Meta Platforms, Inc. v. Judang Team LLC et al

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United States District Court
Northern District of California
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
META PLATFORMS, INC.,
Plaintiff,
v.
JUDANG TEAM LLC, et al.,
Defendants.
Case No. 25-cv-05156-TSH
ORDER DENYING DEFENDANTS’
MOTION TO DISMISS PURSUANT TO
RULE 12(b)(6)
Re: Dkt. No. 33
I. INTRODUCTION
Plaintiff Meta Platforms, Inc. (“Meta”) brings this action against Defendants Judang Team
LLC, Perfeos LLC, Jot & Journeys, and Antonio Jose Liévano (collectively, “Defendants”),
alleging that Defendants operated a deceptive and misleading advertising scheme on Meta’s social
media platforms and improperly obtained advertising credit lines from Meta. ECF No. 1. Pending
before the Court is Defendants’ Motion to Dismiss pursuant to Rule 12(b)(6). ECF No. 33
(“Mot.”). The Court finds this matter suitable for disposition without oral argument pursuant to
Civil Local Rule 7-1(b) and VACATES the February 12, 2026, hearing. For the reasons stated
below, the Court DENIES the motion.1
II. BACKGROUND
A. Factual Background
Meta, a Delaware corporation with its principal place of business in California, owns and
operates multiple social media platforms—including Facebook, Instagram, and WhatsApp—and
various business and advertising services. Compl. ¶¶ 4, 15–18 (ECF No. 1). Facebook is “an
1 The parties consent to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c). ECF Nos.
13, 32.
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online service that is available on computers and mobile devices” used to “discover and connect to
interests.” Id. ¶ 15. Instagram is “a free photo and video sharing service and mobile application.”
Id. ¶ 16. And WhatsApp is “an encrypted communication service available on mobile devices and
desktop computers.” Id. ¶ 17.
Defendant Judang Team LLC (“Judang”), a Florida limited liability company, “promotes
itself as a social media manager” on its website, judangteam.com. Id. ¶ 5. Defendant Perfeos
LLC (“Perfeos”), a Florida limited liability company, “purports to sell various merchandise” on its
website, shopatmars.com. Id. ¶ 6. Defendant Jot & Journeys (“J&J”), an unincorporated Florida
business, “purports to sell various consumer goods including stationary products and energy
drinks” on its website, jotandjourney.com. Id. ¶ 7. Defendant Antonio Jose Liévano (“Liévano”),
a resident of Florida, is the founder and sole member of Judang and Perfeos and operates J&J. Id.
¶ 8. Meta alleges Liévano acted individually and through his entities. Id. ¶ 1.
Overall, Meta alleges that Defendants (1) “used fraudulent financial documents to
improperly obtain more than $8 million in advertising credit lines from Meta for which they never
paid,” and (2) “used the fraudulently obtained advertising credit lines to purchase ads on Facebook
and Instagram” to facilitate Defendants’ “bait-and-switch” and “subscription fraud” schemes. Id.
¶ 2.
1. Meta’s Services And Related Policies2
Meta offers various personal and business services through its social media platforms.
Individuals and businesses can create user accounts on Facebook and Instagram. Id. ¶¶ 19, 27, 32.
Any individual or business with a Facebook or Instagram account can create and place
advertisements on Facebook and Instagram. Id. ¶ 19. And any Facebook user can create or
manage a Facebook Page which is a public page designed for businesses, organizations, and
public figures. Id. ¶ 24.
2 As discussed below, Meta’s Complaint implicates six policies: Meta’s Terms of Service
(“Meta’s Terms”); Instagram’s Terms of Use (“Instagram’s Terms”); Meta’s Advertising
Standards (“Meta’s Ad Standards”); Meta’s Commercial Terms (“Meta’s Commercial Terms”);
Meta’s Self-Service Advertising Terms (“Meta’s Self-Serve Ad Terms”); and Meta’s Facebook
Online Invoicing Terms and Conditions (“Meta’s Online Invoicing Terms”). Compl. ¶ 3.
Collectively, Meta refers to these as, “Meta’s and Instagram’s Terms and Policies.” Id.
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a. User Accounts
Anyone who creates a Facebook account must agree to Meta’s Terms. Id. ¶¶ 3, 27. Meta’s
Terms prohibit users from (1) violating Meta’s Community Standards, Meta’s Ad Standards, or
Meta’s Commercial Terms; (2) doing or sharing anything “that is unlawful, misleading,
discriminatory or fraudulent (or assists someone else in using [Meta’s] Products in such a way”;
and (3) doing anything to “impair the proper working, integrity, operation, or appearance of
[Meta’s] services, systems, or Products.” Id. ¶¶ 3, 28–30. Under these Terms, users cannot use
Facebook if Meta has previously disabled the user’s account for violating any of Meta’s policies.
Id. ¶ 31.
Anyone who creates or uses an Instagram account must agree to Instagram’s Terms. Id. ¶¶
3, 32. Instagram’s Terms prohibit users from doing (1) “anything unlawful, misleading, or
fraudulent or for an illegal or unauthorized purpose”; and (2) “anything to interfere with or impair
the intended operation of [Instagram].” Id. ¶¶ 33–34. Under these Terms, users cannot use
Instagram if Meta has previously disabled the user’s account for violating any of Meta’s policies.
Id. ¶ 35.
b. Commercial Services
Anyone who creates and publishes an ad on Facebook must agree to Meta’s Terms, Meta’s
Self-Serve Ad Terms, Meta’s Commercial Terms, and Meta’s Ad Standards. Id. ¶¶ 3, 20. These
Terms apply equally to activities Meta users perform on behalf of third parties. Id. ¶¶ 36, 39, 43.
Anyone who advertises on Instagram must additionally agree to Instagram’s Terms. Id. ¶¶ 3, 20.
Both groups are also subject to Meta’s Community Standards and Instagram’s Community
Guidelines. Id. ¶ 20.
Meta’s Commercial Terms require a user to ensure that any third party the user acts on
behalf of abides by applicable terms of use and require that “access or use of the Meta products for
business or commercial purposes complies with all applicable laws, rules, and regulations.” Id. ¶¶
36–38.
Meta’s Ad Standards apply to ads on Facebook and Instagram and “prohibit ads promoting
products, services, schemes or offers using deceptive or misleading practices, including those
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meant to scam people out of money or personal information.” Id. ¶¶ 39–40.
Meta’s Self-Serve Ad Terms apply to use of ad interfaces and any order placed through the
ad interfaces (an “Order”). Id. ¶ 41. These Terms require that “ads must comply with all
applicable laws, regulations, and guidelines” and require payment of all amounts specified in each
Order placed. Id. ¶¶ 42–43. These Terms state that if an
account is past due, we may take additional steps to collect past due
amounts. You will pay all expenses associated with such collection,
including reasonable attorneys’ fees. Past due amounts will accrue
interest at 1% per month or the lawful maximum, whichever is less.
Id. ¶ 44. In addition, advertisers must agree to Meta’s Online Invoicing Terms for any Order
placed through Facebook’s online advertising portal for which Facebook agrees to invoice the
advertiser; under these Terms, advertisers must “make all payments within thirty (30) days of the
date of the applicable invoice.” Id. ¶ 45.
Meta reviews products sold through Facebook and Instagram ads by soliciting feedback
from customers who purchased products and employing shoppers to purchase and evaluate
products. Id. ¶ 22. If an advertiser violates any of Meta’s policies, Meta can ban their account
from running ads and disable all Facebook and Instagram accounts belonging to that advertiser.
Id. ¶ 23.
Certain businesses with accounts on Facebook or Instagram are eligible to apply for ad
credit lines. Id. ¶ 21. Once approved,
advertisers are provided a credit line for limited ad costs, which
represents the maximum amount a business could spend on ads on a
monthly basis before payment is required. Monthly invoices are
provided for any ads purchased using these credit lines and are
payable within 30 days of issuing. Businesses may seek
modifications to their credit lines, for instance, to increase limits.
Id.
c. Facebook Pages
Facebook users with the role of administrator or moderator can manage a Facebook Page
and create and run ads on behalf of the Page. Id. ¶¶ 24–25. Anyone who manages a Facebook
Page must agree to Meta’s Commercial Terms. Id. ¶ 36. While any Facebook user can leave a
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comment on a Facebook Page, the Page’s administrators and moderators control posted content by
choosing specific words or phrases to block from the page—this results in the comment containing
blocked content being hidden from the Page. Id. ¶ 26.
2. The Parties’ Relationship
Defendant Liévano created, controlled, and used (1) multiple Instagram user accounts
between September 7, 2011, and April 4, 2025, and (2) multiple Facebook user accounts between
February 13, 2019, and April 4, 2025. Id. ¶¶ 47–49.
Defendant Judang, including by and through Liévano, created and controlled a Facebook
business account on February 1, 2021, titled, “Judang Team,” along with related advertising
accounts. Id. ¶ 52. On September 7, 2022, Judang created a Facebook Page with the name
“Judang Team.” Id. ¶ 53. On May 27, 2024, Defendants submitted a Judang fiscal year 2023
balance sheet to Meta to obtain an advertising credit line increase. Id. ¶ 56; see id., Ex. 3 (“Judang
Balance Sheet”) (ECF No. 1-3).
Defendant Perfeos, including by and through Liévano, created and controlled a Facebook
business account on July 17, 2023, titled, “Shop at Mars,” along with related advertising accounts.
Id. ¶ 52. On September 25, 2023, Perfeos created a Facebook Page with the name “Shop at Mars.”
Id. ¶ 53. On April 23, 2024, Defendants submitted a Perfeos fiscal year 2022 balance sheet to
Meta to obtain an advertising credit line increase. Id. ¶ 56; see id., Ex. 2 (“Perfeos Balance
Sheet”) (ECF No. 1-2).
Defendant J&J, including by and through Liévano, created and controlled a Facebook
business account on October 29, 2023, titled, “Jot & Journeys,” along with related advertising
accounts. Id. ¶ 52. On January 19, 2024, J&J created a Facebook Page with the name “Jot &
Journeys.” Id. ¶ 53. On April 1, 2024, Defendants submitted a J&J fiscal year 2022 balance sheet
to Meta to obtain an advertising credit line increase. Id. ¶ 56; see id., Ex. 1 (“J&J Balance Sheet”)
(ECF No. 1-1).
Collectively, between February 2021 and July 2024, Judang, Perfeos, and J&J (1) “created
and ran, and caused to be created and run, over 9,000 ads on Facebook and Instagram”; and (2)
“created, managed or used more than 100 Facebook Pages and more than 40 Business Manager
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accounts.” Id. ¶ 50. Additionally, “Defendants, including by and through Liévano, created,
managed, or used more than 100 other Facebook Pages.” Id. ¶ 53.
In April 2024, Defendants stopped paying their ad invoices after accumulating “an
outstanding balance of, at least, $8,111,746.62.” Id. ¶ 59. Meta denied all credit line increases to
Defendants between June 3–17, 2024. Id. ¶ 69. Meta also suspended all credit lines for Judang,
Perfeos, and J&J because Defendants violated Meta’s Self-Serve Ad Terms and Meta’s Online
Invoicing Terms. Id. ¶¶ 70–71.
On February 11, 2025, Meta sent Defendants a cease-and-desist letter
for their violations of Meta’s and Instagram’s Terms, Ad Policies, and
Self-Serve Ad Terms, and failure to pay ad invoices. At that time,
Meta also disabled more than 150 Facebook user accounts, Instagram
accounts, business accounts, and Facebook Pages associated with
Defendants.
Id. ¶ 72; see id., Ex. 4 (“Cease-and-Desist Letter”) (ECF No. 1-4). In the Cease-and-Desist Letter,
Meta provided links to its various Terms, demanded that Defendants stop violating the Terms, and
informed Defendants that they were not authorized to access Facebook or Instagram “for any
reason whatsoever.” Id. ¶ 73. On February 11, 2025, Liévano controlled and used an Instagram
account, and on February 24, 2025, Liévano controlled and used a Facebook account; Meta
disabled both accounts on April 4, 2025. Id. ¶¶ 49, 74.
3. Defendants’ Improper Activities
Meta alleges the following in the Complaint. Starting in October 2023, Defendants
facilitated bait-and-switch and subscription fraud schemes using Facebook and Instagram ads. Id.
¶ 54. To finance their schemes, “Defendants knowingly submitted false and materially misleading
documents and made false and misleading statements in order to induce Meta into providing
multiple credit line increases.” Id. ¶ 55. Defendants submitted substantively identical balance
sheets for Judang, Perfeos, and J&J to obtain credit line increases for those entities and did not tell
Meta “that they submitted the same financial documentation for multiple entities.” Id. ¶¶ 56, 87;
see id., Exs. 1–3. Defendants also submitted other false financial documents including balance
sheets, income statements, and banking statements, to prove their creditworthiness. Id. ¶¶ 57, 86.
Finally, Defendants “did not tell [Meta] that the financial statements they submitted were not
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audited” when Meta requested audited statements. Id. ¶ 87. “Meta reasonably and justifiably
relied on these false and materially misleading financial statements and Defendants’ related
statements and omissions when deciding to approve Defendants’ requests for credit line
increases.” Id. ¶ 58.
Defendants then purchased ads from Meta using the fraudulently obtained credit lines from
Meta and agreed to have Meta invoice them for the ad purchases. Id. ¶¶ 60, 73. Collectively,
“Defendants placed more than 9,000 deceptive and misleading ads for merchandise on Facebook
and Instagram.” Id. ¶ 60. These ads redirected other users to Defendants’ e-commerce websites
where users could purchase the advertised merchandise. Id. ¶¶ 61–62. For users who purchased
merchandise from Defendants’ websites, some received “low-quality and counterfeit goods,” and
some did not receive merchandise at all. Id. ¶¶ 63–65. Other users “were charged recurring
subscription fees that they did not authorize.” Id. ¶¶ 66–67.
“Defendants attempted to conceal their schemes from Meta and its users by blocking users
from posting complaints and negative reviews on Defendants’ Facebook Pages. . . . In total,
Defendants blocked more than 1,000 words and phrases associated with poor product quality,
failure to deliver products, slow delivery times, and negative customer experience from Facebook
Pages they controlled.” Id. ¶ 68.
B. Procedural Background
On June 18, 2025, Meta filed its complaint against Defendants Judang, Perfeos, J&J, and
Liévano, alleging two causes of action under California law: (1) Breach of Contract; and (2)
Fraud. Compl. ¶¶ 75–91 (ECF No. 1). Meta seeks, inter alia, “a permanent injunction that
prohibits Defendants from continuing their bait and switch and subscription schemes” and
damages. Id. at 3, 24.
On November 6, 2025, Defendants filed the instant Motion to Dismiss pursuant to Rule
12(b)(6). ECF No. 33 (“Mot.”). On November 20, 2025, Meta filed an Opposition. ECF No. 38
(“Opp.”). On November 26, 2025, Defendants filed a Reply. ECF No. 39 (“Reply”).
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III. LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “tests the legal
sufficiency of a claim. A claim may be dismissed only if it appears beyond doubt that the plaintiff
can prove no set of facts in support of his claim which would entitle him to relief.” Cook v.
Brewer, 637 F.3d 1002, 1004 (9th Cir. 2011) (cleaned up). Rule 8 provides that a complaint must
contain a “short and plain statement of the claim showing that the pleader is entitled to relief.”
Fed. R. Civ. P. 8(a)(2). Thus, a complaint must plead “enough facts to state a claim to relief that
is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Plausibility does
not mean probability, but it requires “more than a sheer possibility that a defendant has acted
unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint must therefore provide a
defendant with “fair notice” of the claims against it and the grounds for relief. Twombly, 550 U.S.
at 555 (citation omitted).
In considering a motion to dismiss, the court accepts factual allegations in the complaint as
true and construes the pleadings in the light most favorable to the nonmoving party. Manzarek v.
St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008); accord Erickson v. Pardus,
551 U.S. 89, 93–94 (2007). However, “the tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of
the elements of a cause of action, supported by mere conclusory statements, do not suffice.”
Iqbal, 556 U.S. at 678.
If a Rule 12(b)(6) motion is granted, the “court should grant leave to amend even if no
request to amend the pleading was made, unless it determines that the pleading could not possibly
be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en
banc) (cleaned up). A court “may exercise its discretion to deny leave to amend due to ‘undue
delay, bad faith or dilatory motive on part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing party . . ., [and] futility of
amendment.’” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892–93 (9th Cir. 2010)
(alterations in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). Courts have broader
discretion in denying motions for leave to amend after leave to amend has already been granted.
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See Rich v. Shrader, 823 F.3d 1205, 1209 (9th Cir. 2016) (“[W]hen the district court has already
afforded a plaintiff an opportunity to amend the complaint, it has wide discretion in granting or
refusing leave to amend after the first amendment, and only upon gross abuse will its rulings be
disturbed.”) (cleaned up); Chodos v. W. Publ’g Co., 292 F.3d 992, 1003 (9th Cir. 2002) (“[W]hen
a district court has already granted a plaintiff leave to amend, its discretion in deciding subsequent
motions to amend is particularly broad.”) (cleaned up).
IV. DISCUSSION
Defendants move to dismiss both of Meta’s claims for failing to state a cognizable claim.
Mot. at 1. In sum, the Court concludes that Meta alleges cognizable claims for breach of contract
and fraud. Therefore, dismissal of Claims 1 and 2 is not warranted.
A. Breach Of Contract Claim (Claim 1)
Defendants argue that Meta’s Breach of Contract claim fails against Liévano because he
“was not a party to any pertinent contract (no privity).” Mot. at 1:1–9. Defendants further argue
that the claim fails because it “is impermissibly vague and fails to comply with FRCP Rule 8.” Id.
To prevail on a breach of contract claim under California law, a plaintiff must prove “(1)
the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3)
defendant’s breach, and (4) the resulting damages to the plaintiff.” Oasis W. Realty, LLC v.
Goldman, 51 Cal. 4th 811, 821 (2011). “Implicit in the element of damage is that the defendant’s
breach caused the plaintiff’s damage.” Troyk v. Farmers Grp., Inc., 171 Cal. App. 4th 1305, 1352
(2009) (emphasis in original). Whether a party breached a contract is a question of fact. Locke v.
Warner Bros., 57 Cal. App. 4th 354, 365 (1997).
Here, the Court concludes that Meta alleges a cognizable breach of contract claim against
each Defendant. Accordingly, the Court DENIES Defendants’ motion to dismiss Meta’s Breach
of Contract Claim (Claim 1).
1. Privity For Defendant Liévano
Defendants argue that Meta’s Breach of Contract claim against Liévano fails because it
does not “plausibly allege that Liévano personally entered into or was bound by any of the cited
agreements.” Mot. at 4:5–5:27. Meta contends that Liévano has liability because (1) “Liévano
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breached Meta’s Terms in his personal capacity”; and (2) Liévano breached “each contract
identified in the Complaint because he did business as the other three Entity Defendants.” Opp. at
3:24–7:12.
For a cognizable breach of contract claim, a plaintiff must allege sufficient facts showing
the existence of a contract between the parties. Oasis, 51 Cal. 4th at 821. Contractual privity
exists between parties who are in a contractual relationship with one another. See Windham at
Carmel Mountain Ranch Ass’n v. Superior Ct., 109 Cal. App. 4th 1162, 1176 (2003) (“Privity of
contract is a relationship that is a prerequisite for maintaining certain causes of action[.]”)
(emphasis in original). An essential element of any contract is mutual consent. Monster Energy
Co. v. Schechter, 7 Cal. 5th 781, 789 (2019). “Consent is not mutual, unless the parties all agree
upon the same thing in the same sense.” Id. (cleaned up).
Here, the Court finds that Meta pleads sufficient facts to plausibly allege that Liévano was
contractually bound by each of Meta’s cited agreements. Defendants argue that “Liévano cannot
be held personally liable for breach of contract” because the alleged breaches “are corporate acts,
not personal ones.” Mot. at 4:7–14. But it is axiomatic that only corporations can conduct
“corporate acts.” See Frances T. v. Vill. Green Owners Ass’n, 42 Cal. 3d 490, 506–08 (1986)
(discussing corporate acts). To that end, Defendants’ assertion that Meta “attempts to treat
Liévano as a party to the agreements . . . without regard for the entity form” is false. Mot. at 4:24–
27. In Defendants’ own words, Meta alleges that “Liévano is the owner and operator” of “the
unincorporated J&J” business. Id. at 1:11–13, 4:7–11 (citing Compl. ¶ 8). For an unincorporated
entity, “[a] sole owner is a sole proprietorship and a sole proprietorship is not a legal entity
separate from its individual owner.” Ball v. Steadfast-BLK, 196 Cal. App. 4th 694, 701 (2011).
Thus, Meta’s allegations regarding J&J pertain directly to Liévano. See id. (“Use of a fictitious
business name does not create a separate legal entity distinct from the person operating the
business.”) (cleaned up); see also Opp. at 7:1–12 (“Liévano, as sole operator of this unregistered
entity is thus personally liable for J&J’s conduct.”).
Meta alleges that J&J created a Facebook business account and a Facebook Page,
purchased ads from Meta that required invoicing, and placed ads on Facebook and Instagram.
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Compl. ¶¶ 52–53, 56, 60, 73. Through these actions, J&J entered into each of the contracts
alleged by Meta. See id. ¶¶ 3, 20, 27, 32, 45 (alleging Facebook account creation binds a user to
Meta’s Terms, Instagram use binds a user to Instagram’s Terms, publishing an ad on Facebook
binds a user to Meta’s Self-Serve Ad Terms, Meta’s Commercial Terms, and Meta’s Ad
Standards, and purchasing ads that Meta agrees to invoice for binds a user to Meta’s Online
Invoicing Terms). Therefore, because J&J entered into contracts with Meta, Liévano also entered
into contracts with Meta. As such, the Court need not reach Defendants’ arguments that Meta fails
to “specify that Liévano created or used accounts personally (as opposed to through the entities)”
and does not properly plead “an alter ego theory . . . to pierce the corporate veil.” Mot. at 4:15–18,
5:10–15 (emphasis in original). At the pleadings stage, Meta plausibly alleges that Liévano and
Meta have contractual privity resulting from Liévano’s acts through J&J.
Defendants’ lone cited case is inapposite. See Mot. at 5:4–9 (citing Frances T., 42 Cal. 3d
at 512 n.20). Frances T. involved a corporate defendant—the question presented was whether the
entity’s board of directors were liable for, inter alia, breach of contract. Frances T., 42 Cal. 3d at
495, n.1. The California Supreme Court explained that because the defendant entity was a
corporation, “[t]he board members may not be held personally liable absent allegations that they
entered into a contract with plaintiff on their own behalf or purported to bind themselves
personally.” Id. at 512 n.20; see also United States Liab. Ins. Co. v. Haidinger-Hayes, Inc., 1 Cal.
3d 586, 595 (1970) (“Directors and officers are not personally liable on contracts signed by them
for and on behalf of the corporation unless they purport to bind themselves individually.”). But
here, J&J is not a corporate defendant, nor is Liévano a corporate officer of J&J. Compl. ¶ 8.
Therefore, the analysis in Frances T. does not apply to the Court’s analysis here regarding
Liévano’s liability for contracts entered into by J&J.
2. Pleading Under Rule 8
Defendants argue that Meta’s Breach of Contract claim fails under Rule 8 for being
“impermissibly vague because, in addition to lumping all the Defendants together, there are no
distinctions about which contracts are at issue.” Mot. at 6:1–7:21. Meta contends that its
Complaint puts “each Defendant on notice that it is alleged to have violated Meta’s and
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Instagram’s Terms and Policies and of the specific conduct amounting to a breach.” Opp. at 7:13–
9:27.
Under the Federal Rules of Civil Procedure, a plaintiff’s complaint must contain “a short
and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). The failure to comply with Rule 8 is a basis for dismissal that is not dependent on
whether the complaint is without merit. McHenry v. Renne, 84 F.3d 1172, 1179 (9th Cir. 1996).
“Something labeled a complaint but written . . . without simplicity, conciseness and clarity as to
whom plaintiffs are suing for what wrongs, fails to perform the essential functions of a
complaint.” Id. at 1180. To comply with Rule 8, a complaint need not provide detailed factual
allegations, but it is “a plaintiff’s obligation to provide the grounds of his entitlement to relief.”
Twombly, 550 U.S. at 555 (cleaned up). A plaintiff must do more than assert “labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id.
Rather, the plaintiff must provide sufficient factual allegations “to state a claim to relief that is
plausible on its face.” Id. at 570.
Here, the Court finds that Meta pleads sufficient facts to plausibly allege a breach of
contract claim against each Defendant. Defendants first argue that there “is an abundance of
authority for the notion that lumping together factual allegations and claims against several
defendants does not comply with FRCP Rule 8.” Mot. at 6:2–24. Meta counters that a “complaint
is not insufficient merely because it refers to defendants in the plural where more than one
defendant is alleged to have taken the actions described in the Complaint.” Opp. at 7:19–8:5.
Meta has the better argument. Defendants cite to no authority—and the Court is aware of none—
supporting their proposition that collective allegations constitute a per se violation of Rule 8. See,
e.g., Russo v. Fed. Med. Servs., Inc., 744 F. Supp. 3d 914, 922 (N.D. Cal. 2024) (“Collective
allegations can be sufficient . . . if the claims involve actors engaged in the same or similar
conduct.”). Instead, the touchstone of Rule 8 is fair notice. Twombly, 550 U.S. at 555. Meta’s
Complaint “defines ‘Defendants’ plural as collectively referring to all four Defendants.” Opp. at
8:6–10 (citing Compl. ¶ 1). The Complaint then uses the term “Defendants” when signaling that
an allegation applies to each Defendant, such as when each Defendant placed “deceptive and
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misleading ads on Facebook.” Id. at 8:6–28 (citing Compl. ¶¶ 60–65, 68). When necessary, the
Complaint parses the individual Defendants. See id. at 8:10–22 (citing Compl. ¶¶ 47–48, 50–53)
(discussing when each individual Defendant entered contracts with Meta). Overall, Meta alleges
that each of the four Defendants contracted with Meta and each Defendant breached their
contracts, often by committing the same misconduct—this permits each Defendant to respond to
the allegations levied against them. Id. at 8:10–9:8 (citing Compl. ¶¶ 47–48, 50–53, 60–68); cf.
EcoHub, LLC v. Recology Inc., No. 22-cv-09181-TSH, 2023 WL 6725632, at *6 (N.D. Cal. Oct.
11, 2023) (finding collective allegations put individual defendants on notice and explaining
“[w]hile some allegations are overlapping, this is appropriate given the claims”). Therefore, group
pleading is not fatal in this case because Meta’s group allegations still give Defendants fair notice
of the breach of contract claim against them. See DeSoto Cab Co., Inc. v. Uber Techs., Inc., No.
16-cv-06385-JSW, 2018 WL 10247483, at *15 (N.D. Cal. Sept. 24, 2018) (“‘[G]roup pleading’ is
not fatal as long as the complaint gives defendants fair notice of the claims against them.”).
Moreover, despite Defendants’ assertion to the contrary, Meta’s allegations establish
which specific contracts are at issue.3 See Mot. at 6:25–7:11. Meta alleges that Facebook account
creation binds users to Meta’s Terms; Instagram use binds users to Instagram’s Terms; advertising
on Facebook or Instagram binds users to Meta’s Self-Serve Ad Terms, Meta’s Commercial Terms,
and Meta’s Ad Standards; and agreeing to invoicing binds users to Meta’s Online Invoicing
Terms. Compl. ¶¶ 3, 20, 27, 32, 45. Meta also “alleges that each Defendant agreed to Meta’s and
Instagram’s Terms and Policies by creating and using various Facebook and Instagram accounts.”
Opp. at 8:10–22 (citing Compl. ¶¶ 47–48, 50–53). As such, Meta plausibly alleges that each
Defendant entered into each of the six contracts at issue and faces liability under each contract.
3 In their argument, Defendants provide an example where the Complaint refers to “Meta’s
Terms.” Mot. at 7:2–11 (citing Compl. ¶ 78). Defendants assert that it is unclear “which
agreement from all of ‘Meta’s Terms’ these allegations are purportedly directed toward.” Id. The
Court is not sure what to make of this statement. In its Complaint, Meta identifies each of the
contracts at issue, describes each contract, and provides website links to access each contract. See
Compl. ¶¶ 3, 27–45. Using this information, it is clear that “Meta’s Terms” refers to Meta’s
Terms of Service which “[e]veryone who uses Facebook must agree to.” Id. ¶¶ 3, 27. Thus,
Defendants’ example fails to demonstrate that Meta does not identify the specific contracts at
issue.
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Finally, Defendants’ argument that the Complaint fails to distinguish “who received the
line of credit” falls flat. Mot. at 7:12–19. Meta alleges that Judang, Perfeos, and J&J received
lines of credit. Compl. ¶¶ 55–56. Therefore, Meta’s breach of contract claim complies with Rule
8.
B. Fraud Claim (Claim 2)
Defendants argue that Meta’s Fraud claim fails because it “is barred by California’s
economic loss rule” and “the Complaint fails to plead with the particularity required by FRCP
Rule 9(b).” Mot. at 1:1–9.
Under California law, a tortious breach of contract may be found when “the breach is
accompanied by a traditional common law tort, such as fraud or conversion.” Robinson
Helicopter Co. v. Dana Corp., 34 Cal. 4th 979, 990 (2004). The “elements of fraud are: (1) a
misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity
(or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting
damage.” Id. “False representations made recklessly and without regard for their truth in order to
induce action by another are the equivalent of misrepresentations knowingly and intentionally
uttered.” Engalla v. Permanente Med. Grp., Inc., 15 Cal. 4th 951, 974 (1997) (cleaned up).
Fraudulent intent is a question of fact. Beckwith v. Dahl, 205 Cal. App. 4th 1039, 1061 (2012).
Here, the Court concludes that Meta alleges a cognizable fraud claim against each
Defendant. Accordingly, the Court DENIES Defendants’ motion to dismiss Meta’s Fraud Claim
(Claim 2).
1. Economic Loss Doctrine
Defendants argue that the economic loss rule bars Meta’s Fraud claim because it is “not
based on any independent duty” and “[t]he facts recited are identical to the facts used to describe
[Meta’s] breach of contract claim[.]”4 Mot. at 7:22–8:17. Meta contends that the economic loss
4 In their Reply, Defendants argue for the first time that “although the Opposition argues that the
Complaint alleges ‘knowing and intentional’ conduct that amounts to fraud, the Complaint does
not contain clear allegations to that effect.” Reply at 7:2–10 (emphasis in original). Defendants
cannot sandbag Meta with new arguments raised for the first time in their Reply. See VLSI Tech.
LLC v. Intel Corp., 706 F. Supp. 3d 953, 974–75 (N.D. Cal. 2023) (declining to consider argument
raised for the first time in reply brief because argument was waived); Competitive Techs., Inc. v.
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rule is unavailable here because Meta’s Fraud claim seeks “to hold the Defendants culpable for
intentionally and knowingly defrauding Meta,” not for breaching contracts. Opp. at 10:1–11:17.
California’s economic loss doctrine “is deceptively easy to state: In general, there is no
recovery in tort for negligently inflicted purely economic losses, meaning financial harm
unaccompanied by physical or property damage.” Rattagan v. Uber Techs., Inc., 17 Cal. 5th 1, 20
(2024) (emphasis in original) (cleaned up). The rule “prevents the law of contract and the law of
tort from dissolving one into the other”; it “requires a purchaser to recover in contract for purely
economic loss due to disappointed expectations, unless he can demonstrate harm above and
beyond a broken contractual promise.” Robinson, 34 Cal. 4th at 988 (cleaned up). As such, the
rule does not bar a fraud claim that is independent of a breach of contract claim. Id. at 991.
Instead, “the rule functions to bar claims in negligence for pure economic losses in deference to a
contract between litigating parties.” Sheen v. Wells Fargo Bank, N.A., 12 Cal. 5th 905, 922
(2022).
“California law distinguishes between fraud in the ‘execution’ or ‘inception’ of a contract
and fraud in the ‘inducement’ of a contract.” Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal. 4th
394, 415 (1996). Fraud in the inducement “occurs when the promisor knows what he is signing
but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by
reason of the fraud, is voidable.” Id. (emphasis in original) (cleaned up). The economic loss
doctrine does not preclude tort damages where a contract was fraudulently induced. Robinson, 34
Cal. 4th at 989–90; see also Harris v. Atlantic Richfield Co., 14 Cal. App. 4th 70, 78 (1993)
(“when one party commits a fraud during the contract formation or performance, the injured party
may recover in contract and tort”).
Here, the Court finds that because Meta pleads sufficient facts to plausibly allege that
Defendants fraudulently induced Meta to contract with them, the economic loss doctrine does not
preclude Meta’s fraud claim. Defendants argue that Meta’s fraud claim is simply a disguised
Fujitsu Ltd., 333 F. Supp. 2d 858, 863–63 (N.D. Cal. 2004) (declining to reach arguments raised
for the first time in reply brief and noting fairness concerns). The Court therefore declines to
reach this argument.
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breach of contract claim. Mot. at 8:12–17. Not so. Meta alleges that Defendants submitted false
financial documents as part of their applications for ad credit lines with Meta, that Meta relied on
the false documents when it decided to extend credit lines to Defendants, and that as a result, Meta
extended $8.1 million in credit lines to Defendants which they failed to pay back. Compl. ¶¶ 55–
59, 85–91. In other words, Meta alleges that Defendants’ fraudulent conduct induced Meta to
extend millions of dollars in ad credit lines which in turn induced Meta to enter contracts with
Defendants that governed the credit lines. Opp. at 10:1–8, 11:7–14. Under California law, Meta’s
theory of harm—that it was fraudulently induced into certain contracts with Defendants—is
exactly the type of claim where tort damages are allowed. Id. at 10:1–8; see Robinson, 34 Cal. 4th
at 989–90.
In their Reply, Defendants insist that permitting Meta’s fraud claim would contravene
California law. Reply at 6:8–7:1 (citing Rattagan, 17 Cal. 5th at 21, 26–27). Defendants assert
that the “pertinent contract as it relates to the alleged fraud is Meta’s Self-Serve Ad Terms.” Id.
According to Defendants, Meta’s fraud claim fails because the “extent of the damages suffered
from the alleged fraud is non-payment, which was clearly contemplated in the contract.” Id.
Defendants miss the mark. To be sure, non-payment is a reasonably foreseeable consequence of
extending credit to another party. See Connor v. Great W. Sav. & Loan Ass’n, 69 Cal. 2d 850,
870–71 (1968) (discussing risk of loan notes not being paid). However, “[n]o rational party would
enter into a contract anticipating that they are or will be lied to.” Robinson, 34 Cal. 4th at 993. So
while the parties’ contracts may cover Meta’s risk of non-payment associated with extending
credit lines to Defendants, those contracts did not contemplate that Meta would calculate its risk
based upon Defendants’ false creditworthiness. See Opp. at 11:7–14. As such, Defendants’
reliance on Rattagan is misplaced. As explained by the Rattagan court, Defendants have potential
liability in tort, not because they breached the contracts through non-payment, but because they
separately used affirmative misrepresentations to induce Meta into the contracts in the first place.
Rattagan, 17 Cal. 5th at 33.
In sum, Meta alleges it suffered economic losses due to Defendants’ intentionally tortious
conduct, not just those attributable to Defendants’ breach of contract; thus, the economic loss
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doctrine simply does not apply. Id. at 34. Therefore, Meta’s fraud claim passes muster under the
economic loss rule.
2. Particularity Under Rule 9(b)
Defendants argue that Meta’s Fraud claim fails under Rule 9 because (1) “[t]he Complaint
lumps all the Defendants together, almost uniformly, throughout the facts and causes of action”;
(2) there is no information about “other financial documents submitted by Defendants with their
credit line applications”; and (3) Defendants cannot “decipher what alleged misrepresentations are
attributable to who.” Mot. at 8:18–9:26. Meta contends that “the Complaint pleads fraud with the
particularity required by Rule 9(b).” Opp. at 11:18–13:6.
Under the Federal Rules of Civil Procedure, where a plaintiff asserts a claim sounding in
fraud, the plaintiff must “state with particularity the circumstances regarding fraud or mistake.”
Fed. R. Civ. P. 9(b). A claim sounds in fraud if the plaintiff alleges “a unified course of fraudulent
conduct and rel[ies] entirely on that course of conduct as the basis of a claim.” Vess v. Ciba-Geigy
Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). The context surrounding the fraud must “be
specific enough to give defendants notice of the particular misconduct so that they can defend
against the charge and not just deny that they have done anything wrong.” Kearns v. Ford Motor
Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (cleaned up). Thus, “[a]verments of fraud must be
accompanied by the who, what, when, where, and how of the misconduct charged.” Vess, 317
F.3d at 1106 (cleaned up).
Here, the Court finds that Meta pleads sufficient facts to allege its fraud claim with the
requisite particularity against each Defendant. Meta argues that its fraud claim complies with
Rule 9(b) because “[i]t identifies the ‘who, what, when, where, and how’ of the fraud.” Opp. at
12:8–22. The Court agrees. Meta alleges that Liévano, Judang, Perfeos, and J&J (the “who”)
induced Meta to provide ad credit lines (the “what”) on the dates they submitted credit
applications (the “when”) through Meta’s online platform (the “where”) by submitting false
financial information (the “how”). Id. (citing Compl. ¶¶ 1, 8–9, 56, 85–90). This is all that Rule
9(b) requires. Vess, 317 F.3d at 1106; cf. Doe v. Roblox Corp., 602 F. Supp. 3d 1243, 1263 (N.D.
Cal. 2022) (“These allegations are specific enough to give Roblox notice of how Doe believes it
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defrauded her.”).
Defendants’ arguments to the contrary are unavailing. First, as discussed, “the Complaint
is not deficient merely because it refers to ‘Defendants’ plural when alleging conduct attributed to
each Defendant individually.” Opp. at 12:23–13:2. In the same token, the Complaint sufficiently
alleges that each Defendant defrauded Meta by inducing Meta to provide credit lines based on
false financial information. See id. (“[T]he Complaint makes clear that each Defendant has
engaged in the same misconduct.”). Thus, because the Complaint alleges that each Defendant
submitted false information in the form of unaudited balance sheets, income statements, and
banking records, Defendants are incorrect that they cannot “decipher what alleged
misrepresentations are attributable to who.” Mot. at 8:18–9:26; see Compl. ¶¶ 55–57, 86–87.
Particularity is not lacking merely because the Defendants engaged in the same purported
misconduct. See United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1184 (9th Cir. 2016)
(“There is no flaw in pleading [under Rule 9(b)] where collective allegations are used to describe
the actions of multiple defendants who are alleged to have engaged in precisely the same
conduct.”); Anita Silingo v. WellPoint, Inc., 904 F.3d 667, 677 (9th Cir. 2018) (explaining that “a
complaint need not distinguish between defendants that had the exact same role in a fraud” to
comply with Rule 9(b)).
Second, Meta describes Defendants’ alleged misconduct with sufficient detail to provide
them with notice. Meta provides detailed information on balance sheets submitted by Defendants
with their ad credit line applications; in fact, Meta attaches copies of these balance sheets to the
Complaint. Compl. ¶ 56, Exs. 1–3. Meta further alleges that Defendants submitted other false
financial documents with their credit line application. Id. ¶ 57. Defendants complain that Meta
does not allege where the financial documents “originated, why they evidence fraud, or when they
were created.” Reply at 7:13–28. But Rule 9(b) only requires a plaintiff to set forth “what is false
or misleading about a statement, and why it is false.” United Healthcare, 848 F.3d at 1180.
Meta’s allegations that the financial documents provided false information regarding Defendants’
“financial states and assets” in order to mislead Meta as to Defendants’ creditworthiness for ad
credit lines clear this hurdle. Compl. ¶ 86. Therefore, Meta’s fraud claim complies with Rule
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9(b).
V. CONCLUSION
For the reasons stated above, the Court DENIES Defendants’ Motion to Dismiss.
IT IS SO ORDERED.
Dated: January 20, 2026
THOMAS S. HIXSON
United States Magistrate Judge
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