SAN FRANCISCO (CN) — Meta’s attempt to dodge claims of a conspiracy to blacklist competitors of the online adult website OnlyFans fell flat in federal court late Wednesday.
Senior U.S. District Judge William Alsup denied Meta’s requests to dismiss and strike an amended class action by online adult entertainers claiming a conspiracy to blacklist them and their Facebook and Instagram posts because they associated with competitors of OnlyFans.
Plaintiffs who work in online adult entertainment claim the social media giants' parent company Meta engaged in a scheme to reduce competition in the market and force providers to work exclusively through OnlyFans. They say Meta engaged in covert payments and manipulation of shared terrorism-related databases and Meta’s internal algorithms, and even removed posts and suspended accounts linking to OnlyFans and other pornographic websites.
Since the amended complaint was filed, three Meta executives have been identified by name in a court filing — including Nick Clegg, Meta’s vice president of global policy, and Nicola Mendelsohn, vice president of the global business team. The plaintiffs accuse them of being as the “John Does” who accepted bribes from OnlyFans to help the platform dominate the industry.
Meta said in court last month that the amended complaint still lacks information that backs up the plaintiffs' claims to make “the inference of culpability plausible” for why accounts were removed or deprioritized.
But in a 14-page order issued late Wednesday, Alsup ruled the plaintiffs’ claims are plausible for several reasons. They provided an email that purports to show several wire transfers from Fenix defendants to Meta defendants, listing names of several adult entertainment websites that compete with OnlyFans; submitted graphs and news reporting showing changes in online traffic increasing for OnlyFans and decreasing for competitors; and offered a whistleblower report which Alsup said backs up claims that Meta employees were accepting bribes.
Alsup found the email supports plaintiffs’ claim that Meta employees accepted bribes from Fenix in late 2018 to blacklist competitors of OnlyFans. He also granted the plaintiffs’ request to submit the whistleblower report on employees' acceptance bribes and working to “take down OnlyFans competitor accounts and flag competing URLs” which caused a lengthy debate in court in November.
He also said the plaintiffs provided enough evidence to show financial harm, and disagreed with Meta’s claims that Section 230 of the Communications Decency Act bars the lawsuit. He said the plaintiffs have offered plausible claims that Meta did more than merely demote or remove information from third parties — which it is allowed to do as an information content provider — and “purposefully designed their platforms to filter posts and accounts in an anticompetitive manner.”
“Furthermore, contrary to Meta defendants’ suggestion, allowing plaintiffs to pursue their claims would not open the door to others ‘to recover for the removal of posts whenever automated content-moderation tools are used,’” Alsup wrote. “Rather, this order finds only that, when automated content-moderation tools are allegedly designed to facilitate unlawful conduct, the claims survive CDA defenses.”
Alsup noted the Ninth Circuit has affirmed the dismissal of an unfair competition claim on the basis of Section 230, but recently also affirmed how internet service providers may “abuse [their] immunity to block content for anticompetitive purposes or merely at [their] malicious whim.”
“Meta defendants also argue that the First Amendment protects their decisions to remove plaintiffs’ content from their platforms,” he wrote. “But the Supreme Court has held that the First Amendment does not immunize anticompetitive conduct.”
He said the First Amendment does not shield Meta defendants from liability for anticompetitive suppression of speech — and that if Meta is removing posts and accounts linked to adult entertainment websites except for OnlyFans, “then they are helping OnlyFans to achieve an unlawful monopoly.”
Alsup rejected Meta’s argument that it is not liable for the actions of employees who aparticipated in anticompetitive conduct, given evidence that employees at the highest levels may have accepted bribes. He also said Meta misstated the law when it argued that vicarious liability does not apply to unfair competition claims, because only individual owners of Meta — not the named Meta defendants — must have personally participated in the unlawful practices to be held liable.
“It is premature to conclude that those accepting bribes were involved in a frolic of their own so as to immunize Meta itself,” Alsup said. “The employment of individuals within Meta defendants’ content-moderation and security teams predictably and plausibly creates the risk that employees will intentionally and tortiously remove certain content from Meta defendants’ platforms.”
But the plaintiffs didn't succeed entirely. Alsup denied their request to redact identities of people they claim handled business of OnlyFans in the Philippines because those identities are on public websites.
He agreed to redact parts of an exhibit containing bank account information — save the last four digits of the account numbers — and the name of a minor, but said other information like details of wire transfers from Fenix International to Meta employees would remain public. He said similar information in the defendants’ briefs and in the second amended complaint should also be public.
“The ruling reinforces the importance of whistleblowers, and we look forward to proceeding to discovery," the plaintiffs' attorney David Azar said by email.
A lawyer representing Meta did not respond to requests for comment. But in an email, a Meta spokesperson said the claims "are completely false and lack a shred of evidence to back them up. We’re confident we’ll win this case.”
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