In Pulaski & Middleman v. Google, Inc., the Ninth Circuit recently held that a class could be certified in connection with Google AdWords, even though damages would require some individualized calculations.
Under Google’s AdWords program, advertisers paid Google for ads based on the click-through rate. Google, however, allegedly never told advertisers that their ads might appear on supposedly less desirable sites, known as Parked Domains (undeveloped domains that appear when users enter generic search terms) and Error Pages (ad-containing pages that appear when data are entered incorrectly).
Plaintiffs sued Google under both the UCL and the FAL, alleging that Google misled advertisers regarding the kinds of websites on which their ads might appear and seeking restitution on behalf of a class of persons and entities that were charged for clicks on ads that appeared on Parked Domains and/or Error Pages.
Plaintiffs moved to certify a Rule 23(b)(3) class and proposed three methods for calculating restitution, all based on the difference between what advertisers actually paid, and what they would have paid had they known their ads were being placed on Parked Domains and Error Pages. The district court found that Rule 23(a) was satisfied, but denied the motion for class certification on predominance grounds because individual questions would arise regarding the amount of restitution owed to the class and its individual members. The district court declined to apply Yokoyama v. Midland National Life Insurance Co., which held that damages calculations alone cannot defeat class certification because the court found that Plaintiffs here, unlike in Yokoyama, had not proposed a workable method for calculating damages.
The Ninth Circuit reversed, stating that Yokoyama’s holding applies regardless of the degree of individualized calculations required. The Ninth Circuit recognized that predominance doesn’t exist where class members were exposed to differing messages, but held that here, every member of the class was exposed to the same alleged omission from the AdWords sign-up materials.
The Ninth Circuit also rejected the district court’s conclusion that Plaintiffs’ restitution calculations were arbitrary. The court explained that, as long as there is “some reasonable basis of computation,” damages calculations are not arbitrary. Plaintiffs’ models all focused on calculating the difference between what the advertisers paid and what a reasonable consumer would have paid, had Google told them their ads might be placed on Parked Domains and Error Pages. The Ninth Circuit held that this was enough.
One important takeaway from this case is that Pulaski endorses “price premium” as the appropriate measure of restitution in false advertising omissions cases, implicitly rejecting the disgorgement arguments made by many plaintiffs.