Bright Data, Inc. v. Meta Platforms

• Court: Superior Court of Delaware
• Decided: August 18, 2023
• Docket: N23C-01-229 SKR CCLD
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

BRIGHT DATA, INC. and ) BRIGHT DATA, LTD., ) ) Plaintiffs, ) ) v. ) C.A. No. N23C-01-229 SKR CCLD ) META PLATFORMS, INC., and ) INSTAGRAM, LLC, ) ) Defendants. )

Submitted: June 27, 2023 Decided: August 18, 2023

MEMORANDUM OPINION AND ORDER Upon Consideration of Defendant’s Motion to Stay Proceedings: GRANTED.

David Wilks, Esquire, and D. Charles Vavala III, Esquire, of WILKS LAW LLC, Wilmington, Delaware, for Plaintiffs Bright Data Inc. and Bright Data Ltd.

Karen Jacobs, Esquire, Alexandra Cumings, Esquire, and Stephanie Rudolph, Esquire, of MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware, for Defendants Meta Platforms, Inc. and Instagram LLC.

RENNIE, J. INTRODUCTION This memorandum opinion considers, and grants in full, Defendant Meta

Platforms, Inc. (“Meta”)’s motion to stay Delaware proceedings in deference to an

earlier-filed pending legal action in the United States District Court for the Northern

District of California (the “California Action”).1 It addresses only Meta’s motion

to stay, as its alternative motion to dismiss, as well as Plaintiffs Bright Data Inc. and

Bright Data Limited (collectively, “Bright Data”)’s motion for partial summary

judgment are rendered moot by the Court’s ruling. The underlying case is a breach

of contract action involving the use of automation to collect or “scrape” data from

Facebook and Instagram users.

FACTUAL OVERVIEW2 Meta operates Facebook, a social networking website and mobile application

that enables its users to create personal profiles and connect with each other on their

computers and mobile devices.3 It also operates Instagram, a photo and video

sharing service, website, and mobile application.4 To view and interact with most

content on Facebook and Instagram, users must create an account and login using

that account.5 A user that is not logged into Facebook or Instagram through an

1 See Meta Platforms, Inc. v. Bright Data, Ltd., No. 23-cv-00077 (N.D. Cal.). 2 Unless otherwise noted, the facts are drawn from the complaint and the record provided by the parties, which includes the complaint pending in the United States District Court for the Northern District of California. 3 Cal. Compl. ¶ 14. 4 Id. ¶ 15. 5 Id. ¶ 16. 2 account can only view a limited amount of content before the user is redirected to a

login screen.6

Meta has approved means for Facebook and Instagram users to share data with

third parties through designated Application Programming Interfaces (“APIs”).7 It

permits these third parties, such as authorized developers and businesses, to use

certain APIs to access data from the Facebook and Instagram platforms, with

appropriate user content.8 But, the third parties must, among other things, agree to

abide by Facebook and Instagram’s Terms and Meta’s Platform Terms (the

“Facebook and Instagram Terms”).9 Broadly speaking, the Facebook and Instagram

Terms prohibit users from engaging in unlawful activity,10 impairing the operation

of the social networks,11 and collecting data using automated means without express

permission.12 Combined with other technological measures that Meta proactively

uses, the Facebook and Instagram Terms are designed to combat “scraping” and

other abuse.13

At this point, an explanation of what, exactly, “scraping” is seems in order.

Scraping is a form of data collection that relies on unauthorized automation for the

6 Id. 7 Id. ¶ 19. 8 Id. 9 Id. Facebook and Instagram are distinct entities, governed by separate Terms and Conditions with largely overlapping language. So, in the interest of brevity, the Court will consolidate the two sets of Terms and Conditions for this factual recitation. 10 Id. ¶¶ 22-23. 11 Id. ¶¶ 24-25. 12 Id. ¶¶ 26-28. 13 Id. ¶¶ 29-30. 3 purpose of extracting data from a website or app.14 Under the scraping umbrella,

there exist two variations: “logged-in” scraping, which involves scraping data that

is behind a password-protected website, and “logged-out” scraping, which involves

scraping data that is viewable without a password, but may still be subject to

restrictions on access, use, and rate and data limits.15

Since at least April 2021, Bright Data has used automated means to scrape (and

facilitate the scraping of) data from Facebook and Instagram.16 To do so, it has

developed, maintained, and sold scraping software designed to scrape Facebook and

Instagram.17 Bright Data has also set up and sold access to its IP address and server

infrastructure used to scrape data from the platforms.18 This infrastructure includes,

but is not necessarily limited to, Bright Data’s “Facebook Scraper” tool, which

scrapes Facebook users’ profile information and engagement,19 and its “Instagram

Scraper” tool, which scrapes data from Instagram users’ profiles and posts.20 Bright

Data’s scraping activity, and subsequent sale of scraped Instagram and Facebook

user information, was not authorized by Meta.21

And therein lies the problem. On November 29, 2022, Meta held a video

conference with Bright Data and sent an email demanding that it: (i) remove and

14 Id. ¶ 30. 15 Id. ¶ 29. 16 Id. ¶ 36. 17 Id. 18 Id. 19 Id. ¶ 39. 20 Id. ¶ 40. 21 Id. ¶ 58. 4 cease the selling of any user data obtained from Facebook and Instagram; (ii)

remove and disable any access to existing datasets of Meta users’ data; and (iii) stop

scraping and facilitating the scraping of Meta users’ data.22 The meeting and email

were ostensibly unsuccessful, because on January 6, 2023, Meta sent Bright Data a

follow-up letter reminding it of its alleged noncompliance with the Facebook and

Instagram Terms.23 Meta also demanded, once again, that Bright Data cease its data

scraping activity on Facebook and Instagram.24

Bright Data refused. This litigation followed.

PROCEDURAL HISTORY

Meta filed the California Action in federal court on January 6, 2023 for breach

of contract and tortious interference with contract arising from Bright Data’s

scraping activities and sale of data from Facebook and Instagram.25 Through the

California Action, Meta seeks damages for Bright Data’s alleged breach of the

Facebook and Instagram Terms and to enjoin Bright Data from continuing its

scraping activities going forward.26

The same day Meta filed the California Action, Bright Data filed a complaint in

this Court based on the same set of facts (the “January 6 Lawsuit”).27 Meta removed

22 Id. ¶ 59. 23 Id. ¶ 60. 24 Id. 25 See generally Meta Platforms, Inc. v. Bright Data, Ltd., No. 23-cv-00077 (N.D. Cal.), D.I. 1. 26 Id. 27 See D.I. 11, Ex. B. 5 the January 6 Lawsuit to the United States District Court for the District of Delaware

on January 20, 2023.28 Upon learning that Meta intended to transfer the January 6

Lawsuit to the Northern District of California the next business day, Bright Data

voluntarily dismissed the January 6 Lawsuit on February 10, 2023.29

On January 30, 2023, Bright Data filed the matter sub judice (the “Delaware

Action”).30 Through the Delaware Action, Bright Data brings substantially the same

claims as it did in the January 6 Lawsuit. In fact, the petition appears nearly identical

to the issues raised in the California Action: Meta alleges that Bright Data breached

the Facebook and Instagram Terms, and Bright Data seeks a declaration that its

conduct is permissible under the Facebook and Instagram Terms.31

Meta moved to stay the Delaware Action in favor of the California Action on

March 6, 2023.32 The Court heard argument on the motion on June 27, 2023.

STANDARD OF REVIEW Generally, the jurisdiction where an action is first filed becomes the scene of

battle and courts, where subsequent proceedings are filed, will stay them in order to

await the outcome of the first-filed litigation. In other words, under the Delaware

28 Bright Data, Ltd. v. Meta Platforms, Inc., et al., 23-cv-00073 (D. Del.), D.I. 1. 29 Id., D.I. 13. 30 Bright Data allegedly did not scrape or offer to sell data from Facebook or Instagram until after the Delaware Action was filed on January 30. According to Meta, this was strategic: Bright Data scraped and sold data after the filing to “enable [itself] to pursue this lawsuit, defeat diversity, and [] try to prevent this case from being removed and then transferred to California.” Def.’s Op. Br. 7-8. 31 Id., D.I. 1. 32 D.I. 11. 6 Supreme Court’s forum non conveniens framework as annunciated in McWane Cast

Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., litigation should be confined to

the jurisdiction in which it is first commenced.33 And while the Court will not, as a

matter of right, stay an action by reason of a prior filed action in another jurisdiction

involving the same issues and parties, it will pay deference to the parties’ first choice

of forum.

Put differently, the Court has broad discretion to grant a stay where the facts and

circumstances warrant it.34 This discretion is exercised freely where there is a prior

action pending elsewhere that involves the same parties and the same issues in a

court capable of doing prompt and complete justice.35 The major considerations

involved when determining whether to grant a stay in a particular case are the

economy of judicial effort, the efficiency of the administration of justice, and the

prevention of an unwarranted delay.36

ANALYSIS

A. The California Action Constitutes a First-Filed Action.

The first question when applying the McWane doctrine is whether “there is a

prior action pending elsewhere.”37 Bright Data, through its response, does not

33 263 A.2d 281, 283 (Del. 1970); see also Prezant v. DeAngelis, 636 A.2d 915, 918 (Del. 1994); Williams Gas Supply Co. v. Apache Oil Corp., 594 A.2d 34, 36 (Del. 1991); ANR Pipeline Co. v. Shell Oil Corp., 525 A.2d 991, 992 (Del. 1987). 34 McWane, 263 A.2d at 283. 35 Id. 36 Palmer v. Palmer, 409 A.2d 1050, 1052 (Del. 1979). 37 McWane, 263 A.2d at 283. 7 dispute the contours of McWane; instead, it argues that: (i) McWane is inapplicable

because the Delaware Action was “simultaneously” filed with the California Action

and (ii) the “standstill agreement” reached by Meta and Bright Data Limited

forecloses a first-filed argument under McWane. This is incorrect for two reasons.

First, Bright Data did not “ha[ve] to” abandon the January 6 Lawsuit, as it

contends.38 Rather, after the parties simultaneously filed their suits on January 6,

Bright Data made a strategic choice to drop the January 6 Lawsuit so as to avoid

transfer to the Northern District of California.39 In choosing to prevent transfer,

Bright Data unwittingly chose to relegate itself to a later-filed status when it brought

the Delaware Action on January 30, 2023. The Court will not reward that decision

by reading the Delaware Action as a continuation of the January 6 Lawsuit.40

Second, although the parties entered into a standstill agreement in which both

agreed not to argue which suit was “first filed,” that commitment was expressly

38 Pl.’s Answering Br. in Opp’n to Def.’s Mot. to Dismiss or Stay (“Answering Br.”) at 4. 39 Bright Data Ltd. v. Meta Platforms, Inc., et al., 23-cv-00073 (D. Del.), D.I. 1, 11. 40 This is especially true in light of the series of maneuvers Bright Data undertook in an apparent effort to block transfer of the Delaware Action to California. For example, Bright Data allegedly did not scrape or offer to sell data from Facebook or Instagram until after the Delaware Action was filed on January 30. According to Meta, this was strategic: Bright Data scraped and sold data after the filing to “enable [itself] to pursue this lawsuit, defeat diversity, and [] try to prevent this case from being removed and then transferred to California.” Def.’s Op. Br. 7-8. Moreover, Bright Data is incorrect that United Phosphorus, Ltd. v. Mirco-Flo, 808 A.2d 761 (Del. 2002), stands for the proposition that the mode of dismissal “makes no difference” in determining whether a second suit warrants the same status as the first. Answering Br. 7 n.4. The first suit in United Phosphorus was found to be a “continuation” because it was initially dismissed by the Court, not voluntarily abandoned by the plaintiff for strategic reasons. United Phosphorus, 808 A.2d at 765. 8 limited to “suits simultaneously [filed] on a future agreed-upon date and time.”41

So, because the standstill agreement defines its scope based on when the covered

lawsuits were filed, and Bright Data filed the Delaware Action after Meta filed the

California Action, the agreement does not extend to this suit.42 And as importantly,

the agreement does not contemplate lawsuits filed by the plaintiff in this action –

Bright Data, Inc. – which Bright Data admits is a distinct entity from Bright Data

Limited.43 If Meta and Bright Data Limited had intended to include third parties in

the standstill agreement, they could have easily stated so, but they did not.

B. The California Action is Entitled to Greater Deference Under McWane.

Having concluded that the California Action was first filed, the Court must now

decide if this case involves the same parties and issues as the California Action. The

Court must also consider whether the claim will be litigated promptly and

completely in California. If so, allowing the Delaware Action to proceed will be a

needless duplication of time and effort.

In any McWane analysis, the parties and issues in the competing litigations are

rarely exactly identical.44 Accordingly, the Court must balance the lack of complete

identity of parties against the possibility of conflicting rulings which could result if

41 Answering Br. Ex. 5 (emphasis added). 42 The standstill agreement states, in relevant part, that “if [Meta] intend[s] to file a separate enforcement action at some point . . ., we both [will] file our respective suits simultaneously on a future agreed-upon date and time, and that neither party argue [will] that its suit was ‘first filed.’” Id. 43 D.I. 11, Ex. D. 44 Choice Hotels Intern., Inc. v. Columbus-Hunt Park DR. BNK Investors, LLC, 2009 WL 3335332, at *7 (Del. Ch. Oct. 15, 2009). 9 both actions were allowed to proceed simultaneously.45 This balancing calls on the

peculiar discretion of the Court to responsibly manage its own docket.46

1. The California Action and the Delaware Action Involve Nearly Identical Issues. In this case, that analysis is relatively straightforward. It is well-settled that

McWane favors stay “not only where the parties and issues are identical, but also

where there exists a substantial or functional identity between the two [issues] such

that they arise out of a common nucleus of operative fact.” 47 And, as our courts

have recognized, declaratory judgment actions in one forum necessarily rest on the

same facts as an enforcement action in a different forum.48

For example, in Dura Pharms., Inc. v. Scandipharm, Inc.,49 the Delaware Court

of Chancery noted that an Alabama suit alleging breach of contract and a Delaware

suit seeking a declaratory judgment that termination of the contract was not a breach

“involve[d] the same issues.”50 And more recently, the Court of Chancery

concluded that a claim seeking to enjoin the breach of a non-disclosure agreement

was functionally identical to a claim for breach of the same agreement already

45 Playtex, Inc. v. Columbia Cas. Co., 1989 WL 40913, at *3 (Del. Super. Apr. 25, 1989). 46 Life Assur. Co. of Pennsylvania v. Associated Investors Intern. Corp., 312 A.2d 337, 341 (Del. Ch. 1973). 47 Tulum Mgmt. USA LLC v. Casten, 2015 WL 7456003, at *2 (Del. Ch. Oct. 15, 2009). 48 See, e.g., Dura Pharms., Inc. v. Scandipharm, Inc., 713 A.2d 925, 930 (Del. Ch. 1998) (finding that where a plaintiff seeks a declaration that a contract is invalid, that suit arises out of the same facts as an action seeking to enforce a contract). 49 Id. 50 Id. 10 before an arbitration tribunal in LG Electronics, Inc. v. Interdigital

Communications, Inc.51

Therefore, the Delaware Action – whereby Bright Data seeks a declaration that

it is not bound by the Facebook and Instagram Terms – and the California Action –

whereby Meta seeks to enforce the Facebook and Instagram Terms – meet

McWane’s “substantial or functional identity” test.

2. The California Action and Delaware Involve Nearly Identical Parties. Likewise, the parties in the Delaware and California Actions are also

substantially identical. As with issue identity, identical parties are not always

prerequisites to granting a motion to stay.52 Instead, in determining party identity,

Delaware courts consider parties to be “substantially the same” under McWane

when the “related entities are involved but not named in both actions.”53 Our courts

have found parties to be substantially the same when a prior-filed action involved

“subsidiaries” of the parties in the Delaware case.54

Here, Meta Platforms, Inc. and Bright Data, Ltd. are parties to both the California

and Delaware Actions. The remaining parties to the Actions are subsidiaries of

those companies. Because subsidiaries are “in privity with” – and therefore

51 98 A.3d 135, 146 (Del. Ch. 2014). 52 W.C. McWuaide v. McQuaide, 2005 WL 1288523, at *4 (Del. Ch. May 24, 2005). 53 Id. 54 See, e.g., AT&T Corp. v. Prime Sec. Distributors, Inc., 1996 WL 633300, at *3 (Del. Ch. Oct. 24, 1996); Sprague Elec. Co. v. Vitramon, Inc., 1984 WL 8273, at *1 (Del. Ch. 1984). 11 substantially identical to – its owners for purposes of McWane’s second prong,55 the

Court finds all the related entities are involved in both Actions.

3. The Northern District of California Is Capable of Doing Prompt and Complete Justice.

Next, the Court turns to the California court’s ability to do “prompt and complete

justice.” Bright Data does not meaningfully contest the competency of the

California federal court to decide this dispute; rather, it contends that the California

court is incapable of providing “prompt justice” as defined in McWane.

Delaware courts, however, have consistently found federal courts to be more

than capable of providing prompt and complete justice.56 Given the Northern

District of California’s (relative) expertise in considering interpretation issues

within the Facebook and Instagram Terms,57 the Court has no reason to doubt its

ability to do so here.

Moreover, the Court is unpersuaded by Bright Data’s contention that the

California court lacks jurisdiction over some of the claims in the California Action.58

Pre-judging another Court’s jurisdictional determination within the context of a

55 Id. 56 See, e.g., Corwin v. Silverman, 1999 WL 499456, at *6 (Del. Ch. June 30, 1999); see also Kaufman v. Kumar, 2007 WL 1765617, at *3 (Del. Ch. June 8, 2007). 57 See, e.g., Meta Platforms, Inc. v. BrandTotal Ltd., 2022 WL 1990225, at *20 (N.D. Cal. June 6, 2022) (deciding substantially similar case regarding data scraping); Facebook, Inc. v. ILikeAd Media Int’l Co. Ltd., 2022 WL 2289064, at *2 (N.D. Cal. Feb. 1, 2022) (interpreting Facebook’s forum-selection clause); Be In, Inc. v. Google Inc., 2013 WL 5568706, at *7 (N.D. Cal. Oct. 9, 2013) (assessing enforceability of browsewrap agreements). 58 See Meta Platforms, Inc. v. Bright Data, Ltd., No. 23-00077 (N.D. Cal), D.I. 35. 12 McWane analysis violates McWane’s very foundation. And even assuming,

arguendo, that the Court agreed with Bright Data’s position, such a finding could

present an irreconcilable conflict that principles of comity are intended to defend.

Anyhow, Meta is free to challenge the Northern District of California’s

jurisdiction at any time during the pendency of the California Action.59 If the

California court dismisses the California Action for lack of personal jurisdiction,

the parties could easily return to Delaware and lift the stay.

4. All Other Discretionary Factors Favor Stay.

Finally, the Court turns to the “other practical considerations” relevant to

promoting the efficient administration of justice based on the Delaware Supreme

Court’s holding in General Foods Corp. v. Cryo-Maid, Inc.60 As the Supreme Court

recently explained, this factor is “neither hollow in meaning nor rigid in

application.”61 The Court, thus, must weigh the efficient administration of justice

and analogous considerations to determine whether it would be “extraordinarily

expensive and cumbersome for a defendant to litigate a case in Delaware.”62

But, as discussed above, allowing the California and Delaware Actions to

proceed simultaneously would require two courts to adjudicate the same contractual

dispute and risk waste of judicial resources and inconsistent resolution of the issues.

59 Although it has yet to do so, and the parties are already proceeding with discovery accordingly. 60 198 A.2d 681 (Del. 1968). 61 Martinez v. E.I. DuPont de Nemours and Co., Inc., 86 A.3d 1102, 1112 (Del. 2014). 62 Id. at 1113. 13 To that end, the Court’s strong interest in ensuring that litigation remain easy,

expeditious, and inexpensive is persuasive here.

And, last but not least, California has a more significant relationship to this case

than Delaware. Meta’s principal place of business is in California, and the only

Meta witness that Bright Data names in its complaint resides in California. By

contrast, the only tie this case has to Delaware is Meta’s and Bright Data, Inc.’s

incorporation.63 Without more, the Court is satisfied that Delaware has no

substantial interest in adjudicating this action. Allowing the California Action to

move forward allows the parties to pursue their claims more economically, while

placing them in their natural alignment as plaintiff and defendant.

CONCLUSION

For the reasons set forth above, Meta’s motion to stay is GRANTED without

prejudice to Bright Data’s right to reapply depending on the turn of events in the

California Action. No further consideration of Meta’s motion to dismiss or Bright

Data’s motion for partial summary judgment is necessary. Those motions are

accordingly denied as MOOT.

IT IS SO ORDERED

/s/ Sheldon K. Rennie Judge Sheldon K. Rennie

63 See Eureka Res., LLC v. Range Res.-Appalachia, LLC, 62 A.3d 1233, 1238 (Del. Super. 2012). 14