Facebook, Google and Hamilton: Not quite David vs Goliath
Are you ever up late at night wondering whatever happened to the class action tackling the tech giants Google and Facebook over their decision to restrict digital asset advertising started back in 2018? Well wonder no longer.
The lawsuit, first filed in court by self-proclaimed lawyer and lead applicant Andrew Hamilton, alleged that Facebook and Google’s 2018 cryptocurrency bans amounted to cartel provisions in breach of the Competition and Consumer Act and caused large financial loss to Australian digital currency business owners.
Despite early confidence from Hamilton that Facebook and Google were acting as a cartel, and that it would be “pretty easy to prove it”, the class action has faltered at its first case management hearing on 11 September 2020.
Unsurprisingly, Federal Court Court Justice Rares provided comments on the filed pleadings and declined to let the matter proceed until the case was re-pleaded.
Justice Rares said to Hamilton:
I have considerable difficulty perceiving that you have pleaded any kind of case that could even remotely resemble a prima facie case.
Throughout the hearing Justice Rares described the class action as "vague and general", highlighting a notable lack of detail about how the two technology giants are alleged to have actually breached specific provisions of the Competition and Consumer Act, or caused any clear loss or damage to Hamilton or the other 180 odd members involved in the class action.
Justice Rares also identified that the pleadings failed to make clear connections between the applicants' alleged losses and the actions taken by Facebook and Google. It is unclear why the losses, which so far can only be connected to movements in a global market for digital currency - over which the two companies have no control, should be the subject of compensation at all. Or as Justice Rares put it to Hamilton:
First of all, you haven't pleaded any actual purchase by you or anything or any sale by you in which you’ve lost anything, so there’s no actual transaction. You haven't pleaded or identified any activity in Australia by you which caused you any loss or damage. I can’t see a causation of what you’re pleading, namely that these two worldwide companies which do not control the whole of the market for advertising can stop these products from having value.
As expected, Justice Rares also flagged a more fundamental jurisdictional issue. As multinational giants, Facebook and Google’s bans were imposed all around the world. Noting that Hamilton lived in Israel and transacted in digital assets from Israel, Justice Rares suggested that:
I can't see how this court has jurisdiction at all over [the group members] because I can't see where there's causation of conduct at all in Australia
In addition to all the above issues, Hamilton made little headway in his argument that the court ought to make orders preventing Hamilton from being liable for Google or Facebook's costs. Justice Rares refused to grant this application, suggesting that he would hear arguments on this point once Google and Facebook have had an opportunity to respond.
In the end, the court made orders granting Hamilton leave to file an amended statement of claim on or before 23 October 2020, of no more than 3 pages. Considering the case at its current stage, Hamilton must identify the substance of his allegations if he wishes for the “David verses Goliath case'' to move forward.
Overall, the class action appears to have fallen short in the same way it did when it was first raised in July 2019. Further, there remain open questions about the connection of the claim to Australia, as well as to how losses for the change in value of multiple assets with a fluctuating value could be attributable to Facebook and Google's actions.
Both giants will almost certainly continue to resist service of the claim, and if they are forced to respond, will not consent to an order that protect's Hamilton against a costs order. With the next case management hearing scheduled for 30 October 2020, this class action will have to find a better sling for their submissions and not throw away their shot at re-pleading by the next hearing.