AdTrader, Inc. v. Google LLC

7 F.4th 803

ADTRADER, INC.; Specialized Collections Bureau, Inc. ; Classic and Food EOOD ; LML Consult Ltd.; Ad Crunch Ltd.; Plaintiffs-Appellants, Gaw | Poe LLP, Appellant,

v.GOOGLE LLC, Defendant-Appellee.

No. 20-15542

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 11, 2021 San Francisco, California

Filed July 30, 2021

Randolph Gaw (argued), Mark Poe, Samuel Song, Victor Meng, and Flora Vigo, Gaw Poe LLP, San Francisco, California, for Plaintiffs-Appellants.

Jeffrey M. Gutkin (argued), Michael G. Rhodes, Kyle C. Wong, Audrey J. Mott-Smith, and David S. Houska, Cooley LLP, San Francisco, California, for Defendant-Appellee.

Before: J. Clifford Wallace and Daniel P. Collins, Circuit Judges, and Jed S. Rakoff,^* District Judge.

RAKOFF, District Judge:

Google LLC ("Google") operates platforms that help advertisers find and purchase advertising space on third-party websites. When Google succeeds in placing such ads, it receives payments from the advertisers, a portion of which are passed to the website publishers, with Google keeping the remainder for itself. Google charges advertisers and pays publishers based on the number of users who view, click on, or purchase products in response to the advertisements so placed. Google represents, however, that it does not charge advertisers or pay publishers for "invalid traffic," that is, traffic that does not represent genuine human activity.

In this case, plaintiff AdTrader, Inc. ("AdTrader") brought a class action lawsuit in December 2017 on behalf of itself and advertisers who used Google advertising services but did not receive refunds for invalid traffic. Google informed AdTrader and the district court in April 2019 that Google would issue refunds to the advertisers who used a Google platform called DoubleClick Bid Manager ("DBM Advertisers"), but would continue to litigate the claims the claims asserted by AdTrader on behalf of other putative advertiser classes and by AdTrader individually. Google stipulated that it would pay AdTrader's attorneys’ fees, if awarded by the Court, out of Google's own pocket, rather than have them deducted from any common fund for payments to class members.

Seeking such an award, AdTrader argued that it was entitled to a percentage of the monetary benefit it conferred on DBM Advertisers and moved for attorneys’ fees pursuant to a California fee-shifting statute or, alternatively, the "common fund" doctrine, described below. The district court denied attorneys’ fees under the fee-shifting statute, but awarded fees under the common fund doctrine. Unsatisfied, AdTrader now challenges on appeal the amount of the fee award.

We dismiss the appeal for lack of jurisdiction, because the class action below has reached neither a final judgment on the merits nor a final settlement, and because no exception to the final judgment rule here applies.

BACKGROUND

I. Factual Background

As noted, Google acts as a broker for digital advertisement sales, operating exchanges that match advertisers with website publishers that have advertising space. Google runs three such advertising platforms: (1) DoubleClick Ad Exchange ("AdX"); (2) AdWords ("AdWords"); and (3) DoubleClick Bid Manager ("DBM"). On the buyer side of the exchange, advertisers pay Google to place their ads on third-party websites. On the seller side, Google offers website publishers a portion of the revenue Google receives from the advertisers.

Advertisers whose advertisements are thus placed on a third-party website pay Google based on the number of users who view such ads ("impressions"), click on their ads ("clicks"), or purchase the products so advertised ("conversions"). Google does not charge advertisers (or pay publishers) when Google determines, using automated filters, that an impression, click, or conversion does not "reflect genuine user interest," or when the advertising traffic is connected to a website publisher's violation of Google's policies. Google refers to false impressions, conversions, and clicks, as well as violations of its publisher policies, as "invalid traffic." When Google spots invalid traffic during a billing cycle, Google automatically reverses the charge to the advertiser and stops the corresponding payment to the publisher. However, if Google detects invalid traffic only after a billing cycle has ended, Google offers publishers debits and advertisers credits to cancel out charges that stem from invalid traffic. Similarly, when a publisher egregiously violates Google's publisher policies, Google's stated practice is to terminate the publisher's account, debit the publisher for all unpaid amounts, and issue credits to advertisers to offset the charged-for traffic to the terminated publisher's website.

AdTrader is an advertising network that uses DBM to bid on ad space for its clients. AdTrader's clients include: Classic and Food EOOD ("Classic"), LML Consult Ltd. ("LML"), and Fresh Break Ltd. ("Fresh Break"), three restaurants that use DBM to advertise on AdX publisher websites; Ad Crunch Ltd. ("Ad Crunch"), a digital advertising agency that uses DBM to advertise on AdX publisher websites; and Specialized Collections Bureau, Inc. ("SCB"), a collections agency that advertises through AdWords. AdTrader claims that when its advertiser clients were charged for false clicks, impressions, and conversions, "AdTrader sometimes bore the brunt of those overcharges and had to absorb those costs itself." AdTrader also sells advertising space for website publisher clients, and guides the publishers’ compliance with policies governing online advertising exchanges. On May 19, 2017, Google terminated AdTrader's account, claiming that AdTrader had violated provisions of Google's advertising exchange program policies. AdTrader alleges that Google improperly withheld earnings that were owed to AdTrader prior to termination.

II. Procedural Background

In December 2017, AdTrader sued Google on behalf of itself, a putative class of advertisers who did not receive refunds or credits for transactions that Google represented to publishers as "invalid traffic," and a putative subclass of "[a]ll business and Google-recognized advertising agencies and advertising networks that had an active AdWords account as of September 1, 2017." AdTrader alleged, inter alia , breach of contract, unjust enrichment, and violations of California's unfair competition statute.

In February 2018, Google moved to dismiss the class action complaint. The motion to dismiss was mooted when AdTrader filed a First Amended Complaint three weeks later. Google then moved to dismiss the First Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) on April 17, 2018. In July, the district court dismissed the unjust enrichment claim, but allowed AdTrader to proceed on its breach of contract, unfair competition, and false advertising claims.

On August 13, 2018, AdTrader again amended its Complaint to add Classic, LML Consult, and Ad Crunch, and SCB as co-plaintiffs. Each of the Plaintiffs brought individual claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and intentional interference with contract, and sought a declaration that the limitation of liability clause in the AdX Publisher Agreement was unenforceable. Plaintiffs also sought "to represent three classes and one subclass of advertisers who entered into advertising platform agreements with Google and who did not receive refunds for invalid traffic" or had earnings withheld for noncompliance with a Google policy. On behalf of those classes, Plaintiffs alleged breach of contract, breach of the implied covenant of good faith and fair dealing, breach of the implied duty to perform with reasonable care, and false advertising and unfair competition under California state statutes.

Google again moved to dismiss and again secured only a partial victory. On April 22, 2019, the district court dismissed Plaintiffs’ claims for breach of the implied covenant of good faith and fair dealing and the implied duty to perform with reasonable care. The court denied, however, the motions to dismiss the causes of action based on breach of the DBM agreement, false advertising, unfair competition, and, with respect to traffic determined to be invalid after invoicing, breach of the AdX and AdWords Agreements. Three days later, Google informed AdTrader and the district court that it would provide $65.7 million in refunds to DBM Advertisers for invalid ad traffic between 2012 and 2017. Google ultimately issued two categories of refunds. "Category I" refunds credited DBM Advertisers for invalid traffic between 2012 and 2017. "Category II" refunds credited DBM Advertisers for refunds that could not be processed because doing so would have resulted in a negative balance on the recipient's account. Google distributed nearly all of those refunds by September 2019.

On March 13, 2020, the district court certified the AdWords Advertiser Class for the breach of the AdWords Agreement, false advertising, and unfair competition claims. The Court appointed SCB as class representative and Gaw Poe, the law firm for all Plaintiffs, as class counsel. But the Court denied certification of the proposed DBM Advertiser Class and DBM-AdX Advertiser Subclass, because AdTrader and its clients were not members of the proposed classes and were therefore inadequate representatives.

Two weeks after class certification, the district court issued an order, awarding AdTrader some but not all of the attorneys’ fees it had requested (the "Fee Order"). As the basis for making an attorneys’ fee award, the court first denied AdTrader's request for attorneys’ fees made pursuant to California's public-interest litigation fee-shifting statute, California Code of Civil Procedure § 1021.5. But the district court awarded some attorneys’ fees "under the common fund doctrine," reasoning that AdTrader's efforts meaningfully benefitted the relevant class by...