Fraley v. Facebook, Inc.
| Decision Date | 16 December 2011 |
| Docket Number | Case No.: 11-CV-01726-LHK |
| Court | U.S. District Court — Northern District of California |
| Parties | ANGEL FRALEY, et al., Plaintiffs, v. FACEBOOK, INC, a corporation; and DOES 1-100, Defendants. |
Facebook, Inc. ("Facebook") owns and operates Facebook.com, a social networking site with over 600 million members worldwide and over 153 million members in the United States. While members join Facebook.com for free, Facebook generates its revenue through the sale of advertising targeted at its users. At issue here is one of Facebook's advertising practices in particular, "Sponsored Stories," which appear on a member's Facebook page, and which typically consist of another member's name, profile picture, and an assertion that the person "likes" the advertiser, coupled with the advertiser's logo. Sponsored Stories are generated when a member interacts with the Facebook website or affiliated sites in certain ways, such as by clicking on the "Like" button on a company's Facebook page.
In this putative class action, Plaintiffs Angel Fraley; Paul Wang; Susan Mainzer; J.H.D., a minor, by and through James Duval as Guardian ad Litem; and W.T., a minor, by and through Russell Tait as Guardian ad Litem (collectively "Plaintiffs"), on behalf of themselves and all otherssimilarly situated, allege that Facebook's Sponsored Stories violate California's Right of Publicity Statute, Civil Code § 3344; California's Unfair Competition Law, Business and Professions Code § 17200, et seq. ("UCL"); and the common law doctrine of unjust enrichment. Plaintiffs allege that Facebook unlawfully misappropriated Plaintiffs' names, photographs, likenesses, and identities for use in paid advertisements without obtaining Plaintiffs' consent. Second Am. Compl. ("SAC") ¶¶ 107-136, June 6, 2011, ECF No. 22. 1 Defendant filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) arguing lack of Article III standing, immunity under § 230 of the federal Communications Decency Act ("CDA"), and failure to state a claim upon which relief can be granted. Mot. to Dismiss at 1-2, July 1, 2011, ECF No. 30 ("Mot."). The Court held a hearing on this motion on September 29, 2011. Having considered the parties' submissions and argument and the relevant law, and for the reasons discussed below, the Court GRANTS in part and DENIES in part Defendant's motion to dismiss.
Unless otherwise noted, the following allegations are taken from the Complaint and judicially noticeable documents and are presumed to be true for purposes of ruling on Defendant's motion to dismiss.2 See Marder v. Lopez, 450 F.3d 445, 447 n.1 (9th Cir. 2006). Facebook is a free, web-based social networking site with over 153 million members in the United States. SAC ¶ 13. To join Facebook, a user must provide his or her name, age, gender, and a valid e-mail address, and agree to Facebook's terms of service. Id. at ¶ 16; Mot. at 2. Once registered, a member receives a "Profile" page, may upload a "profile photo" representing him or herself, and may establish connections with other members by approving them as Facebook "Friends." SAC ¶¶17-18. In addition, Facebook allows members to share information with their Friends in a variety of ways: members may "Post" by adding text, images, videos, and hyperlinks to their own profile page, id. at ¶ 23; "Check-in" by announcing their geographical location within the feature "Places," id. at ¶ 24; and "Like" content by clicking on a thumbs-up button that appears next to certain items on the Internet, both within Facebook.com and on external sites, id. at ¶ 25. Whenever members take one of these actions, Facebook generates a "Story," which then appears on their Friends' "News Feed." Id. at ¶¶ 15, 17, 20.
Facebook earns revenue primarily through the sale of targeted advertising that appears on members' Facebook pages. Id. at ¶¶ 13, 21. Plaintiffs challenge one of Facebook's advertising services in particular, known as "Sponsored Stories," which Facebook launched on January 25, 2011, and which was enabled for all members by default. Id. at ¶¶ 26, 30. A Sponsored Story is a form of paid advertisement that appears on a member's Facebook page and that generally consists of another Friend's name, profile picture, and an assertion that the person "likes" the advertiser. A Sponsored Story may be generated whenever a member utilizes the Post, Like, or Check-in features, or uses an application or plays a game that integrates with the Facebook website, and the content relates to an advertiser in some way determined by Facebook. Id. at ¶ 26. For example, Plaintiff Angel Fraley, who registered as a member with the name Angel Frolicker, alleges that she visited Rosetta Stone's Facebook profile page and clicked the "Like" button in order to access a free software demonstration. Subsequently, her Facebook user name and profile picture, which bears her likeness, appeared on her Friends' Facebook pages in a "Sponsored Story" advertisement consisting of the Rosetta Stone logo and the sentence, "Angel Frolicker likes Rosetta Stone." Id. at ¶¶ 65-68. Plaintiffs Susan Mainzer, Paul Wang, J.H.D., and W.T. were similarly featured in "Sponsored Story" advertisements after clicking on a "Like" button on a company's website, which they did for various reasons, such as to access a special offer code for a new product, to access photographs of an event, or to become eligible for a promotional prize. Id. at ¶¶ 69-85; see also id. at ¶ 25. Plaintiffs allege that they were unaware at the time they clicked those "Like" buttons that their actions would be interpreted and publicized by Facebook as an endorsement of those advertisers, products, services, or brands. Id. at ¶¶ 26, 61. Plaintiffs further allege that membersare often enticed to click on a "Like" button simply to receive discounts on products, support social causes, or to see a humorous image. Id. at ¶ 25.
Unlike ordinary "Stories" that appear in a member's News Feed, Sponsored Stories are offset along with other advertisements paid by Facebook advertisers. The SAC quotes Facebook CEO Mark Zuckerberg explaining that "[n]othing influences people more than a recommendation from a trusted friend" and that "[a] trusted referral is the Holy Grail of advertising." Id. at ¶ 43. On average, actions taken by Facebook members are shared with 130 people, the average number of friends a member has. Id. at ¶ 45. The SAC also quotes Facebook COO Sheryl Sandberg stating that "[m]aking your customers your marketers" is "the illusive goal we've been searching for." Id. These beliefs about the marketing value of friend endorsements have been corroborated by the Nielsen Company, a leading marketing research firm. Id. at ¶ 42. According to Facebook, members are twice as likely to remember seeing a Sponsored Story advertisement compared to an ordinary advertisement without a Friend's endorsement and three times as likely to purchase the advertised service or product. Id. at ¶¶ 44-45. Plaintiffs therefore assert that the value of a Sponsored Story advertisement is at least twice the value of a standard Facebook.com advertisement, and that Facebook presumably profits from selling this added value to advertisers. Id. at ¶¶ 44, 47.
Plaintiffs assert that Sponsored Stories constitute "a new form of advertising which drafted millions of [Facebook members] as unpaid and unknowing spokepersons for various products," for which they are entitled to compensation under California law. Opp'n at 1; see SAC ¶ 46. Although Facebook's Statement of Rights and Responsibilities provides that members may alter their privacy settings to "limit how your name and [Facebook] profile picture may be associated with commercial, sponsored, or related content (such as a brand you like) served or enhanced by us," id. at ¶ 32, members are unable to opt out of the Sponsored Stories service altogether, id. at ¶¶ 30, 34. Furthermore, although the Statement of Rights and Responsibilities provides that "[y]ou give us permission to use your name and [Facebook] profile picture in connection with [commercial, sponsored, or related] content, subject to the limits you place," id. at ¶ 32, Plaintiffs all registered for a Facebook account prior to January 25, 2011. Therefore, they could not haveknown about Sponsored Stories at the time they agreed to Facebook's Terms of Use, nor did Facebook ask them to review or re-affirm the Terms of Use upon introduction of the Sponsored Story advertising feature. Id. at ¶¶ 50-53.
Plaintiffs allege that Facebook's practice of misappropriating their names and likenesses for commercial endorsements without their consent (1) violated their statutory right of publicity under California Civil Code § 3344; (2) violated the UCL; and (3) unjustly enriched Facebook. Plaintiffs bring this putative class action on behalf of all persons in the United States who were registered members of Facebook.com as of January 24, 2011, and whose names, photographs, likenesses, or identities associated with their account were used by Facebook in a "Sponsored Story" advertisement. SAC ¶ 95. Plaintiffs seek declaratory and injunctive relief, as well as damages and other equitable relief. Id. at ¶ 136.
A Rule 12(b)(1) motion to dismiss tests whether a complaint alleges grounds for federal subject matter jurisdiction. If the plaintiff lacks standing under Article III of the U.S. Constitution, then the court lacks subject matter jurisdiction, and the case must be dismissed. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101-02 (1998).
A jurisdictional challenge may be facial or factual. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Where the attack is facial, the court determines whether the allegations contained in the complaint are sufficient on their...
To continue reading
Request your trial