throbber
Case 3:20-cv-07182-JCS Document 108 Filed 02/19/21 Page 1 of 19
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`FACEBOOK, INC.,
`Plaintiff,
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`v.
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`BRANDTOTAL LTD., et al.,
`Defendants.
`
`Case No. 20-cv-07182-JCS
`
`
`ORDER REGARDING MOTION TO
`DISMISS COUNTERCLAIMS
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`Re: Dkt. No. 77
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`I.
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`INTRODUCTION
`Plaintiff Facebook, Inc. brought this action asserting various claims against Defendants
`BrandTotal Ltd. and Unimania, Inc. (collectively, “BrandTotal”1) based on BrandTotal’s
`collection and marketing of data from Facebook’s websites—specifically, its eponymous social
`network (hereinafter the “Facebook Network,” in order to distinguish that product from the
`corporate entity) and Instagram. BrandTotal asserts counterclaims based on Facebook blocking its
`access to those products, and the Court previously denied BrandTotal’s application for a
`temporary restraining order (“TRO”). Facebook now moves to dismiss BrandTotal’s
`counterclaims for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil
`Procedure. The Court held a hearing on February 19, 2021. For the reasons discussed below,
`Facebook’s motion is GRANTED, and BrandTotal’s counterclaims are DISMISSED, with leave
`to amend some counterclaims as discussed below. The shall file a joint letter proposing a schedule
`on February 22, 2021.2
`
`
`1 Unimania, Inc. is a software development subsidiary of BrandTotal Ltd.
`2 The parties have consented to the jurisdiction of the undersigned magistrate judge for all
`purposes pursuant to 28 U.S.C. § 636(c).
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`Northern District of California
`United States District Court
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`Case 3:20-cv-07182-JCS Document 108 Filed 02/19/21 Page 2 of 19
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`II.
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`BACKGROUND
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`A. The Parties’ Allegations and Claims
`The following subsections summarize the parties’ factual allegations as context for their
`respective claims and positions. Nothing in these subsections should be construed as resolving
`any issue of fact that might be disputed at a later stage of the case.
`
`1.
`Facebook’s Allegations and Claims
`Facebook is a social networking company with billions of individual users across multiple
`products, including the Facebook Network and the Instagram social network.3 See Compl. (dkt. 1)
`¶ 13. All users of the Facebook Network agree to contractual terms including that users will not
`do anything that would “impair the proper working or appearance” of Facebook’s products, will
`not access or collect data from Facebook’s products “using automated means” without Facebook’s
`permission, and will not attempt to access data that the particular user lacks permission to access.
`Id. ¶¶ 21, 24, 26. All Instagram users similarly agree not to do “anything to interfere with or
`impair the intended operation” of Instagram, not to “collect[] information in an automated way
`without [Facebook’s] express permission,” not to access information “in unauthorized ways,” and
`not to violate anyone else’s rights, including intellectual property rights. Id. ¶¶ 22, 25, 27. Users
`of both networks agree not to do anything unlawful, misleading, or fraudulent, or to facilitate such
`activity. Id. ¶ 23. According to Facebook, BrandTotal agreed to these terms when it created
`accounts on the Facebook Network and Instagram. See id. ¶¶ 35–39.
`Facebook employs various measures to prevent “scraping”—bulk automated collection—
`of content from its products, including monitoring usage patterns, using “CAPTCHA” tests to
`determine whether users are human as opposed to automated programs, and disabling accounts
`that violate its rules. Id. ¶ 29.
`BrandTotal offered programs called UpVoice and Ads Feed that users could install as
`extensions for the Google Chrome internet browser, which Facebook alleges worked as follows:
`
`
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`3 This case concerns only the Facebook and Instagram social networks. References herein to
`Facebook’s products or social networks therefore refer to those two networks, and not to any other
`networks or products that Facebook, Inc. offers.
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`Case 3:20-cv-07182-JCS Document 108 Filed 02/19/21 Page 3 of 19
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`Once installed by the users . . . [BrandTotal] used the users’ browsers
`as a proxy to access Facebook computers, without Facebook’s
`authorization, meanwhile pretending to be a legitimate Facebook or
`Instagram user. The malicious extensions contained JavaScript files
`designed to web scrape the user’s profile information, user
`advertisement
`interest
`information, and advertisements and
`advertising metrics from ads appearing on a user’s account, while the
`user visited the Facebook or Instagram websites. The data scraped by
`[BrandTotal] included both public and non-publicly viewable data
`about the users.
`
`[BrandTotal’s] malicious extensions were designed to web scrape
`Facebook and Instagram user profile information, regardless of the
`account’s privacy settings. The malicious extensions were
`programmed
`to send unauthorized, automated commands
`to
`Facebook and Instagram servers purporting to originate from the user
`(instead of [BrandTotal]), web scrape the information, and send the
`scraped data to the user’s computer, and then to servers that
`[BrandTotal] controlled.
`Id. ¶¶ 45–46. Facebook alleges that BrandTotal collected information including “the user’s ID,
`gender, date of birth, relationship status, and location information,” users’ “Ad Preferences”
`information that Facebook used to determine what ads to show them, and—with respect to
`advertisements that users viewed while using the extension—“information about the advertiser,
`the image and text of the advertisement, and user interaction and reaction metrics (e.g., number of
`views, comments, likes) associated with an advertisement.” Id. ¶ 54. According to Facebook, the
`UpVoice and Ads Feed extensions used nearly identical code and functioned materially the same
`way. See id. ¶ 57.
`Facebook provides a searchable public library of all advertisements published on its
`networks, which includes data such as the “Page” responsible for running the ad, the geographic
`region it is directed to, and the number of users that viewed the ad on a particular day. See id.
`¶¶ 17–19. Facebook’s public library does not include demographic information about users that
`viewed a particular ad, or information regarding how users interacted with an ad (e.g., “likes” and
`comments). Id. ¶ 20.
`BrandTotal induced users to install these browser extensions by offering gift cards as
`payment for UpVoice users, by allowing Ads Feed users to review lists of ads they had seen in the
`last ninety days so that users could return to ads that interested them, and by telling users that they
`would serve as “panelists” to influence corporate marketing decisions. Id. ¶¶ 43–44, 49, 56.
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`United States District Court
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`Case 3:20-cv-07182-JCS Document 108 Filed 02/19/21 Page 4 of 19
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`BrandTotal analyzed and sold the data that it obtained from users to corporate clients. Id. ¶ 37.
`BrandTotal used different trade names for its browser extensions (which gathered data) and its
`marketing intelligence product (which incorporated that data), and advertised its products to both
`potential individual users (who might install the browser extensions and provide data) and
`potential corporate clients (who might purchase data) on the Facebook Network. Id. ¶¶ 39–40, 42,
`47.
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`According to Facebook, BrandTotal made misleading representations to users of its
`browser extensions, both by including the Facebook Network in a list of “participating sites” when
`Facebook had not agreed to work with BrandTotal or authorized it to access Facebook’s data, and
`by failing to include Instagram in the list of “participating sites” even though the browser
`extension scraped data from Instagram. Id. ¶ 50.
`On September 30, 2020, Facebook disabled BrandTotal’s accounts on Instagram and the
`Facebook Network and instated other technological measures to block BrandTotal’s access to
`Facebook’s products. Id. ¶ 58. On October 1, 2020, Facebook filed a civil action against
`BrandTotal in California state court alleging that the browser extensions breached Facebook’s
`terms of service. Id. ¶ 59.4 Later that day, Google removed the browser extensions from its
`Chrome Web Store, which disabled their functionality. Id. ¶ 60. On October 3, 2020,
`BrandTotal’s chief product officer created accounts on Instagram and the Facebook Network using
`false names. Id. ¶ 61. On October 12, 2020, BrandTotal introduced a new UpVoice browser
`extension on the Chrome Web Store, listing the developer of the extension as “UpVoice Team.”
`Id. ¶ 62. According to Facebook, the new UpVoice extension—like its predecessors—collected
`data when users accessed the Facebook Network and returned that data to BrandTotal, including
`data that was, “in some cases, not even viewed by the user.” Id. Around thirty users installed this
`new extension. Id.
`Facebook asserts the following claims: (1) breach of contract, based on the Facebook
`Network and Instagram terms of service, id. ¶¶ 67–73; (2) unjust enrichment, id. ¶¶ 74–80;
`
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`4 Facebook voluntarily dismissed its state court action before bringing the present action in this
`Court, one day before BrandTotal had intended to seek a TRO in state court.
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`Northern District of California
`United States District Court
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`Case 3:20-cv-07182-JCS Document 108 Filed 02/19/21 Page 5 of 19
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`(3) unauthorized access in violation of the Computer Fraud and Abuse Act (“CFAA”), id. ¶¶ 81–
`86; (4) unauthorized access in violation of California Penal Code § 502, id. ¶¶ 87–95;
`(5) interference with contractual relations by inducing Facebook’s users to share their login
`credentials with BrandTotal, in violation of Facebook’s terms of service, id. ¶¶ 96–102; and
`(6) unlawful, unfair, or fraudulent business practices in violation of California’s Unfair
`Competition Law, Cal. Bus. & Prof. Code § 17200 (the “UCL”), Compl. ¶¶ 103–10. Facebook
`seeks both injunctive and compensatory relief. See id. at 21–22, ¶¶ (a)–(h) (Prayer for Relief).
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`2.
`BrandTotal’s Allegations and Counterclaims
`BrandTotal is an advertising consulting company that offers its clients analysis of the
`clients’ own advertising and their competitor’s advertising on social media, including Instagram
`and the Facebook Network. Counterclaim (dkt. 23) ¶ 8.5 BrandTotal alleges that it collects
`information only after receiving “informed consent and deliberate opt-in” from its users, which
`users grant in exchange for gift cards. Id. ¶ 10. BrandTotal’s users must “confirm they have read
`the privacy policy which details the demographic and advertising . . . information BrandTotal
`collects” before they install the UpVoice browser extension. Id. ¶ 11.
`According to BrandTotal, the UpVoice extension “allows BrandTotal to collect data the
`user either owns or has a right to access and certain public information about the websites the user
`visits,” including “the ads they see and interact with on social media sites like Facebook, as they
`browse as usual on those sites,” and “deidentified information about the user by using hashed
`values for the user’s device and user IDs.” Id. ¶¶ 13–14, 16.
`
`BrandTotal does not collect the user’s names or email addresses,
`although the user provides that when they sign up. BrandTotal does
`not keep or compile participants’ private postings, photos, or web
`history, nor does BrandTotal mine “friend” information, or otherwise
`take data not expressly authorized. Rather, the information collected
`relates to who is seeing what advertisement, where and at what times.
`Id. ¶ 17. BrandTotal anonymizes the information it collects and provides aggregated data, broken
`out by demographic information (“age, gender, high level location, marital status, interests”) to its
`
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`5 BrandTotal’s Answer and Counterclaim is filed as a single docket entry. Citations herein to the
`“Counterclaim” refer to paragraphs in the portion of that document so captioned, which begins on
`page 14.
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`clients. Id. ¶ 18.
`BrandTotal acknowledges the provision in Facebook’s terms of service prohibiting data
`collection by automated means without Facebook’s permission, but implies that Facebook’s
`claimed ability “to pick and choose who . . . will be allowed to access the information” conflicts
`with other provisions of the terms of service “acknowledg[ing] that users own the rights in their
`own information.” Id. ¶ 21. BrandTotal also alleges that Facebook itself aggregates and sells user
`data as part of its own advertising consulting service. Id. ¶ 22.
`According to BrandTotal, Facebook’s actions to cut off BrandTotal’s access to Facebook
`products and block BrandTotal’s browser extensions from appearing in Google’s Chrome Web
`Store prevent BrandTotal from compiling advertising analytics for its customers, prevent
`BrandTotal’s users from logging in “to collect any rewards they have earned,” and prevent
`BrandTotal from recruiting new participants. Id. ¶ 28. BrandTotal customers, including
`“reputable large companies,” are questioning their relationship, prospective customers that were in
`negotiations are walking away, and BrandTotal cannot secure receivables, lending, or venture
`capital investment while it lacks access to Facebook’s networks. Id. ¶¶ 29–30. As a result,
`BrandTotal is “in jeopardy of being insolvent.” Id. 31.
`BrandTotal asserts the following counterclaims: (1) intentional interference with contract,
`based on contracts with its corporate customers, id. ¶¶ 32–41; (2) intentional interference with
`prospective economic advantage, id. ¶¶ 42–48; (3) unlawful, unfair, and fraudulent conduct in
`violation of the UCL, id. ¶¶ 49–63; and (4) declaratory judgment that BrandTotal has not breached
`any contract with Facebook because its access “has never been unlawful, misleading, or
`fraudulent,” because its products “have never impaired the proper working appearance or the
`intended operation of any Facebook product” or “accessed any Facebook product using automated
`means,” and because the individual users own the information at issue and have the right to decide
`whether to share it with BrandTotal, id. ¶¶ 64–73. BrandTotal seeks both injunctive and
`compensatory relief. Id. at 23, ¶¶ A–E (Prayer for Relief).
`
`B. Procedural History
`Facebook initially filed state law claims against BrandTotal in the California Superior
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`Court for San Mateo County, case number 20-CIV-04526, but later voluntarily dismissed that case
`and filed the present action in this Court, adding a federal claim under the CFAA. BrandTotal
`asserted its counterclaims in this action and moved for a temporary restraining order, which the
`Court denied in an order dated November 2, 2020. See Order Denying TRO (dkt. 63).6 The Court
`determined that although BrandTotal raised serious issues (but failed to show a likelihood of
`success) as to at least some of its claims, id. at 20–30, and established a threat of irreparable harm
`and a balance of potential harms that tipped in its favor, id. at 15–20, 30–31, the public interest did
`not support issuing a TRO “where BrandTotal built its business on ignoring Facebook’s
`prohibition on automated access without permission, created separate architecture to collect users’
`Facebook profile data in ways not reflected in those users’ Facebook privacy settings, and now
`requests an immediate order preventing Facebook from taking any steps to limit its access despite
`an order requiring Facebook to enforce its terms of use and police such access,” id. at 31–34.
`Since denying the motion for a TRO, the Court has authorized BrandTotal to conduct early
`discovery in support of a motion for a preliminary injunction, but denied BrandTotal’s request to
`set an expedited schedule for such a motion. BrandTotal filed its motion for a preliminary
`injunction (dkt. 104) on February 18, 2021, one day before the hearing on the present motion to
`dismiss.
`
`C. The Parties’ Arguments
` Facebook contends that BrandTotal’s counterclaim for declaratory judgment should be
`dismissed because BrandTotal’s allegations amount to admissions that it breached Facebook’s
`terms of use under the Court’s interpretation of those terms in the context of denying BrandTotal’s
`motion for a TRO. Mot. (dkt. 77) at 4–5. With respect to BrandTotal’s claim for interference
`with contract, Facebook argues that BrandTotal has not alleged intent by Facebook to hinder
`BrandTotal’s performance of a contract, knowledge by Facebook that Google would remove the
`UpVoice browser extension from its store, or any actual breach or impairment of a contract with
`
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`6 Facebook, Inc. v. BrandTotal Ltd., No. 20-cv-07182-JCS, __ F. Supp. 3d __, 2020 WL 6562349
`(N.D. Cal. Nov. 9, 2020). Citations herein to the Court’s previous order refer to page numbers of
`the version filed in the Court’s ECF docket.
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`BrandTotal’s customers. Id. at 5–8. Facebook also argues that any interference was justified by
`Facebook’s legitimate business interest in enforcing its terms of use and complying with an order
`of the Federal Trade Commission (“FTC”), which Facebook contends should not be subject to any
`balancing test. Id. at 9–10 & n.4. For interference with prospective advantage, Facebook
`contends that BrandTotal has not identified any specific relationship with a probability of
`economic advantage, knowledge by Facebook of any such relationship, or an independently
`wrongful act by Facebook. Id. at 10–13. Facebook moves to dismiss the “unlawful” prong of
`BrandTotal’s UCL claim for the same reasons as the interference claims, id. at 14, the “unfair”
`prong for failure to allege elements of an antitrust claim like market definition and anticompetitive
`conduct, id. at 14–18, and the “fraudulent” prong for failure to allege any misrepresentation, much
`less BrandTotal’s own reasonable reliance on a misrepresentation, id. at 19–20.
`BrandTotal argues that its declaratory relief claim for non-breach of contract should
`proceed based on a theory that Facebook’s terms of use are unenforceable as contrary to public
`policy, which BrandTotal has asserted as an affirmative defense to Facebook’s claim for breach.
`Opp’n (dkt. 90) at 5–6. If the Court concludes that BrandTotal’s failure to plead such a theory
`more clearly in its counterclaim is a barrier to pursuing it, BrandTotal requests leave to amend to
`conform its pleading to its argument. Id. at 6–7.
`With respect to its claim for interference with contract, BrandTotal notes that the Court
`previously found in the context of denying at TRO that BrandTotal could likely show Facebook
`was aware that BrandTotal’s contracts with customers relied on its collection of data, and argues
`that Facebook’s knowledge and intent can be inferred from BrandTotal’s allegations that the
`removal of UpVoice from Google’s store (at Facebook’s behest) effectively shut down
`BrandTotal’s business, and from Facebook’s status as the world’s largest social media company.
`Id. at 7–10.7 BrandTotal contends that its allegation that it now cannot provide advertising
`analytics for its customers is sufficient to allege that interference in fact resulted from Facebook’s
`
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`7 BrandTotal also notes that in opposing the previous motion for a TRO, Facebook did not
`challenge BrandTotal’s allegations of intent. Opp’n at 7–8. BrandTotal does not argue, however,
`that failure to raise such an argument in that separate context has any legal consequence for
`Facebook’s ability to do so here.
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`conduct, and that no legitimate justification for Facebook’s interference with a competitor is
`apparent from the pleadings. Id. at 10–12. Similarly, for interference with prospective advantage,
`BrandTotal contends that its allegations of having lost customers and investment as a result of
`Facebook’s conduct are sufficient. Id. at 12–15.
`Turning to its UCL claim, BrandTotal argues that it should be allowed to proceed on the
`“unlawful” prong based on its tortious interference claims. Id. at 16. BrandTotal contends that it
`should not be required to plead the elements of a Sherman Act claim to proceed on the “unfair”
`prong, and that its allegations of Facebook leveraging its dominance, in conjunction with
`allegations regarding removal of BrandTotal’s accounts and the takedown notice to Google,
`amount to a violation of the “spirit” of the antitrust laws that is sufficient for this claim. Id. at 16–
`17. For the “fraudulent” prong, BrandTotal contends that it has alleged both its own and the
`public’s reliance on Facebook’s representations that users own their data and control their privacy
`settings—which, in BrandTotal’s view, conflict with Facebook’s efforts to block users from
`sharing that data with BrandTotal through UpVoice and other products. Id. at 17–18. BrandTotal
`seeks leave to amend if the Court determines that any of its allegations are insufficient. Id. at 18–
`19.
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`Facebook argues in its reply that BrandTotal should not be allowed to amend or reconstrue
`its declaratory judgment claim to argue that the terms of use are unenforceable, because such a
`claim would be redundant to BrandTotal’s already-pleaded affirmative defense and because the
`laws that BrandTotal cites regarding data privacy rights do not conflict with the terms of use.
`Reply (dkt. 100) at 2–3. Facebook contends again that BrandTotal’s interference with contract
`claim fails for lack of certainty that Google would comply with Facebook’s request to remove
`UpVoice from its store or that such removal would interfere with BrandTotal’s contracts, and that
`the inferences necessary to reach such a conclusion do not plausibly arise from BrandTotal’s
`allegations. Id. at 4–6. Facebook also argues that BrandTotal has not provided more than
`conclusory allegations of actual disruption. Id. at 6–7. Even if BrandTotal could otherwise allege
`interference, Facebook contends that its enforcement of its terms of use and compliance with the
`FTC’s order provide a complete defense. Id. at 7–9. Facebook argues that the related claim for
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`interference with prospective advantage requires a more specific showing of the particular
`relationship at issue, Facebook’s knowledge of it, and an independently wrongful act, all of which,
`in Facebook’s view, BrandTotal has not sufficiently alleged. Id. at 9–11. Facebook also argues
`again that BrandTotal cannot assert a UCL claim based on unfairness without alleging a relevant
`market and monopoly power, that its allegations describe vigorous competition rather than
`anticompetitive conduct, and that BrandTotal has not alleged any misrepresentation with
`particularity as required by Rule 9(b). Id. at 11–15.
`
`III. ANALYSIS
`A. Legal Standard
`A complaint may be dismissed for failure to state a claim on which relief can be granted
`under Rule 12(b)(6) of the Federal Rules of Civil Procedure. “The purpose of a motion to dismiss
`under Rule 12(b)(6) is to test the legal sufficiency of the complaint.” N. Star Int’l v. Ariz. Corp.
`Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). Generally, a claimant’s burden at the pleading stage
`is relatively light. Rule 8(a) of the Federal Rules of Civil Procedure states that a “pleading which
`sets forth a claim for relief . . . shall contain . . . a short and plain statement of the claim showing
`that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a).
`In ruling on a motion to dismiss under Rule 12(b)(6), the court takes “all allegations of
`material fact as true and construe[s] them in the light most favorable to the non-moving party.”
`Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal may be based on a
`lack of a cognizable legal theory or on the absence of facts that would support a valid theory.
`Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A pleading must “contain
`either direct or inferential allegations respecting all the material elements necessary to sustain
`recovery under some viable legal theory.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 562 (2007)
`(citing Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)). “A pleading
`that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action
`will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555).
`“[C]ourts ‘are not bound to accept as true a legal conclusion couched as a factual allegation.’”
`Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). “Nor does a
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`complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal,
`556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). Rather, the claim must be “‘plausible on its
`face,’” meaning that the claimant must plead sufficient factual allegations to “allow the court to
`draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (quoting
`Twombly, 550 U.S. at 570).
`
`B. BrandTotal’s Counterclaim for Declaratory Judgment
`In its counterclaim, BrandTotal seeks declaratory judgment that it has not breached
`Facebook’s terms of service because its process of obtaining data is not “automated,” its access
`has never been “unlawful, misleading, or fraudulent,” and it has not “impaired the proper working
`appearance or the intended operation of any Facebook product.” Counterclaim ¶¶ 64–73.
`BrandTotal’s opposition brief does not address any of those contentions, instead arguing only that
`the terms of service are unenforceable as contrary to public policy. See Opp’n at 5–7. As
`discussed in the Court’s previous order denying a TRO, BrandTotal’s own allegations and
`evidence described its products’ “automated” access of Facebook’s social networks. Order
`Denying TRO at 28–30; see, e.g., Counterclaim ¶¶ 13–18 (describing BrandTotal’s collection of
`data using UpVoice); id. ¶ 21 (acknowledging that Facebook’s terms of service prohibit collection
`of data by automated means without permission). BrandTotal therefore violated the terms of
`service, as written, at least in that respect, and BrandTotal cannot state a claim for declaratory
`judgment that it did not do so. Facebook’s motion to dismiss this claim is GRANTED
`BrandTotal’s current theory that the terms of service are unenforceable does not appear in
`its counterclaim, and its arguments are best construed as seeking leave to amend to assert such a
`counterclaim. Facebook is correct that the counterclaim BrandTotal wishes to assert would be
`duplicative of BrandTotal’s fifth affirmative defense asserting that the terms of use are
`unenforceable as contrary to public policy. While there may be circumstances where a
`counterclaim for declaratory judgment could “serve [a] useful purpose” despite overlapping with
`an affirmative defense, BrandTotal has identified no such purpose here. See Stickrath v.
`Globalstar, Inc., No. C07-1941 TEH, 2008 WL 2050990, at *4 (N.D. Cal. May 13, 2008)
`(citations and internal quotation marks omitted). To the contrary, granting leave to amend would
`11
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`Northern District of California
`United States District Court
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`

`

`Case 3:20-cv-07182-JCS Document 108 Filed 02/19/21 Page 12 of 19
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`likely lead only to further litigation of the sufficiency of BrandTotal’s allegations, without
`materially affecting the scope of the case. Leave to amend this counterclaim for declaratory relief
`is therefore DENIED, without prejudice to BrandTotal later moving for leave based on changed
`circumstances—for example, if Facebook withdraws its claim for breach of contract while
`BrandTotal believes it still has an interest in proving the terms of service unenforceable.
`
`C. BrandTotal’s Counterclaims for Interference
`BrandTotal asserts counterclaims for intentional interference with contract and intentional
`interference with prospective economic advantage. “‘The elements which a plaintiff must plead to
`state the cause of action for intentional interference with contractual relations are (1) a valid
`contract between plaintiff and a third party; (2) defendant’s knowledge of this contract;
`(3) defendant’s intentional acts designed to induce a breach or disruption of the contractual
`relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting
`damage.’” HiQ, 938 F.3d at 995–96 (quoting Pac. Gas & Elec. Co. v. Bear Stearns & Co., 50
`Cal. 3d 1118, 1126 (1990)). While the typical case involves actual breach, the element of
`“disruption” of a contract can also be satisfied “where the plaintiff’s performance has been
`prevented or rendered more expensive or burdensome.” Id. at 996 n.8 (citation and internal
`quotation marks omitted). A claim for interference with prospective advantage also requires,
`among other elements, that interference occurred through an “independently wrongful act.”
`Reeves v. Hanlon, 33 Cal. 4th 1140, 1145 (2004).
`Whether BrandTotal has included sufficient allegations of each of those elements is a close
`call, and Facebook might be correct that BrandTotal’s counterclaim requires further specificity as
`to, for example, the nature of its contracts with customers, the extent to which it could perform
`those contracts relying only on non-Facebook data sources, and what BrandTotal believes
`Facebook knew or intended when it deactivated BrandTotal’s accounts and asked Google to
`remove BrandTotal’s products from Google’s store.8 At the very least, however, the liberal rules
`
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`8 To briefly address one of Facebook’s arguments, Facebook contends that BrandTotal cannot
`proceed on this claim because Facebook did not know that Google would comply with the request
`to remove UpVoice. See Reply at 4–5. Facebook’s argument suggests that a business acting with
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`United States District Court
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`of pleading and the record submitted on the TRO motion suggest that BrandTotal could likely
`amend to cure any such defects.
`As with the TRO, the more significant issue is Facebook’s defense that it acted with a
`“legitimate business purpose,” which can serve as a defense to

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