LinkedIn dodges UCL claims because big businesses aren't covered plaintiffs

Topdevz, LLC v. LinkedIn Corp., 2021 WL 3373914, No. 20-cv-08324-SVK (N.D. Cal. Aug. 3, 2021)

Plaintiffs, on behalf of a putative class of advertisers, alleged that LinkedIn overstates the level of actual user engagement with ads on its platform in order to charge premium rates to advertisers. Every advertiser “agree[s] to pay on the basis and at the rate shown when a campaign, order or other purchase was submitted … e.g., price per impression, click” or other pricing options. LinkedIn does not provide advertisers with access to raw data regarding which users viewed their ads, their level of engagement, or whether the users are real humans or automated bots. It provides various metrics, such as “reach metrics,” which purport to measure the number of impressions, views, and clicks.

In August 2020, LinkedIn discovered that its video ad metrics for Sponsored Content ads may have been inflated: it was counting views in the app even when the user merely scrolled past the video and the video was only playing offscreen. A couple of months later, LinkedIn notified the affected advertisers and provided them with makegoods.

Plaintiffs brought UCL and common-law claims.

Some courts have held that “where a UCL action is based on contracts not involving either the public in general or individual consumers who are parties to the contract, a corporate plaintiff may not rely on the UCL for the relief it seeks.” But other courts have only excluded “sophisticated corporations or large corporations,” a rule the court applied here (and which might seem to preclude class treatment even if these claims continue). The complaint alleged that “[m]ost LinkedIn advertisers are small businesses.” It described each named plaintiff as a corporation or limited liability company, and didn’t plead facts that they were small and/or unsophisticated entities, seeking to represent a class of all persons or entities who paid for ads on LinkedIn’s platform, without limitation as to size or sophistication.

Other courts have held that “[t]he relative size of the plaintiff companies … is secondary to the analysis of whether, as a result of the alleged unfair or fraudulent business practice, consumers are adversely affected.” But the allegations of harm to the public were vague and conclusory. Thus, the UCL complaint was dismissed with leave to amend, apparently allowing repleading on either theory if appropriate.

Also, their claim for restitution under the UCL failed because they couldn’t show that they lacked an adequate remedy at law, following Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020), in which held that “a federal court must apply traditional legal principles before awarding restitution under the UCL and CLRA” and “state law cannot expand or limit a federal court’s equitable authority.”

Other claims didn’t fare much better.