Case 5:12-md-02314-EJD Document 174 Filed 11/17/17 Page 1 of 9
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`In re Facebook Internet Tracking Litigation
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`Case No. 5:12-md-02314-EJD
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`ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS
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`Re: Dkt. No. 162
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`Plaintiffs’ third amended complaint alleges that Defendant Facebook, Inc. violated its
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`contractual obligations by tracking logged-out Facebook users on third-party websites. Facebook
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`now moves to dismiss for the third time. Facebook’s motion will be granted.
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`I. BACKGROUND
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`In this putative class action, Plaintiffs allege that Facebook improperly tracked the web
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`browsing activity of logged-out Facebook users on third-party websites.1 Third Am. Compl.
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`(“TAC”), Dkt. No. 157. Plaintiffs previously asserted a variety of common law claims and claims
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`1 For a more detailed discussion of Plaintiffs’ factual allegations, see this Court’s orders granting
`Facebook’s motion to dismiss Plaintiffs’ first amended complaint (Dkt. No. 87 at 2–6) and
`Facebook’s motion to dismiss Plaintiffs’ second amended complaint (Dkt. No. 148 at 1–3).
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`Case No.: 5:12-md-02314-EJD
`ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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`Case 5:12-md-02314-EJD Document 174 Filed 11/17/17 Page 2 of 9
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`for violations of federal and state statutes. After two rounds of motions to dismiss, this Court
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`dismissed the majority of Plaintiffs’ claims with prejudice for lack of standing and for failure to
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`state a claim. Order Granting Def.’s Mot. to Dismiss (“MTD Order”), Dkt. No. 148. This Court
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`granted leave to amend only as to Plaintiffs’ claims for breach of contract and breach of the duty
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`of good faith and fair dealing. Id. Plaintiffs timely filed their third amended complaint. Facebook
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`now moves to dismiss under Fed. R. Civ. P. 12(b)(6) and 15(c). Def.’s Mot. to Dismiss (“MTD”),
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`Dkt. No. 162.
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`II. LEGAL STANDARD
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`A motion to dismiss under Fed. R. Civ. P. 12(b)(6) tests the legal sufficiency of claims
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`alleged in the complaint. Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.
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`1995). Dismissal “is proper only where there is no cognizable legal theory or an absence of
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`sufficient facts alleged to support a cognizable legal theory.” Navarro v. Block, 250 F.3d 729, 732
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`(9th Cir. 2001). The complaint “must contain sufficient factual matter, accepted as true, to ‘state a
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`claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
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`Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
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`III. DISCUSSION
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`Plaintiffs’ TAC asserts causes of action for (1) breach of contract (TAC ¶¶ 139–48) and (2)
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`breach of the duty of good faith and fair dealing (TAC ¶¶ 149–61). Plaintiffs also seek to enlarge
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`the scope of the proposed class.
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`A. Breach of Contract
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`Plaintiffs allege that each of them entered into a contract with Facebook that consisted of
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`(1) Facebook’s Statement of Rights and Responsibilities (“SRR”), (2) Facebook’s Privacy Policy,
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`and (3) relevant pages from Facebook’s Help Center. TAC ¶ 140. According to Plaintiffs,
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`Facebook promised in the contract that it would not track the web browsing activity of logged-out
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`Facebook users on third-party websites. Id. ¶ 142. Plaintiffs allege that Facebook broke that
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`promise by collecting data about logged-out users’ browsing activity and using cookies to connect
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`ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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`Case 5:12-md-02314-EJD Document 174 Filed 11/17/17 Page 3 of 9
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`that activity to users’ identities. Id.
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`To state a claim for breach of contract, Plaintiffs must allege that (1) they entered into a
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`contract with Facebook, (2) Plaintiffs performed or were excused from performance under the
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`contract, (3) Facebook breached the contract, and (4) Plaintiffs suffered damages from the breach.
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`Oasis W. Realty, LLC. v. Goldman, 51 Cal. 4th 811, 821 (2011) (citing Reichert v. General Ins.
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`Co., 68 Cal. 2d 822, 830 (1968)). “In an action for breach of a written contract, a plaintiff must
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`allege the specific provisions in the contract creating the obligation the defendant is said to have
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`breached.” Woods v. Google Inc., No. 05:11-cv-1263-JF, 2011 WL 3501403, at *3 (N.D. Cal.
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`Aug. 10, 2011).
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`The parties agree that the SRR constitutes a contract. MTD 8; Pls.’ Opp’n to Def.’s Mot. to
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`Dismiss (“Opp’n”), Dkt. No. 163. However, the SRR itself does not contain a promise to not track
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`logged-out users. Rather, Plaintiffs argue that the operative contract is a combination of provisions
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`from Facebook’s SRR, Facebook’s Privacy Policy,2 and Facebook’s Help Center pages.3
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`i. The Data Use Policy was not incorporated by reference into the Statement of
`Rights and Responsibilities.
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`Plaintiffs cite the following language from Facebook’s Data Use Policy (dated September
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`7, 2011):
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`We receive data whenever you visit a . . . site with a Facebook
`feature (such as a social plugin). This may include the date and time
`you visit the site; the web address, or URL, you’re on; technical
`information about the IP address, browser and the operating system
`you use; and, if you are logged in to Facebook, your User ID.
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`TAC ¶ 60 (emphasis added). Plaintiffs argue that this language “implicitly promises to the average
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`user that Facebook will not receive [a user-identifying] cookie when the user is not logged in.” Id.
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`2 During the alleged class period, Facebook changed the title of this document from “Privacy
`Policy” to “Data Use Policy.” Opp’n 4 n.4. As discussed below, Facebook also changed the
`substance of the document. In this order, unless otherwise indicated, the term “Privacy Policy”
`refers to both the Privacy Policy and the Data Use Policy.
`3 Plaintiffs’ statement of their cause of action for breach of contract does not identify the specific
`contractual language that Facebook allegedly breached. TAC ¶¶ 139–48. However, Plaintiffs
`identify specific contractual language in their brief in opposition to Facebook’s motion to dismiss.
`Opp’n 4 (citing factual allegations in the TAC at ¶¶ 24, 57, 60, and 62–67).
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`Case No.: 5:12-md-02314-EJD
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`Plaintiffs argue that this version of the Data Use Policy is part of the contract because it
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`was incorporated by reference into the SRR. Opp’n 4–5. Under California law, for the terms of
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`another document to be incorporated by reference into an executed document, “the reference must
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`be (1) clear and unequivocal, the (2) reference must be called to the attention of the other party
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`and he must consent thereto, and (3) the terms of the incorporated document must be known or
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`easily available to the contracting parties.” Woods, 2011 WL 3501403, at *3 (quoting Troyk v.
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`Farmers Grp., Inc., 171 Cal. App. 4th 1305, 1331 (2009)).
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`Here, Plaintiffs argue that the Privacy Policy was incorporated by reference into the SRR
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`because of the following language in the SRR:
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`Your privacy is very important to us. We designed our Privacy
`Policy to make important disclosures about how you can use
`Facebook to share with others and how we collect and can use your
`content and information. We encourage you to read the Privacy
`Policy, and to use it to help make informed decisions.
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`TAC ¶¶ 24, 57.4 According to Plaintiffs, this language means that the Privacy Policy is
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`incorporated by reference into the SRR because the “SRR expressly refers to the Privacy Policy,
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`says that the Policy is important, links to that Policy and tells users to read it to make important
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`decisions about their privacy.” Opp’n 5.
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`Plaintiffs’ complaint cites four versions of Facebook’s SRR, dated April 22, 2010 (TAC
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`Ex. A), August 25, 2010 (TAC Ex. B), October 4, 2010 (TAC Ex. C), and April 26, 2011 (TAC
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`Ex. D). TAC ¶¶ 19–20. The excerpt quoted above appears in all four versions of the SRR.
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`As discussed above, Plaintiffs argue that Facebook’s Data Use Policy promised that
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`Facebook would not track logged-out users. However, the version of the Data Use Policy that
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`contains this language was not published until September 7, 2011—more than four months after
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`the latest version of the SRR (dated April 26, 2011) that Plaintiffs attach to their complaint. See
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`TAC Ex. D (attaching the April 26, 2011, version of the SRR), Ex. H (attaching the September 7,
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`4 Plaintiffs’ opposition brief quotes additional language from the SRR that is not cited in the TAC:
`“You may also want to review the following documents: Privacy Policy: the Privacy Policy is
`designed to help you understand how we collect and use information.” Opp’n 5.
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`Case No.: 5:12-md-02314-EJD
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`Northern District of California
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`Case 5:12-md-02314-EJD Document 174 Filed 11/17/17 Page 5 of 9
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`2011, version of the Data Use Policy). Earlier versions of the Privacy Policy did not contain the
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`language that Plaintiffs allege constitutes a promise not to track logged-out users. Compare id. Ex.
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`H (attaching the September 7, 2011, version of the Data Use Policy, which states that Facebook
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`“receive[s] data whenever you visit a . . . site with a Facebook feature (such as a social plugin) . . .
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`. [including], if you are logged in to Facebook, your User ID”) (emphasis added), with id. Ex. E
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`(attaching the April 22, 2010, version of the Privacy Policy), Ex. F (attaching the October 5, 2010,
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`version of the Privacy Policy), and Ex. G (attaching the December 22, 2010, version of the
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`Privacy Policy).
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`As Facebook points out, the SRR does not use the term “Data Use Policy” and does not
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`contain any other references to the Data Use Policy. MTD 11–12. Nor could it, since the Data Use
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`Policy Plaintiffs cite and rely on did not exist until several months after Facebook published the
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`most recent version of its SRR that Plaintiffs attach to their complaint. Plaintiffs do not address
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`this deficiency in their opposition brief. Compare MTD 11–12 (noting that the Data Use Policy
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`“was active starting on September 7, 2011,” and that the policy “was not incorporated into any of
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`the SRR versions attached to the TAC, and was therefore not a part of the contract”), with Opp’n
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`4–5 (arguing that the SRR “expressly refers to the Privacy Policy,” but offering no response to
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`Facebook’s point that the Data Use Policy was not operative at the time the cited SRR was
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`published). In addition, Plaintiffs do not allege that earlier versions of the Privacy Policy
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`contained similar promises to not track logged-out users.5
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`As such, the Court finds that the Data Use Policy was not incorporated by reference into
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`5 During the hearing on Facebook’s motion on November 16, 2017, Plaintiffs’ counsel argued that
`the September 7, 2011, Data Use Policy is incorporated into the April 26, 2011, SRR because
`Facebook’s users continuously agree to the SRR each time they use or access Facebook. Plaintiffs
`base this argument on the following statement from the SRR: “By using or accessing Facebook,
`you agree to this Statement.” TAC Ex. D. Under this theory, Plaintiffs argue that they agreed to
`the SRR on or after September 7, 2011, which means that the Data Use Policy would have been
`incorporated into the contract between the parties as of that date. This argument fails for two
`reasons: first, the TAC does not identify the dates that Plaintiffs “used or accessed” Facebook; and
`second, Plaintiffs have not alleged that the April 26, 2011, version of the SRR remained in effect
`as of September 7, 2011.
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`the SRR because the SRR did not “clearly and unequivocally” reference it. See Troyk, 171 Cal.
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`App. 4th at 1331.
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`ii. The relevant Help Center pages were not incorporated by reference into the
`Statement of Rights and Responsibilities.
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`Plaintiffs also argue that various Help Center pages were incorporated by reference into the
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`SRR. Opp’n 5–8. Facebook notes, and Plaintiffs do not dispute, that the SRR contains no direct
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`references to any Help Center pages. See MTD 8–9 (“the SRR does not reference—or even hint
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`at—a single one of the Help Center pages Plaintiffs quote from”); Opp’n 6 (“the Help Center
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`pages are the third link in the contractual chain . . . . the Privacy Policy linked to the Help Center
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`pages and directed users to them”). Rather, Plaintiffs’ theory is that certain Help Center pages
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`were incorporated by reference into the Privacy Policy, and that the Privacy Policy was in turn
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`incorporated into the SRR. Opp’n 7 (“the SRR incorporates the Privacy Policy, and, in turn, the
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`Help Center pages”); TAC ¶¶ 61 (“The Help Center pages are incorporated by reference into the
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`Privacy Policy and are a part of the contract.”), 135 (stating that two questions common to all
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`members of the proposed class are “whether the SRR incorporates by reference the Privacy
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`Policy” and “whether the Privacy Policy incorporates by reference the Help Center pages”).
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`Even if the Court assumes that the Privacy Policy was incorporated into the SRR,
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`Plaintiffs’ argument fails because the Help Center pages were not incorporated into the Privacy
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`Policy. In the TAC, Plaintiffs cite several Help Center pages that, according to Plaintiffs,
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`contained promises not to track logged-out users. See TAC ¶¶ 62–67. Some Help Center pages
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`contain explicit promises to that effect—for instance, one page states: “When you log out of
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`Facebook, we remove the cookies that identify your particular account.” Id. ¶ 62, Ex. I. However,
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`none of those Help Center are referenced in the Privacy Policy. The Privacy Policy does not link
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`to them, mention them, or otherwise reference them directly.
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`Instead, Plaintiffs appear to argue that the individual Help Center pages are subparts of a
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`single “broader document.” Opp’n 5–6 (“a mainstay of Internet contract law teaches that
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`customers are often contractually bound to individual provisions . . . even when the hyperlink only
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`Case 5:12-md-02314-EJD Document 174 Filed 11/17/17 Page 7 of 9
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`links to the broader document”). This argument finds little factual support. The Help Center pages
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`exist independently at different URLs, as underscored by the fact that Plaintiffs attached Help
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`Center pages as separate exhibits to their TAC. See TAC ¶¶ 62–67 (citing, in order, TAC Exs. I, J,
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`M, L, MM, NN, OO, PP, R, S). No evidence suggests that a Facebook user who reads one Help
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`Center page has also read, or is even aware of, any of the others.
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`Plaintiffs also argue that the Help Center in its entirety is incorporated into the Privacy
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`Policy because the Privacy Policy links to some of its pages. Opp’n 6 (“Here, the TAC
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`demonstrates clearly how that the Help Center generally (not just specific pages) are incorporated
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`into the SRR. . . . [T]he Privacy Policy linked to the Help Center pages and directed users to them,
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`without exclusion.”) (emphasis added). Plaintiffs’ argument that the Privacy Policy “directed”
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`users to Help Center pages “without exclusion” is at odds with TAC, which alleges that the
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`Privacy Policy linked to some Help Center pages, but not to the Help Center pages containing
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`Facebook’s promises to not track logged-out users. TAC ¶¶ 62–67. This relationship is too
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`attenuated to support Plaintiffs’ position that the entire Help Center is incorporated into the
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`Privacy Policy. See Woods, 2011 WL 3501403, at *3–4 (finding that pages within Google’s Help
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`Center were not incorporated by reference into another document, even when that document
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`contained direct hyperlinks to the Help Center pages at issue).
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`As such, the Court finds that the Help Center pages cited in the TAC were not incorporated
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`into the Privacy Policy because they were not “known or easily available to the contracting
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`parties.” Id. (quoting Troyk, 171 Cal. App. 4th at 1331).
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`B. Breach of the Duty of Good Faith and Fair Dealing
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`As Plaintiffs note, a claim for a violation of the duty of good faith and fair dealing must
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`rest “upon the existence of some specific contractual obligation.” Opp’n 15 (quoting Avidity
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`Partners, LLC v. State, 221 Cal. App. 4th 1180, 1204 (2013)); see also Rosenfeld v. JPMorgan
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`Chase Bank, N.A., 732 F. Supp. 2d 952, 968 (N.D. Cal. 2010) (“[T]he implied covenant of good
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`faith and fair dealing ‘cannot impose substantive duties or limits on the contracting parties beyond
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`those incorporated in the specific terms of their agreement.’ ”) (quoting Agosta v. Astor, 120 Cal.
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`App. 4th 596, 607 (2004)).
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`As discussed in the previous section, Plaintiffs have not identified contractual provisions
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`that prohibited Facebook from tracking logged-out users in the manner Plaintiffs allege. Plaintiffs’
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`claim for breach of the duty of good faith and fair dealing must therefore be dismissed.
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`C. Expanded Class Period
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`Plaintiffs’ second amended complaint alleged a class period that began on May 27, 2010,
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`and ended on September 26, 2011. Second Am. Compl. (“SAC”) ¶ 172, Dkt. No. 93. In the order
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`granting Facebook’s motion to dismiss Plaintiff’s SAC, this Court dismissed the majority of
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`Plaintiffs’ claims without leave to amend. MTD Order 14. This Court granted leave to amend only
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`as to Plaintiffs’ claims for breach of contract and breach of the duty of good faith and fair dealing,
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`and only “[b]ecause Plaintiffs [did] not identif[y] the specific contractual provisions they allege
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`were breached.” Id. at 13–14.
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`In their TAC, Plaintiffs allege a new class period that begins on April 22, 2010, and ends
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`on “a later date to be determined upon the completion of discovery.” TAC ¶ 132. This expanded
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`class definition exceeds the scope of leave to amend that the Court granted in its order dismissing
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`Plaintiffs’ SAC. Fed. R. Civ. P. 15(a)(2) provides that “a party may amend its pleading only with
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`the opposing party’s written consent or the court’s leave.” Plaintiffs did not obtain Facebook’s
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`consent or this Court’s leave to expand its class allegations. Accordingly, Plaintiffs’ expanded
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`class allegations are stricken.
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`D. Leave to Amend
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`Courts “should freely give leave [to amend] when justice so requires.” Fed. R. Civ. P.
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`15(a)(2); In re Korean Air Lines Co., Ltd., 642 F.3d 685, 701 (9th Cir. 2011). Absent a showing of
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`prejudice, delay, bad faith, or futility, there is a strong presumption in favor of granting leave to
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`amend. Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
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`However, courts can dismiss without leave to amend in the event of a plaintiff’s “repeated
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`failure to cure deficiencies by amendments previously allowed.” Foman v. Davis, 371 U.S. 178,
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`182 (1962); see also Abagninin v. AMVAC Chem. Corp., 545 F.3d 733, 742 (9th Cir. 2008)
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`(“Leave to amend may also be denied for repeated failure to cure deficiencies by previous
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`amendment.”); Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009), as
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`amended (Feb. 10, 2009) (“where the plaintiff has previously been granted leave to amend and has
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`subsequently failed to add the requisite particularity to its claims, ‘[t]he district court’s discretion
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`to deny leave to amend is particularly broad’ ”) (quoting In re Vantive Corp. Sec. Litig., 283 F.3d
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`1079, 1097–98 (9th Cir. 2002)).
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`Here, the Court previously allowed Plaintiffs to amend their claims for breach of contract
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`and breach of the duty of good faith and fair dealing. Since Plaintiffs’ amendments did not cure
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`the defects the Court identified, Plaintiffs’ claims will be dismissed without leave to amend.
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`IV. CONCLUSION
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`Facebook’s motion to dismiss is GRANTED. The Clerk shall close this file.
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`IT IS SO ORDERED.
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`Dated: November 17, 2017
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`______________________________________
`EDWARD J. DAVILA
`United States District Judge
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`Case No.: 5:12-md-02314-EJD
`ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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`Northern District of California
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`United States District Court
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