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GIBSON, DUNN & CRUTCHER LLP

ORJN SNYDER (pro hac vice pending)
osnyder@gibsondunn. com
ALEXANDER SOUTHWELL (pro hac vice pending)
asouthwell@gibsondunn. com
200 Park Avenue .
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New York, NY
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10166-0193. _
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Telephone: 212.351.4000
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Facsimile: 212.351.4035 _
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SAN MATEO COUNTY
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GIBSON; DUNN & CRUTCHER LLP '

MAY 1 0 2019
ETHAN DETTMER, SBN
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196046
[email protected]
KIM DO, SBN 32413-1 '

[email protected] '

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DEPUTY CLERK
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555 Mission Street, Suite 3000

San Francisco; CA 941 05-0921
Telephone; 4 1 5 393.8200
O Facsimile: 415.393.8306 r

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Attorneys for Facebook, Inc.

N SUPERIOR COURT OF THE STATE OF CALIFORNIA

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FOR THE COUNTY OF SAN MATEO
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¥ FACEBOOK, INC., a Delaware corporation, CASE NO.
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Plaintiff, .
COMPLAINT FOR
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G\ 1) BREACH 0F CONTRACT
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2) BREACH OF THE IMPLIED
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RANKWAVE CO., LTD., COVENANT OF GOOD FAITH AND

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FAIR DEALING
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Defendant.
3) UNLAWFUL, UNFAIR, OR
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FRAUDULENT BUSINESS PRACTICES

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DEMAND FOR JURY TRIAL
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Plaintiff Facebook, Inc. brings this action for monetary damages and equitable relief against

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Defendant Rankwave Co., Ltd. (“Rankwave”). 1g_cw_02592

CMP
Complaint
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COMPLAINT AND DEMAND FOR JURY TRIAL

 INTRODUCTION ‘

1. Rankwave ‘is an application (“app”) developer that breached its contract with Facebook '

by violating Facebook?s policies and California law. Specifically, Rankwavé (i) useddata associated
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with Rankwave,’s apps to offer advertising and marketing services, and (ii) failed to comply with

Facebook’s requests for proof of Rafikwave’s complia'nce-with Facebook poiicies, including an audit.

These actions are prohibiited by Facebook’s policies, by which Defendant cofitractually agreed t6 abide.

2.‘
Since approximately 2010, Rankwave has developed and 'operated different kinds
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apps on the Facebook Platform. Rankwave used the Facebook data associated with Rankwave’s apps

to create and sell advertising and marketing analytics and models—which violated Fac‘ebbok’s policies

10 and terms.
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11 ‘3.
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Facebook bringsthis action for breach of contract .and Violations of California law.

12 Facebook seeks damages and an injunction requiring Rankwave’s specific performance of its

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13 obligations under Facebook Platform Policy 7.9, which requires Rankwave to respond to Facebook’s'

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requests for proof ofRankwavc’s compliance with Fa-cebook policies; comply with Facebook’s request
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for an audit, and delete any Facebook data that Rankwave possesses in violation ofFabebook’s’policies.

16 PARTIES
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17 4. Facebook is Delaware corporation with its principal pl‘acé of business in Menlo Park,
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18 San Mateo County, California.

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19 .5. Defendant'Rankwave' Co., Ltd., is a South Korean corporation that provideé computer

20 programming services and data analytics'solutions.‘ Rankwfive is headquartered and registered at 521’

21 Tehéran Road, 8th Ffoor (Samsun-dong, Pamass Tower), Gangnam-gu, Seofil, Sofith Korea. During

22 the period from approximately 2010 to 2019; and. potentialily at other times, one or more Rankwave

23 employees and developers created and administered multiple'apps on behalf" of Rankwave.

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24 JURISDICTION AND VENUE

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6. This Court has subject mafier jurisdiction pursuant to California Code of Civil

26 ProcedUre § 410.10. The amount in controversy exceeds the jurisdictional minimum ofthis Court, and

27 'thc total amount of damages sought-exceeds $25,000, exclusive of interest and costs. The contractual

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COMPLAINT AND DEMAND FOR JURY TRIAL

 H interestt-at stake in this litigation has significant value_to Facebook. Further, Rankwave’s unlawful

conduct and breaches have interfered with Facebook’s business.

7. The Court has personal jurisdiction over Rankwave as a result of its substantial,

continuous, and systematic contacts with the State of California; because it has purposely availed itself

of the benefits and privileges of conducting business activities in California; and because the claims

IxoooquIAwVN asserted in this Complaint arise from and relate to those actioné Rankwave directed toward California,

causing foreseeable harm and injuries Within this State.

8. ‘The Court also has personal jurisdictiofi over Rankwave because Rankwave uséd the

Facebook Platform and thereby agreed 'to Facebook’s Terms_of Service (“TOS”). By agreeing to the

TOS, Rankwave, yin relevant part, agreed to éubmit to the personal jurisdiction of thi’s Court- for

litigatihg claims, causes of action, or disputes with Facebook.

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9. Venue is proper in this Court because a substantial part of the events giving rise to the

claims raised in this lawsuit occurred in San Mateo Counfy and because Rankwave agreed to comply

with Facebook’s TOS, which require disputes to be resolved 1n the Northern District of California or a '-

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state court located 1n San Mateo County.

A. BackgrOund

10. Facebook is a sobial networking website énd mobile application that enables its uéers t0

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create their own personal profiles' and connect with each other on mobile devices and personal

computers. As of March 2019, Facebook daily active u'_sers averaged 1.5 billion and monthly active
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users averaged 2.3 billion, worldwide.

11. Facebook also operates a “Development Platform” referred to as the “Facebook

”
Platform. This technological medium enables app developers (“Develope_rs’ ’)to run apps that interact

with Facebook and Facebook users.

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COMPLAINT AND DEMAND FOR JURY TRIAL

 12. Facebook permits Developers to access and interact with the Facebook Platform, subjedt .

Ito
and restricted by Facebook’s TOS and Platform Policies.‘

Facebook’s TOS I V

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13. A11 Facebook users, including Developers, agreé to comply with Facebook’s TOS when.
they .create a Faéebook account. Everyone who uses Facebook must agree to Facebook’s TOS

(available at https://www;faceboék.con1/terms.th), and other rules that goveffi different types of

access to, and use of, Facebodk. These other rules include Facebook’s Community Standards
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(available at https://www.facebook.com/communitvstandardsl), and Platform Policies (available at

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https://develbpers.facebookcom/po'licvl).

10 14. Section 3.2 of th'e TOS prohibits using Facebook t6 do anything “[t]hat violates these

11‘ “is unlawful; filisleading, discriminatbry or fraudulent.”

Terms, and other terms and pqliciés,” and that
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12 Platform Policies
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15. Developers operating on the Facebook Platform agree f0 the Platform Policies.

14 16. The Platform Policies impose obligations and restrictions on Developers, including that

15 Developers rfiust obtain consent from the users of their apps before they (Lsan‘ aécess their data o‘n

16 Facebook. The Platform Policies largely regtrict D'evelépersvfroin using'Facebook‘ data outside of the

17 environment of the afip, for any purpose other than enhancing the app users’ experience on the app.

18 17. Through the Platform Policies, Developers agree that Facebook can audit their appé to

19 ensure compliance with the Platform Policies and bther Facebook policiésf .
Developers agree to

20 provide proof of such compliance if Facebook $0 requests.- Developers agree to the Platform Policies

_21 at the time they first sign up to the Platform, and continue to agree to the Platform Policies as a condition

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of ugifig Facebéok’s Platform. Over time, the Platform Policies have imposed substantially the same

23‘ restrictions on the use and collection of Facebook data.

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25

,
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Over thé years, the “Platform Policies” have been called the “Developer Principles and Policies,”
28 the “Platform Guidelines,” or the “Developer Terms of Service.” For simplicity, this Complaint
uses the term “Platform Policies” to refer to these policies.
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COMPLAINT AND DEMAND FOR JURY TRIAL

 18. The relevant P1atfofin Policies state:

N “Only use an entity's data on behalf of the entity (i.e., only to provide services to that entity
and not for your own business purposes or another entity's purposes)” Facebook Platform
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Policy, Section 6.1.

A “[Facebook] or an independent auditor acting on our behalf may audit your app, systems, and
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records to ensure your use of Platform and data you receive from us is safe and complies with
our Terms, and that you've complied with our requests and requests from people who use
Facebook to deleteuser data obtained through our Platform. If requested, you must provide
proof that your app complies with our terms.” Facebook Platform Policy, Section 7.9.
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B. _
Rankwave Agreed to Facebook’s TOS and Platform Policies
19. Rankwave created a public Facebook Page—a profile on Facebook used to promote a

business or other commercial, political, or charitable organization or endeavor—on or about February

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10 3, 2012. Rankwave also created a Facebook business account on or about September 15, 2014. At all

11 relevant times, Rankwave was a Facebook user that agreed t6 and was bound by the TOS.

12 20. Between approximately 2010 and 2019, Rankwave’s employees and agents created and

13 operated apps on behalf of Rankwave on the Facebook Platform. Rankwave’s employees and agents
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~14 accepted and agreed to be bound by the Platform Policies on behalf of Rankwave.

15 C. —
Rankwave Created and Operated Different Apps on the Facebook Platform
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16 21. Between 2010 and 2019, Rankwave operated at least fhirty apps on the Facebook

17 Platform (collectively, “Rankwave’s apps”). B(efore Rankwave’s apps could accgss Facebook data,
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18 Rankwave had to obtain the app users’ consent.

19 22. Rankwave developed different kinds of apps including apps, used .by businesses

20 (“business to busihess” or “B2B apps”) and apps used by individual Facebook users (“consufier apps”).

21 Rankwave’s B2B apps were installed and used by businesses to track and analyze activity on their.

22 Facebook Pages (“Facebook Pages data”). Facebook Pages data commonly includes public comments

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23 and likes on Facebook Pages. Users of Rankwavc’s B2B apps‘included a South Korean department

24 store, tourism organization, and baseball teafi.

25 23. Rankwave also operated different 'consumer apps, which were install'ed by individual
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app users. For example, between March 19, 2012 and March 30, 201 8, Rankwave operated a consumer

27 app calied the “Rankwave App.”- This consumer app was designed to measurelthe app user’s popularity

28 on Facebook by "analyzing the level of interaction that other users had with the app user’s Facebook

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 posts. On'its website, Rankwave claimed that this app calculated a user’s “social ififluence score” by

“evaluating your social activities” and feceiving “responses from your friends.” 'The RankWave App
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stopped operating on the Facebook Platform on or about March 30, 201 8.

D. Facebook’s Investigation of Rankwave’ s Acquisition by a Korean Entertainment

Company

24. In or about June 2018, Facebook began investigating Rankwave in connecltion with its
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acquisition by a Korean entertainment company.

25. On information and belief, at the time ofthe acquisition in May 2017, the Facebook data

associated with Rankwaye’ s various apps received a valuation of approximately 11 Ibillion South
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10 Korean won (approximately $9,800,000):

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11 26. On information and belief, beginning no later than 2014, instead of only using data

‘12 associated with its apps to enhance the app experience, Rankwave also used Facebook Pages data

13 associated with its apps for its own business purposes, which include providing consulting services to ~

14 advertisers and marketihg companies. This is prohibited by Facebook Policy 6.1.

15 E. Facebook’s Attempts to Exercise Its Contractual Right to an Audit Pursuant to the

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17 27. As part of its investigation, Facebéok sought to determine whéther Rafikwave had used

18 any user data (as opposed to Facebook Pages data)'to provide marketing and advertising services. On
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or about January 17, 2019, ‘Fa‘cebook sent Rankwave a written request for information (“RFI”) by

20 email. ‘The RFI requested proof that Rankwave Was in compliance with its contractual obligations

21 under Facebook’s Policies’énd TCS. Facebook also sought to determine which specific Facebook data

22 Rankwave used >to sell advertising and marketing serfices, including whether any usér data had been
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23 impacted. Rankwave’s response to the RFI was due Ianuary 3 1, 2019.

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24 28. January 29, 2019, 'Faceblook sent an email to Rankwave reminding them that their
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25 respdnse to the RFI was due on January 3 1, 2019.

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26 29. Rankwave did not respOnd to Facebook’s emails or the' RFI by January 3 1 , 20_1 9, despite

27 ifs obligations under‘Platform Policy 7.9 to provide proof of compliance with Facebook’s Platform

28‘ Policies and TOS.

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 1 30. On February 13, 2019, Facebook sent Rankwave a Cease and desist letter (“C&D

2 Letter”). The C&D Letter infbfined Rankwaye that it had violatéd and continued to Violate th: Platform

3 'Policies, including Policy 7.9, by failing to provide proof of compliancte-With Facebook’s Platform
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4 Policies and TOS. _

5 3 1. The C&D Letter demanded that .Rankwave:

6 (i) Provide a fuli accounting of Facebook uéer datgjn its possession;

7 .(ii) Identify all individuals, organizations, and go§ernmental entities to which it had sold,

8 of otherwise distributed, Facebook user data;

9 (iii) Provide a full reéord of the access logs and pemiséions it had granted third parties to

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access the data;

Delete and destroy Facebook user data. after returning

11 (iv) all it to Facebook; and

12 (V) Provide Faéebook with full access to all storage 'and related devices so that Facebook

‘13 c'ould‘ confirm deletion-find déstructién of the data thrbugh afi audit.

14 32. In the C&D. Letter, Facebook reserved all rights to take action to enforce Facebook’s
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v.15 policies and terms, including the Platform Pol'icies' and TOS, in ordér to protect its users, wébsite,

16 services, network, and Platform. IThe letter explained that Facebook would consider Rankwave’s

17 failure, t6 respond as an admission that it had violated Facebook policies and terms.
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18 33. On or about February 17, 2019, Rankwave began to try to lull Facebook with false

19 representations that it' would respond to Facebook but needed more time. Specifically; Rankwave I
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20 responded to Facebook’s C&D Letter in an email and stated that Rankwave’s chief technology officer
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had resigned, and thus Rankwave needed more time'to respond.

22 34. Facebook replied on or about February 19, 20 1 9, explained this was a serious and urgent

23 matter for Facebook, and defnandéd that Rankwave comply wit_h the C&D Letter and respond in writing
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24 to the RFI by Febmary 21, 2019.

25 35. On or about 'Febru'ary 20, 2019, Rankwave responded by email and claimed that it had

26 not violated Facebook’s TOS or Platform Policies, but Rankwave failed to provide any proéf in

27 support, any responses to the RFI, and ignored the demands in the C&D Letter, including the audit

28'
request. Rankwave further c‘laimed that it had not had access to any of its Facebook apps since 201 8.
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COMPLAINT AND DEMAND FOR JURY TRIAL

 This statement was false, howe'ver, as Rankwave continued to use at least one of its B2B apps until at
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least April 2019.

36. On or about February 23, 2019, Facebook sent an email to Rankwave demanding that

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Rankwave: comply with the.C&D Letter and provide written answers to the RFI by February 25, 2019.

37. On or about February 25, 2019, Rankwave claimed in an email that it would~need nine

additional days to respond because ité leédership was visiting Spain.

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38. On tor ?about February 27, 2019, Facebook agreed via email to e'xtend the time for
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March that. it
Rankwave to respond to 6, 2019, but warned would not give any further extensiéns of

time. Rankwave failed to respond. .

10 39. To date, Rankwave has failed to comply with the RFI, C&D Letter, audit request, afid

11 Facebook’s bther requests for firoof of Rankwavefs compliance with- Facebo'ok’s policies, incl'uding‘

12 the Platform Policies and TOS.

13 F. Rankwave’s Unlawful Acfs Hive Caused Facebook Harm

14 40. Rankwave’s breaches of Facebook’s Platform Policies and other misconduct described

15 aBove have harmed Facebook, including by negatively impacting Facebook’s 'service.

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16 41. Rankwavefs misconduct also. has harmed Facebook’_s reputation, public trust, and

17 goodwill, and causedrFacebook’to sperid resources investigating and redressing RankWave’s wrongful

18 conduct. Facebook has suffered damages attribufable to the_ efforts and resources it has used t6

19 inx-Ie‘stigate, address, and mitigate the matters set forth in this Complaint.

20 42. Rankwave has beéfi unjustly enriched by its activities at the expense pf Facebook.

21. 43. Mone_tary damages would not adequately remedy the breach of Facebook’s contractual

22 right to audit Rankwave to determine Rankwave’s compliance with Facebook’s Platform Policies and

23 'TOS‘.

24 44. The only adequate remedy for Rankwave’s breach with respect to Facebook’ s a_udit right

25 is Rankwave’s ‘specific- performance of .its contractual obligations to Facebook to comply with

26 'Facebook’s audit request and provide proof of compliance with Facebook’s Platform Policies and TOS.

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 45. Rankwave received adequate consideration fof its agreement with and 'contractual‘

obligations to Facebook, namely its ability to develop and operate apps on the Facebdok Platform.

Facebook’s Policies and TOS as to RankanC are just and reasonable.

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FIRST CAUSE OF ACTION

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(Breach of Contract)

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46.‘ Facebook incorporates allA
other paragraphs as iffully set forth herein.
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47. Rankwave has operated a Facebook account since at least February 12, 2012, Wheqit

created a Facebook Page. When it created its Facebook account, Rankane entered into agreements 4

writh‘F’acebook by agreeing td Facebook’s TOS.

10 48. Rankwave also agreed to the Platform Policies by creating, developing, and

11 administering dozens of apps on the Facebook Platform from approximately 2010 through

12 approximately 201.9. These apps included the Rankwave app.

13 49. Rankwave breached these agreements with Facebéok by taking the actions described -

14 above in violation of TOS 3.2.1 and Platform Policies 6.1 and 7.9. These include using Facebook

15 Pages data’associated with Rankwavg’s apps to offef advertising and marketing services; and failing to
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16 comply with Facebook’s RFI requesting proof of compliance with its policies, including the/Platform

17 Policies and TOS, and'its requést for an‘audit.

18 50. Facebook Has performed all conditions, covenants, and promises required of it in

19 accordance with its agreements with Rankwave;

20 5 1. Rankwave’s breaches have caused Facebook to incfir .damagés.

21 52. The harms caused by Rank\;s/ave"s breach of Platform Policy 7.9 can only b_e adequately

22 remedied by specific performance of the contract between Fagebook and Rankwave.

23 SECOND CAUSE 0F ACTION

24 (Breach of the Implied Covenan£ of Good Faith and Fair Dealifig)

25 53. Facebook incorporates all other paragraphs as if fully sét forth herein.

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54. Rankwave deprived" Facebook of the benefit of its contracts, including Facebook’s

27 contractual rights to confirm and audit Rankwave’sacompliance with its agreements with Facebook.

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55. As a~ result of Rahkwave’s breaches 0f the covenant of good faith and fair dealing,
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N Facebook has suffered actual and tangible damages. I

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56. Rankwave has been unjustly enriched in the amoufit of $9,800,000 by violating-
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A Facebook’s policies, including the P1atform,Policies and TOS.

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THIRD CAUSE oF-ACTION
(Unlawful, Unfair, 0r Fraudulent Business Practices)

57. FaCebéok incorporates all other paragraphs as if fully set forth herein.
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58. Rankwave’s actions described above, constitute unlawful, unfair, or fraudulent acts or

practices in the conduct of a business, in violation of California’s Business and Professions Code

'10 .Section 17200 et seq.,- including actions that afe forbidden by other state law.

as.
11 59. Facebook sqffé'red damages a result of these violations.

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PRAYER FOR RELIEF -

13‘ Facebook seeks judgment awarding the following relief:

14 (a) Injufictive relief restraining Rankwave from accessing the FacebookPlétform;

15_ (b) Injunctive relief requifing Rankwave to comply with Platform Policy 7.9 and respond

16 fully find accurately to Facebook’s RFI and other fequests for proof of cdmpliance with Facebook’s
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17 Platform Policies and TOS, including a forensic data audit;

18 (c) Injunétive relief requiring Rankwave to delete any and all Facébook data as apprqpriate _

19 after Rankwave complies with ?latform Policy‘7.9;

20 I(d) Mohe'y damages, including, but not limited to, actual, consequential, infiidental, and
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21 exerhplatly damages in an amount to be determined in the course of this proceeding;

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22 (e) Disgorgement of the value of'the Facebook data that ~RankWave has unjustly received

23 and‘retained in violation of its obligations to Facébook;

24 (f) Attorney’s fees, costs, and expenses incurred in conneétion with investigating and

25 redressing Rankwavefs misconduct;

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26 (g) Pre-judgment and post-judgment interest; and

27 (h) All- other equitable or legal relief the Court deems just and proper.

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COMPLAINT AND DEMAND FOR JURY TRIAL

 PLAINTIFFS RESPECTFULLY DEMAND A_JURY TRIAL.

DATED: May 10,.2019

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GIBSON, DUNN & CRUTCHEK L P

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‘/ Ethan D. DettnEf.
Orin Snyder
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Alexander Southwell
Kim Do
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Attorneys _for Facebook, Inc.

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Platform Enforcement and Litigation

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Facebook, Inc. .t
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Jessica Romero
11 Michael Chmelar
Stacy Chen
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