U.S. Seventh Circuit Court of Appeals Judge Nancy L. Maldonado
CHICAGO — Facebook- and Instagram-parent company Meta can't use a user agreement to thwart lawsuits from local publishers and broadcasters who claim the tech giant has used market data misrepresentations to lure advertisers away from the traditional advertising outlets and onto Facebook, in particular.
On Aug. 27, a three-judge panel of the U.S. Seventh Circuit Court of Appeals sided with Alton-based radio broadcasting company Metroplex Communications, allowing the company's class action lawsuit to move ahead against Meta.
The ruling upheld the decision of southern Illinois federal judge, U.S. District Judge Staci M. Yandle. It was authored by Seventh Circuit Judge Nancy Maldonado. Judges Candace Jackson-Akiwumi and Doris Pryor concurred in the appellate ruling.
In the ruling, the Seventh Circuit judges agreed federal law does not allow Meta to use a user services agreement to defeat any lawsuit filed against the company by anyone who may have ever used Facebook or one of its social media properties.
Metroplex has been in court against Meta since 2022, when it filed a class action lawsuit against the California-based tech company best known for its operation of the Facebook and Instagram social media platforms.
Metroplex is represented in the action by attorneys from the firms of Goldenberg Heller & Antognoli, of Edwardsville; and Margulis Gelfand, of Clayton, Missouri.
Metroplex owns and operates a local news website and three Metro East radio stations, MyMix 94.3 FM; and WBGZ 107.1 FM and 1570 AM, all based in Alton. In addition to selling and publishing advertisements on its website and radio stations, court documents say the company also sells and places ads in local print publications, as well.
However, Metroplex claims Meta has undercut its advertising business by allegedly unfairly luring prospective advertisers away from traditional outlets and onto platforms like Facebook.
Specifically, in its lawsuit, Metroplex claims Meta has engaged in alleged anticompetitive practices in violation of federal antitrust law by allegedly exaggerating the actual market reach of advertisments posted to Facebook and other Meta-owned properties.
Metroplex sought to expand the action to include a class of other small publishers and broadcasters who they say Meta has allegedly similarly wronged.
In response, Meta sought to dismiss the lawsuit, asserting Metroplex can't sue Meta because the dispute actually belongs in private arbitration, and not in court. Meta claimed that outcome is dictated by its user agreement, which generally requires disputes between Meta and social media users into binding arbitration, rather than in court.
Meta asserted that since Metroplex has placed ads on Facebook, it can't now sue Meta over its advertising practices.
However, judges hearing the dispute have said the user agreement's mandatory arbitration provision doesn't apply in this dispute.
In the appellate ruling, Judge Maldonado noted Metroplex did not sue Meta as an advertiser, but rather "as a competitor vying for ad purchasers."
So, the judges agreed that endorsing "Meta's reading" of the arbitration agreement under the law would lead to "absurd results" the courts cannot endorse, including potentially shielding Meta from all lawsuits, no matter the alleged harm committed by Meta.
"Taken to its logical end, Meta’s reading would require any party that has ever advertised on Facebook to arbitrate any claim that touches, however tangentially and indirectly, on Meta’s ad practices," Maldonado wrote in the appellate decision.
"We decline to adopt an interpretation that would transform a commercial terms agreement into a sweeping waiver of judicial recourse for all claims against Meta."
Meta is represented in the action by attorneys from the firm of Latham & Watkins, of Chicago; San Francisco; and Washington, D.C.
