Dz Reserve v. Meta Platforms, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DZ RESERVE; CAIN MAXWELL, No. 22-15916

DBA Max Martialis,

D.C. No.

Plaintiffs-Appellees, 3:18-cv-04978-JD

v.

OPINION

META PLATFORMS, INC., FKA

Facebook, Inc.,

Defendant-Appellant.

Appeal from the United States District Court

for the Northern District of California

James Donato, District Judge, Presiding

Argued and Submitted September 12, 2023

San Francisco, California

Filed March 21, 2024

Before: J. Clifford Wallace, Sidney R. Thomas, and

Danielle J. Forrest, Circuit Judges.

Opinion by Judge Sidney R. Thomas;

Partial Dissent by Judge Forrest

2 DZ RESERVE V. META PLATFORMS, INC.

SUMMARY *

Class Certification

The panel affirmed the district court’s order certifying

one class of advertisers who paid Meta Platforms, Inc.

(Meta) to place advertisements on its social media

platforms—the damages class, and vacated the district

court’s order certifying another class of advertisers—the

injunction class.

The advertisers alleged that Meta fraudulently

misrepresented the “Potential Reach” of advertisements on

its platforms by stating that Potential Reach was an estimate

of people, although it was actually an estimate of accounts.

The panel affirmed the district court’s certification under

Fed. R. Civ. P. 23(b)(3) of the damages class. The

misrepresentation constituted a “common course of

conduct” under the test for determining whether common

issues predominate among the class. Given that all class

members encountered the same misrepresentation about

Potential Reach—the nucleus of the fraud—the slight

variations in the other information available on the Ads

Manager did not defeat the commonality of the

misrepresentation. The district court properly determined

that the element of justifiable reliance was capable of

classwide resolution. The panel affirmed the district court’s

holding that the requirements of typicality and adequacy

were satisfied. Accordingly, the district court did not abuse

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

DZ RESERVE V. META PLATFORMS, INC. 3

its discretion in determining that Fed. R. Civ. P. 23(b)(3) was

satisfied.

The panel vacated the certification of the Rule 23(b)(2)

injunction class for the district court to reconsider whether

the named Plaintiff Cain Maxwell had Article III standing to

seek an injunction. The district court had no occasion to

consider the record or to analyze Meta’s argument against

Maxwell’s standing to seek injunctive relief.

Dissenting in part, Judge Forrest agreed that the district

court’s certification of the injunction class must be vacated

and remanded for the district court to reconsider whether

Plaintiff Cain Maxwell had standing to pursue that

claim. She disagreed that the district court properly certified

the damages class because Plaintiffs cannot satisfy the

predominance requirement where there were individual

questions that must be answered related to multiple elements

of Plaintiffs’ fraud-based claims.

COUNSEL

Geoffrey Graber (argued), Andrew N. Friedman, Karina G.

Puttieva, and Madelyn Petersen, Cohen Milstein Sellers &

Toll PLLC, Washington, D.C.; Eric Kafka, Cohen Milstein

Sellers & Toll PLLC, New York, New York; Charles

Reichmann, Law Offices of Charles Reichmann,

Kensington, California; for Plaintiffs-Appellees.

Andrew B. Clubok (argued), Susan E. Engel, and Margaret

A. Upshaw, Latham & Watkins LLP, Washington, D.C.;

Elizabeth L. Deeley, Melanie M. Blunschi, Nicholas

Rosellini, and Nicole Valco, Latham & Watkins LLP, San

4 DZ RESERVE V. META PLATFORMS, INC.

Francisco, California; Samir Deger-Sen, Latham & Watkins

LLP, New York, New York; for Defendant-Appellant.

Jennifer B. Dickey and Jordan L. Von Bokern, U.S.

Chamber Litigation Center, Washington, D.C.; Erik R.

Zimmerman, Jazzmin M. Romero, and Jordan T. DeJaco,

Robinson Bradshaw & Hinson PA, Chapel Hill, North

Carolina; for Amicus Curiae Chamber of Commerce of the

United States of America.

David M. Berger, Gibbs Law Group LLP, Oakland,

California, for Amicus Curiae Digital Content Next.

OPINION

S.R. THOMAS, Circuit Judge:

Meta Platforms, Inc. (Meta), formerly known as

Facebook, appeals the district court’s order certifying two

classes of advertisers who paid Meta to place advertisements

on its social media platforms—a damages class and an

injunction class. The advertisers allege that Meta

fraudulently misrepresented the “Potential Reach” of

advertisements on its platforms by stating that Potential

Reach was an estimate of people, although it was actually an

estimate of accounts. As to the damages class, the primary

issue on appeal is whether that misrepresentation constitutes

a “common course of conduct” under our test for

determining whether common issues predominate among

the class. We conclude that it does. Because the district

court did not abuse its discretion in determining that Federal

Rule of Civil Procedure 23(b)(3) was satisfied, we affirm the

certification of the damages class. However, we vacate the

DZ RESERVE V. META PLATFORMS, INC. 5

certification of the Rule 23(b)(2) injunction class for the

district court to reconsider whether the named Plaintiffs have

standing to seek an injunction.

I

Meta owns and operates several online social media and

messaging platforms and applications, including Facebook,

Instagram, and WhatsApp. As with many social media

companies, Meta “generates substantially all of its revenue

from advertising.”

In 2018, a nationwide class of advertisers (“Plaintiffs”)

filed this action against Meta, alleging that Meta had

misrepresented the Potential Reach of advertisements on its

platforms. Meta tells advertisers that “Potential Reach

estimates how many people your ad could potentially reach

depending on the targeting and ad placement options you

select while creating an ad.” Each time that an advertiser

designs a Meta advertising campaign, Meta’s self-service

advertisement creation interface, known as the Ads

Manager, displays the campaign’s Potential Reach.

Plaintiffs assert that Potential Reach is misleading

because it actually measures social media accounts, not

living humans. Meta has taken steps to increase the accuracy

of Potential Reach by working to remove fake and duplicate

accounts, as well as by updating the calculation of Potential

Reach to include only accounts that were shown an

advertisement in the last thirty days. Nevertheless,

throughout the class period, the number of accounts was

always larger than the number of people because non-human

entities like businesses and clubs have accounts, some

people have multiple accounts, and some people and bots

create fake accounts.

6 DZ RESERVE V. META PLATFORMS, INC.

Each advertiser views a different Potential Reach for

each campaign dependent on that campaign’s unique

targeting criteria, so the discrepancy between people and

accounts varies by campaign. The parties disagree as to the

size of this discrepancy. The district court noted this

evidentiary dispute but concluded that Meta’s criticism of

Plaintiffs’ expert evidence “does not foreclose classwide

proof of injury.” Plaintiffs allege that because of the

misrepresentation of Potential Reach, they purchased more

Meta advertisements and paid more for those advertisements

than they would have with accurate information.

The named Plaintiffs are two former Meta advertisers,

DZ Reserve and Cain Maxwell. DZ Reserve was an e-

commerce business that spent over $1 million on 740 Meta

advertising campaigns. Maxwell operated an online firearm

mount store and spent approximately $379 on 11 Meta

advertising campaigns. DZ Reserve has ceased operations

since the filing of the complaint, and it is unclear from the

record whether Maxwell’s business is still operating.

Following motion practice and the filing of several

amended complaints, the district court sustained three of

Plaintiffs’ claims under California state law: fraudulent

misrepresentation, fraudulent concealment, and violation of

California’s Unfair Competition Law (“UCL”). Plaintiffs

then moved to certify the following class under Federal Rule

of Civil Procedure 23: United States residents who

purchased at least one advertisement on Meta’s platforms

from August 15, 2014 to the present, excluding advertisers

who used certain specialized purchasing methods or who

were shown a Potential Reach lower than 1,000. The district

court certified the class under Rule 23(b)(3) seeking

damages for fraudulent misrepresentation and concealment,

DZ RESERVE V. META PLATFORMS, INC. 7

and under Rule 23(b)(2) seeking injunctive relief under the

UCL.

II

We have jurisdiction pursuant to 28 U.S.C. § 1292(e)

and Rule 23(f) of the Federal Rules of Civil Procedure. We

review a district court’s decision to certify a class for abuse

of discretion. Olean Wholesale Grocery Coop., Inc. v.

Bumble Bee Foods LLC, 31 F.4th 651, 663 (9th Cir. 2022)

(en banc). “A class certification order is an abuse of

discretion if the district court applied an incorrect legal rule

or if its application of the correct legal rule was based on a

factual finding that was illogical, implausible, or without

support in inferences that may be drawn from the facts in the

record.” Van v. LLR, Inc., 61 F.4th 1053, 1062 (9th Cir.

2023) (internal quotation marks and citation omitted).

“When reviewing an order granting class certification, we

accord the district court noticeably more deference than

when we review a denial.” Jabbari v. Farmer, 965 F.3d

1001, 1005 (9th Cir. 2020). “We review the district court’s

determination of underlying legal questions de novo, and its

determination of underlying factual questions for clear

error.” Olean, 31 F.4th at 663 (citations omitted).

III

A

Before certifying a class, the district court must ensure

that the plaintiffs have made two showings, one under Rule

23(a) and one under Rule 23(b). Olean, 31 F.4th at 663.

8 DZ RESERVE V. META PLATFORMS, INC.

First, the proposed class action must satisfy four

prerequisites under Rule 23(a):

(1) the class is so numerous that joinder of all

members is impracticable;

(2) there are questions of law or fact common

to the class;

(3) the claims or defenses of the

representative parties are typical of the

claims or defenses of the class; and

(4) the representative parties will fairly and

adequately protect the interests of the class.

Fed. R. Civ. P. 23(a).

The district court must perform a “rigorous analysis” of

these prerequisites, which frequently “will entail some

overlap with the merits of the plaintiff’s underlying claim.”

Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351 (2011).

That being said, “[m]erits questions may be considered to

the extent—but only to the extent—that they are relevant to

determining whether the Rule 23 prerequisites for class

certification are satisfied.” Amgen Inc. v. Connecticut Ret.

Plans & Tr. Funds, 568 U.S. 455, 466 (2013).

Second, the class must fit into at least one of three

categories outlined in Rule 23(b). Olean, 31 F.4th at 663.

Here, the district court certified the class under Rule

23(b)(3), which enables the potential recovery of damages

and requires both that “questions of law or fact common to

class members predominate over any questions affecting

only individual members,” and that a class action be

“superior to other available methods for fairly and efficiently

adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The

DZ RESERVE V. META PLATFORMS, INC. 9

district court also certified the class under Rule 23(b)(2),

which requires “the party opposing the class has acted or

refused to act on grounds that apply generally to the class, so

that final injunctive relief or corresponding declaratory relief

is appropriate respecting the class as a whole.” Fed. R. Civ.

P. 23(b)(2). We address certification of the damages class

under Rule 23(b)(3) and certification of the injunction class

under Rule 23(b)(2) in turn.

B

We need not analyze all of the criteria required for

certification of a damages class, because Meta challenges

only the district court’s findings regarding the predominance

of common factual or legal issues under Rule 23(b)(3) and

typicality and adequacy of representation under Rule

23(a)(3) and (4). The district court did not abuse its

discretion in concluding that Plaintiffs have sufficiently

demonstrated predominance, typicality, and adequacy, and

so we affirm certification of the damages class under Rule

23(b)(3).

1

The requirement under Rule 23(b)(3) that common

questions predominate over individual ones “tests whether

proposed classes are sufficiently cohesive to warrant

adjudication by representation.” Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 623 (1997).

The predominance inquiry is “more demanding” than the

commonality inquiry. Id. at 624. Contrary to Meta’s

contentions, predominance is not more demanding because

the common issues must in some way be “more common”

than would be required under Rule 23(a)(2). Rather,

predominance is more demanding because not only must

10 DZ RESERVE V. META PLATFORMS, INC.

there be common issues, but the common issues must

predominate. “The requirements of Rule 23(b)(3) overlap

with the requirements of Rule 23(a): the plaintiffs must

prove that there are questions of law or fact common to class

members that can be determined in one stroke, in order to

prove that such common questions predominate over

individualized ones.” Olean, 31 F.4th at 664 (cleaned up).

To clarify the inquiry, we proceed with the

predominance analysis in three steps. First, we identify

which questions are central to the plaintiffs’ claim. Second,

we determine which of these questions are common to the

class and which present individualized issues. Third, we

analyze whether the common questions predominate over

the individual questions.

Under step one, we must identify which questions are

central to the plaintiffs’ claim, which “begins, of course,

with the elements of the underlying cause of action.” Erica

P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804, 809

(2011). The proposed class under Rule 23(b)(3) seeks

damages for fraudulent concealment and fraudulent

misrepresentation under California law, both of which

require a showing of five elements: “(a) misrepresentation

(false representation, concealment, or nondisclosure);

(b) knowledge of falsity (or ‘scienter’); (c) intent to defraud,

i.e. to induce reliance; (d) justifiable reliance; and

(e) resulting damage.” Engalla v. Permanente Med. Grp.,

Inc., 15 Cal. 4th 951, 974 (1997), as modified (July 30, 1997)

(internal quotation marks and citation omitted).

Under step two, we determine which of those elements

are “common”—which means they are “capable of being

established through a common body of evidence, applicable

to the whole class.” Olean, 31 F.4th at 666. Because this

DZ RESERVE V. META PLATFORMS, INC. 11

standard is identical to the analysis under Rule 23(a)(2)’s

commonality requirement, “courts must consider cases

examining both subsections in performing a Rule 23(b)(3)

analysis.” Id. at 664.

The district court properly determined that each of the

five elements of fraud under California law is capable of

classwide resolution. Meta has only legitimately challenged

the district court’s findings regarding misrepresentation and

justifiable reliance. On appeal, Meta does not dispute the

district court’s conclusion that the knowledge and intent

elements present common issues. Although Meta does

appeal the district court’s damages finding, we decline to

consider Meta’s damages argument because it was not raised

before the district court. 1 Accordingly, we concentrate our

analysis on the elements of misrepresentation and justifiable

reliance.

i

Where, as in this case, a defendant has uniformly

represented that a certain metric means something that it

does not, the element of misrepresentation presents a

common question. See In re Hyundai & Kia Fuel Econ.

Litig., 926 F.3d 539, 557–65 (9th Cir. 2019) (en banc); In re

First All. Mortg. Co. (First Alliance), 471 F.3d 977, 990–91

1

“[A]n issue will generally be deemed waived on appeal if the argument

was not raised sufficiently for the trial court to rule on it.” Armstrong v.

Brown, 768 F.3d 975, 981 (9th Cir. 2014) (internal quotation marks and

citation omitted). Before the district court, Meta relied exclusively on

criticisms of Plaintiffs’ experts’ damages modeling techniques and

inputs. Meta’s argument on appeal is altogether different, as Meta now

contends not that the model itself is deficient, but that it is not possible

to use such a model at all. Because Meta did not raise this argument

before the district court, we consider it waived.

12 DZ RESERVE V. META PLATFORMS, INC.

(9th Cir. 2006); Blackie v. Barrack, 524 F.2d 891, 902–05

(9th Cir. 1975).

Class action fraud claims often involve similar

misrepresentations that cause a large number of victims to

each suffer a small financial loss. Fraud claims are thus

particularly well suited to class treatment under Rule

23(b)(3), which was designed “to overcome the problem that

small recoveries do not provide the incentive for any

individual to bring a solo action prosecuting his or her

rights.” Amchem, 521 U.S. at 617 (quoting Mace v. Van Ru

Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)). We have

“consistently upheld” the availability of the class action to

address mass frauds perpetrated through similar

misrepresentations in the securities context “in large part

because of the substantial role that the deterrent effect of

class actions plays in accomplishing the objectives of the

securities laws.” Blackie, 524 F.2d at 903. That reasoning

applies equally well to consumer protection laws, and we

have explained that consumer fraud victims often present a

“cohesive group” because “[i]n many consumer fraud cases,

the crux of each consumer’s claim is that a company’s mass

marketing efforts, common to all consumers, misrepresented

the company’s product . . . .” Hyundai, 926 F.3d at 559. In

sum, “[p]redominance is a test readily met in certain cases

alleging consumer or securities fraud . . . .” Amchem, 521

U.S. at 625.

In determining whether a misrepresentation presents a

common question, we generally categorize the

misrepresentation as falling into one of two groups. On the

one hand, a “fraud perpetrated on numerous persons by the

use of similar misrepresentations may be an appealing

situation for a class action . . . .” First Alliance, 471 F.3d at

990 (quoting Fed. R. Civ. P. 23, Advisory Committee Notes

DZ RESERVE V. META PLATFORMS, INC. 13

to 1966 Amendments, Subdivision (b)(3)). Accordingly,

“this court has followed an approach that favors class

treatment of fraud claims stemming from a ‘common course

of conduct.’” Id. A “common course of conduct” refers to

a defendant’s “centrally orchestrated strategy” to defraud,

whereby “[e]ach plaintiff is similarly situated with respect

to” that scheme. Id. at 991 (internal quotation marks and

citation omitted). On the other hand, “a case may be

unsuited for class treatment ‘if there was material variation

in the representations made or in the kinds or degrees of

reliance by the persons to whom they were addressed . . . .’”

Id. at 990 (quoting Fed. R. Civ. P. 23, Advisory Committee

Notes to 1966 Amendments, Subdivision (b)(3)).

In this case, the claimed misrepresentation is the one that

the district court described in its certification order: “[T]he

ability of Potential Reach to reach ‘people,’ namely unique

individuals” when the metric was “actually . . . an estimate

of ‘accounts’ reached.”

Meta misstates the misrepresentation at issue, insisting

that the misrepresentation is the numerical discrepancy

between people and accounts, rather than the fact that Meta

substituted people for accounts. Under its theory, Meta

contends the misrepresentations materially varied because

the numerical value of the discrepancy differed for each

individual advertiser based on its advertising budget and

targeting, and thus there was no common misrepresentation

among the class. We disagree.

In Blackie, we rejected a similar strategy to create the

illusion of variation in a claimed misrepresentation by

mischaracterizing the nature of the misrepresentation at

issue. See Blackie, 524 F.2d at n.20. There, a class of

stockholders alleged that the Ampex Corporation uniformly

14 DZ RESERVE V. META PLATFORMS, INC.

misapplied an accounting principle, which resulted in

overstatements of various financial estimates. Id. at 902–05.

Like Meta, Ampex argued that the misrepresentation was the

numerical discrepancy in each financial estimate, such that

there was material variation in the exact numerical

discrepancies. Id. at 904 n.20. We rejected that argument

and affirmed class certification, stating that “plaintiffs are

complaining of abuses of accounting principles, not

estimates.” Id. Likewise, we will not opine on the viability

of Meta’s alternative misrepresentation theory—the

numerical discrepancy between people and accounts—

because it is not the theory presented to us.

Meta’s insistence that the misrepresentation must be the

numerical discrepancy between people and accounts is based

partly on its suggestion that the substitution of people for

accounts is not itself material. However, we have previously

affirmed both class certification and ultimate liability based

on similar facts. In First Alliance, we affirmed class

certification and a finding of class-wide fraud where a bank

induced borrowers to agree to unconscionable loan terms by

having loan officers “point to the ‘amount financed’ and

represent it as the ‘loan amount.’” See 471 F.3d at 985, 990–

92. We did not focus on the numerical difference between

the amount financed and the loan amount for each individual

borrower, but instead concluded that the overall scheme was

fraudulent. Id.

More importantly, proof of materiality “is not a

prerequisite to class certification.” Amgen, 568 U.S. at 459.

As the Supreme Court has instructed:

Rule 23(b)(3) requires a showing that

questions common to the class predominate,

not that those questions will be answered, on

DZ RESERVE V. META PLATFORMS, INC. 15

the merits, in favor of the class. Because

materiality is judged according to an

objective standard, the materiality of

[defendant’s] alleged misrepresentations and

omissions is a question common to all

members of the class [named plaintiffs]

would represent. . . . As to materiality,

therefore, the class is entirely cohesive: It

will prevail or fail in unison.

Id. at 459–60.

Because materiality is an objective inquiry, differences

in the size and sophistication of the advertisers in the class

are irrelevant. Here, the question is the same for every class

member: Would substituting people for accounts in Potential

Reach be material to the reasonable consumer? At the class

certification stage, identification of a common question is all

that is required. The district court properly concluded that

issue was a matter for trial.

Given the claimed misrepresentation to be the

substitution of people for accounts, Plaintiffs have clearly

satisfied our “common course of conduct” test. It is

undisputed that Potential Reach was shown to every

advertiser on Meta’s Ads Manager, Potential Reach was

always expressed as a number of people, and Potential Reach

always estimated a number of accounts. Class members

were thus exposed to uniform misrepresentations about the

potential reach of their advertisements.

Meta raises two additional arguments against a finding

of Potential Reach estimates being a common

misrepresentation. First, Meta disputes that the

misrepresentation was uniform because Plaintiffs viewed

16 DZ RESERVE V. META PLATFORMS, INC.

Potential Reach alongside other metrics, namely “Estimated

Daily Reach.” While Potential Reach represents how many

people meet a campaign’s targeting criteria, Estimated Daily

Reach factors in an advertiser’s budget and past

performance.

These slight differences do not defeat commonality

under our “common course of conduct” test. As we have

previously explained, “[t]he class action mechanism would

be impotent if a defendant could escape much of his potential

liability for fraud by simply altering the wording or format

of his misrepresentations across the class of victims.” First

Alliance, 471 F.3d at 992. Consequently, “[c]onfronted with

a class of purchasers allegedly defrauded over a period of

time by similar misrepresentations, courts have taken the

common sense approach that the class is united by a common

interest in determining whether a defendant’s course of

conduct is in its broad outlines actionable, which is not

defeated by slight differences in class members’ positions

. . . .” Blackie, 524 F.2d at 902 (collecting cases).

We have consistently held that similar contextual

differences do not constitute material variations. In Blackie,

we held that there was commonality where defendants

uniformly misapplied an accounting principle in some forty-

five different documents, even though the resulting financial

estimates fluctuated over time. Id. In First Alliance, we

applied Blackie to hold that borrowers exposed to similarly

misleading sales presentations represented a cohesive class,

even though the exact wording of the sales presentations and

individual loan specifics varied. First Alliance, 471 F.3d at

990–91. Most recently, we affirmed a class of car purchasers

exposed to uniform fuel economy misrepresentations, even

though some purchasers viewed the misrepresentations on

stickers placed on the vehicles, while others were only

DZ RESERVE V. META PLATFORMS, INC. 17

exposed to the misrepresentations through nationwide

marketing. Hyundai, 926 F.3d at 560–61.

Here, the variations in Estimated Daily Reach and

disclosures accompanying Potential Reach are no more

material than the fluctuating estimates, differently worded

sales pitches, and disparate modes of exposure considered in

our prior cases.

Second, Meta contends that any misrepresentations

differed among class members because it updated its

disclosures about Potential Reach twice during the class

period. In September 2017, Meta disclosed that Potential

Reach “[e]stimates are based on the placements and

targeting criteria you select,” and are “not designed to match

population or census estimates.” In June 2020, Meta

disclosed that “[t]hese metrics are considered estimated and

sampled, and depend on factors such as how many accounts

are used by each person on Facebook Company Products.”

We have determined that there were individualized

questions where “explicit signs or explicit verbal advice

would negate the claimed misrepresentation” for some class

members. Berger v. Home Depot USA, Inc., 741 F.3d 1061,

1070 (9th Cir. 2014), abrogated on other grounds by

Microsoft Corp. v. Baker, 582 U.S. 23 (2017). However,

unlike the situation in Berger, none of the disclosures here

negated the misrepresentation, which would have required a

clear statement that Potential Reach measures accounts.

Instead, Meta essentially argues that Plaintiffs should have

known better than to rely on Potential Reach. But as the

district court found, several documents offered by Plaintiffs

show that Meta intended for advertisers to rely on its

Potential Reach numbers. Thus, “[w]e find unpersuasive in

this case the defense that plaintiffs should not have relied on

18 DZ RESERVE V. META PLATFORMS, INC.

statements that were made with the fraudulent intent of

inducing reliance.” First Alliance, 471 F.3d at 992.

In support of its disclosure argument, Meta also relies on

Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir.

2012), overruled on other grounds by Olean, 31 F.4th 651.

Disclosures were not at issue in Mazza. Instead, Mazza held

that an inference of reliance was inappropriate because “it is

likely that many class members were never exposed to the

allegedly misleading advertisements.” Id. at 595. Unlike

Mazza, here it is undisputed that all class members were

exposed to Potential Reach.

Given that all class members encountered the same

misrepresentation about Potential Reach—the nucleus of the

fraud—the slight variations in the other information

available on the Ads Manager do not defeat the commonality

of the misrepresentation.

ii

The district court properly determined that the element

of justifiable reliance is capable of classwide resolution.

Under California law, “when the same material

misrepresentations have actually been communicated to

each member of a class, an inference of reliance arises as to

the entire class.” Mirkin v. Wasserman, 5 Cal. 4th 1082,

1095 (1993). Because Meta communicated the same

misrepresentation to all class members—that Potential

Reach measures people when it really measures accounts—

the class is entitled to an inference of reliance. Meta’s

argument to the contrary rests on its theory that Plaintiffs

were not exposed to a uniform misrepresentation, which we

have rejected.

DZ RESERVE V. META PLATFORMS, INC. 19

Despite California’s presumption of reliance, Meta

argues that reliance is always an individualized inquiry

because defendants have a right to rebut the presumption of

reliance. As a practical matter, Meta’s argument that

reliance can never be a common question is incompatible

with the voluminous caselaw from both the United States

and California Supreme Court certifying fraud class actions.

See Basic Inc. v. Levinson, 485 U.S. 224, 242 (1988)

(explaining the utility of the presumption of reliance in the

federal security fraud context and stating that “[r]equiring

proof of individualized reliance . . . effectively would have

prevented respondents from proceeding with a class action

. . . .”); see also Vasquez v. Superior Ct., 4 Cal. 3d 800, 814–

15 (1971) (discussing California’s presumption of reliance

for common law fraud and analogizing to the presumption in

federal securities fraud cases). The purpose of the

presumption of reliance is to avoid precluding all fraud class

actions. See Basic, 485 U.S. at 242. Accordingly, if the

availability of rebuttal defeated commonality, the

presumption would be pointless. While rebuttal “has the

effect of leaving individualized questions of reliance in the

case, there is no reason to think that these questions will

overwhelm common ones and render class certification

inappropriate under Rule 23(b)(3).” Halliburton Co. v.

Erica P. John Fund, Inc., 573 U.S. 258, 276 (2014) (internal

quotation marks and citation omitted).

Meta finally argues that the Rules Enabling Act prohibits

application of California’s presumption of reliance here.

The Rules Enabling Act instructs that rules of procedure

“shall not abridge, enlarge or modify any substantive right.”

28 U.S.C. § 2072(b). Meta argues that application of the

presumption of reliance amounts to lessening a plaintiff’s

burden of proving reliance in a class action case. However,

20 DZ RESERVE V. META PLATFORMS, INC.

California’s presumption of reliance also applies in

individual fraud actions. Engalla, 15 Cal. 4th at 977. Failing

to apply the presumption of reliance would thus amount to

abridging a substantive right, as the presumption would

apply in individual cases but not in federal class actions.

Contrary to Meta’s contention, the Rules Enabling Act

requires application of California’s presumption of reliance.

Because the presumption of reliance applies to each

member of the class, reliance presents a common question

provable by common evidence. See Vasquez, 4 Cal. 3d at

814 (“If [Plaintiffs] can establish without individual

testimony that the representations were made to each

plaintiff and that they were false, it should not be unduly

complicated to sustain their burden of proving reliance

thereon as a common element.”).

iii

Having arrived at step three, our analysis in this case is a

simple one. “The predominance inquiry asks whether the

common, aggregation-enabling, issues in the case are more

prevalent or important than the non-common, aggregation-

defeating, individual issues.” Tyson Foods, Inc. v.

Bouaphakeo, 577 U.S. 442, 453 (2016) (internal quotation

marks and citation omitted). Although predominance does

not require that all questions be common, Hyundai, 926 F.3d

at 557, predominance is necessarily satisfied if all questions

are common. Because the district court properly concluded

that each of the five elements of fraud presents a common

question, the district court did not abuse its discretion in

holding that common issues predominated.

DZ RESERVE V. META PLATFORMS, INC. 21

2

Meta argues the named Plaintiffs are not typical or

adequate because they suffer from credibility problems that

expose them to individualized defenses related to reliance.

The district court did not clearly err in finding that the named

Plaintiffs’ credibility was not vulnerable to attack.

Accordingly, we affirm the district court’s holding that the

requirements of typicality and adequacy are satisfied.

Although Meta names both typicality and adequacy in its

argument, its contention that Plaintiffs will be preoccupied

with unique defenses falls within our typicality caselaw.

Under Federal Rule of Civil Procedure Rule 23(a), class

plaintiffs must demonstrate, among other things, that the

named plaintiffs are typical class representatives. See Olean,

31 F.4th at 663 (citing Fed. R. Civ. P. 23(a)). “Under the

rule’s permissive standards, representative claims are

‘typical’ if they are reasonably co-extensive with those of

absent class members; they need not be substantially

identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020

(9th Cir. 1998), overruled on other grounds by Wal-Mart,

564 U.S. at 338 (quoting Fed. R. Civ. P. 23(a)(3)). A named

plaintiff is not typical if “there is a danger that absent class

members will suffer if their representative is preoccupied

with defenses unique to it.” Hanon v. Dataproducts Corp.,

976 F.2d 497, 508 (9th Cir. 1992) (quoting Gary Plastic

Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith,

Inc., 903 F.2d 176, 180 (2d Cir. 1990)). We will affirm a

district court’s typicality determination if “[t]he district court

did not commit a clear error of judgment in concluding that

. . . [the named plaintiff] would not be subject to unique

defenses such that typicality would be defeated . . . .” Just

Film, Inc. v. Buono, 847 F.3d 1108, 1120 (9th Cir. 2017).

22 DZ RESERVE V. META PLATFORMS, INC.

The district court did not clearly err in finding no danger

that the named Plaintiffs would be preoccupied with unique

defenses. Meta insists that the named Plaintiffs are not

typical because, unlike other class members, neither named

Plaintiff actually relied on the Potential Reach estimates.

We have “emphasize[d] that the defense of non-reliance is

not a basis for denial of class certification” and reliance is

more appropriately considered at the merits stage. Hanon,

976 F.2d at 509. Even so, the record supports the district

court’s finding at the certification stage that the named

Plaintiffs relied on Meta’s misrepresentations.

Meta argues that DZ Reserve’s owner dishonestly

testified that the Potential Reach misrepresentation deterred

him from buying Meta advertisements, and that Maxwell

dishonestly claimed to have relied on Potential Reach. The

district court rejected these contentions by pointing to

evidence that DZ Reserve had been deterred from using

Meta advertisements, Maxwell relied on Potential Reach,

and both named Plaintiffs would have spent less money on

Meta advertisements had they known that Potential Reach

was a misrepresentation. The record supports the district

court’s conclusion that the named Plaintiffs have no

credibility issues that would destroy their typicality.

Even if DZ Reserve and Maxwell faced credibility

questions, those issues would not destroy typicality.

Credibility issues only destroy typicality in “unique

situation[s]” where “it is predictable that a major focus of the

litigation will be on a defense unique” to the named plaintiff.

Id. at 509. We have found such unique situations where a

named plaintiff in a securities action was a serial litigant who

purchased stock solely to facilitate litigation, id. at 508, or

where the named plaintiff insisted that he was not really

deceived by the alleged misrepresentation. Stearns v.

DZ RESERVE V. META PLATFORMS, INC. 23

Ticketmaster Corp., 655 F.3d 1013, 1019 (9th Cir. 2011),

abrogated on other grounds by Comcast Corp. v. Behrend,

569 U.S. 27 (2013). Neither of those situations apply here,

where the named Plaintiffs are not serial litigants and

presented evidence that they both actually received and

relied upon the alleged misrepresentation.

3

In sum, for the foregoing reasons, we conclude that the

district court did not abuse its discretion in certifying the

damages class under Rule 23(b)(3).

C

Meta appeals the district court’s order certifying an

injunction class under Rule 23(b)(2) on the basis that the

named Plaintiffs lack Article III standing to seek injunctive

relief under California’s UCL. Meta did not present this

theory before the district court. However, an objection that

a federal court lacks subject-matter jurisdiction “may be

raised by a party, or by a court on its own initiative, at any

stage in the litigation, even after trial and the entry of

judgment.” Arbaugh v. Y&H Corp., 546 U.S. 500, 506

(2006). As we explain below, DZ Reserve did not submit

any evidence that would support its standing to seek

injunctive relief. However, Maxwell’s standing is a closer

call and may require additional factual development.

Therefore, we remand the question of Maxwell’s standing to

seek injunctive relief to the district court for its consideration

in the first instance.

“In a class action, standing is satisfied if at least one

named plaintiff meets the requirements.” Bates v. United

Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007). In

order to establish Article III standing, “the plaintiff must

24 DZ RESERVE V. META PLATFORMS, INC.

have suffered an injury in fact—a concrete and imminent

harm to a legally protected interest, like property or

money—that is fairly traceable to the challenged conduct

and likely to be redressed by the lawsuit.” Biden v.

Nebraska, 600 U.S. __, 143 S.Ct. 2355, 2365 (2023) (citing

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61

(1992)). “[A] plaintiff must demonstrate standing separately

for each form of relief sought.” Friends of the Earth, Inc. v.

Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 185 (2000).

Thus, the fact that the named Plaintiffs have standing to seek

damages does not mean that they automatically have

standing to seek injunctive relief. See City of Los Angeles v.

Lyons, 461 U.S. 95, 105–06 (1983); see also TransUnion

LLC v. Ramirez, 594 U.S. 413, 436 (2021) (“[A] plaintiff’s

standing to seek injunctive relief does not necessarily mean

that the plaintiff has standing to seek retrospective

damages.”).

In order to establish standing for injunctive relief, “a

plaintiff must show that he is under threat of suffering ‘injury

in fact’ that is concrete and particularized; the threat must be

actual and imminent, not conjectural or hypothetical; it must

be fairly traceable to the challenged action of the defendant;

and it must be likely that a favorable judicial decision will

prevent or redress the injury.” Summers v. Earth Island Inst.,

555 U.S. 488, 493 (2009) (citing Friends of Earth, 528 U.S.

at 180–81). “The plaintiff must demonstrate that he has

suffered or is threatened with a concrete and particularized

legal harm, coupled with a sufficient likelihood that he will

again be wronged in a similar way.” Bates, 511 F.3d at 985

(citations and quotation marks omitted). “Past exposure to

harmful or illegal conduct does not necessarily confer

standing to seek injunctive relief if the plaintiff does not

continue to suffer adverse effects.” Mayfield v. United

DZ RESERVE V. META PLATFORMS, INC. 25

States, 599 F.3d 964, 970 (9th Cir. 2010). “Nor does

speculation or ‘subjective apprehension’ about future harm

support standing.” Id. (quoting Friends of the Earth, 528

U.S. at 184 and citing Lujan, 504 U.S. at 564).

Consumer fraud plaintiffs can satisfy the imminent

injury requirement by showing they “will be unable to rely

on the product’s advertising or labeling in the future, and so

will not purchase the product although [they] would like to.”

Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 970 (9th

Cir. 2018).

The plaintiff bears the burden of establishing the

elements of standing. See Lujan, 504 U.S. at 561. A plaintiff

must also demonstrate Article III standing at each stage of

the litigation, including on appeal. Bain v. Cal. Teachers

Ass’n, 891 F.3d 1206, 1211–12 (9th Cir. 2018). Standing

must be proven, “with the manner and degree of evidence

required at the successive stages of the litigation.” Lujan,

504 U.S. at 561. Thus, although standing may be established

at the pleading stage through allegations in the complaint,

the plaintiff must prove the elements of standing at each

successive stage. Id. Because the preponderance of the

evidence standard applies at the class certification stage,

standing at the time of class certification must be established

by a preponderance of the evidence. See Olean, 31 F.4th at

664–65.

With these general principles in mind, we examine the

standing of the named Plaintiffs to assert claims for

injunctive relief.

1

DZ Reserve does not have standing to seek injunctive

relief. DZ Reserve did not submit any evidence of a threat

26 DZ RESERVE V. META PLATFORMS, INC.

of suffering “actual and imminent” future injury that was

concrete and particularized, and that could be redressed by

injunctive relief. Nor did DZ Reserve demonstrate a

sufficient likelihood that it would again be wronged in a

similar way. Rather, the owner of DZ Reserve simply

testified that he would have spent less on Meta

advertisements in the past had he known the truth about

Potential Reach. He did not testify about his desire to

purchase Meta advertisements in the future. Further, as we

have noted, DZ Reserve is no longer operating as a business.

Thus, DZ Reserve lacks standing to assert a claim of

injunctive relief.

2

We remand the question of whether Maxwell has

adequately pled an injury sufficient to confer standing to

seek injunctive relief. In so doing, we note that there are two

issues for the district court to consider.

The first question is whether Maxwell’s testimony that

he “think[s] [he] would” purchase Meta advertisements in

the future satisfies Davidson, which relied on a plaintiff’s

more direct assertion that she “desires to purchase” and

“would purchase” a product if she was able to trust the

product’s advertising. 889 F.3d at 970–71.

The second question is how to square Maxwell’s

testimony with the evidence suggesting that Maxwell no

longer has a business to advertise. A plaintiff typically loses

standing to challenge a policy affecting businesses when the

plaintiff has ceased operating an affected business, unless

the challenged policy caused the business’s closure. See City

News & Novelty, Inc. v. City of Waukesha, 531 U.S. 278, 283

(2001); see also San Lazaro Ass’n, Inc. v. Connell, 286 F.3d

1088, 1096 (9th Cir. 2002); Clark v. City of Lakewood, 259

DZ RESERVE V. META PLATFORMS, INC. 27

F.3d 996, 1007–08 (9th Cir. 2001). Maxwell’s business

ceased operations sometime in 2019. He testified that he

stopped operations because he “ran out of inventory.” The

record does indicate that Maxwell has not officially

dissolved the business and that his associated tax ID remains

active. The record does not indicate whether Maxwell has

continued to pay taxes associated with the business. It will

be difficult for Maxwell to establish an imminent injury if he

has no business to advertise, or in the alternative, if he does

not offer a compelling explanation for why he would

purchase advertisements without a business.

The district court has had no occasion to consider the

record or to analyze Meta’s argument against Maxwell’s

standing to seek injunctive relief. Moreover, Maxwell did

not have the opportunity to present arguments concerning his

standing to seek injunctive relief directly to the district court.

Therefore, we remand the question of standing to seek

injunctive relief to the district court for its consideration in

the first instance.

D

In sum, we affirm the district court’s certification of the

damages class. We vacate the district court’s certification of

the injunction class and remand for further proceedings

consistent with this opinion. Each party should bear its own

costs on appeal.

AFFIRMED in part; VACATED AND REMANDED

in part.

28 DZ RESERVE V. META PLATFORMS, INC.

FORREST, J., dissenting in part:

I agree that the district court’s certification of Plaintiffs’

Rule 23(b)(2) injunction class must be vacated and

remanded for the district court to reconsider whether

Plaintiff Cain Maxwell has standing to pursue that claim. I

disagree, however, that the district court properly certified

Plaintiffs’ Rule 23(b)(3) damages class because Plaintiffs

cannot satisfy the predominance requirement where there are

individual questions that must be answered related to

multiple elements of Plaintiffs’ fraud-based claims.

Therefore, I respectfully dissent in part.

I. BACKGROUND

Defendant-Appellant Meta Platforms, Inc. (Meta), one

of the world’s largest social media companies, owns and

operates Facebook and Instagram, among other platforms.

Meta claims that more than two billion people use Facebook

every month, with over 200 million monthly active users in

the United States alone. Because of its large user base,

Meta’s platforms are attractive to prospective advertisers,

ranging from Fortune 500 companies and government

agencies to small businesses and individual proprietors. And

Meta “generates substantially all of its revenue from

advertising.”

A. Meta’s Advertising System

Most advertisers purchase ads from Meta through its

online self-service ad creation interface, known as “Ads

Manager.” Advertisers “have a wide range of different

advertising objectives, which influences how they set up

their ads and assess ad performance.” When developing an

ad campaign in Ads Manager, advertisers specify their

objective. Advertisers who want to generate awareness of

DZ RESERVE V. META PLATFORMS, INC. 29

their product or service, and who want Meta to show their ad

“the largest number of times to the largest number of people

in a given audience,” may choose “brand awareness” or

“reach” as their advertising objective. Other advertisers “are

interested in ‘performance advertising,’ or driving specific

actions with their ads, such as clicks and conversions”—i.e.,

prompting users to visit a website or purchase a product.

These advertisers “are typically focused on trying to identify

or have their ads delivered to specific users likely to take a

desired action,” and a large audience size is less important.

Ads Manager provides several planning tools to help

advertisers design their ad campaigns and target their desired

audience. First (and relevant here) is Potential Reach, which

is defined as “an estimation of how many people are in an ad

set’s target audience” based on statistical sampling and

modeling. A default Potential Reach automatically displays

in Ads Manager, and it updates dynamically in real time as

an advertiser tailors its ad campaign using numerous

targeting and placement criteria, such a demographics (e.g.,

age, gender, location, education), interests (e.g., sports

teams, dogs), and the platform where the ads will be shown

(Facebook, Instagram, etc.). The “default” Potential Reach

displayed to each advertiser during the class period was

between 200 to 250 million, purportedly reflecting the

number of people in the United States between 18 and 65

years old who use Meta’s platforms. As an advertiser selects

targeting criteria, the Potential Reach recalculates, and a

color-coded dial shows whether the target audience is “fairly

broad,” “defined,” or “too specific.” Each advertiser sees a

different Potential Reach estimate for each ad campaign they

run because the non-default—or targeted—Potential Reach

estimate is calculated based on the advertiser’s selected

criteria.

30 DZ RESERVE V. META PLATFORMS, INC.

Potential Reach is “not an estimate of how many people

will actually see [an advertiser’s] ad” or how many people

may click on an ad or take any other action with respect to

an ad. That data is provided in separate Estimated Daily

Results metrics, which are displayed adjacent to Potential

Reach in Ads Manager. Estimated Daily Reach is part of the

Estimated Daily Results and is the estimated number of

people that an ad actually will reach per day based on the

advertiser’s selected criteria, budget, and past ad

performance. Advertisers are not charged based on the

Potential Reach calculation.

Once an ad launches, advertisers can track their results

in real time. Based on detailed performance data, such as the

number of times an ad was shown and clicked on, advertisers

can assess the success of their campaign and return on

investment and adjust their campaign and budget as they see

fit. Advertisers are not shown Potential Reach as part of the

post-ad purchase results.

B. Changes to Potential Reach Calculation

Potential Reach has always been displayed to advertisers

as an estimate, but during the class period Meta changed how

it calculates Potential Reach and updated its disclosures in

Ads Manager accordingly. In September 2017, Meta

introduced an “information” icon in Ads Manager

explaining that Potential Reach “[e]stimates are based on the

placements and targeting criteria you select,” and are “not

designed to match population or census estimates.” A year

and a half later in March 2019, Meta changed its calculation

methodology to count only those people who had actually

seen an ad on Meta’s platforms in the last 30 days, rather

than those who were active on a Meta platform and could

have seen an ad. Lastly, in June 2020, Meta “added

DZ RESERVE V. META PLATFORMS, INC. 31

disclosures to explain that ‘people’ is an ‘estimated and

sampled’ metric, which depends on ‘factors such as how

many accounts are used by each person on [Meta’s

products].” Throughout the class period, Meta also

undertook efforts to remove fake accounts and de-duplicate

accounts across platforms—i.e., counting separate

Instagram and Facebook accounts belonging to the same

person as only one person in Potential Reach estimates.

C. Plaintiffs’ Lawsuit

In 2018, Plaintiffs sued Meta alleging the Potential

Reach calculation is materially misleading because it

exceeds the actual number of people in an ad’s target

audience, causing advertisers to purchase more ads and pay

higher prices for ads than they otherwise would have. Named

Plaintiffs DZ Reserve, an e-commerce business, and Cain

Maxwell are former Meta advertisers. Between December

2017 and December 2018, DZ Reserve spent over $1 million

on 740 ad campaigns comprising approximately 26,000 ads.

Maxwell (d/b/a Max Martialis) operated an online store and

spent approximately $400 on 11 ad campaigns comprising

28 ads between September 2018 and May 2019. Named

Plaintiffs alleged that they viewed and relied on Potential

Reach in purchasing Meta ads.

Plaintiffs proceeded on three California state-law claims:

(1) fraudulent misrepresentation, (2) fraudulent

concealment, and (3) injunctive relief under California’s

Unfair Competition Law (UCL). And they sought to certify

a class related to each claim encompassing the millions of

advertisers (persons or entities) in the United States who

paid to place at least one ad on Meta’s platforms from

August 2014 to the present. Plaintiffs asserted that Potential

Reach is a material misrepresentation because Meta

32 DZ RESERVE V. META PLATFORMS, INC.

characterizes it as a calculation of “people,” which Meta

knows is inaccurate because it is a calculation of accounts,

and because Potential Reach is always significantly more

than the number of people. Plaintiffs further claimed that the

inflation of the Potential Reach calculation is susceptible to

proof through common evidence because their statistics

expert, Dr. Charles Cowan, established that the default

Potential Reach shown to advertisers is always inflated by at

least 33% and the targeted Potential Reach is always inflated

by at least 10%. Through a conjoint survey, Plaintiffs’

expert, Dr. Greg Allenby, further determined that Potential

Reach inflation, as found by Dr. Cowan, has “a statistically

significant impact on consumer demand for [Meta]

advertisements.”

Meta opposed class certification, arguing, among other

things, that Plaintiffs could not satisfy Rule 23(b)(3)’s

predominance requirement because each class member

received a fundamentally different Potential Reach estimate

and the class members varied in multiple ways that are

material to whether the elements of Plaintiffs’ claims can be

met—including the varying disclosures that advertisers may

have viewed, the advertisers’ objectives for their ad

campaign, and the mix of information each advertiser had

access to or relied on in purchasing ads.

Over Meta’s objection, the district court certified two

classes: a Rule 23(b)(3) damages class for Plaintiffs’

common law fraud claims and a Rule 23(b)(2) class for

Plaintiffs’ UCL injunction claim. 1 The district court

evaluated Rule 23(a)’s threshold commonality requirement

1

The class includes only those who purchased ads through Ads Manager

under Meta’s standard contract, and for which Meta provided a Potential

Reach of 1,000 of greater.

DZ RESERVE V. META PLATFORMS, INC. 33

and Rule 23(b)(3) predominance requirement “in tandem.”

It determined that all class members were exposed to a

similar misrepresentation and that “whether Meta made

misrepresentations to all class members [could] be shown

through common evidence” because Potential Reach was

represented as an estimate of “people” when it really was “an

estimate of ‘accounts,’” and “the number of unique accounts

and unique people were different.” It further reasoned that

materiality and reliance do “not necessarily undermine

predominance” in fraud cases because, under California law,

a “presumption, or at least an inference, of reliance arises

wherever there is a showing that a misrepresentation was

material.” Rather, materiality and reliance could be

established “through common evidence” because “Potential

Reach metrics were shown to all advertisers,” it was “an

important number for advertisers,” and “[a] majority of

advertisers rely on Potential Reach as a metric for their

advertisements.”

This court granted review of the district court’s class

certification decision under Federal Rule of Civil Procedure

23(f).

II. ANALYSIS

We review the district court’s class certification decision

for abuse of discretion. Olean Wholesale Grocery Coop.,

Inc. v. Bumble Bee Foods LLC (Olean), 31 F.4th 651, 663

(9th Cir. 2022) (en banc). The district court “abuses its

discretion only if it (1) relies on an improper factor, (2) omits

a substantial factor, or (3) commits a clear error of judgment

in weighing the correct mix of factors.” B.K. ex rel. Tinsley

v. Snyder, 922 F.3d 957, 965 (9th Cir. 2019). The district

court’s determination of underlying legal questions is

reviewed de novo, and its determination of underlying

34 DZ RESERVE V. META PLATFORMS, INC.

factual questions is reviewed for clear error. Olean, 31 F.4th

at 663. “An error of law is a per se abuse of discretion.” B.K.,

922 F.3d at 965. A factual finding is clearly erroneous if it is

illogical, implausible, or “without support in inferences that

may be drawn from the record.” Id. at 965–66.

Federal Rule of Civil Procedure 23 governs class

certification. Plaintiffs, as the party seeking class

certification, bear the burden of demonstrating that the

requirements of Rule 23 are satisfied. Stromberg v.

Qualcomm Inc., 14 F.4th 1059, 1066 (9th Cir. 2021). “As a

threshold matter, a class must first meet the four

requirements of Rule 23(a): (1) numerosity,

(2) commonality, (3) typicality, and (4) adequacy of

representation.” Id. Additionally, “the class must meet the

requirements of at least one of the ‘three different types

of classes’ set forth in Rule 23(b).” Id. (citation omitted).

Relevant here, Plaintiffs must satisfy the requirements of

Rule 23(b)(3) for a damages class. Certification under this

provision is appropriate only where “questions of law or fact

common to class members predominate over any questions

affecting only individual members.” Fed. R. Civ. P. 23(b)(3).

The goal of Rule 23(b)(3) is well-established—by adding the

predominance (and superiority) requirements, the Advisory

Committee intended to “achieve economies of time, effort,

and expense, and promote . . . uniformity of decision as to

persons similarly situated, without sacrificing procedural

fairness.” Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 615

(1997) (emphasis added) (quoting Advisory Committee

Notes). Thus, predominance is established where the

proposed class is “sufficiently cohesive” to justify class-

wide adjudication. Id. at 623. This required cohesion exists

where there are common questions capable of class-wide

resolution. Olean, 31 F.4th at 663. Or, stated another way,

DZ RESERVE V. META PLATFORMS, INC. 35

where common questions of law or fact “can be determined

in one stroke.” Id. at 664. Conversely, individual questions

dominate where evidence will inevitably vary from class

member to class member. Id.

Plaintiffs must establish that the preponderance

requirement is met by a preponderance of the evidence. Id.

at 665. Rule 23 “does not set forth a mere pleading standard,”

but instead requires that the district court conduct “a rigorous

analysis” to ensure that the party seeking certification has

satisfied its burden “through evidentiary proof.” Comcast

Corp. v. Behrend, 569 U.S. 27, 33 (2013). “Such an analysis

will frequently entail overlap with the merits of the

plaintiff’s underlying claim . . . because the class

determination generally involves considerations that are

enmeshed in the factual and legal issues comprising the

plaintiff’s cause of action.” Id. at 33–34 (citations and

internal quotation marks omitted). And the Supreme Court

has instructed that “[i]f anything, Rule 23(b)(3)’s

predominance criterion is even more demanding than Rule

23(a).” Comcast, 569 U.S. at 34.

In considering predominance, the court begins “with the

elements of the underlying cause of action.” Olean, 31 F.4th

at 665. Plaintiffs must show that a common question relating

to an essential element predominates. Id. at 666. A class may

fail to establish predominance where even one essential

element requires individualized determination and this

individualized issue outweighs “common, aggregation-

enabling issues.” See Lara v. First Nat’l Ins. Co. of Am., 25

F.4th 1134, 1138 (9th Cir. 2022). The district court certified

a Rule 23(b)(3) class for Plaintiffs’ fraudulent

misrepresentation and fraudulent concealment claims.

Under California law, the elements of these claims are: “(1) a

misrepresentation (false representation, concealment, or

36 DZ RESERVE V. META PLATFORMS, INC.

nondisclosure); (2) knowledge of falsity (or scienter);

(3) intent to defraud, i.e., to induce reliance; (4) justifiable

reliance; and (5) resulting damage.” Robinson Helicopter

Co. v. Dana Corp., 34 Cal. 4th 979, 990 (2004). A plaintiff

may rely on a presumption of reliance, but “only [by

making] a showing that the misrepresentations were

material.” Engalla v. Permanente Med. Group, Inc., 15 Cal

4th 951, 977 (1997), as modified (July 30, 1997).

The plaintiffs’ ability to prove each element of their

claim must be considered in light of the class-action

mechanism, which often is ill-suited to fraud claims. As the

1966 Advisory Committee on Rule 23 notes, even where a

“common core” exists in a fraud case, it nonetheless “may

be unsuited for treatment as a class action if there was

material variation in the representation made or in the kinds

or degrees of reliance by the persons to whom they were

addressed.” 2 Fed. R. Civ. P. 23, Advisory Committee Notes

to 1966 Amendments, Subdivision (b)(3). Here, Plaintiffs

failed to establish predominance because there are three

2

The majority asserts that fraud claims are “particularly well suited to

class treatment under Rule 23(b)(3).” Maj. Op. 12. The majority

references a passing statement from Amchem, which states that

predominance may be “readily met in certain cases” of consumer fraud.

See 521 U.S. at 625 (emphasis added). The majority ignores, however,

the rest of the paragraph from which it quotes, which specifically

cautioned courts to heed the “[Rule 23 Advisory] Committee’s warning,

[which] continues to call for caution when individual stakes are high and

disparities among class members great.” Id. The majority’s statement

that fraud claims are “particularly well suited” for class treatment runs

in the face of the Committee’s cautionary understanding that our sister

circuits have consistently recognized. See, e.g., In re St. Jude Med., Inc.,

522 F.3d 836, 838 (8th Cir. 2008) (noting the “difficulty with class

treatment of cases alleging fraud or misrepresentation”); Moore v.

PaineWebber, Inc., 306 F.3d 1247, 1253 (2d Cir. 2002) (same).

DZ RESERVE V. META PLATFORMS, INC. 37

issues that involve individualized questions: (1) whether

each advertiser in the class was subject to a

misrepresentation, (2) whether any misrepresentation was

material, and (3) whether each advertiser relied on a material

misrepresentation. I address each in turn.

A. Misrepresentation

To assess whether predominance is satisfied regarding

the misrepresentation element, we must first be specific in

identifying Plaintiffs’ claimed misrepresentation. On appeal,

Plaintiffs argue that Meta categorically misrepresented its

Potential Reach metric presented to advertisers by

characterizing it as a metric of “people” rather than

“accounts.” The majority accepts this characterization of

Plaintiffs’ claims. But Plaintiffs’ complaint alleged that

Meta failed to provide “accurate Potential Reach” because

this calculation “is inflated.” Core to Plaintiffs’ claims is the

degree of discrepancy between the number of people and the

number of accounts (not just the characterization of Potential

Reach as a calculation of people), which the Plaintiffs

explicitly attempt to prove. 3

Meta does not dispute that Potential Reach calculated

accounts as a proxy for people. But contrary to the majority’s

suggestion, this proxy is not inherently misleading like the

3

If Plaintiffs’ claimed misrepresentation rested solely on the description

of Potential Reach as a calculation of people, there would have been no

need for Plaintiffs to submit statistical evidence regarding the degree of

inflation of the Potential Reach calculation. The analysis could have been

merely definitional—especially given that Meta does not dispute it used

accounts as a proxy for people. And the district court recognized that

Plaintiffs’ theory was more than merely definitional, stating: “Potential

Reach was always expressed as a number of ‘people,’ and the

discrepancy between people and accounts made the number inaccurate.”.

38 DZ RESERVE V. META PLATFORMS, INC.

accounting practices challenged in Blackie v. Barrack, 524

F.2d 891 (9th Cir. 1975), discussed more below. Potential

Reach as described is misleading only if there is a significant

deviation between the number of accounts and the number

of people that may see ads. 4 If these two populations neatly

correlate, characterizing Potential Reach as a calculation of

people is accurate. Moreover, whether a deviation between

the number of accounts and the number of people is a

misrepresentation must consider Meta’s express disclosure

that Potential Reach is an estimate. Cf. Estimate, Merriam-

Webster (defining “estimate” as “a rough or approximate

calculation”), https://www.merriam-

webster.com/dictionary/estimate?utm_campaign=sd&utm_

medium=serp&utm_source=jsonld; Estimate, Oxford

English Dictionary (defining “estimate” as “an approximate

notion of (the amount, number, magnitude, or position of

anything) without actual enumeration or measurement”),

https://www.oed.com/dictionary/estimate_v?tab=meaning_

and_use#5272337. On this point, the district court erred by

reasoning that any variation between accounts and people

was a misrepresentation.

Properly framed, Plaintiffs’ assertion that there is a

cohesive class for which common questions predominate

begins to unravel. Consistent with the Rule 23 Advisory

Committee’s admonishment that fraud claims are not well

suited for class treatment, we have upheld class certification

of these kinds of claims in limited circumstances where the

4

The relevant metric to whether a misrepresentation occurred is the

Potential Reach after targeting. Only 1.2% of U.S. ads were purchased

with numbers near the default Potential Reach of 200-250 million.

Additionally, while the district court mentioned default Potential Reach

in analyzing typicality, it did not rely on default Potential Reach in

analyzing predominance for the misrepresentation element.

DZ RESERVE V. META PLATFORMS, INC. 39

misrepresentations stemmed from a “common course of

conduct” or “centrally-orchestrated scheme.” In re First All.

Mortg. Co., 471 F.3d 977, 990–91 (9th Cir. 2006). The

substance of the misrepresentation must be sufficiently

uniform to prove fraud on a class-wide basis. See In re

Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 560 (9th

Cir. 2019) (approving a class certification where class

members were uniformly exposed to a nationwide

advertising campaign that gave “uniform fuel-economy

misrepresentations”); see also In re First All., 471 F.3d at

990 (“The required degree of uniformity among

misrepresentations in a class action for fraud is a question of

law . . . .”). If the challenged communication is not

sufficiently uniform, then whether a material

misrepresentation occurred depends on individual questions

specific to each class member. See Berger v. Home Depot

USA, Inc., 741 F.3d 1061, 1069 (9th Cir. 2014), abrogated

on other grounds by Microsoft Corp. v. Baker, 582 U.S. 23

(2017).

Plaintiffs assert that Meta made a common

misrepresentation that fits “comfortably” within the

“common course of conduct” principle, first established in

Blackie, and applied again in First Alliance, because Meta

uniformly represented that Potential Reach was a

measurement of people. This argument is unavailing. At

issue in First Alliance was a challenge to certification based

on Rule 23(a)(2)’s commonality requirement, not Rule

23(b)(3)’s predominance requirement. For commonality, we

declined to adopt a “talismanic rule” that requires

“representations [to be] all but identical.” In re First All., 471

F.3d at 991 (quoting In re Am. Cont’l Corp./Lincoln Sav. &

Loan Sec. Litig., 140 F.R.D. 425, 430 (D. Ariz. 1992)).

Rather, we held that in a common-course-of-conduct

40 DZ RESERVE V. META PLATFORMS, INC.

analysis, courts must determine whether the “center of

gravity” of the fraud overshadows any variations in

individual misrepresentations across the class. Id. at 991.

Where there are immaterial variations, a common course of

conduct can compensate for reduced uniformity. See id. at

990. The center of gravity in First Alliance was a

standardized protocol to induce fraud: sales agents were

“carefully trained” in a “standardized training program”

requiring memorization of a specific sales pitch and “strict

adherence to a specific method of hiding information.” Id.

In Blackie, we analyzed whether financial reports that

“uniformly misrepresent a particular item” presented a

common question, again for purposes of the commonality

requirement. 524 F.2d at 903. Plaintiffs cite Blackie’s

commonality analysis to support their predominance

argument. 5 But the difference between the commonality and

predominance analyses and the factual differences between

Blackie and this case are key. The Blackie plaintiffs argued

that 45 financial documents fraudulently inflated a stock

price. Id. at 902. The court found a common

misrepresentation based on the “unique situation of the

accounting and legal principles” at play and that “financial

reports throughout the period uniformly and fraudulently”

failed to adhere to “accepted accounting principles” in a

manner that “injur[ed] all purchasers.” 6 Id. at 904. The court

5

The Blackie court did not analyze predominance for the

misrepresentation element, only for reliance, causation, and damages.

524 F.2d at 905–08.

6

The commonality and predominance analyses in Blackie were informed

by the “flexibl[e]” context of securities fraud laws. 524 F.2d at 907; see

also id. at 903 n.19; cf. Sullivan v. Chase Inv. Servs. of Bos., Inc., 79

F.R.D. 246, 259 (N.D. Cal. 1978) (citing Blackie to support the

proposition that “common questions generally predominate in securities

DZ RESERVE V. META PLATFORMS, INC. 41

further noted that “plaintiffs are complaining of abuses of

accounting principles, not estimates.” Id. at 904 n.20.

But this case is about estimates. Meta represented to the

advertiser class that Potential Reach is an estimate of people

who could potentially view a given ad based on the

advertiser’s targeting criteria. That Meta provided a common

description of Potential Reach does not automatically

establish that this description was a misrepresentation as to

all class members. Cf. Blackie, 524 F.2d at 903 n.19 (noting

that even where a common course of conduct exists in a

fraud class that satisfies Rule 23(a)(2) commonality, the

predominance requirement may not be satisfied).

Predominance requires more than a common but superficial

thread connecting class members—this may be shown where

class claims “prevail or fail in unison.” Amgen Inc. v. Conn.

Ret. Plans & Tr. Funds, 568 U.S. 455, 460 (2013). And

given the context here, whether Meta’s characterization of

Potential Reach was misleading turns on how much

deviation there was between the Potential Reach estimate

and the number of people that fell within the advertiser’s

target criteria.

As discussed, targeted Potential Reach estimates are

tailored to each advertiser’s choices. Advertisers can narrow

their estimates with standard demographics (age, education,

gender, etc.) and by location and interests. Altogether, the

available targeting criteria provide thousands of options.

How this targeting criteria impacts the accuracy of each

estimate is apparent considering, for example, duplicate

counts. One Facebook user may have two or more

accounts—take, for example, one professional and one

fraud cases involving standardized written representations to a class of

investors”).

42 DZ RESERVE V. META PLATFORMS, INC.

personal. So, if an advertiser selects only geographic criteria,

both accounts may be counted. But if the advertiser selects

both geography and interests criteria, the work account may

be excluded and only the personal account counted or vice

versa. Given the variability at play in targeted Potential

Reach calculations, their degree of accuracy relative to the

number of people is not uniform—one Potential Reach

calculation may be an accurate “estimate” of the people who

may see an advertisement based on the selected criteria

while another is not.

To make up for the lack of uniformity in the millions of

Potential Reach calculations that Meta provided, Plaintiffs

first assert that the district court found that Potential Reach

estimates were always “significantly inflated.” This

misconstrues the record. The district court acknowledged

that Plaintiffs’ expert opined the Potential Reach calculation

was always significantly inflated and that Meta’s expert did

not eliminate the possibility that some inflation occurred. 7

What underpins the district court’s decision is the latter

7

The majority seems to agree that the district court’s acknowledgement

that Meta failed to show that no inflation occurred is not the same as

crediting Plaintiffs’ expert that significant inflation always occurred, but

it ignores the significance of this point in the class context. Resolving

conflicts in the evidence is within the district court’s purview. See Ellis

v. Costco Wholesale Corp., 657 F.3d 970, 983 (9th Cir. 2011) (“[T]he

district court was required to resolve any factual disputes necessary to

determine whether there was a common pattern and practice that could

affect the class as a whole.”); Olean, 31 F.4th at 666 (“The determination

whether expert evidence is capable of resolving a class-wide question in

one stroke may include weighing conflicting expert testimony and

resolving expert disputes, where necessary to ensure that Rule 23(b)(3)’s

requirements are met . . . .” (cleaned up)). And without a finding

regarding the rate of inflation, the common pattern begins to unravel

because there is no set inflation range binding class members together.

DZ RESERVE V. META PLATFORMS, INC. 43

point—that because Meta’s expert failed to establish that no

inflation occurred, characterizing Potential Reach as a

calculation of people was inaccurate, regardless of the

degree of inaccuracy. This means the class includes

advertisers who received targeted Potential Reach estimates

with a discrepancy between people and accounts that could

range from 1% to 50%. Cf. Thrifty Payless, Inc. v. The

Americana at Brand, LLC, 218 Cal. App. 4th 1230, 1242 &

n.7 (2013) (holding fraud action may be based on an estimate

after considering the disparity and finding “the huge

disparity between the estimates and the ultimate costs

supports an inference of misrepresentation” (emphasis

added)).

Plaintiffs’ reliance on In re U.S. Foodservice Inc.

Pricing Litig., 729 F.3d 108 (2d Cir. 2013), in arguing that a

uniform misrepresentation was made regardless of any

variation in Potential Reach inflation, is unavailing. In that

case, the degree of difference between what the plaintiffs

were charged and the “cost-plus” pricing they were entitled

to pay was irrelevant to liability because any difference—

one cent or a thousand dollars—was proof that plaintiffs

were harmed. 729 F.3d at 118, 123. The same is not true

here. Meta did not charge advertisers based on its Potential

Reach estimates. And the degree of inflation in the Potential

Reach calculation is the crux of whether Meta

misrepresented the estimated number of people who could

potentially see a given ad.

Determining whether the Potential Reach calculations

were misrepresentations is further challenged by Meta’s

evolving disclosures over the class period. Early on, Meta’s

disclosures stated that Potential Reach was “not designed to

match population or census estimates.” Then in 2019, Meta

changed its disclosure to state that Potential Reach depends

44 DZ RESERVE V. META PLATFORMS, INC.

on “[h]ow many accounts are used per person.” Meta

changed the disclosure again in 2021 to state that “the

presence of fake accounts” could impact the Potential Reach

calculation. I disagree that the impact of these changes goes

only to class-wide merits issues. The court must determine

whether individual or common questions will predominate

in assessing whether Meta’s Potential Reach calculations

were fraudulent misrepresentations. The disclosures that

Meta provided regarding the nature of its calculated estimate

are important to this analysis. The reasoning in Berger v.

Home Depot USA, Inc. is particularly persuasive. 741 F.3d

at 1067–69. There, the district court denied certification of a

fraud claim brought against Home Depot related to its tool-

rental contracts over a multi-year period. Id. at 1066. We

affirmed on predominance grounds because the class period

covered five different versions of the contract, each with

different language requiring an “independent legal analysis.”

Id. at 1069. The varying disclosures that Meta provided

about the limitations of Potential Reach estimates likewise

present individualized issues in determining whether Meta

made fraudulent misrepresentations. Cf. Mazza v. Am.

Honda Motor Co., 666 F.3d 581, 596 (9th Cir.

2012) (holding a class definition as fatally overbroad where

many class members learned that the advertising was

misleading before purchase).

In the cases where we have upheld certification of a fraud

class based on misrepresentation of an estimate, the class

members were given the same estimate. See In re Hyundai,

926 F.3d at 553, 559 (upholding certification based on

“inflated fuel economy standards” that were uniformly

disseminated). That is not what happened here, and the

evidence does not establish that the millions of unique

Potential Reach calculations that Meta provided to the class

DZ RESERVE V. META PLATFORMS, INC. 45

had the same degree of inflation. Is a Potential Reach

calculation with a 2% deviation a misrepresentation where

the targeted population includes millions of people? What

about a Potential Reach calculation with an 8% deviation

where the targeted population includes only 1,000 people?

Where a class claim “prevail[s] or fail[s] in unison,” it

satisfies predominance. Amgen, 568 U.S. at 460. That

standard is not met here because the factfinder could

conclude that some, but not all, Potential Reach calculations

presented to the class members were fraudulently

misleading. See Lara, 25 F.4th at 1139 (affirming denial of

class certification because “figuring out whether each

individual putative class member was harmed would involve

an inquiry specific to that person”). 8

B. Materiality

Because this case does not involve a uniform

misrepresentation, many of the problems discussed in

relation to the misrepresentation element of Plaintiffs’ claim

also apply to the materiality-of-the-misrepresentation

element. Under California law, a misrepresentation is

material if “a reasonable man would attach importance to its

existence or nonexistence in determining his choice of action

8

The reasoning in Reitman v. Champion Petfoods USA, Inc., 830 F.

App’x 880 (9th Cir. 2020), though unpublished, is similarly persuasive.

There, this court affirmed denial of certification on predominance

grounds because whether a representation was false depended on

comparing each individual product. Id. at 881. The products, dog food,

had packaging that contained different information, and the court would

need to conduct a bag-to-bag comparison for each representation. This

led to individual questions predominating. Id. Here, each Potential Reach

estimate is akin to an individual product that would require an

individualized assessment to determine if each “product” was indeed

false.

46 DZ RESERVE V. META PLATFORMS, INC.

in the transaction in question.” Engalla, 15 Cal. 4th at 977

(quoting Restatement (Second) of Torts § 538 (1977)).

Materiality is generally a fact question unless the “fact

misrepresented is so obviously unimportant that the jury

could not reasonably find that a reasonable man would have

been influenced by it.” Id. Our focus here is whether

common or individual issues will predominate in

determining whether a misrepresentation is material, not

whether Plaintiffs can prove materiality. See Amgen, 568

U.S. at 469; Olean, 31 F.4th at 667.

In the majority’s view, Amgen established that

materiality always satisfies predominance because it is

governed by an objective standard. I disagree. In Amgen, the

Court concluded that the class had a “fatal similarity.” 568

U.S. at 470. If materiality failed for one, it failed for all. Id.

at 468 (“A failure of proof on the common question of

materiality ends the litigation and thus will never cause

individual questions of reliance or anything else to

overwhelm questions common to the class.”). The Court

reached this conclusion because “[i]n no event will the

individual circumstances of particular class members bear

on the inquiry” of the materiality of the allegedly fraudulent

statements Amgen made about its products that inflated its

stock price. 568 U.S. at 460. This makes sense in securities-

fraud cases that address fraudulent statements that are

released to and impact the market. See id. at 466

(“[I]mmaterial information, by definition, does not affect

market price . . . .”). But nothing in Amgen commands that

materiality, no matter the context, necessarily is provable

with class-wide evidence and, therefore, satisfies the

predominance requirement.

Additionally, while Amgen addressed a claim arising

under federal law, the Plaintiffs’ claims here are governed

DZ RESERVE V. META PLATFORMS, INC. 47

by California law. California courts applying that state’s law

have recognized that materiality cannot be resolved on a

class-wide basis where this issue inevitably depended on

individualized questions. See, e.g., In re Vioxx Class Cases,

180 Cal. App. 4th 116, 129 (2009) (stating that “if the issue

of materiality . . . is a matter that would vary from consumer

to consumer, the issue is not subject to common proof, and

the action is properly not certified as a class action”). 9 And

federal courts applying California law likewise have found

Rule 23 predominance lacking when plaintiffs fail to proffer

class-wide evidence of how a reasonable consumer would

interpret the allegedly misrepresented fact or when

consumers are interested in a product for a variety of

reasons. See, e.g., Townsend v. Monster Beverage Corp., 303

F. Supp. 3d 1010, 1045, 1047–48 (C.D. Cal. 2018)

(collecting cases).

Here, plaintiffs primarily rely on two pieces of evidence

in arguing that materiality is susceptible to class-wide proof:

9

In an unpublished decision, the California Court of Appeal upheld

denial of class certification in part because individualized questions

predominated regarding the materiality of “online fuel calculator”

estimates provided to encourage consumers to buy the Toyota Prius.

Reynante v. Toyota Motor Sales USA, Inc., No. B275937, 2018 WL

329569 (Cal. Ct. App. Jan. 9, 2018). The online calculations were

accompanied by a message stating that “results are based on estimates.”

Id. at *4. The court reasoned that “[w]hether a consumer was actually

misled by the fuel calculator prior to purchasing a [car] necessarily

would vary by customer” because “[s]ome customers, for example,

could have viewed the fuel calculator and have been adequately

informed—whether by their experience with vehicle EPA estimates or

by the disclaimer—that their actual fuel efficiency would vary based on

driving conditions.” Id. Similarly here, many advertisers are repeat

players and Meta provides historical data from previous ad campaigns

that can further alter their understanding of Potential Reach.

48 DZ RESERVE V. META PLATFORMS, INC.

Dr. Cowan’s statistical analysis and Dr. Allenby’s conjoint

survey. Plaintiffs assert that Dr. Cowan can establish that all

Potential Reach estimates were inflated by at least 10%. The

Supreme Court has held that “proving classwide liability”

through statistical sampling is appropriate if “each class

member could have relied on that sample to establish

liability” in an individual action. Tyson Foods, Inc. v.

Bouaphakeo, 577 U.S. 442, 455 (2016). But here, it is

unclear that materiality can be established based on just the

percentage of deviation. As discussed above, the degree of

inflation in the Potential Reach estimate informs whether a

misrepresentation has occurred, let alone a material

misrepresentation. The degree of inflation relative to the

total number of people within the targeted audience may also

be relevant. A 10% deviation may have different import as

relates to a reach of millions than to a reach of thousands or

hundreds. But even assuming plaintiffs could establish that

a 10% inflation rate, or some other threshold, is always

material, that does not resolve the claims of class members

who received Potential Reach estimates with less than the

threshold. Thus, again, while Plaintiffs’ statistical evidence

may prove or disprove some claims, they have not shown it

can resolve all claims within the far-reaching class. 10

10

This is true even if the misrepresentation at issue is merely Meta’s

statement that Potential Reach is an estimate of people instead of

accounts. Plaintiffs point to no evidence that could establish on a class-

wide basis that reasonable advertisers view the account-as-proxy-for-

people itself as a material misrepresentation regardless of the degree of

deviation between those two metrics. Cf. In re NJOY, Inc. Consumer

Class Action Litig., 120 F. Supp. 3d 1050, 1117 (C.D. Cal. 2015)

(rejecting a survey as dispositive of materiality, in a predominance

analysis, where it “did not ask respondents questions relevant in

assessing the materiality of information omitted from the packaging”).

DZ RESERVE V. META PLATFORMS, INC. 49

Turning to Dr. Allenby’s conjoint survey, the district

court assessed this evidence in analyzing damages, not

materiality. This survey included only small-to-medium

businesses, not the full breadth of entities that compose the

class. It also did not mirror Meta’s varying disclosures

during the class period. And lastly, this survey is

representative of only 7% of the class. 11 While the survey

shows that some respondents would increase their spending

if an audience size was increased 10% in the abstract,

Plaintiffs have not pointed to any evidence that the

reasonable ad purchaser in this class would understand the

estimated Potential Reach to not have any inflation or

deviation. Nor is there any evidence addressing how

reasonable advertisers would understand Potential Reach in

light of Meta’s evolving disclosures.

In sum, there are two primary reasons why

predominance is not satisfied as to materiality. First,

determining the objective perspective of a reasonable

advertiser is made difficult by the breadth of Plaintiffs’

proposed class, which includes millions of advertisers of all

types conducting advertising campaigns ranging from

millions of dollars to tens of dollars. Cf. Webb v. Carter’s

Inc., 272 F.R.D. 489, 502 (C.D. Cal. 2011) (declining to

apply the objective “reasonable consumer standard” where

materiality would “vary from consumer to consumer”).

Second, Meta told advertisers that Potential Reach is an

estimate, and Meta provided evolving disclosures about the

limitations of this estimate. A false estimate undoubtedly can

11

The study only included respondents that spent $1,000 to $25,000 per

year on advertising through their employment. The majority of Meta’s

advertisers spend less than $50 per year. And one of the Named Plaintiffs

spent upwards of $1 million on Meta advertising.

50 DZ RESERVE V. META PLATFORMS, INC.

be the basis for a fraud claim, see Aloe Vera of Am., Inc. v.

United States, 699 F.3d 1153, 1164 (9th Cir. 2012), but what

a reasonable purchaser believes about the precision of

information necessarily is impacted by what they are told

about precision. This case is a far cry from the objective

class-wide materiality analysis that was appropriate in

Amgen. Because securities fraud impacts the market,

“fantastic scenarios in which an individual investor might

rely on immaterial information (think of the superstitious

investor who sells her securities based on a CEO’s statement

that a black cat crossed the CEO’s path that morning)” do

not establish that materiality is an individualized issue.

Amgen, 568 U.S. at 469. But here, the ability to establish

materiality based on class-wide proof is not undermined by

“fantastic scenarios.” Id.

The Named Plaintiffs’ own actions help demonstrate the

point. Taking a “peek at the merits,” Dancel v. Groupon,

Inc., 949 F.3d 999, 1005 (7th Cir. 2019) (citation omitted),

the owner of DZ Reserve made statements online that

inflation in the Potential Reach calculation “should . . . not

deter anyone from doing [Facebook] ads for [e-commerce].”

Cf. Johnson v. Harley-Davidson Motor Co. Grp., LLC, 285

F.R.D. 573, 581 (E.D. Cal. 2012) (finding materiality

lacking, in part, because the former named plaintiffs, even

with full knowledge of a product’s defect, “would still buy

and recommend the [product]”). And Maxwell set an

advertising budget of $20 regardless of whether the Potential

Reach estimate was one million or 50 million. Contrary to

the district court’s assertion otherwise, this evidence

suggests that ad buyers as a group may not have “attach[ed]

importance” to Potential Reach in choosing to buy Facebook

ads. Engalla, 15 Cal. 4th at 977.

DZ RESERVE V. META PLATFORMS, INC. 51

The district court’s assertion that materiality is provable

on a class-wide basis because “Potential Reach is an

important number for advertisers,” improperly conflates the

importance of the subject matter with the importance of the

claimed misrepresentation and also fails to meet the rigors

of Rule 23(b)(3). Cf. In re ConAgra Foods, Inc., 90 F. Supp.

3d 919, 1019 (C.D. Cal. 2015), aff’d sub nom. Briseno v.

ConAgra Foods, Inc., 674 F. App’x 654 (9th Cir. 2017), and

aff’d sub nom. Briseno v. ConAgra Foods, Inc., 844 F.3d

1121 (9th Cir. 2017) (analyzing the materiality of food labels

not for their importance generally but for how consumers

understand them). ConAgra concerned whether a “100%

Natural” food label on cooking oil was a misrepresentation.

Id. at 1018. Food labels are shown to all consumers, but the

district court did not consider the importance of food labels

in the abstract, it considered the content of the challenged

label and how reasonable consumers would understand that

content. Id. at 1019.

Here, the district court’s and the majority’s framing of

Plaintiffs’ case derails their analyses. Cf. Gonzalez v.

Corning, 885 F.3d 186, 201 (3d Cir. 2018), as amended

(Apr. 4, 2018) (“[T]he ‘question of defect’ they propose is

only superficially a ‘common question,’ just as any question

becomes universal when it includes the word ‘all.’”); In re

Vioxx, 180 Cal. App. 4th at 133–34 (rejecting an argument,

as an “oversimplification,” where plaintiffs argued there was

nothing more material than “risk of death” because some

patients and doctors would still use the medicine regardless

of the risk). The proper focus is on how advertisers in the

class would view the Potential Reach estimates they received

in specific transactions, based on the total mix of information

available at the time of purchase. See Engalla, 15 Cal. 4th at

977–78 (assessing materiality based on the explicit and

52 DZ RESERVE V. META PLATFORMS, INC.

implicit representations made in the context of the

transaction). Facebook provided advertisers with

individualized information beyond Potential Reach. For

example, the “Estimated Daily Reach” calculation—viewed

alongside Potential Reach—estimated how many people

might see an ad each day based on the buyer’s advertising

budget. The Estimated Daily Reach was part of the calculus

informing the buyers’ reasonable expectations in purchasing

ads. Cf. Algarin v. Maybelline, LLC, 300 F.R.D. 444, 457

(S.D. Cal. 2014) (looking at consumer expectations for a

product in determining that materiality was not susceptible

to common proof).

For all these reasons, the materiality analysis required in

this case centers on individualized questions of what

advertisers understood about the information they were

given at the time they purchased Facebook ads, and,

therefore, Plaintiffs have not satisfied the predominance

requirement.

C. Reliance

Finally, actual reliance is an essential element of fraud

under California law. Conroy v. Regents of Univ. of Cal., 45

Cal. 4th 1244, 1256 (2009). Actual reliance does not require

proving the alleged misrepresentation was the “sole” or

“decisive” cause of the plaintiff entering into the transaction.

Id. A plaintiff need only prove the misrepresentation was an

“immediate cause” or “played a substantial part” in entering

the transaction. Id. A plaintiff meets this burden by showing

that, absent the misrepresentation, the plaintiff “would not,

in all reasonable probability, have entered into the . . .

transaction.” Id. (internal quotation marks and citation

omitted). California law recognizes that “when the same

material misrepresentations have actually been

DZ RESERVE V. META PLATFORMS, INC. 53

communicated to each member of a class, an inference of

reliance arises as to the entire class.” Kaldenbach v. Mutual

of Omaha Life Insurance Co., 178 Cal. App. 4th 830, 851

(2009), as modified (Oct. 26, 2009) (citation and emphasis

omitted). But the presumption of reliance does not apply

where uniformity of representation is lacking, or at least does

not predominate. Id.

The seminal California case applying this presumption

involved salesmen that “memorized a standard statement”

that was “recited by rote to every member of the class.”

Vasquez v. Superior Ct., 4 Cal. 3d 800, 812 (1971); see also

Occidental Land, Inc. v. Superior Ct., 18 Cal. 3d 355, 358–

59, 363 (1976) (applying presumption where the class read

the same document containing the misrepresentation and

was required to state in writing that they had read it). On the

other hand, the Kaldenbach court did not apply the

presumption of reliance where the case involved

individualized sales presentations because the plaintiff had

not overcome the “significant individual issues” of whether

misrepresentations were made to each class member. 178

Cal. App. 4th at 851.

Here, the district court erred by applying the

presumption of reliance as a basis for granting class

certification of Plaintiffs’ Rule 23(b)(3) damages class

because Plaintiffs did not establish that Meta made a uniform

misrepresentation. 12

12

Plaintiffs rely on Tobacco II to discount alternative information Meta

provided to advertisers. Tobacco II stated that “an allegation of reliance

is not defeated merely because there was alternative information

available to the consumer-plaintiff, even regarding an issue as prominent

as whether cigarette smoking causes cancer.” 46 Cal. 4th 298, 328

(2009). This language, however, concerns alternative information

54 DZ RESERVE V. META PLATFORMS, INC.

For these reasons, I would reverse the district court’s

certification of Plaintiffs’ Rule 23(b)(3) damages class. I do

not reach Meta’s additional challenges regarding the district

court’s typicality and adequacy analyses.

external to a defendant’s representation, such as medical studies by third

parties. See id. (citing to a case discussing “common knowledge”). It

does not concern information provided by the defendant that is directly

relevant in determining whether a misrepresentation occurred at all.