IP Law Daily, PUBLICITY RIGHTS—N.D. Cal.: Meta can’t escape lawsuit by Australian businessman over his image used in ‘scam’ ads, (Jun 20, 2024)

By Donielle Tigay Stutland, J.D.

Meta did not establish Section 230 immunity to dismiss a claim for misappropriation of name and likeness.

A federal district court in California denied a motion to dismiss a case brought by an Australian businessman against Meta Platforms Inc. alleging that the social media company misappropriated the businessman’s name and image by allowing fraudulent actors to run scam advertisements on its platforms. The court rejected Meta’s affirmative defense of Section 230(c)(1) immunity, finding that there was still a factual dispute as to whether Meta’s ad systems were neutral tools that anyone could use (or misuse) or whether the tools themselves contributed to the content of the ads, including to the aspects of the content that are allegedly illegal. The court rejected Meta’s motion to dismiss claims of misappropriation of name and likeness and negligence. The court rejected Meta’s argument that the businessman failed to allege facts showing that Meta, as opposed to the users who created the ads at issue, ever “used” his identity. As such, the court concluded that there remained a factual issue as to whether Meta profited from allowing scam ads to run on its platform. The court did dismiss claims of negligent failure to warn and unjust enrichment (Forrest v. Meta Platforms, Inc., No. 5:22-cv-03699-PCP (N.D. Cal. June 17, 2024)).

Background. Dr. Andrew Forrest is a prominent Australian businessman and philanthropist, known for founding Fortescue Metals Group and having a net worth in the billions. In 2019, Dr. Forrest learned that ads using his name and likeness to endorse cryptocurrency and other fraudulent investment products were appearing on Facebook. He paid for an investigation of these ads and determined that the advertisers were located outside the United States, including in Eastern Europe and Southeast Asia. In May 2019, Dr. Forrest communicated with a senior Meta executive in Australia. Dr. Forrest demanded that Meta prevent further dissemination of the ads. However, Dr. Forrest alleges that scam ads continue to appear on Meta’s platforms in Australia.

Dr. Forrest filed this a lawsuit against Meta in September 2021 in California state court. Meta removed the case to federal court in June 2022. Dr. Forrest also initiated a criminal investigation against Facebook in Australia. Meta moved to dismiss the case.

Section 230 Immunity defense. Meta argued that the case should be dismissed because it has immunity under Section 230(c)(1) of the Communications Decency Act, which provides that “[n]o provider … of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

While the court noted that the businessman’s allegations establish that Meta acted as an interactive computer service provider, the court determined that a factual dispute remained as to whether the challenged ads are provided entirely by another information content provider.

The businessman argued that Meta has “active involvement” in deciding what ads look like and who they are shown to and that its automated tools “supercharge Meta’s ability to produce and drive the Scam Ads to vulnerable viewers,” which has “been a substantial factor in the continuing production, dissemination, and success” of the challenged ads.

The court rejected Meta’s affirmative defense of Section 230(c)(1) immunity, finding that there was still a factual dispute as to whether Meta’s ad systems were neutral tools that anyone could use (or misuse) or whether the tools themselves contributed to the content of the ads, including to the aspects of the content that are allegedly illegal.

Misappropriation. Turning to the California claims, the court first analyzed the businessman’s claim for misappropriation of his name and likeness. The court found that the businessman adequately pleaded a California common law claim for misappropriation of his name and likeness. While Meta argued that the businessman had not alleged facts showing that Meta, as opposed to the users who created the ads at issue, ever “used” his identity, the court indicated that this is a factual dispute which is premature to decide at this stage of litigation. The court highlighted that the allegations are not just that Meta “displayed unrelated ads … adjacent to … content that allegedly used [plaintiff’s] name and likeness” and that was “created by third-party users.” Rather, the businessman claims that "Meta itself played a role in producing the ads—ads which themselves allegedly misappropriated Dr. Forrest’s identity.” The court concluded that at this stage, Dr. Forrest adequately pleaded his misappropriation claim.

Negligence. Turning to the negligence claim, the court indicated that the businessman argued that Meta breached its duty to the general public, including himself, to design and run its ad business in a “commercially reasonable manner,” a duty it breached in several ways, including producing the challenged ads, operating in a way that facilitated scam ads, and using defective screening and review procedures.

Meta again argued that the challenged ads were entirely created by third parties, and that Meta is under no duty to control the conduct of third parties except in the presence of a special relationship. But the court again found this to be a premature factual dispute. The court concluded that Dr. Forrest plausibly alleged that Meta played an active role in creating the ads at issue, and the court noted that it need not at this stage decide whether Dr. Forrest has alleged a relationship between Meta and its users sufficient to impose upon Meta a duty to control third-party advertisers even if it did not help create the ads. The court denied the motion to dismiss the negligence claim.

Other claims. The court granted Meta’s motion to dismiss the negligent failure to warn, unjust enrichment, and declaratory judgment claims. The court also noted that discovery and Meta’s deadline to answer Dr. Forrest’s complaint are currently stayed due to the criminal investigation in Australia.

The Case is No. 5:22-cv-03699-PCP.

Judge: Pitts, P.

Attorneys: Arthur H. Bryant (Bailey Glasser LLP) for Andrew Forrest. Jacob Marcus Heath (Orrick, Herrington & Sutcliffe, LLP) for Meta Platforms, Inc.

Companies: Meta Platforms, Inc.

Cases: PublicityRights TechnologyInternet CaliforniaNews