NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 23 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
ROSEMARIE VARGAS; et al., No. 21-16499 Plaintiffs-Appellants, D.C. No. 3:19-cv-05081-WHO and MEMORANDUM* NEUHTAH OPIOTENNIONE; JESSICA TSAI,
Plaintiffs,
v.
FACEBOOK, INC.,
Defendant-Appellee.
Appeal from the United States District Court for the Northern District of California William Horsley Orrick, District Judge, Presiding
Argued and Submitted July 28, 2022 Withdrawn January 9, 2023 Resubmitted June 20, 2023 San Francisco, California
Before: M. MURPHY,** GRABER, and OWENS, Circuit Judges. Dissent by Judge OWENS.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Michael R. Murphy, United States Circuit Judge for the U.S. Court of Appeals for the Tenth Circuit, sitting by designation. Plaintiffs Rosemarie Vargas, Jazmine Spencer, Kisha Skipper, Deillo
Richards, and Jenny Lin appeal from the dismissal of their Third Amended Class
Action complaint against Defendant Facebook, Inc. We review the dismissal de
novo, Meland v. Weber, 2 F.4th 838, 843 (9th Cir. 2021), and reverse and remand
for further proceedings.
1. The district court erred by dismissing the operative complaint for failure
to allege a concrete injury sufficient to confer Article III standing. Under Federal
Rule of Civil Procedure 12, the bar to allege standing is not high. See Maya v.
Centex Corp., 658 F.3d 1060, 1068 (9th Cir. 2011) (holding that “Twombly and
Iqbal are ill-suited to application in the constitutional standing context”); see also
Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (“At the pleading stage,
general factual allegations of injury resulting from the defendant’s conduct may
suffice, for on a motion to dismiss we presume that general allegations embrace
those specific facts that are necessary to support the claim.” (brackets omitted)
(citation and internal quotation marks omitted)). And we must accept all factual
allegations as true. See Warth v. Seldin, 422 U.S. 490, 501 (1975) (“For purposes
of ruling on a motion to dismiss for want of standing, both the trial and reviewing
courts must accept as true all material allegations of the complaint, and must
construe the complaint in favor of the complaining party.”).
The operative complaint alleges that Facebook’s “targeting methods provide
2 tools to exclude women of color, single parents, persons with disabilities and other
protected attributes,” so that Plaintiffs were “prevented from having the same
opportunity to view ads for housing” that Facebook users who are not in a
protected class received.
Plaintiff Vargas provides an example. She alleges that she is a disabled
female of Hispanic descent and a single parent living in New York City with her
two minor children and that she is a frequent Facebook user who has posted photos
of herself and her children. Because of her use of Facebook, the platform knew
that she was “a single parent, disabled female of Hispanic descent.” She sought
housing from August 2018 through April 2019 and was ready, willing, and able to
move. In an effort to find housing, she accessed the Facebook Marketplace.
Although she sought housing in Manhattan, her Facebook searches yielded no ads
for housing in Manhattan. After receiving unsatisfactory search results, in early
2019, Plaintiff Vargas sat side by side with a Caucasian friend “and conducted a
search for housing through Facebook’s Marketplace, both using the same search
criteria . . . . [The Caucasian friend] received more ads for housing in locations
that were preferable to Plaintiff Vargas. Plaintiff Vargas did not receive the ads
that [the friend] received.” Third Am. Compl. at 24 (emphases added). In other
words, her Caucasian friend saw more, and more responsive, ads than Plaintiff
Vargas received even though they used identical search criteria. See Havens
3 Realty Corp. v. Coleman, 455 U.S. 363, 373–74 (1982) (holding that racially
diverse “testers” attempting to obtain truthful information about available housing
had standing to sue under the Fair Housing Act of 1968).
The district court faulted the complaint for not identifying specific ads that
Plaintiff Vargas did not see. But Plaintiffs’ very claim is that Facebook’s practices
concealed information from housing-seekers in protected classes. And nothing in
the case law requires that a plaintiff identify specific ads that she could not see
when she alleges that an ad-delivery algorithm restricted her access to housing ads
in the first place.
The district court also relied on the fact that only paid ads used Facebook’s
targeting methods, and Plaintiffs do not specify whether the ads that Plaintiff
Vargas’s Caucasian friend saw (and that Plaintiff Vargas did not) were paid ads.
The operative complaint alleges that Facebook hosts a vast amount of paid
advertising but does not allege that all ads on the Marketplace are paid ads.
Nonetheless, given the allegations concerning the magnitude of paid advertising, it
is plausible to infer that one or more of the ads that Plaintiff Vargas could not
access because of Facebook’s methods was paid. If Plaintiff Vargas cannot prove
that she was denied access to one or more paid ads, then her claims will fail on the
merits—but they do not fail for lack of standing. See Cath. League for Religious
& Civil Rts. v. City & County of San Francisco, 624 F.3d 1043, 1049 (9th Cir.
4 2010) (en banc) (“Nor can standing analysis, which prevents a claim from being
adjudicated for lack of jurisdiction, be used to disguise merits analysis, which
determines whether a claim is one for which relief can be granted if factually
true.”). Plaintiff Vargas alleges a concrete and particularized injury—deprivation
of truthful information and housing opportunities—whether or not she can
establish all the elements of her claims later in the litigation.
2. The district court also erred by holding that Facebook is immune from
liability pursuant to 47 U.S.C. § 230(c)(1). “Immunity from liability exists for ‘(1)
a provider or user of an interactive computer service (2) whom a plaintiff seeks to
treat, under a [federal or] state law cause of action, as a publisher or speaker (3) of
information provided by another information content provider.’” Dyroff v.
Ultimate Software Grp., 934 F.3d 1093, 1097 (9th Cir. 2019) (quoting Barnes v.
Yahoo!, Inc., 570 F.3d 1096, 1100 (9th Cir. 2009)). We agree with Plaintiffs that,
taking the allegations in the complaint as true, Plaintiffs’ claims challenge
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 23 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
ROSEMARIE VARGAS; et al., No. 21-16499 Plaintiffs-Appellants, D.C. No. 3:19-cv-05081-WHO and MEMORANDUM* NEUHTAH OPIOTENNIONE; JESSICA TSAI,
Plaintiffs,
v.
FACEBOOK, INC.,
Defendant-Appellee.
Appeal from the United States District Court for the Northern District of California William Horsley Orrick, District Judge, Presiding
Argued and Submitted July 28, 2022 Withdrawn January 9, 2023 Resubmitted June 20, 2023 San Francisco, California
Before: M. MURPHY,** GRABER, and OWENS, Circuit Judges. Dissent by Judge OWENS.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Michael R. Murphy, United States Circuit Judge for the U.S. Court of Appeals for the Tenth Circuit, sitting by designation. Plaintiffs Rosemarie Vargas, Jazmine Spencer, Kisha Skipper, Deillo
Richards, and Jenny Lin appeal from the dismissal of their Third Amended Class
Action complaint against Defendant Facebook, Inc. We review the dismissal de
novo, Meland v. Weber, 2 F.4th 838, 843 (9th Cir. 2021), and reverse and remand
for further proceedings.
1. The district court erred by dismissing the operative complaint for failure
to allege a concrete injury sufficient to confer Article III standing. Under Federal
Rule of Civil Procedure 12, the bar to allege standing is not high. See Maya v.
Centex Corp., 658 F.3d 1060, 1068 (9th Cir. 2011) (holding that “Twombly and
Iqbal are ill-suited to application in the constitutional standing context”); see also
Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (“At the pleading stage,
general factual allegations of injury resulting from the defendant’s conduct may
suffice, for on a motion to dismiss we presume that general allegations embrace
those specific facts that are necessary to support the claim.” (brackets omitted)
(citation and internal quotation marks omitted)). And we must accept all factual
allegations as true. See Warth v. Seldin, 422 U.S. 490, 501 (1975) (“For purposes
of ruling on a motion to dismiss for want of standing, both the trial and reviewing
courts must accept as true all material allegations of the complaint, and must
construe the complaint in favor of the complaining party.”).
The operative complaint alleges that Facebook’s “targeting methods provide
2 tools to exclude women of color, single parents, persons with disabilities and other
protected attributes,” so that Plaintiffs were “prevented from having the same
opportunity to view ads for housing” that Facebook users who are not in a
protected class received.
Plaintiff Vargas provides an example. She alleges that she is a disabled
female of Hispanic descent and a single parent living in New York City with her
two minor children and that she is a frequent Facebook user who has posted photos
of herself and her children. Because of her use of Facebook, the platform knew
that she was “a single parent, disabled female of Hispanic descent.” She sought
housing from August 2018 through April 2019 and was ready, willing, and able to
move. In an effort to find housing, she accessed the Facebook Marketplace.
Although she sought housing in Manhattan, her Facebook searches yielded no ads
for housing in Manhattan. After receiving unsatisfactory search results, in early
2019, Plaintiff Vargas sat side by side with a Caucasian friend “and conducted a
search for housing through Facebook’s Marketplace, both using the same search
criteria . . . . [The Caucasian friend] received more ads for housing in locations
that were preferable to Plaintiff Vargas. Plaintiff Vargas did not receive the ads
that [the friend] received.” Third Am. Compl. at 24 (emphases added). In other
words, her Caucasian friend saw more, and more responsive, ads than Plaintiff
Vargas received even though they used identical search criteria. See Havens
3 Realty Corp. v. Coleman, 455 U.S. 363, 373–74 (1982) (holding that racially
diverse “testers” attempting to obtain truthful information about available housing
had standing to sue under the Fair Housing Act of 1968).
The district court faulted the complaint for not identifying specific ads that
Plaintiff Vargas did not see. But Plaintiffs’ very claim is that Facebook’s practices
concealed information from housing-seekers in protected classes. And nothing in
the case law requires that a plaintiff identify specific ads that she could not see
when she alleges that an ad-delivery algorithm restricted her access to housing ads
in the first place.
The district court also relied on the fact that only paid ads used Facebook’s
targeting methods, and Plaintiffs do not specify whether the ads that Plaintiff
Vargas’s Caucasian friend saw (and that Plaintiff Vargas did not) were paid ads.
The operative complaint alleges that Facebook hosts a vast amount of paid
advertising but does not allege that all ads on the Marketplace are paid ads.
Nonetheless, given the allegations concerning the magnitude of paid advertising, it
is plausible to infer that one or more of the ads that Plaintiff Vargas could not
access because of Facebook’s methods was paid. If Plaintiff Vargas cannot prove
that she was denied access to one or more paid ads, then her claims will fail on the
merits—but they do not fail for lack of standing. See Cath. League for Religious
& Civil Rts. v. City & County of San Francisco, 624 F.3d 1043, 1049 (9th Cir.
4 2010) (en banc) (“Nor can standing analysis, which prevents a claim from being
adjudicated for lack of jurisdiction, be used to disguise merits analysis, which
determines whether a claim is one for which relief can be granted if factually
true.”). Plaintiff Vargas alleges a concrete and particularized injury—deprivation
of truthful information and housing opportunities—whether or not she can
establish all the elements of her claims later in the litigation.
2. The district court also erred by holding that Facebook is immune from
liability pursuant to 47 U.S.C. § 230(c)(1). “Immunity from liability exists for ‘(1)
a provider or user of an interactive computer service (2) whom a plaintiff seeks to
treat, under a [federal or] state law cause of action, as a publisher or speaker (3) of
information provided by another information content provider.’” Dyroff v.
Ultimate Software Grp., 934 F.3d 1093, 1097 (9th Cir. 2019) (quoting Barnes v.
Yahoo!, Inc., 570 F.3d 1096, 1100 (9th Cir. 2009)). We agree with Plaintiffs that,
taking the allegations in the complaint as true, Plaintiffs’ claims challenge
Facebook’s conduct as a co-developer of content and not merely as a publisher of
information provided by another information content provider.
Facebook created an Ad Platform that advertisers could use to target
advertisements to categories of users. Facebook selected the categories, such as
sex, number of children, and location. Facebook then determined which categories
applied to each user. For example, Facebook knew that Plaintiff Vargas fell within
5 the categories of single parent, disabled, female, and of Hispanic descent. For
some attributes, such as age and gender, Facebook requires users to supply the
information. For other attributes, Facebook applies its own algorithms to its vast
store of data to determine which categories apply to a particular user.
The Ad Platform allowed advertisers to target specific audiences, both by
including categories of persons and by excluding categories of persons, through the
use of drop-down menus and toggle buttons. For example, an advertiser could
choose to exclude women or persons with children, and an advertiser could draw a
boundary around a geographic location and exclude persons falling within that
location. Facebook permitted all paid advertisers, including housing advertisers, to
use those tools. Housing advertisers allegedly used the tools to exclude protected
categories of persons from seeing some advertisements.
As the website’s actions did in Fair Housing Council of San Fernando
Valley v. Roommates.com, LLC, 521 F.3d 1157 (9th Cir. 2008) (en banc),
Facebook’s own actions “contribute[d] materially to the alleged illegality of the
conduct.” Id. at 1168. Facebook created the categories, used its own
methodologies to assign users to the categories, and provided simple drop-down
menus and toggle buttons to allow housing advertisers to exclude protected
categories of persons. Facebook points to three primary aspects of this case that
arguably differ from the facts in Roommates.com, but none affects our conclusion
6 that Plaintiffs’ claims challenge Facebook’s own actions.
First, in Roommates.com, the website required users who created profiles to
self-identify in several protected categories, such as sex and sexual orientation. Id.
at 1161. The facts here are identical with respect to two protected categories
because Facebook requires users to specify their gender and age. With respect to
other categories, it is true that Facebook does not require users to select directly
from a list of options, such as whether they have children. But Facebook uses its
own algorithms to categorize the user. Whether by the user’s direct selection or by
sophisticated inference, Facebook determines the user’s membership in a wide
range of categories, and Facebook permits housing advertisers to exclude persons
in those categories. We see little meaningful difference between this case and
Roommates.com in this regard. Facebook was “much more than a passive
transmitter of information provided by others; it [was] the developer, at least in
part, of that information.” Id. at 1166. Indeed, Facebook is more of a developer
than the website in Roommates.com in one respect because, even if a user did not
intend to reveal a particular characteristic, Facebook’s algorithms nevertheless
ascertained that information from the user’s online activities and allowed
advertisers to target ads depending on the characteristic.
Second, Facebook emphasizes that its tools do not require an advertiser to
discriminate with respect to a protected ground. An advertiser may opt to exclude
7 only unprotected categories of persons or may opt not to exclude any categories of
persons. This distinction is, at most, a weak one. The website in Roommates.com
likewise did not require advertisers to discriminate, because users could select the
option that corresponded to all persons of a particular category, such as “straight or
gay.” See, e.g., id. at 1165 (“Subscribers who are seeking housing must make a
selection from a drop-down menu, again provided by Roommate[s.com], to
indicate whether they are willing to live with ‘Straight or gay’ males, only with
‘Straight’ males, only with ‘Gay’ males or with ‘No males.’”). The manner of
discrimination offered by Facebook may be less direct in some respects, but as in
Roommates.com, Facebook identified persons in protected categories and offered
tools that directly and easily allowed advertisers to exclude all persons of a
protected category (or several protected categories).
Finally, Facebook urges us to conclude that the tools at issue here are
“neutral” because they are offered to all advertisers, not just housing advertisers,
and the use of the tools in some contexts is legal. We agree that the broad
availability of the tools distinguishes this case to some extent from the website in
Roommates.com, which pertained solely to housing. But we are unpersuaded that
the distinction leads to a different ultimate result here. According to the complaint,
Facebook promotes the effectiveness of its advertising tools specifically to housing
advertisers. “For example, Facebook promotes its Ad Platform with ‘success
8 stories,’ including stories from a housing developer, a real estate agency, a
mortgage lender, a real estate-focused marketing agency, and a search tool for
rental housing.” A patently discriminatory tool offered specifically and knowingly
to housing advertisers does not become “neutral” within the meaning of this
doctrine simply because the tool is also offered to others.
REVERSED and REMANDED.
9 FILED JUN 23 2023 Vargas v. Facebook, Inc., No. 21-16499 OWENS, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS
I respectfully dissent. Each of Plaintiffs’ theories of injury—denial of
truthful information, denial of the opportunity to obtain a benefit, denial of the
social benefit of living in an integrated community, and stigmatic injury—depends
on Plaintiffs having been personally discriminated against by at least one housing
advertiser that used Facebook’s Ad Platform. Thus, to survive a motion to dismiss,
Plaintiffs would need to plausibly allege that a housing ad that would otherwise
have appeared in their News Feeds or in their search results on Facebook
Marketplace did not appear because the advertiser used Facebook’s Ad Platform to
exclude their protected class. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-
57 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).
As to each named plaintiff, the Third Amended Complaint (“TAC”) does not
identify any such ad or advertiser. Nor does it allege facts supporting an inference
that housing discrimination (even if the identities of the ads and advertisers are
unknown) is plausibly the reason Plaintiffs failed to find housing ads meeting their
respective search criteria. Plaintiffs have alleged nothing to exclude the possibility
that suitable housing was not available or not advertised on Facebook. See Iqbal,
556 U.S. at 682 (finding that an allegation of discrimination was not plausible in
view of one “obvious alternative explanation”).
1 Although Vargas alleges in Paragraph 95 of the TAC that her Caucasian
friend, while using the same search criteria, received ads on Facebook Marketplace
that she did not, she does not specify whether the ads her Caucasian friend saw
were user-generated or paid (i.e., created using the Ad Platform and its audience
selection tools). Users can distinguish paid ads from user-generated ads by the
label “Sponsored.” See Andrew Hutchinson, Facebook Provides New Option to
Boost Marketplace Posts, and Marketplace Ads for Businesses, SocialMediaToday
(June 7, 2018), https://www.socialmediatoday.com/news/facebook-provides-new-
option-to-boost-marketplace-posts-and-marketplace-ad/525158/. Only paid ads are
relevant to Vargas’s housing discrimination claims.
Accordingly, I would affirm the district court’s dismissal for failure to allege
a concrete injury sufficient to confer standing.