AdWords User Wins Boost in Suit Against Google

(CN) - Google cannot scuttle a class action over allegedly unfair pricing practices connected to its advertising service, AdWords, a federal judge ruled.

Lead plaintiff and Arkansas attorney Rick Woods said he pulled the plug on his account after 17 months because Google denied him certain discounts, placed his advertising on websites he found ill suited, and failed to restrict the ads to predesignated geographical locations.

AdWords allows users to display advertisements on Google and other websites that belong to Google's partners, charging the advertiser a fee for each ad "click," Woods explained in his 2011 complaint.

Though the service offers a discount feature called Smart Pricing, Woods said Google failed to apply the discount formula to about 60 percent of the "Display Network" clicks his ads received.

Woods filed a second amended complaint in 2012, paring his original nine claims down to four: breach of contract, bad faith, violation of the California Unfair Competition Law (UCL) and violation of the California False Advertising Law.

Google then moved to dismiss, but U.S. District Judge Edward Davila upheld most claims Tuesday in San Jose, Calif.

"The court finds that Woods has sufficiently alleged that in several instances Google failed to Smart Price on the Display Network, thus constituting a breach of the agreement," Davila wrote.

Woods can also advance his claim for breach of implied covenant of good faith and fair dealing, according to the ruling.

He had claimed that the Smart Price failures amounted to fraudulent, unfair and unlawful business practices of the UCL, but Davila said the complaint failed to meet the standards of the last prong.

"Woods has not "identified a statute independent of the UCL which he claims that Google has violated so as to underlie his 'unlawful' UCL claim," the ruling states. "Accordingly, Woods has not sufficiently pleaded a violation of the UCL's 'unlawful' prong."

Davila dismissed that claim with prejudice but preserved Woods' false-advertising claim as well as his claim that the geographic or location targeting failures amounted to a UCL violation.

The parties face a case-management conference on May 17.

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