SAN FRANCISCO (CN) — Defending a $9.9 million fundraising campaign to promote justice for George Floyd and Breonna Taylor, Change.org argued in court Tuesday that it cannot be sued over how it chose to spend the donated funds.
“I think the contract is clear,” Change.org lawyer Jonah Knobler said during a virtual court hearing. “It says, ‘We will do billboards. We will do social media. We will give you 12.5 webpage displays per dollar.’ We did all those things; we think that’s it.”
Lead plaintiff Sean Randal of Los Angeles County sued the for-profit, petition-platform company on June 11, two days after it stopped accepting donations to promote its Justice for George Floyd and Breonna Taylor petitions.
Floyd and Taylor, both Black, were killed by police. A video of a Minneapolis officer kneeling on Floyd’s neck as he pleaded “I can’t breathe” this past May and reports of officers fatally shooting Taylor in her Louisville, Kentucky, home while executing a no-knock search warrant set off a wave of racial justice protests across the country this past summer.
The Floyd campaign became Change.org’s most popular petition ever with nearly 20 million signatures. Donors contributed $7.7 million to the Floyd petition and $2.2 million to the Taylor petition.
An open letter published on June 9 by former Change.org employees argued the company was misleading donors into thinking they were supporting Floyd’s family or racial justice groups, when the money was actually going to a for-profit company to promote petitions. By soliciting donations, the ex-employees argued, Change.org was “siphoning resources away” from organizations fighting for racial justice.
The original class action complaint filed in June claimed Change.org used donations to “pay itself” to circulate the petitions and that it pocketed the rest of the money as profit.
An amended complaint filed in September frames the lawsuit in a different light, claiming that donors were promised their money would be used to promote the petitions on billboards, in social media and through emails, but Change.org used most of it for other purposes.
Change.org spent $102,000 advertising the Floyd petition on 118 digital billboards and $415,000 promoting it on social media, according to testimony by the company’s chief operating officer Benjamin Joffe-Walt.
In total, Joffe-Walt said the company will spend $2.5 million of donors’ money to promote the petitions, $1.5 million to create an internal team dedicated to racial justice advocacy, and $6 million to fund racial justice organizations.
A webpage soliciting donations for the petitions said contributions would “allow” Change.org to “put the petition on billboards across the country, blanket social media with calls to join, and email the petition to millions of people.”
During the court hearing on Change.org’s motion to dismiss Tuesday, plaintiffs’ attorney John Edward Norris, of Davis & Norris in Birmingham, Alabama, said the company is only spending 25% of donations on what it promised.
Those promises formed the basis of a contract “that doesn’t allow them to take 75% of the money and spend it on things other than what is specified,” Norris argued.
U.S. District Judge Edward Chen said the dispute may come down to what the word “allow” means.
It could mean “that all the money will be spent on these things, or it will allow some spending on these things,” Chen said.
Norris argued that any reasonable consumer would interpret it to mean “we’re going to spend a significant portion of it” on what was promised.
Representing Change.org, Knobler, of the firm Patterson Belknap Webb & Tyler in New York, said that because his client used some of the money on what was promised, there is no breach of contract. Even if there was a breach, he added, the lawsuit should still be dismissed because the plaintiffs suffered no damages.
“It’s not the case that anytime what you get is different from what you were promised, you are damaged,” Knobler said.
When asked to explain his damages theory, Norris said the calculation is easy. Change.org spent $7.50 of every $10 in donations on things other than what was promised.
“I think the simple math is 75% of their money back,” Norris said.
Each donor should get to decide if they want to use their money to support Change.org’s new racial justice team or nonprofit groups focused on racial justice since they were not told their money would be spent that way, Norris argued.
Chen said it seems more like the plaintiff, Randal, seeks a partial recission of the contract rather than actual damages.
Norris asked that Chen let his client file an amended complaint with a recission-of-contract claim if he decides to dismiss the lawsuit based on the damages issue.
Knobler argued that a recission claim would be futile because under California law, recission is not allowed when it affects the rights of third parties, such as racial justice groups who were pledged millions of dollars in donated funds.
Beyond that problem, he said a recission-of-contract claim would still fail because the donors suffered no injury. The donors obtained more value from their contributions than they expected because extra money is being donated to racial justice groups, he argued.
“If you made out like a bandit, and got more value than what you were promised, you can’t rescind,” Knobler said.
After 45 minutes of debate, Chen took the arguments under submission.