Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 1 of 29 Page ID #237
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF ILLINOIS
`
`METROPLEX COMMUNICATIONS,
`INC., on behalf of itself and all others
`similarly situated,
`
`Plaintiff,
`
`v.
`
`META PLATFORMS, INC.,
`
`Defendant.
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`Case No. 3:22-cv-1455
`
`Hon. David W. Dugan
`
`DEFENDANT META PLATFORM, INC.’S MEMORANDUM
`IN SUPPORT OF ITS MOTION TO DISMISS
`
`
`
`
`
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 2 of 29 Page ID #238
`
`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`
`Page
`
`INTRODUCTION ...............................................................................................................1
`
`FACTUAL BACKGROUND ..............................................................................................2
`
`A.
`
`The Parties ...............................................................................................................2
`
`1.
`
`2.
`
`Plaintiff Metroplex Communications, Inc. ..................................................2
`
`Defendant Meta Platforms, Inc. ...................................................................3
`
`B.
`
`The Challenged Statements ......................................................................................3
`
`1.
`
`2.
`
`Meta’s MAU Estimates In Its SEC Filings ..................................................4
`
`Estimated Audience Sizes For Meta Advertising Campaigns .....................5
`
`C.
`
`Lawsuits ...................................................................................................................6
`
`1.
`
`2.
`
`DZ Reserve v. Meta Platforms, Inc. .............................................................6
`
`Metroplex Communications, Inc. v. Meta Platforms, Inc. ...........................7
`
`III.
`
`IV.
`
`LEGAL STANDARDS .......................................................................................................7
`
`ARGUMENT .......................................................................................................................8
`
`A.
`
`B.
`
`Plaintiff Lacks Article III Standing ..........................................................................8
`
`Plaintiff Has Not Stated A Lanham Act Claim ......................................................10
`
`1.
`
`2.
`
`3.
`
`4.
`
`Plaintiff Lacks Standing Under The Lanham Act ......................................10
`
`Plaintiff Has Not Alleged A “Commercial Advertising Or
`Promotion” .................................................................................................11
`
`Plaintiff Has Not Plausibly Alleged A False Or Misleading
`Statement....................................................................................................14
`
`a.
`b.
`
`The SEC Estimates Are Not False Or Misleading .........................15
`The Statements Regarding Individual Ad Campaigns Are
`Not False Or Misleading ................................................................17
`Plaintiff Has Not Sufficiently Alleged Materiality ....................................18
`
`C.
`
`Plaintiff Has Not Stated An IUDTPA Claim .........................................................19
`
`i
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 3 of 29 Page ID #239
`
`
`D.
`
`E.
`
`Plaintiff Has Not Pled A Basis For Injunctive Relief ............................................19
`
`Plaintiff’s Claims Are Time-Barred .......................................................................20
`
`V.
`
`CONCLUSION ..................................................................................................................20
`
`
`
`ii
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 4 of 29 Page ID #240
`
`
`TABLE OF AUTHORITIES
`
`CASES
`
`
`
`Page(s)
`
`AAVN, Inc. v. WestPoint Home, Inc.,
`2019 WL 1168102 (N.D. Ill. Mar. 13, 2019) ...........................................................................11
`
`Allbirds, Inc. v. Giesswein Walkwaren AG,
`2020 WL 6826487 (N.D. Cal. June 4, 2020) .......................................................................9, 10
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) ...................................................................................................................8
`
`Avery v. State Farm Mut. Auto. Ins. Co.,
`835 N.E.2d 801 (Ill. 2005) .......................................................................................................19
`
`Bell Atl. Corp. v. Twombly,
`550 U.S. 544 (2007) ...................................................................................................................8
`
`Bell v. Publix Super Markets, Inc.,
`982 F.3d 468 (7th Cir. 2020) ...................................................................................................15
`
`Bridges v. Blackstone Grp., Inc.,
`2022 WL 2643968 (S.D. Ill. July 8, 2022) ..............................................................................17
`
`C=Holdings B.V. v. Asiarim Corp.,
`992 F. Supp. 2d 223 (S.D.N.Y. 2013) ......................................................................................12
`
`CardioNet, Inc. v. LifeWatch Corp.,
`2008 WL 567031 (N.D. Ill. Feb. 27, 2008) ...............................................................................8
`
`Catilina Nominees Proprietary Ltd. v. Stericycle, Inc.,
`2021 WL 1165087 (N.D. Ill. Mar. 26, 2021) ...........................................................................12
`
`Chi. Consulting Actuaries, LLC v. Scrol,
`2005 WL 819555 (N.D. Ill. Apr. 6, 2005) ...............................................................................14
`
`City of Los Angeles v. Lyons,
`461 U.S. 95 (1983) ...................................................................................................................10
`
`Conditioned Ocular Enhancement, Inc. v. Bonaventura,
`458 F. Supp. 2d 704 (N.D. Ill. 2006) .........................................................................................8
`
`Control Sols., LLC v. Oshkosh Corp.,
`2011 WL 1131329 (N.D. Ill. Mar. 28, 2011) .................................................................8, 16, 17
`
`iii
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 5 of 29 Page ID #241
`
`
`In re Copper Antitrust Litig.,
`436 F.3d 782 (7th Cir. 2006) ...................................................................................................20
`
`Crabtree v. Experian Info. Sols., Inc.,
`948 F.3d 872 (7th Cir. 2020) ...............................................................................................9, 18
`
`Daniels v. Southfort,
`6 F.3d 482 (7th Cir. 1993) .......................................................................................................20
`
`DZ Reserve, et al. v. Meta Platforms, Inc.,
`No. 18-cv-04978-JD (N.D. Cal.) ...........................................................................................6, 7
`
`eBay Inc. v. MercExchange, L.L.C.,
`547 U.S. 388 (2006) .................................................................................................................19
`
`First Health Grp. Corp. v. BCE Emergis Corp.,
`269 F.3d 800 (7th Cir. 2001) .............................................................................................11, 13
`
`Gensler v. Strabala,
`764 F.3d 735 (7th Cir. 2014) .....................................................................................................8
`
`Genus Lifesciences, Inc. v. Lannett Co., Inc.,
`378 F. Supp. 3d 823 (N.D. Cal. 2019) .....................................................................................12
`
`Guar. Tr. Co. of N.Y. v. York,
`326 U.S. 99 (1945) ...................................................................................................................19
`
`Hot Wax, Inc. v. Turtle Wax, Inc.,
`191 F.3d 813 (7th Cir. 1999) .................................................................................10, 15, 18, 19
`
`Hytera Comms. Corp. Ltd, v. Motorola, Sols., Inc.,
`2022 WL 3645908 (N.D. Ill. Aug. 24, 2022) ..........................................................................14
`
`ISI Int’l Inc. v. Borden Ladner Gervais LLP,
`316 F.3d 731 (7th Cir. 2003) ...................................................................................................13
`
`Johnson Controls, Inc. v. Exide Corp.,
`152 F. Supp. 2d 1075 (N.D. Ill. 2001) ...............................................................................14, 20
`
`LAJIM, LLC v. Gen. Elec. Co.,
`917 F.3d 933 (7th Cir. 2019) ...................................................................................................19
`
`Lexmark Int’l, Inc. v. Static Control, Components, Inc.,
`572 U.S. 118 (2014) ...........................................................................................................10, 11
`
`LG Elecs. U.S.A. v. Whirlpool Corp.,
`809 F. Supp. 2d 857 (N.D. Ill. 2011) .......................................................................................19
`
`iv
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 6 of 29 Page ID #242
`
`
`Lujan v. Defenders of Wildlife,
`504 U.S. 555 (1992) ...............................................................................................................8, 9
`
`Maui Jim, Inc. v. Smartbuy Guru Enters.,
`459 F. Supp. 3d 1058 (N.D. Ill. 2020) .....................................................................................14
`
`McDavid Knee Guard, Inc. v. Nike USA, Inc.,
`2010 WL 3000178 (N.D. Ill. July 28, 2010) ......................................................................13, 19
`
`Meta Platforms, Inc. v. DZ Reserve, et al.,
`No. 22-15916 (9th Cir.) .............................................................................................................7
`
`Metro. Life Ins. Co. v. O’M & Assoc. LLC,
`2009 WL 3015210 (N.D. Ill. Sept. 16, 2009) ..........................................................................13
`
`MJ & Partners Restaurant Ltd. P’ship v. Zadikoff,
`10 F. Supp. 2d 922 (N.D. Ill. 1998) .........................................................................................19
`
`O’Shea v. Littleton,
`414 U.S. 488 (1974) .................................................................................................................10
`
`Par Sterile Prods., LLC v. Fresenius Kabi USA LLC,
`2015 WL 1263041 (N.D. Ill. Mar. 17, 2015) ...........................................................................13
`
`Platinumtel Comms., LLC v. Zefcom, LLC,
`2008 WL 5423606 (N.D. Ill. Dec. 30, 2008) ...........................................................................11
`
`Rogers v. Hacker,
`2021 WL 2711745 (S.D. Ill. July 1, 2021) ................................................................................8
`
`Rovanco Piping Sys., Inc. v. Perma-Pipe Int’l Holdings, Inc.,
`2022 WL 683690 (N.D. Ill. Mar. 8, 2022) ...............................................................................12
`
`RPost Holdings, Inc. v. Trustifi Corp.,
`2012 WL 12952728 (C.D. Cal. May 11, 2012) .......................................................................12
`
`Sanderson v. Ind. Soft Water Servs., Inc.,
`2004 WL 1784755 (S.D. Ind. July 23, 2004), aff’d sub nom. Sanderson v. Culligan Int’l Co.,
`415 F.3d 620 (7th Cir. 2005) ...................................................................................................14
`
`Segerdahl Corp. v. Am. Litho, Inc.,
`2019 WL 157924 (N.D. Ill. Jan. 10, 2019) ..............................................................................13
`
`Spokeo, Inc. v. Robins,
`578 U.S. 330 (2016) ...................................................................................................................1
`
`Stahl L. Firm v. Judicate W.,
`2013 WL 6200245 (N.D. Cal. Nov. 27, 2013) ..........................................................................9
`
`v
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 7 of 29 Page ID #243
`
`
`TrafficSchool.com, Inc. v. Edriver Inc.,
`653 F.3d 820 (9th Cir. 2011) .....................................................................................................9
`
`Underground Sols., Inc. v. Palermo,
`2014 WL 4703925 (N.D. Ill. Sept. 22, 2014) ..........................................................................20
`
`VitalGo, Inc. v. Kreg Therapeutics, Inc.,
`2017 WL 6569633 (N.D. Ill. Dec. 21, 2017) .......................................................................8, 19
`
`STATUTES
`
`815 ILCS 510/1 et seq. .....................................................................................................................7
`
`15 U.S.C. § 1125(a) ...................................................................................................................7, 11
`
`RULES
`
`Fed. R. Civ. P.
`8(a) .............................................................................................................................................8
`9(b) ...........................................................................................................................8, 15, 16, 17
`12(b)(1) ......................................................................................................................................8
`12(b)(6) ......................................................................................................................................8
`23(f)............................................................................................................................................7
`
`
`
`
`vi
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 8 of 29 Page ID #244
`
`I.
`
`INTRODUCTION
`
`Plaintiff Metroplex Communications, Inc. (“Plaintiff”) cannot sustain its false advertising
`
`case against Meta Platforms, Inc. (“Meta”) because none of the statements it complains about is
`
`an ad, much less a false ad that harmed Plaintiff. Plaintiff claims that Meta caused it and other
`
`purported competitors harm by luring advertisers to Meta’s services with overstated (i) estimates
`
`of Meta’s global user base in its Securities and Exchange Commission (“SEC”) filings and
`
`(ii) estimated audience sizes and reach figures that Meta provided to individual advertisers for
`
`particular ad campaigns. None of the estimates challenged is “advertising” at all, and even if it
`
`were, there is no plausible inference that Plaintiff is an injured competitor of Meta. Plaintiff alleges
`
`no facts suggesting that even a single advertiser was deceived into placing ads on Meta’s services
`
`that they otherwise would have placed through Plaintiff’s radio stations and local news outlets.
`
`Plaintiff’s theory is flawed at every level, and its claims under the Lanham Act and the Illinois
`
`Uniform Deceptive Trade Practices Act (“IUDTPA”) should be dismissed.
`
`Both claims fail at the threshold because Plaintiff has not pled any “concrete and
`
`particularized” injury “fairly traceable” to Meta’s statements, as it must to establish Article III
`
`standing. Spokeo, Inc. v. Robins, 578 U.S. 330, 338-39 (2016). There is no causal connection
`
`between the challenged statements in Meta’s SEC filings and describing individual advertisers’ ad
`
`campaigns, on the one hand, and Plaintiff’s business selling ads for radio stations and other news
`
`outlets in Southern Illinois, on the other. Plaintiff offers nothing but speculation that it lost any
`
`sales to Meta or that its business was somehow harmed.
`
`Plaintiff’s false advertising claim under the Lanham Act additionally fails because Plaintiff
`
`lacks statutory standing and fails to sufficiently allege multiple elements of the claim. The
`
`challenged statements are not actionable under the Lanham Act because they are not
`
`advertisements to the public: they either appeared in SEC filings or were provided to individual
`
`1
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 9 of 29 Page ID #245
`
`
`advertisers when they were creating particular ad campaigns. See Class Action Compl. (Dkt. No.
`
`1) (“Complaint” or “Compl.”) ¶¶ 174, 185. Moreover, Plaintiff does not adequately allege that
`
`any of the statements is false or misleading (i.e., that they had the tendency to deceive a substantial
`
`segment of its audience), or that any alleged deception was material. The IUDTPA claim
`
`additionally fails because the circumstances giving rise to the case did not occur primarily and
`
`substantially in Illinois, as required by the statute.
`
`Both claims also fail to the extent they seek injunctive relief because Plaintiff fails to allege
`
`that a remedy at law is inadequate—to the contrary, it seeks a remedy at law in this very action
`
`based on the same alleged misconduct that it cites in support of its claim for injunctive relief.
`
`Even if Plaintiff could successfully navigate these fatal issues (it cannot), Plaintiff’s
`
`Complaint was filed too late. The statute of limitations on both of Plaintiff’s claims is three years,
`
`meaning that the allegations in the Complaint predating that time (July 8, 2019) are untimely.
`
`Meta respectfully requests that the Court dismiss Plaintiff’s Complaint in its entirety.1
`
`II.
`
`FACTUAL BACKGROUND2
`A.
`
`The Parties
`1.
`
`Plaintiff Metroplex Communications, Inc.
`
`Plaintiff is an Illinois advertising company that owns a “local news website,
`
`advantagenews.com, and the ‘Best of Edwardsville’ website,” as well as several local radio
`
`stations. Compl. ¶ 9. Plaintiff alleges that it is a “competitor” of Meta because it “sells and places
`
`digital and targeted advertisements” on its local news websites and radio stations, and it prints
`
`
`1 For the reasons stated in Meta’s concurrently filed Motion to Compel Arbitration, this case should
`be referred to arbitration. Should the Court deny that motion, the case should be dismissed.
`2 For purposes of this Motion, Meta accepts as true the allegations in the Complaint. In the event
`either claim survives this Motion, Meta reserves all rights with respect to those allegations.
`
`2
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 10 of 29 Page ID #246
`
`
`several local newspapers.
`
` Compl. ¶¶ 4, 9; see also Homepage, Advantage News,
`
`https://www.advantagenews.com (last visited Sept. 9, 2022); Homepage, Best of Edwardsville,
`
`https://www.bestofedwardsville.com (last visited Sept. 9, 2022). And it alleges that it has lost (or
`
`is likely to lose) sales to Meta or the goodwill associated with its products, purportedly as a result
`
`of Meta’s estimates of particular audience sizes “and the number of people potentially and actually
`
`reached.” Compl. ¶¶ 8, 212.
`
`2.
`
`Defendant Meta Platforms, Inc.
`
`Meta is a global technology company that designs applications, including Facebook,
`
`Messenger, Instagram, and WhatsApp, that give people the power to build community and bring
`
`the world closer together. Compl. ¶¶ 10, 14, 30; Ex. 1 (2021 10-K) at 6.3 Meta sells “advertising
`
`to businesses looking to reach consumers and/or develop tools and systems for managing and
`
`optimizing advertising campaigns.” Compl. ¶ 18. Millions of businesses advertise through Meta
`
`using Ads Manager, Meta’s self-service platform. See Ex. 1 at 8.
`
`B.
`
`The Challenged Statements
`
`Plaintiff challenges statements in Meta’s SEC filings dating back to 2015 that estimate
`
`(1) the number of Monthly Active Users (“MAUs”) in the United States and Canada, which
`
`measures the size of Meta’s active user community on Facebook based on user activity during a
`
`30-day period, and (2) the percentage of duplicate and false accounts in Meta’s worldwide MAU
`
`estimates (collectively, the “SEC Estimates”). Compl. ¶ 176. Plaintiff also challenges statements
`
`on Ads Manager that estimated (1) the size of the audience that met the targeting criteria for
`
`individual ad campaigns (“Potential Reach,” later renamed “Estimated Audience Size”), and
`
`(2) the number of people who saw a particular ad at least once (“achieved Reach”). Id. ¶ 186.
`
`
`3 All exhibits are attached to the concurrently filed Declaration of Melanie M. Blunschi.
`
`3
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 11 of 29 Page ID #247
`
`
`Plaintiff claims these statements falsely represented the “number of people potentially and actually
`
`reached in an advertising campaign.” Id. ¶ 212.
`
`1.
`
`Meta’s MAU Estimates In Its SEC Filings
`
`Meta’s SEC filings include numerous figures about its business, including estimates of
`
`MAUs. Id. ¶ 27. Prominently at the beginning of each SEC filing, Meta warns investors that while
`
`it “believe[s]” its MAU estimates are “reasonable estimates,” “[t]he methodologies used to
`
`measure these metrics require significant judgment,” and “from time to time we discover
`
`inaccuracies in our metrics or make adjustments to improve their accuracy.” Ex. 1 at 4; see also
`
`Compl. ¶ 28. Beyond warning investors about the “inherent challenges in measuring usage of our
`
`products across large online and mobile populations around the world,” Meta also explicitly
`
`discloses that its MAUs include some “duplicate” accounts (i.e., when one user maintains more
`
`than one account), and “false” accounts (i.e., when a user incorrectly creates a personal profile for
`
`a business or when an account is created “for purposes that violate our terms of service, such as
`
`bots and spam”). Ex. 1 at 5; Compl. ¶¶ 40-47.
`
`In 2021, Meta estimated the percentage of its worldwide MAUs that are duplicate
`
`(approximately 11%) or false (approximately 5%). Ex. 1 at 5; Compl. ¶¶ 47, 50. Meta only
`
`provides estimates of these percentages at a global level—not for individual countries, users in
`
`specific age groups, or “recent sign-ups” (id. ¶¶ 47, 50, 136)—a fact that Plaintiff disregards in
`
`complaining that Meta underestimated the percentage of duplicate and false accounts in estimates
`
`for particular ad campaigns. Id. ¶¶ 161, 163-165, 168. Meta also explicitly warns investors that
`
`“the actual number of duplicate and false accounts may vary significantly from our estimates,”
`
`4
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 12 of 29 Page ID #248
`
`
`that “[d]uplicate and false accounts are very difficult to measure at our scale,” and that Meta
`
`applies “significant judgment” in making its MAU estimates. Ex. 1 at 4-5, 29.4
`
`2.
`
`Estimated Audience Sizes For Meta Advertising Campaigns
`
`To place an ad on one of Meta’s services, advertisers most commonly use Ads Manager,
`
`an all-in-one tool for creating ads, managing when and where they run, and tracking how well
`
`campaigns are performing towards advertisers’ marketing goals. Compl. ¶¶ 52-53.
`
`Potential Reach and Estimated Audience Size: When an advertiser begins creating an ad
`
`campaign, Ads Manager displays an estimate of how many people meet targeting criteria based on
`
`a default location of the United States and a default audience age of 18-65+. Compl. ¶ 67. That
`
`estimate was referred to as “Potential Reach” and shown as a single number (e.g., 220,000,000)
`
`until October 2021, when it was renamed “Estimated Audience Size” and began being displayed
`
`as a range (e.g., 233,600,000-274,900,000). Id. ¶¶ 64, 79-80. The estimate “updates in real time”
`
`as advertisers select targeting criteria that help them target those most likely to find their ad
`
`relevant, such as demographics (e.g., age, gender, location), and interests (e.g., people who like
`
`dogs or the St. Louis Cardinals). Id. ¶¶ 60-61, 65-66. As an advertiser makes these selections, the
`
`estimated number of people who meet the targeting criteria changes in real time to provide an
`
`estimate that matches the advertiser’s criteria for a particular ad campaign. Id. ¶¶ 66, 68.
`
`Meta has consistently described Potential Reach, and later Estimated Audience Size, as an
`
`“estimate” (id. ¶¶ 71 & n.33, 77, 81), and since March 2019, Meta has disclosed directly on Ads
`
`Manager that estimates “may differ” depending on “[h]ow many accounts are used per person”
`
`(i.e., duplicate accounts). Id. ¶ 73. In the spring of 2021, Meta added a disclosure to Ads Manager
`
`stating that the presence of both duplicate and false accounts may affect the estimate. Id. ¶¶ 83,
`
`
`4 See also Ex. 2 (2020 10-K) at 5; Ex. 3 (2019 10-K) at 4; Ex. 4 (2018 10-K) at 4.
`
`5
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 13 of 29 Page ID #249
`
`
`89.5 And as Plaintiff’s allegations confirm, Meta also expressly discloses that MAUs are “not a
`
`proxy” for Potential Reach or Estimated Audience Size. Id. ¶ 97 n.36. (Plaintiff inexplicably
`
`relies on this statement to allege that Meta pointed ad buyers to the MAU estimates in its SEC
`
`filing when in fact it reflects the opposite. Id. ¶¶ 96-97, 97 n.36, 103.)
`
`Achieved Reach: Once an ad campaign launches, Meta provides advertisers with what the
`
`Complaint calls “achieved Reach” or “Reported Reach,” which is Meta’s estimate of the “number
`
`of people who saw your ads at least once[.]” Id. ¶¶ 87-88. Unlike Estimated Audience Size (or
`
`Potential Reach), which estimates the total number of people who meet the advertiser’s targeting
`
`criteria, achieved Reach estimates how many people actually saw the ad. Id. Meta expressly
`
`discloses that achieved Reach is an “estimate” that may be affected by duplicate and false accounts.
`
`Id. ¶¶ 83, 89.
`
`C.
`
`Lawsuits
`1.
`
`DZ Reserve v. Meta Platforms, Inc.
`
`On August 15, 2018, Danielle Singer and Project Therapy, LLC filed a lawsuit in the
`
`United States District Court for the Northern District of California against Meta (then known as
`
`Facebook, Inc.), purporting to represent all persons who paid for ads on Facebook.com from
`
`January 1, 2013, to present. On December 12, 2018, the Honorable James Donato consolidated
`
`several actions regarding the same allegations and the case has since been captioned DZ Reserve,
`
`et al. v. Meta Platforms, Inc., No. 18-cv-04978-JD (N.D. Cal.). DZ Reserve is ongoing,6 and
`
`
`5 The Complaint describes these changes as occurring “[a]t some time between approximately late
`October 2021 and the present.” Id. ¶ 83. Though not necessary to resolve this Motion, Meta notes
`that the changes actually occurred several months earlier. See Blunschi Decl. ¶ 7.
`6 Proceedings in the district court are stayed pending an interlocutory appeal of the court’s order
`granting class certification. See DZ Reserve, No. 18-cv-04978-JD (N.D. Cal. June 21, 2022) (Dkt.
`436); see generally Meta Platforms, Inc. v. DZ Reserve, et al., No. 22-15916 (9th Cir.). The Ninth
`Circuit granted Meta’s Rule 23(f) petition on June 21, 2022, and briefing is underway.
`
`6
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 14 of 29 Page ID #250
`
`
`includes allegations that advertisers overpaid for Facebook ads because they were misled by
`
`“inflated” Potential Reach estimates that included false and duplicate accounts. Id., Class Action
`
`Compl. (Dkt. No. 1) (Aug. 15, 2018) ¶¶ 5, 49, 74, 88, 92, 94. These claims are based on two public
`
`reports from 2017, which criticized Potential Reach estimates for exceeding census data for certain
`
`ages and locations. See, e.g., id. ¶¶ 17 & n.11, 18 & n.12-13, 38 & n.27, 40 & n.28, 42 & n.29.
`
`2.
`
`Metroplex Communications, Inc. v. Meta Platforms, Inc.
`
`On July 8, 2022, Plaintiff filed this case alleging false advertising under the Lanham Act
`
`(15 U.S.C. § 1125(a)) and the IUDTPA (815 ILCS 510/1 et seq.). Plaintiff claims (i) that
`
`advertisers were likely to be confused into believing that estimates of its global users, audience
`
`sizes, and reach figures included no duplicate or false accounts (even though Meta disclosed that
`
`there were duplicate and false accounts on its platforms), id. ¶ 209; and (ii) as a result of those
`
`supposed “false advertisements,” Plaintiff allegedly “ha[s] been, and/or [is] likely to be, injured
`
`. . . either by direct diversion of sales from themselves or Meta or by a lessening of the goodwill
`
`associated with their products.” Id. ¶ 215. The Complaint does not identify a single sale diverted
`
`to Meta from Plaintiff (or from any putative class member), or any instance of lost goodwill, or
`
`offer any plausible theory that either will occur.
`
`Plaintiff purports to represent a putative class of “[a]ll persons (including entities) in the
`
`United States who, during the Class Period, (a) operated a website or phone app and (b) sold
`
`advertisements to third-parties to display on such website or app,” and the putative subclass of
`
`“Class members who are Illinois citizens.” Id. ¶¶ 194-95.
`
`As detailed below, both claims fail as a matter of law.
`
`III. LEGAL STANDARDS
`
`Rule 12(b)(1) requires dismissal of an action if the court lacks subject matter jurisdiction.
`
`To ensure federal jurisdiction exists, courts must assess whether the plaintiff “satisf[ied] the
`
`7
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 15 of 29 Page ID #251
`
`
`threshold requirement imposed by Art. III of the Constitution by alleging an actual case or
`
`controversy.” Rogers v. Hacker, 2021 WL 2711745, at *2 (S.D. Ill. July 1, 2021) (Dugan, J.).
`
`Rule 12(b)(6) requires a plaintiff to plead facts that “allow[] the court to draw the
`
`reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
`
`556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). And
`
`when a claim sounds in fraud, as Plaintiff’s Lanham Act and IUDTPA claims do, Rule 9(b)
`
`requires a plaintiff to “state with particularity the circumstances constituting fraud.” Fed. R. Civ.
`
`P. 9(b); see Gensler v. Strabala, 764 F.3d 735, 736-37 (7th Cir. 2014) (Lanham Act claims
`
`sounding in fraud should be pled with particularity under Rule 9(b)).7
`
`IV. ARGUMENT
`A.
`
`Plaintiff Lacks Article III Standing
`
`To establish Article III standing, a plaintiff must allege both (i) a “concrete and
`
`particularized,” “actual or imminent, not conjectural or hypothetical” injury-in-fact, and (ii) “a
`
`causal connection between the injury and the conduct complained of.” Lujan v. Defenders of
`
`Wildlife, 504 U.S. 555, 561 (1992) (citations omitted). Plaintiff does not sufficiently allege either.
`
`First, Plaintiff does not allege an injury-in-fact. “In a false advertising suit, a plaintiff
`
`establishes Article III injury if some consumers who bought the defendant’s product under a
`
`mistaken belief fostered by the defendant would have otherwise bought the plaintiff’s product.”
`
`
`7 The weight of authority in the Seventh Circuit indicates that Rule 9(b) applies to false advertising
`claims that sound in fraud—and Plaintiff’s false advertising claims sound in fraud. See, e.g,
`Compl. ¶¶ 181, 224; see also VitalGo, Inc. v. Kreg Therapeutics, Inc., 2017 WL 6569633, at *7 &
`n.5, *8 (N.D. Ill. Dec. 21, 2017) (applying Rule 9(b)’s heightened pleading standard to Lanham
`Act and IUDTPA claims); Control Sols., LLC v. Oshkosh Corp., 2011 WL 1131329, at *2 (N.D.
`Ill. Mar. 28, 2011) (same); CardioNet, Inc. v. LifeWatch Corp., 2008 WL 567031, at *2 (N.D. Ill.
`Feb. 27, 2008) (same); Conditioned Ocular Enhancement, Inc. v. Bonaventura, 458 F. Supp. 2d
`704, 709 (N.D. Ill. 2006) (same). For avoidance of doubt, however, even if Rule 9(b) did not
`apply, the cursory allegations in the Complaint do not even meet Rule 8(a)’s pleading standard.
`
`8
`
`

`

`Case 3:22-cv-01455-DWD Document 25-1 Filed 09/09/22 Page 16 of 29 Page ID #252
`
`
`Allbirds, Inc. v. Giesswein Walkwaren AG, 2020 WL 6826487, at *4 (N.D. Cal. June 4, 2020)
`
`(quoting TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 825 (9th Cir. 2011)). Plaintiff
`
`offers only the conclusory allegation that it suffered injury, “either by a direct diversion of sales”
`
`from Plaintiff to Meta or “by a lessening of the goodwill associated with” Plaintiff’s products.
`
`Compl. ¶ 215. “It is not enough[, however,] to say that your reputation was harmed without
`
`explaining how,” or to allege an injury “unsupported by any factual allegations.” Crabtree v.
`
`Experian Info. Sols., Inc., 948 F.3d 872, 880 (7th Cir. 2020). Plaintiff “points to no definite reasons
`
`to believe” any sales were diverted or its goodwill lessened. Id. For example, Plaintiff alleges no
`
`“lost sales data” to support its claim of diverted sales, nor does it plead any facts to support its
`
`claimed lost goodwill. Allbirds, Inc.,