Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 1 of 19 1 Randolph Gaw (S.B. #223718) [email protected] 2 Mark Poe (S.B. #223714) [email protected] 3 Victor Meng (S.B. #254102) [email protected] 4 Samuel Song (S.B. #245007) [email protected] 5 GAW | POE LLP 4 Embarcadero, Suite 1400 6 San Francisco, CA 94111 Telephone: (415) 766-7451 7 Facsimile: (415) 737-0642 8 Attorneys for Plaintiff Bulletin Marketing, LLC 9 10 11 UNITED STATES DISTRICT COURT 12 NORTHERN DISTRICT OF CALIFORNIA 13 BULLETIN MARKETING, LLC Case No. 17-7211 14 Plaintiff, CLASS ACTION COMPLAINT 15 v. DEMAND FOR JURY TRIAL 16 GOOGLE LLC. 17 Defendant. 18 19 20 Plaintiff Bulletin Marketing, LLC (“Bulletin”) hereby makes the following allegations 21 against defendant Google, LLC (“Google”): 22 1. This is a class action brought against Google for its failure to honor its 23 commitments to pay website publishers for the ad revenue that Google received from placing its 24 ads on those publishers’ websites through the DoubleClick Ad Exchange (“AdX”). 25 2. Under the contract between Google and its AdX publishers, Google can withhold 26 payment of an AdX publisher’s accrued earnings only if (i) such earnings were the product of 27 invalid activity and (ii) the withheld amounts are refunded to the advertisers. Evidence recently 28 uncovered by various parties however, including the Wall Street Journal, reveals that when - 1 - COMPLAINT Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 2 of 19 1 Google decides that ad impressions generated on an AdX publisher’s website are invalid and 2 withholds that publisher’s accrued earnings as a result, Google is not refunding that withheld 3 amount back to advertisers. Instead, Google keeps those funds for itself in violation of its 4 contractual obligations with its AdX publishers. 5 PARTIES 6 3. Plaintiff Bulletin Marketing, LLC is a New Hampshire limited liability company 7 that has its principal place of business in New Hampshire. 8 4. Defendant Google LLC is a Delaware limited liability company that has its 9 principal place of business in California. Google LLC was formerly known as Google, Inc. at the 10 time the parties first contracted with each other, but was subsequently converted to its current 11 business form. 12 JURISDICTIONAL STATEMENT 13 5. The Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332 because there is 14 a complete diversity of citizenship, and the amount in controversy exceeds $75,000. Bulletin is 15 domiciled in New Hampshire, and its sole member is domiciled in the state of Texas. Google is 16 domiciled either in Delaware or California and, on information and belief, its member(s) are all 17 domiciled in the states of Delaware or California. 18 6. The Court has personal jurisdiction over Google because it transacts business in 19 California and because in the Google Service Agreement, it expressly consents to personal 20 jurisdiction in this Court. 21 7. Venue is proper in this district pursuant to 28 U.S.C. § 1391 because Google 22 resides and regularly conducts business in this district, and because the contract with Google at 23 issue in this lawsuit has a forum selection clause requiring that litigation of all disputes is handled 24 in the state or federal courts of Santa Clara County, California. 25 INTRADISTRICT ASSIGNMENT 26 8. Google’s headquarters is located in Mountain View, California, and therefore 27 assignment to the San Jose division of this Court is appropriate. 28 - 2 - COMPLAINT Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 3 of 19 1 FACTUAL ALLEGATIONS 2 Background on DoubleClick Ad Exchange (AdX) 3 9. Google is the largest online marketing/advertising business in the world. The 4 AdWords Advertising Program (“AdWords”) is Google’s primary advertising program. 5 AdWords advertisements are displayed in a variety of formats such as text and/or images, 6 alongside or above search results, on webpages, in e-mails, on blogs, and/or in videos. 7 10. The Google AdSense Content program enables online publishers of websites to 8 partner with Google to earn revenue from AdWords advertisements displayed on websites under 9 their ownership, license, registration and/or other control. Google tracks each time Internet users 10 click on advertisements displayed on AdSense publishers’ websites and charges advertisers for 11 each click. Google pays the AdSense publishers a portion of the amount paid by advertisers for 12 the clicks, while retaining the remaining portion for itself. 13 11. Like AdSense, DoubleClick Ad Exchange also allows website publishers to 14 display advertisements in exchange for a share of the advertising revenue paid to Google by the 15 advertiser for each “impression” (i.e., each time a unique user views the publisher’s website 16 displaying an advertisement served to that website through AdX). 17 12. AdX differs from AdSense in that it is a programmatic, real-time bidding exchange 18 that allows publishers and advertisers to exercise far more granular control over what 19 advertisements are displayed and how much is paid by the advertiser to display those 20 advertisements. It also allows advertisers from outside of the Google Display Network to buy 21 inventory from the publisher, thus significantly increasing the demand. 22 13. Advertisers can buy ad space on AdX. AdX is an ad exchange, which means that 23 it consolidates advertising demand from AdWords and other ad networks, exchanges, and 24 demand-side platforms to participating AdX publishers. Thus, for example, AdWords advertisers 25 can end up buying ad space on the website of an AdX publisher. 26 14. In layman’s terms, advertisers have advertisements that they wish to display on 27 websites and publishers have “inventory” (i.e., ad spaces on their websites) that can accommodate 28 - 3 - COMPLAINT Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 4 of 19 1 the display of those advertisements. AdX facilitates these two groups transacting together for 2 their mutual benefit. 3 15. Put differently, AdX is viewed by industry participants as a more sophisticated ad 4 placement service compared to AdSense, and attracts more experienced and/or larger publishers. 5 16. One feature of AdX is that Google allows businesses to participate on the 6 publishing side even if they do not have their own website, but as managers of websites belonging 7 to others. Google calls such entities Network Partner Managers (“NPM”). Essentially, NPMs 8 help Google manage smaller publishers and penetrate in new markets. Bulletin was an NPM. 9 17. Due to the sophisticated features offered by AdX, website content creators often 10 engage NPM partners to focus on optimizing the revenue earned from Google advertisements 11 placed on their websites (usually by selling ad space at the highest possible price), while those 12 website content creators focus instead on content creation. 13 18. These websites will accordingly be registered in the AdX program under the AdX 14 account belonging to the NPMs. 15 19. The Google Services Agreement, which Bulletin entered into, governs the 16 relationship between AdX publishers and Google. A true and correct copy of this contract is 17 attached hereto as Exhibit 1. The primary obligations of a publisher are set forth in Section 2.3 of 18 the agreement, which requires that an AdX publisher adhere to Google’s published AdX 19 Guidelines and Google’s technical protocols. 20 20. The Google Services agreement also provides the following policies and 21 procedures for Google’s payments to AdX web publishers: 22 Section 8.2: Google Payments 23 (a) For the Services, Google will pay Company an amount equal to the Revenue Share Percentage (listed on the front page of this Agreement) of Ad Revenues attributable to a 24 calendar month. This payment will be made in the month following the calendar month in which the applicable Ads were displayed provided that the amount owed to Company in a 25 given month is above the minimum set forth in the AdX Guidelines. 26 (b) Google’s payments for the Services under this Agreement will be based on Google’s accounting which may be filtered to exclude (i) invalid queries, impressions, conversions, 27 or clicks, and (ii) any amounts refunded to advertisers in connection with Company’s failure to comply with this Agreement, as reasonably determined by Google. 28 - 4 - COMPLAINT Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 5 of 19 1 Google Confiscates Bulletin and Other Publishers’ Accrued AdX Earnings 2 21. Bulletin is a company that helps web publishers maximize the revenues they can 3 earn from displaying advertisements on their websites by helping them expose their inventory to 4 optimal demand. Through AdX, Bulletin offered publishers access to the world’s largest demand 5 pool. 6 22. Bulletin also ensures that web publishers are complying with the requirements of 7 AdX, ranging from actions such as making sure that advertisements are placed in the proper 8 positions on the websites to vetting out objectionable content from those websites. 9 23. Bulletin has worked extensively with Google as an NPM. Bulletin substantially 10 performed its obligations under the Google Services Agreement, and ensured that its publisher 11 clients performed their obligations under the Google Services Agreement. Bulletin and its 12 publisher clients properly displayed Google’s advertisements in conformity with Google’s 13 policies, did not display any impermissible content on their websites, and otherwise performed all 14 of their required contractual duties. 15 24. On or around February 16, 2017, a few days before Google was due to pay 16 Bulletin its accrued AdX earnings, Google disabled Bulletin’s AdX account and withheld 17 payment of all of Bulletin’s accrued AdX earnings for the last earnings period. 18 25. Bulletin was surprised by Google’s actions, and asked its Google account 19 representative, Merri McCann, for guidance, as Bulletin managed multiple websites and it did not 20 know which websites might not have been in compliance with Google’s policies. Ms. McCann 21 responded with non-substantive information, and then ignored all of Bulletin’s remaining e-mails. 22 26. Ms. McCann’s actions were in line with Google policy, as Google requires that its 23 account representatives cease all communications with AdX publishers once Google has disabled 24 their account and withheld their earnings. Thus, these publishers have no effective way of 25 contesting Google’s decision. 26 27. Bulletin submitted an internal appeal to Google. Google’s appeal form is nothing 27 more than a pro forma document, and only asks very general, standardized questions without 28 permitting the user to elaborate on the reasons why Google’s reasons for terminating their AdX - 5 - COMPLAINT Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 6 of 19 1 account and withholding their accrued earnings were erroneous. In particular, because Google 2 did not actually inform Bulletin of what it did wrong, Bulletin had no way of knowing what facts 3 to provide to Google to get it to reconsider its decision. 4 28. Google summarily rejected Bulletin’s internal appeal by means of an auto- 5 generated e-mail that was sent a short time later. On information and belief, nobody at Google 6 closely reviewed Bulletin’s appeal, as the appeal form was designed to convey minimal 7 information to Google and give publishers the illusion that Google might reconsider its decision. 8 29. In any event, Google prevented Bulletin from receiving the benefit of a meaningful 9 appeal of its decision to terminate its AdX account and withhold its accrued AdX earnings, as 10 Google refused to tell Bulletin the reason Google terminated its account. 11 30. Google’s actions are particularly egregious because it always confiscates the 12 entirety of an AdX publisher’s accrued earnings for the earnings period (which lasts two months) 13 even when the vast majority of that publisher’s webpages (or in the case of an NPM, the vast 14 majority of its websites) are fully compliant with all Google policies. In other words, if 5% of a 15 web publisher’s traffic during an earnings period was invalid in some way, Google does not 16 withhold the publisher’s earnings arising from that 5% of bad traffic. Google withholds all of 17 those earnings, even though the earnings arising from the 95% of valid traffic were earned fair 18 and square in accordance with Google’s policies. 19 Google Lies About Refunding Its Advertisers 20 31. Per the express terms of Section 8.2(b) the Google Service Agreement, Google had 21 to pay an AdX publisher for impressions on its website except for “(i) invalid queries, 22 impressions, conversions, or clicks, and (ii) any amounts refunded to advertisers in connection 23 with Company’s failure to comply with this Agreement, as reasonably determined by Google.” 24 In other words, Google could withhold accrued earnings on an AdX publisher’s website only if 25 (A) those earnings were the result of invalid activity, and if (B) Google had actually refunded its 26 advertisers for those amounts. Section 8.2(b) is plainly written in the conjunctive rather than the 27 disjunctive. 28 - 6 - COMPLAINT Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 7 of 19 1 32. Additional context reinforces that simple textual reading of the Google Services 2 Agreement. On its Google Ads Traffic Quality Resource Center webpage, Google explains how 3 it filters out invalid impressions and clicks for its advertisers. A true and correct copy of this 4 webpage is attached as Exhibit 5. 5 33. As Google describes on its Google Ads Traffic Quality Resource Center webpage, 6 it has three ways to detect invalid clicks: (i) filters, (ii) offline analysis, and (iii) investigations. 7 The latter methods – offline analysis and investigations – operate only after the advertiser has 8 been charged for the impression or click. The first method – filters – operates to weed out invalid 9 clicks in real time before they are even charged to advertisers in the first place. Thus, the first 10 clause of Section 8.2(b) is simply explaining to publishers that in some instances, impressions on 11 that publisher’s website will not generate any revenue because those impressions were filtered in 12 “real time” and the advertiser was never charged in the first place. The second clause of Section 13 8.2(b) reassures publishers that when advertisers have, in fact, been charged for an impression 14 that turned out to be invalid in some way, then Google could withhold payment to that publisher 15 only if Google had refunded that advertiser. 16 34. Google does not, however, refund its advertisers when it withholds payment of an 17 AdX publisher’s accrued earnings. In a related lawsuit filed against Google in this Court by a 18 plaintiff called AdTrader, Inc. (“AdTrader”), AdTrader uncovered incontrovertible evidence that 19 Google keeps all funds it withholds from an AdX publisher for itself. 20 35. For example, AdTrader was an NPM who had its AdX account disabled, and its 21 accrued earnings withheld, by Google for some purported violation of a Google policy. But 22 AdTrader was also an advertising network, and during this same earnings period, its advertising 23 clients had displayed ads on some of AdTrader’s publishers’ websites (unbeknownst to Google). 24 Even though all of AdTrader’s accrued AdX earnings were withheld, to this day, Google has 25 never paid any advertising refunds or credits to AdTrader or its advertising clients. 26 36. Alerted to this inconsistency, AdTrader reviewed its records to see whether it had 27 ever received a refund or credit from Google for running advertisements on websites that had 28 invalid activity. It did not, nor did any of AdTrader’s advertising clients when AdTrader was - 7 - COMPLAINT Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 8 of 19 1 handling their accounts. Google gave no refunds or credits even though, every single month, 2 Google withheld a small amount of accrued earnings from AdTrader on its publishing activities 3 for what it deemed to be invalid activity and claimed to have refunded the withheld amounts to its 4 advertisers. During these same months, however, AdTrader and its advertising clients had bought 5 traffic from some of those same websites, so if Google’s claim was true, then AdTrader and its 6 advertising clients should have received some refunds or credits almost every month. 7 37. AdTrader also inquired with a large New York agency, and several European 8 agencies, whose identities are not being disclosed to avoid retaliation from Google, whether they 9 or their clients had ever received a refund or credit for advertising funds spent on websites with 10 invalid activity. None of them had, even though multiple AdX and AdSense publishers 11 (including Bulletin) have publicly stated or privately confirmed that Google always determines 12 that a certain percentage of their clicks or impressions for any particular advertisement every 13 month is invalid for one reason or another. 14 38. Bulletin’s representatives also did some investigation of their own. A prominent 15 journalist that has investigated Google in the past passed along the news that, over the years, their 16 advertiser sources also confirmed that they had never received any refunds from Google, contrary 17 to Google’s representations. But since advertisers had no visibility into what Google did with its 18 publishers, no one ever raised any challenges to Google. 19 39. Additional confirmation came by way of an August 25, 2017 article published in 20 the Wall Street Journal. The article explained that Google had detected a surge of ad fraud during 21 the second quarter of 2017 on its DoubleClick Bid Manager product (which largely connects 22 advertisers to AdX). But rather than offer full refunds or credits to those advertisers, Google was 23 offering only a modest reimbursement – only 7-10% of the total amounts spent by those 24 advertisers at the most, with many advertisers receiving much less. Not surprisingly, many 25 advertisers were unhappy with this development. 26 40. Also in this article, Google said that the refunds it was offering were appropriate 27 “because it doesn’t control the rest of the money spent.” This statement is untrue, as the vast 28 majority of advertisements served through DoubleClick Bid Manager go to AdX publisher - 8 - COMPLAINT Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 9 of 19 1 websites, and Google routinely deducts or withholds payments to those publishers (like it did for 2 Bulletin and AdTrader) on the grounds that some or all of the clicks or impressions generated on 3 that website were somehow invalid. 4 41. Apparently, some executive at Google read this August 25, 2017 article and 5 realized that it publicly exposed that Google was not giving full refunds or credits as contractually 6 obligated. On or around September 1, 2017, Google suddenly changed the terms of the contract 7 governing its relationship with AdWords advertisers – the Google Inc. Advertising Program 8 Terms. The primary change it effected to this agreement was that AdWords advertisers were now 9 required to arbitrate their disputes with Google and were precluded from bringing any class 10 actions against Google. It is plainly obvious that Google made such changes directly in response 11 to the August 25, 2017 Wall Street Journal article to prevent advertisers (especially smaller 12 advertisers) from suing Google and obtaining redress. 13 42. Moreover, even if Google was, in fact, refunding advertisers as it claims to do, 14 such acts would also be a contractual violation to its AdX publishers because Google’s internal 15 policy is that once a refund takes place, the AdX publisher cannot recover its withheld earnings 16 under any circumstances. Thus, even if Google’s decision to withhold an AdX publisher’s 17 accrued earnings was entirely erroneous, it refuses to pay out that publisher’s earnings once a 18 refund has been processed. 19 43. The existence of this supposed Google policy was revealed upon the filing of the 20 AdTrader lawsuit. As recounted in that lawsuit, on a May 24, 2017 recorded telephone call, a 21 high-level Google executive named Anthony Nakache told AdTrader’s employees that: 22 AdTrader: All of the money is going to be refunded to advertisers? 23 Nakache: Yes. 24 AdTrader: Does that mean that every single impression and every single click for all of 25 our publishers has been… 26 Nakache: Exactly. Everything in the account, the account is in violation of our policy, advertisers have been impacted, and as a result we have made the decision to refund all 27 the advertisers and all the revshare from Google. 28 *** - 9 - COMPLAINT Case 5:17-cv-07211-HRL Document 1 Filed 12/20/17 Page 10 of 19 1 AdTrader: So, every single advertisers [sic] who has bought a single impression for the 2 past two months from any of our publishers will get their money back? Is that correct? 3 Nakache: Yes. 4 *** 5 AdTrader: I see. OK, so we are not going to receive anything unless the appeal is successful we will not be paid anything. 6 Nakache: No, the money is going to be paid back to the advertisers. 7 AdTrader: So, whether the appeal is successful or not, we will still not receive the 8 payment, is that correct? 9 Nakache: Yes. 10 44. If one assumes that Mr. Nakache was telling the truth (which is itself unclear), 11 then because Google supposedly sends out those refunds before the AdX publisher even has time 12 to appeal Google’s decision, the decision to withhold accrued earnings is automatically a fait 13 accompli. 14 Class Action Allegations 15 45. Bulletin brings this action on behalf of itself and a Publisher Class, defined as: 16 All online publishers and Network Partner Managers that have displayed advertisements served from the DoubleClick Ad Exchange and, at any time during 17 the applicable limitations period, have had their accrued DoubleClick Ad Exchange earnings reduced by Google, in any amount, on account of what Google 18 claimed to be fraudulent or invalid click activity or impressions. 19 46. Bulletin also brings this action on behalf of itself and a Publisher Forfeiture Sub- 20 Class, defined as: 21 All online publishers and Network Partner Managers that have displayed advertisements served from the DoubleClick Ad Exchange and, at any time during 22 the applicable limitations period, had the entirety of their accrued DoubleClick Ad Exchange earnings withheld by Google on account of what Google claimed to be 23 fraudulent or invalid click activity or impressions. 24 47. Through the process of seeking and obtaining class certification, Bulletin reserves 25 the right to amend the definitions of the proposed classes, as appropriate. 26 48. Excluded from the Classes and the Sub-Class are the officers, directors, and 27 employees of Google, any judicial officer presiding over this action, and the members of his or 28 her immediate family and judicial staff. - 10 - COMPLAINT