On January 5th A federal judge tossed out a class action case against Google involving AdWords (Parked Domains).

The case is In RE Google Adwords Litigation Case No.: 5: 08-CV-3369 EJD

Here are the relevant facts and findings are quoted from the court’s 25 page opinion:

In July 2008, Plaintiffs initiated this lawsuit, alleging that Google engaged in deceptive advertising and unfair, deceptive and unlawful business practices regarding Google AdWords.”

The named Plaintiffs seek to represent a class of former and current Google AdWords customers who purchased Google AdWords services.
“Plaintiffs contend that Google was aware of the negative reputation of parked domains and error pages, and took numerous steps to purposefully conceal its involvement with these sites throughout the Class Period.”

“According to Plaintiffs, Google not only failed to disclose its practice of placing AdWords customers’ ads on parked domains and error pages on its AdWords sign-up and Help Center pages, but purposefully published misleading AdSense policies which prohibited publishers from putting ads on pages lacking content, and “rolled up” the URLs of AFD and AFE sites on Google’s Placement Performance Reports so that advertisers could not see the actual sites upon which Google had placed their ads.”

“”Google argues that Plaintiffs and their experts fundamentally misunderstand how Google’s AdWords product works.”

“Google contends that Plaintiff’s presume that every single ad that appeared on any parked domain or error page was intrinsically worthless and harmful, without accounting for the many instances in which advertisers reaped demonstrable benefits from such ads and without regard to advertisers’ actual perceptions of parked domains and error pages.”

“Additionally, Google maintains that, throughout the class period, it made specific disclosures regarding the AdWords network and the AdSense for domains program.”

“Finally, Google argues that it provides a tool that allows advertisers to self-help and exclude their ads from entire categories of web pages, including parked domains and error pages.”

Defendants argue that class certification is inappropriate because unnamed class members’ claims would require individualized analysis of injury or differ too greatly from the plaintiff’s, a court should analyze these arguments and not by examining the Article III standing of the class representative or unnamed class members.”

“This court is persuaded by the well- reasoned analysis in Bruno and concludes that where one class representative in a UCL or FAL class action has already established Article III standing, the court need not analyze the standing of unnamed class members.

“Additionally, this court finds it more appropriate to address Defendants’ argument regarding the fact-intensive, highly individualized analysis of injury”

“”Defendant contends that ascertainability of all class members who are not entitled to restitution is impossible. The vast majority of advertisers in the proposed class did not elect to use Google’s tool to calculate conversion rates.””

“As such, there is no class-wide method to determine the benefits that advertisers may have received from sales or other conversion events.”

“Even if all AdWords accounts were opted into conversion tracking, conversion rates alone may not be a satisfactory measure of the overall benefits achieved from ads placed on parked domains and error pages.”

“In this case, there is a common question to resolve the issue of liability: whether Google’s alleged omissions were misleading to a reasonable AdWords customer”

“While this question may weigh in Plaintiffs’ favor, the court is unconvinced that such commonalities predominate over questions affecting individual members of the putative class.”

“The question of which advertisers among the hundreds of thousands of proposed class members are even entitled to restitution would require individual inquiries.”

Another obstacle to a finding that common issues predominate particular ad campaign and for each instance in which an ad was clicked.

“While it is often true that “[d]amages calculations alone . . . cannot defeat certification,” Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087, 1094 (9th Cir. 2010), that principle does not apply to the facts here:

“The amount that advertisers pay to use AdWords is determined through an auction process
that generates a separate cost for each advertiser for each ad and for each click, with the specific amounts determined by the interplay of the bidding strategies of the participating advertisers in a given auction.”

“These intricacies make it more difficult to calculate what AdWords customers would have paid “but for” the alleged misstatements or omissions.”

“For instance, “every ad placed on AdWords is priced differently, and the ultimate amount Google charges for each ad depends on dozens of factors that are unique to each ad placement, unique to each individual advertiser, and dependent on the unique attributes of each of the other advertisers who also wished to place ads on the particular web page at issue.”

“Furthermore, under the AdWords auction system, “there is no ‘set’ price per click paid by all advertisers that is knowable ahead of time; instead all advertisers pay a different price that is determined based on the interplay between all of the differing maximum cost-per-clicks (i.e., ‘bids’) from all of the advertisers participating in the auction.”

“This suggests that Plaintiffs cannot simply assume that a reduction in the demand for advertising on AdWords among some undefined group of advertisers would lead to a lower “but for” price for all advertisers.”

“Thus, any effort to determine what advertisers “would have paid” under a different set of circumstances requires a complex and highly individualized analysis of advertiser behavior for each particular ad that was placed.”

“To further complicate matters, advertisers have widely varying goals, which makes it difficult to calculate the actual value of what advertisers received for their payments to Google.”

“One way to measure the performance of an online ad is based on “conversions.”

“In 2009, only a small percentage of active AdWords accounts were opted in to conversion tracking.”

“Even if all AdWords accounts were opted into conversion tracking, conversion rates alone may not be a satisfactory measure of the overall benefits achieved from ads placed on parked domains and error pages.”

“Although it is true that restitution need not be determined with exact precision, it “must be based on a specific amount found owing, and this measureable amount of restitution due must be supported by substantial evidence.”

“The court is not persuaded that, in this case, with these parties and facts, restitution can be reliably measured using common methods.”

“Plaintiffs’ Full Refund Approach, Smart Pricing Approach, and the Content Pricing Approach do not sufficiently take into account the unique circumstances surrounding the AdWords auctions.”

“Since the purpose of restitution is to return class members to status quo, the amount of restitution due must account for the benefits received from ads placed on parked domains and error pages. Here, in many instances, individual proof would show that advertisers received significant revenues and other benefits from ads placed on parked domains and error pages – benefits that would need to be individually accounted for in any restitution calculation.”

“Plaintiffs have not “affirmatively demonstrated” that restitution can be calculated by methods of common proof.”

“While Plaintiffs present a hypothetical “but for” price for advertising on parked domains and error pages absent Google’s alleged “deception,” they overlook the reality of how advertising costs are actually determined in the AdWords system. Where, as here, proof of restitution due each class member cannot be proved with relative ease, the court finds good reason to deny class certification.”