LevelFields, Inc. sued the social media platform in federal court in San Francisco, claiming the term "click" in their advertising agreement referred exclusively to human users rather than automated bots. The company sought to represent a class of similarly situated advertisers.
The district court dismissed the complaint with prejudice, ruling that the contract was unambiguous under California law. The Ninth Circuit agreed, holding that the parties intended the term to be interpreted broadly to include any user selecting an ad delivered to LevelFields' website.
Although the agreement did not explicitly define "click," the contract contained a provision acknowledging that third parties might generate clicks "for prohibited or improper purposes." The panel noted this language supported the conclusion that the parties understood the term to encompass non-human activity of contracting.
LevelFields attempted to introduce extrinsic evidence, including an email from Reddit explaining that clicks were tracked differently depending on the ad format. The district court excluded the email, and the Ninth Circuit found no abuse of discretion in that ruling. The panel held the email was insufficient to create ambiguity terms.
The court also rejected LevelFields' argument that the district court improperly resolved a factual issue regarding the "reasonable means" Reddit used to determine ad delivery. LevelFields admitted it did not allege that Reddit failed to use reasonable means to deliver the ads. The company also agreed there was no guarantee every ad would reach its users.
Because LevelFields had previously been granted leave to amend, the panel found dismissal with prejudice was appropriate. The court noted further amendment would be futile given the unambiguous nature of the contract.
The panel did not address Reddit's alternative arguments for dismissal, including LevelFields' failure to use the exclusive claims process provided.
The three-judge panel included U.S. Circuit Judges Rawlinson, R. Nelson, and Bade.