On March 27, 2018, four nonprofit fair housing organizations filed this suit in the U.S. District Court for the Southern District of New York. The plaintiffs sued Facebook under the Fair Housing Act, 42 U.S.C. § 3613; two of the plaintiffs also sued under the New York City Human Rights Law. Represented by private and in-house counsel, the plaintiffs alleged that Facebook created categories on its advertising platform that facilitated unlawful housing discrimination in housing ads and sought declaratory and injunctive relief, damages, and attorney’s fees. Specifically, the plaintiffs claimed that Facebook’s advertising tools allowed users to target ads based on sex, family status, disability, national origin, and other protected characteristics in violation of the Fair Housing Act and New York City’s anti-discrimination laws.

This case developed from a series of investigations into Facebook’s advertising tools by the plaintiffs (the National Fair Housing Alliance, the Fair Housing Justice Center, Inc., the Housing Opportunities Project for Excellence, Inc., and the Fair Housing Council of Greater San Antonio). The plaintiffs created and submitted their own ads to Facebook in New York, Washington, D.C., Miami, and San Antonio. According to the plaintiffs, their experiments showed that Facebook allowed advertisers to exclude families with children, women, and users with interests based on disability and national origin. For example, the National Fair Housing Alliance posted ads for a fictional real estate company and requested it not be shown to “parents with toddlers,” “parents with preschoolers,” “parents with early school-age children,” “moms of grade school kids,” and “moms of high school kids;” the Alliance claimed that by combining these exclusions, advertisers could discriminate against people with children. The plaintiffs then conducted similar experiments in other jurisdictions using other protected criteria. (Facebook had previously removed certain race-based targeting methods because of an earlier controversy about “affinity marketing.”)

On June 4, 2018, the defendants motioned to transfer the case to the Northern District of California or, alternatively, to dismiss the case. Facebook argued that, by agreeing to its terms of use when creating their Facebook accounts, the plaintiffs agreed to have their suits litigated in California. Facebook also argued under the first-filed rule that Onuoha v. Facebook, a pending suit in California, had priority over the plaintiffs’ suit. In addition, Facebook argued that the court did not have personal jurisdiction and that the plaintiffs did not have standing. Finally, Facebook argued that it was immune from suit under the Communications Decency Act and that the plaintiffs failed to allege discriminatory conduct by Facebook itself.

On June 25, 2018, the plaintiffs filed an amended complaint. The plaintiffs clarified their original complaint by alleging that Facebook provides a service related to "the business of selling or renting dwellings" under the Fair Housing Act and that its creation of categories was discriminatory. The court (Judge John G. Koeltl) denied Facebook’s motion to transfer or dismiss as moot on July 2, 2018, likely because of the plaintiffs’ amendment. Later that month, Facebook again moved to transfer or dismiss.

Over the course of the fall, the parties briefed the pending motions. They also engaged in settlement talks that yielded a motion to dismiss by the plaintiffs on February 6, 2019, and a motion to re-open the case to enter the settlement on March 16.

Pursuant to the settlement agreement, Facebook agreed to pay $1,950,000 to plaintiffs for alleged damages. Additionally, Facebook agreed to provide $500,000 in credit for advertising on Facebook to the plaintiffs. Facebook also agreed to create and administer to certain employees a training program on federal housing law in consultation with the National Fair Housing Alliance. The parties agreed that the plaintiffs could continue to run test ads on Facebook to monitor the efficacy of Facebook’s policy changes. And Facebook agreed to meet with the National Fair Housing Alliance at least once every six months to review Facebook’s ad targeting policies.

The parties agreed that Hunter Hughes III or another mutually agreeable mediator would resolve disputes about implementing the settlement agreement before the parties would return to court. The duration of the settlement was defined as a three-year period from the date that Facebook implemented certain reforms about ad creation specified in the agreement. The court approved the settlement on March 29, 2019 and retained jurisdiction to enforce it. As of September 2019, neither party has made any additional filings, and the settlement remains in force.

This is one of five related cases alleging that Facebook's ad tools enabled discrimination in violation of state or federal laws. The others are Onuoha v. Facebook, Riddick v. Facebook, Communications Workers of America v. Facebook, and Spees v. Facebook.

Cianan Lesley - 04/16/2019


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