SAN FRANCISCO — A federal judge Wednesday dismissed a proposed class action against YouTube over the so-called “Adpocalypse” debacle, ruling that its contract with content providers gave YouTube leeway to decide how advertisements are shown.
The lawsuit was filed last October by the producers of the “Zombie Go Boom” YouTube channel, described by its creators as “a live-action zombie series that is essentially a combination of ‘Mythbusters’ and ‘The Walking Dead.’” It sought to represent a class of other filmmakers who were financially impacted by YouTube’s ad changes.
Represented by attorneys at the Law Offices of Todd M. Friedman in Los Angeles, the “Zombie Go Boom” producers alleged that their ad revenue dropped dramatically—from about $300 to $500 per day to $20 to $40 per day—after YouTube altered its AdSense algorithm.
Those changes were made after The Wall Street Journal reported in March of last year that YouTube, which is owned by Google, displayed ads on objectionable content such as videos supporting neo-Nazi causes and ISIS. But the plaintiffs alleged the changes didn’t work, and instead pulled ads from content that did not breach YouTube guidelines while still displaying them next to other videos that did.
U.S. District Judge Edward Chen of the Northern District of California, in an order granting YouTube’s motion to dismiss the case with prejudice, agreed with the company that its standard agreement with content providers gives YouTube full discretion about whether to display ads next to posted videos at all.
Chen also rejected arguments by the plaintiffs that those provisions in the contract should be declared invalid because they make the agreement “illusory” and breach the “implied covenant of good faith and fair dealing” under California law.
“While the implied convenant of good faith and fair dealing may be applied where contract terms are silent,” Chen wrote, “its application to contradict an express term of a contract is narrowly circumscribed.”
The judge’s order goes in-depth into case law touching on when the covenant can override a contract’s terms. But he ultimately concludes that in YouTube’s case, doing so is not warranted because video producers still gain benefits under other provisions.
“Regardless of how YouTube exercised its discretionary power in determining whether to display advertisements under the partner program terms,” Chen wrote, “the agreement … between Zombie and YouTube was supported by adequate independent consideration.”
“In particular, YouTube allowed Zombie to post videos on its forum free of charge in exchange for getting a license to its content,” he added.
Lawyers for the plaintiffs did not immediately answer emails seeking comment on Chen’s ruling Wednesday afternoon.
Google, which is represented by Wilson Sonsini Goodrich & Rosati, also did not immediately respond to a request for comment.