local ad company has Lanham Act standing against Meta for allegedly overstating ad reach

Metroplex Communic., Inc. v. Meta Platforms, Inc., 2024 WL 940127, No. 22-cv-1455-SMY (S.D. Ill. Mar. 5, 2024)

Metroplex, a local advertising company, brought a putative class action against Meta for unfair competition. Although Meta argued that Metroplex was an ad purchaser for two of its local media properties (a news site and an FM radio station), given that it has advertised on Facebook dozens of times in the last few years, Metroplex argued that it was a Meta competitor.

Metroplex alleged that sells and places digital and targeted advertisements on its local news website, its “Best of Edwardsville” website, radio advertisements for its FM and AM radio stations, and print advertisements that are placed in local newspapers and in the “Best of Edwardsville” magazine. Metroplex also allegedly develops tools and systems for managing and optimizing advertising campaigns for businesses.

Meta allegedly drew buyers away from its local news outlets by (1) using the word “people” in statements related to advertising on Meta and (2) overestimating the number of people on Meta’s apps and reachable by ad campaigns, and contends that Meta’s users were “not actually people,” because some accounts were false and some people have more than one account. It asserted claims under the Lanham Act and the Illinois Uniform Deceptive Trade Practices Act.

Metroplex satisfied Lexmark by alleging that the parties compete directly for the same customers and Meta’s false or misleading statements were material to advertisement buyers. Lost sales could be plausibly inferred by these allegations.

As for stating a claim, Meta noted that most of the challenged statements weren’t “advertising.” They were numerical estimates taken from Meta’s SEC filings or provided to individual advertisers for particular ad campaigns, and generic references to “people” on informational webpages. But the plaintiff did enough to satisfy Rules 8 and 9(b).

A reasonable consumer could be confused despite Meta’s alleged disclaimers or qualifying statements in SEC filings or in icons that led to popup windows, given the allegations of falsity, just as the back label of a product can’t correct false statements on the front. Given allegations that Meta allegedly inflates audience estimates and reach metrics and such audience size figures can be over 30% of the actual number, it would be plausible for consumers to be deceived.

The IUDTPA claim also survived because Metroplex, an Illinois company, alleges it was damaged as a competitor in the Edwardsville and greater Metro East region in Illinois.

The court also rejected Meta’s motion to compel arbitration; these claims, asserted in its capacity as Meta competitor, were outside the scope of the agreement Metroplex signed to run its Facebook pages.