THIS JUST IN!!!! Everyone’s 15 Minutes of Fame has been Extended – Fraley v. Facebook Review
Andy Warhol said “In the future everybody will be world famous for fifteen minutes.” But in a recent California case, Facebook argued and Judge Koh of the Northern District of California agreed that “individuals are local celebrities within their own Facebook social networks.” The case, Fraley et al v. Facebook, Inc., 11-CV-01726-LHK involves a putative class action suit over Facebook’s “Sponsored Stories” which plaintiffs claim violate California Right of Publicity law, California’s Unfair Competition Law, and common law unjust enrichment.
- Plaintiff’s Injury
In ruling against Facebook on the Article III claim Judge Koh maintained Plaintiffs did allege an injury under California right of publicity law because Plaintiffs asserted Facebook used their names, photographs, likenesses, and identities to sell advertisements for products, services, or brands without obtaining Plaintiffs’ consent, and that Plaintiffs were economically injured when denied compensation for such unauthorized use. The Plaintiffs’ claims clearly followed the requirements of the California law which prohibits the nonconsensual use of another’s name, voice, signature, photograph, or likeness for advertising, selling, or soliciting purposes, and creates a cause of action for persons injured by such actions. Cal. Civ. Code § 3344.
Judge Koh rejected Facebook’s argument that Plaintiffs’ theory of economic harm was merely speculative. Judge Koh referenceda line of privacy cases involving the alleged disclosure of personal information that have been dismissed for failure to show injury but found none of the cases cited by Facebook were on point because they did not address the statutory right of publicity. By contrast, Plaintiffs articulated a coherent theory of how they were economically injured by the misappropriation of their names, photographs, and likenesses for use in paid commercial endorsements targeted not at themselves, but at other consumers, without their consent.In noting the potential importance of the Sponsored Stories, Judge Koh referenced quotes by Facebook founder, Mark Zuckerberg, stating that “[a] trusted referral influences people more than the best broadcast message. A trusted referral is the Holy Grail of advertising” Facebook’s COO Sheryl Sandberg explained that “[m]arketers have always known that the best recommendation comes from a friend. . . . This, in many ways, is the Holy Grail of advertising…the value of a Sponsored Story advertisement is at least twice and up to three times the value of a standard Facebook.com advertisement without a friend endorsement.
- Communications Decency Act
Judge Koh also denied Facebook’s motion to dismiss based on the Communications Decency Act. In its motion to dismiss, Facebook argued it was an interactive computer service and as such Plaintiffs claims were barred by § 230 of the CDA, which provides, in relevant part, that “[n]o provider or member of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”
Judge Koh disagreed with Facebook maintaining it ignored the nature of Plaintiffs’ allegations, which accused Facebook not of publishing tortious content, but rather of creating and developing commercial content that violates their statutory right of publicity. Judge Koh noted that while Facebook members provided some of the information used in Sponsored Stories by taking an action such as clicking the “Like” button on a third-party’s website, Plaintiffs alleged that Facebook contributes, at least in part, to the creation or development of the Sponsored Story that ultimately appears on other members’ Facebook pages in the form of a product or service endorsement. Judge Koh, basing her rationale on Plaintiffs’ allegations, found Facebook to be a content provider, in addition to being an interactive computer service provider which precluded immunity under the Communications Decency Act which “applies only if the interactive computer service provider is not also an ‘information content provider.”
- Misappropriation
After failing to dismiss based on Article III and the Communications Decency Act, Facebook next asserted that Plaintiffs failed to state a claim for commercial misappropriation because they did not allege any actionable injury.
Under California Civil Code § 3344, the requirements for commercial misappropriation of one’s identity require: (1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of plaintiff’s name or likeness to defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury;(5) a knowing use by the defendant; and (6) a direct connection between the alleged use and the commercial purpose.
Facebook moved to dismiss on grounds that (1) Facebook’s actions fall within § 3344(d)’s “newsworthy” exception for which consent is not required; (2) Plaintiffs consented to the use of their names, photographs, and likenesses; and (3) Plaintiffs fail to allege sufficient injury under § 3344(a). Facebook did not dispute that it knowingly used Plaintiffs’ identity, or deny that the use of Plaintiffs’ names or likenesses was to Defendant’s advantage.
In claiming the newsworthy exception, Facebook argued its republication of members’ names or profile images next to statements about pages or content they “Like” or other actions they have taken is newsworthy because (1) Plaintiffs are “public figures” to their friends, and (2) “expressions of consumer opinion” are generally newsworthy. Plaintiffs denied they were public figures and disputed whether their act of clicking on a “Like” button—which they may do simply out of curiosity rather than affinity—may be accurately characterized as “expressions of consumer opinion.”
Judge Koh agreed with Facebook holding that the Plaintiffs were “celebrities” within their own Facebook social networks which made them subjects of public interest among the same audience. But Judge Koh found even newsworthy actions may be subjects of § 3344 liability when published for commercial rather than journalistic purposes stating “the Ninth Circuit has squarely held that the commercial use of a person’s newsworthy acts may nonetheless still result in liability under § 3344.”
Judge Koh quickly dismissed Facebook’s consent argument “[n]othing in the provisions of the Terms documents to which Facebook has pointed constitutes a clear consent by members to have their name or profile picture shared in a manner that discloses what services on Facebook they have utilized, or to endorse those services.”
- Holding
Judge Koh, wholly consistent with her opinion that the Plaintiffs were celebrities within their own Facebook social networks, found nothing requiring that a plaintiff’s commercially exploitable value be a result of his own talents or efforts in order to state a claim for damages under § 3344. In a society dominated by reality television shows, YouTube, Twitter, and online social networking sites, the distinction between a “celebrity” and a “non-celebrity” seems to be an increasingly arbitrary one.
The ruling was not a total victory for the Plaintiffs as Judge Koh stated “of course, at summary judgment or at trial, Plaintiffs may not simply demand $750 in statutory damages in reliance on a bare allegation that their commercial endorsement has provable value, but rather must prove actual damages like any other plaintiff whose name has commercial value.”
- Standing
In finding Plaintiffs had standing Judge Koh observed Plaintiffs did not assert their personal information had inherent economic value and that the mere disclosure of such data constituted a loss of money or property. Rather, Plaintiffs insisted they sustained economic loss resulting from Facebook’s failure to compensate them for their valuable endorsement of third-party products and services to their Facebook Friends, and that under § 3344, they have an expectation interest in a minimum statutory damages award of $750. Judge Koh found the Plaintiffs alleged a loss of money or property sufficient to state a claim under the Unfair Competition Law, “‘the concept of restoration or restitution . . . is not limited only to the return of money or property that was once in the possession of that person. Instead, restitution is broad enough to allow a plaintiff to recover money or property in which he or she has a vested interest.’
- Unlawful
Judge Koh found Facebook’s alleged commercial misappropriation of Plaintiffs’ names and likenesses without their consent was properly characterized as a business practice. Therefore Plaintiffs’ § 3344 claim served as the predicate unlawful business practice under the Unfair Competition Law.
- Unfair
Judge Koh also found that Plaintiffs had successfully alleged that Facebook’s practice was contrary to a statutorily declared public policy of preventing the nonconsensual appropriation of an individual’s name, photograph, or likeness for commercial gain. The Court had no basis for finding Facebook’s conduct had any utility, much less that its utility outweighs the gravity of the alleged harm to Plaintiffs. Judge Koh found under either accepted test for unfair business practices in a consumer action, Plaintiffs stated a claim upon which relief could be granted.
- Fraud
Under California Unfair Competition Law to be “fraudulent” a plaintiff must show that “‘[reasonable] members of the public are likely to be deceived’” by the alleged unfair business practice, though the “deception need not be intended.” See, Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008)). Judge Koh found Plaintiffs had properly alleged fraud based on their false belief of control over the use of their names, photographs, and likenesses led them to join Facebook and to engage with Facebook in ways that rendered them unwitting commercial spokepersons without compensation, in violation of their statutory right of publicity. The inability of Plaintiffs to opt out of the Sponsored Stories service, which was introduced after Plaintiffs became Facebook members, and instructions on how to disable an individual post from appearing on Friends’ News Feeds or as a Sponsored Story are only available on a “buried Help Center page, not connected by any link within the Privacy Policy or Statement of Rights and Responsibilities pages. Judge Koh concluded Plaintiff’s had correctly alleged Facebook acted fraudulently by knowingly and intentionally failing to seek and acquire members’ informed consent regarding changes to the Terms of Use.
Finally, Judge Koh dismissed Plaintiffs cause of action for unjust enrichment with prejudice because Plaintiffs had already properly plead restitution in their demand for relief under § 3344 and the Unfair Competition Law, because unjust enrichment is not an independent cause of action under California law.