PUTIAN AUTHENTIC ENTERPRISE MANAGEMENT CO., LTD v. Meta Platforms, Inc.

Opinion

1 2 3 7 8 PUTIAN AUTHENTIC ENTERPRISE Case No. 5:22-cv-01901-EJD MANAGEMENT CO., LTD, et al., Plaintiffs, MOTION FOR TEMPORARY v. 11 META PLATFORMS, INC., Re: Dkt. No. 25 12 Defendant.

13 14 Plaintiffs Putian Authentic Enterprise Management Co., Ltd, Fuzhou Haina Hongyi 15 Network Technology Co., Ltd, Fuzhou Baidai Network Technology Co., Ltd., Nanchang Huimeng 16 Network Technology Co., Ltd., Suzhou Chenghe Network Technology Co., Ltd. filed this action 17 asserting the following claims against Defendants Meta Platforms, Inc. (“Meta”) and Does 1-10: 18 (1) declaratory judgment under 28 U.S.C. § 2201; (2) intentional interference with a contract; (3) 19 intentional interference with prospective economic advantage; (4) promissory estoppel; (5) breach 20 of contract; (6) breach of the implied covenant of good faith and fair dealing; (7) unlawful and 21 unfair conduct in violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. 22 Code § 17200 et seq.; and (8) negligence. Compl., Dkt. No. 1. 23 The Court previously denied Plaintiffs’ motion for a temporary restraining order (“TRO”) 24 and preliminary injunction for failure to show irreparable harm. Order Denying Mot. for TRO and 25 Prelim. Inj. (“TRO Order”), Dkt. No. 17. Plaintiffs now renew their motion seeking a Court order 26 enjoining Defendants from denying Plaintiffs access to their Facebook Business Manager 27 accounts. Mem. of Law in Supp. of Plfs.’ Renewed Mot. for TRO and Prelim. Inj. (“Renewed 1 Mot.”), Dkt. No. 25. Meta opposes. Def. Meta Platform Inc.’s Opp’n to Plfs.’ Renewed Mot. for 2 TRO (“Renewed Opp’n”), Dkt. No. 27. 3 The Court finds this matter suitable for decision without oral argument pursuant to Civil 4 Local Rule 7-1(b). Having considered the parties’ moving papers, the Court DENIES the motion 5 for a TRO with prejudice. 7 A. The Parties and Their Relationship 8 Plaintiffs are social media marketing companies whose businesses are based on providing 9 clients access to Meta’s marketing tools and audience on the Facebook social media platform. 10 Decl. of Chen Xin in Supp. of Mot. for TRO and Prelim. Inj. (“Chen Decl.”), Dkt. No. 6 ¶¶ 7-10. 11 They act as “middlemen” for e-commerce vendors and Meta by purchasing ad space from Meta 12 and then reselling it to the vendors, and as such, are “utterly reliant on the Meta advertising 13 platform.” Id.; see also Second Decl. of Chen Xin in Supp. of Renewed Mot. for TRO and Prelim 14 Inj. (“Second Chen Decl.”), Dkt. No. 20 ¶ 16 (“Under Plaintiffs’ business model, Plaintiffs 15 purchase ad space from resellers, who may work directly with Meta.”) 16 The parties agree that Meta’s Terms of Service govern their relationship. See Renewed 17 Mot. at 20; Renewed Opp’n at 4–5; Reply Mem. of Law in Supp. of Plfs.’ Renewed TRO Mot. 18 (“Renewed Reply”), Dkt. No. 30, at 12. The Terms of Service state in relevant part:

19 You therefore agree not to engage in the conduct described below (or to facilitate or support others in doing so): 20 1. You may not use our Products to do or share anything: 21 • That violates these Terms, our Community Standards, and 22 other terms and policies that apply to your use of our Products. 23 • That is unlawful, misleading, discriminatory or fraudulent. 24 . . . We can remove or restrict access to content that is in violation of 25 these provisions. If we remove content that you have shared in violation of our 26 Community Standards, we’ll let you know and explain any options you have to request another review, unless you seriously or 27 repeatedly violate these Terms . . . . 1 Decl. of Raymond LaMagna in Supp. of Def. Meta’s Opp’n to Renewed TRO Mot. (“LaMagna 2 Decl.”), Dkt. No. 27-2, Ex. 1 at 5 (Section 3.2). The Terms of Service further state:

3 If we determine that you have clearly, seriously or repeatedly breached our Terms or Policies, including in particular our 4 Community Standards, we may suspend or permanently disable access to your account. . . . Where we take such action, we’ll let you 5 know and explain any options you have to request a review, unless doing so may expose us or others to legal liability; harm our 6 community of users; [or] compromise or interfere with the integrity or operation of any of our services, systems or Products . . . . 7 8 Id., Ex. 1 at 7–8 (Section 4.2; emphases added). 9 The Terms of Service also expressly incorporate other terms and policies. Id., Ex. 1 at 9, 10 10 (Sections 4.5.2, 5). Relevant and applicable to Plaintiffs are Meta’s Commercial Terms, 11 Advertising Policies, and Self-Serve Ad Terms. Id., Ex. 1 at 10 (Section 5). 12 The Commercial Terms apply to access or use of Meta Products for the purpose of using 13 ads. They state: “You agree that you will ensure that any third party on whose behalf you access 14 or use any Meta Product for any business or commercial purpose will abide by the applicable 15 terms of use, including these Commercial Terms, the Meta Terms of Service . . ., and any 16 applicable supplemental terms . . . .” Id., Ex. 2 at 1. 17 Meta’s Advertising Policies prohibit certain kinds of ads, including those that violate the 18 Community Standards; enable a user to engage in cheating or deceitful practices; contain 19 deceptive, false, or misleading claims; or promote products, services, schemes or offers using 20 deceptive or misleading practices, including those meant to scam people out of money. Id., Ex. 3 21 at 2–5 (Sections 4.1, 4.2, 4.15, 4.22, 4.25). The Advertising Policies expressly state: “Beyond 22 enforcing our policies on individual ads, violations of our terms and policies may result in further 23 enforcement actions, such as disabling Ad Accounts, Business Managers and/or individual user 24 accounts.” Id., Ex. 3 at 2 (Section 2). The Advertising Policies further state that Plaintiffs are 25 responsible for ensuring that each advertiser complies with the Advertising Policies. Id., Ex. 3 at 26 11 (Section 12.5). 27 Similarly, Meta’s Self-Serve Ad Terms require compliance with all applicable laws, 1 regulations, and guidelines, as well as the Advertising Policies, and “[f]ailure to comply may 2 result in a variety of consequences, including the cancellation of ads you have placed and 3 termination of your account.” Id., Ex. 4 at 1 (Section 2). Furthermore,

4 If you are placing ads on someone else’s behalf, you must have permission to place those ads, and agree as follows: 5 a. You represent and warrant that you have the authority to and will 6 bind the advertiser to these Self-Serve Ad Terms and the Terms of Service, and the Commercial Terms, to which you also agree. 7 b. If the advertiser you represent violates these Self-Serve Ad 8 Terms, the Terms of Service, or the Commercial Terms, we may hold you responsible for that violation. 9 10 Id., Ex. 4 at 3 (Section 14). 11 B. Deactivation of Plaintiffs’ Accounts 12 On December 10, 2021, Plaintiffs became aware that Meta intended to “banhammer” their 13 Facebook Business Manager accounts for “perpetuating misleading e-commerce, celeb bait and 14 business impersonation via an abuse pattern we call agency scaling.” Chen Decl. ¶ 24; LaMagna 15 Decl., Ex. 5 at 2. Plaintiffs retained counsel, who then served a demand letter on Meta regarding 16 what Plaintiffs believed was arbitrary and capricious enforcement of Meta’s Terms of Service and 17 requesting “an opportunity for a hearing.” Chen Decl. ¶ 25; LaMagna Decl., Ex. 5 at 2. The 18 demand letter further stated, “If we are not given an immediate opportunity to be heard by 19 Facebook regarding this proposed ban, we will pursue all available legal rights and remedies, 20 including but not limited to seeing a temporary restraining order and injunctive relief from the 21 court, along with seeking damages for the harm caused to our Clients and related parties by 22 Facebook’s improper actions in this matter.” LaMagna Decl., Ex. 5 at 2. 23 Plaintiffs received no response from Meta until March 14, 2022, when Meta sent a letter to 24 Plaintiffs’ counsel stating: “Meta has completed its investigation into this matter and determined 25 your clients have violated Meta’s terms and policies. More specifically, each of your clients are 26 responsible for deceptive and misleading advertisements on Facebook that violate Meta’s terms 27 and policies.” Id., Ex. 6 at 2. On March 22, 2022, Meta shut down Plaintiffs’ Business Manager 1 accounts. Chen Decl. ¶¶ 17-21. 2 C. Procedural Background 3 On March 24, 2022, Plaintiffs filed this action and their first motion seeking a TRO. Dkt. 4 Nos. 1, 4. The Court denied the first TRO motion for failure to demonstrate irreparable harm. 5 TRO Order, Dkt. No. 17. On March 28, 2022, Plaintiffs filed additional declarations and a 6 renewed motion seeking a TRO, which the Court struck for non-compliance with the Civil Local 7 Rule 7-2(b)’s page limits. Dkt. Nos. 19, 20, 21, 24. On March 29, 2022, Plaintiffs re-filed the 8 amended renewed TRO motion now before the Court. Dkt. No. 29. 10 The standard for a TRO is the same as for a preliminary injunction. See Stuhlbarg Int’l 11 Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). A plaintiff seeking 12 either remedy “must establish that he is likely to succeed on the merits, that he is likely to suffer 13 irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, 14 and that an injunction is in the public interest.” Am. Trucking Ass’ns, Inc. v. City of L.A., 559 F.3d 15 1046, 1052 (9th Cir. 2009) (quoting Winter v. Nat’l Res. Def. Council, Inc., 555 U.S. 7, 20 16 (2008)). Injunctive relief is “an extraordinary remedy that may only be awarded upon a clear 17 showing that the plaintiff is entitled to such relief.” Winter, 555 U.S. at 22. 18 To grant preliminary injunctive relief, a court must find that “a certain threshold showing 19 [has been] made on each factor.” Leiva-Perez v. Holder, 640 F.3d 962, 966 (9th Cir. 2011) (per 20 curiam). Assuming that this threshold has been met, “serious questions going to the merits and a 21 balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary 22 injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and 23 that the injunction is in the public interest.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 24 1135 (9th Cir. 2011) (internal quotation marks omitted). 26 The Court previously held that Plaintiffs had not demonstrated irreparable harm. TRO 27 Order at 3–5. The factual and legal landscape have changed in the last few weeks. Plaintiffs have 1 now offered additional evidence to bolster their assertions of irreparable harm in an attempt to 2 cure what the Court previously found was an evidentiary deficiency. Specifically, Plaintiffs 3 provide two additional declarations from their Chief Operating Officer, Chen Xin, and a 4 declaration from their customer service representative, Jieli Liang. Additionally, on April 18, 5 2022, the Ninth Circuit issued its opinion in hiQ Labs, Inc. v. LinkedIn Corp., --- F.4th ---, 2022 6 WL 1132814 (9th Cir. Apr. 18, 2022). Plaintiffs rely on the Ninth Circuit’s earlier decision in that 7 case, 938 F.3d 985, 993 (9th Cir. 2019), which the Supreme Court vacated in LinkedIn Corp. v. 8 hiQ Labs, Inc., 141 S. Ct. 2752 (2021). Renewed Mot. at 14. Meta does not address hiQ at all. 9 Regardless, even if Plaintiff’s new evidence sufficiently demonstrates irreparable harm 10 under hiQ, the Court finds that Plaintiffs have not demonstrated a likelihood of success on the 11 merits on any of their claims. The Court addresses each claim in turn. 12 A. Intentional Interference with Contract 13 To succeed on a tortious interference with contract claim, a plaintiff must demonstrate: 14 “(1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of the contract; 15 (3) defendant’s intentional acts designed to induce breach or disruption of the contract; (4) actual 16 breach or disruption; and (5) resulting damage.” Name.Space, Inc. v. Internet Corp. for Assigned 17 Names and Numbers, 795 F.3d 1124, 1133 (9th Cir. 2015) (quoting Family Home & Fin. Ctr., Inc. 18 v. Fed. Home Loan Mortg. Corp., 525 F.3d 822, 825 (9th Cir. 2008)). “[A] plaintiff must 19 establish an underlying enforceable contract evidencing a formally cemented economic 20 relationship.” Orchard Supply Hardware LLC v. Home Depot USA, Inc., 939 F. Supp. 2d 1002, 21 1011–12 (N.D. Cal. 2013) (internal quotation marks omitted). 22 Here, Plaintiffs have not sufficiently demonstrated the existence of any valid contracts 23 enforceable under California law. Plaintiffs do not provide copies of any formal contracts; they 24 offer only screenshots of text message complaints from certain customers. Those screenshots 25 indicate the existence of some kind of business relationship, but it is not clear which customers 26 have relationships with which Plaintiffs. Three of these customers stated that they would 27 “terminate cooperation” with Plaintiffs. Second Chen Decl. ¶ 7, Ex. I; Decl. of Jieli Liang in 1 Supp. of Renewed Mot. for TRO and Prelim Inj. (“Liang Decl.”), Dkt. No. 21 ¶ 6, Ex. U. 2 Plaintiffs assert that this phrase “refers to the existence of a contractual business relationship 3 between the parties.” Renewed Reply at 11 n.4. However, they provide no support for that 4 assertion from any source, not even the translator who certified translations of their exhibits. The 5 Court is left to construe Plaintiffs’ assertion as attorney argument. Even taking Plaintiffs at their 6 word, they provide no details of those contracts beyond a general exchange of money for ad space. 7 “The terms of a contract on paper, with no evidence that any parties agreed to those terms, do not 8 prove the existence of a valid contract.” Altera Corp. v. Clear Logic, Inc., 424 F.3d 1079, 1092 9 (9th Cir. 2005). 10 In addition, an intentional interference claim will not arise if “the defendant’s conduct 11 consists of something which he had an absolute right to do.” Neal v. Select Portfolio Servicing, 12 Inc., No. 5:16-CV-04923-EJD, 2017 WL 4224871, at *4 (N.D. Cal. Sept. 22, 2017) (citing Dryden 13 v. Tri-Valley Growers, 65 Cal. App. 3d 990, 996 (1977); internal quotation marks omitted). 14 Meta’s Terms of Service, Commercial Terms, Advertising Policies, and Self-Serve Ad Terms all 15 make clear that fraudulent and misleading conduct is prohibited, that Plaintiffs are responsible for 16 any fraudulent or misleading ads from its clients, and that repeated violations may result not only 17 in the removal of the fraudulent or misleading ads but also termination of Plaintiffs’ accounts. 18 LaMagna Decl., Exs. 1-4. These are the grounds for account deactivation laid out in Meta’s 19 March 14, 2022 letter. Id., Ex. 6. Meta has submitted evidence that Plaintiffs’ clients advertised 20 in a fraudulent or misleading manner, that multiple accounts managed by Plaintiffs were 21 deactivated as “business integrity scams,” and that since December 2019, Meta disabled over 22 1,400 accounts managed by Plaintiffs for policy or intellectual property violations. Decl. of Sam 23 Winters in Supp. of Def. Meta’s Opp’n to TRO Mot., Dkt. No. 27-1 ¶¶ 6-16. Plaintiffs effectively 24 concede that the examples of problematic ads Meta submitted with its opposition were indeed 25 potentially fraudulent or misleading and acknowledge that Meta disabled at least 1,443 out of 26 Plaintiffs’ 21,400 accounts since December 2019. Third Decl. of Chen Xin in Supp. of Renewed 27 Mot. for TRO and Prelim Inj., Dkt. No. 20-1 ¶¶ 9-14, 26. Because Plaintiffs and many of their 1 clients appear to have violated Meta’s terms and policies, Meta was within its rights under the 2 parties’ agreement to terminate Plaintiffs’ accounts. 3 Accordingly, Plaintiffs have not demonstrated a likelihood of success on their claim for 4 intentional interference with a contract. 5 B. Intentional Interference with Prospective Economic Advantage 6 A tortious interference with prospective economic advantage claim has the same elements 7 as a claim for tortious interference with a contract (focusing instead on the existence and 8 knowledge of a prospective economic relationship), but also requires that the defendant’s conduct 9 be ‘wrongful by some legal measure other than the fact of interference itself.’” Name.Space, 795 10 F.3d at 1133 (quoting Kor. Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (2003) 11 (internal quotation marks omitted)). Courts have made clear that “[t]he law precludes recovery for 12 overly speculative expectancies by initially requiring proof” that it is “reasonably probable that the 13 prospective economic advantage would have been realized but for defendant’s interference.” 14 AlterG, Inc. v. Boost Treadmills LLC, 388 F. Supp. 3d 1133, 1154 (N.D. Cal. 2019) (internal 15 quotation marks omitted). 16 Here, Plaintiffs have not offered any evidence of any specifically identified prospective 17 business deal or relationship that Meta’s deactivation of their Business Manager accounts 18 thwarted. Plaintiffs assert that they “had prospective economic relationships with [current e- 19 commerce vendor clients] and new clients” but do not cite to any such evidence. Renewed Mot. at 20 18. Instead, they point only to portions of Chen’s first and second declaration that generally 21 describe past customers, not future customers. The text message complaints from past or current 22 customers do not refer to any particular future business deals that were cancelled as a result of the 23 deactivation. See Second Chen Decl, Ex. I; Liang Decl., Exs. T, U, V, W. 24 Accordingly, Plaintiffs have not demonstrated a likelihood of success on their claim for 25 intentional interference with prospective economic advantage. 26 C. Promissory Estoppel 27 A claim for promissory estoppel requires the establishment of the following four elements: 1 “(1) a promise that is clear and unambiguous in its terms; (2) reliance by the party to whom the 2 promise is made; (3) the reliance must be reasonable and foreseeable; and (4) the party asserting 3 the estoppel must be injured by his or her reliance.” Cockrell v. Wells Fargo Bank, N.A., No. 13- 4 cv-02072-SC, 2013 WL 3830048, at *1 (N.D. Cal. July 23, 2013); see also Boon Rawd Trading 5 Int’l Co., Ltd. v. Paleewong Trading Co., Inc., 688 F. Supp. 2d 940, 953 (N.D. Cal. 2010). 6 Plaintiffs contend that they plead a claim for promissory estoppel in the alternative to their 7 claim for breach of contract. Renewed Reply at 11; see also Renewed Mot. at 18 (“To the extent 8 the Court concludes that certain parts of the parties’ relationship were not governed by contract, 9 the principle of equitable estoppel applies.”). Plaintiffs argue that because Meta “rarely 10 substantiated any of the deactivation notices it sent to Plaintiffs . . . [t]his course of conduct 11 reasonably led Plaintiffs to believe that deactivation notices were frequently erroneously 12 distributed and only acted upon after substantial review and further notice.” Renewed Mot. at 19. 13 But as Plaintiffs acknowledge, Meta’s “deactivation notices referred to e-commerce vendor 14 accounts, not the [Business Manager] Accounts, and Meta “not once took any action to deactivate 15 or otherwise restrict access to the [Business Manager] Accounts.” Id. If that is true, it is difficult 16 to understand how Plaintiffs could infer a course of dealing as to the Business Manager accounts 17 when they purportedly relied upon a course of dealing that concerned only the vendor accounts. 18 “A plaintiff may not state a claim for promissory estoppel where a valid contract, 19 supported by consideration, governs the same subject matter as the alleged promise.” Funai 20 Electric Co., Ltd. v. LSI Corp., No. 16-CV-01210-BLF, 2017 WL 1133513, at *10 (N.D. Cal. 21 Mar. 27, 2017) (citing Horne v. Harley-Davidson, Inc., 660 F. Supp. 2d 1152, 1163 (C.D. Cal. 22 2009)). Here, Meta’s Terms of Service and accompanying terms and policies are the express 23 contract that governs the parties’ relationship and the manner and method in which Meta could 24 terminate Plaintiffs’ Business Manager accounts. Plaintiffs’ attempt to plead in the alternative 25 necessarily fails. Walker v. KFC Corp., 728 F.2d 1215, 1220 (9th Cir. 1984) (“In sum, either KFC 26 was in breach of contract or it was not. That should be the end of the matter. Promissory estoppel 27 is not a doctrine designed to give a party to a negotiated commercial bargain a second bite at the 1 apple in the event it fails to prove a breach of contract.”). 2 Accordingly, Plaintiffs have not demonstrated a likelihood of success on the merits of their 3 promissory estoppel claim. 4 D. Breach of Contract 5 Under California law, a plaintiff asserting a breach of contract claim must plead the 6 following elements: (1) existence of the contract; (2) plaintiff’s performance or excuse for 7 nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach. 8 CDF Firefighters v. Maldonado, 158 Cal. App. 4th 1226, 1239 (2008), as modified on denial of 9 reh’g (Feb. 5, 2008) (citing Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas. Co., 116 Cal. 10 App. 4th 1375, 1391, nn.6, 11 (2004)). 11 Plaintiffs assert that Meta’s Terms of Service create a contractual relationship, but that 12 nothing in the Terms of Service permits Meta to “arbitrarily revoke access to the Meta platforms.” 13 Renewed Reply at 12. Plaintiffs’ attempt to distinguish between the Terms of Service and the 14 Self-Serve Ad Terms is unavailing, as the Terms of Service incorporate the Self-Serve Ad Terms 15 and Advertising Policies—both of which expressly contemplate the possible termination of 16 Plaintiffs’ Business Manager Accounts. LaMagna Decl., Ex. 1 at 10 (Section 5); id., Ex. 3 at 2 17 (“Beyond enforcing our policies on individual ads, violations of our terms and policies may result 18 in further enforcement actions, such as disabling Ad Accounts, Business Managers and/or 19 individual user accounts.”); id. Ex. 4 at 1 (“Failure to comply may result in a variety of 20 consequences, including the cancellation of ads you have placed and termination of your 21 account.”). At any rate, the Terms of Service themselves explicitly address account suspension or 22 termination and permit Meta to suspend or terminate accounts without notice or review in certain 23 circumstances. Id., Ex. 1 at 7–8 (“If we determine that you have clearly, seriously or repeatedly 24 breached our Terms or Policies, including in particular our Community Standards, we may 25 suspend or permanently disable access to your account. . . . Where we take such action, we’ll let 26 you know and explain any options you have to request a review, unless doing so may expose us or 27 others to legal liability; harm our community of users; [or] compromise or interfere with the 1 integrity or operation of any of our services, systems or Products . . . .”). As described above, 2 Meta has submitted evidence of repeated violation of the Terms of Service and Meta’s other terms 3 and policies by Plaintiffs’ customers, for whom Plaintiffs are also responsible under those same 4 terms and policies. See supra Section III.A. The evidence the parties have provided tends to 5 show that it is Plaintiffs who have apparently breached the parties’ contract, not Meta.1 6 Accordingly, Plaintiffs have not demonstrated a likelihood of success on the merits of their 7 breach of contract claim. 8 E. Breach of the Implied Covenant of Good Faith and Fair Dealing 9 “The covenant of good faith and fair dealing [is] implied by law in every contract, [and] 10 exists merely to prevent one contracting party from unfairly frustrating the other party’s right to 11 receive the benefits of the agreement actually made.” Guz v. Bechtel Nat’l Inc., 24 Cal. 4th 317, 12 349 (2000). “[T]he factual elements necessary to establish a breach of the covenant of good faith 13 and fair dealing are: (1) the parties entered into a contract; (2) the plaintiff fulfilled his obligations 14 under the contract; (3) any conditions precedent to the defendant’s performance occurred; (4) the 15 defendant unfairly interfered with the plaintiff’s rights to receive the benefits of the contract; and 16 (5) the plaintiff was harmed by the defendant’s conduct.” Rosenfeld v. JPMorgan Chase Bank, 17 N.A., 732 F. Supp. 2d 952, 968 (N.D. Cal. 2010) (internal citations omitted). 18 For the reasons described above, it does not appear that Plaintiffs fulfilled their obligations 19 under the parties’ contract, and that Meta’s purported “interference” with Plaintiffs’ rights to 20 receive the benefits of the parties’ agreement by terminating their accounts was expressly 21 contemplated by the contract itself. See supra Section III.D. Furthermore, while a plaintiff may 22 bring claims for both breach of contract and breach of the implied covenant, when both claims rely 23

24 1 Plaintiffs also assert a claim for declaratory judgment, seeking a declaration that “declaration that they have not violated any policy articulated within any of Defendant’s various TOS or 25 Advertising Guidelines.” Compl. ¶ 48. Plaintiffs chose not to address this claim for relief in their motion. Renewed Mot. at 16 (“Because Plaintiffs’ first claim is for declaratory relief, that claim is 26 not addressed here.”). However, because the Court finds that there is evidence suggesting that Plaintiffs did breach the parties’ agreement, Plaintiffs have also failed to demonstrate a likelihood 27 of success on their declaratory judgment claim. 1 on the same alleged acts and seek the same relief, the Court may disregard the breach of the 2 implied covenant claim as superfluous. Landucci v. State Farm Ins. Co., 65 F. Supp. 3d 694, 716 3 (N.D. Cal. 2014) (citing Guz, 24 Cal. 4th at 327). 4 Accordingly, Plaintiffs have not demonstrated a likelihood of success on the merits of their 5 implied covenant claim. 7 California Business and Professions Code § 17200 prohibits “any unlawful, unfair or 8 fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” 9 Plaintiffs’ briefing is somewhat unclear on whether they are asserting a UCL claim under the 10 unlawful prong or the unfair prong. Compare Renewed Mot. at 22–23 (discussing “unlawful” acts 11 “in violation of antitrust laws”) with Renewed Reply at 14 (“Plaintiffs’ claim related to antitrust 12 principles arises under the unfairness prong . . . .”). The Court looks to the allegations in the 13 complaint, which plead the unfair prong based on antitrust principles and the unlawful prong claim 14 based on Plaintiffs’ tortious interference and implied covenant claims. Compl. ¶¶ 100-101. As to 15 the unlawful prong claim, the Court has already determined that, based on the record before it, 16 Plaintiffs are not likely to succeed on their tortious interference and implied covenant claims, and 17 therefore they are correspondingly unlikely to success on a UCL claim based on the unlawful 18 prong as pled. See supra Section III.A, B, E. 19 As to the unfair prong claim, Plaintiffs assert, “Meta is using its dominant position and 20 presence as the operator of the world’s largest social media platform in order to assume exclusive 21 proprietary control over public data not owned by the Defendant, and to arbitrarily and 22 capriciously deactivate business manager accounts for [its] own benefit.” Renewed Mot. at 22. It 23 is unclear what “public data” is at issue here—presumably Plaintiffs’ clients have ownership over 24 the information in their ads. Additionally, it is difficult to understand how Meta can exercise 25 “monopolistic control” when only Meta’s products are at issue, much less how Facebook qualifies 26 as “a facility . . . that is essential to competitors.” Id. at 22–23. Most significant, Plaintiffs do not 27 cite to a single piece of evidence to support their claims of antitrust activity. See Renewed Mot. at 1 22–23; Renewed Reply at 14. To the extent Plaintiffs’ allegations about Meta’s deactivation of 2 accounts “for [its] own benefit” is based on Paragraphs 33-34 of Chen’s first declaration, those 3 paragraphs are nothing more than Chen’s opinion. Chen Decl. ¶¶ 33-34 (“In my opinion and 4 based on my personal knowledge . . . .”). Chen does not explain the basis of any purported 5 personal knowledge, and therefore these opinions amount to nothing more than speculation 6 unsupported by any factual evidence. 7 Plaintiffs have not demonstrated a likelihood of success on the merits of their UCL claim. 8 G. Negligence 9 Plaintiffs allege a claim of negligence under California law. To prevail on a claim for 10 negligence, Plaintiffs must demonstrate (1) Meta owed Plaintiffs a duty, (2) a breach of that duty, 11 (3) causation, and (4) damages. Ileto v. Glock Inc., 349 F.3d 1191, 1203 (9th Cir. 2003). The 12 general rule in California is that all persons have a duty “to use ordinary care to prevent others 13 being injured as a result of their conduct.” Rowland v. Christian, 69 Cal. 2d 108, 112 (1968). In 14 determining whether to impose a legal duty, courts consider the factors set forth in Rowland v. 15 Christian, including:

16 foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the 17 defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future 18 harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting 19 liability for breach, and the availability, cost, and prevalence of insurance for the risk involved. 20 21 Id. at 113. Plaintiffs also invoke California Civil Code § 1714(a). Renewed Mot. at 23. Section 22 1714 primarily concerns providing alcoholic beverages to minors, but subsection (a) states in 23 relevant part: “Everyone is responsible, not only for the result of his or her willful acts, but also 24 for an injury occasioned to another by his or her want of ordinary care or skill in the management 25 of his or her property or person, except so far as the latter has, willfully or by want of ordinary 26 care, brought the injury upon himself or herself.” Cal. Civ. Code § 1714(a). 27 Plaintiffs assert that “Meta owed the Plaintiffs a duty of ordinary care and skill by virtue of 1 [a] special relationship between them created by the position of power enjoyed by the Defendant’s 2 control of Facebook and the BM Account generally.” Renewed Mot. at 23. Despite repeatedly 3 referring to a “special relationship,” Plaintiffs cite no case law or evidence supporting the 4 existence of any such special relationship in these circumstances outside the Terms of Service and 5 other applicable terms and policies. Id. at 22–23; Renewed Reply at 14. The California Supreme 6 Court has noted that “the special relationship test”—which arises in an insurance context—“has 7 been criticized as illusory and not sufficiently precise . . . .” Erlich v. Menezes, 21 Cal. 4th 543, 8 552–53 (1999). “[C]ourts will generally enforce the breach of a contractual promise through 9 contract law,” and “the mere negligent breach of a contract” will not ordinarily sound in tort. Id. 10 at 552 (internal quotation marks and citation omitted). 11 Even if Meta owed Plaintiffs a duty beyond the confines of the parties’ written agreement, 12 Plaintiffs do not substantiate a breach of that duty. According to Plaintiffs, “Meta breached this 13 duty to exercise ordinary care and skill with regards to their administration of the Plaintiffs’ 14 [Business Manager] Accounts when they arbitrarily, capriciously, and willfully encouraged 15 employees to falsify pretenses with which to deactivate mature [Business Manager] Accounts as 16 part of the Defendant’s pervasive profit driven culture.” Renewed Mot. at 23–24. As with 17 Plaintiffs’ UCL claim under the unfair prong, Plaintiffs fail to provide any evidence to support that 18 contention beyond Chen’s opinion and conjecture. See supra Section III.F. 19 In conclusion, the Court finds that Plaintiffs have not demonstrated a likelihood of success 20 on the merits of any of their claims. When a plaintiff has failed to show a likelihood of success on 21 the merits, the Court need not consider the remaining Winter factors. Garcia v. Google, Inc., 786 22 F.3d 733, 740 (9th Cir. 2015). Mandatory injunctions such as the one Plaintiffs seek are 23 disfavored, and they therefore must satisfy a higher burden of “establish[ing] that the law and facts 24 clearly favor [their] position . . . .” Id. (emphasis original). Plaintiffs have not done so here. 25 /// 26 /// 27 /// IV. CONCLUSION For the foregoing reasons, the Court DENIES the motion for a TRO with prejudice. 2 IT IS SO ORDERED. 3 Dated: April 19, 2022 4 □□□ 6 EDWARD J. DAVILA 7 United States District Judge 8 9 10 11 a 12

© 15 16

it

Z 18 19 20 21 22 23 24 25 26 27 28 || Case No.: 5:22-cv-01901-EJD ORDER DENYING RENEWED MOT. FOR TRO