Meta Seeks to Dismiss or Arbitrate Lawsuit by Online Advertising Competitor

Meta Platforms has urged dismissal of an advertising competitor’s case on two grounds: the first for failure to state a claim and the second for agreement to an arbitration clause, requiring that Metroplex Communications Inc. arbitrate its competition grievances rather than bring them in court.

As previously reported, the case accuses Meta of touting its Facebook and Instagram advertising products as more effective than they were. The upshot, the suit claims, is that advertising customers were duped into believing that they could reach a larger audience than they actually could. 

Like another class action which recently achieved class certification, Metroplex says that the company overestimated the number of monthly active users, further padding its statistics to draw in potential ad space purchasers.

Metroplex, which purportedly competes with Meta by selling ads for radio stations and other media outlets in Illinois, alleges that Meta misled advertisers into purchasing ads on Meta’s services instead of on plaintiff’s local websites and radio stations, diverting business it would have attracted.

Its complaint states claims for relief under the Lanham Act, claiming that Meta’s Securities and Exchange Commission (SEC) statements regarding its user base and advertising reach constitute false representations.

In a pair of filings last week, Meta said it should not have to face the case in court if at all. In its dismissal bid, Meta claimed that “none of the statements [Metroplex] complains about is an ad, much less a false ad that harmed Plaintiff.”

Further, Meta argued that Metroplex neither raises plausible inference of injury as a competitor nor can Metroplex prove that Meta channeled business away from it. To this end, Meta said that “[t]here is no causal connection between the challenged statements in Meta’s SEC filings and describing individual advertisers’ ad campaigns, on the one hand, and Plaintiff’s business selling ads for radio stations and other news outlets in Southern Illinois, on the other.”

Lastly, Meta added that the claims are time-barred by the Lanham Act and Illinois corollary law’s three-year statute of limitations. The company ventured that Metroplex relies on statements made in 2018 and earlier, plus has no basis to toll the clock.

As to Meta’s motion to compel arbitration, the defendant claimed that Metroplex itself bought advertising from Facebook to market its own advertising sales to local radio stations. As a signatory to its terms, Metroplex purportedly agreed to binding arbitration, Meta said.

Metropolex is represented by Goldenberg Heller & Antognoli P.C. and Margulis Gelfand LLC. Meta Platforms is represented by Latham & Watkins.