United States District Court, N.D. California, San Jose Division
GURMINDER SINGH, on behalf of himself and others similarly situated, Plaintiff,
GOOGLE INC., Defendant.
ORDER GRANTING GOOGLE INC.'S MOTION TO DISMISS
PLAINTIFF'S SECOND AMENDED COMPLAINT WITH LEAVE TO AMEND
[RE: ECF 47]
LABSON FREEMAN United States District Judge.
case deals with something we have all
experienced-“click ads.” Through this action,
Plaintiff Gurminder Singh alleges that Defendant Google Inc.
(“Google”) engages in a scheme of employing false
and misleading advertisements and promotional materials to
induce small businesses to participate in its online
advertising program known as Google AdWords
(“AdWords”), which results in demand for payment
for invalid clicks. Second Am. Compl. (“SAC”)
¶ 1, ECF 44. Singh asserts four claims against Google
arising from this alleged scheme: (1) breach of the implied
covenant of good faith and fair dealing; (2) violations of
California's unfair competition law (“UCL”),
Cal. Bus. & Prof. Code §§ 17200, et
seq.; (3) violations of California's false
advertising law (“FAL”), Cal. Bus. & Prof.
Code §§ 17500, et seq.; and (4) fraud in
the inducement. See generally SAC.
before the Court is Defendant's motion to dismiss
Plaintiff's SAC. See generally Mot., ECF 47. The
Court heard argument on the motion on May 11, 2017. For the
reasons stated herein and on the record, the Court GRANTS
Defendant's motion WITH LEAVE TO AMEND.
is an online service provider whose offerings include various
online advertising programs including the one at issue,
AdWords. AdWords is an online platform that Google makes
available for advertisers to have their ads displayed on
various Google properties, including Google Search and
YouTube, and other websites. SAC ¶¶ 1, 23.
Advertisers pay each time their ad is “clicked, ”
meaning the ads are “pay-per-click” ads.
Id. ¶ 1. The relationship between Google and
AdWords advertisers is governed by the Google Inc.
Advertising Program Terms (the “Agreement”).
Id. ¶ 10; Ex. 1 & 2 to Bish Decl. ISO Mot.,
ECF 47-2, 47-3.
AdWords advertisers are charged by the click, Google
maintains policies to prevent “click fraud, ”
which it defines as “clicks generated with malicious or
fraudulent intent.”Ex. 3 to Bish Decl. ISO Mot. (“Ex.
3”) 1-2, ECF 47-4. The “Google Ad Traffic Quality
Resource Center” refers to “clicks and
impressions on AdWords that Google suspects not to be the
result of genuine user interest” as “invalid
clicks” Id. at 1. The Google Ad Traffic
Quality Resource Center states that “advertisers are
not charged for [invalid] clicks or impressions.”
Id. Google has undertaken various efforts in an
attempt to address click fraud and limit its effect on
AdWords advertisers. For example, Google has “a global
team which is dedicated to staying on top of
[advertisers'] concerns, monitoring traffic across
Google's ad network, and preventing advertisers from
paying for invalid traffic.” SAC ¶ 46. This team
“work[s] to isolate and filter out potentially invalid
clicks” before the advertiser is charged for any
invalid clicks. Ex. 3, at 3.
signed up for an AdWords account in January 2008. SAC ¶
14. He alleges that he has continued to use AdWords since
that time, and now manages three separate AdWords accounts.
Id. ¶¶ 57, 59. Singh avers that in early
2016, he began to suspect that third-party publishers and/or
website owners were fraudulently manipulating certain of his
advertisements. Id. ¶ 60. In this lawsuit,
Singh challenges Google's “pay-per-click”
AdWords Program as unfair, unlawful, and fraudulent. Singh
contends that Google's representations that
“click-fraud” occurs infrequently and that Google
has robust systems in place to effectively filter out the
“vast majority” of invalid clicks and prevent
customers for being charged for those clicks are false and
misleading, and are made to induce individuals and small
business to participate in the AdWords program
notwithstanding the possibility that they may be charged for
fraudulent or “invalid” clicks. Opp'n 1, ECF
53. Singh asserts four causes of action: (1) breach of the
implied covenant of good faith and fair dealing; (2) unfair,
unlawful, and fraudulent competition; (3) false advertising;
and (4) fraudulent inducement.
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim upon which relief can
be granted ‘tests the legal sufficiency of a
claim.'” Conservation Force v. Salazar,
646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro
v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When
determining whether a claim has been stated, the Court
accepts as true all well-pled factual allegations and
construes them in the light most favorable to the plaintiff.
Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681,
690 (9th Cir. 2011). However, the Court need not
“accept as true allegations that contradict matters
properly subject to judicial notice” or
“allegations that are merely conclusory, unwarranted
deductions of fact, or unreasonable inferences.” In
re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th
Cir. 2008) (internal quotation marks and citations omitted).
While a complaint need not contain detailed factual
allegations, it “must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
facially plausible when it “allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
motion to dismiss, the Court's review is limited to the
face of the complaint and matters judicially noticeable.
MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th
Cir. 1986); N. Star Int'l v. Ariz. Corp.
Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). However,
under the “incorporation by reference” doctrine,
the Court also may consider documents which are referenced
extensively in the complaint and which are accepted by all
parties as authentic. In re Silicon Graphics, Inc. Sec.
Litig., 183 F.3d 970, 986 (9th Cir. 1999), abrogated
on other grounds by S. Ferry LP, No. 2 v. Killinger, 542
F.3d 776, 784 (9th Cir. 2008).
moves to dismiss Singh's SAC on two separate grounds.
First, Google argues that Section 7 of the AdWords Agreement
applies here to bar any claims arising from charges for
allegedly invalid clicks that Singh failed to submit through
Google's internal claims process. See Mot. 9-12.
Second, Google contends that the SAC fails to state a claim
under which relief may be granted. The Court addresses each
in turn below.
first argues that the Agreement bars all claims that Singh
did not submit to Google through the claims process. Mot.
9-10 (citing SAC ¶¶ 10, 14, 78); Ex. 2 to Bish
Decl. (“2006 Agreement”) §§ 5, 7, ECF
47-3 (“[The c]ustomer's exclusive remedy, and
Google's exclusive liability, for suspected invalid
impressions or clicks is for [c]ustomer to make a claim for a
refund in the form of advertising credits for Google
Properties within [60 days]. Any refunds for suspected
invalid impressions or clicks are within Google's sole
discretion.”); Ex. 1 to Bish Decl. (“2013
Agreement”) §7, ECF 47-2 (“Customer
understands that third parties may generate impressions or
clicks on Customer's Ads for prohibited or improper
purposes and that its sole remedy is to make a claim for
advertising credits within the Claim Period, after which
Google will issue the credits following claim validation
which must be used by the Use By Date.”). In response,
Plaintiff argues that Google's position is unavailing for
three reasons: (1) waiver is an affirmative defense not
ordinarily cognizable at the pleading stage; (2) waiver is an
equitable defense that is not a complete defense to claims