Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 1 of 47
`
`
`
`SONAL N. MEHTA (SBN 222086)
` Sonal.Mehta@wilmerhale.com
`WILMER CUTLER PICKERING
` HALE AND DORR LLP
`950 Page Mill Road
`Palo Alto, California 94303
`Telephone: (650) 858-6000
`Facsimile: (650) 858-6100
`
`DAVID Z. GRINGER (pro hac vice)
` David.Gringer@wilmerhale.com
`WILMER CUTLER PICKERING
` HALE AND DORR LLP
`1875 Pennsylvania Ave NW
`Washington, DC 20006
`Telephone: (202) 663-6000
`Facsimile: (202) 663-6363
`
`Attorneys for Defendant
`FACEBOOK, INC.
`
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`
`
`SAN JOSE DIVISION
`
`
`
`
`
`
`
`
`MAXIMILIAN KLEIN, et al., on behalf of
`themselves and all others similarly situated,
`
`v.
`
`FACEBOOK, INC.,
`
`Plaintiffs,
`
`Defendant.
`
`
`
` Case No. 5:20-cv-08570-LHK
`
`DEFENDANT FACEBOOK, INC.’S
`NOTICE OF MOTION AND
`MOTION TO DISMISS THE
`CONSOLIDATED CONSUMER
`CLASS ACTION COMPLAINT AND
`CONSOLIDATED ADVERTISER
`CLASS ACTION COMPLAINT;
`MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT
`THEREOF
`
`Hearing Date: July 15, 2021
`Time: 1:30 pm
`Judge: Hon. Lucy H. Koh
`
`Case No. 5:20-cv-08570-LHK
`
`
`
`
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 2 of 47
`
`TABLE OF CONTENTS
`
`Page
`
`
`
`
`
`II.
`
`III.
`
`NOTICE OF MOTION AND MOTION TO DISMISS ..................................................................1
`STATEMENT OF REQUESTED RELIEF .....................................................................................1
`MEMORANDUM OF POINTS AND AUTHORITIES .................................................................1
`INTRODUCTION ...........................................................................................................................1
`BACKGROUND .............................................................................................................................3
`A.
`Pre-2010 Competitive Environment ........................................................................4
`B.
`Post-2010 Competitive Environment .......................................................................5
`ARGUMENT ...................................................................................................................................6
`I.
`Plaintiffs’ Section 2 Claims Are Time-Barred.....................................................................6
`A.
`The Statute Of Limitations Bars All Plaintiffs’ Damages Claims ...........................6
`B.
`Laches Bars All Plaintiffs’ Claims For Injunctive Relief ........................................8
`C.
`No Tolling Theory Applies ......................................................................................9
`1.
`Fraudulent Concealment Does Not Apply ...................................................9
`2.
`Users Cannot Invoke The Continuing Violation Doctrine ........................12
`Plaintiffs Fail To Plausibly Define A Relevant Product Market .......................................13
`A.
`Advertisers Fail To Plausibly Define A Product Market .......................................14
`B.
`Users Fail To Plausibly Define Product Markets ..................................................15
`1.
`Users’ “Social Network” Market Fails As A Matter Of Law ....................16
`2.
`Users’ “Social Media” Market Fails As A Matter Of Law ........................17
`Users Fail To Plausibly Allege Monopoly Power .................................................18
`C.
`Plaintiffs Have Not Adequately Alleged Exclusionary Conduct .......................................19
`A.
`Facebook Did Not Unlawfully Acquire A Monopoly ...........................................19
`B.
`None of Plaintiffs’ Monopoly Maintenance Theories Are Cognizable .................22
`1.
`Plaintiffs’ Product Improvement Allegations Are Non-Cognizable ..........23
`2.
`Facebook’s Acquisitions Were Not Exclusionary .....................................23
`3.
`Facebook Did Not Unlawfully “Kill” Third Party App Developers..........24
`Plaintiffs Lack Antitrust Standing .....................................................................................27
`A.
`Users Have Not Alleged An Antitrust Injury ........................................................28
`1.
`Lost “Information And Attention” Is Not A Cognizable Injury ................28
`2.
`Users’ Alleged Injury From Their Monopoly Acquisition Theory Is
`Speculative .................................................................................................29
`Users’ Purported Injuries Were Not Caused By Lost Competition ...........30
`3.
`No Plaintiffs Were Injured By “Copy, Acquire, Kill” ...........................................31
`
`IV.
`
`B.
`
`Case No. 5:20-cv-08570-LHK
`
`i
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 3 of 47
`
`
`
`C.
`
`Advertisers Have Not Alleged An Antitrust Injury ...............................................31
`The Alleged Injuries From Advertisers’ Section 2 Claims Are
`1.
`Conclusory .................................................................................................31
`Advertisers Lack Antitrust Standing To Pursue Their Section 1
`Claim ..........................................................................................................32
`Users Fail To State A Claim For Unjust Enrichment ........................................................35
`V.
`CONCLUSION ..............................................................................................................................35
`
`
`2.
`
`
`
`Case No. 5:20-cv-08570-LHK
`
`ii
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 4 of 47
`
`
`
`
`CASES
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Allied Orthopedic Appliances Inc. v. Tyco Health Care Grp. LP,
`592 F.3d 991 (9th Cir. 2010) .............................................................................................23
`
`Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of Cal.,
`190 F.3d 1051 (9th Cir. 1999) .....................................................................................27, 33
`
`Am. Prof. Testing Serv., Inc. v. Harcourt Brace Jovanovich Legal &
`Prof. Publ., Inc.,
`108 F.3d 1147 (9th Cir. 1997) ...........................................................................................21
`
`Amarel v. Connell,
`102 F.2d 1494 (9th Cir. 1996) .....................................................................................27, 33
`
`Apple Inc v. Pepper,
`139 S. Ct. 1514 (2019) .......................................................................................................29
`
`Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,
`472 U.S. 585 (1985) ...........................................................................................................25
`
`Assoc. Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters,
`459 U.S. 519 (1983) .....................................................................................................33, 34
`
`Astiana v. Hain Celestial Grp., Inc.,
`783 F.3d 753 (9th Cir. 2015) .............................................................................................35
`
`Atl. Richfield Co. v. USA Petrol. Co.,
`495 U.S. 328 (1990) ...........................................................................................................29
`
`Bay Area Surgical Mgmt. LLC v. Aetna Life Ins. Co.,
`166 F. Supp. 3d 988 (N.D. Cal. 2015) ...............................................................................16
`
`Bell Atl. Corp. v. Twombly,
`550 U.S. 544 (2007) ...............................................................................................22, 24, 26
`
`Bhan v. NME Hosps., Inc.,
`669 F. Supp. 998 (E.D. Cal. 1987), aff’d, 929 F.2d 1404 (9th Cir. 1991) .........................28
`
`Blue Cross Blue Shield v. Marshfield Clinic,
`65 F.3d 1406 (7th Cir. 1995) .............................................................................................32
`
`Brantley v. NBC Universal, Inc.,
`675 F.3d 1192 (9th Cir. 2012) ...........................................................................................27
`
`Complete Entm’t Res. LLC v. Live Nation Entm’t, Inc.,
`2016 WL 3457177 (C.D. Cal. May 11, 2016) ...................................................................13
`
`Case No. 5:20-cv-08570-LHK
`
`iii
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 5 of 47
`
`
`
`Conmar Corp. v. Mitsui & Co. (U.S.A.), Inc.,
`858 F.2d 499 (9th Cir. 1988) .........................................................................................9, 11
`
`Danjaq LLC v. Sony Corp.,
`263 F.3d 942 (9th Cir. 2001) ...............................................................................................8
`
`Dodds v. Cigna Sec., Inc.,
`841 F. Supp. 89 (W.D.N.Y. 1992) .....................................................................................12
`
`Duarte v. Quality Loan Serv. Corp.,
`2018 WL 2121800 (C.D. Cal. May 8, 2018) .....................................................................12
`
`DXS, Inc. v. Siemens Med. Sys. Inc.,
`100 F.3d 462 (6th Cir. 1990) ...............................................................................................7
`
`Eagle v. Star-Kist Foods, Inc.,
`812 F.2d 538 (9th Cir. 1987) .............................................................................................29
`
`Eichman v. Fotomat,
`880 F.2d 149 (9th Cir. 1989) .............................................................................................12
`
`Evans Analytical Grp., Inc. v. Green Plant Farms, LLC,
`2013 WL 3963822 (N.D. Cal. July 29, 2013) ......................................................................5
`
`Feitelson v. Google Inc.,
`80 F. Supp. 3d 1019 (N.D. Cal. 2015) .........................................................................27, 29
`
`Fine v. Barry & Enright Prods.,
`731 F.2d 1394 (9th Cir. 1984) ...........................................................................................28
`
`Foremost Pro Color, Inc. v. Eastman Kodak Co.,
`703 F.2d 534 (9th Cir. 1983) .............................................................................................23
`
`Fraser v. Major League Soccer, L.L.C.,
`284 F.3d 47 (1st Cir. 2002) ................................................................................................24
`
`Free FreeHand Corp. v. Adobe Sys. Inc.,
`852 F. Supp. 2d 1171 (N.D. Cal. 2012) .............................................................................13
`
`FTC v. Qualcomm Inc.,
`411 F. Supp. 3d 658 (N.D. Cal. 2019) ...............................................................................18
`
`FTC v. Qualcomm Inc.,
`969 F.3d 974 (9th Cir. 2020) ...........................................................................13, 25, 26, 30
`
`Garrison v. Oracle Corp.,
`159 F. Supp. 3d 1044 (N.D. Cal. 2016) .....................................................................6, 7, 11
`
`Genus Lifesciences Inc. v. Lannett Co.,
`378 F. Supp. 3d 823 (N.D. Cal. 2019) ...............................................................................21
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case No. 5:20-cv-08570-LHK
`
`iv
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 6 of 47
`
`
`
`Herskowitz v. Apple Inc.,
`940 F. Supp. 2d 1131 (N.D. Cal. 2013) .............................................................................35
`
`Hexcel Corp. v. Ineos Polymers, Inc.,
`681 F.3d 1055 (9th Cir. 2012) ...................................................................................2, 9, 11
`
`Hicks v. PGA Tour, Inc.,
`897 F.3d 1109 (9th Cir. 2018) ...................................................................13, 14, 15, 16, 17
`
`hiQ Labs, Inc. v. LinkedIn Corp.,
`485 F. Supp. 3d 1137 (N.D. Cal. 2020) .............................................................................26
`
`In re Apple iPod iTunes Antitrust Litig.,
`796 F. Supp. 2d 1137 (N.D. Cal. 2011) .............................................................................23
`
`In re Google Dig. Advertising Antitrust Litig.,
`No. 5:20-cv-003556-BLF, Dkt. 143 (N.D. Cal. May 13, 2021) ............................15, 25, 26
`
`In re Late Fee Litig.,
`528 F. Supp. 2d 953 (N.D. Cal. 2007) ...............................................................................35
`
`In re Packaged Seafood Prods. Antitrust Litig.,
`2017 WL 35571 (S.D. Cal. Jan. 3, 2017) ...........................................................................10
`
`In re Super Premium Ice Cream,
`691 F. Supp. 1262 (N.D. Cal. 1988), aff’d sub nom.,
`Haagen-Dazs Co. v. Double Rainbow Gourmet Ice Creams, Inc.,
`895 F.2d 1417 (9th Cir. 1990) ...........................................................................................18
`
`Int’l Tel. & Tel. Corp. v. Gen. Tel. & Elecs. Corp.,
`518 F.2d 913 (9th Cir. 1975) ...............................................................................................8
`
`Intel Corp. v. Fortress Inv. Grp. LLC,
`--- F. Supp. 3d ----, 2021 WL 51727 (N.D. Cal. Jan. 6, 2021) ....................................31, 32
`
`Jacobs v. Tempur-Pedic Int’l, Inc.,
`626 F.3d 1327 (11th Cir. 2010) .........................................................................................16
`
`Kaiser Found. v. Abbott Labs.,
`2009 WL 3877513 (C.D. Cal. Oct. 8, 2009) ........................................................................7
`
`Kinderstart.com, LLC v. Google, Inc.,
`2007 WL 831806 (N.D. Cal. Mar. 16, 2007) ...............................................................15, 21
`
`Knevelbaard Dairies v. Kraft Foods, Inc.,
`232 F.3d 979 (9th Cir. 2000) .............................................................................................33
`
`Korea Kumho Petrochemical v. Flexsys Am. LP,
`2008 WL 686834 (N.D. Cal. Mar. 11, 2008) .....................................................................18
`
`Case No. 5:20-cv-08570-LHK
`
`v
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 7 of 47
`
`
`
`Krottner v. Starbucks Corp.,
`628 F.3d 1139 (9th Cir. 2010) ...........................................................................................12
`
`Lee v. City of Los Angeles,
`250 F.3d 668 (9th Cir. 2001) ...............................................................................................4
`
`Letizia v. Facebook, Inc.,
`267 F. Supp. 3d 1235 (N.D. Cal. 2017) .............................................................................35
`
`Lucas Auto. Eng’g, Inc. v. Bridgestone/Firestone Inc.,
`140 F.3d 1228 (9th Cir. 1998) .....................................................................................30, 31
`
`Lucas v. Bechtel Corp.,
`800 F.2d 839 (9th Cir. 1986) .............................................................................................34
`
`MetroNet Servs. Corp. v. Qwest Corp.,
`383 F.3d 1124 (9th Cir. 2004) .....................................................................................25, 26
`
`Midwestern Mach. Co. v. Nw. Airlines, Inc.,
`392 F.3d 265 (8th Cir. 2004) ...............................................................................................8
`
`Newcal Indus., Inc. v. Ikon Office Sol.,
`513 F.3d 1038 (9th Cir. 2008) ...........................................................................................15
`
`Novell, Inc. v. Microsoft Corp.,
`731 F.3d 1064 (10th Cir. 2013) .........................................................................................25
`
`NSS Labs, Inc. v. Symantec Corp.,
`2019 WL 3804679 (N.D. Cal. Aug. 13, 2019) ..................................................................17
`
`O’Connor v. Uber Techs., Inc.,
`58 F. Supp. 3d 989 (N.D. Cal. 2014) .................................................................................35
`
`Oliver v. SD-3C LLC,
`751 F.3d 1081 (9th Cir. 2014) .............................................................................................8
`
`Oltz v. St. Peter’s Cmty. Hosp.,
`861 F.2d 1440 (9th Cir. 1988) ...........................................................................................14
`
`Olympia Equip. Leasing Co. v. Western Union Tel. Co.,
`797 F.2d 370 (7th Cir. 1986) .............................................................................................27
`
`Pac. Bell Tel. Co. v. linkLine Commc’ns, Inc.,
`555 U.S. 438 (2009) .....................................................................................................22, 25
`
`Pac. Express, Inc. v. United Airlines, Inc.,
`959 F.2d 814 (9th Cir. 1992) .............................................................................................18
`
`Pace Indus., Inc. v. Three Phoenix Co.,
`813 F.2d 234 (9th Cir. 1987) .............................................................................................12
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case No. 5:20-cv-08570-LHK
`
`vi
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 8 of 47
`
`
`
`Packaging Sys., Inc. v. PRC-Desoto Int’l, Inc.,
`268 F. Supp. 3d 1071 (C.D. Cal. 2017) .............................................................................16
`
`Pistacchio v. Apple Inc.,
`2021 WL 949422 (N.D. Cal. Mar. 11, 2021) .....................................................................17
`
`Port Dock & Stone Corp. v. Oldcastle Ne., Inc.,
`507 F.3d 117 (2d Cir. 2007)...............................................................................................26
`
`Rambus Inc. v. FTC,
`522 F.3d 456 (D.C. Cir. 2008) .....................................................................................22, 24
`
`Rebel Oil Co. v. Atlantic Richfield Co.,
`51 F.3d 1421 (9th Cir. 1995) .......................................................................................19, 27
`
`Reiter v. Sonotone Corp.,
`442 U.S. 330 (1979) ...........................................................................................................28
`
`Reveal Chat Holdco LLC v. Facebook, Inc.,
`2021 WL 1615349 (N.D. Cal. Apr. 26, 2021) ...............................................................9, 10
`
`Reveal Chat Holdco, LLC v. Facebook, Inc.,
`471 F. Supp. 3d 981 (N.D. Cal. 2020) ....................................................................... passim
`
`Reveal Chat Holdco LLC v. Facebook, Inc,
`No. 5:20-cv-00363-BLF, Dkt. 62 (Aug. 7, 2020) ..............................................................10
`
`Rheumatology Diagnostics Lab., Inc. v. Aetna, Inc.,
`2013 WL 3242245 (N.D. Cal. June 25, 2013) ...................................................................18
`
`Roy B. Taylor Sales, Inc. v. Hollymatic Corp.,
`28 F.3d 1379 (5th Cir. 1994) .............................................................................................24
`
`Rutledge v. Boston Woven Hose & Rubber Co.,
`576 F.2d 248 (9th Cir. 1978) .............................................................................................12
`
`Ryan v. Microsoft,
`147 F. Supp. 3d 868 (N.D. Cal. 2015) ...............................................................................11
`
`Safeway Inc. v. Abbott Labs.,
`761 F. Supp. 2d 874 (N.D. Cal. 2011) ...............................................................................32
`
`Samsung Elecs. Co. v. Panasonic Corp.,
`747 F.3d 1199 (9th Cir. 2014) .............................................................................................6
`
`Sidibe v. Sutter Health,
`4 F. Supp. 3d 1160 (N.D. Cal. 2013) .................................................................................19
`
`SmileCare Dental Grp. v. Delta Dental Plan of Cal., Inc.,
`88 F.3d 780 (9th Cir. 1996) ...............................................................................................26
`
`Case No. 5:20-cv-08570-LHK
`
`vii
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 9 of 47
`
`
`
`Somers v. Apple, Inc.,
`729 F.3d 953 (9th Cir. 2013) .................................................................................27, 30, 33
`
`Stackla, Inc. v. Facebook Inc.,
`2019 WL 4738288 (N.D. Cal. Sept. 27, 2019) ..............................................................5, 26
`
`Stationary Eng’rs Local 39 v. Philip Morris, Inc.,
`1998 WL 476265 (N.D. Cal. Apr. 30, 1998) .....................................................................28
`
`Tabler v. Panera LLC,
`2020 WL 3544988 (N.D. Cal. June 30, 2020) ...................................................................20
`
`Taleff v. Sw. Airlines Co.,
`828 F. Supp. 2d 1118 (N.D. Cal. 2011) ...............................................................................9
`
`Tate v. Gas & Elec. Co.,
`230 F. Supp. 2d 1072 (N.D. Cal. 2002) .............................................................................21
`
`United States v. Aetna Inc.,
`240 F. Supp. 3d 1 (D.D.C. 2017) .......................................................................................24
`
`United States v. Am. Express Co.,
`838 F.3d 179 (2d Cir. 2016), aff’d sub nom., Ohio v. Am. Express Co.,
`138 S. Ct. 2274 (2018) ...........................................................................................15, 16, 32
`
`United States v. Marine Bancorp.,
`418 U.S. 602 (1974) ...........................................................................................................24
`
`Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP,
`540 U.S. 398 (2004) ...........................................................................................................25
`
`Vess v. Ciba-Geigy Corp. USA,
`317 F.3d 1097 (9th Cir. 2003) .....................................................................................19, 20
`
`Von Saher v. Norton Simon Museum of Art at Pasadena,
`592 F.3d 954 (9th Cir. 2010) ...............................................................................................6
`
`Z Techs. Corp. v. Lubrizol Corp.,
`753 F.3d 594 (6th Cir. 2014) .........................................................................................7, 13
`
`STATUTES, RULES, AND REGULATIONS
`
`Fed. R. Civ. P. 9(b) ..............................................................................................................9, 10, 20
`
`Fed. R. Civ. P. 12(b)(6)..............................................................................................................1, 14
`
`Clayton Antitrust Act, 15 U.S.C. §§ 12-27 (1914) ..................................................6, 13, 24, 28, 35
`
`Sherman Antitrust Act, 15 U.S.C. §§ 1-7 (1890)................................................................... passim
`
`Case No. 5:20-cv-08570-LHK
`
`viii
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 10 of 47
`
`
`
`OTHER AUTHORITIES
`
`3B Phillip E. Areeda & Herbert Hovenkamp,
`Antitrust Law (4th ed. 2015) ........................................................................................21, 27
`
`Case No. 5:20-cv-08570-LHK
`
`ix
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 11 of 47
`
`
`
`NOTICE OF MOTION AND MOTION TO DISMISS
`
`PLEASE TAKE NOTICE THAT, on July 15, 2021 at 1:30 pm in Courtroom 8 of the U.S.
`
`District Court for the Northern District of California, San Jose Division, at 280 South 1st Street,
`
`San Jose, CA, this Motion To Dismiss filed by Defendant Facebook, Inc. will be heard. Pursuant
`
`to Fed. R. Civ. P. 12(b)(6), Facebook moves to dismiss the Consolidated Amended Complaints in
`
`the above-captioned action. Facebook’s Motion to Dismiss is based on this Notice of Motion and
`
`the supporting Memorandum of Points and Authorities.
`
`STATEMENT OF REQUESTED RELIEF
`
`Facebook requests that the Court dismiss Plaintiffs’ claims under Rule 12(b)(6).
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`
`INTRODUCTION
`
`Over the last two decades, Facebook has succeeded in a fiercely competitive environment.
`
`With a seemingly unlimited number of choices about how to spend their time or be entertained or
`
`where to advertise, people and businesses use Facebook’s products every day, not because they
`
`have to, but because they find them valuable. Ignoring this reality, Plaintiffs offer a series of
`
`unfounded and untimely allegations that fail to plausibly allege an antitrust case.
`
`Three individuals who chose to use Facebook’s free products and services for over fifteen
`
`years (Users) now seek to have Facebook pay them for that use. They make this unprecedented
`
`claim despite acknowledging that they have received (and presumably continue to receive)
`
`substantial value from using Facebook. Users also advance an implausible rewrite of history:
`
`They contend that Facebook’s alleged misrepresentations in its privacy policies, starting in 2007,
`
`were the reason that Myspace and/or Friendster failed as competitors, thus enabling Facebook to
`
`obtain an alleged monopoly in supposed markets for “social networks” and “social media.” No
`
`antitrust claim has ever proceeded past a motion to dismiss under such a theory, even if timely
`
`brought, which these claims are assuredly not.
`
`Users are joined by a small number of individuals and entities (Advertisers) who claim
`
`injury through their purchase of an unspecified amount of advertising despite acknowledging that
`
`Facebook offers higher quality ads at far lower rates than what others, including Google, charge.
`
`Case No. 5:20-cv-08570-LHK
`
`
`
`1
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 12 of 47
`
`
`
`As with Users, Advertisers’ claims are tardy, do not allege cognizable antitrust injury, and fail to
`
`plausibly allege anticompetitive conduct. Each complaint thus fails on multiple grounds.
`
` Plaintiffs’ Section 2 claims are time-barred. The “gravamen” of Users’ complaint is
`
`allegedly deceptive conduct that occurred well over a decade ago. The statute of limitations and
`
`laches bar Users’ claims here. Users’ monopoly acquisition theory would require reconstructing
`
`the market as it existed in 2007 and then require the factfinder to assess the significance of privacy
`
`policies in the decisions Users made to sign up for Facebook instead of Myspace and Friendster at
`
`that time. But, to state the obvious, the relevant privacy policies were disclosed and publicly-
`
`available to Users when they signed up for those services and widely-reported thereafter. So there
`
`is no credible argument for tolling. Hexcel Corp. v. Ineos Polymers, Inc., 681 F.3d 1055, 1060
`
`(9th Cir. 2012). That reality is fatal to Users’ and Advertisers’ monopoly maintenance theory as
`
`well, which is tied to a “scheme” involving publicly-known conduct alleged to have ended in 2015.
`
`These acts were not concealed, let alone fraudulently so. Judge Freeman recently dismissed
`
`virtually identical claims against Facebook with prejudice for just this reason.
`
`Plaintiffs allege gerrymandered and legally implausible markets. Advertisers contend
`
`there is a so-called submarket for “social” advertising distinct from online (and presumably other
`
`forms of) advertising. But this attempt to ignore the competitive landscape is foreclosed by Ninth
`
`Circuit precedent, with Judge Freeman holding just last week that it is implausible to create narrow
`
`advertising submarkets that ignore direct competition between Facebook and Google. Users’
`
`alleged “social network” and “social media” markets are also legally deficient. In addition to being
`
`inscrutable, they are not defined using cross-elasticity of demand, and there are no plausible
`
`allegations that warrant excluding obvious economic substitutes that also connect people with one
`
`another. User Class Action Complaint (“UC”) ¶ 62. Users also allege no facts to support the
`
`theory that Facebook has monopoly power, and, on the contrary, allege many facts—including the
`
`presence in the market of scores of large competitors—making clear that it does not.
`
`Plaintiffs’ theories of exclusionary conduct fail to state a claim. Users seek to turn
`
`alleged misrepresentations about Facebook’s privacy policies into a theory of unlawful
`
`monopolization, but that rewrite of history is implausible on its face. Users’ claim would fail
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Case No. 5:20-cv-08570-LHK
`
`
`
`2
`
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21 Page 13 of 47
`
`
`
`anyway because they have not pled this theory, which sounds in fraud, with particularity, nor have
`
`they alleged specific facts that would overcome the Ninth Circuit’s presumption that false
`
`advertising has a de minimis effect on competition. Likewise, Plaintiffs’ claim that Facebook
`
`unlawfully maintained a monopoly, through a so-called “copy, acquire, kill” strategy, fails because
`
`none of the alleged conduct violates the antitrust laws: “Copying” rivals—especially to improve
`
`one’s products—is not anticompetitive; none of the firms Facebook acquired could plausibly be
`
`viewed as a unique competitive threat to Facebook; and Plaintiffs’ refusal to deal theory—which
`
`Judge Freeman already rejected—is at odds with the Supreme Court’s Trinko decision and the
`
`Ninth Circuit’s decision in Qualcomm.
`
`Plaintiffs’ theories of antitrust injury are barred as a matter of law. Users claim that
`
`Facebook should have paid them for their use of Facebook. Again, no antitrust case has ever
`
`survived a motion to dismiss on such a fanciful theory, and it is directly foreclosed by case law.
`
`Advertisers’ theory of injury fares no better. They seek to be “reimbursed” for what they concede
`
`were low-cost, high quality ads compared to other online options. Unsurprisingly, they fail to
`
`allege how the prices they—and not advertisers generally—did pay were “supracompetitive,” or
`
`even how much they paid or what a competitive price would have been. And Advertisers do not
`
`even attempt to link—as they must—the allegedly supracompetitive prices to any of the conduct
`
`that they challenge. Similarly, Advertisers offer no plausible allegations as to how an agreement
`
`between Facebook and Google in one alleged market had an anticompetitive effect in what they
`
`claim is a separate, unrelated market. And, as Judge Freeman also recently recognized, all
`
`Plaintiffs necessarily indulge in pure speculation when they claim that the smattering of firms
`
`Facebook acquired or allegedly “kill[ed]” would have succeeded.
`
`The antitrust laws protect competition; they do not punish success. And they certainly do
`
`not rewrite history in so doing. Both complaints should be dismissed with prejudice.
`
`BACKGROUND1
`
`In a now-familiar story, Facebook was founded in 2004 by Mark Zuckerberg in his college
`
`dorm room. UC ¶ 5; Advertiser Class Action Complaint (“AC”) ¶ 44. Plaintiffs allege that people
`
`1 For purposes of this Motion only, Facebook accepts non-conclusory factual allegations as true.
`3
`Case No. 5:20-cv-08570-LHK
`NOTICE OF MOTION & MOTION TO DISMISS;
`MEMO. ISO MOTION
`
`
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 5:20-cv-08570-LHK Document 97 Filed 05/20/21