A New York federal judge held Google liable Tuesday for illegally monopolizing its advertising placement technology business, dramatically narrowing the scope of the multidistrict litigation from website publishers, advertisers and others by locking the technology giant into the Justice Department's win in a separate Virginia federal court case.
The judge's order will likely dramatically limit any subsequent MDL proceedings, but it would still leave for litigation some targeted conduct left out of the DOJ trial, as well as damages. (Photo by David Paul Morris/Getty Images)
U.S. District Judge P. Kevin Castel's order applying issue preclusion from the U.S. Department of Justice case to the MDL means Google has now again been found to have illegally preferenced ads running through its own servers and anticompetitively locked users into those servers by tying its publisher-side server to its exchange pairing publishers listing ads space with advertisers looking to place ads.
Citing many "identical" claims and issues between the instant litigation and the Eastern District of Virginia case before U.S. District Judge Leonie M. Brinkema, Judge Castel said there's "no unfairness to Google in giving preclusive effect to certain findings and conclusions in DOJ civil enforcement action."
Judge Castel's partial summary judgment order will likely dramatically limit any subsequent MDL proceedings. But it would still leave for litigation some targeted conduct left out of the DOJ trial, as well as damages.
Judge Brinkema found in April that Google entrenched its monopoly power by imposing anticompetitive policies on its customers, including conditioning full functionality for its AdX exchange on using its publisher server, and by eliminating product features to block rivals from competing. She rejected the DOJ's claims targeting Google's advertiser-side server. Her findings led to a September remedies phase trial, with the DOJ pushing for a breakup of Google's ad tech business. Google has vowed to appeal the liability findings.
The MDL plaintiffs, including proposed classes of website publishers and advertisers, as well as media companies the Daily Mail and Gannett Co. Inc. and defunct video ads company Inform, had sought to adopt the full sweep of U.S. District Judge Leonie M. Brinkema's April findings, as they target Google's dominant role in the technology that pairs website publishers selling ad space with advertisers looking to place ads in split-second auctions that take place every time a webpage loads.
Judge Castel effectively obliged Tuesday, finding close enough parallels to the allegations here to apply Virginia court findings of market definition and scope, after agreeing last month to apply a worldwide look to the markets precisely to line up the cases. He came to the same conclusions for Google's market power and anticompetitive conduct, in a 34-page ruling that at times showed serious dissatisfaction with Google's arguments, like when he said it's "simply untrue that Judge Brinkema's findings on monopoly power did not address the advertiser side of the ad exchange market, as Google argues."
Google had opposed issue preclusion by arguing there were key differences between the cases and asserting that in looking at the claims under Fourth Circuit standards, Judge Brinkema diverged from the Second Circuit in important ways. But Judge Castel noted that Google itself described the cases as "substantively identical." And he waved off any differences between the circuits.
"In this MDL and in the E.D. Va. action, district courts in the Second and Fourth Circuits apply the same statutory standards, sections 1 and 2 of the Sherman Act, and the same controlling Supreme Court precedents. That the statutory standards are applied 'differently' does not foreclose issue preclusion," Judge Castel said. "Even at that the variations between the law of the two circuits are minor and, in all instances, Judge Brinkema's findings and conclusions are consistent with the standards of either circuit."
Judge Castel rejected Google arguments that his Virginia-based peer applied a different standard from the Second Circuit when she rejected the company's assertions that the allegations amounted to a refusal to deal with its competitors, a difficult allegation to make under U.S. antitrust law that generally presumes firms can choose with whom they do business.
"Judge Brinkema explained her reasoning, which does not implicate any difference between the two circuits," Judge Castel said. He rejected the variation claims as "an overreading" of a key Second Circuit precedent, and said that Google's arguments of differences based on whether a market is heavily regulated are "utterly without merit."
It doesn't matter that the circuits look at anticompetitive conditioning, or tying, differently, according to the ruling. While "the elements of a tying claim are stated somewhat differently," Judge Castel said there are no fundamental distinctions.
"The supposed gap between Second and Fourth Circuit law is bridged by Judge Brinkema's findings on the impact of the coerced used [sic] of AdX, including its unified pricing rules, on the market for publisher ad servers," Judge Castel said.
Judge Castel also criticized Google for complaining that Judge Brinkema only looked at the alleged conduct holistically, instead of one at a time, arguments he said were based on "cherry picking language from the memorandum opinion and Fourth Circuit precedent."
"Because each anticompetitive act must be separately scrutinized, Google argues that the judge's findings were not compliant with Second Circuit law and prior opinions of this court. But Google does an injustice to the careful findings in the E.D. Va. Action," he said. "Each act or practice that was alleged to be anticompetitive was independently scrutinized."
Nor is there anything unfair to Google about applying issue preclusion, according to the decision, which noted that the search giant knew it was facing just this outcome when battling the Virginia case, where it had "the incentive to aggressively defend a government enforcement action that sought its breakup."
An attorney for Gannett and the Daily Mail, John Thorne of Kellogg Hansen Todd Figel & Frederick PLLC, said the case is "an example of efficient coordination between cases in the two courts," pointing to the syncing of discovery between the DOJ litigation and the MDL. He also pointed to the publisher executives who were key witnesses for Judge Brinkema and were representing plaintiffs in the MDL.
"Judge Brinkema's opinion holding in favor of DOJ repeatedly cited our witnesses. Matt Wheatland (Daily Mail) is cited 27 times in her opinion," Thorne said in an email. "Tim Wolfe (Gannett) is cited 38 times. There is no reason to have another trial on the same issues. DOJ relied on our witnesses in Virginia and Google would be bringing its same witnesses to New York."
An attorney for the proposed publisher class, Philip C. Korologos of Boies Schiller Flexner LLP, welcomed the ruling Tuesday.
"We are gratified that the court has resolved critical issues regarding Google's liability for its scheme to monopolize certain ad tech markets in favor of the proposed publisher class," he said in an email. "We look forward to having a jury determine the substantial damages suffered by website publishers, large and small, as a result of Google's monopolistic conduct."
An attorney for Inform, John C. Herman of Herman Jones LLP, voiced a similar sentiment.
"Having filed the first digital advertising monopoly case against Google in 2019, today's ruling in the MDL is further vindication that the initial allegations were well grounded in both the facts and the law," Herman said in an email. "We look forward to presenting the remaining issues in the case to a jury in the very near future."
Google declined comment Tuesday.
Tuesday's ruling is only the latest setback for Google, which has been hit with monopoly liability findings won by private and government plaintiffs targeting its search engine, its ad tech offerings and its Play Store app distribution. Google's ad tech business has continued to draw more private lawsuits since Judge Brinkema's liability decision. And the business is also facing separate litigation from a coalition of state enforcers led by the Texas attorney general.
Google has fought the cases in bench and jury trial proceedings, and lost in both. In the DOJ ad tech case, the company managed to short-circuit a jury trial by cutting a $2.3 million check to the federal government to cover any damages it may have caused to federal agencies using its offerings. But that strategy may have backfired in the issue preclusion fight, with Judge Castel noting Tuesday that without a jury to offer opaque liability findings, Judge Brinkema instead issued a comprehensive 115-page ruling.
"The court in the E.D. Va. action stated with clarity what it did and did not find as anticompetitive behavior," Judge Castel said. "Thus, this court need not parse the possible paths that the factfinder may have taken in an effort determine which facts were actually and necessarily decided. Judge Brinkema's findings of fact and conclusions of law are precise and concise."
The proposed advertiser class is represented by Dena C. Sharp, Scott Grzenczyk, Mikaela M. Bock and Isabel Velez of Girard Sharp LLP and Tina Wolfson, Theodore W. Maya and Bradley K. King of Ahdoot & Wolfson PC.
The publisher class is represented by David Boies, Philip C. Korologos, Robert J. Dwyer, James Keyte, Luke Williams, Mark C. Mao, Sean P. Rodriguez, Sabria A. McElroy and Izaak Earnhardt of Boies Schiller Flexner LLP, George A. Zelcs, Randall P. Ewing Jr., Marc A. Wallenstein, Ryan Z. Cortazar, Stephen M. Tillery, Michael E. Klenov, Carol L. O'Keefe, Andrew M. Ellis and Ian Moody of Korein Tillery LLC, and Eric L. Cramer, Michael C. Dell'Angelo, Caitlin G. Coslett, Patrick F. Madden, Jeremy Gradwohl and Robert E. Litan of Berger Montague.
Gannett and the Daily Mail are represented by John Thorne, Daniel G. Bird, Bethan R. Jones, Christopher C. Goodnow, Mark P. Hirschboeck, Eliana Margo Pfeffer, Eric J. Maier, Sven E. Henningson, Jonathan I. Liebman and Kyle B. Grigel of Kellogg Hansen Todd Figel & Frederick PLLC.
Inform is represented by Serina M. Vash and John C. Herman of Herman Jones LLP.
Google is represented by Justina K. Sessions, Eric Mahr, Andrew J. Ewalt and Robert J. McCallum of Freshfields LLP and Daniel S. Bitton, Denise L. Plunkett, Craig M. Reiser, Eva H. Yung, Claire L. Haws, Bradley Justus and Caroline P. Boisvert of Axinn Veltrop & Harkrider LLP.
The case is In re: Google Digital Advertising Antitrust Litigation, case number 1:21-md-03010, in the U.S. District Court for the Southern District of New York.
Oct 28
Deal Summary
