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Federal Agency of News LLC v. Facebook, Inc.

United States District Court, N.D. California, San Jose Division

July 20, 2019

FEDERAL AGENCY OF NEWS LLC, et al., Plaintiffs,
v.
FACEBOOK, INC., Defendant.

          ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE, Re: Dkt. No. 25

          LUCY H. KOH UNITED STATES DISTRICT JUDGE

         Plaintiffs Federal Agency of News LLC (“FAN”) and Evgeniy Zubarev (collectively, “Plaintiffs”) bring suit against Defendant Facebook, Inc. (“Facebook”) because Facebook removed FAN's Facebook account and page. Before the Court is Facebook's motion to dismiss. ECF No. 25. Having considered the parties' submissions, the relevant law, and the record in this case, the Court GRANTS Facebook's motion to dismiss without prejudice.

         I. BACKGROUND

         A. Factual Background

         Plaintiff FAN is a “corporation organized and existing under the laws of the Russian Federation” that “gathers, transmits and supplies domestic and international news reports and other publications of public interest.” ECF No. 1 (“Compl.”) at ¶¶ 2, 5. Plaintiff Evgeniy Zubarev is “the sole shareholder and General Director of FAN.” Id. at ¶ 6. Defendant Facebook operates an online social media and social networking platform on which users like FAN can disseminate content by publishing on the users' Facebook page “posts and other content for its Facebook followers.” Id. at ¶¶ 3-4, 25. Facebook users' utilization of Facebook is governed by Facebook's Terms of Service that, if violated, may result in the deletion of users' Facebook accounts and pages. Id. at ¶¶ 4, 53, 94.

         On or about December 2014, FAN started “a Facebook page through which FAN has published its posts and other content for its Facebook followers.” Id. at ¶ 3. After the 2016 United States presidential election, “Facebook began to shut down ‘inauthentic' Facebook accounts that allegedly sought to inflame social and political tensions in the United States.” Id. at ¶ 10.

         Facebook allegedly shut down such accounts because the accounts' activities were “similar or connected to that of Russian Facebook accounts during the 2016 United States presidential election which were allegedly controlled by the Russia-based Internet Research Agency (‘IRA').” Id. FAN's Facebook account and page were among those that were shut down. Id. at ¶ 52. FAN's Facebook account and page were shut down on April 3, 2018. Id.

         1. FAN's Role in Russian Interference in the 2016 United States Presidential Election

         As aforementioned, Facebook shut down Facebook accounts with connections to Russian Facebook accounts allegedly controlled by the IRA. Id. at ¶ 10. The IRA was “an agency which allegedly employed fake accounts registered on major social networks . . . to promote the Russian government's interests in domestic and foreign policy.” Id. at ¶ 11. Specifically, in a United States Intelligence Community report regarding Russian interference in the 2016 presidential election, the IRA was described as an agency of “professional trolls whose likely financier is a close Putin ally with ties to Russian intelligence.” Id. at ¶ 14 (internal quotation marks omitted). Notably, from “the time of FAN's incorporation and until in or about the middle of 2015, FAN and the IRA were located in the same building” in Saint Petersburg, Russia. Id. at ¶ 32.

         In addition, FAN's founder and first “General Director” is Aleksandra Krylova. Id. at ¶ 29. The Special Counsel investigation into Russian interference in the 2016 presidential election that was headed by Robert Mueller determined that Krylova was employed by the IRA from about September 2013 to about November 2014. Id. at ¶¶ 19, 29. However, FAN proclaims that it does not know the veracity of the Special Counsel's finding. Id. at ¶ 29. Nevertheless, on February 16, 2018, the Special Counsel indicted Krylova, who was accused of participation in the IRA's “interference operations targeting the United States.” Id. at ¶ 34.

         Moreover, on October 19, 2018, the United States District Court for the Eastern District of Virginia unsealed a criminal complaint. Id. at ¶ 36. The criminal complaint divulged that the Federal Bureau of Investigation (“FBI”) had uncovered “a Russian interference operation in political and electoral systems targeting populations within the Russian Federation, and other countries, including the United States” codenamed “Project Lakhta.” Id. In support of the criminal complaint, the FBI asserted that Project Lakhta used “inauthentic user names to create fictitious Facebook profiles” and “published false and misleading news articles intended to influence the U.S. and other elections.” Id. at ¶¶ 41, 43. Notably, the FBI also attested that FAN, as well as the IRA, were entities within Project Lakhta. Id. at ¶ 37. Furthermore, the criminal complaint was filed against Elena Khusyaynova, who has been FAN's chief accountant since August 2, 2016. Id. at ¶ 36, 46. However, FAN maintains that it had no involvement in Project Lakhta or a “direct connection” to the IRA. Id. at ¶¶ 40, 51.

         2. Facebook's Role in the United States' Investigation of Russian Interference in the 2016 Presidential Election

          On September 6, 2017, Facebook's Chief Security Officer Alex Stamos announced that “Facebook found approximately $100, 000 in advertisement spending” between June 2015 and May 2017 “associated with more than 3, 000 advertisements in connection with approximately 470 allegedly inauthentic Facebook accounts and Pages.” Id. at ¶ 15. Stamos stated that “Facebook conducted a sweeping search looking for all ads that might have originated in Russia.” Id. at ¶ 16. Facebook then “shared these findings with United States authorities” and provided Congress “with information related to the 3, 000 advertisements.” Id. at ¶¶ 16-17.

         On September 21, 2017, Facebook's cofounder, chairman, and chief executive officer Mark Zuckerberg released a video stating that “Facebook is actively working with the U.S. government on its ongoing investigations into Russian interference” and that Facebook is supplying information to the Special Counsel. Id. at ¶ 19.

         3. The Removal of FAN's Facebook Account and Page

          On April 3, 2018, Facebook shut down FAN's Facebook account and page. Id. at ¶ 52. In an email, Facebook explained that FAN's Facebook account and page were shut down because FAN violated Facebook's Terms of Service. Id. at ¶ 53. FAN was among the more than 270 Russian language accounts and pages that Facebook shut down on April 3, 2018. Id. at ¶ 20. On the same day, Zuckerberg published a blog post explaining Facebook's actions. Id. at ¶ 21. Zuckerberg wrote that the accounts and pages taken down on April 3, 2018 were removed because “they were controlled by the IRA” and not because of “the content they shared.” Id. Specifically, Zuckerberg wrote that the IRA “has repeatedly acted deceptively and tried to manipulate people in the US, Europe, and Russia, ” and since 2016, when the IRA “had set up a network of hundreds of fake accounts to spread divisive content and interfere in the U.S. presidential election, ” Facebook has improved its “techniques to prevent nation states from interfering in foreign elections.” Mark Zuckerberg, https://www.facebook.com/zuck/posts/10104771321644971 (last visited July 19, 2019).

         B. Procedural History

         On November 20, 2018, Plaintiffs filed their complaint against Facebook. ECF No. 1. On April 15, 2019, Facebook filed the instant motion to dismiss. ECF No. 25 (“Mot.”). On May 15, 2019, Plaintiffs filed an opposition. ECF No. 26 (“Opp.”). On May 29, 2019, Facebook filed a reply. ECF No. 27 (“Reply”). On June 12, 2019 and June 19, 2019, Facebook filed two separate statements of recent decisions pursuant to Civil Local Rule 7-3(d)(2). ECF Nos. 28-29.

         II. LEGAL STANDARD

         A. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)

         Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). The U.S. Supreme Court has held that Rule 8(a) requires a plaintiff to plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek, 519 F.3d at 1031 (9th Cir. 2008).

         The Court, however, need not accept as true allegations contradicted by judicially noticeable facts, see Schwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and it “may look beyond the plaintiff's complaint to matters of public record” without converting the Rule 12(b)(6) motion into a motion for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir. 1995). Nor must the Court “assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per curiam) (internal quotation marks omitted). Mere “conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004).

         B. Leave to Amend

         If the Court determines that a complaint should be dismissed, it must then decide whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend “shall be freely given when justice so requires, ” bearing in mind “the underlying purpose of Rule 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (alterations and internal quotation marks omitted). When dismissing a complaint for failure to state a claim, “a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Id. at 1130 (internal quotation marks omitted). Accordingly, leave to amend generally shall be denied only if allowing amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publ'g, 512 F.3d 522, 532 (9th Cir. 2008).

         III. DISCUSSION

         Plaintiffs' complaint states the following five causes of action: (1) a Bivens claim for violation of the First Amendment; (2) “damages under Title II of the U.S. Civil Rights Act of 1964 and 42 U.S.C. Section 1983”; (3) “damages under the California Unruh Civil Rights Act”; (4) breach of contract; and (5) breach of implied covenant of good faith and fair dealing. Compl. at ¶¶ 59-117.

         Facebook argues that the Communications Decency Act renders Facebook immune from all of Plaintiffs' federal and state causes of action, except for Plaintiffs' first cause of action: a Bivens claim for violation of the First Amendment. Mot. at 6. Moreover, Facebook argues that Plaintiffs' Bivens claim for violation of the First Amendment fails because Facebook is not a state actor, and the First Amendment only applies to state actors or private entities whose actions amount to state action. Id. at 9.

         The Court finds Facebook's arguments persuasive. Therefore, below, the Court first addresses why Plaintiffs' second cause of action for “damages under . . . 42 U.S.C. Section 1983” fails, then how Facebook is immune from most of Plaintiffs' remaining causes of action pursuant to the Communication Decency Act, and finally why Plaintiffs' Bivens claim for violation of the First Amendment fails because Facebook is neither a state actor nor a private actor whose actions amount to state action.

         A. Plaintiffs' Second Cause of Action for Damages under 42 ...


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