SAN JOSE (CN) – A federal judge dismissed only part of a class action accusing Google of withholding money from four AdSense advertisers, but allowed the core of the lawsuit to proceed.
U.S. District Judge Beth Labson Freeman dismissed claims that Google profited unjustly, defrauded the plaintiffs or engaged in bad faith when terminating the publishing rights of four AdSense users.
She refused to dismiss claims for liquidated damages, breach of contract, breach of implied covenant of good faith and fair dealing, and unfair competition.
Freeman agreed with Google’s argument that its failure to terminate other AdSense users is not enough to establish faith, as the other websites are not similar, and that “allegations of selective enforcement are not enough to plead bad faith.”
AdSense is a Google-run program that allows people to create ads that appear on Google-administered websites such as its search-engine page. The four publishers — Free Range Content, Coconut Island Software, Taylor Chose and Matthew Simpson — all used AdSense to earn money on a per-click or per-impression basis.
The dispute arose when Google kicked them out of AdSense, claiming they violated its terms by publishing “invalid material.”
Lead plaintiff Free Range Content acknowledged an unaccounted spike in the number of clicks and associated revenue before it was terminated, but said the spike was caused by unknown factors beyond its control. It said it alerted Google to the problem and stood ready to differentiate between valid and invalid clicks when Google terminated its publishing rights.
It also claimed Google kept all of the revenue from its AdSense publishing, including money it said had been generated by invalid advertising methods.
The other three plaintiffs’ claims are similar.
In terms of the core claims of the lawsuit, Freeman sided with the plaintiffs.
“Taking the allegations are true, the challenged terms [of service] are one-sided because they let Google withhold funds for up to two months regardless of the severity of the purported breach and even if the funds are earned through valid activity, notwithstanding Google’s supposed ability to distinguish between valid and invalid ad serves,” Freeman wrote.
She added: “While a more developed record may reveal that Google is justified in withholding the entirety of unpaid earnings, plaintiffs offer sufficient allegations to survive the pleading stage on this issue.”
However, Freeman found the two individual plaintiffs, Chose and Simpson, did not have valid payment-related claims because they failed to register complaints within 30 days.
Freeman rejected the fraud claims, for failure to show which specific statement they relied on that caused them to purchase something and turned out not to be true.
“The court agrees with defendant that plaintiffs have failed to plausibly allege reliance.”
Nevertheless, the breach of contract claims, the claims relating to how Google liquidated funds after the publishing rights were terminated, and other related unfair business practices claims were allowed to go forward.
Google did not respond to a request for comment. It is represented by Jeffrey Gutkin with Cooley LLP in San Francisco.
Patrick Howard, attorney for Free Range Content, did not immediately respond to an emailed request for comment. He is with Saltz Mongeluzzi Barrett & Bendesky in Philadelphia.
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