govinfo:USCOURTS-cand-5_11-cv-01263-3

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   This disposition is not designated for publication in the official reports.1
Case No. 5:11-cv- 1263 JF
ORDER GRANTI NG MOTI ON TO D ISMISS WITH L EAVE TO AME ND
(JFLC3) 
 
 **E-Filed 8/10/2011**
 
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
RICK WOODS, Individually and On Behalf of All
Others Similarly Situated,
                                          Plaintiff,
 
                           v.
GOOGLE INC.,
                                          Defendant.
Case Number 05:11-cv-1263-JF
ORDER  GRANTING MOTION TO1
DISMISS WITH LEAVE TO AMEND
[Document No. 41]
Plaintiff Rick Woods brings this putative class action on behalf of advertisers enrolled in
Google’s AdWords program, alleging breach of contract; breach of the implied covenant of good
faith and fair dealing; violation of the California Unfair Competition Law (UCL), Cal. Bus. &
Prof. Code § 17200; and the California False Advertising Law (FAL), Cal. Bus. & Prof. Code
§ 17500.  Google moves to dismiss Woods’ complaint pursuant to Fed. R. Civ. P. 12(b)(6) for
failure to state a claim upon which relief may be granted.  The Court has considered the moving
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and responding papers and the oral argument of counsel presented at the hearing on July 8, 2011. 
For the reasons discussed below, the motion will be granted, with leave to amend.
I.  BACKGROUND
A. AdWords and AdSense
Google offers two advertising products: AdWords and AdSense.  AdWords allows
advertisers to display advertisements on Google.com’s search results pages and on the sites of
Google’s third-party partners. ( Compl. ¶ 28.)  Advertisers pay each time their ad is “clicked.” 
AdSense allows third parties, known as publishers or partners, to provide advertising space on
their websites for AdWords advertisers.  (Id.)  These publishers receive a share of the revenue
Google receives for each click on an AdWords advertisement that appears on their websites. 
(Id.)
Advertisers join the AdWords program online by clicking through and accepting the
Google Inc. Advertising Program Terms (Agreement).  (Id. ¶ 53-54, ex. A.)  The Agreement
states that it “constitutes the entire and exclusive agreement between the parties with respect to
the subject matter” thereof, and that “[n]o statements or promises have been relied upon in
entering into this Agreement except as expressly set forth” and “any conflicting or additional
terms contained in any other document . . . or oral discussions are void.”  (Id. ex. A § 9.)  It also
states that “[p]rogram use is subject to all applicable Google and Partner policies.”  (Id. ex. A
§ 1.)  Under the Agreement, advertisers agree that their ads “may be placed on . . . any content or
property provided by Google.”  (Id. ex. A § 2.)  Advertisers also may choose to have their
advertisements placed the sites of Google’s AdSense partners, and in doing so they agree that the
advertisements may be placed on “any other content or property provided by a third party
(“Partner”) upon which Google places ads.”  (Id.) The Agreement states expressly that the
advertiser “authorizes and consents to all such placements.” (Id.)  It also provides that “[t]o the
fullest extent permitted by law, Google disclaims all guarantees regarding positioning, levels,
quality, or timing of” clicks and the adjacency or placement of ads within a program.  (Id. ex. A §
5.)  
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   The Google Ad Traffic Quality Resource Center, while not referenced as an exhibit, is2
mentioned repeatedly in the complaint.  (See, e.g., Compl. ¶ 79-80.)  The page appears to contain
the fullest discussion of invalid clicks on one page.  Accordingly, the Court takes judicial notice
of the statements on that URL: http://www.google.com/adwords/adtrafficquality/index.html (“Ad
Traffic Resource Center”).  See Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled
on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119, 1127 (9th Cir.  2002)
(holding that “documents whose contents are alleged in a complaint and whose authenticity no
party questions, but which are not physically attached to the pleading, may be considered in
ruling on a Rule 12(b)(6) motion to dismiss”).
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B. Click Fraud and Invalid Clicks
Because AdWords advertisers are charged by the click, Google maintains policies to
prevent “click fraud”–which it defines as clicks generated with malicious or fraudulent intent–by
not charging advertisers for what it has identified as “invalid clicks.”  The “Google Ad Traffic
Quality Resource Center” defines “invalid clicks” as “clicks on AdWords ads that Google
suspects may constitute click fraud.”   The AdWords Help Center page entitled, “Invalid Clicks”2
defines such events as “[c]licks that Google does not charge to your account because we
determine they were generated by prohibited methods.”  (Degnan Decl., ex. 12.)  Google detects
invalid clicks through a combination of filters, offline analysis, and investigations prompted by
advertiser inquiries.  (Compl. ¶ 82; Resource Center.)  The “AdWords Help Center” indicates
that “[r]eal-time systems filter out activity fitting a profile of invalid behavior (such as repetitive
clicks),” and that “[c]licks and impressions from known sources of invalid activity are
automatically discarded.”  (Degnan Decl., ex. 12.) 
Section 5 of the Agreement states that the“[c]ustomer’s exclusive remedy, and Google’s
exclusive liability, for suspected invalid impressions or clicks is for [c]ustomer to make a claim
for a refund in the form of advertising credits.”  (Compl. ex. A § 5.)  Section 7 of the Agreement
states that “[t]o the fullest extent permitted by law, Customer waives all claims relating to
charges (including without limitation any claim for charges based on suspected invalid clicks)
unless claimed within 60 days after the charge.”  (Id. ex. A § 7.)
Separately, in its agreement with AdSense publishers, Google prohibits a variety of
advertisement implementations identified in AdSense Program Policies.  (Compl. ¶ 74.)  The
complaint labels these policies as Banned Ad Implementations.  (Id.)  Google also prohibits the
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display of advertisements on pages containing pornography and other banned content.  The
AdWords Help Center page entitled, “How does Google monitor invalid clicks form the Display
Network?” states that Google’s Click Quality Team “ensures that publishers found to be
engaging in invalid activity have their AdSense accounts disabled and are not allowed further
participation in the Google Network.”  (Compl. ¶ 87.)
C. Smart Pricing
The AdWords Help Center webpage entitled, “AdWords Costs and Payments” states that
AdWords includes an automatic pricing discount feature called Smart Pricing, “a feature that
automatically reduces the price advertisers pay for clicks if [Google’s] data shows that a click
from a Display Network page is less likely to result in a conversion.”  (Degnan Decl. ex. 5;
Compl. ¶ 94.)  According to the complaint, this means that Google promises to discount the cost
of a click from particular websites based on the likelihood that a click from that site will
“convert” to an actual business result.  (Compl. ¶ 49.)  
D. “Special Partners”
The complaint alleges that Google entered into secret agreements with certain AdSense
publishers, which the complaint refers to as “Special Partners.”  Allegedly, these agreements
allow Special Partners to place advertisements in ways that are prohibited to other AdSense
publishers, allowing them to generate what Woods contends are invalid clicks on the AdWords
advertisements placed on those sites.  (Compl. ¶¶107-140.)  AdWords advertisers do not receive
the same Smart Pricing discount on these sites that they would receive if their ads were placed on
the sites of other publishers.
Woods, a practicing attorney, enrolled in the AdWords Program in September 2009.  As a
part of his enrollment, he assented to the Agreement.  (Compl. ¶ 21.)  He filed the instant class
action complaint March 17, 2011. 
II.  LEGAL STANDARD 
A complaint may be dismissed for failure to state a claim upon which relief may be
granted if a plaintiff fails to proffer “enough facts to state a claim to relief that is plausible on its
face.”  Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).  Allegations of material fact must
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be taken as true and construed in the light most favorable to the nonmoving party.  Cahill v.
Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1997).  However, the Court need not accept
as true allegations that are conclusory, unwarranted deductions of fact, or unreasonable
inferences.  See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).  See also
Twombly, 550 U.S. at 561 (“a wholly conclusory statement of [a] claim” will not survive a
motion to dismiss).  
On a motion to dismiss, the Court’s review is limited to the face of the complaint and
matters judicially noticeable.  MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir.
1986); N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 1983).  However, under
the “incorporation by reference” doctrine, the Court also may consider documents which are
referenced extensively in the complaint and which are accepted by all parties as authentic.  In re
Silicon Graphics, Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999). 
Finally, although their claims arise under state law, Plaintiffs’ allegations are subject to
the Federal Rules of Civil Procedure.  Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir.
2009) (quoting Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1102 (9th Cir. 2003)) (“[T]he
Federal Rules of Civil Procedure apply in federal court, ‘irrespective of the source of the subject
matter jurisdiction, and irrespective of whether the substantive law at issue is state or federal.’”). 
Specifically, allegations sounding in fraud are subject to the heightened pleading requirements of
Fed. R. Civ. P. 9(b).  See Ciba-Geigy, 317 F.3d at 1103-04 (if “the claim is said to be ‘grounded
in fraud’ or to ‘sound in fraud,’ [then] the pleading of that claim as a whole must satisfy the
particularity requirement of Rule 9(b).”); Kaplan v. Rose, 49 F.3d 1363, 1370 (9th Cir.1994)
(claims based in fraud “must state precisely the time, place, and nature of the misleading
statements, misrepresentations, and specific acts of fraud.”). 
IV.  DISCUSSION
A. Breach of contract
Woods alleges that Google breached the parties’ Agreement by failing to offer Smart
Pricing discounts for AdWords advertisers and by charging advertisers for invalid clicks
occurring in connection with what he claims are Banned Ad Implementations on the sites of
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Google’s Special Partners.  
1. Invalid clicks
In an action for breach of a written contract, a plaintiff must allege the specific provisions
in the contract creating the obligation the defendant is said to have breached.  Miron v. Hermalife
Int’l, Inc., 11 Fed. Appx. 927, 929 (9th Cir. 2001).  Woods does not allege that the Agreement
itself contains language that obligates Google not to charge for particular clicks.  Instead, he
claims that the Agreement incorporates language from the AdWords Help Center that allegedly
contains promises by Google.  The complaint fails to explain adequately why this language
should be deemed to be incorporated into the Agreement.  Moreover, even if the Court were to
assume that the statements were incorporated into the Agreement, Woods has not pled
adequately that the language created legal obligations that Google is alleged to have breached.
a. Whether Google’s invalid click policy is incorporated into the Agreement
“Under California law, a contract may validly incorporate the terms of another document. 
The contract need not recite that it incorporates another document so long as it guides the reader
to the incorporated document.”  Maersk-Sealand v. Eurocargo Express, LLC, No. 20-cv-3230,
2004 U.S. Dist. LEXIS 13391, at *19 (C.D. Cal. Apr. 8, 2004) (quoting Shaw v. Regents of
University of California, 58 Cal. App. 4th 44, 45 (1997).  “For the terms of another document to
be incorporated into the document executed by the parties the reference must be [1] clear and
unequivocal, the [2] reference must be called to the attention of the other party and he must
consent thereto, and [3] the terms of the incorporated document must be known or easily
available to the contracting parties.”  Troyk v. Farmers Group, Inc., 171 Cal. App. 4th 1305,
1331 (2009).  “[E]ach case must turn on its facts.”  Id.
 Section 1 of the Agreement states, “[p]rogram use is subject to all applicable Google and
Partner policies, including without limitation the Editorial Guidelines [hyperlink], Google
Privacy Policy [hyperlink], and Trademark Guidelines [hyperlink], and Google and Partner ad
specification requirements.”  (Id. Ex. A § 1.)  The hyperlink next to Editorial Guidelines leads to
an AdWords Help Center page entitled “Advertising Policies” that directs advertisers to “[p]lease
carefully review all the advertising policies described in these pages and make sure that [their]
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ads, keywords, website, and account comply.”  (Degnan Decl., ex. 11.)  On that page, under
“[a]dditional policies and terms,” there is a link entitled “Invalid Clicks,” which states that
invalid clicks are “[c]licks that Google does not charge to your account because we determine
they were generated by prohibited methods.”  (Id.)  It includes links to three other pages in the
AdWords Help Center including one entitled “How does Google respond to invalid click?”  (Id.) 
This page states that clicks that Google determines to be invalid are filtered automatically from
advertiser’s reports, and that Google “will apply the following policies for the protection of
AdWords advertisers:”
• If we find that invalid clicks have escaped automatic detection [the advertiser
will] receive a credit for those clicks.
• Any advertiser or publisher participating in invalid click activity or any related
offense is subject to legal prosecution. [Google] will also take the appropriate
action on the related account.
(Degnan Decl. ex. 12.)  The same page in turn links to the Ad Traffic Quality Resource Center,
which describes Google’s three-step process for detecting invalid clicks, including its proactive
measures and investigation of complaints by advertisers.  (Resource Center.)  The Agreement
itself indicates that an advertiser’s “exclusive remedy” for suspected invalid clicks is for the
advertiser to make a claim for a refund within sixty days. (Compl. ex. A §§ 5,7.)
While the reference in the Agreement to incorporation of all applicable Google policies is
clear and unequivocal, it is not apparent that the terms of Google’s invalid clicks policy in the
AdWords Help Center are “known or easily available to the contracting parties.”  The complaint
refers to more than a dozen pages in both the AdWords Help Center and AdSense Help Center
that allegedly identify Google’s obligations under the invalid clicks policy, including a video clip
and an expert report from another lawsuit, both of which are linked to the AdWords Help Center. 
(See Compl. ¶¶ 77-93.)  The fact that statements about invalid clicks are spread across a variety
of pages in a variety of formats make it difficult to identify the terms of any actual and
unambiguous contractual obligations.  This stands in sharp contrast to other Google policies,
which include clear terms.  At least as they are described in the current complaint, the terms of
the invalid click policy are not articulated adequately to be deemed incorporated into the
Agreement.
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Moreover, even if the Court were to consider Google’s statements in the AdWords Help
Center as part of the Agreement, Woods has not shown that Google breached an actual promise. 
Google defines “invalid clicks” as those “that [Google] suspects may constitute click fraud,”
(Resource Center), and states that it will not charge advertisers for clicks from sources that
Google has prohibited, (Degnan Decl. ex. 14.).  In addition, the “Google Ad Traffic Resource
Center” indicates that Google’s policy with respect to invalid clicks includes both automated
filtering and responsive investigations based on advertisers’ complaints, (id.), and the Agreement
itself indicates that an advertiser’s “exclusive remedy” for suspected invalid clicks is for the
advertiser to make a claim for a refund within sixty days. (Compl. ex. A §§ 5, 7).
Woods has not alleged facts that would support a conclusion that Google acted beyond its
discretion in administering its invalid clicks policy.  Although the complaint alleges that Google
permitted its Special Partners to generate clicks in ways that were prohibited for other publishers,
it fails to explain why Google was obligated to consider these clicks invalid.  Nor has Woods
alleged adequately that the Agreement prohibited Google from excluding certain publishers from
policies it applies to others, or that it had an independent obligation to enforce its policies against
particular publishers.  The allegations themselves suggest that the ad placements at issue were
not prohibited by Google but in fact were endorsed by Google as part of the alleged conspiracy
between Google and its Special Partners.  Finally, Woods does not allege that he attempted to
seek a refund–as required by the Agreement–for charges relating to clicks he suspected were
invalid.  
2. Smart Pricing discount 
Woods also asserts that Google promised to apply its Smart Pricing discount to all
advertisements generated from its AdSense publishers.  As with invalid clicks, the complaint
does not allege that there is express language in the Agreement articulating such a promise;
rather, Woods claims that because the AdWords Help Center contains language to that effect,
such language is incorporated into the Agreement.  Woods argues that the Smart Pricing policy is
incorporated both through § 1, which states that program use is subject to all Google policies,
and through § 7, which states that customers shall pay all charges in accordance with “the
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payment terms in the . . . Program FAQ.”
Google’s Smart Pricing discount is not listed on its “Advertising Policies” webpage, and
is not referred to as a “policy” within the AdWords Help Center.  Section 1 of the Agreement
refers to advertisers’ use of the AdWords program, and the “Advertising Policies” page instructs
users to “review all of the advertising policies in these pages to make sure [their] ads, keywords,
website, and account comply.”  Statements in the Help Center about the Smart Pricing discount,
which relate to Google’s billing practices rather than advertisers’ “use” of the program, are not
“clearly and unequivocally” incorporated into § 1.
Section 7 of the Agreement states that “[c]ustomer shall pay all charges in accordance
with the payment terms in the applicable IO [Insertion Order] or Program FAQ.” (Compl. ex. A
(emphasis added).)  The same section also states that the advertiser “shall be responsible for all
charges . . . set in an online account,” and that “charges are solely based on Google’s
measurements for the applicable Program, unless otherwise agreed to in writing.”  Woods
contends that because Google directs advertisers to the AdWords Help Center for frequently
asked questions, statements on those pages with respect to the charges for advertisements are
incorporated into the Agreement.  However, the AdWords Help Center page entitled “AdWords
Costs and Payments” is located in separate sections entitled, “AdWords costs,” which describes
Google’s charges for the program, and “AdWords Payments,” which describes advertisers’
payment options such as prepay and post-pay.  (Degnan Decl. ex. 5.)  Google contends that the
reference to the “Program FAQ” is limited to statements about payment options and does not
extend to statements in the AdWords Help Center with respect to how Google calculates its
charges.  The fact that the Agreement addresses “charges” and “payment terms” separately
supports this reading.
Even if the Court were to conclude that the language in the AdWords Help Center with
respect to Smart Pricing discounts were incorporated into the Agreement, the complaint does not
allege adequately that Google undertook on an obligation to apply the discount in a particular
way to all advertisements.  The Agreement states unequivocally that charges are based solely on
Google’s measurements unless otherwise agreed in writing, and that advertisers agree to waive
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“all claims relating to charges . . . unless claimed within 60 days after the charge.”
B. Breach of the implied covenant of good faith and fair dealing
Google contends that Woods’ claimed breach of California’s implied covenant of good
faith and fair dealing is redundant to his breach of contract claim because it involves the same
conduct.  This appears to be an incorrect reading of the complaint, as Woods alleges that
irrespective of whether it breached its contractual obligations directly, Google sought to avoid its
obligations and deprive Woods and other advertisers of the benefits of the Agreement.  That said,
the complaint does not allege adequately that Google deprived Woods of a benefit to which he
was entitled under the Agreement.
Under California law, “there is implied in every contract a covenant by each party not to
do anything which will deprive the other parties thereto of the benefits of the contract.”  Harm v.
Frasher, 181 Cal. App. 2d 405, 417 (Cal. Ct. App. 1960).  The “implied covenant of good faith
is read into contracts in order to protect the express covenants or promises in the contract, not to
protect some general public policy interest not directly tied to the contract’s purpose.”  Schulken
v. Wash. Mut. Bank, No. C. 09-02708 JW, 2009 U.S. Dist. LEXIS 114030, at *16 (N.D. Cal.
Nov. 9, 2009).  To state a claim for breach of the implied covenant, a plaintiff must show “that
the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract
term, demonstrates a failure or refusal to discharge contractual responsibilities.”  Careau & Co.
v. Security Pacific Business Credit, Inc., 22 Cal. App. 3d 1371, 1395 (Cal. Ct. App. 1990).  “If
the allegations in a breach of implied covenant claim do not go beyond the statement of a mere
contract breach and, relying on the same alleged acts, simply seek the same damages or other
relief already claimed in a companion contract cause of action, they may be disregarded as
superfluous as no additional claim is actually stated.”  Malcolm v. JP Morgan Chase Bank, N.A.,
No. 09-4496-JF, 2010 U.S. Dist. LEXIS 23770, at *7(N.D. Cal. Mar. 15, 2010) (quoting
Schulken v. Wash. Mut. Bank, No. C. 09-02708 JW, 2009 U.S. Dist. LEXIS 114030 (N.D. Cal.
Nov. 19, 2009)).
As the previous discussion makes clear, the Agreement gives Google wide latitude in
administering its AdWords program.  At the same time, such discretion is bounded by Google’s
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obligation to carry out its responsibilities in good faith.  Woods’ allegations that Google entered
into secret agreements with its Special Partners to generate invalid clicks and failed to apply
discounts to particular ad placements are sufficient at the pleading stage to suggest bad faith.  
However, Woods has failed to allege that Google undertook a specific duty that it failed
to discharge.  The complaint alleges that a “principal benefit” of the Agreement was that
advertisers would “receive cost-effective, relevant, and targeted advertising that was optimized
by Google’s Smart Pricing discount and AdSense Program Policies.”  Compl. ¶ 259.  As
discussed above, Woods has not shown that Google promised advertisers that it would not enter
into any agreements with publishers with terms that were different from those of the basic
AdSense Agreement or that Google had any independent obligation to enforce the AdSense
Agreement against publishers.  Similarly, Woods has not explained why Google’s Smart Pricing
discount feature required it to provide particular discounts to each ad placements.
C. UCL and FAL claims
The UCL prohibits any “unlawful, unfair or fraudulent business practices.” Cal. Bus. &
Prof. Code § 17200, see also Cel-Tech Commc'ns, Inc. v Los Angeles Cellular Tel. Co., 20 Cal.
4th 163, 180 (1999). Because the statute is written in the disjunctive, it applies separately to
business practices that are (1) unlawful, (2) unfair, or (3) fraudulent. See Pastoria v. Nationwide
Ins., 112 Cal. App. 4th 1490, 1496 (2003). Woods contend that Google’s conduct has violated all
three prongs.
1. Unlawful Business Practices
“By proscribing ‘any unlawful’ business practice, [the UCL] ‘borrows’ violations of other
laws and treats them as unlawful practices that the unfair competition law makes independently
actionable.”  Cel-Tech, 20 Cal. 4th at 180.  The only unlawful activities alleged in the complaint
are Google’s alleged breach of contract and breach of the implied covenant of good faith and fair
dealing.  Because Woods has not pled either of those claims adequately, he has failed to state a
claim under this prong of the UCL.
2. Unfair Business Practices
“An act or practice is unfair if the consumer injury [1] is substantial, [2] is not
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outweighed by any countervailing benefit to consumers or to competition, and [3] is not an injury
the consumers themselves could reasonably have avoided.”  Daugherty v. Am. Honda Motor Co.,
144 Cal. App. 4th 824 (Cal. Ct. App. 2006). Plaintiffs must allege facts to support all three
elements of a UCL unfair business practice claim. Id. Woods contends that Google’s alleged
practices of not applying Smart Pricing discounts as represented and charging for invalid clicks
in connection with so-called Banned Ad Implementations are unfair.  He argues that advertisers
reasonably could not have avoided incurring the injury caused by Google’s alleged agreements
with its Special Partners because the practices were undisclosed and the AdWords program does
not allow advertisers to opt out selectively from having their advertisements displayed on Special
Partners’ websites.  Woods also alleges that there is no countervailing benefit to the practice. 
However, unless Woods can explain why he and other advertisers had a legal right to the Smart
Pricing discounts on the ad placements at issue or not to be charged for clicks from so-called
Banned Ad Implementations, he cannot show any cognizable injury.
3. Fraudulent Business Practices and False Advertising
Google asserts that Woods’ UCL and FAL claims premised on fraudulent
misrepresentations are insufficient both because Woods lacks standing to raise them and because
the complaint fails to satisfy the particularity requirements of Fed. R. Civ. P. 9(b).
a. Particularity requirements of Rule 9(b)
Rule 9(b) requires a plaintiff to be “specific enough to give defendants notice of the
particular misconduct which is alleged to constitute the fraud charged so that they can defend
against the charge and not just deny that they have done anything wrong.”  Swartz v. KPMG LLP,
476 F.3d 756, 764 (9th Cir. 2007) (internal quotation marks and citation omitted).  “In the
context of a fraud suit involving multiple defendants, a plaintiff must, at a minimum, identify the
role of each defendant in the alleged fraudulent scheme.”  Swartz, 476 F.3d  at 765 (internal
quotation marks and citation omitted).  The plaintiff not only must set forth more than the neutral
facts necessary to identify the transaction but also must explain why the statement or omission
complained of was false or misleading.  In re GlenFed, Inc. Securities Litigation, 42 F.3d 1541,
1548 (9th Cir. 1994).  
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Case No. 5:11-cv- 1263 JF
ORDER GRANTI NG MOTI ON TO D ISMISS WITH L EAVE TO AME ND
(JFLC3) 
The representations that Woods claims are fraudulent are included in a series of eight
bullet points in paragraph 271 of the complaint.  Six of the bullet points contain quotations from
the Agreement itself; the last two refer to images from the AdWords sign up screen.  Google
contends that Woods has not met Rule 9(b)’s requirement that he explain why the statements or
omissions are false and misleading.  The complaint states that based on Google’s promises and
representations, Woods “reasonably believed that account statements received from Google
would reflect fees in a manner consistent with Google’s stated policies,” and concludes that
Google’s business practices are fraudulent because they are “likely to deceive (or confuse)
members of the public into believing that Google will apply Smart Pricing to all sites across
Google’s Network (except google.com) and that Google will not charge advertisers for invalid
click activity occurring in connection with Banned Ad Implementations.”  (Compl. ¶ 273.)
To satisfy Rule 9(b), Woods must identify both the particular statements he claims are
fraudulent and why he claims that the statements are fraudulent.  Here, it appears that Woods
merely quotes language from the Agreement, along with two additional screenshots, and reasserts
his theory of breach of contract.  To the extent that Woods’ claim of fraud is dependent on his
breach of contract claim, it is insufficient for the reasons described earlier.  To the extent that his
theory of fraud is distinguishable from his contract claim, Woods must explain with greater
particularity why the statements provide a basis for a claim of fraud.  
b. Standing to assert UCL and FAL claims
Google also contends that Woods has failed to establish standing for his
misrepresentation claims.  To establish standing as a class representative for a misrepresentation
claim under the UCL or FAL, a plaintiff must show he personally lost money or property because
of his own actual and reasonable reliance on the allegedly untrue or misleading statements.  See
In re Tobacco II Cases, 46 Cal. 4th 298, 326-28 (2009); see also Kwikset Corp. v. Superior
Court, 51 Cal. 4th 310, 326 N.9 (2011) (applying the same actual reliance standard to a FAL
claim).  Google contends that Woods cannot have actually or reasonably relied on any statements
outside the scope of the AdWords Agreement because the Agreement itself expressly states that
“[n]o statements or promises have been relied upon in entering into this Agreement except as
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Case No. 5:11-cv- 1263 JF
ORDER GRANTI NG MOTI ON TO D ISMISS WITH L EAVE TO AME ND
(JFLC3) 
expressly set forth herein,” and that “any conflicting or additional terms contained in any other
documents . . . are void.” (Compl. ex. A § 9.)  Google contends that as a practicing attorney,
Woods was a sophisticated party in a position to understand that the Agreement into which he
was entering contained a no-reliance clause.
Woods argues that the language in the Agreement is insufficient to disclaim reliance on
extraneous statements, because Google uses the AdWords Help Center explain the AdWords
program to advertisers.  However, Woods does not explain how Google’s use of the AdWords
Help Center to explain its program to advertisers prevented him from understanding the clear
language in the Agreement excluding any reliance on extraneous statements or promises.
Woods also notes that UCL liability may exist “where one of the parties to the contract
makes contradictory or misleading representations in order to obfuscate or obscure the actual
terms of the contract.”  In re Facebook PPC Adver. Litig, No. 09-cv-03043, 2010 U.S. Dist.
LEXIS 136505, *18 (N.D. Cal. Dec. 15, 2010).  Woods argues that Google made misleading
statements designed induce reliance and obscure its own lack of obligations under the
Agreement.  However, the issue is whether “a reasonable jury could find” that Woods was
reasonable in relying upon the extraneous statements notwithstanding an unambiguous
disclaimer.  See id.  In light of Woods’ sophistication as an attorney and the complaint’s lack of
particularity with respect to the statements that were alleged to have induced his reliance, the
Court concludes that Woods has not alleged facts sufficient to support such a claim.
V.  DISPOSITION
The motion will be granted, with leave to amend.  Any amended complaint shall be filed
within thirty (30) days of the date of this order.3
IT IS SO ORDERED. 
DATED: 8/10/2011 __________________________________
 JEREMY FOGEL
 United States District Judge
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