that email in some

5

10:46:45

way?

10:46:53

6

MR. RUDOLPH:

I'm going to caution the

7

witness not to reveal the contents of any

8

attorney-client communications.

9

that question yes or no.

10

THE WITNESS:

But you can answer

I don't believe that I

11

responded.

12

10:47:08

the phone the next -- on a Sunday.

13
14

I think I probably talked to her over

THE VIDEO OPERATOR:

could please refrain from rolling the --

15

THE WITNESS:

16

THE VIDEO OPERATOR:

17

Sorry.

THE WITNESS:

19

THE VIDEO OPERATOR:

It just makes noise

Okay.

Sure.
Thank you.

BY MR. JESSEN:

21
22

10:47:20

on the record.

18

20

Mr. Hurley, if you

Q

10:47:26

How soon did you receive a copy of the

complaint via email before it was actually filed?

23

A

I don't remember the exact -- the exact

24

date.

I mean, it was at least a few days before,

25

I'm sure.

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1

A

Yes.

2

Q

Were you involved in the drafting of

3

I remember I -- yes.

11:06:09

either of these initial disclosures?

4

A

How do you mean, "drafting"?

5

Q

Well, did you participate in preparing

6
7
8
9
10

11:06:30

these in some way?
A

Yes.

I handed over my documents.

I gave

what was asked.
Q

Did you -- do you know, did you review

these initial disclosures at any time?

11

A

Yeah, I -- I reviewed them.

12

Q

Prior to the dates that they were served?

13

A

Yes.

14

Q

Did you review them for accuracy?

15

A

Yes.

16

Q

11:06:54

Did you make every effort to ensure that

17

11:08:49

these initials disclosures were correct?

18

A

Yes.

19

Q

Let's take a look at Exhibit 6, which is a

20

document titled "Plaintiff Michael Hurley's

21

Objections and Responses to Defendant Facebook,

22

Inc.'s First Set of Interrogatories."

23

11:09:03

Do you recognize this document?

24

A

Yes.

25

Q

What do you understand this to be?

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1

A

Basically the -- I understand this to be

2

the objections and responses to the first

3

interrogatories that Facebook basically asked of

4

11:09:29

my -- me through my counsel.

5
6

Q

I'm going to ask you the same series of

11:09:41

questions I asked for the initial disclosures.

7

A

Okay.

8

Q

Sorry.

9

repetitive, but that's just the nature of it.

10
11

Parts of this deposition may seem

Did you participate in drafting these

11:09:53

responses to Facebook's interrogatories?

12

A

Yes.

13

Q

What role did you play?

14

A

I answered the interrogatories basically.

15
16
17

It was done over the phone, if I remember correctly.
Q

11:10:08

You provided information to your counsel

in order to answer the interrogatories?

18

A

Correct.

19

Q

Did you review these responses before they

20

were served on Facebook?

11:10:18

21

A

Yes.

22

Q

Did you review them for accuracy?

23

A

Yes.

24

Q

And did you make every effort to ensure

25

that the responses were correct?

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1

A

Yes.

2

Q

Let's take a look at Exhibit 7.

3

11:10:31

For the record, this is a document titled

4

"Plaintiff Michael Hurley's First Supplemental

5

Objections and Responses to Defendant Facebook,

6

Inc.'s First Set of Interrogatories, Nos. 3, 6 and

7

7."

8

11:10:50

Do you recognize this document?

9

A

Yes.

10

Q

What's your understanding of what it is?

11

A

These are -- well, my understanding is

12

that these are additional answers or basically

13

continuing answers that build upon the original that

14

was sent in on the interrogatories for 3, 6 -- or

15

No. 3, 6 and 7.

11:11:02

16

Q

11:11:33

Did you also provide your counsel with

17

information, as you did on the initial responses, in

18

order to answer these interrogatories?

19

A

Yes.

20

Q

Did you review the responses before they

21

11:11:45

were served on Facebook?

22

A

Yes.

23

Q

Did you review them for accuracy?

24

A

Yes.

25

Q

Did you make every effort to ensure the

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1

responses were correct?

11:11:55

2

A

Yes.

3

Q

Are you aware of any person who has

4

knowledge of facts that you believe support your

5

claims against Facebook in this action?

11:12:14

6

MR. RUDOLPH:

Objection.

7

THE WITNESS:

Do you mean outside of the

8

complaint or --

9

Vague.

BY MR. JESSEN:

10

Q

Yeah.

What I mean is a human being.

Are

11

you aware -- I'm trying to understand if you're

12

aware of the identity of a person who has

13

information that would support your claims in this

14

11:12:56

lawsuit.

15

MR. RUDOLPH:

Objection.

16

THE WITNESS:

Sorry.

17

22

I'm still trying to

Do you mean just in general or -BY MR. JESSEN:

20
21

11:13:20

understand.

18
19

Vague.

Q

Yeah.

So let me break it down a little

11:13:55

bit.
I'm entitled to know what information you

23

have to support the claims you're making in this

24

case against Facebook.

25

understand, right now, are you aware of witnesses

And I'm just trying to
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1

The document marked as Hurley Exhibit 8 is

2

Facebook's first set of requests for production of

3

documents to Plaintiff Michael Hurley.

4

11:19:00

And Hurley Exhibit 9 is Plaintiff Michael

5

Hurley's objections and responses to Defendant

6

Facebook, Inc.'s first set of requests for

7

production.

8
9

11:19:28

I first want to turn your attention to
Exhibit 8.

Have you ever seen this document before?

10

A

Yes.

11:20:01

11

Q

What's your understanding of what it is?

12

A

These are Facebook's requests for, well,

13

documents or information relating to the case from

14

me.

15

Q

To you?

11:20:15

16

A

Yes.

17

Q

Did you review these requests?

18

A

Yes.

19

Q

And did you assist your attorneys in

To me.

20

locating documents that were responsive to these

21

requests?

22

A

Yes.

23

Q

11:20:27

Have you conducted a thorough search for

24
25

all relevant documents?
A

Yes.

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1
2

Q

Are you confident that you've provided all

11:20:44

responsive documents?

3

A

Yes.

4

Q

What exactly did you do to search for

5
6

responsive documents?
A

11:20:54

I used a tool to basically copy my entire

7

Facebook account, or messages as well, and then I

8

used that to find all messages with URLs and passed

9

that along to my counsel.

10

Q

Anything else?

11

A

Not that I can think of.

12
13

11:21:29
I provided

whatever was asked.
Q

Do you think you would have any paper

14

documents that would be relevant to your claims in

15

this case?

11:22:05

16

A

Not that I can think of.

17

Q

What about electronic documents other than

18

what you mentioned?

Would you have any electronic

19

documents other than, again, what you mentioned that

20

would be relevant?

11:22:22

21

A

Not that I can think of.

22

Q

What about any relevant emails?

23

A

Not that I can think of, no.

24

Q

Can you think of any other area that --

25

where you might have documents that are relevant to

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1

minimize.

2

14:34:14
You claim you've been harmed.

Have you

3

taken any steps to try to prevent -- minimize that

4

harm?

5
6

A

I basically stopped using messaging,

14:34:26

Facebook messaging, outgoing, at least.

7

Q

I'm sorry?

8

A

I stopped sending messages.

9

couple.

10

Q

When did you stop sending them?

11

A

Oh, gosh.

12
13

I received a

14:34:37

To the best of my knowledge,

after I joined the complaint.
Q

What specific relief are you seeking from

14

Facebook in this case?

15

MR. RUDOLPH:

16

Objection.

Calls for a

14:35:12

legal conclusion.

17

THE WITNESS:

18

a little bit with this.

19

I'll just refresh my memory

BY MR. JESSEN:

20

Q

I gather you're looking at Exhibit 7.

21

A

Yes, Exhibit 7.

22

Q

Okay.

23

A

So as per my I guess supplemental response

24

to Interrogatory No. 7, I'm seeking -- I'm seeking

25

relief in the form of the statutory damages listed

14:35:33

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1

I, the undersigned, a Certified Shorthand

2

Reporter of the State of California, do hereby

3

certify:

4

That the foregoing proceedings were taken

5

before me at the time and place herein set forth;

6

that any witnesses in the foregoing proceedings,

7

prior to testifying, were administered an oath; that

8

a record of the proceedings was made by me using

9

machine shorthand which was thereafter transcribed

10

under my direction; that the foregoing transcript is

11

a true record of the testimony given.

12

Further, that if the foregoing pertains to

13

the original transcript of a deposition in a Federal

14

Case, before completion of the proceedings, review

15

of the transcript [x] was [ ] was not requested

16

I further certify I am neither financially

17

interested in the action nor a relative or employee

18

of any attorney or any party to this action.

19
20

IN WITNESS WHEREOF, I have this date
subscribed my name.

21
22

Dated: July 16, 2015

23
24

<%signature%>

25

CARLA SOARES
CSR No. 5908
Page 193
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2/8/2016

Matt Campbell of the Blue Hog Report Keeps on Digging | Arkansas Business News | ArkansasBusiness.com

Matt Campbell of the Blue Hog Report Keeps
on Digging
by Jan Cottingham
Posted 6/8/2015 12:00 am
Updated 8 months ago

Matt Campbell, viewing Arkansas politics with the eyes of a liberal outsider trained
in the law, has brought down three major public officials in the last two years
because, he says, he doesn’t like bullies and he thinks people should play by the
rules.
People who know the founder of the Blue Hog Report blog — and there aren’t that
many because, after all, he ain’t from around here — say the same thing.
“Matt cares about people,” says former state Rep. David Kizzia, a lawyer in private
practice in Malvern. “Matt doesn’t like bullies. I don’t think that Matt has any
positive regard for people who utilize their position or their resources to
disadvantage others or to get over on folks. I think those sorts of things offend Matt’s
sensibilities.
“Matt usually has a good read of people,” said Kizzia, who met Campbell when both
worked for the Pulaski County Public Defender’s Office. “And Matt’s usually pretty
intuitive on picking up on hypocrisy. I think if someone lives in a brick house and is
heaving bricks all over the place, Matt is more than happy to return the favor.”
Little Rock lawyer and activist David Couch calls Campbell, 36, “a pot stirrer.”
Campbell, like Couch, thinks government should be transparent and politicians
should be accountable to the people.
“You have to keep people on their toes and keep them accountable and take a
position that’s not necessarily politically popular but probably is popular with the
people,” Couch says.
There’s little doubt that five years after founding the Blue Hog Report blog,
Campbell, who grew up in southwest Missouri, is keeping prominent people in
http://www.arkansasbusiness.com/print/article/105363

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2/8/2016

Matt Campbell of the Blue Hog Report Keeps on Digging | Arkansas Business News | ArkansasBusiness.com

Arkansas on their toes — at least those prominent people who want to hold onto
their government jobs.
His takedowns include a lieutenant governor (Mark Darr), a circuit judge (Mike
Maggio) and, just six weeks ago, the head of Arkansas’ largest school district (Dexter
Suggs). (See Matt Campbell’s Greatest Hits: A Timeline of the Blue Hog Report.)
And he’s done this all for free, or almost free. Someone who didn’t know better
bought an ad on the blog back in 2010 and a former Arkansan sent Campbell a check
along with the exhortation to “keep up the good work.” It was not, apparently, a very
large check.
Campbell is a solo practitioner, the founder, two years ago, of Pinnacle Law Firm of
Little Rock. His practice focuses on what he calls a “weird mix” of things — some oil
and gas cases, a whistleblower case involving the Fort Smith Police Department.
“Anytime somebody feels they’ve been wronged by anything more powerful than
them — I get a lot of those calls,” he said in a recent interview.
But what Campbell does with the Blue Hog Report is investigative journalism,
finding a loose thread and pulling, pulling, pulling until the target’s misdeeds are
finally unraveled.
It wasn’t what he set out to do, Campbell says. “My dad always said that he thought I
would be a lawyer. I think my mom kind of suspected I might go to med school. I
didn’t know what I wanted to be when I grew up until I kind of fell backward into
what I’m doing now.”
What He Did for Love
Like so many other outsiders, Campbell moved to Arkansas for love. A summer job
at the Little Rock law firm of Gill Elrod Ragon Owen & Sherman (now Gill Ragon
Owen PA) brought him to Little Rock in 2005.
“The adorable receptionist who I’d met during my interview in December was at the
front desk, smiling as I walked in,” Campbell said on his Facebook page last month.
http://www.arkansasbusiness.com/print/article/105363

2/6

2/8/2016

Matt Campbell of the Blue Hog Report Keeps on Digging | Arkansas Business News | ArkansasBusiness.com

“Little did I know that I would wind up with a far longer relationship with Leabeth
Campbell than I did with the firm. In the end, though, I’d say that was the most
successful summer job I ever had.”
Now his wife, Leabeth Campbell is the daughter of Diane Suitt Gilleland, whom old­
timers will remember as the director of the Arkansas Department of Higher
Education from 1990 to 1997, approved for the post by then­Gov. Bill Clinton and
replaced by Lu Hardin.
Leabeth didn’t want to leave Arkansas, so Campbell started looking for work in Little
Rock after obtaining his law degree from Washington University School of Law in St.
Louis in 2006.
“It took three or four months to find a job after I got here,” Campbell says. “I couldn’t
get interviews with firms because it was always sort of ‘Why you coming in from out
of state?’”
But he hit it off with Bill Simpson, Pulaski County’s chief public defender, and got a
job as an investigator at the Public Defender’s Office, where he worked for three
years. He moved on to the Arkansas Supreme Court in 2009, serving as an assistant
criminal justice coordinator.
In 2010, Campbell and Jeff Woodmansee co­founded the Blue Hog Report, a blog
devoted to politics.
“2010 was when Vic Snyder retired, and there were five candidates running on the
Democrats’ side for his seat” in Congress, Campbell says. “I didn’t really have the
free time and the flexibility to help any specific campaign, so it was almost just sort
of a news aggregator for me at first.
“It’s funny to go back and look at how superficial a lot of the first posts were because
they were sort of that old­style of blogging, ‘Here’s a news link. Here’s a quote from
it. What do you think?’”
Campbell wears the term “liberal” proudly. However, “I do sort of push back at the
[phrase] ‘Democrat blogger.’ And that label is probably my own fault for calling the
http://www.arkansasbusiness.com/print/article/105363

3/6

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Matt Campbell of the Blue Hog Report Keeps on Digging | Arkansas Business News | ArkansasBusiness.com

blog Blue Hog Report. People ignore the stories you do that actually call Democrats
out.”
“I look into Democrats,” he adds later. “The thing is, on a level like on these
statewide office levels, where anybody would care, I didn’t find anything. And now
there are no statewide Democrats.”
(The Blue Hog Report was inactive during the two years leading up to Democratic
State Treasurer Martha Shoffner’s arrest for bribery and extortion.)
Asked to codify his politics in 50 words, Campbell shared the following by email:
“I believe in Progressivism as originally conceived: that improvements in education,
science and technology lead to a betterment of society, and that government’s chief
role should be to support these advancements. I believe in transparency, New
Keynesian economics, and that skepticism is a healthy default position in all things
political.”
In the spring of 2011, the Blue Hog Report, making free use of the state Freedom of
Information Act, targeted legislative expenditure reimbursements and Secretary of
State Mark Martin’s use of a state vehicle.
The Arkansas Republican Party pushed back, filing FOI requests for the
employment, phone and email records of Campbell, then working at the state
Supreme Court, and Jeff Woodmansee, then an employee at the University of
Arkansas at Little Rock Bowen School of Law Library.
Campbell says the GOP tried to get him fired. Doyle Webb, party chairman, has a
different take:
“The Republican Party of Arkansas issued FOIAs to the Judicial Department of
Arkansas to determine if Mr. Campbell was conducting partisan political activity
during normal work hours while an employee of the state of Arkansas,” Webb said in
an email. “We do not know the basis for his leaving or whether or not he was
terminated from the Judicial Department for illegal political activity, but his political
activity did cease and he gained employment elsewhere.”
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Matt Campbell of the Blue Hog Report Keeps on Digging | Arkansas Business News | ArkansasBusiness.com

Campbell, who denies operating the blog while on the state’s dime, shut down the
Blue Hog Report in May 2011 and maintained a low profile until opening Pinnacle
Law Firm in 2013. Now his own boss, Campbell revived the blog in May 2013.
“It was no big deal to me to keep it shut down while I was [at the Supreme Court]
other than, I guess, some irritation that I knew people felt like they had won,” he
says. “But the irony is they acted like it was never going to come back. So then they
had two years of rope to hang themselves, and that’s exactly what Mark Darr did.”
Dark Secrets
With the Blue Hog Report 2.0, Campbell posts less often but seeks to make every
post count. He bases his reports on meticulous research, which he enjoys. “I hate the
unanswered questions, and I’ll keep digging until I find the answer, just for myself.”
Sometimes someone he knows will pose a question, or he’ll just be curious about
something. And sometimes, it’s something else entirely.
“I guess it goes back to how small Arkansas is. Everybody seems to know something
about someone,” Campbell says. “It seems like everybody has a dark secret with sort
of varying levels of how dark, at least one about somebody. And it seems like
eventually the person they have a secret about will do something to make them mad
and then somebody feels the need to get that story out there.”
And when they do, they turn to Campbell.
Max Brantley of the Arkansas Blog admires Campbell’s work. “It’s pretty rare in the
business of providing information where you can have measurable impact, and
there’s no doubt he has.”
And there’s this, Brantley says: People in public service who might be inclined to
corruption “know that there’s somebody out there digging through the minutia and
matching up records with other events and doing this kind of work. It’s a valuable
thing.”
Political columnist John Brummett says Campbell and the Blue Hog Report have had
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Matt Campbell of the Blue Hog Report Keeps on Digging | Arkansas Business News | ArkansasBusiness.com

a tremendous impact on Arkansas.
“I think there are people in state government taking special pains to behave because
of the Blue Hog. And it may be more than state government since he’s delved into
Little Rock school issues,” Brummett says. “I think people know that this guy is liable
to turn his attention to them, and if he picks them, they’re in trouble if they’ve done
anything wrong.”
Arkansas Business

http://www.arkansasbusiness.com/print/article/105363

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EXHIBIT 5

2/8/2016

Matt Campbell's Greatest Hits: A Timeline of the Blue Hog Report | Arkansas Business News | ArkansasBusiness.com

Matt Campbell's Greatest Hits: A Timeline of
the Blue Hog Report
by Jan Cottingham
Posted 6/8/2015 12:00 am

Matt Campbell has broken a number of important stories that have led to
resignations of public figures: Lt. Gov. Mark Darr, Circuit Judge Michael Maggio and
interim Little Rock School Superintendent Dexter Suggs. (see Matt Campbell of the
Blue Hog Report Keeps on Digging.)
But reporting done by other news outlets, particularly the Arkansas Democrat­
Gazette and the Arkansas Blog, has magnified the Blue Hog Report’s impact. One of
the best examples of this synergy are reports on legislators’ expense reimbursements.
• March 31, 2010 — The Blue Hog Report goes live.
• June 3, 2010 — The Arkansas Democrat­Gazette notes Blue Hog for the first
time, in an article about the attribution of a quote in a campaign ad in the 1st
Congressional District race.
• Sept. 29, 2010 — Campbell turns his attention to then­state Rep. Mark Martin
and his requests for expense reimbursements, alleging that Martin was using his
home office, for which he was reimbursed by the state, in his campaign for secretary
of state, a position he’d go on to win. A Martin spokesman said the reimbursements
were for renting space to himself from a separate office. It’s one of many posts
Campbell will make over the years about Martin. Max Brantley’s Arkansas Blog cites
Campbell’s report in one of its first mentions of the Blue Hog Report.
• March 16, 2011 — Campbell reports the monthly billings to the state of 30
Arkansas House Republicans, ranging from $1,200 to $2,350, for the legislators to —
essentially — rent their home offices to themselves, though they’re labeled
“reimbursements.”
• March 18, 2011 — In a post headlined “Sunlight Is the Best Disinfectant: A Look
at Reimbursements,” Campbell notes that “salary padding under the guise of
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Matt Campbell's Greatest Hits: A Timeline of the Blue Hog Report | Arkansas Business News | ArkansasBusiness.com

‘reimbursements’ is about the only thing that has bi­partisan support, year in and
year out; according to records requested by Blue Hog Report, only five legislators —
four Democrats and one Republican — are not receiving statutory reimbursements
this year.” And he lays out a case for why the reimbursements circumvented the
intent of Amendment 70 to the state Constitution, approved by voters in 1992 and
which sought to prevent expense abuse after the scandal involving state Attorney
General Steve Clark in 1990.
• May 12, 2011 — Campbell reports that Martin’s office keeps no mileage and fuel
logs on the office’s vehicles. He learned this after filing an Arkansas Freedom of
Information Act request in an effort to determine whether the office had bought a
vehicle for Martin or his chief of staff, Doug Matayo, to use to travel between their
homes in northwest Arkansas and the Capitol in Little Rock.
• May 19, 2011 — The Democrat­Gazette confirms the lack of record­keeping at the
Secretary of State’s Office, citing the Blue Hog Report.
• May 26, 2011 — The Arkansas Blog reports that the Arkansas Republican Party
filed FOI requests for the employment, phone and email records of Campbell, then
working at the state Office of the Criminal Justice Coordinator, and Jeff
Woodmansee, co­founder of the Blue Hog Report and an employee at the University
of Arkansas at Little Rock Bowen School of Law Library.
• May 27, 2011 —”An Arkansas political party is using the state Freedom of
Information Act to delve into bloggers’ actions as state employees,” the Democrat­
Gazette reports. “The enormous volume of opposition research being conducted by
Mr. Campbell, along with the timing of certain blog and social­media posts,
prompted the party to verify whether this partisan political behavior is occurring on
the state dime,” state Republican Party spokesman Katherine Vasilos says. The paper
says Campbell has decided to stop blogging.
• May 28, 2011 — The D­G reports that the only email given to the state GOP
doesn’t indicate that Campbell or Woodmansee posted to the Blue Hog Report on
state time.
http://www.arkansasbusiness.com/print/article/105367

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Matt Campbell's Greatest Hits: A Timeline of the Blue Hog Report | Arkansas Business News | ArkansasBusiness.com

• May 2011­May 2013 — The Blue Hog Report goes dark.
• Sept. 26, 2011 — The Arkansas Public Law Center files suit challenging
legislators’ expense reimbursements as an illegal exaction.
• April 3, 2012 — A judge approves a settlement of the center’s suit that curtailed
lawmakers’ reimbursements and required legislators to more thoroughly document
expense reimbursement requests.
• May 6, 2013 — He’s baaaack! Campbell cites Facebook posts by Secretary of State
Mark Martin from Prairie Grove, his home, as evidence that Martin was often absent
from the Secretary of State’s Office in Little Rock.
• May 30, 2013 — Campbell criticizes Martin for spending more than $100,000 of
state money on outside legal counsel, saying he’s the first secretary of state to hire
outside lawyers.
• Aug. 20, 2013 — Campbell outlines problems with the campaign finance reports
of Lt. Gov. Mark Darr, then running for the Republican nomination for the 4th
Congressional District, highlighting meals and gasoline purchases classified as
“fundraisers.” It’s the first of several posts about Darr’s use of campaign money for
personal use.
• Aug. 23, 2013 — Darr acknowledges “some errors” on the reports and files a
complaint against himself with the Arkansas Ethics Commission. Campbell also files
a complaint against Darr with the Ethics Commission.
• Aug. 29, 2013 — Darr leaves the race for the GOP nomination for the 4th
Congressional District.
• Sept. 6, 2013 — The Ethics Commission opens an investigation into Darr.
• Dec. 19, 2013 — The commission fines Darr $11,000 for, among other things,
making personal use of almost $32,000 in campaign funds, and making personal use
of $3,500 in expenses charged to a state credit card.

http://www.arkansasbusiness.com/print/article/105367

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Matt Campbell's Greatest Hits: A Timeline of the Blue Hog Report | Arkansas Business News | ArkansasBusiness.com

• Dec. 31, 2013 — Gov. Mike Beebe and other high­ranking Arkansas officials,
including all five GOP members of the state’s congressional delegation, call on Darr
to resign. A few days later talk of impeachment circulates among members of the
Legislature.
• Jan. 10, 2014 — Darr says he’ll resign effective Feb. 1.
• March 3, 2014 — Campbell reports that Circuit Court Judge Mike Maggio of
Conway, posting under the moniker of geauxjudge, commented about a confidential
adoption proceeding involving actress Charlize Theron on a Louisiana State
University chat board, a violation of judicial ethics. Maggio, a candidate for the
Arkansas Court of Appeals, also posted a number of vulgar, racist, sexist and
homophobic comments.
• March 3, 2014 —The state Judicial Discipline & Disability Commission
announces that Maggio is under investigation.
• March 5, 2014 — Maggio, having acknowledged making the posts, withdraws
from the Court of Appeals race.
• March 11, 2014 — The Blue Hog Report notes that Maggio heard an appeal to
reduce a $5.2 million award in a lawsuit involving a nursing home death on July 8,
2013, the same day seven political action committees received donations from the
nursing home’s owner, Michael Morton. Maggio reduced the award to $1 million,
and those PACs later made donations to his Appeals Court campaign.
• March 17, 2014 — The JDDC opens a second investigation into Maggio.
• March 24, 2014 — The Arkansas Supreme Court relieves Maggio of all his cases.
• May 24, 2014 — The Democrat­Gazette reports that the FBI is investigating
Maggio and the PAC donations.
• Aug. 6, 2014 — The state Judicial Discipline & Disability Commission announces
that it and Maggio have agreed to sanctions that bar him from ever serving as a judge
again in Arkansas.
http://www.arkansasbusiness.com/print/article/105367

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Matt Campbell's Greatest Hits: A Timeline of the Blue Hog Report | Arkansas Business News | ArkansasBusiness.com

• Sept. 11, 2014 — The state Supreme Court orders Maggio removed from his
judicial office immediately.
• Jan. 9 — Maggio waives his right to be indicted by a grand jury and pleads guilty
in U.S. District Court to a felony bribery charge related to Morton’s PAC
contributions. (Morton has not been charged with any crime.)
• April 15 — Under a headline reading “About That Doctorate: Dexter Suggs,
Plagiarist,” Campbell presents the dissertation of interim Little Rock School
Superintendent Dexter Suggs side by side with the earlier dissertation of one
Georganne Scott. Large portions of Suggs’ dissertation repeat word for word Scott’s
dissertation.
• April 22 — Suggs resigns but receives a payout of nearly $250,000.
Arkansas Business

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EXHIBIT 6
FILED UNDER SEAL

EXHIBIT 7
FILED UNDER SEAL

EXHIBIT 8
FILED UNDER SEAL

EXHIBIT 9

1
2
3
4
5
6
7

Michael W. Sobol (State Bar No. 194857)
[e-mail]
David T. Rudolph (State Bar No. 233457)
[e-mail]
Melissa Gardner (State Bar No. 289096)
[e-mail]
LIEFF CABRASER HEIMANN & BERNSTEIN, LLP
275 Battery Street, 29th Floor
San Francisco, CA 94111-3339
Telephone: [phone]
Facsimile: 415.956.1008

12

Hank Bates (State Bar No. 167688)
[e-mail]
Allen Carney
[e-mail]
David Slade
[e-mail]
CARNEY BATES & PULLIAM, PLLC
11311 Arcade Drive
Little Rock, AR 72212
Telephone: [phone]
Facsimile: 501.312.8505

13

Attorneys for Plaintiffs and the Proposed Class

8
9
10
11

14
15

UNITED STATES DISTRICT COURT

16

NORTHERN DISTRICT OF CALIFORNIA

17
18
19

MATTHEW CAMPBELL and MICHAEL
HURLEY, on behalf of themselves and all
others similarly situated,
Plaintiffs,

20

Case No. C 13-05996 PJH (MEJ)
UPDATED REPORT OF FERNANDO
TORRES IN SUPPORT OF PLAINTIFFS’
MOTION FOR CLASS CERTIFICATION

21

v.

Judge: Honorable Phyllis J. Hamilton

22

FACEBOOK, INC.,

HEARING
Date: March 16, 2016
Time: 9:00 a.m.
Place: Courtroom 3, 3rd Floor
|
The Honorable Phyllis J. Hamilton

23
24

Defendant.

25
26
27
28
UPDATED REPORT OF FERNANDO TORRES ISO
PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION;
C 13-05996 PJH (MEJ)

1
2

I.

Experience and Qualifications
1.

I am a professional economist and have over 30 years’ experience in applied and

3

theoretical economics. In the course of this experience, I have been a consultant, a university

4

professor, and a business manager. Both my undergraduate and post-graduate degrees are in

5

economics, the latter with a concentration in econometrics. Econometrics is the application of

6

mathematics, statistical methods, and computer science to economic data. Since 2004, I have

7

specialized in the analysis and valuation of intellectual property and intangible assets. Currently I

8

am a member and Chief Economist of IPmetrics LLC, an intellectual property consulting firm.

9

2.

During the past ten years, I have undertaken a plurality of valuation engagements

10

where I have appraised the value of a variety of intangible assets in several contexts, such as for

11

licensing and transaction rate setting, for loan collateral analysis, and generally to assist in the

12

decision making process regarding the economic role of intangible assets, including intellectual

13

property. I also regularly give presentations and write about valuation techniques as applicable to

14

intangibles, and have co-designed and taught the course “Valuing Intangible Assets for

15

Litigation” for the National Association of Valuation Analysts.

16

3.

Additionally, I have served as a consultant on numerous cases involving

17

intellectual property infringement contract issues and contractual disputes. I have prepared over

18

50 expert reports and have trial, arbitration, and deposition experience as an expert witness on

19

behalf of both plaintiffs and defendants. I have experience in complex commercial litigation

20

cases nationally. I currently consult with and have consulted with clients in California, New

21

York, Texas, Colorado, and Florida.

22

4.

In the course of my career, I have observed the evolution of online social networks

23

and advertising, both as a business owner and as an economist. In the vast majority of intellectual

24

property infringement cases I have worked on, online advertising and the leverage of information

25

to support such activity play a central role. I have long studied and analyzed how online

26

advertising works as well as the nature of the markets that evolve out of, and are supported by,

27

the internet. Understanding these markets has been enabled not only by my education in

28

economics, but also been informed by my knowledge of programming acquired first in college as
UPDATED REPORT OF FERNANDO TORRES ISO
PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION;
C 13-05996 PJH (MEJ)

1

a tool for the analysis of economic phenomena, and later in my professional life having developed

2

a financial statement analysis and forecasting software system,1 and an inventory and billing

3

management system for an acute care hospital.2

4

5.

In recent years, I have been called upon to testify in cases where the intersection of

5

social media and advertising has been alleged to have breached rights and principles of privacy,

6

publicity, trademarks, and patents. In some cases, the issues I have reported on for the courts

7

were the benefits derived by the social media/advertising platform infringing the rights of

8

publicity of a class of users,3 while in others the issue has been the economic value of social

9

media marketing in sustaining the viability of traditional media properties.4 Moreover, many

10

trademark infringement and trade secret cases also tend to involve the analysis and assessment of

11

online advertising activity.5

12

6.

I am being compensated for my work in this case at the rate of $375 per hour.

13

Attached hereto as Exhibit A is a copy of my most current curriculum vitae setting forth in detail

14

my qualifications and experience.

15

II.

16

Introduction, Assignment, and Summary of Conclusions
7.

The Plaintiffs’ Consolidated Amended Class Action Complaint (the “CAC”)6

17

alleges that Facebook utilizes information surreptitiously gathered from purportedly “private”

18

correspondence sent between Facebook users, and uses that information in a number of ways,

19

including:

20
21
22
23
24
25
26
27
28

1

The software system was distributed to the nearly 500 nationalized industrial companies in
Mexico to coordinate budgeting and for which I received a Diploma for Public Service from the
Federal Government of Mexico in 1988.
2
Developed for a private hospital in 1991 in Ensenada, Baja California, Mexico.
3
In: Fraley et al. v. Facebook, Inc., case 11-1726 before the USDC for the Northern District of
California.
4
In: S. Mattocks v. Black Entertainment Television, LLC, case 13-61582 before the USDC for the
Southern District of Florida.
5
In, e.g., Gen. C.E. Yeager v. Aviat Aircraft Inc. and S. Horne, case 10-CV-2055 before the
USDC for the Eastern District of California; Laserfiche v. SAP A.G., case 10-7843 (USDC for the
Central District of California); and Estate of Michael Jackson, et al., v. Howard Mann, et al., case
11-cv-584 (USDC for the Central District of California).
6
Consolidated Amended Class Action Complaint, filed April 25, 2014.
-2-

UPDATED REPORT OF FERNANDO TORRES ISO
PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION;
C 13-05996 PJH (MEJ)

1

a. to increment the “Like” counts of third party websites that
installed Facebook’s “Like” button social plug-in until, on
information and belief, at least October 2012;7

2
3

b. to catalogue information about specific URLs that were shared
and use that information for targeted advertising or other
purposes;8 and

4
5

c. to catalogue information about Facebook users who shared such
URLs and use that information for targeted advertising or other
purposes.9

6
8.

7

According to the CAC, the putative Class Period began on December 30, 2011.10

8
11

9
9.

10
11

Class:

12

All natural-person Facebook users located within the United States
who have sent, or received from a Facebook user, private messages
that included URLs in their content
, from within two years before the
filing of this action up through the date of class certification.

13
14
10.

15
16

I further understand that the Plaintiffs are seeking certification of the following

In this context, I have been asked to analyze the following questions with regard to

the Class defined above:

17

a. Is there proof common to the proposed Class capable of
showing that—and how much—Facebook profited or otherwise
benefited from the Electronic Communications Privacy Act
(“ECPA”) and the California Invasion of Privacy Act (“CIPA”)
violations alleged in the CAC?

18
19
20

b. Is there a reliable Class-wide or formulaic method capable of
quantifying the amount of such profits or value of such benefits
to Facebook and of allocating those profits to the Class?

21
11.

22

Based upon my work to date, I have reached the following conclusions:12

23
24
25
26
27
28

7

Id. at §§27, 39.
E.g., Id. at §86.
9
E.g., Id. at §30.
10
Id. at §59.
11
Id. at §§27, 39.
12
It is, of course, possible that with additional information, including production from Facebook,
and inputs, these conclusions could be refined. The list of documents I have considered in
forming my opinions is attached to this report as Exhibit B.
8

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a. There is evidence common to the Class capable of showing that
Facebook profited or otherwise benefited from the scanning
alleged to violate ECPA and CIPA in the CAC. Specifically, as
explained in the body of this report, I have concluded that the
profits or other unjustly-obtained benefits may be analyzed and
quantified based upon Facebook’s records without reference to
individual proof with respect to any member of the Class, such
Class membership being identifiable and ascertainable based
upon Facebook’s records.

2
3
4
5
6

b. Class-wide evidence capable of showing profits or other
benefits to Facebook falls into two categories (1) evidence
concerning Facebook’s use of information derived from private
messages by creating associations within Facebook’s Social
Graph (described in more detail below); and (2) evidence
concerning Facebook’s profits or other benefits resulting from
its campaign to encourage third-party websites (“Marketers”) to
install the Facebook Like button, of which, as alleged,
Facebook’s unlawful scanning was an integral part.

7
8
9
10
11

c. Standard economic methods are capable of reliably quantifying
the aggregate amount of profits to Facebook, and the aggregate
value of other benefits to Facebook that resulted from scanning
and subsequent uses or potential uses of the information derived
therefrom.

12
13
14

d. The damages calculated are based on the economic benefits the
Defendant received from the information intercepted from the
private messages sent by the Class members. Facebook benefits
from advertising revenue from adding the intercepted user-URL
links into their targeting platform and from enhancing their
understanding of how and what users share links to. The
benefit is defined not only by the potential act of generating
additional revenue from targeting ads to the senders of
intercepted messages, but also by the additional use in better
targeting these and similar users (in marketing terms); and the
benefit is ultimately proportional to the number of URLs
intercepted from private messages.

15
16
17
18
19
20
21

III.

A.

23

25
26
27
28

Facebook, Inc.

12.

22

24

Case Background

Facebook operates the world’s largest social marketing and information platform.

The social network side of the business has over 1.5 billion users around the world.13 On August
13

Measured as monthly active users (“MAUs”), which Facebook defines as “a registered
Facebook user who logged in and visited Facebook through our website or a mobile device, used
our Messenger app, or took an action to share content or activity with his or her Facebook friends
or connections via a third-party website or application that is integrated with Facebook, in the last
30 days as of the date of measurement” (Facebook, 2014 10-K Page 35). Current MAUs from:
Facebook, Inc.’s 2015 Q3 Earnings Report (November 4, 2015) Slide 5. At
http://investor.fb.com/results.cfm.
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24, 2015, 1 in 7 people on Earth used Facebook,14 which is equivalent to approximately 51% of

2

all internet users worldwide.15 In the U.S. and Canada, there are currently 217 million (monthly

3

active) users16 which represent 61% of 357 million people in the region.17 Facebook’s advertising

4

network generates revenue in excess of $1.4 billion monthly,18 49.3% of which is attributable to

5

users in the U.S. and Canada.19 Furthermore, Facebook’s most recent disclosure states that, in the

6

U.S. and Canada, Facebook users performed advertising revenue-generating activities at a rate of

7

$9.86 per quarter per user.20

8
9

13.

Facebook’s online social networking service allows users to communicate through

the sharing of text, photograph, video, and internet content. In addition, these activities are

10

supported by a variety of Facebook applications on mobile devices, including Facebook

11

Messenger, Instagram and WhatsApp.21 While Facebook positions its business as focused on

12

“creating value for people, [M]arketers, and developers,” it generates the bulk of its revenues

13

from the latter two categories and then principally to the degree they want to reach the former.

14

14.

Facebook represents a significant opportunity for Marketers due to the

15

combination of the size of the user base and the abundance of rich user data.22 Thus, access to the

16

wealth of information captured on Facebook enables advertisers to reach people across devices

17
18
19
20
21
22
23
24
25
26
27
28

14

Facebook CEO Mark Zuckerberg’s public post on Facebook.com of August 27, 2015, at:
(https://www.facebook.com/zuck/posts/10102329188394581).
15
Based on the current estimate of worldwide internet users of 2.919 billion people (14.04 million
in the USA) according to the Wolfram|Alpha Knowledgebase, using data from the World Bank
(http://www.wolframalpha.com/ accessed 10/26/15).
16
Facebook, Inc.’s 2015 Q3 Earnings Report, Slide 5 (op cit.).
17
According to U.S. Census projections (321.37 million people in the USA in July 2015) and
Statistics Canada estimates (35.85 million people in Canada in July 2015) [In:
http://www.census.gov/population/projections/data/national/2014/summarytables.html, and
http://www.statcan.gc.ca/pub/91-002-x/2015002/t002-eng.pdf].
18
Facebook, Inc.’s 2015 Q3 Earnings Report, Slide 8 (op cit.), quarterly data divided by three.
19
Facebook, Inc.’s 2015 Q2 Earnings Report, Slide 10 (op cit.).
20
This is the ratio of quarterly revenue to monthly active users per Facebook, Inc.’s 2015 Q3
Earnings Report, Slide 12 (op. cit.).
21
Facebook, 2014 10-K Page 5 (User and Revenue data cited above do not include Instagram or
WhatsApp users).
22
As expressed by Facebook’s Adam Isserlis, Manager, Corporate Communications,
Ads/Monetization; Colleen Coulter, Product Marketing Communications Manager, in “IAB
Social Media Buyers Guide” available on the Interactive Advertising Bureau website
(http://www.iab.net/socialmediabuyersguide).
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and, importantly, to effectively measure the impact of their advertising. In its public disclosures,

2

Facebook emphasizes that the platform creates value for Marketers by its unique combination of:

3

a. Reach, with over a billion and a half monthly active users in
2015;23

4

b. Relevance, supporting ad targeting by rich demographics and
interests data plus Marketers’ and third party data cross
referencing;24

5
6

c. Social Context, by providing information to leverage
recommendations from friends;25 and,

7
8

d. Engagement, with ad products prompting interaction and
sharing.26

9
10

15.

In this report, I will refer to advertisers that use Facebook’s website and the

11

corresponding development tools to leverage the targeted access to the massive user base as

12

‘Facebook Marketers’ or simply ‘Marketers.’

13

16.

Facebook also represents an important platform for software developers by

14

providing access to a substantial user base, a payment management mechanism, and analytical

15

information about the use of applications.27

16

17.

Facebook has built a dominant position in the social networking market and, as

17

such, attracts a significant amount of consumers’ time and attention. According to the Business

18

Intelligence Report on Social Engagement, in 2013 Americans spent an average of 37 minutes

19

daily on social media, a higher time-spend than any other major internet activity, including

20

email.28 More recently, Facebook claims that “when it comes to time spent by users of the

21

platform, across Facebook, Messenger and Instagram, people are now spending more than 46

22

minutes per day on average.”29 This amount of attention is leveraged by Facebook in providing

23

23

24
25
26
27
28

Facebook, Inc.’s 2015 Q3 Earnings Report, Slide 5 (op cit.). and Facebook, Inc. Form 10K
2012, p. 7.
24
Facebook, Inc. Form 10K 2012, p. 7.
25
Id., p. 8.
26
Id.
27
Facebook for Developers website: https://developers.facebook.com/.
28
Business Insider, Business Intelligence Report on Social Engagement
(http://www.businessinsider.com/social-media-engagement-statistics-2013-12).
29
Mark Zuckerberg’s remarks during the Second Quarter, 2015 Earnings Call (page 1 of the
Footnote continued on next page
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Marketers access to a relevant and sizable audience, and now constitutes the company’s

2

overwhelming source of revenue; currently, advertising accounts for 95.5% of Facebook’s

3

revenue.30

4

18.

From an economic perspective, Facebook is thus a platform business and operates

5

a two-sided market. That is, much like broadcast television and terrestrial radio in the past,31

6

Facebook essentially sells to Marketers access to “the thoughts and emotions” of an audience

7

aggregated on the basis of providing online social media products and user-generated content to

8

“users,” rather than simply the transmission of content. In sharp contrast to broadcast media, with

9

Facebook the access is readily measurable and the advertising messages finely targeted and

10

distributed. Thus, essentially, on one side of the market Facebook accrues users providing online

11

products,32 and on the other it sells advertising placements to Marketers. Furthermore, on the

12

user acquisition side, Facebook competes with other social media offerings, such as Twitter and

13

Google+, and with other online activities (including news and video reading/watching). Further,

14

Facebook is developing the platform as a portal through which users can access news,33 discover

15

content by searching,34 and incorporate more and more online activities.35 On the advertising

16

sales side, Facebook competes with both online advertising outlets, such as Google AdWords and

17

DoubleClick,36 and off-line advertising media (including traditional broadcast TV and print

18

advertising). Facebook’s competitive advantage stems from the power of leveraging the deep

19

Footnote continued from previous page
transcript) held on July 29, 2015. Available at: http://investor.fb.com/results.cfm.
30
Facebook, Inc.’s 2015 Q3 Earnings Report, Slide 8 (op cit.).
31
See, inter alia, Ch. 7-Broadcasting in: H. Vogel, Entertainment Industry Economics,
Cambridge University Press, 8th Ed., 2011.
32
As a company, these products now include Instagram and WhatsApp, expanding the original
Facebook and then Messenger products. Facebook, 2014 10-K, p. 5.
33
For example, with the introduction of the “Instant Articles” initiative and new deals with
publishers like the Washington Post (http://media.fb.com/2015/05/12/instantarticles/).
34
E.g., with expanding the power of Facebook search
(http://newsroom.fb.com/news/2015/10/search-fyi-find-what-the-world-is-saying-with-facebooksearch/).
35
Such as video, with video hosting and action tracking
(http://newsroom.fb.com/news/2015/06/news-feed-fyi-taking-into-account-more-actions-onvideos/), app acquisitions like Instagram and WhatsApp, and with plugins to track activities
outside of Facebook.
36
See Google Products and Advertising Platforms (www.thinkwithgoogle.com/products/).

20
21
22
23
24
25
26
27
28

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targeting knowledge available from its unique access to an increasingly complete and

2

computerized social network, including by tracking users beyond the Facebook.com website.

3

Consequently, the two activities, providing online social networking services and selling

4

advertising, are inextricably connected; the profit motive permeates both sides of the operation.

5

19.

Facebook competes for advertising expenditures, among other means, by

6

differentiating its platform from competitors’ as the most effective because of the unique ability

7

to leverage the Social Graph, described in more detail below. Researchers in the field of social

8

and economic networks have noted specifically that they “…find evidence that social advertising

9

is effective, and that this efficacy seems to stem mainly from the ability of targeting based on

10

social networks to uncover similarly responsive consumers.”37 In practice, the superior

11

effectiveness of advertising on this basis is demonstrated by the increasing click-through rates

12

(“CTR”) of ads placed through Facebook as opposed to ads placed through Google’s display

13

network.38

14

B.

The Social Graph

15

20.

The main way in which individual Facebook users knowingly connect with each

16

other is by selecting the “Friend” button to add them to their network. The main way users

17

knowingly interact with brands that have Facebook pages is to select the “Like” button so a

18

“fan”39 link is created allowing the Facebook page’s posts to appear on each fan’s home page (on

19

the “news stream” of posts from friends and liked pages). Facebook also creates connections that

20

users may not be aware of. For example, beyond the Facebook.com website or applications, users’

21

browsing and other activities are also able to be logged using cookies,40 pixels41 and similar

22
23
24
25
26
27
28

37

C. Tucker, “Social Advertising,” February 15, 2012, SSRN (http://ssrn.com/abstract=1975897).
Since mid-2014 Facebook CTRs have increased by 35% vis-à-vis a 25% increase on Google’s
network, according to the latest “Digital Advertising Report Q3 2015”, Adobe Digital Index
(www.cmo.com/adobe-digital-index.html), p.18.
39
In Facebook marketing, while it is natural to speak of a “Friend” of a person, the equivalent for
brands is to use “Fan” instead, although they may also be used interchangeably.
40
Cookies are small files that are stored on the user’s device by the website or application being
used and some ads being viewed.
41
Pixel tags in this context are also called clear GIFs, web beacons, or pixels and are small blocks
of code on a webpage or application that allow them to perform actions such as read and place
cookies and transmit information to Facebook or its partners.
38

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internet technologies.42 The resulting information is used in delivering targeted advertising and

2

refining the information represented on the Social Graph.

3

21.

Facebook’s Social Graph represents the integration of information collected by

4

Facebook about Facebook users, and encompasses their location, demographics, interests,

5

behaviors, and connections, in order to target advertising and marketing communications to

6

specific groups of users identified by these attributes.43

7

22.

Figure 1 illustrates one hypothetical user on the social network (at the center),

8

technically referred to as a “node.” This user is connected to two friends by lines called “edges,”

9

has “Liked” a page (For the F8 Developers Conference, illustrated by its logo on the upper right

10

corner), is interested in cooking (link labeled “cook”), has watched a video on Netflix (bottom

11

right link), and has listened to music on Spotify (middle left link).

12
Figure 1
Facebook Social Graph Illustration44

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

42

See also https://www.facebook.com/help/cookies/.
Although the term is borrowed from Mathematics and Sociology, it was introduced in the
Facebook context by Mark Zuckerberg during the 2007 F8 Developers Conference on May 24,
2007.
44
From Business Insider
(http://static3.businessinsider.com/image/4f5112e169bedd1526000061/facebook-opengraph.jpg).
43

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23.

Figure 1 is a partial visual representation of the Social Graph. In practice, the

2

information contained in the Social Graph is stored in a (complex and distributed) database. The

3

data model Facebook utilizes is called TAO (The Objects and Associations).45 The constituent

4

parts of this model – illustrated above – are Objects (representing the “nodes,” or data items, such

5

as a user or a location) and Associations (representing the “edges,” or relationships between

6

Objects).

7

24.

Thus, as illustrated, even activities (accessing pages, clicking on Like or Share

8

buttons) performed on websites or applications outside of Facebook can, and are, represented in

9

the Social Graph. Granting controlled access and writing abilities to this wealth of information to

10

registered developers, on April 21, 2010, Facebook released the Open Graph Protocol,46 which

11

enables any web page to become a rich object in a Social Graph, and the Graph API,47 which is

12

the primary way for apps to read and write to the Facebook Social Graph.48 Facebook builds and

13

maintains full access to the full Social Graph leveraging its own record of users’ connections

14

behind-the-scenes.

15

C.

The Like Button

16

25.

Facebook social plugins, such as the “Like” Button, are lines of code that third-

17

party websites can integrate into their sites, which display a Facebook logo and execute the

18

programmed code when the page is accessed and/or a Facebook user clicks on it.49 Facebook first

19

implemented the Like Button in or around February 200950 and, in Facebook’s F8 conference in

20
21
22
23
24
25
26
27
28

45

See https://www.facebook.com/notes/facebook-engineering/tao-the-power-of-thegraph/10151525983993920
46
The Open Graph protocol is programming code used on Facebook to allow any web page to
have the same functionality as any other object on Facebook. See Open Graph Protocol open
source website (http://ogp.me/).
47
API, or “Application Programming Interface,” is the code that a third party may utilize to build
software on top of Facebook’s platform. Through Facebook’s API, the third party product is able
to utilize parts of Facebook’s code (and access certain tranches of Facebook’s data) for its
functionality.
48
See https://developers.facebook.com/docs/graph-api.
49
Facebook SDK Documentation
(https://developers.facebook.com/docs/javascript/quickstart/v2.5#plugins).
50
J. Kincaid in: TechCrunch (http://techcrunch.com/2009/02/09/facebook-activates-like-buttonfriendfeed-tires-of-sincere-flattery/).
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2010, it was opened up for third party developers for marketing and application development

2

uses.51

3

26.

As illustrated in Figure 1 above, a Like becomes a Social Graph connection

4

between a user and a Marketer that has installed a Facebook Social plug-in.52 Generally speaking,

5

“Liking” a “Page” means the user is connecting to that Page, and “Liking” in reference to a post

6

from a friend, which means the user is letting that friend (or friend of a friend) know that the user

7

“likes” his or her post (without leaving an explicit comment).53 The first is a link between a user

8

and a Marketer, the second is a link among users. The “Likes” recorded as a result of scanning

9

private messages addressed in this case are of the first type.

10

27.

Facebook developed social plug-ins, such as the “Like” button to continue

11

expanding its network by affiliating with Marketers or third party websites. Social plug-ins

12

enable advertisers and Marketers to integrate user activity inside and outside of the Facebook

13

website. The initial performance metric for these advertising activities was the number of

14

“Likes” associated with a company within Facebook and, increasingly, outside of Facebook on

15

Marketers’ websites.

16
17

28.

Figure 2 below is an illustration from Facebook materials addressed to Marketers

on the benefits of using social plugins.

18
19
20
21
22
23
24
25
26
27
28

51

Facebook F8 April 21, 2010.
Facebook, Social Plugins FAQs, at: https://developers.facebook.com/docs/plugins/faqs/#ref.
53
See Facebook Help Center at: https://www.facebook.com/help/228578620490361.
52

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3
4
5
6
7
8
9
10
11

29.

Facebook is well aware of the power of the Like button to generate actionable

signals for advertisers.54 From its launch in April 2010,

12

55

13

30.

Facebook has promoted this social plug-in aggressively to third-party websites by,

14

for instance, taking control of News Feed content.56 In turn, Marketers that wished to maintain

15

their reach via the social network had to respond by increasing the integration of Facebook into

16

their marketing strategies and budgets.57

17

D.

The Alleged Violations

18

31.

Facebook published a privacy policy and posted descriptions of Facebook’s

19

private messaging service claiming it would provide a way to communicate privately and that the

20

messages would be private.58

21
22
23
24
25
26
27
28

54

According to internal communications produced in discovery, for example, Facebook personnel
sought
(FB000011746).
55
According to Defendant’s internal communications
(FB000011715-6).
56
See Facebook Media, “An Update to News Feed: What it Means for Businesses”
(https://www.facebook.com/business/news/update-to-facebook-news-feed) and “News Feed FYI:
Balancing Content from Friends and Pages” (http://media.fb.com/2015/04/21/news-feed-fyibalancing-content-from-friends-and-pages/).
57
See, e.g., MarketingLand (http://marketingland.com/facebooks-latest-tweaks-favor-friendscould-hurt-page-reach-125931).
58
CAC, at §§21-24.
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32.

The CAC alleges that Facebook actually scanned the content of private messages

2

and used information concerning any URLs contained within the messages to artificially increase

3

the appearance of user engagement with third-party websites by increasing the count on such

4

sites’ Like buttons, as well as for other, undisclosed, purposes.59

5

33.

Additionally,

6
7
.60

8
9

34.

Consequently, in the context addressed in the background section, the following

10

methodological discussion addresses two distinct aspects of how Facebook benefited from the

11

accused actions:

12

a. Benefits from the additional information that enhances the
Social Graph as a means to increase advertising revenue and
profits; and,

13
14

b. Benefits from artificially increasing the “Like Count” on third
party websites using Facebook social plugins,61 because it
enhances clients’ impression of how effective Facebook
Marketing is and incentivizes Marketers’ willingness to invest
in Facebook Marketing.

15
16
17
18
19
20
21
22
23
24
25
26
27
28

59

URL stands for Uniform Resource Locator, the unique identifier of each document on the
internet. Defined initially by Tim Berners-Lee in: “Uniform Resource Locators (URL): A Syntax
for the Expression of Access Information of Objects on the Network” (March 1994) in:
http://www.w3.org/Addressing/URL/url-spec.txt.
60
CAC at §§25-26.
61
At least up to the end of 2012.
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IV.

The Measure of Damages
A.

Benefits Resulting from Enhancing the Social Graph by Incorporating
Intercepted Data.

35.

As discussed below, the incremental value of Facebook’s benefits from enhancing

5

the Social Graph by including data intercepted in private messages can be calculated on a per

6

URL link basis. This incremental profit from Facebook’s accused behavior can be calculated by

7

utilizing the corresponding inputs and the algorithm discussed in this section.

8
9

36.

It is not disputed that Facebook’s Social Graph is a valuable asset. The value

fundamentally arises from the aggregation of the collected information from all users in general,

10

as well as from the information intercepted from the Class members’ private messages. By its

11

actions, Facebook has denied Class members the ability to restrict access to elements of

12

information about them (URL links) and is profitably utilizing the information by enhancing the

13

value of its own social media advertising platform, which helps Facebook maintain and grow its

14

market share in the face of competition. Thus, by gathering data from Class members as alleged

15

by Plaintiffs, Facebook directly benefits by enhancing the informational content and targeting

16

power of their key revenue-generating asset: the Social Graph.

17

37.

The more nuanced the data and the inferences that can be drawn from it, the more

18

effective Facebook marketing becomes and the greater the share of advertising revenue that the

19

Company can extract. For example, in a recent Earnings Call Facebook’s Chief Operating

20

Officer, Sheryl Sandberg, highlighted an advertising campaign on Facebook in which the fast

21

food chain Wendy’s wanted to reach a very specific target group for the launch of a new product

22

(“Jalapeño Fresco Spicy Chicken”): “millennials that are spicy food lovers”. Wendy’s worked

23

with Facebook to create a campaign with five video ads specifically targeted at Facebook users

24

that fit that socio-demographic (millennials) and affinities (spicy food lovers) profile. The

25

targeting of the campaign, based on the information in the Social Graph, was successful in

26

exceeding goals in terms of: (a) the impact of the ads, as significantly more consumers recalled

27

seeing the ads; and (b) in terms of sales, with a significant increase in purchases among the target

28
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segment.62 The more precise the socio-demographic and affinities profile, the more successful

2

and, therefore, profitable, an advertising campaign can be. The value of the Social Graph asset is

3

significant. Working off of publicly-available information, this value can be ascertained as

4

follows, applying the generally recognized Income Approach to Valuation.63

5

38.

Under the Income Approach, the value of an asset is measured by the net present

6

value of the net economic benefit to be received over its economically useful life.64 The three

7

essential factors of this measurement of value are: (1) the value of the net income stream

8

(revenue minus expenses) that can be generated by the asset; (2) an assumption as to the duration

9

of the net income stream; and (3) an assumption as to the risk associated with the realization of

10

the anticipated net income.65 These factors can be determined mainly based on Facebook’s

11

financials.

12

39.

Focusing on the Social Graph delimited as far as possible to the U.S., Facebook

13

has stated that, as of June 30, 2015, advertising revenue from the U.S. is in the order of $1,459

14

million per quarter increasing to $1,630, as of September 30, 2015.66 This is revenue attributable

15

to the Social Graph because it enables the unique selling proposition of targeted advertising on

16

Facebook. Furthermore, according to Facebook, the average cost of revenue, marketing and

17

sales, and general and administrative expenses during the same periods was 40.75%, rising to

18

41.25%, as a percentage of revenue.67 Thus, a profit of $3,459 to $3,830 million per year is

19

attributable to the U.S. portion of the Social Graph asset.68

20

62

21
22
23
24
25
26
27
28

Example discussed by Sheryl Sandberg (Facebook COO) during the 2015 Q2 earnings call held
on July 29, 2015. Available at: http://investor.fb.com/results.cfm.
63
See, inter alia, G.V. Smith and R.L. Parr, Valuation of Intellectual Property and Intangible
Assets, John Wiley & Sons, 2000; R. F. Reilly and R.P. Schweihs, Valuing Intangible Assets,
McGraw Hill, 1999.
64
See, e.g.: Smith and Parr (2000), p. 164.
65
Ibid, p. 169.
66
This is the average of the quarterly advertising revenue from the activities of users located in
the U.S. and Canada during the four quarters ending June 2015 ($1,622 million) and September
2015 ($1,812) as disclosed in: Facebook, Inc.’s 2015 Earnings Reports (July 29, 2015, November
4, 2015) Slide 10 (op cit.). A further adjustment is made to exclude data for Canada, multiplying
by the ratio of the size of the U.S. Population to the total of the two countries (89.96% = 321.37 /
(321.37+35.85) per official U.S. Census and Statistics Canada sources (op. cit.).
67
Facebook, Inc.’s 2015 Earnings Reports (July 29, 2015, November 4, 2015) Slide 13 (op cit.).
Per accepted valuation standards, Research and Development expenses are not includable in this
Footnote continued on next page
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40.

The economically useful life of the asset in question, that is, the usefulness of the

2

information represented in the Social Graph, is not immutable; people’s locations, friends,

3

affinities, and interests change over time. While the Social Graph contains a varied spectrum of

4

information, as a proxy for the likely obsolescence of the information embodied in the Social

5

Graph, the most significant indicator, in my opinion, is geographical mobility. One of the

6

primary selection criteria in defining a target market is location; there is generally no point in

7

advertising to users in locations where sales cannot be made, while other primary attributes tend

8

not to change as often.69

9

41.

Geographical mobility is periodically measured by the U.S. Census. On average,

10

in the span of five years, 35.4% of the population moves.70 This represents an exponential

11

decline in the accuracy of address information of 8.37% per year.71 At this rate, 50% of people

12

will have moved in about eight years.72 In addition, considering the broader context of the

13

valuation of comparable intangible assets for financial reporting, a marketing asset frequently

14

identified in business mergers and acquisitions is the Customer List. The median remaining

15

economic life of Customer Lists among publicly traded U.S. companies is also eight years.73

16

Thus, while it is likely that a lot of the information on the Social Graph will still be current after

17

eight years, a primary attribute and targeting selector (location) will not be accurate for the

18
19
20
21
22
23
24
25
26
27
28

Footnote continued from previous page
valuation because, by definition, their effects are in the future, not as of the valuation date (June
30, 2015).
68
The result of multiplying the quarterly revenue times four quarters and deducting 40.75% for
expenses.
69
These would be parameters such as age, gender, household income, which change predictably,
slowly, sporadically, or not at all.
70
U.S. Census Bureau, Geographical Mobility: 2005 to 2010 (December 2012), Table 2, Page 5
(http://www.census.gov/prod/2012pubs/p20-567.pdf).
71
This equivalent annual rate is calculated algebraically solving the equation expressing the
Census fact that the ratio of the population in year 5 relative to the population in year 0 is 64.6%
(100% - 35.4%) and this is equal to (1 + annual rate)5.
72
Technically, in 7.9 years, calculating: log(0.50) / log(1–0.0837).
73
Data from: Business Valuation Resources, “Benchmarking Identifiable Intangibles and Their
Useful Lives in Business Combinations” BVR 2012, p. 66 (www.bvresources.com).
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majority of people. Based on these considerations, I have concluded that a reasonably reliable

2

remaining useful life for valuing the Social Graph asset is eight years.74

3

42.

A reasonable estimate of the corresponding market discount rate for this asset can

4

be based on the most current assessment of the risk factors recommended by the most reputable

5

industry sources.75 The discount rate is made up of a series of components reflecting the time-

6

value of money (the so-called Risk Free rate76), the general additional risk of equity returns

7

(known as the Equity Risk Premium77), the additional variations of net income in the relevant

8

industry (the Industry Risk Premium), and the incremental risks unique to the asset class. Thus I

9

considered the risk-free rate of 4.0%,78 a market equity risk premium of 5.0%,79 as well as an

10

advertising industry risk premium of 3.66% based on generally accepted data sources.80 In

11

addition, I considered a risk premium reflecting the incremental risks associated with intangible

12

assets relative to financial and tangible business assets of 6.0%.81 Adding together these various

13

components, I thus arrived at the discount rate for the Social Graph asset of 18.66%.82

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

74

This is a conservative position since, in reality, Facebook users tend to maintain their
information current as part of the normal use of the network. The asset is being valued “as is” in
mid-2015, without considering continued updating.
75
Duff & Phelps, 2015 Valuation Handbook: Guide to the Cost of Capital, John Wiley & Sons,
2015
76
In valuation theory, this rate is the return available on a security that the market generally
regards as free of the risk of default. In practice, in the U.S., this is the yield on government
securities, adjusted (or normalized) to remove the distortion of the artificially depressed,
unsustainable rates during the 2008 financial crisis. [Duff & Phelps (2015), Ch. 3].
77
Conceptually, this premium is defined as the extra return, over the expected yield of risk-free
securities, which investors expect to receive from an investment in the market portfolio of
common stocks (Duff & Phelps 2015, pp. 3-17).
78
Technically, this rate is the normalized 20-year U.S. Treasury yield [Duff & Phelps (2015),
Ch. 3].
79
This is the considered forward equity risk premium recommended by Duff & Phelps.
80
See, Duff & Phelps (2015), pp 3-35 and 5-21 (The industry risk premium corresponds to a Beta
of 1.73). In addition, some valuation models consider a specific “Size Premium” which, in this
case, is not necessary since the Facebook Social Graph is evidently the largest marketing database
in the economy.
81
As recommended by IPmetrics for intellectual property (IP) valuation analyses based on market
interest rate spreads for IP-backed securities (See, e.g., M. Loumioti, “The use of intangible assets
as loan collateral” Harvard Business School, 2011 Available at the Social Science Research
Network: http://ssrn.com/abstract=1748675).
82
This is the result of adding the risk-free rate and the three identified risk premiums
corresponding to equity, industry, and asset considerations (18.66 = 4 + 5 + 3.66 + 6).
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43.

Consequently, applying the aforementioned method and inputs, which are the type

2

of methods and parameters applied by valuation professionals like myself, the (U.S.) Social

3

Graph asset relating to the U.S.is valued at approximately $14.5 billion, as illustrated by the

4

results in the following tables:
Table 1

5

U.S. Social Graph Valuation
(As of 2015 Q2)

6

1

Annual
Profit
($
millio
ns)
$ 3,459

0.84274

$ 2,915

2

3,459

0.71022

2,457

3

3,459

0.59853

2,070

11

4

3,459

0.50441

1,745

5

3,459

0.42509

1,470

12

6

3,459

0.35824

1,239

13

7

3,459

0.30190

1,044

8

3,459

0.25443

880

7
Year

8
9
10

14

Table 1.A

(As of 2015 Q3)

17

1

Annual
Profit
($
millio
ns)
$ 3,830

0.84274

$ 3,228

2

3,830

0.71022

2,720

3

3,830

0.59853

2,293

4

3,830

0.50441

1,932

5

3,830

0.42509

1,628

6

3,830

0.35824

1,372

7

3,830

0.30190

1,156

8

18

3,830

0.25443

975
$15,304

Year

19
20
21
22
23
24

Discount
Factor
(at
18.66%)

Total Value:

25

28

$13,820

U.S. Social Graph Valuation

16

27

Discounted
Value
($
millions)

Total Value:

15

26

Discount
Factor
(at
18.66%)

44.

Discounted
Value
($
millions)

Since Facebook already has the infrastructure and software development platform

in place to develop and grow the Social Graph, as well as access to the marketing clients that fund
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the advertising campaigns, the additional information collected through the accused activities has

2

arguably zero incremental cost. Therefore, from an economic perspective, virtually all of the

3

incremental advertising revenue generated from the enhancement can justifiably be considered

4

incremental profit to Facebook. Therefore, the impact of additional information intercepted from

5

private messages on Facebook’s revenue flows directly to the bottom line (profits).

6

45.

With the relevant quantitative information, I would estimate the value of the

7

enhancement to the Social Graph as commensurate with the ratio of (1) intercepted URLs in

8

private messages during the Class period to (2) the total number of links on the Social Graph.

9

46.

Absent specific Facebook network data,83 from public information it can be

10

ascertained that during 2010, Facebook had an average of 127.1 million monthly active users in

11

the U.S.84 On average, within Facebook as a whole, the average monthly active user sent nearly

12

43 messages per month.85 Thus, in 2010, I estimate that the U.S. user base sent approximately

13

65.4 billion messages.86 The following Table shows the results of these estimates on an annual

14

basis.

15
16
17
18
19
20
21
22

83

23
24
25
26
27
28

84

According to Facebook Inc.’s Form 10-K Disclosures, The four quarters of 2010 in the U.S. &
Canada had MAUs of 130,137,144, and 154 million respectively. The average cited is adjusted to
exclude users in Canada.
85
Considering Facebook’s disclosure in connection with the redesign of the Messenger platform,
stating that 350 million MAUs sent 15 billion messages per month, or an average of 42.857
messages per MAU/month, at: https://www.facebook.com/notes/facebook-engineering/theunderlying-technology-of-messages/454991608919.
86
This is the result of multiplying 42.857 messages/user/month times the 127.07 million users,
times 12 months.
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Table 2

2

U.S. Messaging Activity
(2010 – 2015)

3
Year

5

Monthly
Average
Users

Estimated
Messages

(millions)

4

(millions)

6

2010

127

65,353

7

2011

155

79,464

2012

169

86,867

2013

178

91,725

2014

184

94,848

2015H1

190

97,855

8
9
10
47.

11
12

Table 2 may well understate the amount of messaging activity on the network.
48.

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Since user engagement has increased over the Class Period,87 the estimates on

The relative impact of this additional, but allegedly wrongfully obtained

information, on the value of the Social Graph can in principle be ascertained as the addition of
information to the Social Graph. In the absence of detailed information about it, I have relied on
public information to approximate the optimal analysis.
49.

Facebook researchers have published results of the formal characterization of the

entire social network of active members88 of Facebook in May 2011, comprising 721 million
active users.89 From this universe, 149 million are U.S. Facebook users.90 Among these U.S.
social network users, there were 15.9 billion friendship links or graph “edges,” and the average
U.S. user had around 214 Facebook friends.91 The graph is highly connected, in the sense that
87

According to Facebook, between August 2012 and May 2013 user engagement, as illustrated in
the number of likes generated per day, increased from 2.7 Billion to 4.5 billion on average
(https://www.facebook.com/photo.php?fbid=10151908376831729&set=a.10151908376636729.1
073741825.20531316728&type=1&theater).
88
Defined for analysis as “the number of members that logged into the site in the 28 days before
the May 2011 date of the study and had, at least, one Facebook friend.” See, e.g.: J. Ugander, B.
Karrer, L. Backstrom, C. Marlow, “The Anatomy of the Facebook Social Graph”, White Paper,
18 Nov. 2011, Cornell University (http://arxiv.org/abs/1111.4503v1), p. 2.
89
Id. at p. 14.
90
This is nearly 60% of the eligible U.S. population at the time, see Ugander, et al. (2011) p. 2.
91
Ugander, et al. (2011) p. 2.
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typical Facebook members are linked (as “friends” and “friends of friends”) in such a way with

2

the rest of the network as to be able to reach the vast majority of individuals with only a few

3

“hops” or jumps from one friend to another. Specifically, in the U.S. network the average

4

distance between people was found to be 4.3 friends and, furthermore, 96% of all Facebook

5

members were within 5 degrees of separation.92

6

50.

This high degree of “connectedness” is one aspect of the Social Graph that makes

7

it attractive for advertisers and why recommendations from Facebook Friends can be so effective;

8

properly targeted, relatively few recommendations can reach virtually the whole potential market.

9

Moreover, with interests, brand pages, and other actions, the Social Graph now includes more

10

data points (“nodes”) and links (“edges”) than just Facebook Friends. It is the targeting, and

11

specifically the granularity and breath of the targeting information that is enhanced by additional

12

user–URL links, which Facebook gathered unlawfully from intercepting and scanning private

13

messages.

14

51.

Therefore, the economic value of the benefits Facebook derives from the

15

unlawfully gathered user–URL links is proportional to the impact of this additional information

16

on the total information on the Social Graph. In principle, the benefit to Facebook in this respect

17

would be measured by attributing the corresponding portion of the incremental value of the Social

18

Graph to the accretion of the unlawfully gathered links.

19

52.

In other words, at a point in time (t), the value of the Social Graph to Facebook can

20

be expressed as the product of the number of links (L) in the Graph times the value, or worth, of a

21

link (w):

22

Vt = Lt × wt

23

At the next period (t+1), the value is:

24

Vt+1 = Lt+1 × wt+1

25

The change in value to Facebook, the incremental benefit, is then:

26

ΔV = Vt+1 – Vt = Lt+1 × wt+1 – Lt × wt .

27
28

92

Ugander, et al. (2011) p. 5.
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2

53.

Adding and subtracting the value of today’s links at yesterday’s unit value (Lt+1 ×

wt):

3

ΔV = Lt+1 × wt+1 – Lt × wt + Lt+1 × wt – Lt+1 × wt

4

and re-grouping the components of this equation, we have:

5
6

ΔV = Lt+1 (wt+1 – wt ) + (Lt+1 – Lt ) wt
54.

Thus, this equation can be interpreted as stating that: The incremental benefit to

7

Facebook is the sum of the effect of the change in the value of a link, plus the effect of the change

8

in the number of links. Only the second component is directly attributable the capture of

9

additional links, so that the measure of damages (D), with full information, would be calculated

10

as follows, considering only the unlawfully gathered additional links:

11
12
13
14

D = (Lt+1 – Lt ) wt
55.

The calculation of the total value is straightforward; multiplying the corresponding

link value to obtain the incremental benefit to Facebook.
56.

The economic benefit to Facebook from the intercepted links can then be

15

estimated applying the per link values, i.e. wt, to the incremental number of links attributable to

16

the intercepted messages, i.e. (Lt+1 – Lt ).

17
18
19

57.

With the input of the number of intercepted URLs, this value per link estimate can

be applied to determine the total benefit to the defendant.
58.

All Class members are subject to the accused scanning and, in this sense, are

20

injured in the same manner, while Facebook benefits from the aggregate information intercepted

21

out of all the messages.

22

59.

Facebook benefits from advertising revenue from adding the user-URL links into

23

their targeting platform and from enhancing their understanding of how and what users share

24

links to. The benefit is defined not only by the potential act of generating additional revenue

25

from targeting ads to the senders of intercepted messages, but also by the additional use in better

26

targeting these and similar users (in marketing terms); and the benefit is ultimately proportional to

27

the amount of information intercepted from private messages.

28
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60.

Therefore, it is my opinion that a proper attribution of damages among Plaintiff

2

Class Members, calculated as benefits received by the Defendant, should be based on the number

3

of links (URLs) intercepted.

4

B.

Benefits from Inflating the Like Count on Third Party Websites

5

61.

According to the CAC, Facebook also benefits from using the information

6

obtained from the intercepted messages by increasing the counter associated with the “Like”

7

button on third party websites.93 Independently of the actual advertising revenue as analyzed in

8

the previous section, Facebook benefits by providing additional perceived value to all Marketers

9

using these counters to evaluate the effectiveness of Facebook marketing. Due to the wrongful

10

capture of links, and exacerbated by the double counting, Facebook marketing appeared more

11

effective to Marketers and, in turn, Facebook’s clients were induced to extend their relationship

12

with Facebook, not simply by increasing advertising budgets, but at least in part by investing

13

more in building Facebook Pages and installing a variety of plugins feeding additional

14

information for Facebook’s targeting and marketing purposes.

15

62.

As explained in this section, the economic benefit derived by Facebook

16

attributable to one specific way in which it has used the information obtained from the Class

17

Members messages to increase the “Like” count on its clients’ websites lies between two bounds:

18

a higher bound represented by the cost that client websites saved by not having to acquire

19

additional “Likes” calculated at a dollar amount “Y” per “Like”; and a lower bound determined

20

by the market value of artificially acquired “Likes” for pages made possible by manipulating the

21

counting system, of a different dollar amount “Z” per “Like.” This amount represents a cost

22

savings or benefit Facebook was able to provide to its clients directly as a result of the breach of

23

privacy of messages and identifying URLs of Facebook Marketers. Facebook thus benefits from

24

the higher usage rates from Marketers incentivized by the higher Return of Investment (ROI) of

25

the advertising expenditures through the Facebook platform.

26
27
28

93

CAC at §27 and 39.
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63.

Marketers are interested in increasing the number of “Likes” associated with their

2

use of the social plugins on their websites outside of Facebook, not simply in growing the number

3

of “Likes” on their Facebook pages.

4

64.

The importance of Marketers’ website counters being affected by the alleged

5

unlawful actions in this case resides in the fact that, during the Class period, it was a key

6

performance indicator of the marketing function for Facebook’s clients: the Marketers or

7

advertisers on whose websites it was shown. Advertisers, as businesses, are interested in the

8

return on their expenditures in advertising; the conventional ROI which compares gains from

9

advertisements with their cost. While the cost is relatively straightforward to ascertain, in the

10

digital advertising environment, gains from advertising are susceptible to estimation in a variety

11

of ways, such as by the number of visitors to a web page, the number of incoming links, the

12

activity on social networks (e.g., followers, comments, “retweets” or “shares,” references in

13

relevant blogs, views on social media web sites, RSS feed subscribers, among others).94 In the

14

Facebook environment, the number of Likes measured is typically interpreted as an indicator of

15

the reach of an advertising strategy and, given the particular brand/product combination, as a

16

factor in generating sales.95

17

65.

For this analysis, the general principles applied in identifying market valuations of

18

the economic worth of “acquiring” or “attracting” Facebook users to express their affinity for a

19

brand are consistent with the general Cost Approach to valuation; the measurement of value by

20

reference to the amount of money that would be required to replace the functionality of the

21

subject asset (the Like).96 Ultimately, the realized value of a specific set of “Likes” would

22

94

23
24
25
26
27
28

See, for example, Perdue, D. J. (2010). Social media marketing: Gaining a competitive
advantage by reaching the masses. Social Media Marketing, pp. 1, 3–36.
95
By definition, Sales can be seen as the product of marketing reach, times the impact of the ad
(leads per ad), times the yield (sales per lead). Thus, with a given degree of impact and yield, a
higher reach, measured by the Like count for example, generates higher sales. See, e.g.: D.
Buhalis and E. Mamalakis, “Social Media Return on Investment and Performance Evaluation in
the Hotel Industry Context,” in: I. Tussyadiah, A. Inversini (eds.), Information and
Communication Technologies in Tourism 2015, DOI 10.1007/978-3-319-14343-9_18, pp. 241253.
96
The underlying assumption is that the price of new assets (i.e., Likes) is commensurate with the
economic value of service that the property can provide during its life. See: G.V. Smith and R.L.
Parr, Valuation of Intellectual Property and Intangible Assets, John Wiley & Sons, 2000, p. 164.
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generally exceed the cost, to a degree depending on the effectiveness of the specific marketing

2

strategies implemented to leverage them in practice.

3

66.

The effectiveness of the then-novel social network advertising campaigns was

4

typically measured by the number of Likes.97 Knowledge of the mechanics of this “Like” counter

5

obviously led to manipulations, such the “purchase” of spurious “likes,”98 which, at least in one

6

instance, had a market value as low as $0.075 per “like” and even deceptive campaigns that

7

encouraged people to copy and paste in their public Facebook posts certain texts with the

8

appropriate URLs embedded in them, so the Facebook mechanism would reward the intended

9

website with a viral increase of “Likes.”99

10

67.

Ultimately, the meaning of the counter became so diluted by 2013 that both

11

analytics firms and Facebook changed their assessment of the counter as well as the need for the

12

button graphic, developing the Facebook pixel and other hidden plug-ins, and began

13

supplementing these performance measures with other factors.100

14

68.

Therefore, Facebook benefited from the accused practice of using the results of

15

scanning supposedly private messages for URLs and affecting Like counts because this practice

16

gave its clients, Marketers, an incremental impression of effectiveness of their Facebook

17
18
19
20
21
22
23
24
25
26
27
28

97

Advertising generally strives for the general notion of Reach (“the number or percentage of
target audience members exposed at least once to media carrying an advertising message”). In
the online environment, user activity can be measured in great detail and the number of clicks on
a specifically-designed button, or other specific user action (including a link or URL), as reflected
in the Like count provide that measurement.
98
See, e.g., National Public Radio, Planet Money “For $75, This Guy Will Sell You 1,000
Facebook 'Likes'” originally broadcast on May 16,
2012(http://www.npr.org/sections/money/2012/05/16/152736671/this-guy-will-sell-you-sell-you1-000-facebook-likes).
99
Some hoaxes that repeatedly play out in the Facebook context are similar to a “chain letter”
model where users are encouraged to “copy and post” texts such as bogus “copyright”
notifications and spurious claims of privacy claims based on international law. See, e.g., W.
Oremus, “That Facebook Copyright Notice Is Still a Hoax” November 26, 2012, Slate
(http://www.slate.com/blogs/future_tense/2012/11/26/facebook_copyright_notice_berner_conven
tion_status_update_still_a_hoax.html).
100
Nielsen, the company behind the Ratings system, now emphasizes the notion of ‘Brand Lift’ to
measure the effectiveness of online marketing and, specifically, through Facebook (Nielsen
“Quickly and Accurately Measure the Effectiveness of Your Online Ad Campaigns” available as:
www.nielsen.com/content/dam/nielsen/en_us/documents/pdf/Fact%20Sheets/Nielsen%20BrandL
ift.pdf).
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marketing campaigns. Marketers perceiving an incremental return of their spending on Facebook

2

campaigns were undoubtedly encouraged to allocate additional funds to these campaigns.

3

69.

Due to the success of social online networking, acquiring Likes on Facebook pages

4

and outside websites has become a fundamental goal for brands in all Business-to-Consumer

5

markets over the past decade. In studies aimed at estimating the costs of acquiring fans,

6

advertising industry experts have based their analysis on the average of paid advertising needed,

7

on average, to acquire a Facebook page “Like” and convert them into paying customers. In 2011,

8

a study quoted in the well-known trade publication Advertising Age,101 considered 5 million

9

Facebook ads placed by over 50 companies, the acquisition cost of “Fans,”102 calculated by

10

dividing the total cost of clicks by the total number of actions, was found to be $9.56 less than the

11

cost to acquire the same level of sales from non-Fans.103 This is an average of the sampled

12

companies from mostly the consumer packaged goods, auto and finance. Necessarily, the cost

13

per acquisition varies by industry, by product, as well as by the desired behavior from potential

14

customers when visiting the Facebook page. Table 3 shows the average effect summarizing the

15

findings, comparing the cost of attracting a variety of actions (called “conversion” events)

16

between Facebook users that previously “Liked” the corresponding brand, i.e., Fans, and visitors

17

that had not, i.e., Non-Fans.

18
19
20
21
22
23
24
25
26
27
28

101

Advertising Age, Nov. 22, 2011.
“Fans” standing for Facebook Friends on Brand Pages, is the term typically used in advertising
industry. See, inter alia, Peter Elbaor, “The Interconnection of Facebook Fan Pages” October 28,
2011, ComScore Insights Blog, (http://www.comscore.com/Insights/Blog/The-Interconnectionof-Facebook-Fan-Pages).
103
Study by SocialCode, LLC reported in trade publication Advertising Age
(adage.com/print/231128).
102

- 26 -

UPDATED REPORT OF FERNANDO TORRES ISO
PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION;
C 13-05996 PJH (MEJ)

1

Table 3
Cost per Acquisition (CPA) on Facebook
Source: SocialCode, LLC
(May-Sept 2011)

2
3
4

Conversion Type

5

Non-Fan
CPA

Difference

$8.49

App Install

Fan
CPA
$ 2.61

$5.88

Contest Submission

76.25

17.21

59.04

6

Contest Voting

21.09

3.26

17.83

7

Fan Acquisition

5.17

3.39

1.78

Program Sign-Up

75.90

41.25

34.65

Purchase

43.86

12.88

30.98

Sweepstakes Entry

5.81

2.57

3.24

$ 14.93

$ 5.37

$9.56

8
9

TOTAL

10
11

70.

Since Likes can be profitable, as a result of those cost savings, a large number of

12

companies implement marketing strategies to acquire them. Another study found that the average

13

cost of advertising on Facebook to encourage a user to become a Fan – “Like” the advertiser’s

14

Facebook page – was $1.07.104 This cost also varies across sectors and over time. In 2012, the

15

cost per acquired Fan (i.e., cost per click in Fan acquisition campaigns) averaged $0.55.105 These

16

costs are leveraged through targeting via the Social Graph as brands can gain seven times greater

17

CTR by targeting Fans with ads which keeps cost per click at a minimum.106

18

71.

Therefore, the direct incremental impact of the accused practice on Facebook is to

19

increase advertising revenue, in the form of cost savings to advertisers from the accrual of Likes

20

from the intercepted private messages.

21
22
23
24
25
26
27
28

104

Webtrends, White Paper, 2011. Reported in The Wall Street Journal, “How Much Does a
Facebook Fan Cost?” February 1, 2011.
105
Based on data in WebTrends®, “Ads for Fans”, 2012, p. 4.
106
Ibid, p. 2.
- 27 -

UPDATED REPORT OF FERNANDO TORRES ISO
PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION;
C 13-05996 PJH (MEJ)

EXHIBIT A

FERNANDO TORRES, MSc
CHIEF ECONOMIST
Fernando Torres is an intellectual property economist with nearly 30
years of work experience in economics, financial analysis, and
business management in the U.S. and Mexico. He is a member and
Chief Economist at IPmetrics LLC, an IP consulting firm specializing in
the strategic analysis, valuation, and expert witness assessment of the
full spectrum of intangible assets.
Since 2004, Mr. Torres has applied his economics, finance and
business experience, as well as skills in quantitative techniques, to the
analysis and valuation of intangible assets, including valuation for transactional and litigation
purposes (bankruptcy and infringement cases). Prior to joining IPmetrics, Mr. Torres served as
Senior Economist at CONSOR® Intellectual Asset Management.
During recent years, Mr. Torres has undertaken projects involving the valuation and/or the
assessment of infringement damages regarding copyrights, trademarks, patents, trade secrets,
rights of publicity, and other intellectual assets in such industries as commercial agriculture,
auto parts, apparel and footwear, retail, pharmaceuticals, entertainment, telecommunications,
social media, as well as non-profit organizations, among others.
Mr. Torres regularly presents on topics related to intangible asset valuation in a variety of
venues, many of which qualify for CLE credit. During the past few years, Mr. Torres has been
an instructor for the course “Valuing Intangible Assets for Litigation,” which is part of the
requirements of the Certified Forensic Financial Analyst designation issued by the National
Association of Certified Valuation Analysts (NACVA).
Mr. Torres has been active in the area of the copyrights, privacy and rights of publicity
infringement issues, encompassing from the unlicensed use of celebrity images to class action
lawsuits involving the major social networking and web services companies.
Mr. Torres is also the editor and author of the online “Patent Value Guide” and his perspectives
on the value of patents and other intellectual property assets have been cited in the media,
including Managing Intellectual Property, The New York Times, Forbes.com, Business News
Network, Business Valuation Resources, and The Democrat & Chronicle.
Mr. Torres is a member of the National Association of Forensic Economics, and of the Western
Economics Association International, among others. His career has spanned from academia, to
branches of government, to private industry and consulting.
He first earned a B.A. in Economics from the Metropolitan University in Mexico City (1980), and
went on to earn a Graduate Diploma in Economics from the University of East Anglia (U. K.,
1981), and a Master of Science Degree specializing in Econometrics from the University of
London, England (1982).

[e-mail]

www.ipmetrics.com

Fernando Torres
Qualifications and Experience
Page 2

Prior to specializing in IP, his career centered on financial analysis and management in the
private sector, having been both a brand development consultant and an entrepreneur in
several business ventures, mainly in the software development and health care industries.
During the 1980s, Mr. Torres was Professor of Economics at the Metropolitan University in
Mexico City, teaching Economic Policy, Economic Growth, Microeconomics, and Quantitative
Methods. Mr. Torres was later a financial consultant (NASD Series 7, 63, 65) for half a dozen
years with AXA Advisors LLC.

PROFESSIONAL ASSOCIATIONS





National Association of Forensic Economics
Western Economics Association International
American Economic Association
International Trademark Association

PUBLICATIONS


“Why only some patents are valuable” in: IPmetrics Blog, (May 13, 2015).



“General Principle I – Lack of Intrinsic Value” in: PatentValueGuide.com, (February
11, 2013).



“General Principle II – Patent Use is Key to Value” in: PatentValueGuide.com,
(February 8, 2013).



“Conceptual Patent Value Framework” in: PatentValueGuide.com, (January 31,
2013).



“The Impact of Reorganization on Trademark Values,” in: IP Management and
Valuation Reporter, March 2012, BVR, Portland, OR.



“Fundamental Principles of Patent Value,” in: IP Management and Valuation
Reporter, January 2012, BVR, Portland, OR.



“Key Factors of Infringement Damages Apportionment in the Java & Android Case”
in: IPmetrics Blog, (December 8, 2011).



Book Chapter: “Valuation, Monetization, and Disposition in Bankruptcy” in IP
Operations and Implementation for the 21st Century Corporation, John Wiley and
Sons, Inc. (November, 2011).



“Have Patent Litigation Damages Awards Been Worth It?” in: IPmetrics Blog, (April
29, 2011).



“Celebrity Advertising and Endorsement” in: IPmetrics Blog, (March 2, 2011).



“The Patent to Trademark Value Transition: Nespresso” IPmetrics Blog, (February 3,
2011).

[e-mail]

www.ipmetrics.com

Fernando Torres
Qualifications and Experience
Page 3



“The Liquidation Value of IP” in: IPmetrics Blog, (January 26, 2011).



“An Econometric Model of Trademark Values” in: IPmetrics Blog, (January 25,
2011).



Chapter 15: “Copyrights” in Wiley Guide to Fair Value Under IFRS, John Wiley and
Sons, Inc. (May, 2010).



“The Road to Asia,” Feature Article (co-author) in: World Trademark Review, No. 23,
February/March 2010, pp. 19-22.



"Trademark Values in Corporate Restructuring" (July, 2007). Social Sciences
Research Network: http://ssrn.com/abstract=1014741



“Establishing Licensing Rates Through Options”
(September, 2006) Social
Sciences Research Network: http://ssrn.com/abstract=1014743
and in:
http://formulatorres.blogspot.com/2006_05_01_archive.html



Book Chapter: “Ch. 9: Recent developments in Patent Valuation” in: Practicing Law
Institute, Patent Law Institute 2007: the Impact of Recent Developments on Your
Practice, PLI Course Handbook (March 19, 2007).



“Establishing Licensing Rates through Options,” in: ipFrontline, September 12, 2006
(http://www.ipfrontline.com/depts/article.asp?id=12586&deptid=3).

COURSES AND PRESENTATIONS


“What is a Brand Worth?” MCLE webinar, The State Bar of California, Trademark
Interest Group, March 2015.



“Intellectual Property Valuation Techniques,” MCLE presentation for Pillsbury
Winthrop Shaw Pittman, San Diego, CA, August 2014.



“10 Common Mistakes in IP Valuation/Damages”, CLE presentation to Jeffer
Mangels Butler & Mitchell LLP, Los Angeles, CA, July 2014.



“Intellectual Property Valuation Techniques,” MCLE presentation, San Diego, CA,
April 2013



“Intellectual Property Valuation and Monetization,” a seminar for the Special
American Business Internship Training (SABIT) Intellectual Property Rights program,
U.S. Department of Commerce. March, 2013.



“Valuing IP in the Context of Bankruptcy,” webinar for the Certified Patent Valuation
Analyst curriculum, Business Development Academy. October, 2011.



“Recent Developments in Intellectual Property Economic Damages,” Presentation at
the Annual Conference of the National Association of Forensic Economics. June,
2011.



“Valuing the Intangible: Where to Start?” CLE presentation to Sheppard Mullin
Richter & Hampton, LLP. December, 2009.

[e-mail]

www.ipmetrics.com

Fernando Torres
Qualifications and Experience
Page 4



“Defending and Enforcing Your Technology.” Panelist at: Foley’s Emerging
Technologies Conference: Navigating a New World – San Diego, CA (Foley &
Lardner LLP); September 2009.



”Intellectual Property Valuation, Monetization and Disposition in Bankruptcy” – CLE
presentation at the Spring Trademark Program of the NY Intellectual Property Law
Association – New York, NY; June 2009.



“Damages Valuation and Expert Witnesses” (co-presenter) – CLE presentations to:
•
•
•

Gibson, Dunn & Crutcher LLP – Irvine, CA (June, 2008)
Arent Fox, LLP — Washington, DC (April, 2008)
Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P.
Washington, DC (April, 2008)

–



“Valuing Intangible Assets for Litigation” (Instructor) – National Association of
Certified Valuation Analysts (NACVA) – Fort Lauderdale, FL; December 2007



“Valuing Intangible Assets for Litigation” (Instructor) – National Association of
Certified Valuation Analysts (NACVA) – Philadelphia, PA; October 2007



“Trademark Values in Corporate Restructuring” – Western Economics Association
International 82nd Annual Conference – Seattle, WA; July, 2007



“Entrepreneurship and Innovation” (Session Chair) – Western Economics
Association International 82nd Annual Conference – Seattle, WA; July, 2007



“Alternative Focuses for ‘But For’ Scenario Specification in Commercial Litigation”
(Discussant) – National Association of Forensic Economics, Western Conference –
Seattle, WA; June, 2007



“Patent Values in the Evolving I.P. Market” – Practicing Law Institute – Hot Topic
Briefing Teleconference; May 2007 (CLE Presentation)



“Key Issues in Intellectual Property Due Diligence” – Due Diligence Symposium
2007 – ACG – Iselin, NJ; April 2007



“Life Sciences IP Due Diligence” – American Conference Institute – San Francisco,
CA; January 2007



“Developments in Patent Valuation” – Practicing Law Institute – San Francisco, CA;
January 2007 (CLE Presentation)



“Collins & Aikman Europe and Other Cross-Border Asset Sales: A Tale of Two
Venues” – American Bankruptcy Institute, Winter Leadership Meeting – Phoenix, AZ;
December 2006



“Valuing Intangible Assets for Litigation” (Instructor) – National Association of
Certified Valuation Analysts (NACVA) – San Diego, CA; December 2006.

[e-mail]

www.ipmetrics.com

Fernando Torres
Qualifications and Experience
Page 5

LITIGATION-RELATED EXPERIENCE
(Last Four Years)
Date
Range
February
2012

March
2012

Parties

Case No.

Court

Status

The Int’l. Aloe
Science Council
Inc. V. Fruit of
the Earth, Inc.

11-CV-2255 United States Settled
District Court

A. Fraley, et al v.
Facebook, Inc.

11-CV-1726 United States Settled
District Court

District of
Maryland

Nature

Hired by

Involvement

Trademark
Infringement.

Kane
Kessler,
P.C.

Expert
Rebuttal
Report on
Damages,
Depositions

Rights of
Publicity

The Arns
Law Firm

Expert
Declarations
in Support of
Motion for
Class
Certification,
Value of
Injunctive
Relief,
Deposition

Northern
District of
California

Class
Action

Superior
Closed
Court of the
State of
California
(Los Angeles)

Rights of
Publicity

Wilson
Elser
Moskowitz
Edelman &
Dicker LLP

Preliminary
Expert
Damages
Report,
Arbitration

Contract,
Database

Neymaster
Goode, PC

Expert
Damages
Rebuttal
Report,
Deposition,
Arbitration

Copyright
&
Trademark
Infringement

Ezra
Brutzkus
Gubner
LLP

Expert
Damages
Report,
Deposition

Intangible
Asset
Fair
Market
Value

Tripp Scott
PA

Declaration,
Expert
Damages
Report,
Deposition

Patent
Infringement

Ferraiuoli,
LLC

Expert
Damages
Report,
Deposition

Contract,
Software
IP value

Kalbian
Hagerty
LLP

Expert
Rebuttal
Reports,
Depositions,
Trial
testimony

August
2013

Jude Law v.
Paloform Inc.

SC120354

September
November
2013

Scidera, Inc. v.
Newsham
Choice
Genetics, LLC

American
AAA 16174-00582- Arbitration
Association
12

February
2014

Lambert Corp.
v.
LBJC, Inc.et al.

13-CV-0778 United States Settled
District Court

S. Mattocks v.
Black
Entertainment
Television LLC

13-CV61582

April 2014

July – Aug.
2014

Aug. 2014Aug. 2015

Tierra
Intelectual
Borinquen, Inc.
v.
Toshiba
Corporation.
S. Abu-Lughod
v. S. Calis,
Tocali, Inc.,
ASCII Media,
Inc., et al.

[e-mail]

Closed

Central
District of
California
United States Closed
District Court
Southern
District of
Florida
13-cv-47

United States Settled
District Court
Eastern
District of
Texas

13-cv-2792

United States Closed
District Court
Central
District of
California

www.ipmetrics.com

Fernando Torres
Qualifications and Experience
Page 6

Date
Range
Feb – Mar
2015

Jan. - May
2015

Parties

Case No.

Court

Status

Nature

Hired by

Involvement

S. Nerayoff vs.
L. Rokhsar

2031572012

Supreme
Closed
Court Of The
State Of New
York

Value of
Patent
Assets

Baker &
Hostetler
LLP

Expert
Declaration
on Patent
Value,
Trial
testimony

In Re Google,
Inc., Privacy
Policy
Litigation.

12-cv-1382

United States Closed
District Court

Breach of
Contract
Class
Action

Grant &
Eisenhofer
P.A.

Expert
Report on
Privacy
Damages,
Deposition

[e-mail]

Northern
District of
California

www.ipmetrics.com

EXHIBIT B

Exhibit B - List of Materials Relied On:
I relied on the following documents and materials in forming my opinions:
Academic Literature
1.

Vogel, Harold L. Entertainment Industry Economics. Cambridge
University Press, 2011..

2.

Smith, Gordon V., and Russell L. Parr. Valuation of intellectual property
and intangible assets. Vol. 13. Wiley, 2000.

3.

Reilly, Robert F., and Robert P. Schweihs. Valuing intangible assets.
McGraw Hill Professional, 1998.

4.

Business Valuation Resources, “Benchmarking Identifiable Intangibles
and Their Useful Lives in Business Combinations” 2012, p. 66
(www.bvresources.com).

5.

Duff & Phelps, 2015 Valuation Handbook: Guide to the Cost of Capital,
John Wiley & Sons, 2015

6.

Loumioti, Maria. "The use of intangible assets as loan collateral." Harvard
Business School Job Market Paper (2011).,
(http://ssrn.com/abstract=1748675)

7.

Ugander, Johan, Brian Karrer, Lars Backstrom, and Cameron Marlow.
"The anatomy of the facebook social graph." arXiv preprint
arXiv:1111.4503 (2011). (http://arxiv.org/abs/1111.4503v1)

8.

Perdue, David J. "Social media marketing: Gaining a competitive
advantage by reaching the masses." Senior Honors Papers (2010): 127.

9.

Buhalis, Dimitrios, and Emmanouil Mamalakis. "Social media return on
investment and performance evaluation in the hotel industry context." In
Information and Communication Technologies in Tourism 2015, pp. 241253. Springer International Publishing, 2015.

10.

Goldfarb, Avi, and Catherine Tucker. "Shifts in privacy concerns."
Available at SSRN 1976321 (2011). (http://ssrn.com/abstract=1976321)

11.

Tucker, Catherine. "Social advertising." Available at SSRN 1975897
(2012). (http://ssrn.com/abstract=1975897)

12.

Tucker, Social Networks, Personalized Advertising, and Perceptions of
Privacy Control, Time Warner Research Program on Digital
Communications, Summer 2011
(http://209.59.135.49/pdf/TWC_Tucker_v3a.pdf).

Articles and Other Online Sources
1.

Business Insider, Business Intelligence Report on Social Engagement
(http://www.businessinsider.com/social-media-engagement-statistics2013-12).

2.

Business Insider Depiction of Social Graph
(http://static3.businessinsider.com/image/4f5112e169bedd1526000061
/facebook-open-graph.jpg).

3.

MarketingLand (http://marketingland.com/facebooks-latest-tweaks-favorfriends-could-hurt-page-reach-125931).

4.

W. Oremus, “That Facebook Copyright Notice Is Still a Hoax” November
26, 2012, Slate
(http://www.slate.com/blogs/future_tense/2012/11/26/facebook_copyright
_notice_berner_convention_status_update_still_a_hoax.html)

5.

Trade publication, Advertising Age, Nov. 22, 2011,
(adage.com/print/231128).

6.

Peter Elbaor, “The Interconnection of Facebook Fan Pages” October 28,
2011, ComScore Insights Blog,
(http://www.comscore.com/Insights/Blog/The-Interconnection-ofFacebook-Fan-Pages).

7.

Webtrends, white paper, 2011. Reported in The Wall Street Journal,
“How Much Does a Facebook Fan cost?” February 1, 2011. Based on data
in WebTrends®, “Ads for Fans”, 2012, p. 4.

8.

Facebook CEO Mark Zuckerberg’s public post on Facebook.com of
August 27, 2015, at:
(https://www.facebook.com/zuck/posts/10102329188394581)

9.

Wolfram|Alpha Knowledgebase, using data from the World Bank
(http://www.wolframalpha.com/ accessed 10/26/15).

10.

US Census projections and Statistics Canada estimates [In:
http://www.census.gov/population/projections/data/national/2014/summar
ytables.html, and http://www.statcan.gc.ca/pub/91-002-x/2015002/t002eng.pdf]

11.

“IAB Social Media Buyers Guide” by Facebook’s Adam Isserlis,
Manager, Corporate Communications, Ads/Monetization; Colleen Coulter,
Product Marketing Communications Manager available on the Interactive
Advertising Bureau website (http://www.iab.net/socialmediabuyersguide).

12.

Facebook for Developers website: https://developers.facebook.com/.

13.

“Instant Articles” initiative and new deals with publishers like the
Washington Post (http://media.fb.com/2015/05/12/instantarticles/).

14.

Expanding the power of Facebook search
(http://newsroom.fb.com/news/2015/10 /search-fyi-find-what-the-worldis-saying-with-facebook-search/).

15.

Video, with video hosting and action tracking
(http://newsroom.fb.com/news/2015 /06/news-feed-fyi-taking-intoaccount-more-actions-on-videos/), app acquisitions like Instagram and
WhatsApp, and with plugins to track activities outside of Facebook

16.

Google Products and Advertising Platforms
(www.thinkwithgoogle.com/products/)

17.

“Digital Advertising Report Q3 2015,” Adobe Digital Index
(www.cmo.com/adobe-digital-index.html), p.18, 24.

18.

Open Graph protocol, this is used on Facebook to allow any web page to
have the same functionality as any other object on Facebook. See:
http://ogp.me/.

19.

https://developers.facebook.com/docs/graph-api

20.

Facebook SDK Documentation
(https://developers.facebook.com/docs/javascript/quickstart/v2.5#plugins).

21.

J. Kincaid in: TechCrunch (http://techcrunch.com/2009/02/09/facebookactivates-like-button-friendfeed-tires-of-sincere-flattery/).

22.

Facebook Help Center (Each Facebook account has a unique username.
On a user’s timeline page, their username will appear at the top of the
browser and look something like www.facebook.com/[username]).
https://www.facebook.com/help/228578620490361.

23.

Facebook, Social Plugins FAQs, at:
https://developers.facebook.com/docs/plugins/faqs/#ref.

24.

Facebook for Business post on November 14, 2014
(https://www.facebook.com/business/news/update-to-facebook-newsfeed).

25.

Facebook Media, “An Update to News Feed: What it Means for
Businesses” (https://www.facebook.com/business/news/update-tofacebook-news-feed)

26.

“News Feed FYI: Balancing Content from Friends and Pages”
(http://media.fb.com/2015/04/21/news-feed-fyi-balancing-content-fromfriends-and-pages/).

27.

Facebook’s disclosure in connection with the redesign of the Messenger
platform, at: https://www.facebook.com/notes/facebook-engineering/theunderlying-technology-of-messages/454991608919

28.

Facebook, between August 2012 and May 2013 user engagement, as
illustrated in the number of likes generated per day, increased from 2.7
Billion to 4.5 billion on average

(https://www.facebook.com/photo.php?fbid=10151908376831729&set=a.
10151908376636729.1073741825.20531316728&type=1&theater).
29.

Nielsen “Quickly and Accurately Measure the Effectiveness of Your
Online Ad Campaigns” available as:
www.nielsen.com/content/dam/nielsen/en_us/documents/pdf/Fact%20She
ets/Nielsen%20BrandLift.pdf.

30.

National Public Radio, Planet Money “For $75, This Guy Will Sell You
1,000 Facebook 'Likes'” originally broadcast on May 16, 2012
(http://www.npr.org/sections/money/2012/05/16/152736671/this-guy-willsell-you-sell-you-1-000-facebook-likes).

31.

https://www.facebook.com/notes/facebook-engineering/tao-the-power-ofthe-graph/10151525983993920

32.

“Uniform Resource Locators (URL): A Syntax for the Expression of
Access Information of Objects on the Network” by Tim Berners-Lee
(March 1994) in: http://www.w3.org/Addressing/URL/url-spec.txt.

33.

US Census Bureau, Geographical Mobility: 2005 to 2010 (December
2012), Table 2, Page 5 (http://www.census.gov/prod/2012pubs/p20567.pdf).

34.

https://www.facebook.com/help/cookies/

Document produced by Defendant in Campbell et al. v. Facebook, Inc.
1.
2.
3.
4.
5.
6.
7.

FB000012475
FB000015766
FB000026790
FB000026793
FB000011745
FB000011715
FB000008271

Other Information
1.

Plaintiffs’ Consolidated Amended Complaint filed on April 25, 2014

2.

Facebook, Inc. 2014 10-K

3.

Facebook, Inc.’s 2015 Q3 Earnings Report (November 4, 2015) At:
http://investor.fb.com/results.cfm

4.

Facebook, Inc.’s 2015 Q2 Earnings Report, July 29, 2015

5.

Facebook, Inc. 2012 10-K

6.

Second Quarter, 2015 Earnings Call held on July 29, 2015. Available at:
http://investor.fb.com/results.cfm.

7.

Facebook securities registration statement (SEC Form S-1/A May 16,
2012 p 2).

8.

Facebook F8 Developer Conference, April 21, 2010.

9.

Facebook, Inc. 2010 10-K Disclosures

EXHIBIT 10
FILED UNDER SEAL

EXHIBIT 11
FILED UNDER SEAL

EXHIBIT 12
FILED UNDER SEAL

EXHIBIT 13

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Volkswagen denies fitting defeat device in its cars in India
IBNLive - Feb 9, 2016
A cheat or defeat device is a software in diesel engines to
manipulate emission tests by changing the performance of the
vehicles to improve ...

VW Submits V-6 Diesel-Update Plan For Audi, Porsche, V…
Green Car Reports - Feb 4, 2016
Cutting its deadline extremely close, Volkswagen submitted a
proposed fix for 3.0-liter V-6 TDI diesel models with "defeat device"
software to ...
VW Submits Fix For 3.0-Liter Diesels To California Officials
Cinema Blaze - Feb 5, 2016
Explore in depth (8 more articles)

Oregonians sue Volkswagen in Lane County court over ill…
The Register-Guard - Jan 19, 2016
... sue Volkswagen in Lane County court over illegal emissions
device ... said that clandestine software allowing six-cylinder
Volkswagen diesel ...

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2/13/16, 2:55 PM

volkswagen 'software device' - Google Search

https://www.google.com/search?hl=en&gl=us&tbm=nws&auth...

Defeat devices had been an 'open secret' at Volkswagen…
This is Money - Jan 26, 2016
According to VW UK boss Paul Willis, the software should not be
referred to as a 'defeat device' at all this side of the Atlantic, as he
insisted it ...
VW diesel cheating an 'open secret' within company, report alleges
Christian Science Monitor - Jan 26, 2016
Explore in depth (38 more articles)

Supplier Bosch Defends Diesels, Blames VW, Investigate…
Green Car Reports - Feb 1, 2016
Automotive supplier Bosch says it had nothing to do with
Volkswagen's use of "defeat device" software to cheat on emissions
tests.

Beyond Volkswagen, Europe's Diesels Flunked a Pollutio…
New York Times - Feb 7, 2016
In September, VW admitted installing software in 11 million diesel ...
conceded that the software was an illegal defeat device designed to
cheat ...

Volkswagen AG Sales Coming Back on Track
Business Finance News - Feb 12, 2016
Volkswagen AG (ADR) (OTCMKTS:VLKAY) sales have finally
returned ... were equipped with the “defeat device” or emissions
rigging software.

Probe Reveals 'Cheat Device' Was Open Secret in Volks…
NDTVAuto.com - Jan 25, 2016
News of Volkswagen (VW) using 'cheat devices' that tricked ...
cheating software was an open secret in the engine development
department.
Examiner.com

VW bosses reportedly knew of, discussed 'defeat device' as early as ...
Examiner.com - Jan 22, 2016
Explore in depth (55 more articles)

Infotainment and smartphone integration riding shotgun at…
MobileSyrup.com - 2 hours ago
Volkswagen is advertising its “App-Connect” platform, with a video
station ... Fiesta will also get those two platforms later this year as
software updates. ... more of a connected device than other
combustion vehicles tend to be.

Volkswagen delays earnings report citing “open question…
Ars Technica - Feb 5, 2016
Worldwide, the number of diesel Volkswagens with so-called “defeat
device” software rises to about 11 million. According to a press
release ...
New York Times

Volkswagen, Reeling From Emissions Scandal, to Delay Earnings ...
In-Depth - New York Times - Feb 5, 2016
Explore in depth (301 more articles)

Volkswagen's Software Was 'Illegal Defeat Device,' Ger…
New York Times - Dec 1, 2015
LONDON — German regulators said on Tuesday that the software
Volkswagen used in many of its diesel vehicles constituted illegal
cheating ...
Volkswagen to recall 323000 cars in India
In-Depth - Livemint - Dec 1, 2015
Explore in depth (1,190 more articles)

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2/13/16, 2:55 PM

volkswagen 'software device' - Google Search

https://www.google.com/search?hl=en&gl=us&tbm=nws&auth...

Big brands revving to go
Saudi Gazette - 7 hours ago
Volkswagen was putting a brave face on its problems with US ... with
a device that secretly detected when their emissions were being
read, to give a ... River Technology gave presentations on the growing
role of software and ...

Emissions Lies Haunt VW as It Faces Tougher Justice De…
Bloomberg - Feb 7, 2016
No one has died from the emissions-cheating software Volkswagen
AG ... admitting it created a device to fool emissions tests, Mary D.
Nichols, ...
VW haunted by emissions lies as it faces tougher U.S. prosecutors
Automotive News - Feb 8, 2016
Explore in depth (8 more articles)

VW owners could see "generous compensation" in wake o…
Nooga.com - Feb 9, 2016
Volkswagen plans to offer "generous compensation" to about
600,000 ... were affected by the company's emissions "defeat device"
software, ...

"Clean Diesel" Leads to Clean Lawsuit
Local Talk News - Feb 12, 2016
"Our lawsuit alleges that Volkswagen put profit ahead of honesty, ...
sold under all three brand names with a software "defeat device"
capable of ...
WRGB

VW sinks to 5-year low; Audi extends streak
Automotive News - Feb 2, 2016
WASHINGTON -- Volkswagen's U.S. sales fell 15 percent last
month, the ... control software devices that weren't disclosed as
required by law.
VW Submits Recall Plan for 3-Liter Diesels to CARB, EPA
In-Depth - Bloomberg - Feb 2, 2016
Explore in depth (205 more articles)

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