US Supreme Court rebuffs Meta bid to avoid advertisers’ lawsuit

By Jonathan Stempel

(Reuters) -The U.S. Supreme Court declined on Monday to hear a bid by Meta Platforms (NASDAQ:) to avoid a multi-billion dollar class action by advertisers that accused the Facebook and Instagram parent company of overcharging them by inflating the number of people their ads might reach.

The justices turned away Meta’s appeal of a lower court’s decision that let advertisers seek damages as a group over Meta’s claims about the “potential reach” of their ads.

A three-judge panel of the San Francisco-based 9th U.S. Circuit Court of Appeals ruled 2-1 against Menlo Park, California-based Meta in March 2024. The panel said that because Meta provided the same alleged misrepresentation about how many people might see ads, the advertisers could try to prove that their damages, which they said could exceed $7 billion, stemmed from a “common course of conduct.”

Led by former Meta advertisers DZ Reserve and Cain Maxwell, the plaintiffs faulted Meta for focusing on the number of social media accounts, not the lower number of actual people, and said it fraudulently overestimated potential viewers by as much as 400%.

Class actions sometimes lead to greater recoveries at lower cost than when plaintiffs sue individually.

The class in this case covered potentially millions of individuals and businesses that have paid for ads on Facebook and Instagram since Aug. 15, 2014.

In its appeal, Meta said at least three federal appeals courts have rejected the “common course of conduct” test.

The company said the test ignored how some advertisers may have found its alleged misrepresentation immaterial, or chose not to rely on it.

Meta also said the 9th Circuit, relative to nearly every other federal appeals court, gives too much deference to federal district judges who initially certify class actions, including in the advertisers’ case.

Ads generate substantially all of Meta’s revenue, which totaled $116.1 billion in the first nine months of 2024.