Pages 1 - 138 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA Before The Honorable Vince Chhabria, Judge IN RE: FACEBOOK, INC. CONSUMER PRIVACY USER PROFILE LITIGATION. ) ) ) ) ) ) ) NO. 18-MD-02843 VC San Francisco, California Wednesday, May 29, 2019 TRANSCRIPT OF PROCEEDINGS APPEARANCES: For Plaintiffs: BY: BY: KELLER ROHRBACK LLP 1201 Third Avenue - Suite 3200 Seattle, Washington 98101 DEREK W. LOESER, ESQ. CARI C. LAUFENBERG, ESQ. BLEICHMAR, FONTI & AULD LLP 555 12th Street, Suite 1600 Oakland, California 94607 LESLEY E. WEAVER, ESQ. MATTHEW S. WEILER, ESQ. JOSHUA D. SAMRA, ESQ. ANNE K. DAVIS, ESQ. (APPEARANCES CONTINUED ON FOLLOWING PAGE) REPORTED BY: Ana M. Dub, RDR, CRR, CCRR, CRG, CCG Official Reporter, CSR No. 7445 2 1 APPEARANCES: 2 For Defendant: (CONTINUED) BY: GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, New York 10166-0193 ORIN SNYDER, ESQ. BY: GIBSON, DUNN & CRUTCHER LLP 1050 Connecticut Avenue, NW Washington, D.C. 20036 JOSHUA S. LIPSHUTZ, ESQ. BY: GIBSON, DUNN & CRUTCHER LLP 555 Mission Street - Suite 3000 San Francisco, California 94105 KRISTIN A. LINSLEY, ESQ. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 PROCEEDINGS 1 Wednesday - May 29, 2019 10:34 a.m. 2 P R O C E E D I N G S 3 ---o0o--- 4 (Call to Order of the Court.) 5 6 7 8 9 THE CLERK: Calling Case Number 18-MD-2843, In Re Facebook Inc. Consumer Privacy User Profile Litigation. Can one member from the plaintiff and from the defendant please step forward and state the appearances of your parties. MR. LOESER: Good morning, Your Honor. Derek Loeser 10 from Keller Rohrback for the plaintiffs. 11 the Court, I'll allow my colleagues to introduce themselves. 12 THE COURT: 13 MS. WEAVER: 14 If it's okay with Sure. Good morning, Your Honor. Lesley Weaver, Bleichmar Fonti & Auld. 15 THE COURT: 16 MS. LAUFENBERG: Good morning. Good morning, Your Honor. Cari 17 Laufenberg, Keller Rohrback. 18 THE COURT: Good morning. 19 MS. DAVIS: Anne Davis, Bleichmar Fonti & Auld. 20 THE COURT: Good morning. 21 MR. GOULD: Benjamin Gould, Keller Rohrback. 22 THE COURT: Good morning. 23 MR. SAMRA: Good morning, Your Honor. 24 25 Bleichmar Fonti & Auld. THE COURT: Good morning. Josh Samra, 4 PROCEEDINGS 1 2 MR. WEILER: Good morning, Your Honor. Matthew Weiler, Bleichmar Fonti & Auld, for plaintiffs. 3 THE COURT: 4 MR. SNYDER: Good morning. Good morning, Your Honor. Orin Snyder, 5 Gibson Dunn, for Facebook; and I'm joined by my colleagues Josh 6 Lipshutz, Kristin Linsley, and Christopher Leach. 7 THE COURT: Hi, everyone. 8 MR. SNYDER: Hi, Judge. 9 THE COURT: Okay. Why don't I start with Facebook, 10 and why don't we start with the last question that I posed to 11 you, which is, let's assume -- I know you strongly disagree 12 with this; but let's assume, for the sake of argument, that 13 Facebook suggested to its users that if your settings are to 14 share stuff with friends only, only your hundred friends -- 15 let's say a user has 100 friends -- and you adjust your 16 settings so that your posts and your likes and whatnot, your 17 photographs are shared only with your friends, we, Facebook, 18 will make sure not to give anyone else access to that 19 information. 20 that assurance, Facebook actually disseminated the photographs 21 and the likes and the posts to hundreds of companies. 22 23 24 25 Okay? And let's say that in contravention of Wouldn't that be a really serious privacy violation? MR. SNYDER: The answer, Your Honor, is no, and I'll explain why. The answer to your full question is both. We do really 5 PROCEEDINGS 1 contend that this is not serious enough to give rise to a claim 2 of invasion of privacy or any other privacy -- 3 4 THE COURT: happened. 5 6 I understand that. MR. SNYDER: And so let me explain why. Addressing your hundred friends -- 7 THE COURT: 8 MR. SNYDER: 9 You also say that that's not what Yes. -- example -- and this really goes to the core of Facebook's argument, both on standing, which I 10 understand we're going to put a pin in and hopefully you'll 11 give me a moment but maybe not, and to consent -- and to the 12 consent questions. 13 Your Honor, first, the gravamen, obviously, of any privacy 14 tort, including any invasion of privacy tort, is a reasonable 15 expectation of privacy, whether it's seclusion upon intrusion, 16 whether it's public disclosure of private facts, or any 17 constitutional privacy right that may exist under California 18 law. 19 And what's key here, Your Honor, is that the plaintiffs 20 admit, throughout their lengthy Complaint, that they shared 21 their Facebook information with, in this case, a hundred 22 friends, friends of friends, or even strangers. 23 THE COURT: 24 MR. SNYDER: 25 it -- Okay. Okay. But let's talk about my example. Your analysis. Let's just keep 6 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: 3 Okay. -- to friends. Plaintiffs admit they were told that they could control 4 their sharing to not control [sic] with friends. 5 of your hypothetical. 6 Facebook that Facebook cannot -- 7 8 9 THE COURT: Plaintiffs admit they were told by Wait. Okay? Put your Okay? My question is, assume -- forget about what the plaintiffs are alleging right now. 11 hypothetical. 13 Start over. talking points away, maybe, and listen to my question. 10 12 That's part Okay? We're talking about a Okay? The hypothetical is, a Facebook user sets her settings so that only her friends can see her photographs. 14 MR. SNYDER: Yes. 15 THE COURT: Okay? And Facebook assures the user that 16 if you only share stuff with your friends, we, Facebook, will 17 not give access to those photographs to anyone else. 18 MR. SNYDER: 19 THE COURT: Yes. And assume, despite that assurance that 20 Facebook gives the user, that Facebook actually disseminates 21 those photographs to hundreds of companies. 22 23 MR. SNYDER: And there are no other disclosures under this hypothetical? 24 THE COURT: Correct. 25 MR. SNYDER: Okay. 7 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: 3 THE COURT: 4 Okay? Same answer. Now, so is that a serious privacy invasion by Facebook? 5 MR. SNYDER: No. There is no privacy interest, 6 because by sharing with a hundred friends on a social media 7 platform, which is an affirmative social act to publish, to 8 disclose, to share ostensibly private information with a 9 hundred people, you have just, under centuries of common law, 10 under the judgment of Congress, under the SCA, negated any 11 reasonable expectation of privacy. 12 THE COURT: But, so how is that different from -- 13 okay. 14 was a kid, my dad would invite a bunch of people over and he 15 would show a slideshow of our family vacation to Europe. 16 Right? 17 photographs. 18 19 Let's say -- I mean, I sort of vaguely remember when I And he might invite 20 friends and show them the I mean, if somebody gets ahold of that information and disseminates it to a thousand companies -- 20 MR. SNYDER: 21 THE COURT: Yes. -- isn't that -- I mean, the fact that he 22 showed those slides to 20 people doesn't prevent him from 23 asserting a privacy interest -- 24 MR. SNYDER: 25 THE COURT: It does --- in those slides. 8 PROCEEDINGS 1 2 MR. SNYDER: -- Your Honor. And if you let me explain, as a matter of law, it clearly 3 does. 4 expectation of privacy, and whether it's the Restatement, 5 whether it's California common law, whether it is old 6 British -- English common law. 7 8 The gravamen of any privacy tort is a reasonable I'll read -- I'll read what the Restatement 652D says (reading): 9 There's no tort liability when a defendant merely 10 gives further publicity to information that the 11 plaintiff has already publicized. 12 It is -- 13 14 THE COURT: word -- 15 MR. SNYDER: 16 THE COURT: 17 MR. SNYDER: 18 But "publicized," that's an important 100 people. Yes. -- right? Yes, it is. But let me explain. The social act of broadcasting your private 19 information to 100 people negates, as a matter of law, any 20 reasonable expectation of privacy. 21 Facebook -- 22 THE COURT: The very premise of You seem to be treating it as a binary 23 thing, like either you have a full expectation of privacy or 24 you have no expectation of privacy at all. 25 understand why we should think of it in that way. And I don't 9 PROCEEDINGS 1 I mean, if I don't tell anybody something, if I don't 2 share a certain thing with anybody, I have a full expectation 3 of privacy in that. 4 doesn't eliminate my expectation of privacy. 5 it, but it doesn't eliminate it. 6 If I share it with ten people, that It might diminish And if I share something with ten people on the 7 understanding that the entity that is helping me share it will 8 not further disseminate it to a thousand companies, I don't 9 understand why I don't have -- why that's not a violation of my 10 expectation of privacy. 11 MR. SNYDER: Because, Your Honor, what the plaintiffs 12 are doing here and what Your Honor's hypothetical suggests is a 13 brand-new right of privacy that has never been recognized 14 before. 15 And if you'll let me be heard, Your Honor, the plaintiffs 16 say in their brief, and Your Honor is suggesting, that, quote, 17 the disclosure of private information, bracket, to 100 people, 18 closed bracket, is itself a brand-new privacy right. 19 That's just not right, Your Honor. There is no privacy 20 right when the act is the negation of any expectation of 21 privacy. 22 23 24 25 I believe, Your Honor, it is not a close call. Let me give you a hypothetical of my own. I go into a classroom and invite a hundred friends. This courtroom. I invite a hundred friends, I rent out the courtroom, and I have a party. And I disclose -- 10 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: 3 4 5 6 7 These people are not all your friends. No. And I disclose something private about myself to a hundred people, friends and colleagues. Those friends then rent out a 100,000-person arena, and they rebroadcast those to 100,000 people. I have no cause of action because by going to a hundred 8 people and saying my private truths, I have negated any 9 reasonable expectation of privacy, because the case law is 10 11 clear. And I can cite -THE COURT: If you disclose -- let me -- I agree with 12 you that if you turned around right now in open court, on the 13 record, and disclosed something about yourself, you would not 14 have an expectation of privacy in that. 15 16 But what if you shared with your partners in your New York -- you're in the New York office? 17 MR. SNYDER: 18 THE COURT: 19 20 21 Yes, Your Honor. What if you shared with your partners in your New York office some medical condition that you had? MR. SNYDER: Absent any fiduciary or other legal duty, I would be out of luck. And let me tell you, Your Honor -- 22 THE COURT: 23 partnership has an agreement. 24 us and it won't be disclosed." 25 Wait a minute. Okay? So you say -- the "You can share stuff with And so you share with a hundred people -- your hundred 11 PROCEEDINGS 1 partners in your New York office a serious medical condition 2 that you have that's going to put you out of commission for a 3 while, and then the Gibson Dunn office does a press release 4 about it. 5 been invaded? 6 Your privacy has not -- your privacy rights have not MR. SNYDER: It has not, Your Honor. And I know 7 Your Honor is looking at me skeptically, but all you need to do 8 is go to the common law. 9 Your Honor wishes. 10 And I'll march through some cases, if But you have to, as a matter of law -- the Restatement, 11 the annotations to the Restatement, the cases going back 12 literally centuries, hold that you have to closely guard 13 something in order to have a reasonable expectation of privacy. 14 It's commonsensical. 15 This is why every parent says to their child, "Do not post 16 it on Facebook if you don't want to read about it tomorrow 17 morning in the school newspaper," or, as I tell my young 18 associates if I were going to be giving them an orientation, 19 "Do not put anything on social media that you don't want to 20 read in the Law Journal in the morning." 21 There is no expectation of privacy when you go on a social 22 media platform, the purpose of which, when you are set to 23 friends, is to share and communicate things with a large group 24 of people, a hundred people. 25 THE COURT: And, of course, I want -- But there are different levels of risk you 12 PROCEEDINGS 1 take; right? 2 information to your 20 friends or your 50 friends or your 3 hundred friends, you're certainly taking a risk that other 4 people will learn about that information. 5 tell a secret to your best friend, you're running the risk that 6 your best friend is going to tell his wife about that, and his 7 wife is going to tell her friend, and a larger circle of people 8 will learn about it. 9 you're not necessarily taking on is that the entity that's I mean, you may -- when you disseminate Just like when you But what you're not risking, a risk that 10 helping you disseminate that information to your friends will 11 then turn around and disseminate it to a thousand different 12 corporations. 13 MR. SNYDER: Your Honor, the hypothetical you gave -- 14 which, of course, bears no resemblance to the facts of this 15 case at all because of the disclosures that negated any 16 reasonable expectation of privacy because users were told -- 17 this is an asterisk to your hypothetical -- "We can't control 18 what third parties do with your information. 19 going to share things with other people, including app 20 developers, including others." 21 So put the disclosures aside. Your friends are The disclosures are the 22 icing on the cake in negating and vitiating any reasonable 23 expectation of privacy. 24 hypothetical, and certainly without consent as an issue, as a 25 matter of black letter common law, the user no longer has any But even without disclosures, in your 13 PROCEEDINGS 1 expectation of privacy over information after she shares it 2 with a hundred people. 3 Now, the reason is, Your Honor, because they shared the 4 information -- this is what the case law, if you stretch it 5 out, teaches -- you've lost control over the information and 6 its subsequent disclosure, which is why, if you look at the 7 congressional judgment behind the SCA, for example, it 8 expressly authorizes the recipient of information with consent 9 to share it with the world. 10 So the case law -- 11 THE COURT: And it's commonsensical. Well, it doesn't expressly authorize the 12 recipient of the information to share it with the world. 13 just says that if the recipient of the information shares it, 14 it's not a violation of the SCA. 15 16 MR. SNYDER: Okay. It Fair enough. But my point, Your Honor, is that the SCA and the 17 congressional judgment underlying it, reflects the 18 commonsensical common law principle that if you don't hold 19 something private, it's not private. 20 something private and publicize it to a hundred people, as a 21 matter of law, you have no reasonable expectation of privacy. 22 23 And if you don't hold In your hypothetical, do you have a breach of contract action against Facebook? 24 THE COURT: 25 MR. SNYDER: Oh, I would think so, yeah. Perhaps so under your hypothetical. But 14 PROCEEDINGS 1 2 let me give Your Honor a couple of cases. THE COURT: Well, no. Let me ask you first. I think, 3 for the most part -- the Complaint is riddled with these 4 statements by Facebook executives with, sort of, grandiose 5 statements about privacy and "Your privacy is important to us" 6 and all that kind of stuff. 7 statements aren't terribly relevant. 8 little bit relevant. 9 the user understands the disclosure language. I think, for the most part, those I mean, they may be a They may be a little bit relevant to how And we can get 10 to that in a bit. 11 a little bit of a sideshow, except with respect to this 12 question. 13 14 But for the most part, I think that stuff is I mean, what you are saying now seems contrary to the message that Facebook itself disseminates about privacy. 15 MR. SNYDER: 16 THE COURT: I would -I mean, would Facebook -- I mean, if we 17 were asking the CEO or whoever about -- if they were standing 18 here instead of you, would they be saying the same thing? 19 That if Facebook promises not to disseminate anything that 20 you send to your hundred friends and Facebook breaks that 21 promise and disseminates your photographs to a thousand 22 corporations, that that would not be a serious privacy 23 invasion? 24 MR. SNYDER: 25 but I can speak for Facebook. First of all, I can't speak for the CEO, 15 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: Okay. And what I can say to Your Honor is, 3 first of all, I don't think any of the statements were 4 grandiose. 5 and layered disclosures that Facebook makes to these users. 6 7 I think they're fully consistent with the robust THE COURT: Facebook doesn't think that that is a serious privacy issue? 8 MR. SNYDER: 9 THE COURT: 10 MR. SNYDER: Your hypothetical? Yeah. I think it may be -- there's a difference 11 between Facebook's statement, as the CEO has said repeatedly, 12 about its commitment to privacy and what it wants to do above 13 and beyond the law to respect privacy issues. 14 THE COURT: 15 MR. SNYDER: 16 THE COURT: 17 18 But my hypothetical is not -But it's not -Facebook does not consider that to be a serious privacy breach? MR. SNYDER: Facebook does not consider that to be 19 actionable, as a matter of law under California law, because 20 the very act of sharing with a hundred friends vitiates, as a 21 matter of basic common law, any expectation of privacy. 22 23 24 25 Let me point Your Honor just to random cases that we found in response to Your Honor's order last night. There's a Georgia case, Supreme Court case, C-o-t-t-r-e-l-l versus Smith, 299 Georgia 517, where an 16 PROCEEDINGS 1 extramarital affair was already exposed on blogs and to 2 Facebook friends, so it wasn't a private fact. 3 privacy interest. 4 There are other cases involving -- 5 6 THE COURT: Was it friends only? Because you just said "blogs." 7 MR. SNYDER: 8 THE COURT: 9 MR. SNYDER: 10 THE COURT: 11 MR. SNYDER: 12 THE COURT: 13 No tort; no Facebook friends. Yeah, but you just said "blogs." And -So if it's out on the blogs -And Facebook. -- for everybody to see, then that's a different story. 14 MR. SNYDER: 15 THE COURT: And Facebook. Right. But the whole point, I mean, 16 Facebook's whole point, I thought, in sort of communicating to 17 consumers how important privacy is, is that if you share stuff 18 only with your friends, that doesn't mean you're sharing it 19 with the world. 20 No, Your Honor, Facebook never says that. MR. SNYDER: 21 Facebook says when you -- are we in your hypothetical, or are 22 we in the real world? 23 world. 24 THE COURT: 25 MR. SNYDER: Because I'd like to go to the real Okay. Let's go to the real world. In the real world, in the real world, not 17 PROCEEDINGS 1 only is it common sense and a matter of basic common law that 2 when you share private information with a hundred people, 3 you've lost any control over that information and its privacy; 4 but the belt and suspenders on this case that negates any 5 privacy interest as a matter of basic common sense, again, are 6 the disclosures, because the disclosures here -- I made a board 7 that is -- just sort of strips it down to its basics. 8 THE COURT: Great. And let me just pull up the actual 9 document, because when -- this usually happens in patent cases 10 where the lawyers pull out portions of a disclosure, and then I 11 go to the full document -- so I always like to have the full 12 document up when -- 13 MR. SNYDER: 14 THE COURT: -- a lawyer is showing me a poster board. 15 MR. SNYDER: My last board had the full document, and 16 for the Court's convenience, I condensed it. 17 THE COURT: 18 MR. LOESER: 19 can't actually see. 20 THE COURT: 21 24 25 So -- That's perfectly fine. Your Honor, this is very apropos where we Well, you're free to move around and go wherever you want. 22 23 That's fine, Your Honor. MR. LOESER: Some judges get very angry when you walk -THE COURT: No, no, no. Knock yourself out. But let me just pull up the -- so this is Exhibit 45? 18 PROCEEDINGS 1 2 So this is Exhibit 45. Data Use Policy. 3 MR. SNYDER: 4 THE COURT: 5 6 7 8 9 This is the December 11th, 2012, Yes. And so this also -- And what page of that filing should I go to? MR. SNYDER: Let me make the broader point, Your Honor, as my colleagues are looking for the page number. So the broader point is that not only is it a matter of common sense and common law that when you disclose your private 10 information to a hundred people, you have no privacy interest 11 in that information, but here, the disclosures to Facebook were 12 multiple and they said two things. 13 One, when you share information with friends, friends 14 could share it with third parties, including apps. 15 happened here. 16 THE COURT: 17 MR. SNYDER: 18 THE COURT: 19 MR. SNYDER: That's what This is on page 10 of 16, right -Yes. -- of the disclosure? Yes. 20 ". . . information you share on Facebook can be 21 reshared. 22 Facebook, anyone" -- that goes to your question about 23 scale -- "anyone who can see it" -- 24 25 This means that if you share something on THE COURT: So one of the phrases that you took out -- that's not the beginning of the sentence. "Information you 19 PROCEEDINGS 1 share on Facebook can be reshared." 2 The beginning of the sentence is: 3 "Just like when you share information by e-mail 4 or elsewhere on the web, information you share on 5 Facebook can be reshared." 6 Right? 7 MR. SNYDER: It proves my point double, yes. I'm just 8 trying to give the salient sentence, which says anyone can see 9 it -- anyone who can see it, your hundred friends -- 10 THE COURT: But when you share -- when you send an 11 e-mail, when you share information by e-mail, you don't 12 necessarily expect that the company that operates the e-mail 13 system will take that information and disseminate it to a 14 thousand other companies. 15 16 MR. SNYDER: The question is: Do you have an expectation of privacy in the information? 17 And in your hypothetical, when you send it to a hundred 18 people, anyone who can see it -- the hundred people -- can 19 share it with others, meaning, potentially, tens of thousands 20 or more, including the games, applications, and websites they 21 use. 22 23 24 25 And that's this case, of course. THE COURT: And -- No, that's not this case because they haven't sued because their friends are resharing information. MR. SNYDER: Well, it's the case that their information was shared with friends who shared it with Kogan; 20 PROCEEDINGS 1 and then Kogan, in violation of our policies, gave it to 2 Cambridge Analytica and served back ads to the users. 3 Facebook, on a board I'm about to show you, made clear, 4 as, again, is common sense, that once the sped arrow is 5 launched, once your private information is shared with a 6 hundred people, Facebook can't control what a third-party app 7 or game might do with that information. 8 common sense. 9 And that, again, is And so -- THE COURT: But here's the thing. I know that we 10 can't just focus on this language, and you have other language 11 that is maybe a little more helpful to you. 12 But if we do look at this language in isolation, I would 13 say that it's a little bit misleading, because what it -- the 14 image that it invokes -- right? -- is, you post a message and 15 you share that message with your friend or you send an e-mail 16 to a friend or you make photographs available to a friend, and 17 then your friend may turn around and forward it to somebody 18 else. 19 friend playing FarmVille through Facebook and the act of your 20 friend playing FarmVille through Facebook giving Zynga -- is 21 that the name of the company? 22 MS. WEAVER: 23 THE COURT: 24 25 Right? But it doesn't really invoke the image of your Yes. -- giving Zynga access to all of your Facebook information that your friend could potentially see. This paragraph that you've put up does not invoke that 21 PROCEEDINGS 1 image. 2 being passed along. 3 4 It invokes a much more benign image of your information MR. SNYDER: about, if you're talking about apps, if you're talking about -- 5 THE COURT: 6 MR. SNYDER: 7 THE COURT: 9 MR. SNYDER: 10 THE COURT: 11 MR. SNYDER: 12 THE COURT: Apps. So I respectfully disagree, but I Okay. But -- -- to users --- on a 12(b)(6) motion? Yes. As a matter of law? I mean, that's another -- 14 MR. SNYDER: 15 THE COURT: 16 I'm talking about apps now. believe that this provides ample notice -- 8 13 Well, it depends on what you're talking Yes. -- issue I'm struggling with. You're saying that the only conclusion that a reasonable 17 Facebook user could draw from this paragraph that you've called 18 out now is that the user is going to understand that when their 19 friend is playing FarmVille through Facebook, Zynga is going to 20 be able to go in and grab all the information that is available 21 to your friend from your Facebook account. 22 MR. SNYDER: Your Honor, it's not just this language. 23 It is the multiplicity of disclosures, the layered disclosures, 24 that plaintiffs paste throughout their Complaint that we cite 25 to in our moving brief and reply brief. 22 PROCEEDINGS 1 THE COURT: 2 a little bit of a head fake. 3 intentional, but you could -- it seems to me that you could 4 view this paragraph as a little bit of a head fake. 5 MR. SNYDER: I mean, so far, arguably, I mean, this is I mean, I'm not saying it was Well, if you look at "Controlling what is 6 shared when the people you share with use applications," which 7 is on Document 187-45, page 10 of 16, that disclosure says: 8 9 10 11 "Just like when you share information by e-mail or elsewhere . . . ," dot-dot-dot. Then it says: "Your friends and other people you share 12 information with often want to share your information 13 with applications to make their experiences on those 14 applications more personalized and social. 15 example, one of your friends might want to use a music 16 application that allows them to see what their friends 17 are listening to. 18 application, your friend would want to give the 19 application her friend list -- which includes your 20 User ID -- so the application knows which of her 21 friends is also using it. 22 to share the music you," the user, "'like' on 23 Facebook. 24 then the application can access it just like anyone 25 else. For To get the full benefit of that Your friend might also want If you have made that information public, But if you've shared your likes with just your 23 PROCEEDINGS 1 friends, the application could ask your friend for 2 permission to share them." 3 THE COURT: Okay. So that's a good counterpoint to 4 what I said, but -- so that's sort of the Spotify example; 5 right? 6 MR. SNYDER: 7 THE COURT: 8 9 Yes. And then, if you go down to the last sentence in that section of the disclosures, it says: "If an application asks permission from someone 10 else to access your information, the application will 11 be allowed to use that information only in connection 12 with the person that gave the permission and no one 13 else." 14 So it seems to me one way to interpret that is: 15 All right. 16 goes on Spotify, and Spotify wants to point out to your friend 17 what their friends are listening to. 18 tell your friend what you are listening to or what music you 19 like, what music you've said that you liked on Facebook, or 20 something like that. 21 MR. SNYDER: 22 THE COURT: So we're talking about Spotify now. So your friend So Spotify might want to Right? Correct. So in connection with that interaction 23 between Spotify and your friend, Spotify may have access to 24 your information and may point that out -- may point that 25 information out to your friend. 24 PROCEEDINGS 1 But it doesn't follow, it seems to me, automatically, that 2 this means that Spotify will also have access to your 3 information outside the context of its interactions with your 4 friends. 5 can't remember what -- And so that gets to the question that I asked you. 6 MR. SNYDER: 7 THE COURT: 8 Yeah, Question 5. 9 MR. SNYDER: Question 5, Your Honor. -- number it was. So the answer to Question 5 -- and I 10 appreciate the questions because we can answer them directly, 11 "yes" or "no" or "maybe." 12 And in this case, the answer is, the words "only be 13 allowed" do not describe, as a matter of law, on a 12(b)(6) 14 motion, a technological limitation on what Spotify -- 15 16 THE COURT: matter of law, that we have to interpret it that way. 17 MR. SNYDER: 18 THE COURT: 19 What I'm saying -In other words, the plaintiffs aren't moving for judgment -- 20 MR. SNYDER: 21 THE COURT: 22 MR. SNYDER: 23 THE COURT: 24 MR. SNYDER: 25 I don't think it -- I don't think, as a paragraph -- I'm sorry. -- on the pleadings -I misspoke. -- here. No reasonable reading of this I 25 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: 3 THE COURT: 4 MR. SNYDER: 5 Why not? -- supports the notion -Why? -- that "only be allowed" describes a technological limitation. 6 THE COURT: 7 MR. SNYDER: Why not? Well, I'll tell you. The plain and 8 ordinary definition of "allowed," the word "allowed," is like 9 "may" and "can." 10 "Allowed" is not "Is it physically feasible?" but what is 11 permissible, acceptable, sanctioned. 12 English dictionary, "allowed" is -- 13 THE COURT: If you look at the Oxford No, I understand that. But I'm saying 14 there's another sort of colloquial use of "allowed." 15 give you an example. 16 Let me Okay? March Madness brackets. Okay? I don't know if your 17 office does this, but many offices say to employees, "Look, you 18 cannot use your work computer to fill out your March Madness 19 brackets," for whatever reason, because we're uptight or 20 because it creates a server problem or something like that. 21 22 MR. SNYDER: on Facebook. You're not allowed to. 23 THE COURT: 24 MR. SNYDER: 25 somewhere. You can't use your office computer to go Oh, another example. We don't like that rule, but it exists 26 PROCEEDINGS 1 THE COURT: 2 to do that. 3 implemented. 4 5 So there are two -- so you're not allowed There are two possible ways that could be One is, we're going to trust you not to do it. And if we catch you doing it, you're going to be in trouble. 6 The other way is to just block the website. 7 And so I might be on my computer and I may want to go to 8 my March Madness brackets, and up pops a message: 9 allowed to go to this website. 10 You are not And so that's a technological barrier to my being able to 11 access that information. 12 at least plausible that a user could interpret that language 13 that way. 14 15 16 17 18 MR. SNYDER: plausible. And I don't understand why it's not I'll explain why it's not reasonable nor Not only is it the plain, ordinary -- THE COURT: The question isn't: What's more plausible? MR. SNYDER: No, Your Honor. What I'm saying is, it 19 is an unreasonable, implausible reading, as a matter of law, to 20 read it the way Your Honor suggested. 21 THE COURT: 22 MR. SNYDER: 23 Why? I'm about to explain. First is, when you look to the canons of construction, 24 which is what we need to do in discerning the plain language, 25 if it is plain, is first you look to the dictionary definition. 27 PROCEEDINGS 1 And there's no question that every dictionary definition, 2 whether it's Merriam-Webster, Oxford English, does not make the 3 colloquial point Your Honor is making -- let me start with 4 that -- but makes clear that the word "allow" means -- 5 THE COURT: 6 MR. SNYDER: 7 THE COURT: 8 9 Well, but do you disagree --- permission. -- that people use the word "allow" that way? MR. SNYDER: But the second canon of construction 10 which is applicable here and dispositive in support of what I'm 11 saying is that when Facebook -- the canon of construction is 12 that in trying to discern words of a contract, you don't just 13 look at the word at issue, but you look at the word in the 14 context of the integrated agreement. 15 The integrated agreement makes clear that when Facebook 16 wanted in its disclosures to refer to technical limitations, it 17 did not use what you say is a colloquial "allow." 18 THE COURT: 19 MR. SNYDER: 20 21 Show me that. It used words that are descriptive and accurate to technological restraint or disability. So the Data Use Policy -- 22 THE COURT: 23 MR. SNYDER: 24 THE COURT: 25 Okay. All right. Same document? -- November 15th, 2013, page 10 -Okay. Go ahead. Hold on. Let me get there. 28 PROCEEDINGS 1 2 MR. SNYDER: "Once you remove an app, it won't be able to" -- 3 THE COURT: 4 that you're reading. 5 MR. SNYDER: 6 THE COURT: 7 MR. SNYDER: 8 THE COURT: 9 MR. SNYDER: 10 THE COURT: 11 MR. SNYDER: Wait. Hold on. Let me find the language Can you tell me where on -Yeah. Page 10. -- where on the page you are? Yeah. It is -- Oh, I found it. -- the third paragraph. I found it. -- "it won't be able to continue to 12 update the additional information you've given them 13 permission to access . . . ." 14 If you look at that same page -- where is that, Chris? -- 15 Dot-dot-dot. it says: 16 "You always can remove apps you've installed by 17 using your apps settings . . . ." 18 And then it gives a -- 19 THE COURT: 20 MR. SNYDER: 21 THE COURT: 22 MR. SNYDER: 23 24 25 You said the next page? I'm sorry. Same page. Sorry. Page 10. Okay. Let me see where that is. Yeah, it's the bottom of the third paragraph, the last sentence. THE COURT: Okay. Bottom -- 29 PROCEEDINGS 1 2 MR. SNYDER: And then it says: "But remember, apps may still be able to access 3 your information . . . ." 4 And so when Facebook wanted to refer to scope of 5 permission to use data, they refer to it as, in the referenced 6 language, "allowed." 7 constraint or limitation, they used -- 8 THE COURT: 9 MR. SNYDER: 10 When they wanted to refer to a physical "Able." -- "able to," "be able to." And then other language in the Data Use Policy further 11 discloses that Facebook "cannot physically," cannot physically 12 or technologically limit how apps -- Kogan, in this case -- use 13 data once they've obtained it. 14 THE COURT: 15 MR. SNYDER: 16 THE COURT: 17 MR. SNYDER: 18 19 20 Where's that? Page 9 of the same policy. Okay. And that's the board -- that's the second board that is -- I don't need the board. Let me just -- And there they say: "Remember that these games, applications and 21 websites are created and maintained by other 22 businesses and developers" -- 23 THE COURT: 24 language that you're reading. 25 MR. SNYDER: Wait. Hold on. I want to find the And I apologize, Judge. 30 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: 3 That's okay. "Remember that these games, applications and websites" -- 4 THE COURT: 5 want to read the paragraph -- 6 MR. SNYDER: 7 THE COURT: 8 9 10 11 I found it. Okay. Wait. Hold on. Give me one sec. I just Yeah. -- that precedes it. Go ahead. MR. SNYDER: And this language, Your Honor, again, goes to any reasonable expectation of privacy. THE COURT: "Remember that these games, applications 12 and websites are created and maintained by other 13 businesses and developers who are not part of, or 14 controlled by, Facebook, so you should always make 15 sure to read their terms of service and privacy 16 policies to understand how they treat your data." 17 MR. SNYDER: 18 THE COURT: Right. But this doesn't speak to the issue that 19 we were just talking about, because this is telling me about my 20 own interaction with apps on the Facebook platform. 21 MR. SNYDER: 22 THE COURT: 23 24 25 Right. Precisely. But this is an issue about my friends being able to share my information with the app. MR. SNYDER: Precisely. And that's why these layered disclosures, in combination, are so effective and robust. 31 PROCEEDINGS 1 You're told a number -- 2 THE COURT: 3 MR. SNYDER: Effective from the standpoint of? User disclosure and user understanding. 4 Smith v. Facebook looks at these exact same terms in the 5 cookies context, and the Ninth Circuit said there is no claim 6 because these disclosures are sufficient. 7 The district court in that case, the district court in 8 that case, in a decision, a written decision, held, as a matter 9 of law, there is no privacy claim here because these 10 disclosures put the folks on notice that this was going to 11 happen. 12 13 And so here what you have, Your Honor, are multiple layered disclosures. 14 The first disclosure is: 15 THE COURT: What do you share on Facebook? Since you bring up the Smith case, it 16 seems like courts often just say -- just go straight to the 17 question it was disclosed or it was not disclosed, and they 18 don't really pay attention to what the test should be, 19 depending on which stage of the litigation you're at. 20 And that sort of gets to this other question that I had 21 that I asked you. 22 stage. 23 is: 24 mean? 25 I mean, is it -- we're at the 12(b)(6) So I would think that you would have to -- the question What would a reasonable Facebook user interpret this to MR. SNYDER: Yes. 32 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: 3 THE COURT: Do you agree with that? Yes. It's an objective test. Courts -- And then I would think that you could only 4 win at the 12(b)(6) stage if your interpretation is the only 5 plausible interpretation. 6 MR. SNYDER: Do you agree with that? I agree that if my interpretation -- you 7 could say it both ways. 8 plausible, or the defendant's interpretation is unreasonable or 9 implausible. 10 If my interpretation is the only And we believe this case is ripe for 12(b)(6) dismissal 11 because, as in Smith v. Facebook, an ordinary, reasonable user 12 in an objective test would understand these layered 13 disclosures, which are robust and blunt, to mean, one, when I 14 share with a hundred friends, my hundred friends may share with 15 apps; two, we don't control what those apps, Kogan, may or may 16 not do. 17 And Cambridge Analytica demonstrates that in a dramatic 18 way; that in the end, we can't control Kogan. 19 contract with him and hope that he honors his obligations to 20 us. We can only 21 So if you're concerned, user, about what your friends 22 might be doing with apps or if you're concerned about what apps 23 might be doing with your data, you have multiple options. 24 Option 1, you can control, in a granular sense, your 25 privacy settings. You have control over your information. 33 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: Well, privacy settings don't help. Privacy settings do help. You can -- and 3 that's the next disclosure. 4 information other people share with applications. 5 6 7 8 9 You can control most of the And then in another disclosure -THE COURT: But that's not privacy settings. That's app settings. MR. SNYDER: The notion that Facebook was hiding anything, we think, is preposterous, because in multiple places 10 on multiple pages, repeatedly and clearly Facebook is saying: 11 If you share something with your friends, they might share it 12 with their apps; and if you're concerned about what the apps 13 are doing with your information, check their policies. 14 15 This is from the plaintiffs' own Complaint, paragraph 599: "Facebook told users that by using their App 16 settings, they could prevent an App from accessing 17 their data via a Friend that used the App. 18 true at all relevant times." 19 There was no coercion. 20 21 22 There was no surprise. There was full disclosure. THE COURT: It was true that Facebook told them at all relevant times. 23 MR. SNYDER: 24 THE COURT: 25 This was they're saying. Yes. Not that it was the case, I think is what 34 PROCEEDINGS 1 MR. SNYDER: Right. My point, though, is that having 2 been told "There is no expectation of privacy," you can't cry 3 foul that there's gambling going on in this establishment when 4 you've been warned. 5 6 Second, 593 of the Complaint: "At all relevant times, the SRR told users, 'You 7 own all of the content and information you post on 8 Facebook, and you can control how it is shared through 9 your privacy [hyperlinked] and application 10 [hyperlinked] settings.'" 11 So if you are a user concerned about your friends taking 12 your data and information and sharing it with Spotify, and who 13 knows what Spotify will do because you've been told Facebook 14 does not control Spotify, we have given you a user-friendly 15 mechanism for protecting that. 16 It goes on, on 594: 17 "The Data Policy . . . discussed in more detail," 18 below, I guess, "[told] . . . users" -- "discussed in 19 more detail" -- oh -- "how users could use the 20 Privacy . . . and App Settings to control whether and 21 how other users or other entities could access one's 22 own content and information." 23 Unless we treat Facebook users as imbeciles, which the law 24 does not, a reasonable user, which is the standard in this 25 district, as a matter of law, renders implausible the notion or 35 PROCEEDINGS 1 argument that these disclosures were either misleading or 2 insufficient. 3 The privacy settings, which are clearly disclosed and 4 accessible to users -- not buried in the fine print on the 5 bottom of an airline ticket or the bottom of a cruise line 6 disclaimer, but prominent, accessible, hyperlinked -- control 7 which friends can see your info. 8 9 That is dispositive here. You say we don't treat them as imbeciles, THE COURT: and, of course, I agree with that. But it does raise another 10 question in my mind, which is, I assume that when we're 11 applying the "reasonable Facebook user" test, we are kind of 12 going back in time; right? 13 Facebook user in 2012 when they signed up for Facebook. 14 you agree with that? 15 MR. SNYDER: We're imagining the reasonable Would At the time the alleged -- I would say at 16 the time the alleged misconduct or privacy breach occurred 17 because -- 18 19 Why wouldn't it be at the time that THE COURT: they -- 20 MR. SNYDER: 21 THE COURT: 22 MR. SNYDER: 23 THE COURT: Because you're bound by -Okay. We'll get to that in a second. That's the incorporated by reference. So it's sort of hard, because I guess what 24 I would say is that: 25 Analytica scandal. Okay. I know about the Cambridge I read all the news articles or some of the 36 PROCEEDINGS 1 news articles when the scandal broke. 2 started paying more attention and learning more once I got 3 assigned this case. 4 studying the disclosures and reading the words of the 5 disclosures in the context of what has happened -- right? -- in 6 the context of Kogan getting this information and disseminating 7 it to Cambridge Analytica, in the context of the excellent 8 briefs that both sides have filed. 9 down and I spend the probably hundreds of hours that I've spent And then I, of course, And I've spent a tremendous amount of time Right? And so when I drill 10 looking at this issue, I can read this language and I can 11 figure it out. 12 And I think your interpretation probably is the best 13 interpretation -- right? -- for an extremely well-informed 14 person who is trying to figure out what this language 15 discloses. 16 But if I go back in time to 2012 or whenever somebody 17 signed up for Facebook and nobody had even heard of Cambridge 18 Analytica, and this concept of a friend sharing information 19 with an app was much more abstract, would a reasonable user be 20 able to go through these layers of disclosures as you've 21 described them? 22 You seem to think that word helps. I'm not sure -- 23 I think it's actually sort of counterproductive to your 24 argument. 25 But would a reasonable Facebook user at the time, not an 37 PROCEEDINGS 1 extraordinarily well-informed Facebook user who's familiar with 2 Cambridge Analytica, but a reasonable Facebook user at the time 3 be able to go through all these layers of disclosures and 4 figure out that if they send stuff to their friends, that it 5 will inevitably result in the dissemination of all their 6 information to hundreds, if not thousands, of corporations 7 unless they go in and they change their app settings? 8 9 MR. SNYDER: Your Honor, I respectfully but forcefully reject the premise of the question. You don't need to go back 10 in time. 11 the canons of construction or the contract interpretation. 12 There's no drill-down needed. 13 needed. 14 There's no Cambridge Analytica moment that changes There's no hundreds of hours There's no well-informed person standard. There is an objective reasonable user standard, and that 15 is governed by contract interpretation. 16 this district held whether the terms of service adequately 17 notified the reasonable platform user, that's the standard. 18 And you can discern what the intention of the parties is from 19 the writing here in only one way. 20 THE COURT: And in the Yahoo case, And this is what I struggle with. Even if 21 I agree that your interpretation is the best interpretation 22 after staring at it for a long time and thinking about it and 23 reading your briefs, we're talking about a reasonable user; 24 we're talking about a 12(b)(6) motion. 25 position, at this point, to conclude from all these words that And am I really in a 38 PROCEEDINGS 1 the Facebook user who signs up in 2012 could only interpret 2 this language in the way that you're suggesting? 3 4 5 MR. SNYDER: Well, the answer is -- the answer is yes, there is only one reasonable reading of this language. And let me tell you again, the three sources of truth in 6 the disclosures that are dispositive, as a matter of law under 7 12(b)(6), that there's only one reasonable reading. 8 9 The privacy settings control which friends can see your information. So you can -- if you really want to be private, 10 there are people who have archival Facebook pages that are like 11 their own private mausoleum. 12 the purpose of repository, you know, of your private 13 information, and no one will ever see that. 14 15 16 THE COURT: It's only set to me, and it's for That's so strange. I'm curious. Do you know how many -- like, what percentage of Facebook users -MR. SNYDER: I don't, but it's more common than you 17 think, because people like the user interface; they like the 18 functionality. 19 And it's -- THE COURT: One thing I could imagine is, whether it's 20 an individual or a business, starting off with the settings 21 private while they set up their -- 22 MR. SNYDER: 23 THE COURT: 24 MR. SNYDER: 25 THE COURT: Correct. -- Facebook page -Correct. -- and then they go live with it. 39 PROCEEDINGS 1 2 3 MR. SNYDER: So the privacy settings control which friends can see your information. Once you go to friends, the gig is over because you've 4 just gone -- taken a hundred people and pronounced your 5 personal likes and dislikes. 6 something and showing your friends that you like something is a 7 non-private act. 8 media, is to render not private your likes, your dislikes, your 9 expressions. In fact, the very act of liking It's the whole premise of Facebook and social When I tag someone in a photo, it's to tell 10 people, not keep private, that I'm sitting on a park bench with 11 John Smith. 12 So it's the opposite of private when you do that. But second, the app settings then control whether friends 13 can share your data with apps. 14 where you can say, "No, this is private. 15 privacy rights in this information." 16 So that's the second point I want to have But you're told if you don't change your app settings, 17 friends can take your data and tell Spotify what music you 18 like. 19 suspenders, and the data policy says, "We can't control what 20 these apps do with your information, so be careful; read their 21 terms of service." 22 If that's not enough, Facebook gives belt and And, Your Honor, there is no need to spend hundreds of 23 hours with those paragraphs. 24 whether it's the Yahoo case, the Perkins case in Google, the 25 Smith case in Facebook, that where, as here, terms of service The Courts rule repeatedly, 40 PROCEEDINGS 1 and privacy policies are reduced to writing, it is appropriate, 2 as a matter of contract interpretation, as a matter of law, to 3 read them reasonably and not read them unreasonably. 4 It would be unreasonable to read these provisions -- 5 THE COURT: 6 MR. SNYDER: 7 Unreasonably. -- unreasonably. Let me say one more point on that. I say layered 8 disclosures. 9 Facebook took pains to make sure that it told its users, in 10 multiple places that they might look, how to control friend 11 sharing. 12 over it, they may miss the action. 13 The reason I say that, it sounds good, but also, It wasn't just in one place so that if a user elides If Facebook intended, as counsel suggested when I had the 14 board blocking them, that Facebook was trying to hide 15 something, there's a very easy way to deep-six these 16 disclosures. 17 touch points, data policy, app settings, privacy settings. 18 Facebook did the opposite, put it on multiple And what's telling about the Complaint is -- which does 19 take a hundred hours to read. 20 admission that is binding on the plaintiffs and, again, 21 dispositive of Facebook's argument that there is no reasonable 22 expectation of privacy here. 23 In paragraph 408, this is an "In order to gain access to non-public content 24 and information, App Developers needed to request 25 permission from the App User. Through this process, 41 PROCEEDINGS 1 App Developers gained access to the App User's content 2 and information and the user's Friends' content and 3 information." 4 In other words, this is the paragraph 121 and 122 from 5 their original Complaint that they struck in this Complaint, 6 which acknowledged -- and I think it was fatal, which is why it 7 came out of the Complaint -- that no app developer, Kogan or 8 other app developer, obtained information in excess of or in 9 contravention of any Facebook user's privacy settings. 10 This is not a case where people go on Facebook and they're 11 blindsided because friends are getting their data and sharing 12 it with apps. 13 Kogan was exactly, exactly what was advertised. 14 This is a case where what happened up until And, of course, Facebook users have another choice if they 15 don't like the platform. 16 is, Your Honor. 17 hundred -- because it's 200 hours to read it twice -- what you 18 realize is this is really just a broadside against Facebook. 19 And I'm not going to argue right now. 20 five minutes at the end to argue standing. 21 Complaint is really a Complaint about ubiquitous sharing on 22 social media platforms. 23 And ultimately, that's what this case If you read the Complaint and spend the I'm going to beg you for But this is why the They don't like it because when you go on a social media 24 platform and share your information with a hundred people, 25 you've lost control. And that creates anxiety, and that 42 PROCEEDINGS 1 creates concern. 2 we say, in the raging debate that's going on in this country 3 about what does privacy mean in the digital age, we're only 4 about five years or six years into the digital age in the sense 5 that apps were not widely adopted until maybe 2014, 2013, 2015. 6 So we're less than half -- 7 It doesn't give rise to a claim, which is why THE COURT: Yeah, I think that really cuts against 8 you, because it speaks to what a reasonable Facebook user would 9 understand when they're reading these disclosures in 2012. 10 MR. SNYDER: 11 THE COURT: 12 MR. SNYDER: 13 THE COURT: No, Your Honor. That's my whole point -No. -- is that the concept of an app and the 14 interaction between your friend and an app is so much more 15 abstract to the 2012 reader pre-Cambridge Analytica than it is 16 now. 17 18 19 MR. SNYDER: Facebook told users what would happen clearly, bluntly, repeatedly, and it happened. The point I was making is that to the extent that these 20 plaintiffs or similarly situated people feel aggrieved by how 21 the Internet has developed and how information sharing on the 22 Internet has revolutionized human civilization, because people 23 are now sharing things in a digital realm that they never did 24 before, that's not for the federal district courts to invent 25 new privacy rights. 43 PROCEEDINGS 1 And it's why -- it's why -- it's why, Your Honor, you have 2 Congress debating these issues, why you have the FTC 3 investigating these issues. 4 case, on these facts, given the allegations, that this case can 5 or should proceed because there is no common law tort or tort 6 analogue that fits these facts. 7 8 THE COURT: But that does not mean in this Do you want to talk a little bit about business partners? 9 MR. SNYDER: 10 THE COURT: Yes. They label these companies as "business 11 partners." I don't know -- I can't remember where they got 12 that from. Maybe they got that from The New York Times article 13 or something. 14 MR. SNYDER: 15 THE COURT: 16 MR. SNYDER: 17 THE COURT: Yeah. You label them as "device manufacturers." Um-hmm. It's not clear to me where you get that. 18 I mean, it seems like you're rewriting their Complaint when you 19 describe them as "device manufacturers." 20 21 22 MR. SNYDER: So let me explain that. And thank you for asking for that clarification. This may be the most cynical of their arguments and, also, 23 the one that demonstrates the point I just made, which is that 24 the Complaint here is how Facebook operates, not that there is 25 an actionable conduct. Let me explain why. 44 PROCEEDINGS 1 First, you have to -- the Complaint conflates -- and maybe 2 we fell into the trap. 3 manufacturers with so-called whitelisted apps and other apps. 4 So if you break down the players into four categories, you have 5 Kogan and Cambridge Analytica. 6 parties. 7 whitelisted apps, which are the so-called -- 8 9 I don't think we did -- device That's the Cambridge Analytica You have other apps, Spotify. THE COURT: Yeah, I know. You have the so-called I'm just asking you, how did you come up with "device manufacturers" to describe what 10 they call "business partners"? 11 MR. SNYDER: Because originally, they were -- 12 THE COURT: Because they had a list of business 13 partners. 14 MR. SNYDER: 15 THE COURT: 16 They do. They do. And they don't seem like device manufacturers. 17 MR. SNYDER: 18 THE COURT: 19 MR. SNYDER: Some of them are; some of them aren't. Okay. Let me break them up into their 20 constituent categories. 21 Paragraph 483 of the Complaint is what we're going to respond 22 to now, as well as Your Honor's Question 6. 23 And page -- thanks, Josh. And it's alleged: "Facebook partnered with a diverse set of 24 companies, including Business Partners, to develop and 25 integrate Facebook's User Platform on multiple devices 45 PROCEEDINGS 1 and operating systems." 2 And so on and so forth. 3 And so let me address why that business partner allegation 4 5 does not get to first base under 12(b)(6). First and critically, as to the Clapper requirement of 6 particularity, the Complaint, again, suffers fatally from the 7 absence of any allegation, among the thousands of allegations 8 in the Complaint, that any plaintiff's information was shared 9 with any of these business partners. 10 THE COURT: Well, I mean, I don't know. I mean, let's 11 say we're just limiting ourselves to these 53 business 12 partners. 13 access to my data based on my interaction with them or based on 14 my friends' interaction with them, it's a virtual certainty 15 that at least one, and likely many more, of these business 16 partners will have my data. 17 If I'm on Facebook and these business partners have MR. SNYDER: I respectfully disagree. And I also, 18 again, respectfully disagree with the premise that "virtual 19 certainty" is the standard. 20 L-u-j-a-n, this is precisely the kind of non-particularized 21 speculation, and the Lujan case made clear -- that was the 22 Wildlife case where -- 23 THE COURT: 24 MR. SNYDER: 25 Under Clapper and Lujan, I know the case. Yeah. And so there is no "reasonable likelihood" or "virtually 46 PROCEEDINGS 1 certain" test. 2 plaintiffs are required -- this is my first point. 3 many other points. 4 allege, plausibly, that any of these so-called business 5 partners received their data. 6 failure. 7 a BlackBerry during that stump period between when Facebook 8 launched and apps were developed. 9 BlackBerries of the world and the Apples of the world built 10 There's a duty to investigate, and these But the first point, they're required to 12 MR. SNYDER: 13 THE COURT: 16 That is a pleading And that's when the Facebook-like environments then. THE COURT: 15 They didn't. You can't just assume that they accessed Facebook on 11 14 There are Okay. Okay. I understand that argument. And then your second argument is that this, too, was disclosed. MR. SNYDER: Yeah. So, yes. As to all categories, 17 the disclosures were more than sufficient. 18 a board for that one too. And I think I have 19 And this really, Your Honor, is not only commonsensical -- 20 before we get to the language -- it really is no good deed goes 21 unpunished. 22 Facebook in 2007, being excited that I could actually go on my 23 BlackBerry and access my Facebook information on my BlackBerry. 24 It was exciting because, before that, you had the flip phones 25 and maybe you could text on a flip phone. I remember, because I was an early adopter of So now I had my 47 PROCEEDINGS 1 2 BlackBerry. And BlackBerry built this really kind of protoskeletal 3 Facebook-like environment so that I could access my Facebook 4 data on my BlackBerry. 5 As a BlackBerry user and a Facebook user, heretofore only 6 using Facebook on my desktop, how do I think my information got 7 from Facebook to BlackBerry? 8 THE COURT: 9 the name of "business partners" to "device manufacturers." 10 MR. SNYDER: 11 THE COURT: 12 Well, I think this is why you have changed No, I haven't. And it's why you're using BlackBerry as an example. 13 MR. SNYDER: 14 THE COURT: No. Because I actually think you have a -- to 15 the extent that they are complaining that information was 16 shared with device manufacturers, I think they have a pretty 17 weak argument there. 18 MR. SNYDER: 19 THE COURT: 20 21 Well, I'm not -And so I'm not as concerned with the device manufacturers. MR. SNYDER: Let me get to the others, then. 22 I'm not changing any names, Your Honor, respectfully. 23 Paragraph 486 of the Complaint -- thank you, Josh -- says: 24 25 "Facebook formed Business Partnerships as early as 2007. These deals allowed Facebook to expand its 48 PROCEEDINGS 1 reach by outsourcing to Business Partners the time, 2 labor and money required to build Facebook's Platform 3 on different devices and operating systems." 4 So my understanding is that the gravamen of that 5 allegation is device manufacturers. 6 Complaint, they talk about whitelisted apps and other apps. 7 THE COURT: But then elsewhere in the Let's assume that the Complaint makes 8 pretty clear that business partners are not limited to device 9 manufacturers. 10 So let's go to other apps and so-called MR. SNYDER: 11 whitelisted apps. 12 device manufacturers. Those are the other categories other than 13 THE COURT: 14 MR. SNYDER: 15 THE COURT: 16 No. Let's stick with business partners -- But --- which consists of a universe of companies that is greater than device manufacturers. 17 MR. SNYDER: Well, I can list them, Your Honor, 18 because I have a list of them in front of me, and they are -- 19 they fall into two categories: 20 whitelisted apps. 21 in the Complaint, other than device manufacturers and Kogan, at 22 issue. 23 other apps or so-called And those are the only two other categories And as to those categories of so-called business partners, 24 from the user perspective, all apps are the same. 25 told, as we've marched through over the past half an hour or 45 Users are 49 PROCEEDINGS 1 minutes, that their friends could share their information with 2 apps. 3 apps or small apps. 4 THE COURT: It didn't say with public apps or private apps or big But I don't think the allegation about 5 business partners is that the business partners got Facebook 6 users' information through friends. 7 you can correct me, but I don't think that's the allegation 8 relating to business partners. 9 If I'm misunderstanding, I think the allegation relating to business partners is 10 that Facebook simply gave business partners access to this 11 data. 12 MR. SNYDER: I don't think so, Your Honor. My 13 understanding of the allegation is that they either gave it to 14 device manufacturers to facilitate a Facebook-like experience 15 on these other operating systems, one; or, two, that these 16 companies obtained Facebook user information, the so-called 17 business partners, as a result of friend sharing. 18 THE COURT: 19 MR. SNYDER: 20 THE COURT: Interaction with friends? Friend sharing. Where does it say that? I mean, where 21 does it say that in the Complaint? 22 to mean: 23 getting information about you through your friends without your 24 knowledge; and then we've got this separate problem with 25 business partners where Facebook was just giving data to these I interpreted the Complaint Okay, we've got the app problem here where apps are 50 PROCEEDINGS 1 2 business partners willy-nilly. And some of them are device manufacturers. And we can 3 kind of understand why device manufacturers needed to get data. 4 But we have these other companies and -- 5 6 MR. SNYDER: had access to the contact numbers. 7 THE COURT: 8 MR. SNYDER: 9 If you look at the allegation, 563, Apple Wait. Hold on. Let me go to 563. If you look at all of the partners, because I have them all broken down here on my outline, in each 10 instance, it was to either facilitate use on an operating 11 system or the ability to read -- there's an allegation, 557: 12 Up to 2017, Yahoo had access to users' news feeds, 13 including posts and users friends, for 100,000 users per 14 month -- I guess that's what Your Honor is referring to -- for 15 a feature that Yahoo had discontinued in 2012. 16 But that was with user permission, Your Honor. They're 17 apps. 18 categories, whether it's these private companies or public apps 19 or otherwise, users are told that their information will be 20 shared with third parties for purposes of targeting advertising 21 back to the users, which the plaintiffs acknowledge the 22 targeting of advertising is neither actionable or unlawful in 23 any way. 24 25 And so that's my point here. My point is that as to all And so it's hard to discern, again, I guess -THE COURT: I mean, I admit the allegations are a 51 PROCEEDINGS 1 little fuzzier here than they are in the third-party app 2 context. 3 MR. SNYDER: This is the problem with the Complaint, 4 Your Honor. 5 article and they just reprinted what they saw, without 6 conducting a reasonable enough investigation to back any of it 7 up as to this. 8 9 What happened is, they took every newspaper And there's no claim here, Your Honor, that there is a data breach. There's no claim here that there is any use by 10 any of these so-called business partners in excess of or in 11 contravention of user settings. 12 And so despite having so many at bats here, the most they 13 can come up with on this business partner claim is an 14 allegation that they don't like that these big companies got 15 their data. 16 Well, they had the ability, Your Honor, to restrict what 17 information was shared or not shared on the privacy settings 18 that we went through a little earlier. 19 forced or coerced sharing. 20 and knowledge of users. 21 So this is not, again, This is sharing with the consent And so this is -- this stands in no different camp or no 22 different analytical framework than any third-party app. 23 the question is: 24 where users were told that business partners, so-called, which 25 are just another category of apps, would get their information? And Is there a reasonable expectation of privacy 52 PROCEEDINGS 1 Again, Your Honor, what we're talking about here is a 2 complaint about information sharing on Facebook. 3 plaintiffs don't like it, and it's their right not to like it, 4 but there is no common law tort, common law analogue, statute 5 of Congress that makes it illegal for a social media company to 6 share information that users voluntarily share with friends in 7 circumstances where they were told, in clear and no uncertain 8 terms, that once you share your information, you lose control 9 of it and, even more, Facebook can't control what third parties 10 The do with it. 11 So not only is there no serious invasion of privacy, 12 there's no invasion of privacy at all, which, of course, brings 13 us full circle to the taboo topic, which I'm not going to get 14 to, which is Article III. 15 THE COURT: The other question that we haven't given 16 you a chance to address yet -- I think you've addressed 17 everything that I put out there except for this last issue, 18 which is changing the terms of service after somebody agrees to 19 it. 20 And mainly, I guess what I want from you -- if you want -- 21 I'm happy for you to argue it, if you want; but mainly, I want 22 to make sure I'm just not missing any cases that you think are 23 favorable to you -- 24 MR. SNYDER: Yes, Your Honor. 25 THE COURT: -- at this point. 53 PROCEEDINGS 1 MR. SNYDER: And I appreciated the question because 2 I think there is some misunderstanding, not in this Court, but 3 in general in the jurisprudence because of some of these old 4 cases that are hard to follow. 5 And I think this is a really easy, easy question. So the 6 answer is, there is clear incorporation by reference. 7 don't have to say "incorporated by reference" under the case 8 law. 9 sometimes called the privacy policy, was incorporated by 10 And the best cases showing that the Data Use Policy, reference into the SRR -- 11 THE COURT: 12 MR. SNYDER: 13 THE COURT: 14 No. I was actually asking -- Oh. -- the change -- I was more interested in hearing from the plaintiffs on that question -- 15 MR. SNYDER: 16 THE COURT: 17 You Got it. -- because I think they're a little bit behind the eightball on that issue. 18 MR. SNYDER: 19 THE COURT: Yes. But I think you are probably behind the 20 eightball on the issue of changing the terms of service after 21 users signed up. 22 MR. SNYDER: 23 THE COURT: 24 MR. SNYDER: 25 THE COURT: Aah. And so I wanted to -Yes. And as I said, I'm happy to hear you argue 54 PROCEEDINGS 1 that a little bit -- 2 MR. SNYDER: 3 THE COURT: 4 Yes. -- but mainly, I want to make sure I'm not missing any of the cases on that. 5 MR. SNYDER: 6 THE COURT: Okay. I know there were a couple of cases from 7 San Jose on that. 8 Judge Grewal decision on that that are somewhat favorable to 9 you. 10 11 I think there was a Judge Koh decision and a MR. SNYDER: There are good Ninth Circuit cases too, Your Honor. 12 THE COURT: There's a Donato decision that is 13 distinguishable but, I suppose, partly helps you; partly helps 14 the plaintiffs. 15 16 What else -- there was one other case I think I read on this. But I just want to make sure I'm not missing any cases. 17 MR. SNYDER: 18 THE COURT: 19 MR. SNYDER: 20 21 THE COURT: support you on this. 23 MR. SNYDER: 25 Okay. We can send them to Your Honor, or I can put them into the record. 22 24 There's actually a plethora of cases. But -- Go ahead and tell me what other cases There are two principles. There are two operative, dispositive principles here. The first is, users are bound, under California law, by 55 PROCEEDINGS 1 updated user agreements where the company, as here, updates its 2 agreements on the platform, where, as here, there is a 3 so-called unilateral modification clause which exists here. 4 Tompkins versus 23andMe, Ninth Circuit case from 2016, 5 840 F.3d 1016. 6 unilateral modification clause is enforceable in California 7 when -- and the Ninth Circuit didn't condition its holding on 8 any sort of notice requirement. There, the Court held that the modification -- 9 THE COURT: 10 MR. SNYDER: 11 THE COURT: 12 MR. SNYDER: 13 I have that in my stack, but I haven't -That was a -I haven't read that yet. That was a motion to dis- -- that was decided on the pleadings. 14 THE COURT: 15 MR. SNYDER: Okay. Ali, A-l-i, versus JPMorgan Chase, Ninth 16 Circuit 2016; Procurium, holding the same. 17 fully enforceable. 18 the issue was decided on the pleadings. 19 Not unconscionable, Again, no notice requirement. And, again, Then the second, several district courts have, as 20 Your Honor noted, held that continued use after posting of new 21 terms constitutes assent. 22 Tech case, Judge Grewal, 2013. 23 24 25 It's the Facebook versus Profile There is a Google case from 2016, Judge Koh decided, September 23, 2016, M-a-t-e-r-a v. Google. And same holding. And then there is the DeVries case, I think Your Honor 56 PROCEEDINGS 1 mentioned, from 2017 which holds: 2 "In general, courts have enforced new terms where 3 prior agreements included change-in-terms provisions." 4 There's the Campos case, another Northern District case 5 6 from 2019, Judge Corley: "Plaintiff has not shown that the [unilateral 7 modification] provision is subsequently 8 unconscionable, especially given that the arbitration 9 agreement that applies to plaintiff's dispute is the 10 agreement she expressly agreed to." 11 There's a West versus Uber case, Judge Gutierrez, 2018, 12 citing Biometric, which I'll get to in a minute, and find that 13 the plaintiffs assented to unilaterally modified terms when 14 they continued using Uber for a year after receiving notice of 15 the changes in terms. 16 17 THE COURT: And then Biometric was Judge Donato's case; right? 18 MR. SNYDER: 19 THE COURT: 20 MR. SNYDER: 21 THE COURT: 22 Facebook sent e-mails to -- 23 MR. SNYDER: 24 THE COURT: 25 MR. SNYDER: Yeah. Yeah. And then -That was the one where they sent -- Yes. And maybe that happened here too. Yes. 57 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: 3 THE COURT: 4 MR. SNYDER: We're going on the Complaint right now -Well, yeah. -- which doesn't contemplate -The truth is that Facebook did more than 5 merely post the revised contract on its website. 6 notice in a variety of ways. 7 THE COURT: 8 But we have to assume that it didn't for purposes of this motion; right? 9 10 It gave users MR. SNYDER: Well, you know, I think that in, again, the Donato case, Facebook users agreed, you know; and so -- 11 THE COURT: But that was, like, after -- that wasn't 12 just a summary -- that wasn't a motion to dismiss. 13 think it was even summary judgment. 14 evidentiary hearing. 15 MR. SNYDER: Right? I don't It was after an We don't need to -- the fact is, just so 16 Your Honor could be comfortable knowing that Facebook wasn't 17 trying to get one over, we did go beyond what the law required, 18 which, again, is an example of how the Complaint is not only 19 overblown -- 20 THE COURT: So let's talk about what the law requires, 21 then. 22 cases going in both directions on this issue and the courts are 23 sort of all over the map. I mean, I guess what I -- it does seem that there are 24 But I guess what I'm having trouble wrapping my head 25 around is, your argument seems to stand for the following 58 PROCEEDINGS 1 proposition. 2 say -- let's say I sign up in 2012, and the terms of service 3 say you can share information with your friends and under no 4 circumstances will we, Facebook, permit the disseminat- -- 5 allow the dissemination of that information to anybody else. 6 Your friends might do it. 7 doing it. 8 else. 9 else under any circumstance. 10 And I sign up for that. All right? Facebook has terms of service which We can't prevent your friends from But we will not provide that information to anybody We will not give access to that information to anybody And then a year later, Facebook 11 changes the terms of service and says: 12 disseminate all the information you make available to your 13 friends to anybody we like for any reason under any 14 circumstances. 15 all of my information to a thousand companies. 16 We have the right to And ten minutes later, Facebook disseminates Your position, it seems to me, stands for the proposition 17 that that's perfectly okay -- 18 MR. SNYDER: 19 THE COURT: 20 MR. SNYDER: I would say --- from a legal standpoint. No, Your Honor, because I neglected to 21 say and was about to say -- and then Josh reminded me to say -- 22 all of this is subject to the covenant of good faith and fair 23 dealing. 24 unfairly. 25 So you can't act in bad faith and you can't deal But as a matter of contract interpretation and 59 PROCEEDINGS 1 enforcement, you have a remedy. 2 THE COURT: If you don't -- You can't invoke the covenant of good 3 faith and fair dealing where you do something that is directly 4 authorized by the contract. 5 MR. SNYDER: 6 THE COURT: Well -And so if you are -- if the contract 7 explicitly says that Facebook has the right to change the terms 8 of service any time it wants without you agreeing to it, then I 9 don't think there could be a breach of covenant of good faith 10 and fair dealing claim because Facebook is doing what is 11 explicitly authorized by the contract. 12 MR. SNYDER: I would say, I have not studied that 13 issue because it's not implicated here. 14 every case to consider this issue has held that, under certain 15 circumstances, there could be an implied covenant of good faith 16 and fair dealing claim. 17 But I will say that But let me make two other points, because your 18 hypotheticals are challenging but, thankfully, are not this 19 case. 20 And so the terms here did not change in such a dramatic 21 fashion. 22 what the cases say, each of them -- or many of them, at 23 least -- is that the plaintiff has a remedy if they don't like 24 this contract, if they don't like this bargain which says 25 Facebook can change its terms of use from time to time. They're minor changes. But more important than that, They 60 PROCEEDINGS 1 have two remedies. 2 see how they've changed, "or," or they can discontinue using 3 the service if they don't like the rules of the road. 4 5 They can review them from time to time to And, of course, that, ultimately, is another fatal problem. 6 THE COURT: So if I'm using Facebook, I need to -- 7 every day I need to go check to see if my terms of service have 8 changed? 9 MR. SNYDER: Actually not, because as the plaintiffs 10 know -- and I believe the Court could take judicial notice 11 under Rule 12(b)(6) -- Facebook announces any major changes 12 prominently, repeatedly, in press releases, on its website, 13 often e-mails. 14 e-mails to users. 15 16 I mean, in the Donato case, often e-mails, And California courts -THE COURT: But what you're asking me to rule is that 17 if I sign up for Facebook, it's my obligation to read the terms 18 of service every day -- 19 MR. SNYDER: 20 THE COURT: 21 MR. SNYDER: That's not --- to make sure that they haven't changed. That's not what I said, Your Honor. 22 I said is that you're bound by the contract, and the 23 contract -- 24 25 THE COURT: service -- What Which says that we can change our terms of 61 PROCEEDINGS 1 MR. SNYDER: 2 THE COURT: 3 MR. SNYDER: Yes. -- any time we want. Yes, Your Honor. That's the contract. 4 And if you don't like a contract, you don't have to sign it. 5 They have a remedy. 6 THE COURT: 7 MR. SNYDER: THE COURT: Every case to That's not correct. There are cases going both ways on this. 12 13 You don't have to. consider this that I've seen -- 10 11 The problem is, I haven't yet agreed to the new terms of service because I don't know what they are. 8 9 They could discontinue service. MR. SNYDER: Well, okay. Well, I'm not aware of either a controlling Ninth Circuit case -- 14 THE COURT: 15 MR. SNYDER: For example, Judge Tigar's Safeway case. Okay. So whether there's an outlier case 16 or not, the weight of authority, the substantial weight of 17 authority, including from the Ninth Circuit in the Tompkins 18 case -- and I haven't gotten to the California Supreme Court 19 cases -- hold -- 20 THE COURT: 21 question of California law. 22 MR. SNYDER: 23 THE COURT: 24 25 We'll get to those because this is a Right. Tell me about the California Supreme Court cases. MR. SNYDER: The California -- 62 PROCEEDINGS 1 THE COURT: I would be bound by those cases; right? 2 MR. SNYDER: Well, the California cases all support 3 Facebook. 4 THE COURT: 5 MR. SNYDER: 6 intermediate appellate court. Okay. What are they? There's Casas, C-a-s-a-s, which is a 2014 7 ". . . even a modification clause not providing for 8 advance notice does not render an agreement illusory, 9 because the agreement also contains an implied 10 covenant of good faith and fair dealing." 11 And California courts have held, Your Honor, that even in 12 the face of a direct contractual right -- and this is from the 13 Tompkins case at page 1016, 840 F.3d 1016. 14 writes: The Ninth Circuit 15 "California courts have held that the implied 16 covenant of good faith and fair dealing prevents a 17 party from exercising its rights under a unilateral 18 modification clause in a way that would make it 19 unconscionable." 20 There's no allegation here that anything unconscionable 21 22 23 occurred. There's another case, Serpa, S-e-r-p-a. THE COURT: So, in other words, if the provision that 24 is adopted later would have been unconscionable when adopted 25 originally, then it can't be adopted later. Is that what that 63 PROCEEDINGS 1 2 stands for? MR. SNYDER: I believe it says -- and the Casas case 3 holds this. 4 case, I think, holds this -- that if a subsequent modification 5 renders the contract unconscionable, such as some hypothetical 6 that we can think of -- Tompkins is quoting or citing Casas. 7 THE COURT: 8 MR. SNYDER: The Serpa Right. -- then the implied covenant of good 9 faith and fair dealing may step in and bar the contracting 10 party from exercising its contractual rights in a way that 11 would be -- 12 THE COURT: So, in other words, if you could never 13 have agreed to it in the first place, you're not -- Facebook 14 isn't allowed to adopt the same provision later. 15 16 MR. SNYDER: only in the substantive outcome or the change, or delta -- 17 18 19 I'm not sure whether unconscionability is (Co-counsel confer.) MR. SNYDER: Yeah. Okay. Thank you. So Perdue actually answers the question, Perdue versus 20 Crocker Bank, California Supreme Court, 38 Cal3d. 913, at 21 page 924: 22 ". . . we hold as a matter of law that the card is a 23 contract authorizing the bank to [unilaterally] impose 24 such charges, subject to the bank's duty of good faith 25 and fair dealing in setting or varying such charges." 64 PROCEEDINGS 1 So in the end, if a party is acting in a piggish or 2 blatantly commercially unreasonable way, the courts are going 3 to step in, in equity, and say -- in law and equity and say, 4 "No, we're not allowing this." 5 6 7 And so this is not that case. THE COURT: That's about, like, increasing fees without -- okay. 8 MR. SNYDER: 9 THE COURT: And that's not this case, of course. Could I ask you, though. I mean, why 10 would it be so difficult for Facebook to simply say -- let's 11 say I agree to a terms of service, and then there's some 12 significant change in the terms of service. 13 Facebook account. 14 create a pop-up which says, "Our terms of service have changed. 15 You need to agree to the new terms of service before you 16 continue to use Facebook"? Why would it be so hard for Facebook to just 17 18 (Co-counsel confer.) MR. SNYDER: Okay. 19 One -- I got it, Josh. 20 One, they did. 21 THE COURT: 22 MR. SNYDER: 23 24 25 And I go on to my Okay. Two answers to that. But that's not in this motion. I understand you asked a question. And so Judge Donato writes, Facebook sent -- that -- the fact that the terms were changing, quote: "They were provided notice that the terms of the 65 PROCEEDINGS 1 user agreement were changing through an e-mail from 2 Facebook sent directly to the e-mail addresses each 3 plaintiff had on file with Facebook. 4 plaintiff -- none of whom disputes remaining an active 5 Facebook user to this day -- would also have received 6 a 'jewel notification' on his individual Facebook 7 newsfeed. Each This individualized notice" -- 8 THE COURT: 9 MR. SNYDER: 10 THE COURT: 11 MR. SNYDER: I read -Okay. I read -So that's point one. 12 Point two is, as a commercial actor, Facebook has its own 13 business reasons why it does or doesn't decide to have pop-ups 14 as opposed to e-mail notifications. 15 to any cause of action under the common law or any 16 congressional statute. 17 18 19 20 21 But that doesn't give rise And, again, it comes full circle, Your Honor, to Facebook's basic point. Your Honor just asked a good question, a very good question. Should the Facebooks of the -- 22 THE COURT: 23 things like that -- 24 MR. SNYDER: 25 THE COURT: Facebook pays you a lot of money to say No. -- to me. 66 PROCEEDINGS 1 2 MR. SNYDER: No, Your Honor. Should social media platforms be required to provide 3 pop-up notices when they change their terms of service? 4 a very interesting question. 5 agree and disagree; legislators should agree and disagree. 6 That's I'm sure editorialists would If that is going to be the law of the land, it's going to 7 be because either Article II legislature says so, a state 8 legislator says so, the executive branch, the FTC says so. 9 10 THE COURT: requires it. 11 12 Or because California contract law MR. SNYDER: Or because California contract law requires it. 13 And there is no principle of contract construction or 14 canons of interpretation that would read the SRR and California 15 law to render invalid Facebook's absolute constitutional and 16 contractual right, because the right to contract is 17 constitutionally based. 18 reasonably. 19 violate the implied covenant of good faith and fair dealing, as 20 Judge Grewal said and other judges said, the plaintiff is not 21 without a remedy. 22 like it. 23 We have a right to write our contracts And so long as they're not unconscionable or They can stop using Facebook if they don't THE COURT: Okay. So what I would like on this issue 24 is just a letter from both sides by Friday, listing -- no 25 argument, no parenthetical -- just listing the cases that I 67 PROCEEDINGS 1 should read on this issue. 2 didn't -- I know there were page limits in the brief, and it's 3 nobody's fault, but it didn't get great treatment in the 4 briefs, and I think it's an interesting and important question. 5 MR. SNYDER: Okay? Because it wasn't -- it I know I'm about to sit down. May I just 6 ask two questions? 7 address Question 2, which is the incorporation by reference 8 question? The first is: 9 THE COURT: 10 MR. SNYDER: 11 12 13 14 No. Does Your Honor want me to That's okay. Okay. And then, two, I'll just ask Your Honor to consider giving me five minutes. THE COURT: Let's see where we are at the end because -MR. SNYDER: It's very pertinent to -- of course, I 15 showed restraint, and I hope -- but the arguments I just made 16 obviously dovetail with an informed standing analysis. 17 THE COURT: I will tell you that I've given a 18 tremendous -- both at the last hearing and in preparation for 19 this one, I've given a tremendous amount of consideration to 20 the standing issue. 21 MR. SNYDER: 22 THE COURT: 23 any further argument on it. 24 25 MR. SNYDER: respect that. Of course. And I really don't think I need to hear Well, I will just -- I appreciate and If I can reserve, at Your Honor's sole 68 PROCEEDINGS 1 discretion, three minutes at the end, I'd appreciate you 2 begging my indulgence. 3 THE COURT: So what I propose that we do now is, I 4 propose that we take a five-minute break. 5 about an hour and a half. 6 hear from the plaintiffs and maybe give Facebook the last word 7 briefly, hopefully not on standing. 8 And then we can return and I can And we'll aim to wrap up at about 1 o'clock so that people 9 can get some lunch. 10 All right. 11 We've been going for Okay? Thank you. THE CLERK: Court is in recess. 12 (Recess taken at 12:02 p.m.) 13 (Proceedings resumed at 12:12 p.m.) 14 15 MR. LOESER: Your Honor, while people are piling in, I have a PowerPoint that I'll hand up to you. 16 THE COURT: 17 get through this PowerPoint. 18 MR. LOESER: 19 THE COURT: You realize you're not going to be able to I know. But you read everything; so -- We don't need to go through this 20 PowerPoint. 21 in and have you respond on the consent points. 22 that's sort of the meat of it. What I would like to do is maybe just jump right I mean, I think 23 How do you want to respond to their points regarding 24 consent with respect to third-party apps and business partners? 25 Why don't we start with third-party apps. 69 PROCEEDINGS 1 MR. LOESER: Sure. And tracking with the questions 2 that you asked -- and just so you know, I'll be answering some 3 of the questions, including the consent questions. 4 will jump up for other matters. 5 probably occupy both podiums unless you tell us not to. 6 THE COURT: 7 MR. LOESER: Great. Ms. Weaver And at some point, we'll That's fine. And the -- and so Question Number 2 is 8 this issue of corporation; so we'll get back to that and we'll 9 talk about consent. 10 First, just as a threshold issue, this notion that there 11 are no privacy rights for people on Facebook, I won't waste a 12 lot of time on that. 13 in the sense that they're saying that it really doesn't even 14 matter if you consented or not; there's no privacy rights. 15 that's clearly wrong and clearly inconsistent with positions 16 Facebook has taken in other cases like the SCA case that we 17 talked about the last hearing. 18 wrong. 19 It's obviously -- it relates to consent So, but I think it's obviously And so the actual disclosures are extremely important. And we talked a bit about this at the last hearing as 20 well, but it's worth just mentioning. 21 indicated in a lot of your questions, it's obviously a very 22 factual issue. 23 dismiss. 24 25 And And as you have It's generally not decided on motions to It's not the least bit uncommon for -THE COURT: Well, a fair number of courts do decide them on a motion to dismiss, but they don't -- it seems like 70 PROCEEDINGS 1 they often do so without inquiring whether it's appropriate to 2 decide them on a motion to dismiss. 3 I mean, they kind of just look at the language, and they 4 say that was disclosed, and they move on without inquiring 5 whether there are other plausible interpretations of the 6 language and whether it's appropriate for them to be making 7 these rulings at a 12(b)(6) stage as opposed to a later stage. 8 9 MR. LOESER: Yeah. I think, fortunately, in this district, where you had a lot of social media cases, cases 10 against Facebook, Google, Yahoo, the courts have been extremely 11 thorough in their analysis, have looked at what the disclosures 12 really say. 13 The Opperman case, which we talked about last time, 14 Judge Tigar really indicated what the standard was very 15 clearly. 16 Where you have language that people can interpret in different 17 ways, it is not appropriate. 18 He indicated why it's not appropriate to decide. So there are cases -- Facebook likes to talk about the 19 Smith v. Facebook case in which the Ninth Circuit ruled as a 20 matter of law. 21 case. 22 duties or its promises when it monitored website browsing. 23 they disclosed precisely that, that they monitor website 24 browsing. 25 say, "Look, there's no dispute. That really stands in stark contrast to this There, the case was about whether Facebook breached its And That's the kind of circumstance where the Court can There's nobody even disputing 71 PROCEEDINGS 1 it." 2 binding on them, unlike this case. 3 circumstance. 4 The plaintiffs didn't even dispute that the terms were So that's the rare The much more common circumstance is in the litany of 5 cases that we've cited in our briefs and which Judge Koh and 6 Judge Tigar and others go through and very clearly indicate, 7 when you have two competing interpretations, it's not 8 appropriate for a motion to dismiss. 9 10 So, first, the threshold issue is -THE COURT: So on that issue, let me ask you. What 11 would you expect -- so the idea behind not ruling on an issue 12 like this as a matter of law at the motion to dismiss stage is 13 that there will be something that will help you, at a 14 subsequent stage in the litigation, figure out what the true 15 answer is. 16 Right? And so what is that in this case? I mean, what 17 information -- let's say we got to the summary judgment stage. 18 What information would I be able to bring to bear on this 19 interpretation question that I can't bring to bear now? 20 MR. LOESER: Well, first of all, Your Honor, just -- 21 and this is, again, not the least bit unusual. 22 interpretation of these documents, and they have a different 23 interpretation. 24 disputed issue of fact, subject to you or a jury then decides 25 whose interpretation is more reasonable. We have an So that just, by its nature, means there's a 72 PROCEEDINGS 1 Well, it depends how plausible your THE COURT: 2 interpretation is. 3 dismiss stage. But let's assume we get past the motion to 4 Contract interpretation is a question of law; right? 5 mean, if it is a contract, would it be a jury question -- 6 MR. LOESER: 7 THE COURT: 8 MR. LOESER: 9 10 I It would. -- as to what this disclosure disclosed? When there are two plausible interpretations of a contract, I think it's a question of fact. The jury decides what the reasonable interpretation is. 11 I always thought it was like -- I thought THE COURT: 12 California law was pretty clear that contract interpretation is 13 a question of law for the judge to decide. 14 MR. LOESER: Well, here's how Judge Tigar looked at 15 the issue in the Opperman case. 16 quote; so I'll try and skip to the end but frame it. 17 is 205 F.Supp.3d at 1077. 18 you're looking at. 19 this. 20 they didn't disclose -- And it's a bit of a long The Court is looking at exactly what They say the contract and the terms means The plaintiff says it means that. The plaintiff said 21 THE COURT: And it's for the jury. 22 MR. LOESER: Yeah, for the jury. 23 THE COURT: 24 25 And this And the judge -- Judge Seeborg has -- I think it's a Facebook case, where he says the same thing. MR. LOESER: But I just -- Well, I'll just read the end, the last -- 73 PROCEEDINGS 1 THE COURT: Is there any analysis of California 2 contract law in those cases and any engagement on the question 3 of whether it should be a judge or a jury question? 4 MR. LOESER: Well, I believe so. And I'd have to flip 5 open Opperman to see if he's citing other Ninth Circuit or 6 federal cases or California cases. 7 state cases, but I'll check that. 8 9 I believe he does dip into But the last line of the quotation I was going to read, he writes: 10 "It remains to be seen whether these expectations 11 were objectively reasonable, but that is a question 12 for the jury, not this Court." 13 And there are other cases that we've cited in which 14 the courts indicate that the Court would have some discomfort 15 substituting its own views for that of the jury when deciding 16 these disputed issues of fact. 17 So I think the other thing, you're asking what would we 18 show later? 19 just the contractual terms, I think it's also important to 20 hear -- 21 Well, discovery would occur. THE COURT: And in addition to But what discovery would be relevant to 22 the question of how a reasonable Facebook user in 2012 would 23 interpret this language? 24 25 MR. LOESER: Well, we could certainly ask questions about why -- what does the language mean to Facebook? What do 74 PROCEEDINGS 1 2 they think the theory is? For example, there were things said today about how nobody 3 that uses Facebook and shares anything would ever believe 4 anything is private. 5 of executives at Facebook. 6 that statement. 7 the opposite in courts and they've said just the opposite 8 publicly. 9 Well, I'm pretty sure that's not the view They would strongly disagree with I know they would, because they've said just So there's all kinds of testimony we could elicit about 10 the surrounding circumstances of the disclosures and the 11 reasonable expectations of Facebook and people utilizing 12 Facebook. 13 THE COURT: I assume you would ask for all documents 14 that reflect Facebook's decision for what language to adopt in 15 its terms of service or in the section in its terms of service 16 on apps. 17 MR. LOESER: 18 THE COURT: 19 MR. LOESER: There would be all kinds of questions. 20 MS. WEAVER: It's funny you should raise this because Right. Third-party apps. 21 one of the points that we were talking about is that in our -- 22 we issued a set of very narrow requests for production, and our 23 RFP Number 5 sought, actually, the disclosures that Mr. Snyder 24 was referring to; i.e., please produce to us all documents that 25 reflect notice to users when you change your terms of service. 75 PROCEEDINGS 1 And we received nothing from them that directly 2 communicated to users, "We are changing terms of service." 3 maybe that's just incomplete discovery. 4 opportunity to pursue it. 5 the terms of reasonableness and context, is important. 6 So We haven't had the But certainly, that notice issue, in If you look through the cases that decide MR. LOESER: 7 the issue of what the disclosures mean on summary judgment and 8 other stages, invariably they're referring to deposition 9 testimony of the plaintiffs; they're referring to deposition 10 11 testimony of the executives about what was intended. THE COURT: But the test is a reasonable Facebook 12 user; right? 13 courts treat it and it sounds like -- it sounds like both sides 14 agree that it's the reasonable Facebook user at the time. 15 so it sounds like an objective inquiry, not a subjective one, 16 where the actual -- where the actual views of the plaintiff 17 would be dispositive, which is weird because it's a contract 18 and we're -- It's not -- it sounds like from the way the 19 MR. LOESER: 20 THE COURT: 21 22 And Right. -- inquiring about whether there was a meeting of the minds. MR. LOESER: Well, and I think that the -- like, the 23 allegations in the Complaint by the plaintiffs we would say are 24 reasonable interpretations of the contract. 25 upon whether the language is reasonable, that you have a bunch And so it bears 76 PROCEEDINGS 1 of people who read it that way and they reasonably concluded 2 that that's what it means. 3 You know, I can -- there's a variety -- if discovery were 4 to go forward here, we would ask for all kinds of information 5 that I think would fill out the question for you about: 6 interpretation is more reasonable? 7 did Facebook executives believe? 8 things mean? 9 them and take them into account when deciding what to do? 10 Whose What is it based on? What What do they think these And how did people like the plaintiffs react to You were going to say, other than that THE COURT: 11 sort of discovery. 12 about to say that there's some other type of information that 13 could be brought to bear. 14 I think I interrupted you before you were MR. LOESER: Right. I would just refer the Court to 15 the fact that there are a number of regulatory agencies that 16 have investigated Facebook, investigated their conduct, their 17 disclosure, the terms of service, data policy, all of these 18 documents they took into account. 19 In England, the DCMS collected a huge amount of 20 information, evaluated Facebook's conduct, and came to 21 conclusions. 22 obtained lawful consent and Facebook had not been clear. 23 And those conclusions were that Facebook had not And, you know, the FTC, back in 2011, looked at these same 24 disclosures, evaluated them. 25 which is still an issue pertinent to today, which is: At the time, the issue was -Was it 77 PROCEEDINGS 1 clear to people that their privacy settings didn't actually 2 control who got to see their information? 3 upon its collection of evidence, "No, it's not clear. 4 disclosures are not adequate." 5 6 These And so that kind of evidence was gathered by these regulators, and they came to a determination which -- 7 8 The FTC said, based THE COURT: Are you talking about the current FTC investigation? 9 MR. LOESER: In 2011 -- they're sort of joined. In 10 2011, the FTC told Facebook, "Your disclosures are not 11 adequate. 12 privacy settings don't actually control who sees this stuff." 13 You are not making it clear to people that your THE COURT: Right. I was confused. I thought you 14 were talking about -- because what the FTC is investigating now 15 is whether Facebook violated the terms of the consent decree -- 16 MR. LOESER: 17 THE COURT: 18 MR. LOESER: 19 THE COURT: 20 Right. -- by not adequately disclosing -Right. -- what it was doing with this information. 21 MR. LOESER: Right. Because what Facebook agreed in 22 2011 was that if they were going to disclose information in a 23 way that exceeded people's privacy expectations or privacy 24 settings, they would have to get express informed consent to do 25 that. 78 PROCEEDINGS 1 And the FTC is investigating whether, when they gave the 2 information -- I think, based upon public disclosures and 3 articles -- when they gave information to whitelisted apps and 4 to business partners and Cambridge Analytica, were they, in 5 fact, exceeding the users' privacy settings, which is what we 6 allege in this case, and the FTC is evaluating whether that 7 occurred. 8 9 Now, at the motion to dismiss stage, I think it's fair to look at that. 10 You don't have to -- THE COURT: But is the FTC inquiring into whether, 11 like, a reasonable Facebook user would understand these 12 disclosures to mean what Facebook says they mean? 13 engaging in a somewhat different inquiry; namely, whether 14 Facebook violated its agreement with the FTC, the consent 15 decree with the FTC? 16 MR. LOESER: 17 18 Or are they I'm not in the room, Your Honor, but I'm sure that both of these things are being discussed. I would think that if they're saying to Facebook -- and 19 Facebook's counsel, who I think is involved in that 20 investigation, could probably get up and explain this better 21 than me. 22 decree -- and the consent decree required that they get express 23 consent if they were going to exceed privacy settings -- then 24 what Facebook, I'm sure, is telling them is that "We didn't 25 exceed privacy settings, and here are our disclosures." But if the allegation is they violated the consent The 79 PROCEEDINGS 1 FTC, I would think, would be evaluating those disclosures. 2 THE COURT: I mean, I think about, like, the food 3 labeling cases, where there's something on the label of 4 vitamins or something and the plaintiff comes in and argues 5 that it's misleading. 6 the experts conduct surveys, and they offer opinions about what 7 the ordinary consumer would interpret this disclosure on the 8 label to mean. 9 And there's a battle of experts. And I mean, when you hear "reasonable Facebook user" and "What 10 would a reasonable Facebook user understand these words to 11 mean?" you think about those surveys. 12 sort of weird in the context of a contract between, you know, 13 Facebook and individual users to conduct that sort of inquiry. 14 So anyway, I was curious if you thought that that sort of 15 thing would be relevant to answering the question. 16 MR. LOESER: Go ahead. 17 MS. WEAVER: Well, yes. 18 But, again, it seems I mean, I think, certainly, the user experience in this particular case -- 19 THE COURT: I'm sorry. I'm enjoying the contrast 20 between what he's brought up to the podium and what you've 21 brought up to the podium. 22 23 MS. WEAVER: It's a little -- uh, yeah. What can I say? 24 THE COURT: 25 MS. WEAVER: Sorry. Go ahead. But I do think you're right, Your Honor, 80 PROCEEDINGS 1 that the user experience, if we got to trial in this case, we 2 would want to actually replicate what the platform looked like 3 in 2007. 4 there were any policies. 5 So the question is: I mean, we have plaintiffs who joined in 2005, before What did it look like? How did they 6 change it? 7 back -- and as they added -- I mean, for example, the app 8 setting was not added until December 2009. 9 know, somebody who signed up, as you noted previously, might 10 have a very different experience trying to hunt for that when 11 they thought that they knew already how the platform worked, 12 especially if they aren't getting a notice saying, "This is 13 where you need to go." 14 Is it reasonable to understand that you would go THE COURT: And what -- you But in any of these other cases, like you 15 mentioned Judge Tigar's case -- that was the Safeway case; 16 right? 17 battle of experts in that case? 18 what the individual plaintiffs in that case understood the 19 language to mean? 20 21 22 And he said this is a question for a jury. MR. LOESER: Was there a Or was it a question about I'm just looking at the decision, Your Honor, to see if there's any reference to the actual -THE COURT: I think in the decision, he's just looking 23 at the language and saying -- I didn't see any reference to, 24 like, a battle of the experts or anything. 25 there was one at trial or if there even was a trial. I was curious if I don't 81 PROCEEDINGS 1 2 even know if there was a trial. MR. LOESER: Yeah. All I can say, just looking at 3 this quickly, is the Court was considering the evidence that 4 the plaintiffs presented, which included their own testimony 5 about what they believed the service was supposed to be, based 6 upon the disclosures that were given to them. 7 MS. WEAVER: But here, also at issue is the conduct. 8 I mean, there are a lot of questions of fact around what -- 9 and, in fact, you know, even in the defendant's presentation, 10 there's a citation here to a paragraph 485, when we were 11 discussing business partners. 12 And, you know, we've quoted: "Facebook notes that this list is 'comprehensive 13 to the best of our ability.'" 14 But it stated: 15 ". . . it is possible we have not been able to 16 identify some integrations . . . ," et cetera. 17 So there's a lot of unknowables out there. We've tried to 18 plead a very particularized complaint, but we don't actually 19 know -- to be truthful, we don't know all of the facts about 20 business partners. 21 because early on, there were more disclosures. 22 fewer public disclosures. 23 THE COURT: We at least know about some of the apps Yeah. There have been But you don't go past the 12(b)(6) 24 stage because we need to find stuff out. 25 asking is: The question I'm What type of information would I use that I'm not 82 PROCEEDINGS 1 capable of using now at the 12(b)(6) stage to resolve this 2 interpretation question? 3 it's a hybrid contract interpretation question/disclosure 4 interpretation question. 5 MR. LOESER: Which seems like -- it seems like Well, and I think -- and I apologize that 6 we're going back and forth; but, again, we'll do it until you 7 tell us we can't. 8 9 But the point you made earlier about changing expectations about how social media works, for example, I could see the 10 value of an expert who would talk about that, who would talk 11 about what people reasonably expected based upon how apps were 12 used and a new technology and the fact that -- it could look at 13 language that Facebook uses now, for example, and contrast it 14 to what it was using before to make the point that people 15 reasonably -- their interpretation -- the plaintiffs' 16 interpretation that they provided in the Complaint is a 17 reasonable one. 18 So, sure -- 19 THE COURT: But you probably could have done that; 20 right? 21 considered at the 12(b)(6) stage -- right? -- the language that 22 Facebook uses now compared to the language it used before? 23 24 25 I mean, that could have been something that we MR. LOESER: Correct, and we have cited that. I'm suggesting that there would be a role of an expert witness to talk about reasonable expectations. 83 PROCEEDINGS 1 Also, I don't want to rule out the relevance of actually 2 taking depositions of Facebook people. 3 Mr. Zuckerberg talks a lot publicly about how important privacy 4 settings are and what they intended to communicate with their 5 disclosures and what mistakes were made and what needs to be 6 made more clear. You know, 7 Well, a deposition in which we get into those topics, 8 I think, would be highly useful for determining ultimately 9 whether the plaintiffs' interpretation is reasonable. So 10 I think there's discovery of Facebook people who were involved 11 in running the company, given how important they say privacy is 12 to people's experience. 13 And I think that's a point that's worth stepping back and 14 making. 15 disclosures. 16 Then I really do want to get into the specific And that's the nature of Facebook. I think we all should 17 have a lot of concern and take pause when Mr. Snyder tells 18 everyone that there is no expectation of privacy when people 19 use Facebook. 20 to consider when it talks about what happens when a company 21 creates the reasonable expectation of privacy and induces 22 people to share. 23 for Facebook, is they need people to share data. 24 they make money. 25 And the case law, I think, is really important And that really is the currency of the realm That's how That's how they made $55 billion last year. And this notion that you can create this reasonable 84 PROCEEDINGS 1 expectation of privacy to induce people to share but then come 2 into court and say that it's completely unreasonable, as a 3 matter of law, for people to have any expectation of privacy 4 I think is really concerning. 5 dismiss, it really shouldn't help Facebook. And particularly on a motion to 6 But more broadly, I think it's a very concerning point 7 that they're making here, given how much they've done to create 8 this Facebook experience that gets people comfortable sharing. 9 So, but getting into disclosures themselves, you know, 10 there are -- and the briefing has gone through and the 11 Complaint goes through in some detail the different disclosures 12 Facebook made. 13 Mr. Snyder was referring to our discussion of those disclosures 14 as somehow admissions that people were given information, 15 obviously, those were not admissions. 16 Your Honor, I think, rightly noted, when In fact, usually, the paragraph -- like he raised 17 paragraph 599 which talks about a disclosure. 18 paragraph, 600, says contrary to that disclosure. 19 So we have gone through all these things. 20 a reason why we listed them in the Complaint. 21 the Court to consider them. 22 The very next I think there's We do want And in our briefing, we've gone through and we've put 23 these disclosures and the misconduct into different buckets. 24 I think that, just for the sake of time, we won't go through 25 all of the categories; but Your Honor is aware there's business 85 PROCEEDINGS 1 partner disclosures that we think are misleading; there's 2 whitelisted apps; there's disclosures to advertisers. 3 said they wouldn't disclose your information -- personal 4 information to advertisers, but it was misleading because a lot 5 of the business partners are advertisers. 6 these disclosures about third-party apps. 7 8 partners and third-party apps -THE COURT: 10 MR. LOESER: 12 13 And then there's And so what we'll talk about now, I think, are business 9 11 They Okay. -- and websites. So -- and we talked about business partners in some detail before; so perhaps that's a shorter conversation. But what Facebook told people was: We may provide 14 information to service providers to help us bring you the 15 services we offer. 16 And we've listed these disclosures on page 26. 17 from the last hearing. 18 these slides. 19 a declaration, and we refer to the declaration. 20 We learned We have paragraph references on most of Here, some of these disclosures were provided in THE COURT: But what I want to -- I understand the 21 disclosure. 22 given information in that disclosure seems different from the 23 list of companies that you've included on 24 paragraph 400-something of your Complaint. 25 I understand that the description of who is being But what I guess I'm still struggling with a little bit 86 PROCEEDINGS 1 with respect to business partners is, putting aside the device 2 manufacturers, how did Facebook -- I mean, they say that: 3 those are just -- those other ones are just third-party apps. 4 Oh, And I guess my response to that is, I look through your 5 Complaint and I'm not really sure who those people are or what 6 bucket they should fit in. 7 manufacture point. 8 because I think it's pretty obvious that if I'm using Facebook 9 on my iPhone, iPhone is going to have access to my data. 10 less obvious in 2012, but probably still fairly obvious. 11 I think I get the device I think it's kind of a weak point for you Maybe But, so that's why I asked you, pick a couple of these 12 companies and explain to me a -- couple of these business 13 partners and explain to me what the complaint alleges about 14 what happened with respect to those companies that was not 15 disclosed. 16 I just don't -- I still don't quite understand. MR. LOESER: Right. And Ms. Weaver is going to 17 address that. 18 on to that, I think it is important to look at the specific 19 language of the disclosures themselves. 20 as "service providers" or "vendors" are used, that's the 21 analysis that you have to do and that Judge Tigar did and 22 Judge Koh did when looking at the particular disclosures. But I will make the point, just before you move 23 THE COURT: 24 MR. LOESER: 25 THE COURT: And where terms such I totally get that point. Yeah. And so if there's -- I get that point. 87 PROCEEDINGS 1 MR. LOESER: 2 THE COURT: Right. But the part that I don't quite get from 3 your Complaint is, what were the circum- -- what did Facebook 4 do with this information? 5 have all this information"? 6 between Facebook and these business partners that resulted in 7 the business partners getting the data? 8 friends? 9 business partners got my data, or was it through me, or was it 10 Did Facebook just say, "Yahoo, here, Or what was the arrangement And was it through You know, was it through my friends that these directly from Facebook? All of that is a little bit fuzzy. 11 MR. LOESER: Right. 12 MS. WEAVER: So those allegations, Your Honor, are in 13 489 and 490, for example. 14 Yahoo, which you just referenced. 15 THE COURT: 16 MS. WEAVER: 17 THE COURT: 18 MS. WEAVER: Okay. The three that we picked included Wait. Hold on. Hold on. No problem. Let me go to those. Yes. Sorry. You're -- So 484, you're right, was the 19 paragraph that lists the 53 business partners that Facebook has 20 currently identified. 21 And just to circle back to the point I made earlier, on 22 the issue of determining at a motion to dismiss whether these 23 particular disclosures are adequate, you might want to know if 24 there are other entities out there that are not on this list. 25 And Facebook is saying here that there may well be others. 88 PROCEEDINGS 1 So, of course, I understand our burden at the pleading stage, 2 but it's a little bit of a Catch-22. 3 What we know is at 486, the business partnerships were 4 formed as early as 2007. 5 Yahoo, if you go to 489: We know that, for example, with 6 ". . . Yahoo, was [sic] able to read the streams of 7 users' and users' Friends posts, while others, like 8 Sony, Microsoft and Amazon, were able to obtain . . . 9 e-mails." 10 And so the question arises, if, as Mr. Loeser says -- 11 12 THE COURT: So what do we know about how? Like, was this -- 13 MS. WEAVER: 14 THE COURT: We know that they used -Were they obtaining this stuff through my 15 friends, or were they obtaining it through some interaction 16 with me or, sort of, through some separate partnership or 17 arrangement with Facebook? 18 MS. WEAVER: So the technical answer is that they were 19 obtaining content and information through a Graph API. 20 not exactly what you are asking, but I wanted to give you that 21 information as well. 22 sets up so that they can obtain it. 23 That's So it's through a platform that Facebook And, yes, it's our understanding that what they are 24 getting is the world. 25 Netflix. And, in fact, I believe -- maybe it was It wasn't just friends. It was friends of friends. 89 PROCEEDINGS 1 So that's an even larger community. 2 we would argue, applies to this. 3 4 THE COURT: MS. WEAVER: 6 THE COURT: 7 MS. WEAVER: 8 THE COURT: 10 11 But is it as a result of my friend interacting with Netflix? 5 9 And, again, no disclosure, Yes. With the Netflix app? Yes. So it is the same -- there is really an overlap between your list of business partners and third-party apps? MS. WEAVER: Right. And -- exactly. And I'm not 12 really sure -- we're not sure -- there's been -- there are 13 three groups; right? 14 FTC and Facebook agreed that those apps would be disconnected. 15 And then it was only later revealed that there were these 16 whitelisted apps that includes Netflix and, for some reason, 17 Airbnb and Alibaba. 18 frankly -- 19 THE COURT: There's apps before 2015. And then the And, you know, there's a -- and, Right. But the way -- it sounds like what 20 you're saying -- but I want to make sure I understand -- is 21 that the way these companies, like Netflix, Alibaba, whoever, 22 got my data -- I'm using me hypothetically; I'm not on Facebook 23 but -- the way they got my data is by interacting with my 24 friend, and I had not adjusted my app settings to prevent the 25 apps from getting my data from my friend. 90 PROCEEDINGS 1 So it's basically the same analysis for these business 2 partners as it is -- with the possible exception of the device 3 manufacturers, it's basically the same analysis for these 4 business partners, in terms of disclosure, as what you're 5 calling third-party apps. 6 MS. WEAVER: That is true, but with an important 7 exception. 8 turned off app sharing in, I believe, 2015, and they told users 9 that. 10 apps. Facebook actually disabled the app setting that And yet, after that date, they gave data to whitelisted 11 THE COURT: 12 MS. WEAVER: Right. Okay. And so there's no mechanism there. Like, 13 our understanding is that it is somehow through friends of 14 friends, but there's no consent and there's no ability of the 15 user to turn it off anymore. 16 THE COURT: So then what is the point of creating this 17 category of business partners in your complaint? 18 seems like kind of an artificial category of entities receiving 19 my data. 20 MS. WEAVER: 21 THE COURT: I mean, it Well, I agree with that. Seems like half of them or more should 22 just -- they fall in the same category as what you're 23 describing as third-party app sharing, and the same analysis is 24 to be conducted. 25 MS. WEAVER: Yeah, I don't disagree. I think, 91 PROCEEDINGS 1 honestly, part of it is a function of timing. 2 We filed this case. It was about Cambridge Analytica and 3 apps. 4 complaints were filed, and we said, "No, this is actually 5 related. 6 in. 7 partners and apps. 8 9 And then this other story broke. And if you'll recall, It's all about third-party data," and we brought it And we have a different body of information about business And so the truth is, we don't know exactly. I mean, we know that Facebook makes some facial argument that it was 10 device makers in the beginning and that that was how they were 11 accessing. 12 fact that we know, for example, a New York attorney general is 13 now investigating Facebook, focusing specifically on the issue 14 of business partners. 15 16 17 But there's a lot that remains unknown, beyond the So, you know, I think in some broad sense you are right. What we have alleged. THE COURT: So it sounds like -- I mean, it almost 18 sounds like what you're saying is that there was this second 19 New York Times article which did not reflect a proper 20 understanding of what was happening, and you sued on that 21 New York Times article that didn't reflect a proper 22 understanding of what was happening. 23 24 25 MS. WEAVER: not true. You sound like Mr. Snyder. No, that's I mean, let's start at this premise. THE COURT: Don't ever say that to me again. 92 PROCEEDINGS 1 MS. WEAVER: I'm so sorry. 2 MR. SNYDER: Oh, God. 3 MS. WEAVER: We've retained experts. 4 You hurt my feelings. We've analyzed how the -- 5 THE COURT: It sounds like The New York Times article 6 sort of categorized them -- put them in two separate buckets 7 and you just adopted that for the purpose of drafting your 8 Complaint, but it's wrong. 9 10 MS. WEAVER: That's not true. So what I would just say there is, our understanding is 11 there are technical differences. 12 obtained the data through Graph API Version 1.0. 13 turned off at one point and turned into Graph API Version 2.0. 14 And then, at some point in time, these apps developed their own 15 APIs. 16 So the early apps got -- It's just a way to access data. That was then And frankly, our first 17 Complaint had a lot more detail about this, but it seemed very 18 confusing, and so we took some of that out to clean it up here 19 and keep it at a high level. 20 At a high level, what is happening is sharing without user 21 consent, without disclosure. 22 MR. LOESER: And that's where we are. So -- Well, and I just think from a disclosure 23 point, Your Honor, there is a distinction, as you've noted, 24 between device manufacturers and these other businesses. 25 don't think you can read the disclosures that they provided And I 93 PROCEEDINGS 1 about service providers and vendors and the like and have 2 that -- and say that it's not a plausible interpretation to say 3 that what they did exceeded that; that these business partners, 4 however you want to describe them, whatever they are, don't fit 5 the categories that they've described. 6 THE COURT: Well, I think that -- I think that that is 7 true, but -- so you look at this list of business partners, and 8 you say, well, this disclosure about service providers -- 9 right? -- seems quite a bit narrower than the list of business 10 11 partners that you've included in the Complaint. But the problem is, we now have established that many of 12 these companies that you list as business partners obtained my 13 data as third-party apps through my friends. 14 MS. WEAVER: But they're not apps -- 15 MR. LOESER: Frankly, Your Honor -- 16 MS. WEAVER: -- if I may. 17 MR. LOESER: -- that may be true for some, and it may 18 19 not be true for others. I think that it's important to consider that this idea 20 that these business partners are just apps is a new idea from 21 Mr. Snyder. 22 The fact of the matter is, they had different disclosures. 23 And previously, they talked about disclosures with regard to 24 apps, and then they pointed you to these disclosures with 25 regard to service providers as a different disclosure. Not the 94 PROCEEDINGS 1 2 app disclosure. That was not what applied here. They said, "No, no, Your Honor. What applies are these 3 disclosures regarding service providers and vendors." 4 said, "Those are the disclosures that we want you to evaluate 5 when deciding that we did, in fact, give people information 6 that would indicate that content and information was shared 7 with these entities that we're referring to as business 8 partners." 9 THE COURT: And they So maybe what I need to look at to have a 10 better understanding of this is -- you're saying, well, 11 Mr. Snyder is now calling them apps, but there is a -- it looks 12 like you have cited in your Complaint a letter from Facebook to 13 the Energy and Commerce Committee, sort of talking about these 14 business partners, and I should go read that letter to develop 15 a better understanding of -- 16 MR. LOESER: 17 THE COURT: 18 MS. WEAVER: Right. -- the business partners. If I may, just to correct the record, so 19 business partners are not apps. 20 484, Acer is not an app; Samsung is not an app. 21 that we were looking at as well, Yandex is a Russian search 22 engine; it's not an app. 23 THE COURT: 24 MS. WEAVER: 25 THE COURT: If you look at the list at The examples Amazon has an app. But if you -But app developers -But I assume that if you -- Yandex, the 95 PROCEEDINGS 1 Russian search engine, I assume -- I mean, again, it's hard -- 2 MS. WEAVER: 3 THE COURT: So -- so --- to understand from the allegations, but 4 I assume that the idea is, you use the Russian search engine 5 through Facebook, and so it's an app that you're using -- 6 MS. WEAVER: 7 THE COURT: 8 MS. WEAVER: 9 Your Honor. I don't --- on Facebook. I don't know that that's true, And, in fact, if you read our allegations, from 10 488 through 4- -- we move into the whitelisting, but at 493, 11 just for the business partners, they are giving business 12 partners special access to Facebook identifiers, including, for 13 example, at 48- -- give me a moment here. 14 15 If you look at 496, for example, we start talking about whitelisted companies who are apps. 16 THE COURT: 17 MS. WEAVER: 18 THE COURT: 19 whitelisted apps. Okay. MS. WEAVER: 21 THE COURT: I want to not get bogged down in Fine. -- first, the distinction between business partners and apps. 23 MS. WEAVER: 24 partner -- so it's not apps. 25 Fine. I want to understand -- 20 22 Well, before we get to -- Right. And what I can say is, a business It's app developers. Right? So Cambridge Analytica and that sort of -- that first 96 PROCEEDINGS 1 category is about app developers. 2 partners who are, among other things, advertising on the site. 3 Business partners are app And so if you look, there are allegations at 4 paragraph 710, where we have e-mails from Mr. CEO Zuckerberg 5 talking about developing relationships with business partners. 6 And what he's talking about, some of those are apps and some of 7 them are not. 8 bartering, and some of them are allowing offset for advertising 9 costs with these businesses. 10 And those relationships, some of them were So we don't have the agreements. They haven't been 11 public. 12 may have apps but they are not app developers. 13 But I guess I would say that these are businesses who The agreements that Facebook had with the app developers 14 was a barter transaction where they gave access to user content 15 and data so app developers could develop an app. 16 THE COURT: But the thing I'm struggling with is, 17 you're drawing that distinction; but in looking at Facebook's 18 disclosures -- 19 MS. WEAVER: 20 THE COURT: 21 Right. Right? -- what Facebook says is that if your friend interacts 22 with an app, the app can get all -- I mean, it doesn't say it 23 this clearly but -- the app can get all of your information -- 24 right? -- unless you change your app settings. 25 MS. WEAVER: Right. 97 PROCEEDINGS 1 THE COURT: 2 MS. WEAVER: 3 And so -Those app settings didn't apply to business partners. 4 THE COURT: Okay. Where does the Complaint explain 5 that, that those app settings did not apply to business 6 partners? 7 MS. WEAVER: 8 MS. LAUFENBERG: 9 MS. WEAVER: 10 THE COURT: 11 MS. WEAVER: 12 THE COURT: Yeah. That's 710? 602. 602. Paragraph 602? Yes. That's page 229. And is there anything that you -- I mean, 13 I'm not saying that you necessarily have to, but I'm just 14 curious for helping -- in terms of helping me understand it. 15 Is there anything that you cite for that? 16 citations to reports and articles and -- 17 MS. WEAVER: 18 THE COURT: 19 MS. WEAVER: 20 THE COURT: 21 You have a lot of Right. -- letters and things like that. Right. Do you cite anything in your Complaint for that? 22 MS. WEAVER: Sure. I mean, we have -- we cite 23 extensively the DCMS report, which is the body of the U.K. 24 House. 25 And the report -- is it -MS. LAUFENBERG: 710. 98 PROCEEDINGS 1 MS. WEAVER: 2 THE COURT: 3 MS. LAUFENBERG: 4 MS. WEAVER: Paragraph 710. Okay. (C). "The fact that Apps including 5 Whitelisted Apps and Business Partners 'were able to 6 circumvent users' privacy of platform settings and 7 access friends' information, even when the user 8 disabled the Platform,' is 'an example of Facebook's 9 business model driving privacy violations.'" 10 11 12 This is from the report itself. THE COURT: that report yet. Okay. I will admit that I have not read Okay. 13 MS. WEAVER: 14 THE COURT: 15 MS. WEAVER: There are a few out there. Okay. So if you're ready to talk about 16 whitelisted apps, then the difference there gets even more 17 confusing because, here, Facebook has told users "We are 18 cutting off app access"; and then, if you look at 19 paragraph 497, the DCMS committee says that this whitelisting 20 was driven primarily by revenue and economics. 21 And it is supported by other e-mails, which we cite, which 22 have come out, basically saying Facebook was giving 23 preferential treatment to companies that it should have 24 rightfully been cutting off. 25 and Netflix. So -- And these included Lyft, Airbnb, 99 PROCEEDINGS 1 THE COURT: You mean should have been cutting off -- 2 so, in other words, this was in 2015 when Facebook said, "We're 3 going to stop allowing third-party apps to grab your 4 information through your friends," and they identified a date 5 by which they would do that. 6 that you're calling whitelisted apps that continue to have the 7 ability to grab my information through my friends. 8 9 10 MS. WEAVER: And there's this subset of apps And -- yes, exactly. And the app controls were cut off so users couldn't change that. That, Your Honor, is at 499. 11 THE COURT: 12 MS. WEAVER: The what were cut off? Sorry. Sorry? The app settings were cut off. 13 So at this point, they didn't exist on the platform for users 14 to cut off apps. 15 THE COURT: 16 MS. WEAVER: Okay. Where is that? I'll get that to you in a second. 17 But if you look at paragraph 499, there is your date. 18 ". . . failed to state that tens of companies were 19 given special whitelist access beyond May 2015." 20 And then what later comes out, you know, there's another 21 report at paragraph 502 that Facebook is striking deals with 22 RBC, Nissan Motor Company, et cetera. 23 And so they are continuing -- and I have to be honest. 24 You're right. 25 and when are these whitelisted apps? At some point, when are these business partners I don't know. I take 100 PROCEEDINGS 1 your point well that maybe it doesn't matter to some extent, 2 because these are all adhering to the same theme, that these 3 are in violation of, what we would say, users' reasonable 4 expectations that their privacy controls could prevent this 5 kind of sharing and that their publishing controls, for 6 example, would prevent that kind of sharing. 7 THE COURT: 8 MS. WEAVER: 9 THE COURT: 11 MS. WEAVER: 13 So what about -- Paragraph 375 is the app setting removal in 2015. 10 12 Okay. Sorry. What? Paragraph 375 answers your question about the removal of the app settings, the ability to turn off apps. MR. LOESER: So, Your Honor, why don't we jump to 14 third-party apps because Mr. Snyder spent a good deal of time 15 trying to explain to you why the disclosures regarding 16 third-party apps meant that everything that happened here that 17 was bad was consented to by Facebook users. 18 wildly wrong in that regard. 19 THE COURT: 20 21 I'll let you get to that, but just, I want to read that paragraph that Ms. Weaver pointed me to. Was it 375? 22 MS. WEAVER: 23 MS. LAUFENBERG: 24 MS. WEAVER: 25 And I think he's Yes. Correct. So: "The 'Apps others use' control panel" -- 101 PROCEEDINGS 1 THE COURT: 2 MS. WEAVER: 3 THE COURT: 4 MS. WEAVER: 5 MS. LAUFENBERG: 6 MS. WEAVER: 7 THE COURT: 8 9 All right. Let me just read it. Sure. Okay. And paragraph 600 reiterates that. And 601 as well. Again, citing the DCMS report. Okay. All right. Thank you. Go ahead. MR. LOESER: Okay. So here's the deal. Facebook 10 creates a platform that they say provides everybody with 11 everything they need to know to control what happens to their 12 information. 13 happens to your information. 14 They say that a lot. You control exactly what And the DCMS report, which Ms. Weaver just mentioned, 15 after their exhaustive study, determined there's very little 16 the user can do to prevent their information from being 17 accessed. 18 were told you can indicate what your privacy wishes are by 19 using your privacy settings. 20 and behold, Cambridge Analytica gets the information. 21 And Cambridge Analytica is a good example of users You set to friends only, and, lo So where, I think, their argument falls apart is when you 22 look at paragraph 596 through 598, which we have on Slide 38 23 here for just ease of reference, and that's this "only in 24 connection with your friends" language. 25 So the very same disclosure that Mr. Snyder put up and 102 PROCEEDINGS 1 tried to explain to you "This is it. 2 you need to know," if you go down in that disclosure, there's 3 the rest of the paragraph. This tells you everything And that paragraph says (reading): 4 "If your friend grants specific permission to the 5 application or website, it will generally only be able 6 to access content and information about you that your 7 friend can access. 8 allowed to use the content and information in 9 connection with that friend." 10 11 12 In addition, it will only be And they have further explanation of what that means. They say (reading): "For example, if a friend gives an application 13 access to a photo you only shared with your friends, 14 that application could allow your friend to view or 15 print the photo, but it cannot show that photo to 16 anyone else." 17 And that language changed a bit. And it's another issue, 18 hopefully on summary judgment or at trial, when we're going 19 through the data policy, which we don't think is a contract, 20 we'll see the different ways that they said this. 21 always had this restriction that it would only be used with 22 your friends. 23 24 25 But they Now -THE COURT: I wanted to go back and look at the provision that you just read me about photographs. 103 PROCEEDINGS 1 MR. LOESER: 2 THE COURT: 3 else. That they cannot share that with anybody Where is that? 4 MS. WEAVER: 5 THE COURT: Paragraphs 596 and 597. No. 6 disclosure language. 7 MS. WEAVER: 8 THE COURT: 9 Yeah. I want to look at the actual Oh, I'm sorry. Can we use Exhibit 45? been using. 10 MS. LAUFENBERG: 11 THE COURT: Exhibit 40. 12 MR. SAMRA: 43. 13 MS. LAUFENBERG: 14 THE COURT: 15 16 And where is this? Exhibit 40. So that's the -- 43. Oh, sorry. 43. So September 7th, 2011. On, like, page -- What page of that exhibit? 17 18 That's what we've MS. WEAVER: I thought it was page 9. Is that right? 9 or 10. 19 MS. LAUFENBERG: 20 THE COURT: Exhibit 43 or 45? 21 MR. SAMRA: Your Honor, I have page 5 on Exhibit 43. 22 THE COURT: Page 5 on Exhibit 43. 23 24 25 10, I think. Okay. "Controlling what is shared when the people you share with use applications." MS. WEAVER: Right. And if you go to the last 104 PROCEEDINGS 1 paragraph there, that's where the language is. 2 ". . . the application will be allowed to use that 3 information only in connection" -- 4 5 6 THE COURT: Is it "LOE Ser" or "LAW Ser"? MR. LOESER: 8 THE COURT: 9 MR. LOESER: "LOE Sher." Loeser. Sorry about that. There's so many ways to say it wrong, and either one of those are preferable to the other one. 11 12 But where's the language that Mr. Loeser was reading to me about -- 7 10 Right. THE COURT: Mr. Loeser was reading to me some language about sharing pictures, sharing photos. 13 Where is that? MR. LOESER: The language is very clearly stated in my 15 MS. WEAVER: But he said paragraphs 596 to 597. 16 MR. LOESER: Yeah, but I don't see it in 596. 17 MS. LAUFENBERG: 14 18 outline. That's what I have. 19 MS. WEAVER: 20 What? Exhibit 40? (Co-counsel confer.) 21 22 I think it's Exhibit 40, Josh. MS. WEAVER: So give us just a moment, Your Honor. Sorry. 23 (Co-counsel confer.) 24 MS. LAUFENBERG: 25 MR. LOESER: Page 4 of Exhibit 40. Okay. We found it. 105 PROCEEDINGS 1 THE COURT: "For example, if a friend gives an 2 application access to a photo you only shared with 3 your friends, that application could allow your friend 4 to view or print the photo, but it cannot show that 5 photo to anyone else." 6 Okay. 7 8 9 MR. LOESER: Okay. So this is an important disclosure. And Your Honor raised the possibility and there was 10 another question about whether this was a technological 11 limitation or something else. 12 matters what it is and if there are multiple interpretations, 13 because as you noted, what matters for a motion to dismiss is, 14 is the plaintiffs' interpretation a plausible one? 15 And frankly, I don't think it Mr. Snyder may have a different interpretation. And I'm 16 not even sure what's better, if it's a technological limitation 17 or merely authority. 18 allegation in the Complaint and the plaintiffs' reasonable 19 interpretation of that provision is entitled to be credited. 20 And on a motion to dismiss, it's a plausible one. 21 THE COURT: But the fact of the matter is, the So that's -- But the interpretation that you have put 22 forward is that this disclosure implies that Facebook is 23 actually doing something to limit the way third-party apps can 24 use this data; and, in fact, Facebook is not doing anything to 25 limit the way that third-party apps are using this data; and so 106 PROCEEDINGS 1 the disclosure is inaccurate in that sense. 2 put forward. 3 MR. LOESER: Correct. That's what you've And that, again, if you look at 4 the language and put yourself in the shoes of a Facebook user, 5 when they read a statement that the information that their 6 friend gives about them will only be used in regard with that 7 friend, that seems like a plausible interpretation. 8 of, it means exactly what it says. 9 It's kind Now -- 10 THE COURT: Well, but -- and their response to that 11 is, "Well, those were, in fact, the restrictions we imposed on 12 third-party apps." 13 And you say, "But they didn't enforce those restrictions." 14 Or do you say, "No, they actually didn't impose those 15 restrictions, in the first place, on third-party apps"? 16 MS. WEAVER: So, first, with the first category, app 17 developers like Cambridge Analytica, there are plenty of 18 allegations in this Complaint, largely from -- 19 20 THE COURT: with Cambridge Analytica. 21 22 MS. WEAVER: right. 23 24 25 Well, they didn't share the information No. They shared it with Kogan. That's But they didn't audit -THE COURT: So are you saying app developers like Kogan? MS. WEAVER: Yes. 107 PROCEEDINGS 1 THE COURT: 2 MS. WEAVER: Okay. Kogan was an app developer, and they 3 didn't audit any of these. 4 find one instance -- 5 THE COURT: The DCMS report said they didn't I understand your argument that they 6 didn't audit; that, basically, they said, to use an analogy 7 that my law clerk gave me this morning, they said that the 8 curfew is 10 o'clock, but they never checked to see if anybody 9 was home at 10 o'clock. 10 MS. WEAVER: 11 THE COURT: 12 the curfew existed? 13 that the curfew existed, or do you allege that there never was 14 a curfew to begin with? 15 MS. WEAVER: Not a bad analogy. But what I'm asking is: Do you agree that Even if it wasn't enforced, do you agree So here's where it gets complicated. If 16 you're talking about allowing, just the rule -- and let's set 17 aside that the definition of "allow" may mean "to restrain or 18 not permit," which is a -- but let's set that aside. 19 take their interpretation. 20 we didn't enforce. 21 22 23 Let's "Allowing" means we had a rule that Yes, I mean, I think that they said that there was a rule. I think that they didn't enforce it. THE COURT: And by saying "allowed," in context, it 24 contains with it an implication that they're going to do 25 something -- 108 PROCEEDINGS 1 MS. WEAVER: 2 THE COURT: 3 MS. WEAVER: 4 THE COURT: 5 MS. WEAVER: 6 THE COURT: Right. -- to enforce the curfew. Right. I understand that argument. Hang on. I understand that argument. I'm just 7 asking, like, do you agree with -- because what they say is: 8 We did, in fact, impose a curfew. 9 the curfew, but we did, in fact, impose a curfew, however 10 11 12 They may not have followed toothless. Do you agree that -- do you accept that they imposed a curfew? 13 MS. WEAVER: 14 THE COURT: So -Because I couldn't find anything in the 15 papers to suggest -- to indicate that they actually did impose 16 a curfew. In other words -- 17 MS. WEAVER: 18 THE COURT: 19 Oh, there --- I couldn't find anything in the papers. Like, we don't have their agreements with the third-party 20 apps; right? 21 third-party use of this data," and they point to something in 22 the Data Use Policy that doesn't seem to say that. 23 And so they say, "We had a policy restricting And so I'm trying to understand if you -- are you alleging 24 that they had no curfew, or are you merely alleging that they 25 had a curfew that was toothless? 109 PROCEEDINGS 1 MS. WEAVER: 2 THE COURT: 3 MS. WEAVER: 4 THE COURT: 5 MS. WEAVER: 6 THE COURT: 7 MS. WEAVER: 8 Both. Okay. Where -- So --- do you allege that they had -So --- no curfew? Right. curfew. 9 THE COURT: 10 MS. WEAVER: Okay. 11 THE COURT: -- apps. 12 MS. WEAVER: 13 So the whitelisted apps had no I'm talking about regular third-party -- But I don't want to let that go because that is a huge violation. 14 THE COURT: 15 MS. WEAVER: 16 THE COURT: 17 MS. WEAVER: I get that. Business partners had no curfew. I get that. So then we come to this point that we 18 discussed in the last hearing which is the metadata stripping. 19 They are saying -- 20 THE COURT: 21 MS. WEAVER: 22 23 24 25 Let's hold on. Well, because it disabled the ability of the app developers to comply with user privacy settings. THE COURT: But I don't understand your metadata stripping -MS. WEAVER: Okay. 110 PROCEEDINGS 1 2 THE COURT: put those -- 3 MS. WEAVER: 4 THE COURT: 5 6 -- allegations at all; so I would like to Fine. -- aside for a second and just try to get an answer to my question. Do you allege in this Complaint that Facebook told users 7 in its app settings they're only allowed to use your 8 information in connection with your friends but that, in fact, 9 Facebook did not impose that restriction? 10 MR. LOESER: 11 THE COURT: 12 That there was -- Yes. -- no such curfew; there was no such restriction? 13 MR. LOESER: Cambridge Analytica is the best example 14 of it, and it makes sense to start with that since that's where 15 the case started. 16 But Kogan got the information. 17 the app. 18 people. 19 20 300,000 people downloaded And from that, he parleyed that into 87 million THE COURT: And you're saying -- here's what I'm asking. 21 MR. LOESER: 22 THE COURT: Yeah. Are you alleging that he had permission to 23 do that or that he was not told that he could not do that? 24 Because they say -- 25 MR. LOESER: Yeah, I understand what you're saying. 111 PROCEEDINGS 1 2 THE COURT: other third-party apps that they're not allowed to do that." 3 MR. LOESER: 4 THE COURT: 5 6 had any teeth. 8 THE COURT: 11 Right? But -- MR. LOESER: 10 Right. And we have a separate discussion of whether that curfew 7 9 They say, "We told Kogan, we told these Right. -- did they say, "We told Kogan, we told the other third-party apps they're not allowed to do that with your data"? And I don't see anything that proves -- or I don't see any 12 evidence that they, in fact, told Kogan and other third-party 13 apps "You're not allowed to do that with the data." 14 wondering what your position is on that. 15 MR. LOESER: And so I'm I think the best way to put it, 16 Your Honor, is that we are evaluating these disclosures to 17 decide if a user had a reasonable expectation of privacy or a 18 reasonable expectation that something would not happen. 19 However -- whatever this means in terms of the power that 20 an app had to do or not do something, when a user reads that 21 disclosure, the reasonable interpretation of the user is 22 something was not going to happen. 23 going to happen was that information was not going to be used 24 for purposes other than in connection with their friend. 25 it's a thing that they were told was not going to happen that And that thing that was not So 112 PROCEEDINGS 1 did happen. 2 Now, I don't -- 3 MS. WEAVER: Kogan -- 4 MR. LOESER: I don't really know if that means -- I 5 don't know, did Facebook tell Kogan "You're not supposed to use 6 this information for persons other than friends"? 7 if they said that or not. 8 between Facebook and Kogan. 9 I don't know We'd have to look at the agreement But from the standpoint of these plaintiffs and the value 10 and relevance of this disclosure, it's that they were told 11 something was not going to happen and that's exactly what 12 happened. 13 14 15 Now, Facebook, in their brief, talks about -- draws a somewhat different distinction here. THE COURT: Well, but don't you think there's a 16 difference between, like -- okay. 17 Facebook doesn't say anything to the third-party apps about -- 18 in an effort to limit their use of the data. 19 scenario. One scenario is that That's one 20 The second scenario is Facebook tells the third-party 21 apps, in its contracts or whatever, "You're not allowed to use 22 third-party data except in connection with friends." 23 MR. LOESER: 24 THE COURT: 25 Right. And then the third scenario -- oh, and then in that second scenario, Facebook does nothing to enforce 113 PROCEEDINGS 1 2 3 4 that. Which is true. MR. LOESER: So we can put that aside because that happened. THE COURT: And then the third scenario is that 5 Facebook tells people that they can only use data in connection 6 with their friends and then does something to enforce that, 7 Facebook being the -- 8 MR. LOESER: 9 THE COURT: 10 Right. -- behemoth that it is. And so it seems to me that all three of those scenarios 11 are different, and I'm trying to figure out whether you're 12 alleging the first scenario. 13 MS. WEAVER: 14 So what we allege, actually, at pages 537 through 539 -- 15 MS. LAUFENBERG: 16 MS. WEAVER: 17 THE COURT: 19 MS. WEAVER: 21 22 23 Paragraphs. Sorry. -- is that, in fact, Facebook -- 18 20 Paragraphs. Sorry. What? 537 and -- To 539. So there were a number of, sort of, Cambridge Analytica whistleblowers. Right? And Sandy Parakilas is one of them. And he has stated and been interviewed by various regulatory agencies. 24 THE COURT: 25 MS. WEAVER: He has testified. This is the "better not to know" quote? Yes, exactly. 114 PROCEEDINGS 1 But what he's reporting is violation of the Data Use 2 Policy and specifically what you're asking about and, also, at 3 paragraph 470. 4 Now, you may or may not find Dr. Kogan credible, but it's 5 a disputed fact, at paragraph 470, that he says the ability to 6 gather people's Facebook friends' data without their permission 7 was a Facebook core feature. 8 THE COURT: 9 10 11 12 13 14 But where in Facebook's Data Use Policy does it say that developers violate the policy if they use it? Is it just that same disclosure that we're talking about? MS. WEAVER: They do say, at iterative points in time, that "App developers will comply with your privacy settings." Is that what you're asking? THE COURT: Maybe. I don't know. I mean, I couldn't 15 find any language that directed app developers to limit their 16 use of my data. 17 MR. LOESER: Here's what I'm struggling with, 18 Your Honor. 19 think is better for the plaintiff. I can't figure out which of those three things you 20 THE COURT: 21 MR. LOESER: 22 23 Well, the third is the worst. Because to me, all those roads seem to lead to Rome. THE COURT: I think the third is bad for you. Right? 24 If they said developers are only allowed to do this with your 25 data and it were not the case that they did nothing to make 115 PROCEEDINGS 1 sure that that promise was kept but developers went around 2 that, I think you would have a tougher claim. 3 4 MR. LOESER: So I'm glad I asked. But I think, taking that right there, we know from the 5 Cambridge Analytica reporting -- and, again, we don't have 6 discovery in this case but -- from reporting, that Facebook did 7 nothing to monitor. 8 And I'm just not sure what difference it makes when you're 9 evaluating the disclosure. 10 11 So we know they didn't do anything. The fact that they didn't do anything means that we probably have a good negligence claim. And -- but the disclosure, they're putting that disclosure 12 in front of you, saying that based on this disclosure, users 13 consented to every single thing that was given to apps. 14 And we're saying to you, well, wait a second. 15 from Cambridge Analytica that this wasn't used just in 16 connection with the friends. 17 inadequate basis on which to find consent. 18 We know So the disclosure is an And so I think that discovery will enable us to figure out 19 which of your three options really apply. 20 options may be better or worse, frankly, for Facebook, 21 particularly for a variety of the claims that we've asserted. 22 And some of those But from the standpoint of the questions you've asked us, 23 which is "Let's talk about consent and these disclosures," it 24 seems to me that any of those three options don't really make a 25 difference, because the fact of the matter is, the disclosure 116 PROCEEDINGS 1 is -- at the very least, you can look at that disclosure and 2 say there's different ways of interpreting it. 3 and given Ninth Circuit case law -- 4 THE COURT: And given that Well, what do you think about -- I mean, 5 there was an interpretation that you didn't put forward that I 6 asked about, which is whether you could interpret that language 7 as imposing some sort of technological restriction on the apps. 8 What's your view of that? 9 MR. LOESER: Yeah. I guess I have the same view. I'm 10 just not sure what difference it makes. 11 parse the language and come to different understandings of what 12 it means. 13 THE COURT: If you can -- you can Well, I think it makes a difference 14 because if they're using the word "allowed" in the sense 15 that -- I don't know if it makes a difference for this motion, 16 but I could see it making a difference at the end of the day, 17 because if you interpret "allowed" in the way that they want -- 18 that they and, I think, you have interpreted it in your 19 papers -- and, in fact, they engaged in meaningful efforts to 20 enforce those restrictions but it simply didn't work on 21 occasion or simply didn't work sometimes, then I think you 22 lose, probably. 23 MR. LOESER: Well, we relish that fight, because one 24 of the things we learned in discovery, in the limited discovery 25 that we got, was they didn't actually evaluate the terms of use 117 PROCEEDINGS 1 of any of the apps, the thousands and thousands of apps. 2 it was physically impossible for them to do so because there 3 are so many apps. 4 Maybe But we know that they didn't monitor what Kogan did, and 5 we know that they didn't read these policies that supposedly 6 dictated the terms vis-à-vis users and the app. 7 So I think we're going to be in a pretty good spot when it 8 comes down to trying to sort out, based on discovery, well, 9 what did Facebook really do to try and put some teeth into 10 these disclosures that it made to people? 11 expectation of privacy. 12 Did they do anything to enforce that? 13 14 They create an They create an expectation of conduct. And I think that, frankly, it is an issue for another day, but I think it's an interesting issue for another day. 15 MS. WEAVER: 16 THE COURT: And I would -But do you think that -- it sounds like 17 you may not think that that's a plausible interpretation of the 18 language, that "We impose technological restrictions on 19 third-party apps so that they can only use it in connection 20 with your friends." 21 MR. LOESER: Frankly, Your Honor, I don't understand 22 technology well enough to know if they could or couldn't do 23 that. 24 and say: Does this assure people that something's not going to 25 happen? And it seems like it did assure people, whether it was But I can read, and I can try and look at a disclosure 118 PROCEEDINGS 1 2 a technological limitation or a permission, whatever it was. THE COURT: Yeah, but you seem to be assuming that if 3 it happened, then they didn't adequately disclose. 4 even if one out of a thousand app developers misused 5 information, that means this disclosure was inadequate. 6 7 MS. WEAVER: The facts that we allege are actually very different -- right? -- which is that they -- 8 THE COURT: 9 MS. WEAVER: Okay. 10 THE COURT: I know. 11 MS. WEAVER: Fine. 12 THE COURT: 13 MR. LOESER: 14 Cambridge Analytica. 15 circumstance, which I really don't think so. 16 MS. WEAVER: No, I know. I'm just trying to -We have kind of an N of one, which is Maybe it was an extremely unique No. There are 400 other apps that they 17 discontinued from the cite. 18 THE COURT: 19 MR. LOESER: 20 I mean, You guys are now arguing with each other? Yeah, we're arguing with each other. And Ms. Weaver will talk about the Rankwave case, which is 21 a case that Mr. Snyder just recently filed against an app 22 developer for, kind of looks like, doing what Cambridge 23 Analytica or Kogan did, anyway. 24 25 And so it does seem like -- anyway, it's a factual issue. It's an interesting question. But I don't think it changes how 119 PROCEEDINGS 1 we interpret these disclosures. 2 THE COURT: 3 MR. LOESER: Okay. Let me run through a few other things on 4 the problem with what they did vis-à-vis apps. 5 want to jump to some of these legal questions that I think it's 6 worth giving you some information. 7 THE COURT: I want to let people go soon, because 8 we've blown through lunchtime. 9 take another ten minutes. 10 11 12 MR. LOESER: And then I do Okay. And so, anyway, why don't you Well, I'll quickly deal with third-party apps. So one of the things that you heard Mr. Snyder say -- and 13 he said a lot -- and their briefs say, is that it's really 14 clear to people how to control what apps get. 15 And I think that it's important to step back again and 16 look at what the FTC said in 2011 about how these settings 17 operated and how, in the privacy settings -- which people 18 naturally believed would determine who could see their 19 information, because that's what the settings say -- the 20 privacy settings didn't refer to these app settings. 21 And it's very easy for Mr. Snyder to say now, in 22 hindsight, "That's kind of ridiculous. 23 you control apps with app settings and privacy with privacy 24 settings," but that's exactly what the FTC said was not clear. 25 Of course everyone knew Now, in their brief, they explained -- 120 PROCEEDINGS 1 2 3 THE COURT: And then they entered a consent decree, and than Facebook changed its disclosures. MR. LOESER: I don't think they changed their 4 disclosures so much as they supposedly changed their conduct. 5 But they didn't. 6 So I also think it's important to note that the Statement 7 of Rights and Responsibilities indicates -- there's some 8 language about how people can control who sees their 9 information through their privacy settings and app settings. 10 And you've heard an interpretation that "Of course that means 11 that you need to do both things." 12 Okay? And, again, when we're looking at plausible 13 interpretations on a motion to dismiss, maybe that's what 14 Mr. Snyder or Facebook thinks is a plausible interpretation, 15 but the FTC came to a different conclusion. 16 another plausible interpretation. 17 18 19 THE COURT: So there must be The FTC came to a different conclusion about that particular language? MR. LOESER: They came to a different conclusion about 20 the fact that when you go into the privacy settings and you 21 think you're determining who can see your information, you're 22 not actually controlling who can see your information because 23 there's something else called these app settings. 24 25 Facebook has taken the position -THE COURT: But I thought that that disclosure, I 121 PROCEEDINGS 1 thought that sentence in the terms came after the FTC came down 2 on Facebook. 3 change in the disclosure language that emanated from the FTC 4 proceedings. Am I misremembering that? I thought that was a Am I wrong about that? 5 MS. WEAVER: Which language? 6 MR. LOESER: The SRR language about you control -- I'm 7 8 not sure. I'll check. But I think the point is, when Mr. Snyder looks at that 9 language and says the statement that says you control through 10 your app settings and your privacy settings, he says to you, 11 "Well, that means you" -- and it's very clearly put in their 12 brief -- "That tells users you absolutely have to go do both 13 things in order to determine who can see your information." 14 And all I'll say on that is that if they wanted it to say 15 that, they should have written that. 16 need to set both of these things in order to control who sees 17 your information." 18 19 20 21 And that's not, not what they said. THE COURT: okay. What else? "You need to be aware you I'm not sure I buy that argument, but What else should we make sure -- MS. WEAVER: Your Honor, I'd like to be heard on the -- 22 THE COURT: 23 MS. WEAVER: 24 THE COURT: 25 MS. WEAVER: -- we talk about? -- economic harm issue. What? I would like to be heard on the economic 122 PROCEEDINGS 1 harm issue. 2 THE COURT: 3 MS. WEAVER: Okay. Yeah, very briefly. Okay. Great. 4 The question of whether to recognize a claim for economic 5 harm comes down to whether the Court agrees that there must be 6 value in the content and some loss by the plaintiffs. 7 And is it enough for us to allege -- 8 THE COURT: 9 MS. WEAVER: 10 this, first of all, the value. 11 What's the loss by the plaintiffs? Sorry? So the loss -- let me start with And Mr. Loeser just referenced a complaint. We have a 12 copy here for the Court. 13 Santa Clara County by Facebook against Rankwave, which is an 14 app. 15 claim and a claim under Section 17200, just as we do here. 16 This was filed on May 10th in And the Rankwave complaint asserts a breach of contract The heart of the claim is that Rankwave took users' 17 content generated on Facebook, such as public comments and 18 likes -- that's paragraph 22 -- as well as the level of 19 interaction other users had with the app users' Facebook 20 profile -- that's paragraph 23 -- and then they allege at 21 paragraph 25, that the Facebook data associated with Rankwave's 22 various apps received a valuation of $9.8 million. 23 THE COURT: 24 is: 25 data being taken? Okay. But that's -- I mean, the question What loss did an individual plaintiff experience from this 123 PROCEEDINGS 1 2 MS. WEAVER: THE COURT: MS. WEAVER: 6 THE COURT: So the first --- because the question is: What loss did a plaintiff experience? 8 9 I view everything you just said to be irrelevant to your economic harm theory -- 5 7 Well, the first -- the economic loss -- 3 4 Right. MS. WEAVER: Okay. Then the second thing is that plaintiff -- or that Facebook itself describes in its 10 disclosures with plaintiffs that their photos and videos could 11 constitute intellectual property. 12 that if plaintiffs -- let me find the -- 13 And that's the concept here, Can we hand up the -- 14 MS. LAUFENBERG: 15 THE COURT: Yeah. Well, is there any allegation that any 16 particular plaintiff had their intellectual property rights 17 damaged by these disclosures? 18 MS. WEAVER: 19 THE COURT: 20 I don't remember you arguing that in your brief. 21 MS. WEAVER: 22 Duffey declaration. 23 give us" -- 24 25 Well, Your Honor -- THE COURT: says. It's true. This is Exhibit 27 to the And when it says, "The permissions you Okay. I believe you that that's what it I'm asking, does anybody allege that their intellectual 124 PROCEEDINGS 1 property rights were harmed -- 2 MS. WEAVER: What we allege is that content and 3 information was taken beyond the scope of the agreement. 4 if some of that content and information is intellectual 5 property, you don't have to show a loss, just like a privacy 6 harm. 7 "intellectual property," in the user agreement. 8 effective April 2018, before we filed suit. 9 And so when I have an agreement -- And they, themselves, here in this document, call it 10 THE COURT: 11 MS. WEAVER: 12 THE COURT: 13 14 And This is Did you argue this in your brief? We did not, Your Honor. Okay. Anything else you want to make sure to discuss in the last five minutes? MR. LOESER: Yes. One final thing, Your Honor. Your 15 question asked about incorporation by reference, and I do think 16 it's worth jumping back to that. 17 THE COURT: 18 MR. LOESER: Yeah. So specifically, you asked about 19 incorporation by reference, and that assumes that the data 20 policy becomes part of the contract -- 21 THE COURT: 22 MR. LOESER: 23 Right. -- this SRR, frankly. The other part of that question that you're not asking 24 about and I want to make sure you don't want to hear anything 25 about is whether the data policy is itself a contract. 125 PROCEEDINGS 1 And we talked about that at some length previously. 2 think, frankly -- I don't think it is under Nguyen v. Barnes & 3 Noble. 4 conspicuous enough, and they don't use the language of assent 5 that's required. 6 And I It just doesn't -- they don't have -- it's not So that takes us into this realm that you're talking about 7 now, which is incorporation by reference. 8 about -- identifies a few cases that go through California law 9 on this, and that's the Shaw case and the Wollschlaeger case And our brief talks 10 and then Anthem II are the cases that -- frankly, that the 11 defendants -- 12 THE COURT: 13 MR. LOESER: 14 15 16 17 18 Right. -- point to. I think that if you look at Shaw, what's clear about incorporation by reference is that you have to indicate -THE COURT: That was, like, a university professor who had a contract with his employer at UC Davis? MR. LOESER: Right, for royalties. And the professor 19 was handed a document, that he signed, that said he was 20 entitled to, among other things, royalties on patents. 21 then UC Davis tried to get out of that agreement later. 22 And And what the case stands for is the proposition that if 23 you want to incorporate something by reference, it's not just a 24 matter of referring to it. 25 indication of assent. You also have to provide some There has to be some indication that 126 PROCEEDINGS 1 your purpose in referring to that document is to make it part 2 of the contract. 3 4 THE COURT: So what are your best cases on the idea that the Data Use Policy is not incorporated by reference? 5 MR. LOESER: I think, frankly, the best case is -- 6 frankly, it's Shaw. 7 reference because they so clearly indicate in Wollschlaeger as 8 well and Amtower v. Photon Dynamics, which is 158 Cal.App.4th 9 1582, 2008 -- that's a case that interprets Wollschlaeger and 10 provides what is a rational explanation of what it means. 11 THE COURT: 12 MR. LOESER: 13 It's cases that found incorporation by What is that case called again? Amtower v. Photon Dynamics, Inc. But the principal, I think, is what really matters. 14 that's: 15 intended for this document to become part of a contract? 16 Did the party provide some indication that they You can't just refer to the document. You have to provide 17 some indication that you intended for it to be part of a 18 contract. 19 And So if you look at the language that Facebook actually uses 20 here, which I have on Slide 20, which I believe is the 21 Complaint at 243 and 244 -- and this is in 2009 -- this 22 language existed from 2009 through 2018. 23 paragraphs 651 through 652. 24 THE COURT: 25 MR. LOESER: And it's Right. And this is in the Statement of Rights 127 PROCEEDINGS 1 and Responsibilities, which is the contract between the 2 parties. 3 (reading): 4 It says -- and we have a blowout here on the slide "Your privacy is very important to us. We 5 designed our data policy to make important disclosures 6 about how you can use Facebook to share with others 7 and how we collect and use your content and 8 information. 9 Policy and use it to help you make informed We encourage you to read the Data Use 10 decisions." 11 So there's none of the language of assent, where they've 12 made it clear to them -- they say, "We encourage you to read 13 it." 14 of our contract." 15 There's nothing in here that says, "And we make this part Now, if you look at the current terms, I think they 16 provide a good indication of what you would need to have in 17 order to actually provide this language of assent. 18 Slide 21, which refers to paragraph 656 in the Complaint. 19 have this nice bold disclosure now -- and this is, of course, 20 post Cambridge Analytica -- which states: And that's 21 "Our Data Policy and Your Privacy Choices. 22 provide these services, we must collect and use your 23 personal data. 24 Policy, which you must agree to in order to use our 25 Products." To We detail our practices in the Data They 128 PROCEEDINGS 1 So that is language of assent. And they made it clear, 2 starting in April nineteen- -- 2018, that they intended this 3 document to be part of the contract. 4 So that, in a nutshell, Your Honor, is why we don't 5 believe that the data policy is incorporated by reference into 6 the contract. 7 8 9 THE COURT: Okay. Let me make sure I don't have any other questions for you. So like I said, just submit a letter listing cases. No 10 argument. 11 read on the issue of subsequent changes to the terms of -- to 12 the contract, to the terms of service, and I will read them. 13 14 Okay. Just the cases you want me to Mr. Snyder, do you want to take five to seven minutes to -- 15 16 No parentheticals. MR. SNYDER: Yes. May I just take a one-minute restroom break? 17 THE COURT: 18 MR. SNYDER: 19 THE CLERK: Oh. Yeah, sure. Sorry. Thank you. Court is in recess. 20 (Recess taken at 1:28 p.m.) 21 (Proceedings resumed at 1:31 p.m.) 22 MR. SNYDER: 23 THE COURT: 24 25 Thank you, Judge. We definitely have to let people go. So -MR. SNYDER: Yes. 129 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: 3 THE COURT: 4 thing to respond to. 5 MR. SNYDER: -- really, just five, seven minutes. Yes, Your Honor. Whatever you think is the most important Yes, Your Honor. I'll briefly respond to 6 the contract point, the business partners point, the curfew 7 point. 8 THE COURT: 9 MR. SNYDER: Okay. On the contract point, this is not, 10 Your Honor, respectfully, a hybrid contract-disclosure matter. 11 This is a pure contract interpretation question. 12 canons of construction tell us that we do not need experts. 13 don't need -- this is not a food label case, because that's not 14 a contract. 15 of legal analysis. And the We That's something very different, different bucket 16 THE COURT: 17 MR. SNYDER: 18 THE COURT: 19 MR. SNYDER: But there's this reasonable -Yes. -- Facebook user standard. For sure. Like any contract 20 interpretation, what would be the reasonable reading of a 21 contract and what is a plausible reading? 22 here. There's no ambiguity You only need parol evidence when there's ambiguity. 23 (Court reporter interrupts for clarification.) 24 THE COURT: 25 MR. SNYDER: P-a-r-o-l. Sorry. And so, as I said repeatedly, the 130 PROCEEDINGS 1 privacy settings, the app settings, and all the other policies 2 are clear and robust and can be interpreted and should be 3 interpreted as a matter of law, as provided in the consent and 4 disclosures required. 5 On the business partners, it's frustrating, Your Honor. 6 The reason I stood up multiple times is -- and, unfortunately, 7 this infects a lot of the plaintiffs' argument. 8 guesswork or just contrary to either their own pleading or, in 9 this case, their own exhibits. 10 It's either The reason Your Honor granted pre-motion discovery many 11 moons ago is because the plaintiffs wanted that question 12 answered. 13 14 15 What did we tell our app developers? And not only was there a curfew, but the plaintiffs cited the curfew in their submissions. That's Exhibit 25. And on Exhibit 25, there is a provision, which we provided 16 to them in discovery and which they submitted to Your Honor, 17 which makes this frustrating because -- 18 19 (Co-counsel confer.) Oh, this is the SSR. MR. SNYDER: 20 And it says, "Special Provisions Applicable to 21 Developers/Operators of Applications and Websites." 22 23 24 25 In a nutshell -THE COURT: Wait. me go there. MR. SNYDER: Yeah. Hold on. Hold on. Hold on. Let 131 PROCEEDINGS 1 THE COURT: 2 MR. SNYDER: 3 THE COURT: 4 Okay. All right. And this is -This is from -- let's see. This is the SSR from November 15th, 2013; is that right? 5 MR. SNYDER: 6 THE COURT: 7 MR. SNYDER: It seems that way, Your Honor. Okay. But essentially, this made clear that we 8 have a separate set of rules of the road for our app 9 developers, called "Facebook Platform Policies"; and those, 10 among other things, prohibit the Kogans of the world from 11 selling data. 12 And so there was a clear curfew. THE COURT: Where is the curfew? What's the language 13 that reflects the curfew? 14 Applicable to Developers/Operators of Applications and 15 Websites." 16 17 18 MR. SNYDER: This is "Special Provisions Right. And basically, it says to a developer: "You will not use" -- Number 3 -- "display, 19 share, or transfer a user's data in a manner 20 inconsistent with your privacy policy." 21 And -- 22 THE COURT: 23 MR. SNYDER: 24 THE COURT: 25 MR. SNYDER: With "your" privacy policy? Right. This is a developer. So, "Developer" -Correct. 132 PROCEEDINGS 1 THE COURT: -- "you have to have a privacy policy, and 2 you will not use, display, share, or transfer a user's data in 3 a manner inconsistent with" -- 4 MR. SNYDER: 5 THE COURT: 6 MR. SNYDER: 7 THE COURT: 8 9 Correct. -- "your privacy policy." Right. And so does Facebook dictate to the developers what their privacy policies are? MR. SNYDER: Yes. It's in the Facebook Platform 10 Policies, which are hyperlinked in this document. 11 clear that Kogan was not permitted to sell the data to 12 Cambridge Analytica and did so in violation of Facebook's 13 Platform Policies. 14 So there was a curfew. 15 On the question of whether -- 16 THE COURT: 17 MR. SNYDER: 18 And it makes That's the thing, is I was looking -Paragraph 7: "You will not sell user data. If you are 19 acquired by or merge with a third party, you can 20 continue to use user data . . . ." 21 THE COURT: Yeah, but I'm asking about this 22 limitation: 23 apps will only -- can only -- are only allowed to use your data 24 in connection with your friends. 25 You will only use user data -- that third-party And so I'm looking in this -- I've been looking in this 133 PROCEEDINGS 1 paragraph 9, because it's what you cited to -- 2 MR. SNYDER: 3 THE COURT: Yes. -- for an indication that third-party apps 4 are only allowed to use my information in connection with my 5 friends, and I couldn't find that from this paragraph. 6 MR. SNYDER: That's because we don't have the platform 7 policies in front of us. 8 Your Honor, because I have limited time, to answer the 9 question: 10 I'm using this as a shortcut, Was there a curfew? And the curfew Your Honor referred to was: Did we tell 11 third-party apps that they couldn't sell and/or transfer data? 12 And we did. 13 THE COURT: And I guess all I'm saying is, it seems 14 like from what has been submitted to me, it's not clear that 15 there even was a curfew. 16 notion that there was a curfew, however toothless. 17 to me that it's not an issue for me to grapple with. 18 19 MR. SNYDER: But they are not contesting the So it seems Paragraph 6, just for the record, says: "You will not directly or indirectly transfer any 20 data you receive from us to (or use such data in 21 connection with) . . . ." 22 So we believe that the curfew was clear. 23 And I would just take issue with the "toothless" point. 24 While the company has said publicly that it could have and 25 should have done more, the fact is, the company, a day late, 134 PROCEEDINGS 1 took action, contacted the relevant parties, sought 2 certifications. 3 further enforcement evidence. 4 And this lawsuit that we filed, obviously, is As to business partners, Your Honor, again, very 5 frustrating because they cite to a bunch of paragraphs where 6 they engage in speculation without any factual support, but 7 what is binding on them is their admission in paragraph 4 or 8 8 of the Complaint which makes clear that, whether it's private 9 APIs or public APIs, there was no use of data by any of these 10 so-called partners in excess of or in contravention of user 11 settings designated by Facebook users. 12 App settings were never shut off. There's no evidence. 13 There's no factual support. 14 it's wrong. 15 And their own Complaint contradicts it, because it says in 408 16 that app developers only gained access with permission from the 17 app user, which is the dispositive point here. 18 whitelisted app, a so-called private API, or otherwise, one, 19 never in excess of user permission; two, never was shut off 20 those permissions as paragraph 4 or 8 acknowledges, which 21 brings us to the next point, which is counsel's, you know, 22 expression of concern for a comment I made about privacy. 23 To the extent that that's alleged, And it's based on -- it's a conclusory allegation. So let me be very, very clear. Whether it's a Facebook scrupulously 24 honors and respects privacy on its platform, but in accordance 25 with users' privacy settings. And that's the part they want to 135 PROCEEDINGS 1 2 elide over. Users had the absolute right to control who saw what. And 3 to the extent a user made that privacy designation, Facebook 4 scrupulously honored it. 5 And what's clear from this lengthy Complaint, when you 6 look at 408, is that at no time did Facebook take any action in 7 excess of those privacy settings, which brings us to the next 8 point, which is, counsel ignored, throughout their argument, 9 Facebook's specific warning that it cannot control what the 10 Kogans of the world do with user -- 11 THE COURT: I understand that. 12 MR. SNYDER: -- information. 13 Counsel said, "What difference does it matter?" 14 It matters. 15 THE COURT: I understand your argument on that point. 16 MR. SNYDER: The final point is -- I don't think you 17 need anything on incorporation by reference, unless Your Honor 18 wants something there. 19 20 21 THE COURT: No, no, no. That's okay. I just wanted to see if the plaintiffs had any better cases on that. MR. SNYDER: And so in answer -- so counsel's first 22 answer to your question, which was "Yes, these other business 23 partners are just like all other apps," is the operative 24 admission. 25 did, as opposed to Cambridge Analytica, exceeded the app It is the operative point, because nothing Facebook 136 PROCEEDINGS 1 2 3 settings. The final point is -- I guess I'm not going to say anything about standing. 4 THE COURT: 5 MR. SNYDER: 6 I think that's probably a good choice. Unless Your Honor wanted me to. But what happened here -- not standing. What happened 7 here is exactly what we said could happen, and that's what, 8 again, makes counsel's arguments so disingenuous. 9 10 11 We imposed a curfew on our app developers. We told our users: developers will get your information. 12 So we told Kogan: 13 We told our users: 14 15 If you share with friends, app You can't sell the information. Kogan might get your information if you give information to friends. And then we told everyone: If you don't like these rules, 16 you have so many different ways to protect your privacy. 17 can, of course, leave the system entirely. 18 sees what and who you share with. 19 and what the app policies are. You You can limit who You can look at what apps 20 And so this is not the Wild West where the plaintiffs were 21 without ample protection and ability to safeguard their privacy 22 if they so chose. 23 And a number of users, Your Honor, in 2012, up to and 24 including today, elected to change their privacy settings to 25 make private what they wanted to keep private, and then to lose 137 PROCEEDINGS 1 control of the privacy when that was their decision on this 2 social media platform. 3 Unless the Court has any other questions, the final thing 4 I wanted to say, actually, is, without arguing standing at all, 5 because I'm not going to, in the event that the Court rules, as 6 the order suggested it might, that it finds standing based on 7 some privacy harm, we would just respectfully request that 8 the Court make clear which causes of action the Court finds 9 standing exists under, because obviously there's -- 10 THE COURT: 11 MR. SNYDER: 12 Of course. -- a laundry list. Because we may ask the Court, after reviewing the order if 13 it goes against us on that point, to certify the standing 14 question to the Circuit. 15 THE COURT: 16 MR. SNYDER: 17 THE COURT: 18 MR. LOESER: 19 Okay. Thank you, Judge. You seem like you really want to -I just want to ask a question, Your Honor. 20 THE COURT: 21 MR. LOESER: Good. Mr. Snyder has said repeatedly that 22 there's nothing in the Complaint in which we allege that 23 privacy settings were violated. 24 about last time, too, whether we allege they violated privacy 25 settings. It's something that you asked 138 PROCEEDINGS 1 Why don't we submit just a document, with no argument, 2 just identifying the paragraphs of the Complaint where we 3 specifically allege that privacy settings were not complied 4 with. Would that be useful? 5 THE COURT: 6 MR. LOESER: 7 THE COURT: 8 Sure. Okay. Thank you. Why don't you do that on Friday also. And thank you very much. 9 MR. SNYDER: Thank you, Judge. 10 MS. LAUFENBERG: 11 THE CLERK: Thank you. Court is adjourned. 12 (Proceedings adjourned at 1:44 p.m.) 13 ---o0o--- 14 15 CERTIFICATE OF REPORTER 16 17 I certify that the foregoing is a correct transcript from the record of proceedings in the above-entitled matter. 18 19 DATE: Monday, June 3, 2019 20 21 22 23 __________________________________________________ 24 Ana M. Dub, CSR No. 7445, RDR, CRR, CCRR, CRG, CCG Official Reporter, U.S. District Court 25