On Wednesday, a Northern District of California court ruled on Facebook’s second motion to dismiss BrandTotal Ltd. and Unimania’s (collectively, BrandTotal) counterclaims in a case lodged by Facebook over the defendants’ use of online tools that engage in allegedly unauthorized data collection.
The 30-page opinion written by Chief Magistrate Judge Joseph C. Spero explained that BrandTotal is an advertising consulting company that assists its corporate customers in analyzing their own and their competitors’ advertising on social media and other websites by enlisting individual consumers or “panelists” to share the advertisements they view. To create useful analyses for its corporate clients, BrandTotal relies to a great extent on data collected from Facebook, due to Facebook’s enormity compared to other social media platforms, the court explained.
BrandTotal’s most used product is UpVoice, “an application or browser extension that offers panelists cash rewards to share their demographic information and the advertisements they see and interact with on social media,” the opinion stated. Facebook filed suit against BrandTotal in October 2020, first in state court, then in federal court alleging it violated Facebook’s terms of service, broke several state laws, and committed Computer Fraud and Abuse Act violations.
Shortly after, BrandTotal filed counterclaims. In February, the court granted Facebook’s motion to dismiss BrandTotal’s counterclaims partly due to a Federal Trade Commission order requiring Facebook to block access to any “Covered Third Party” that did not comply with Facebook’s terms of use. In its order, the court granted leave for the defendant to amend most of those counterclaims.
Facebook moved once again to dismiss BrandTotal’s refreshed counterclaims seeking declaratory relief and accusing Facebook of intentionally interfering with contract and prospective economic advantage, and violating California’s Unfair Competition Law.
The court granted dismissal of BrandTotal’s declaratory judgment counterclaims, without leave to amend, because the declarations it seeks are the mirror-images of Facebook’s initial claims, Judge Spero wrote. However, the court noted that its order comes without prejudice to BrandTotal later moving for leave premised on changed circumstances.
Judge Spero issued a mixed ruling on the four interference with contract claims, declining to dismiss them based on contracts with customers, panelists, and Google.
Erring on the side of caution, the court wrote, it permitted the counterclaimant’s interference with economic advantage claim to proceed in the alternative to its interference with contract claim as to its relationship with existing customers, existing panelists, and Google.
Neither California Unfair Competition Law (UCL) claim weathered the motion. One, brought under the “unfair” prong of the UCL was dismissed with leave to amend should BrandTotal be able to modify it “to avoid the refusal-to-deal doctrine,” the court wrote. Judge Spero’s opinion permitted BrandTotal to file second amended counterclaims no later than June 25.
Facebook is represented by Wilmer Cutler Pickering Hale and Dorr LLP and Hunton Andrews Kurth LLP. BrandTotal and Unimania are represented by Husch Blackwell and Kronenberger Rosenfeld.
