Class Action Against Facebook Survives Motion to Dismiss | Practical Law
https://content.next.westlaw.com/practical-law/document/Ibb0a5e65ef0511e28578f7ccc38dcbee/Class-Action-Against-Facebook-Survives-Motion-to-Dismiss?viewType=FullText&transitionType=Default&contextData=(sc.Default)The US District Court for the Northern District of California denied in part Facebook's motion to dismiss a class action asserting, among other claims, right of publicity violations based on Facebook's use of its users' names and likenesses in its Sponsored Stories advertising. Facebook sought dismissal asserting that, among other grounds, it is protected from liability as an interactive computer service under the federal Communications Decency Act, Facebook users' "likes" fall within the newsworthiness exception to California's right of publicity statute, the plaintiff's failed to allege sufficient injury and, in any case, the plaintiffs consented to the use based on Facebook's terms of use.
The US District Court for the Northern District of California denied in part Facebook's motion to dismiss a class action asserting, among other claims, right of publicity violations based on Facebook's use of its users' names and likenesses in its Sponsored Stories advertising. Facebook sought dismissal asserting that, among other grounds, it is protected from liability as an interactive computer service under the federal Communications Decency Act, Facebook users' "likes" fall within the newsworthiness exception to California's right of publicity statute, the plaintiff's failed to allege sufficient injury and, in any case, the plaintiffs consented to the use based on Facebook's terms of use.
Key Litigated Issues
Fraley v. Facebook, Inc. is a class action asserting, among other claims, violations by Facebook of the class plaintiffs' California rights of publicity. The class includes Facebook users whose names and likenesses have been used in Facebook's Sponsored Story advertising feature.
In deciding Facebook's motion to dismiss, key issues before the US District Court for the Northern District of California included whether:
Section 230 of the Communications Decency Act (CDA) shields Facebook from liability as an interactive computer service.
The plaintiffs alleged sufficient injury for the claims to proceed.
The plaintiffs consented to Facebook's use of their names and likenesses in its Sponsored Stories advertising feature.
Facebook's Sponsored Story content met the newsworthiness exception permitting the use of the plaintiffs' names and likenesses.
Background
This class action asserts, among other claims, that Facebook's Sponsored Story advertising feature violates the plaintiffs' California rights of publicity. Facebook's Sponsored Stories are a type of paid advertisement generated based on certain interactions by Facebook members with Facebook or affiliated websites. For example, the complaint alleges that after one of the named plaintiffs visited Rosetta Stone's Facebook page and clicked the "Like" button to access free Rosetta Stone content, a Sponsored Story advertisement including her username and profile picture was displayed on her friends' Facebook pages. The advertisement featured a Rosetta Stone logo and stated that the user "likes Rosetta Stone."
The complaint alleged that:
These uses violate the plaintiffs' statutory right of publicity by using their names and likenesses in a commercial context without their consent.
As a result, the plaintiffs suffered damages measurable by the additional profit Facebook earned from selling Sponsored Stories compared to its regular advertisement sales.
Facebook filed a motion to dismiss asserting, among other things, that:
The claims are barred by Section 230 of the CDA, which shields "interactive computer service" providers from liability for information provided by another content provider.
The plaintiffs failed to allege sufficient injury under the California right of publicity statute.
Sponsored Stories fall within an exception to the California right of publicity statute for information that is newsworthy.
If consent was required, the plaintiffs gave their consent based on Facebook's terms of use.
Outcome
The district court denied the motion to dismiss, finding that:
Facebook's alleged actions are not protected under Section 230 of the CDA because creating Sponsored Stories makes it a content provider, rather than an interactive computer service provider, in that context.
Using the plaintiffs' "likes" for commercial advertising removes these uses from the scope of the Cailforinia statute's newsworthiness exception.
The plaintiffs' claims sufficiently alleged a violation of their individual statutory rights under the California right of publicity statute. Distinguishing this case from the court's earlier decision in Cohen v. Facebook, Inc., the court held that the plaintiffs had asserted sufficient economic injury for the claim to proceed by making specific allegations of economic harm. Specifically, the plaintiffs cited statements by Facebook executives and others as to the value of personal endorsements in advertising.
Whether Facebook's terms of use gave Facebook the right to use the plaintiffs' names and likenesses in Sponsored Stories was a question of fact and not a proper ground for dismissal, noting that the general permission given in Facebook's terms of use and other documents does not constitute members' clear consent to these uses or endorsement of the services. The court further noted that the plaintiffs alleged that the Sponsored Stories feature was not available when they joined Facebook and that they were not asked to consent after Facebook introduced them.
Practical Implications
Companies with websites that sell advertisements that include names, likenesses or other aspects of users' identities should take care in the wake of this district court's order. This order shows that the area of law covering the intersection between advertising and social networking is still relatively unsettled. Further, companies considering a similar advertising feature may wish to evaluate the benefits of an opt-in approach, instead of a default opt-out approach.
Settlement
In August 2013 the district court entered an Order Granting Motion for Final Approval of Settlement Agreement on August 26, 2013. The settlement included:
A monetary payment.
An injunction requiring Facebook to:
provide greater disclosure and transparency as to when and how member's names and profile pictures are republished; and
give members additional control over when their names and profile pictures are republished.