Supreme Court Denies Petition for Appeal in Google AdWords Class Action


The US Supreme Court has declined to hear an appeal from Google in a large class action brought against the search engine giant by advertisers, paving the way for the class action to go forward at the trial court level. The Supreme court’s denial of certiorari leaves the 9th Circuit’s decision granting class certification to the advertisers in place. Given the Supreme Court’s rejection of class certification in the enormous Wal-Mart sex discrimination class action in 2011, the Supreme Court’s action in declining to hear Google’s appeal provides a positive outlook to potential class action plaintiffs facing the question of class certification.

The Advertisers’ Allegations About AdWords

The class of plaintiffs are made up of advertisers who bought advertising with Google’s AdWords service between 2004 and 2008. The advertisers allege that they were misled by Google in violation of California unfair trade practices law based on the fact that Google often placed their ads on so-called “parked domains” or error pages, and charged the advertisers for this service, but did not inform the advertisers of this practice when selling them advertising space through AdWords. Parked domains are websites that are either in development or not developed at all, and error pages are pages where no actual website exists, thus less valuable of a location to place an ad than on an active website.

The advertisers initially sought both injunctive relief and restitution, but dropped the request for injunctive relief when Google changed its practices regarding AdWords. The class action now seeks restitution on behalf of the class of advertisers, which is the difference between what the advertisers paid for the service and what they would have paid had they know that Google would place their ads on parked domains and error pages.

Challenges in Measuring Damages Do Not Defeat the Class

The district court had initially denied class certification to the advertisers, agreeing with Google that the proposed method of using restitution to compensate the class was “arbitrary” and therefore unable to meet the requirements for a class action that damages be reasonably measurable and that plaintiffs share sufficiently common issues relating to their damages.

The 9th Circuit disagreed, finding that the damage done to the various advertisers was sufficiently similar, stating that, when plaintiffs are “deceived by misrepresentations into making a purchase, the economic harm is the same: the consumer has purchased a product that he or she paid more for than he or she otherwise might have been willing to pay if the product had been labeled accurately.” The court also held that the proposed method of compensating plaintiffs – by returning to them the difference between what they paid and what they would have paid had they known about Google’s practices – was not unreasonable in its measurability.

The Supreme Court’s decision to let the 9th Circuit opinion stand regarding class certification is notable, as class actions have faced challenges in the years since the Supreme Court’s decision in the Wal-Mart sex discrimination class action in 2011, which had denied class certification based on issues of commonality among the plaintiffs.

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