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Meta Platforms must face marketers' class action, US appeals court finds

Figurines with laptops and cellphones are pictured in front of Facebook logo in this illustration, July 24, 2022

March 21 (mod1s) - A split U.S. appeals court ruled Meta Platforms (META.O), opens new tab must face a class action by advertisers that alleged the Facebook and Instagram owner of overcharging them by unlawfully misrepresenting the amount of people their advertisements would reach. 

In a 2-1 ruling on Thursday, the 9th U.S. Circuit Court of Appeals in San Francisco found advertisers may sue for damages as a group over Meta's statements about the "potential reach" of their advertisements.

Advertisers argued the statistic employed counted the number social network accounts, not the smaller number of real individuals, thus exaggerated the number of prospective viewers by as much as 400%. 

The court also decertified a second class seeking injunctive relief, meaning the advertisers cannot sue as a group, since it wasn't obvious that the lead plaintiff had legal standing to proceed. 

A dissenting judge would have decertified both courses. The marketers have calculated Meta might owe more than $7 billion in damages, court records reveal.

Meta and its attorneys did not immediately reply to demands for comment. 

The Menlo Park, California-based corporation has stated advertising contribute "substantially all, opens new tab" of its income, which reached $134.9 billion in 2023. Net income was $39.1 billion. 

Class actions allow potentially higher damages at cheaper expense than if plaintiffs are obliged to litigate individually. 

Circuit Judge Sidney Thomas wrote for the majority that since Meta supplied the same claimed deception regarding potential reach, marketers might attempt to establish that their asserted losses came from a "common course of conduct."

The class encompasses potentially millions of people and organizations who have paid for advertisements on Facebook and Instagram since Aug. 15, 2014. 

Their case included an allegation that top management knew that duplicate and phony accounts, including from bots, boosted the "potential reach" number, but made efforts to cover it up. 

Circuit Judge Danielle Forrest, in a partial dissent, said she would decertify the damages class because of personal uncertainties about what advertisers knew about what Meta was telling them before they purchased advertising.

Geoffrey Graber, a lawyer representing the marketers, said he looked forward to bringing the damages case to a jury. 

The case is DZ Reserve et al v Meta Platforms Inc, 9th U.S. Circuit Court of Appeals, No. 22-15916.


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