George Orwell’s 1984 warned that “Big Brother is Watching You.” It’s 2023 now, and every Facebook user knows that the internet giant is the modern-day equivalent of Big Brother. Facebook knows the location, sex, ethnicity, religion, political leanings, lifestyle choices and number of children every subscriber has. Each click adds new data to its ad platform, so advertisers can zero in on their most likely potential buyers.

Facebook algorithms use its huge database to determine which categories apply to each user. That data might help advertisers, but it can also hurt subscribers. Rosemary Vargas, the lead plaintiff in Vargas et. al. v Facebook, sued the company because its targeting methods give advertisers “tools to exclude women of color, single parents, persons with disabilities and other protected attributes.” Vargas claimed Facebook’s ad platform prevented her and the other four plaintiffs in the case from having an equal opportunity to view housing ads that were presented to Facebook users who are “not members of a protected class.”

In an opinion on June 23, the Ninth Circuit Court of Appeals reversed the dismissal of Vargas’ suit against Facebook by Presiding District Judge Appeal William Horsley Orrick from the United States District Court for the Northern District of California. In a 2-1 unpublished memorandum opinion signed by Ninth Circuit Judge Susan P. Graber and Tenth Circuit Judge Michael R. Murphy, Orrrick’s opinion, which held that plaintiffs “…failed to allege a sufficient concrete injury,” was reversed and remanded.

Vargas’ suit began when she tried to locate suitable housing in New York City in 2018 through Facebook’s Marketplace. She described herself as a disabled female of Hispanic descent and a single parent whose search “yielded no ads for housing in Manhattan.” Vargas then asked a Caucasian friend to conduct a search by using identical search criteria. The friend received many more housing ads that were suitable to Vargas.

Orrick found fault with Vargas’ complaint for several reasons. First, he ruled that she lacked standing to sue because she failed to identify specific ads. The Ninth Circuit disagreed, saying that “nothing in case law requires a plaintiff to identify the specific ads she could not see.” Orrick also ruled that Vargas lacked standing because she failed to identify which ads were paid, because only paid ads used Facebook’s targeting methods. The Ninth Circuit disagreed with this reasoning as well.

Next, the opinion disagreed with Orrick’s belief that Facebook is immune from liability because a section of the U.S. Code extends immunity to “providers…of interactive computer service” when they are acting as “publishers” of information provided by another information provider.” The Ninth Circuit denied immunity because Facebook, as creator of the ad platform and its algorithms, is a “co-developer of content and not merely…a publisher of information provided by another information content provider.”

The opinion noted, “Facebook permitted all paid advertisers, including housing advertisers, to use its tools,” and said plaintiff’s allegations that “housing advertisers used the tools to exclude protected categories of persons from seeing some advertisements” could be true. It said, “Facebook’s own actions “contribute materially to the alleged illegality of the conduct… Facebook created the categories, used its own methodologies to assign users to the categories, and provided simple drop-down menus and toggle buttons to allow housing advertisers to exclude protected categories of persons.”

Without success, Facebook argued it was a “passive transmitter of information.” The company did not “require” housing advertisers to discriminate, and that all of its data is “neutral.” In addition, the opinion found that Facebook promotes its Ad Platform with “success stories,” which include stories from a housing developer, a real estate agency, a mortgaged lender, a real-estate-focused marketing agency, and a search tool for rental housing.” The ad platform that “specifically and knowingly” offers a discriminatory tool is not “neutral,” the Ninth Circuit concluded.

Circuit Judge John B. Owens dissented because he said the plaintiffs failed to show they had been personally discriminated against by at least one advertiser who used Facebook’s ad platform and therefore plaintiffs “failed to allege a concrete injury sufficient to confer standing.”

The American Civil Liberties Union filed an amicus brief supporting Vargas and her fellow plaintiffs. The brief defined Facebook’s ad platform as enabling “digital redlining – the new frontier of discrimination” that violates civil rights laws. They said Facebook created and maintains technology practices that further entrench discriminatory practices against already marginalized groups…”

If Vargas pursues her now-remanded case, the Ninth Circuit decision may pose at least a small hurdle for Big Brother Facebook to overcome.