Case 3:19-cv-06176-CRB Document 73 Filed 08/03/20 Page 1 of 11
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`DOTSTRATEGY CO,
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`Plaintiff,
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`v.
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`TWITTER INC.,
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`Case No. 19-cv-06176-CRB
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`
`ORDER GRANTING IN PART AND
`DENYING IN PART MOTION TO
`DISMISS
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`Defendant.
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`Twitter, Inc., promises advertisers on its platform that they will only be charged when
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`“people” interact with the accounts or Tweets they are paying to promote. DotStrategy, Co.,
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`believes it was charged for interactions with automated accounts (“bots”) and that Twitter failed to
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`refund it for those interactions even after it learned that the bot accounts were not, in fact,
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`controlled by “people.” DotStrategy has sued Twitter under California’s Unfair Competition Law.
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`Twitter moves to dismiss. The motion is denied as to dotStrategy’s allegations based on
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`interactions with bots. The First Amended Complaint adequately alleges that dotStrategy suffered
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`economic injury as a result of its reliance on Twitter’s false representation that advertisers would
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`only be charged for interactions with “people.” However, dotStrategy has not adequately alleged
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`that it was wrongfully charged for interactions with “fake” accounts that were nonetheless
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`controlled by people. Twitter’s motion is granted as to those allegations.
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`I.
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`BACKGROUND
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`“Twitter is a social networking and microblogging service, enabling registered users to
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`read and post short messages called Tweets.” FAC (dkt. 58) ¶ 1. Twitter does not make money
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`by charging users for access to the platform. Id. ¶ 4. Instead, it sells advertising. Id. Advertisers
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`pay to promote their Tweets or Twitter accounts. Id. ¶ 7.
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`Twitter charges advertisers based on how many times users interact with the promoted
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`account or content. Id. ¶ 8. At various times it has represented that advertisers pay only for
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`interactions with “people.” Id. For example, in 2013, Twitter represented to advertisers that they
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`would “only be charged when people follow your Promoted Account or retweet, reply, favorite or
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`click on your Promoted Tweets.” Id. ¶ 37(c). Similarly, in 2014, Twitter claimed that advertisers
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`would “[p]ay only when people follow[ed] [their] account.” Id. ¶ 38(c).
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`DotStrategy is a marketing company which has advertised its services on Twitter. Id. ¶ 21.
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`Between October 2013 and December 2016, dotStrategy placed thirty-four ads on Twitter for
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`which it paid a total of $2,220.76. Id. ¶ 36. DotStrategy alleges that when it placed its ads, it
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`reviewed and relied on Twitter’s representations that advertisers would only be charged for
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`interactions with “people.” Id. ¶¶ 39, 75.
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`When it first began advertising with Twitter, dotStrategy agreed to the Twitter Advertising
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`Terms. Huffman Decl. (dkt. 67) ¶ 3.1 The Advertising Terms include two provisions relevant
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`here. First, they state that Twitter “[t]o the fullest extent permitted by law . . . disclaim[s] all
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`guarantees regarding . . . quality . . . of . . . any User Actions . . . .” Huffman Decl. Ex. B (dkt. 67-
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`2) ¶ 9. Second, they explain that “[c]harges are solely based on [Twitter’s] measurements for the
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`Program.” Huffman Decl. Ex. B ¶ 11.
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`A large number of accounts on Twitter are primarily controlled by bots rather than human
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`beings. FAC ¶ 9. In July 2018, Twitter deleted 70 million accounts “it had deemed spammy,
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`inactive, or which were displaying ‘erratic’ behavior that indicated they were likely bots.” Id. ¶ 49
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`1 DotStrategy does not oppose Twitter’s request for judicial notice of the Advertising Terms, and
`Twitter correctly notes that the FAC incorporates the Advertising Terms by reference because it
`implicates the parties’ rights and duties under that document. See Coto Settlement v. Eisenberg,
`593 F.3d 1031, 1038 (9th Cir. 2010). Twitter’s request for judicial notice of the Advertising
`Terms is therefore granted. See RJN (dkt. 68). The other documents Twitter requests notice of
`are either “not subject to reasonable dispute” because their veracity “can be accurately and readily
`determined from sources whose accuracy cannot reasonably be questioned[,]” see Fed. R. Evid.
`201(b), (b)(2); see also Moore v. Apple, Inc., 73 F. Supp. 3d 1191, 1197 & n.1 (N.D. Cal. 2014)
`(materials available online subject to judicial notice); Erickson v. Neb. Mach. Co., No. 15–cv–
`1147–JD, 2015 WL 4089849, at *1 n.1 (N.D. Cal. July 6, 2015) (materials available on the
`Wayback Machine subject to judicial notice), or incorporated by reference because they are quoted
`in or implicated by the FAC, see Coto, 593 F.3d at 1038; Daniels-Hall v. Nat’l Educ. Ass’n, 629
`F.3d 992, 998 (9th Cir. 2010) (documents quoted in complaint incorporated by reference).
`Twitter’s request for judicial notice is therefore granted in its entirety.
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`Case 3:19-cv-06176-CRB Document 73 Filed 08/03/20 Page 3 of 11
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`(quoting another source). Around the same time, 480 of dotStrategy’s Twitter followers were
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`deleted. Id. ¶ 50. After a Twitter account has been deleted, it is “as if the account never existed,”
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`making it difficult or impossible to find information about the account. Id. ¶ 51 (quoting another
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`source).
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`DotStrategy believes that Twitter wrongfully charged it for interactions with “fake
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`accounts that often [took] the form of an automated bot.” Id. ¶¶ 16–18. It has brought suit
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`claiming that Twitter’s misrepresentations violated the UCL. Id. ¶¶ 72–87. Twitter moves to
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`dismiss. See Mot. (dkt. 65).
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`II.
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`LEGAL STANDARD
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`Pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint may be dismissed for
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`failure to state a claim upon which relief may be granted. Dismissal may be based on either “the
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`lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal
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`theory.” Godecke v. Kinetic Concepts, Inc., 937 F.3d 1201, 1208 (9th Cir. 2019). A complaint
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`must plead “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on
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`its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly,
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`550 U.S. 544, 570 (2007)). A claim is plausible “when the plaintiff pleads factual content that
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`allows the court to draw the reasonable inference that the defendant is liable for the misconduct
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`alleged.” Id. When evaluating a motion to dismiss, the Court “must presume all factual
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`allegations of the complaint to be true and draw all reasonable inferences in favor of the
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`nonmoving party.” Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). “[C]ourts
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`must consider the complaint in its entirety, as well as other sources courts ordinarily examine
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`when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the
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`complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v.
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`Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).
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`Claims for fraud must meet the pleading standard of Federal Rule of Civil Procedure 9(b),
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`which requires a party “alleging fraud or mistake [to] state with particularity the circumstances
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`Case 3:19-cv-06176-CRB Document 73 Filed 08/03/20 Page 4 of 11
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`constituting fraud or mistake.”2 Rule 9(b) “requires . . . an account of the time, place, and specific
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`content of the false representations as well as the identities of the parties to the
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`misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (internal quotation
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`marks omitted).
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`If a court does dismiss a complaint for failure to state a claim, it should “freely give leave
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`[to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). A court nevertheless has
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`discretion to deny leave to amend due to “undue delay, bad faith or dilatory motive on the part of
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`the movant, repeated failure to cure deficiencies by amendments previously allowed, undue
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`prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of
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`amendment.” Leadsinger, Inc. v. BMG Music Publ’g., 512 F.3d 522, 532 (9th Cir. 2008)
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`(alteration in original) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
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`III. DISCUSSION
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`Twitter advances four arguments for dismissal. First, it argues that dotStrategy has not
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`alleged false statements or misrepresentations with the specificity required by Rule 9(b). Mot.
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`at 9–13. Second, it argues that dotStrategy has failed to adequately plead reliance on any
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`ostensible misstatements. Id. at 14–17. Third, it contends that dotStrategy’s claims are precluded
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`by disclaimers in the Advertising Terms. Id. at 13–14. Fourth, it argues that dotStrategy has
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`failed to establish UCL standing. Id. at 17–18.
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`A.
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`False Statements
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`Twitter complains that the FAC fails to satisfy Rule 9(b) because dotStrategy alleges that
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`Twitter wrongfully charges for “fake,” “false,” or “spam” accounts without adequately defining
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`those terms. Id. at 10–13. Twitter is correct. DotStrategy clearly considers “bot” accounts (i.e.,
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`those controlled entirely or primarily by a computer program rather than a human being) to be
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`fake. See FAC ¶ 17. But, as Twitter points out, and as counsel for dotStrategy confirmed during
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`oral argument, the FAC also alleges that a broader category of human-controlled Twitter accounts
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`are fake, without identifying the outer boundaries of this group. See, e.g., id. ¶ 63 (stating that
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`2 DotStrategy does not contest that Rule 9(b) applies to its UCL claim, which sounds in fraud.
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`“fake Twitter Accounts . . . include[e] but [are] not limited to automated bots.”). Although the
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`FAC includes some vague suggestions about what makes a human-controlled account fake, see,
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`e.g., id. ¶¶ 17, 74, 76, 80, its allegations are insufficient to put Twitter on notice as to which of its
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`statements were ostensibly false.
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`DotStrategy responds that the terms “fake,” “false,” and “spam” cannot be insufficiently
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`precise, because Twitter itself has used those words to describe activity forbidden on its platform.
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`Opp’n (dkt. 70) at 5–6. This argument fails. The Twitter communications dotStrategy cites may
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`state that “fake” or “spam” accounts are not allowed, see id., but because they do not explain what
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`those terms mean, they do nothing to help satisfy Rule 9(b). DotStrategy suggests its lack of
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`precision should be excused because what makes an account “fake,” “false,” or “spam” in
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`Twitter’s eyes is a “matter[ ] within the opposing party’s knowledge.” Opp’n at 7 (quoting Moore
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`v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989)). But the fact that Twitter
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`knows what it means when it uses these terms does not excuse dotStrategy’s obligation to identify
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`the categories of interactions it was wrongfully charged for.
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`Any theory of liability premised on interactions with human-controlled accounts fails for
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`the additional reason that the FAC identifies no statement promising that Twitter advertisers
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`would not be charged for interactions with “fake” accounts that were controlled by people. The
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`only alleged misstatements that could possibly be construed as making such a promise are general
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`proclamations about the benefits of advertising with Twitter. See, e.g., FAC ¶¶ 27, 38 (promising
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`that advertising on Twitter can “build an engaged audience to amplify your message” and “an
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`active community of advocates and influencers for your business”). Even assuming these claims
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`are more than non-actionable puffery, but see Reply (dkt. 71) at 9–10, they could not reasonably
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`be construed as a promise that advertisers would not be charged for engagements with human-
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`controlled accounts. A reasonable advertiser would understand that achieving its goals might
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`require some interaction with Twitter users who use the platform to disseminate spam, violate
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`Twitter’s terms of service, or otherwise qualify as “fake” despite being human. This is especially
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`true because according to dotStrategy’s own allegations, Twitter is rife with such users. See FAC
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`¶ 53.
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`Finally, at oral argument, dotStrategy’s counsel suggested that a reasonable advertiser
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`would understand the word “people” to mean people who abide by Twitter’s rules. The Court
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`rejects this argument. It is aware of no definition of personhood that is contingent on abiding by a
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`corporation’s terms of service.
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`However, dotStrategy adequately alleges that Twitter falsely represented that advertisers
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`would not be charged for interactions with bots. The FAC identifies numerous statements to the
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`effect that advertisers would only be charged for interactions with “people.” See, e.g., FAC
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`¶ 37(c) (“You’ll only be charged when people follow your Promoted Account or retweet, reply,
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`favorite or click on your Promoted Tweets.”). A reasonable advertiser would understand these
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`statements to mean that they would not be charged—or would be offered a refund—for
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`interactions Twitter knew involved an automated account. Unsurprisingly, Twitter concedes that
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`“these statements could be interpreted as a promise that Twitter will not charge for known bot-
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`engagement.” Mot. at 17.
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`And contrary to Twitter’s position, see Reply at 1, the FAC adequately alleges that
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`dotStrategy was charged and has not been refunded for interactions with bot accounts. In
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`particular, it alleges that dotStrategy’s @buzznnames Twitter account lost 480 (roughly 17%) of
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`its followers in the twenty-eight days preceding July 20, 2018. FAC ¶ 50. The FAC further
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`alleges that Twitter embarked on a campaign to purge its platform of bots during the same time
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`period, leading to the deletion of 70 million accounts, id. ¶ 49, and that a large number of
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`automated accounts are active on Twitter, id. ¶¶ 9, 56(a). Taken together, those facts plausibly
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`allege that at least some of the 480 deleted accounts must have been bots, that dotStrategy most
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`likely paid for interactions with some of those bots, and that Twitter failed to reimburse the money
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`paid for those interactions despite knowing they involved automated accounts. See id. ¶¶ 21, 48,
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`52.
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`True, dotStrategy has not identified what interactions with the 480 deleted accounts it was
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`charged for or which deleted accounts were bots. But that imprecision must be excused because
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`the information that could fill the gap is a “matter[ ] within the opposing party’s knowledge.”
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`Moore, 885 F.2d at 540. As the FAC explains, “when an account is deleted, Twitter does not
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`Case 3:19-cv-06176-CRB Document 73 Filed 08/03/20 Page 7 of 11
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`provide data about the account after the deletion date. It is as if the account never existed.”3 FAC
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`¶ 51 (quoting another source). Because only Twitter has access to the data that would allow
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`dotStrategy to identify the bot accounts it was wrongfully charged for, the FAC’s failure to
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`identify those accounts with particularity is not dispositive. See Rubenstein v. Neiman Marcus
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`Grp. LLC, 687 F. App’x 564, 568 (9th Cir. 2017). Even Twitter agrees that dotStrategy need not
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`“identify each account for which it believes it was improperly charged, and the precise date and
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`time . . . it was improperly charged for an advertising interaction by that account.” Reply at 5–6
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`(emphasis in original).
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`Twitter’s motion to dismiss is granted as to dotStrategy’s allegations that it was wrongfully
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`charged for interactions with “fake” accounts controlled by humans. But it is denied with respect
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`to allegations that dotStrategy was wrongfully charged for accounts controlled by bots. The rest
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`of this Order therefore addresses Twitter’s other arguments only as applied to the latter theory of
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`liability.
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`B.
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`Reliance
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`Twitter asserts that dotStrategy fails to adequately allege reliance on the misrepresentations
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`regarding interactions with automated accounts. Mot. at 14–17. But the FAC identifies specific
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`false representations made by Twitter, see FAC ¶¶ 37–38, and alleges both that “[o]n or about
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`October 9, 2013, through December 3, 2016, Plaintiff reviewed various representations by Twitter
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`on its Promoted Products, including the representations identified [earlier in the FAC,]” id. ¶ 39,
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`and that it “relied” on those representations, id. ¶ 75. As dotStrategy correctly notes, this Court
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`has held virtually identical allegations adequate to allege reliance on false advertising in a case
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`involving UCL claims.4 See Bronson v. Johnson & Johnson, Inc., No. C 12–04184 CRB, 2013
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`WL 5731817, at *6 (N.D. Cal. Oct. 22, 2013) (holding allegations that purchasers relied on a
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`3 It makes no difference if dotStrategy could have accessed some of this information at some
`point before filing the instant suit. DotStrategy could not have known that it would need access to
`this information for litigation before it became aware that it had been wrongfully charged for
`interactions with automated accounts.
`4 Twitter argues Bronson is distinguishable because dotStrategy does not allege it relied on the
`alleged false statements. Reply at 7 n.2. But that is incorrect, dotStrategy does allege it relied on
`Twitter’s misrepresentations. See FAC ¶ 75.
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`website or packaging that displayed “specific [false] representations” adequate to satisfy
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`Rule 9(b), even though the complaint did “not allege the specific date” when the consumers
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`reviewed the misrepresentations). Other decisions in this district have also held reliance
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`adequately pled when plaintiffs alleged that they reviewed and relied upon specific
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`misrepresentations during a comparable span of time.5 See, e.g., Bruton v. Gerber Prods. Co., No.
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`12–CV–02412–LHK, 2014 WL 172111, at *3, *13 (N.D. Cal. Jan. 15, 2014).
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`Twitter makes much of the fact that dotStrategy agreed to the Advertising Terms in
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`October 2013. Reply at 6–7. Twitter contends that this renders any misrepresentations it made
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`after October 2013 irrelevant. Id. That argument fails for two reasons. First, the FAC alleges that
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`Twitter misrepresented in 2013 that advertisers would not be charged for interactions with bots,
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`FAC ¶ 37(c), so even if statements made after that point are irrelevant, dotStrategy would still
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`adequately allege reliance. Second, the FAC alleges that dotStrategy continued to place ads,
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`thereby incurring additional charges, after October 2013. FAC ¶ 36. Misrepresentations after that
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`date are relevant because dotStrategy could have relied on them in deciding to place additional ads
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`at additional cost. Cases involving misrepresentations made after the plaintiff’s purchase was
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`complete are distinguishable.
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`Finally, to the extent Twitter argues dotStrategy’s reliance was unreasonable, that
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`argument fails for the reasons explained above. A reasonable consumer would understand
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`statements such as “You’ll only be charged when people follow your Promoted Account or
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`retweet, reply, favorite or click on your Promoted Tweets” to mean that Twitter would refund
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`charges for those interactions if it later learned they involved a bot. See FAC ¶ 37(c).
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`C.
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`Contractual Disclaimers
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`Twitter argues that dotStrategy’s suit is precluded by two disclaimers from the Advertising
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`Terms: that “[Twitter] disclaim[s] all guarantees regarding [the] . . . quality . . . of . . . any User
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`Actions” and that “Charges are solely based on our measurements for the Program.”6 Mot. at 13
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`5 Twitter contends these cases are distinguishable because they involve food labeling but does not
`explain why that factual distinction is legally relevant. See Reply at 7 n.2.
`6 The Advertising Terms also state that an advertiser’s “exclusive remedy, and our exclusive
`liability, for suspected Invalid User Actions, is to make a claim for a refund in the form of
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`(internal citations omitted, internal alterations and emphasis in original).
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`As an initial matter, Twitter’s suggestion that extra-contractual misrepresentations can
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`never give rise to a UCL claim when corrected by contractual disclaimers is false. See Reply at
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`11–12. The Ninth Circuit has recognized that a UCL fraud claim can be based on misleading
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`representations in a solicitation even when the plaintiff later signed a contract with provisions
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`contradicting the earlier falsehoods. See Rubio v. Capital One Bank, 613 F.3d 1195, 1204–06 (9th
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`Cir. 2010). As a result, a plaintiff may state a claim for fraud under the UCL while failing to plead
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`a breach of contract claim. See id. Contrary to Twitter’s reading of the case, Reply at 11 n.6,
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`Rubio involved a fraud claim under the UCL, not just truth-in-lending laws, see 613 F.3d at 1204,
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`and has been extended to facts virtually identical to those presented here by courts in the Northern
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`District of California, see In re Facebook PPC Advert. Litig., No. 5:09–cv–03043–JF, 2010 WL
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`5174021, at *7–10 (N.D. Cal. Dec. 15, 2010). The question, then, is not whether Twitter’s
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`contractual terms corrected the false statements in its advertising, but whether dotStrategy’s
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`reliance on the false advertising was reasonable even in light of the contractual disclaimers. See
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`id. at *9.
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`DotStrategy’s reliance on Twitter’s misstatements was reasonable despite the contractual
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`disclaimers because the contractual provisions Twitter relies on are not irreconcilable with
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`dotStrategy’s understanding that it would not be charged for interactions with bots. Disclaiming
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`the “quality” of “User Actions” is not a clear warning that those users might not be people. See
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`Mot. at 13. A reasonable advertiser could understand the disclaimer to refer to other aspects of
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`user interactions, such as whether users would retweet promoted content with positive rather than
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`negative messaging. That understanding would be particularly reasonable given Twitter’s other
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`representations guaranteeing that advertisers would not pay for interactions with automated
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`accounts. See FAC ¶ 37(c). Similarly, that Twitter has discretion to determine charges for
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`Promoted Products credits within the time period required under Section 11 below.” Mot. at 13.
`The “time period required” is sixty days from the date of the charge. Reply at 12 n.8. Because
`Twitter does not argue that dotStrategy’s claims must be referred to this internal arbitration
`process, and explicitly disclaims reliance on the sixty-day limitations period, see id., it is
`unnecessary to decide whether this provision is enforceable under California law.
`9
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`Case 3:19-cv-06176-CRB Document 73 Filed 08/03/20 Page 10 of 11
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`advertising does not mean it can charge for interactions with automated accounts when it explicitly
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`promised not to do so elsewhere. An advertiser could reasonably believe that Twitter would
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`determine the amount of advertising charges in a manner consistent with its other representations.
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`In short, Twitter cannot rely on ambiguous disclaimers to correct unambiguous
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`misrepresentations.
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`D.
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`UCL Standing
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`A private plaintiff only has standing to bring a UCL claim if it “has suffered injury in fact
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`and has lost money or property as a result of the unfair competition.” Cal. Bus. & Prof. Code
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`§ 17204. Standing under the UCL is therefore limited to plaintiffs who have suffered economic
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`harm, rendering it meaningfully narrower than Article III standing. Kwikset Corp. v. Superior
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`Court, 246 P.3d 877, 886 (Cal. 2011).
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`Twitter advances three arguments that dotStrategy has failed to meet this standard. Two
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`are redundant of arguments considered above. First, Twitter argues that “because the FAC does
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`not adequately explain what Twitter’s alleged unlawful activity is, . . . it fails to establish that
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`Plaintiff paid money ‘as a result of’ any unlawful activity.” Mot. at 17 (emphasis in original).
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`This argument fails because, as explained above, dotStrategy has adequately alleged that Twitter
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`falsely represented that advertisers would only be charged for interactions with people. Second,
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`Twitter argues that because dotStrategy “does not identify which alleged misrepresentations it
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`relied on” it has failed “to establish the ‘causal connection’ UCL requires.” Mot. at 18 (emphasis
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`in original). This argument fails because dotStrategy has adequately pled reliance.
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`That leaves only Twitter’s contention that dotStrategy has not demonstrated economic
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`injury. See Mot. at 17–18. DotStrategy alleges that it “paid for ads for which it would not have
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`agreed to pay anything at all had it known the truth about Twitter’s misconduct.” FAC ¶ 77. That
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`is sufficient to allege economic injury. See Kwikset Corp., 246 P.3d at 892 (plaintiffs who
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`purchased lockets falsely labeled “Made in U.S.A.” suffered economic injury because they would
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`not have bought the lockets had they known the truth).
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`Twitter argues that dotStrategy received the benefit of its bargain because it gained more
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`Twitter followers. Mot at 18; Reply at 13–14. The Court rejects this theory’s underlying
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`assumption that “a public[ly] visible increase in . . . follower count” is the only goal an advertiser
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`might have in promoting its products on Twitter. See Mot. at 18. Presumably human followers
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`are more valuable to advertisers than automated ones, because humans, unlike bots, sometimes
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`purchase goods and services. If anything, that difference seems more meaningful than, for
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`example, a product’s domestic origin. See Kwikset Corp., 246 P.3d at 892.
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`IV. CONCLUSION
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`For the foregoing reasons, the motion to dismiss is granted in part and denied in part.
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`IT IS SO ORDERED.
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`Dated: August 3, 2020
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`
`CHARLES R. BREYER
`United States District Judge
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