Plaintiff Shared.com (Shared) scored a victory over Meta Platforms Inc. in a case concerning Meta’s alleged breaches of contract regarding Shared’s advertising on, and monetizing from Facebook. Judge Richard Seeborg dismissed three of the six claims, finding that they treated Facebook as a publisher of third-party information and thus fell within Section 230 of the Communications Decency Act’s (CDA) protection.
Wednesday’s opinion explained that Shared is an online content creator based out of Ontario, Canada that develops and publishes contemporaneous and entertaining online content. Between 2006 to 2020 Shared said that its Facebook pages amassed approximately 25 million followers, aided by its substantial engagement with Facebook’s “advertising ecosystem.”
Specifically, Shared directly purchased “self-serve ads,” which helped drive traffic to Shared.com and Shared’s Facebook pages as well as participated in a monetization program called “Instant Articles.” The latter worked by Facebook embedding articles from Shared.com into the Facebook news feed with ads from other businesses embedded into those articles, the revenue from which Facebook split with Shared.
In 2018, the relationship soured when Shared lost access to Instant Articles on at least three occasions and Facebook failed to make timely payment Instant Articles ad revenue payments. Simultaneously, trouble arose with Shared’s self-serve ad buys when Facebook, “arbitrarily and incorrectly” rejected ads without explanation.
The final blow came in October 2020 when Facebook unpublished Shared’s Facebook pages, suspended its ability to advertise, disabled Shared’s ad accounts, and the personal Facebook profiles of several Shared employees, allegedly without reason.
The complaint claims that the lack of access, the late payment, the ad rejection, and the complete disbanding of Shared’s Facebook accounts were against the operative contracts it entered into. It also purportedly caused Shared’s business and valuation to crater and force the company to lay off more than a dozen employees.
The suit stated contract-related, statutory, and fraud claims based on the various acts committed by Facebook. In this week’s opinion, Judge Seeborg summarized that the claims had to surmount three obstacles to survive dismissal: Section 230 of the CDA, the Limits on Liability within the Facebook Terms of Service, and pleading sufficiency.
The court opined that claims for conversion, breach of contract, and breach of the implied covenant of good faith and fair dealing involved Facebook’s decision to suspend Shared’s accounts, curtailing its ability to reach followers. Though Shared argued that Facebook violated its own terms of service because it did so with Shared committing clear, serious, or repeated breaches of those provisions, the court found it irrelevant. “At bottom, these claims seek to hold Defendant liable for its decision to remove third-party content from Facebook,” Judge Seeborg ruled.
The other claims withstood both the liability limits and Facebook’s challenge to the claims’ sufficiency, even with regard to fraud-based claims to which the heightened pleading standard applied.
Shared.com is represented by the Law Offices of Seth W. Wiener and Gardella Grace P.A. and Facebook by Orrick, Herrington & Sutcliffe LLP.
