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Court Revives Class Action Over Google's AdWords

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By Casey C. Sullivan, Esq. on September 23, 2015 9:59 AM

The Ninth Circuit revived a seven-year-old class action lawsuit over Google's AdWords program on Monday. AdWords places brief, text-based ads on websites working with Google -- including, between 2004 and 2008, undeveloped domains and error pages. Advertisers sued, alleging that the placement of ads of such undesirable sites violated California's Unfair Competition and Fair Advertising Law.

The putative class of advertisers was originally denied certification under the theory that there was no common method for determining how much restitution each advertiser would be due. The Ninth Circuit reversed that ruling Monday, emphasizing that it's the entitlement to restitution itself, not the individual amount due, that mattered for class action certification.

Google's Bad Ads

Google's ads program worked fairly simply. Internet advertisers provided advertisements to Google who then placed ads on third-party sites. Advertisers decided how much they would pay per ad and what types of websites they wanted to advertise on. Google then used an auction-based algorithm to set prices and place ads. Advertisers didn't know in advance where exactly their ads would end up.

Google also placed those ads on parked domains -- undeveloped domains that featured little but pages of ads -- and error pages, according to the Ninth Circuit. Several advertisers sued, alleging that placement mislead advertisers under California's Unfair Competition and Fair Advertising Law. They're seeking class certification for anyone who advertised through AdWords between July 11, 2004, and March 31, 2008.

Entitlement to Restitution Matters -- Not the Amount

Google got the suit kicked in district court by focusing on problems of restitution. Under Federal Rule of Civil Procedure 23(b)(3)'s predominance requirement, a class must share common questions of fact or law. When it came to restitution, however, the district court saw those questions as individualized -- an advertiser who spent thousands on expensive AdWords placements would not share the same factual basis for restitution as a small advertiser who spent only a few dollars over four years.

The Ninth Circuit disagreed. Entitlement to restitution is not the same inquiry as the amount of restitution owed under California's Unfair Competition and Fair Advertising Law. The Ninth reaffirmed its 2010 ruling in Yokoyama, that "damage calculations alone cannot defeat certification." Under Yokoyama, individualized damage calculations, as might be necessary in the AdWords case, do not defeat predominance, so long as there is a shared faction question about the class's entitlement to restitution.

Yokoyama versus Comcast

Further, Yokoyama's ruling is unchanged by the Supreme Court's ruling in Comcast v. Behrend the Ninth found. In that 2013 case, the Supreme Court rejected an antitrust class where plaintiffs' damages model did not establish that damages were "capable of measurement on a classwide basis." Comcast means no more than that "plaintiffs must be able to show that their damages stemmed from the defendant's actions," the Ninth ruled -- which is to say, Comcast doesn't stand for much in terms of limiting class certification.

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