Liapes v. Facebook, Inc.

95 Cal.App.5th 910

313 Cal.Rptr.3d 330

Samantha LIAPES et al., Plaintiffs and Appellants,

v.FACEBOOK, INC., Defendant and Respondent.

A164880

Court of Appeal, First District, Division 3, California.

Filed September 21, 2023

Gupta Wessler, Jennifer D. Bennett, San Francisco, Linnet Davis-Stermitz, Peter Romer-Friedman, Matthew W.H. Wessler; Law Offices of William Most, William Brock Most ; Aqua Terra Aeris Law Group, Jason R. Flanders, Sacramento; Outten & Golden, Jahan C. Sagafi, San Francisco, Adam T. Klein, Pooja Shethji; Peter Romer-Friedman Law and Peter Romer-Friedman for Plaintiffs and Appellants.

David Brody, Jon Greenbaum, Sanaa Ansari; Amanda Goad; Olga Akselrod, Linda S. Morris ; and Jacob Snow for Lawyers’ Committee for Civil Rights Under Law, ACLU Foundation of Southern California, ACLU Foundation, ACLU Foundation of Northern California and Upturn as Amici Curiae on behalf of Plaintiffs and Appellants.

Gibson, Dunn & Crutcher, Rosemarie T. Ring, Ryan Azad, San Francisco, Theodore J. Boutrous, Jr., Bradley J. Hamburger and Matt Aidan Getz, Los Angeles, for Defendant and Respondent.

Rodríguez, J. Samantha Liapes filed a class action against Facebook, Inc. (Facebook, now known as Meta Platforms, Inc.), alleging it does not provide women and older people equal access to insurance ads on its online platform in violation of the Unruh Civil Rights Act and Civil Code section 51.5 — both of which prohibit businesses from discriminating against people with protected characteristics, such as gender and age. ( Civ. Code, §§ 51, 51.5, 52, subd. (a), undesignated statutory references are to this code.)¹ Liapes alleged Facebook requires all advertisers to choose the age and gender of its users who will receive ads, and companies offering insurance products routinely tell it to not send their ads to women or older people. She further alleged Facebook's ad-delivery algorithm, the system that determines which users will receive ads, discriminates against women and older people by relying heavily on the two key data points of age and gender. As a result, Liapes alleged, women and older people were excluded from receiving insurance ads.

The trial court sustained Facebook's demurrer, deciding Liapes did not plead sufficient facts to support her discrimination claims. It concluded Facebook's tools are neutral on their face and simply have a disproportionate impact on a protected class, rather than intentionally discriminating. The court further concluded Facebook was immune under section 230 of the Communications Decency Act of 1996 ( 47 U.S.C. § 230 ( section 230 )), which applies to interactive computer service providers acting as a "publisher or speaker" of content provided by others. Liapes appealed. We review de novo the ruling on the demurrer. ( Regents of University of California v. Superior Court (2013) 220 Cal.App.4th 549, 558, 163 Cal.Rptr.3d 205 ( Regents ).) Liberally construing the complaint and drawing all reasonable inferences in favor of Liapes's claims, we conclude the complaint alleges facts sufficient to state a cause of action and reverse. ( Ibid. )

BACKGROUND²

Facebook is a popular social networking service with over two billion users every month. As a condition to joining, users must provide it with their birth dates and gender. Users cannot opt out of disclosing this information. Users engage with Facebook in various ways, including through its " ‘News Feed,’ " " ‘Stories,’ " " ‘Marketplace,’ " and " ‘Watch.’ " Companies use it to send ads, such as for insurance products and services, to consumers. They pay Facebook to place their ads on users’ News Feeds.

Facebook provides advertisers with several tools to determine who receives ads. One is "Audience Selection," allowing advertisers "to specify the parameters of the target audience of Facebook users who will be eligible to receive the advertisement." There are thousands of categories advertisers may select or exclude, such as interests and behaviors, when setting the audience. But advertisers are required to make three selections establishing basic target audience parameters: age, gender, and location. Each of these three categories has a drop-down menu indicating advertisers can include or exclude users by age or gender. The default setting is 18 to 65 years and older and all genders, meaning all users 18 years old or older would receive the ad.

Facebook, however, counsels against the broad default audience parameters. In "Facebook Blueprint," a training program for advertisers, Facebook strongly encourages them to narrow the age range and genders of users who will receive ads to make them more effective. It suggests, for example, " ‘Let's start with gender. If you want, you can choose to reach out to only men or only women. If you have a bridal dress shop, women might be a better audience for you. But if you have a shaving and beard grooming business, maybe you'll want to reach out to men.’ " Other tips include considering one's customer base: " ‘[t]hink about what [your customers] like, how old they are and the interests they have. This can help you identify audience options that will help you reach people like them on Facebook.’ " Thus, if " ‘the majority of your current customers are women, it might be a good idea to set your audience to reach women and exclude men.’ "

Once the audience is selected, the advertiser determines the ad content and the Facebook page or other web page on which the ad will link. The advertiser purchases impressions — an event that occurs every time a user is shown an ad on Facebook — or clicks — an event that occurs every time a user clicks on an ad. Facebook then sends the ad to users within the Audience Selection parameters. Users who are not within the selected audience will not receive the ad.

Facebook also allows advertisers to target their ads through a "Lookalike Audiences" tool. Advertisers provide Facebook with a list of users "whom they believe are the type of customers they want to reach." Facebook then applies its own analysis and algorithm to identify a larger audience resembling the sample audience. The resulting audience will be eligible to receive the ad. Facebook expressly uses age and gender to directly determine which users will be included in a Lookalike Audience. Thus, if an advertiser creates a sample audience that is disproportionately male or younger, the Lookalike Audience will disproportionately exclude women and older people.

Once the audience has been selected, Facebook thereafter uses an ad-delivery algorithm to further determine which users within a particular audience will receive ads. "For example, if an advertiser chooses an audience selection of 500,000 but purchases only 50,000 impressions to be sent to Facebook users within that audience selection, Facebook must determine which of the 500,000 Facebook users will actually receive the advertisement." The algorithm uses a variety of data points, such as data about each user and past and ongoing performance of certain types of ads to determine which users will receive the ad. In doing so, the algorithm relies heavily on age and gender to determine which users will actually receive the ad, regardless of whether the advertiser directs Facebook to limit its Audience Selection based on those factors .

One research study of Facebook's ad platform " ‘observe[d] significant skew in delivery along gender ... despite neutral targeting parameters.’ " This bias, the researchers concluded, was the result of the platform — not the advertisers — making choices about which users to show the ads. Another study auditing over 100,000 ads published on Facebook determined credit ads were more likely to be sent to a larger share of men than women.

Liapes is a 48-year-old woman and regular Facebook user. She was interested in learning about insurance products via ads on her News Feed because she did not have life insurance at that time. But she could not view several life insurance ads posted on Facebook due to her age or gender; had she been able to view the ads, she would have qualified for the insurance, applied for a quote, and possibly obtain a policy. For example, a life insurance ad by Ladder was only sent to people age 25 to 45. She did not see a Health IQ Special Rate Insurance ad since it was only sent to males ages 30 to 64. Similarly, she did not see a National Family Assurance ad because it was only sent to males ages 30 to 49. In addition, she did not see four ads for auto insurance or four ads for services comparing auto insurance rates in her News Feed. As a result, she had a harder time learning about those products or services.

In 2020, Liapes filed a class action alleging Facebook violated the Unruh Civil Rights Act by engaging in age and gender discrimination when providing users with ads regarding insurance opportunities.³ She alleged she and class members were harmed by being segregated, classified, and treated in an unequal, stereotypical, and arbitrary manner, and being denied information they have a right to receive on an equal basis because of their age and/or gender.⁴ In addition, Liapes alleged Facebook aided, abetted, and/or incited numerous insurance companies to publish the ads in a way that denied older persons and/or women full and equal accommodations, advantages, facilities, and services of their business establishments. ( § 51, subd. (b).) Based on the same allegations, Liapes further asserted Facebook violated section 51.5 by intentionally discriminating against, boycotting, and/or refusing to provide services to women and older people based on their age and gender.

The trial court sustained Facebook's demurrer. It determined Liapes failed to allege Facebook engaged in intentional discrimination because the default setting for the Audience Selection tool and Lookalike Audience is age and gender neutral. The court disregarded Liapes's allegations that the ad-delivery algorithm expressly discriminated on the basis of age and...