April 13 (Reuters) - Facebook Inc, which runs the world's
largest social networking website, won a court ruling on Friday
rejecting a bid by thousands of advertisers to sue the company
as a group for overcharging them.
U.S. District Judge Phyllis Hamilton in Oakland, California,
denied the advertisers' request for class-action status, saying
they failed to show they had enough in common to sue for breach
of contract and violating California's unfair competition law.
"The court is persuaded by Facebook's argument that
plaintiffs have not shown that they have a viable method for
proving each class member's recovery," Hamilton wrote. "The need
to determine both liability and damages on an individualized
basis makes this case inappropriate for class treatment."
Jonathan Shub, a lawyer for the advertisers, declined to
comment. Facebook spokesman Andrew Noyes said the company is
reviewing the decision.
Class certification often leads to higher recoveries and
allows plaintiffs to cut legal bills.
Facebook is expected this year to conduct perhaps the most anticipated U.S. initial public offering ever. The Menlo Park,
California-based company is valued at $95.8 billion, according
to SharesPost Inc, which tracks valuations of private companies.
In their 2009 lawsuit, the advertisers accused Facebook of
overcharging them on their "cost-per-click" contracts, under
which they paid fees each time users clicked their ads.
According to the advertisers, Facebook improperly imposed
charges for nonexistent clicks, for clicked ads that never
opened, for clicks caused by server problems, and for accidental
multiple clicks by individual users, among other types of
clicks.
But citing a 2011 U.S. Supreme Court decision involving Wal-Mart Stores Inc that limited class-action litigation,
Hamilton said the advertisers showed neither a "systemic breach
of contract" nor enough similarity among the claims raised.
"There is no way to conduct this type of highly specialized
and individualized analysis for each of the thousands of
advertisers in the proposed class," she said.
Hamilton scheduled a May 17 conference to discuss how best
the case should proceed.
The case is In re: Facebook Inc PPC Advertising Litigation,
U.S. District Court, Northern District of California, No.
09-3043.
For Facebook: Whitty Somvichian of Cooley Godward Kronish.
(Reporting By Jonathan Stempel)
Follow us on Twitter: @ReutersLegal