23-763 Phhhoto Inc. v. Meta Platforms, Inc.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

August Term 2023

(Argued: November 16, 2023 Decided: December 10, 2024)

No. 23-763

––––––––––––––––––––––––––––––––––––

PHHHOTO INC.,

Plaintiff-Appellant,

-v.-

META PLATFORMS, INC., FKA FACEBOOK, INC.,

Defendant-Appellee,

DOES NOs. 1-7,

Defendants. * ––––––––––––––––––––––––––––––––––––

Before: LIVINGSTON, Chief Judge, WESLEY, and CHIN, Circuit Judges.

This appeal requires us to decide whether a plaintiff claiming unlawful monopolization under the Sherman Act sufficiently alleged the fraudulent concealment theory of equitable tolling. Plaintiff-Appellant Phhhoto Inc.

* The Clerk of the Court is directed to amend the official caption as set forth above.

1 (“Phhhoto”) alleges that one of the world’s largest technology companies, Defendant-Appellee Meta Platforms, Inc. (“Meta”), engaged in a scheme to injure Phhhoto’s business through anticompetitive means, including the adoption of an algorithmic feed for Instagram that purportedly suppressed Phhhoto’s content on that platform. More than four years after the new algorithm was introduced, Phhhoto filed the instant action, alleging in relevant part that Meta’s shift to an algorithmic feed, in combination with certain of its earlier acts, constituted an anticompetitive course of conduct in violation of Section 2 of the Sherman Act. The United States District Court for the Eastern District of New York (Matsumoto, J.) dismissed this claim under Federal Rule of Civil Procedure 12(b)(6) after determining that it had accrued outside of the Sherman Act’s four-year statute of limitations and that equitable tolling could not save it from untimeliness. On appeal, Phhhoto argues that the amended complaint sufficiently alleges Meta’s fraudulent concealment of an anticompetitive scheme and that the district court therefore erred in dismissing the antitrust claim as time-barred. Reviewing the record de novo, we agree with Phhhoto that it adequately alleged that the Sherman Act’s four-year statute of limitations should be equitably tolled until October 25, 2017. Accordingly, we VACATE the district court’s judgment and REMAND for further proceedings.

Judge Chin dissents in a separate opinion.

FOR PLAINTIFF-APPELLANT: SCOTT MARTIN (Irving Scher, on the brief), Hausfeld LLP, New York, NY; Sarah LaFreniere, Hausfeld LLP, Washington, D.C.

(Phillip F. Cramer, Sperling & Slater, LLC, Nashville, TN; Eamon P. Kelly & Nathan A. Shev, Sperling & Slater, LLC, Chicago, IL, for Josh Davis, Christopher R. Leslie, Robert H. Lande, Peter C. Carstensen, John B. Kirkwood, Edward D. Cavanaugh, Darren Bush & Harry First, as amici curiae)

2 (Nada Djordjevic, DiCello Levitt LLP, Chicago IL; Gregory S. Asciolla, DiCello Levitt LLC, New York, NY; Robin A. van der Meulen, Scott & Scott Attorneys at Law LLP, New York, NY; Kristen Marttila, Lockridge Grindal Nauen P.L.L.P., Minneapolis, MN, for The Committee to Support the Antitrust Laws, as amicus curiae)

FOR DEFENDANT-APPELLEE: AARON M. PANNER (Alex Treiger, on the brief), Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., Washington, D.C.

DEBRA ANN LIVINGSTON, Chief Judge:

Plaintiff-Appellant Phhhoto Inc. (“Phhhoto”) appeals from a March 31, 2023

judgment of the United States District Court for the Eastern District of New York

(Matsumoto, J.) dismissing its amended complaint against Defendant-Appellee

Meta Platforms, Inc. (“Meta”) as time-barred. In relevant part, Phhhoto’s

amended complaint alleges that Meta engaged in a course of unlawful

monopolization in violation of Section 2 of the Sherman Act,

. The

district court dismissed this claim as untimely, holding that it accrued outside of

the Sherman Act’s four-year statute of limitations and that it could not be saved

by equitable tolling.

The essence of Phhhoto’s antitrust claim is that Meta used anticompetitive

means, starting in or around 2015, to exclude Phhhoto from the personal social

3 networking services market. This alleged anticompetitive conduct included,

inter alia, withdrawing Phhhoto’s access to certain features of the Instagram

platform on which Phhhoto relied, terminating a joint project to incorporate

Phhhoto into the Facebook newsfeed, and releasing an app that replicated

Phhhoto’s technology. Even as they called into question the viability of

Phhhoto’s business strategy, which heavily relied on Meta’s Instagram platform,

these acts were not as significant as Meta’s decision to adopt an algorithmic feed

for Instagram in March 2016. The new algorithm represented a shift from the

chronological feed that Instagram had used from its inception.

In the wake of the new algorithm, Phhhoto’s popularity faded as quickly as

it had previously surged. Meta justified its shift to an algorithmic feed in neutral

terms—claiming that the new feed was based on factors such as user interest in

the post, user relationship with the posting account, and recency of the post.

However, despite the popularity of its platform and the high engagement of its

users, Phhhoto experienced a sharp decline in new user registrations and user

engagement following Meta’s adoption of the algorithmic feed.

With its user metrics and prospects for funding plummeting, Phhhoto

“worked tirelessly” to identify the reason for its sudden decline in popularity. A-

4 116–17, ¶ 92. Owing in part to Meta’s neutral description of the algorithm,

Phhhoto did not suspect algorithmic suppression as a potential explanation until

October 25, 2017, when one of its co-founders, Champ Bennett, stumbled upon

information suggesting a probability that Meta had engaged in anticompetitive

behavior. At this point, Phhhoto had gone out of business and its co-founders

had rejoined their prior company, Hypno, which had a negligible presence on

social media. In an effort to “connect Phhhoto’s remaining Instagram followers

to Hypno,” A-119, ¶ 104, Bennett posted an identical video promoting Hypno to

Phhhoto’s old Instagram account and Hypno’s new one. This led to two

surprising observations. First, Phhhoto’s post “appeared to vanish” from

Bennett’s personal Instagram feed. A-120, ¶ 105. Second, while Phhhoto had

“approximately 500 times” more followers than Hypno, Hypno’s post received

more views and “likes” compared to Phhhoto’s.

. Based on these

observations, Bennett and his co-founders began to investigate whether Meta was

using its algorithmic feed to suppress competitive third-party content on

Instagram.

The district court never reached the merits of Phhhoto’s antitrust claim,

holding instead that it was time-barred under the Sherman Act’s four-year statute

5 of limitations. Conceding that its antitrust claim is untimely absent equitable

tolling, Phhhoto argues on appeal that the district court erred in declining to toll

the statute of limitations based on fraudulent concealment. We agree. After

conducting our own independent review of the allegations in Phhhoto’s amended

complaint, we conclude that Phhhoto is presently entitled to equitable tolling of

the Sherman Act’s limitations period until October 25, 2017, such that Phhhoto’s

antitrust claim is timely for purposes of Meta’s motion to dismiss. 1

Accordingly, we VACATE the district court’s judgment and REMAND for

further proceedings.

BACKGROUND

I. Factual Background 2

1 Before Phhhoto’s complaint was filed, the parties agreed to toll “any applicable statutes of limitations” for fourteen days. Thus, equitably tolling the Sherman Act’s four-year statute of limitations to October 25, 2017 renders Phhhoto’s antitrust claim timely at this stage. 2 The factual background presented here is derived from the allegations in Phhhoto’s amended complaint, which we “accept as true” and construe “in the light most favorable to the plaintiff[]” for purposes of reviewing the district court’s dismissal under Rule 12(b)(6). Nat’l Credit Union Admin. Bd. v. U.S. Bank Nat’l Ass’n,

(2d Cir. 2018) (alteration adopted and citation omitted).

6 A. Phhhoto’s Early Success

Phhhoto was founded in 2012 by Champ Bennett, Omar Elsayed, and

Russell Armand. Two years later, Phhhoto launched to the public as a

photography and social networking app. Through the app, users could

“capture[] five frames in a single point-and-shoot burst and link[] them together

into a looping video,” creating an animated photo known as a “phhhoto.” A-87,

¶ 1.

Phhhoto quickly gained popularity. Meta’s CEO, Mark Zuckerberg,

created an account on Phhhoto’s platform soon after it launched. Other Meta

executives quickly followed suit. But Phhhoto’s popularity was not confined to

tech circles, as celebrities also joined the platform. At one point, Phhhoto had a

rate of new user growth exceeding even that of Instagram.

B. Phhhoto and Meta’s Initial Collaboration

In its early days, Phhhoto seemed to have a symbiotic relationship with

Meta. After acquiring the popular photo- and video-sharing app, Instagram, in

April 2012, Meta continued to facilitate interoperability between Instagram and

third-party apps such as Phhhoto. This interoperability was achieved largely

through a feature known as iPhone Hooks, which allowed users to post content

7 created on third-party apps directly to Instagram and permitted captions to be

“pre-populate[d]” with “a hashtag identifying the developer of the content.” A-

99–100, ¶ 34. These hashtags were a promotional tool for third-party apps,

allowing users to identify the app from the caption of an Instagram post and then

to “download it [from Apple’s App Store] for their own use.” A-100, ¶ 35.

iPhone Hooks “positioned Instagram as a hub for other apps” and thus “as a key

platform in the market for personal social networking services.”

Phhhoto relied on this interoperability feature to reach new users and

increase user engagement. The ability to share “phhhotos” on Instagram drove

much of Phhhoto’s business growth, with “more people seeing . . . phhhotos [on

Instagram] and [subsequently] downloading [the Phhhoto] app than through

other platforms.” A-104, ¶ 48.

In turn, Phhhoto’s success created an opportunity for Meta to “expand[] its

user engagement . . . among younger audiences.” A-107, ¶ 58. Indeed, Meta

twice attempted to collaborate with Phhhoto. First, in February 2015, the

Strategic Partnerships Manager for Meta’s Facebook business, Bryan Hurren,

offered “to incorporate Phhhoto’s technology into the Messenger service on Meta’s

Facebook platform.” A-90, ¶ 8. Phhhoto declined, concluding that it would not

8 benefit Phhhoto’s business. A few weeks later, Hurren shared with Bennett a

second proposal—this time, “to integrate Phhhoto into the Facebook newsfeed.”

A-106–07, ¶ 57. This integration would allow users to “post phhhotos to the

Facebook newsfeed directly through the Phhhoto app,”

and permit phhhotos

to appear in their native animated format on Facebook, as they did on Instagram.

Excited about the prospect of reaching more Facebook users, Phhhoto offered to

lead the technical integration.

C. Meta’s Anticompetitive Scheme

Based on this early history, Phhhoto and Meta appeared well positioned to

continue developing a seemingly symbiotic business relationship. From Meta,

Phhhoto could gain exposure and develop a user base; from Phhhoto, Meta could

attract users from new generations and revitalize its brand. At some point in

2015, however, there was a shift in the companies’ relationship, based—as claimed

by Phhhoto—on Meta’s concern that Phhhoto presented a competitive threat to

Meta’s dominance. This shift might have occurred very early in that year, in

which case Meta’s purported interest in collaborating with Phhhoto was merely

obscuring Meta’s “scheme to crush Phhhoto and drive it out of business.” A-90,

¶ 9. Or the scheme might have developed more gradually, ultimately

9 superseding—but not rendering disingenuous—Meta’s early efforts to team up

with Phhhoto. Either way, the scheme culminated in March 2016, when Meta

adopted an algorithmic feed for Instagram that resulted in Phhhoto’s demise as an

operational company.

a. Find Friends API

On March 31, 2015, Meta “suddenly withdrew Phhhoto’s access” to an

application programming interface (“API”) on Instagram known as the “Find

Friends API.” A-109, ¶ 65. The Find Friends API allowed third-party apps, such

as Phhhoto, “to access the Instagram friends list” and to create a “social graph” for

their users.

As a digital representation of a user’s personal network, the

social graph “provides the foundation for users” to interact with one another. A-

130–31, ¶ 137. Without the ability to recreate Instagram’s social graph, Phhhoto’s

relationship with potential investors would suffer, prompting Bennett to contact

Hurren about the withdrawal. Hurren informed Bennett that the change was

made because “Meta was . . . upset that Phhhoto was growing in users through its

relationship with Instagram.” A-109–10, ¶ 67.

10 b. Facebook Newsfeed Integration Project

In another about-face, Meta “surreptitiously terminated the project . . . for

integrating Phhhoto’s content into the Newsfeed of Meta’s Facebook platform.”

A-90, ¶ 9. Meta strung “Phhhoto along for months without making meaningful

progress on the [proposed] integration.” A-107, ¶ 59. Meta repeatedly delayed

the proposed launch, citing purported legal and technical concerns, even as

“Phhhoto worked diligently to meet all of Facebook’s specifications.” A-108,

¶ 62. At some point between February and June 2015, Meta quietly “decided to

abandon the project.” A-108, ¶ 63.

c. Pre-Populated Hashtags

Meta abandoned another interoperability feature on August 9, 2015,

withdrawing the component of iPhone Hooks that allowed third-party developers

to pre-populate captions with hashtags. Meta explained publicly that this change

was due to “feedback that the pre-filled captions . . . often feel spammy,” A-111,

¶ 71, and encouraged third-party developers to use watermarks to identify their

content instead. This suggestion was fruitless, however, as it ignored a critical

distinction between hashtags and watermarks: whereas the former are located

11 entirely in captions, the latter are overlaid on posts and thus “disfigure or cover

up content that would not otherwise be impacted by a hashtag.” Id. ¶ 73.

d. Boomerang

Next, in October 2015, Meta introduced a new app called “Boomerang” that

mirrored—was a “clone” of—Phhhoto’s technology. A-90, ¶ 9. Meta unveiled

Boomerang on the official launch date of Phhhoto’s app for Android devices. To

promote the new app, Meta also adopted self-preferencing policies that boosted

Boomerang’s performance while lowering that of third-party apps. For example,

after eliminating the pre-populated hashtag capability two months earlier, Meta

added an automatic “Made with Boomerang” caption to all posts originating from

the app. A-113, ¶¶ 81–82 (citation omitted). So, while third-party developers

could no longer identify content made on their apps, Meta required users to

attribute their posts to Boomerang, even including a link in each caption that led

users to download the app.

e. Algorithmic Feed

Finally, in March 2016, Meta adopted an algorithmic feed for Instagram.

From its inception, Instagram had a non-algorithmic feed that displayed posts in

reverse chronological order, such that “the newest posts would appear first in a

12 user’s feed” and the oldest would appear last. A-114, ¶ 85. Without disclosing

the mechanics of the new algorithm, Meta explained that it was “based on the

likelihood [the user will] be interested in the content, [the user’s] relationship with

the person posting [the content] and the timeliness of the post.” A-114–15, ¶ 86.

Meta attempted to downplay the significance of this change, with Kevin Systrom,

the co-founder and former CEO of Instagram, assuring the public that “it’s not like

people will wake up tomorrow and have a different Instagram.” A-115, ¶ 88

(alteration adopted).

But this is exactly what happened to Phhhoto. While Phhhoto expected

that its popularity and high user engagement would prove beneficial under the

new algorithm, the performance of its content suggested otherwise. Following

the adoption of the algorithmic feed, Phhhoto’s business began to crumble, with

new user registrations and existing user engagement “plummet[ing].” A-126–27,

¶ 125. New user registrations “declined precipitously,” and existing users

disengaged, “post[ing] less content, comment[ing] less frequently, and shar[ing]

or favorit[ing] content shared by others less frequently.” A-116, ¶ 91. Phhhoto

was “rapidly failing,” A-126–27, ¶ 125, and its performance in Apple’s App Store

13 showed it: from April 1, 2016 to May 1, 2016, Phhhoto’s ranking among photo and

video apps dropped from 11th to 41st place.

With its metrics continuing to decline, Phhhoto could not rally investors to

fund the company. Phhhoto could not resuscitate its business and decided to

shut down its app on June 20, 2017.

D. Phhhoto’s Discovery

In the early days of the algorithmic feed, “Phhhoto’s team worked

tirelessly” to pinpoint the cause of the app’s “sudden[] unpopular[ity].” A-116–

17, ¶ 92. Assuming the decline was related to an internal coding issue, the team

“spent months . . . running analytics to determine if Phhhoto had bugs that were

causing the app to crash on users.” Id. Phhhoto’s co-founders also considered

alternative explanations “such as competition from Boomerang and cyclical

usage.” A-117, ¶ 93. These potential causes were “ruled . . . out,” id., leaving

Phhhoto’s co-founders no discernible way to save the app from slipping into

obscurity.

After Phhhoto shut down in June 2017, its co-founders “returned to work at

their prior company, Hypno,” which “provide[s] camera platforms and interactive

experiences for live events, retail, and attractions.” A-119, ¶ 104. To boost the

14 “little social media presence” Hypno had, Bennett sought to advertise the

company to “Phhhoto’s remaining Instagram followers.” Id. At the time,

Phhhoto had approximately 500 times more followers than Hypno. So, on

October 25, 2017, Bennett posted the same promotional video to two Instagram

accounts—Phhhoto’s old account and Hypno’s new one—with the goal of

drawing Phhhoto’s followers to Hypno.

But this strategy did not play out as Bennett anticipated. To start, Bennett

observed that “the post from the old Phhhoto account appeared to vanish from

[his] own Instagram feed.” A-120, ¶ 105. Additionally, Hypno’s post

outperformed Phhhoto’s—with the former receiving 100 views and the latter

receiving 36—even though the posts were identical and Phhhoto had significantly

more followers on Instagram. Phhhoto’s post was also “liked” 50% less

frequently than Hypno’s. Like Bennett, “other Phhhoto followers . . . were not

seeing posts from Phhhoto’s old Instagram account.” Id. ¶ 106.

Phhhoto’s team now had reason to doubt the accuracy of Meta’s public

description of the algorithmic feed and to investigate whether Meta was engaged

in “purposeful suppression of Phhhoto’s content.” A-120–21, ¶ 107 (emphasis

omitted). Bennett asked a tech journalist that day whether he had “ever heard

15 anything about Instagram using [its] algorithmic feed to suppress competitive

apps in [the] photo/video space.” A-121–22, ¶ 110.

Eventually, public information emerged suggesting that Meta had engaged

in algorithmic suppression and other forms of anticompetitive conduct. In

December 2018, a committee of the U.K. Parliament “publicly released

documents” that were previously “produced confidentially” in federal litigation

in California, revealing that some of Meta’s early exclusionary acts toward

Phhhoto were part of an anticompetitive scheme that included algorithmic

suppression. A-129, ¶ 133. The New York Times later identified the name of

this scheme—“Project Amplify”—and was the first to report that “Meta did, in

fact, manipulate and reorder posts and content in users’ newsfeeds to benefit

Meta.” A-123, ¶ 114.

II. Procedural Background

Phhhoto filed the instant action on November 4, 2021, asserting an antitrust

claim under the Sherman Act and state-law causes of action for fraud, unfair

competition, and deceptive acts or practices. After Meta indicated its intent to

move to dismiss Phhhoto’s complaint under Federal Rule of Civil Procedure

12(b)(6), the district court held a pre-motion conference in which it requested that

16 Phhhoto file an amended complaint to address “some . . . deficiencies” in the

original one. A-69–70. Phhhoto filed an amended complaint on March 21, 2022. 3

Meta moved to dismiss on June 6, 2022. In opposing Meta’s motion to dismiss,

Phhhoto argued in relevant part that the statute of limitations for its antitrust claim

was subject to equitable tolling based on fraudulent concealment and that the

claim was therefore timely.

The district court disagreed, dismissing as time-barred the Sherman Act

claim in Phhhoto’s amended complaint without further leave to amend. 4 Having

dismissed the only claim over which it had original jurisdiction, the district court

declined to exercise supplemental jurisdiction over the remaining state-law claims.

A final judgment to that effect issued on March 31, 2023. Phhhoto appealed.

3 Phhhoto’s amended complaint omits the cause of action for deceptive acts or practices in violation of New York General Business Law § 349, but otherwise replicates the claims that were brought in the original complaint. 4 Although the district court declined to exercise supplemental jurisdiction over Phhhoto’s state-law claims, the district court dismissed those claims “with prejudice.” A-218. This was error. A dismissal after declining to exercise supplemental jurisdiction must be without prejudice. See Kolari v. N.Y. Presbyterian Hosp.,

, 119 (2d Cir. 2006); see also Carnegie-Mellon Univ. v. Cohill,

(1988). In any event, because we vacate the portion of the district court’s judgment dismissing Phhhoto’s federal-law claim as time-barred—the basis for the district court’s decision to decline to exercise supplemental jurisdiction over the state-law claims—we also vacate the portion of the district court’s judgment dismissing the state-law claims.

17 DISCUSSION

On appeal, Phhhoto argues that the district court erred at each step of the

fraudulent concealment analysis and thus in its conclusion that Phhhoto’s antitrust

claim is untimely. We agree. Reviewing the district court’s tolling

determination de novo, we hold that, for purposes of Meta’s motion to dismiss, the

allegations in the amended complaint entitle Phhhoto to equitable tolling of the

statute of limitations for its Sherman Act claim until October 25, 2017. These

allegations present multiple factual disputes—corresponding to the elements of

the fraudulent concealment test—that are not resolvable on a motion to dismiss

and instead should be developed through appropriate discovery.

I. Standard of Review

In its briefing, Phhhoto argues that the district court erroneously declined

to equitably toll the Sherman Act’s four-year statute of limitations, “whether

reviewed as an abuse of discretion or de novo.” Appellant’s Reply Br. at 1.

The operative standard of review for equitable tolling determinations

depends on “what aspect of the lower court’s decision is challenged: a legal

conclusion, a factual finding, or an exercise of discretion.” Doe v. United States,

(2d Cir. 2023) (internal quotation marks and citation omitted). “[W]e

18 review the legal premises for [the district court’s] conclusion de novo, the factual

bases for clear error, and the ultimate decision [to deny equitable tolling] for abuse

of discretion.” DeSuze v. Ammon,

(2d Cir. 2021). 5 Accordingly,

we apply de novo review where the district court denied equitable tolling based

“on the belief that the decision was compelled by law,” Phillips v. Generations Fam.

Health Ctr.,

(2d Cir. 2013) (citation omitted), or where the

“asserted error is legal in nature,” Clark v. Hanley,

(2d Cir. 2023).

Here, we conclude that a de novo standard governs our review. To begin,

the district court declined to equitably toll the statute of limitations based on its

“belief” that this result “was compelled by law.” Phillips,

(citation

omitted). The district court concluded that Phhhoto failed to meet the legal

prerequisites for equitable tolling, reaching that conclusion “as a matter of law.”

A-214 (determining that Phhhoto could not satisfy the reasonable diligence prong

of the fraudulent concealment test “as a matter of law”); see also A-189 (“[T]his

Court finds that Phhhoto’s factual allegations are insufficient to satisfy the three

5 It is undisputed that the district court did not make factual findings at this motion to dismiss stage. See Roth v. Jennings,

(2d Cir. 2007) (“[A] ruling on a motion for dismissal pursuant to Rule 12(b)(6) is not an occasion for the court to make findings of fact.”). As such, neither party contends that our review of the district court’s equitable tolling determination is for clear error.

19 elements for fraudulent concealment . . . .”). Next, Phhhoto ultimately

challenges the district court’s “legal conclusion[s]” on appeal, Doe,

,

identifying multiple “error[s]” in the decision below that are “legal in nature,”

Clark,

. These asserted legal errors pertain to the elements of

fraudulent concealment, which Phhhoto argues “are more than . . . support[ed]”

by the allegations in the amended complaint—contrary to the district court’s

holding below. Appellant’s Br. at 29. 6

After determining that Phhhoto failed to plead fraudulent concealment, the

district court was not faced with a discretionary call. “Before a court may

exercise discretion to grant equitable tolling, a litigant must demonstrate as a

factual matter the existence of [various] elements.” Doe,

. “The law

prohibits a judge from exercising her discretion where these . . . elements are

missing.”

In other words, for the equitable tolling decision to become

6 See also Appellant’s Br. at 23 (“[T]he district court wrongly held that Phhhoto failed to plead that Meta engaged in concealment at all.”); Appellant’s Br. at 36 (“Nor do any of the three events identified by the district court as purported ‘additional storm warnings’ . . . suggest the probability of . . . an anticompetitive scheme.”) (citation omitted); Appellant’s Br. at 45 (“In the context of all of Phhhoto’s efforts, the district court’s cited authority concerning appropriate due diligence is plainly inapposite here.”).

20 discretionary, the district court needed to conclude that the doctrine could apply

in the first place.

The district court reached the opposite conclusion here, holding that none

of the three elements of the fraudulent concealment test was adequately pled.

This determination resolved a binary question of law—whether Phhhoto

sufficiently pled the elements of fraudulent concealment. The district court was

not faced with a “range of possible permissible decisions.” Phillips,

(citation omitted). Because the district court determined that Phhhoto had

not pled the elements of fraudulent concealment—all of which are “necessary

predicate[s] for equitable tolling” based on fraudulent concealment, Belot v. Burge,

(2d Cir. 2007)—the district court had no choice but to decline to

equitably toll Phhhoto’s antitrust claim. Thus, in dismissing Phhhoto’s antitrust

claim as untimely, the district court reached legal conclusions that we review de

novo.

II. Fraudulent Concealment

Private antitrust claims are “forever barred” if not brought “within four

years after the cause of action accrued.” 15 U.S.C. § 15b. A cause of action for

an alleged antitrust violation accrues “when a defendant commits an act that

21 injures a plaintiff’s business.” Higgins v. N.Y. Stock Exch., Inc.,

(2d Cir. 1991) (quoting Zenith Radio Corp. v. Hazeltine Rsch., Inc.,

(1971)). For purposes of this appeal, Phhhoto does not dispute that its cause of

action under the Sherman Act accrued no later than April 2016, when Phhhoto felt

“the adverse impact of” Meta’s anticompetitive scheme.

(citation omitted).

Because Phhhoto did not bring suit until November 4, 2021—more than four years

later—its antitrust claim is time-barred unless subject to equitable tolling.

As with other statutes of limitations, the Sherman Act’s four-year time bar

can be equitably tolled only in “rare and exceptional circumstance[s].” Smith v.

McGinnis,

(2d Cir. 2000) (per curiam) (citation omitted). One such

circumstance is where the plaintiff can demonstrate fraudulent concealment. See

New York v. Hendrickson Bros., Inc.,

(2d Cir. 1988). To prove

fraudulent concealment, an antitrust plaintiff must establish: “(1) that the

defendant concealed from him the existence of his cause of action, (2) that he

remained in ignorance of that cause of action until some point within four years of

the commencement of his action, and (3) that his continuing ignorance was not

attributable to lack of diligence on his part.”

The plaintiff must plead the

22 fraudulent concealment with particularity, in accordance with Federal Rule of

Civil Procedure 9(b). See Armstrong v. McAlpin,

, 88–89 (2d Cir. 1983).

The second element has been framed in two different—and potentially

conflicting—ways, leading to confusion in the lower courts. See, e.g., Nat’l Grp.

for Commc’ns & Computs. Ltd. v. Lucent Techs. Inc.,

, 265 n.15

(S.D.N.Y. 2006) (noting that “[t]here has been some variation in the way that the

three elements [of the fraudulent concealment test] have been articulated” by this

Court). First, in New York v. Hendrickson Brothers, Inc., we included as a

requirement of pleading fraudulent concealment that the plaintiff “remained in

ignorance of [its] cause of action until some point within four years of the

commencement of [its] action” (hereinafter, the “Hendrickson formulation”).

(emphasis added). A decade later, in In re Merrill Lynch Limited

Partnerships Litigation, we modified the Hendrickson formulation—inadvertently,

in our view—asking whether the concealment “prevented [the plaintiff’s]

discovery of the nature of the claim within the limitations period.”

, 60

(2d Cir. 1998) (per curiam) (emphasis added). This language has been repeated

in subsequent cases, see Corcoran v. N.Y. Power Auth.,

, 543 (2d Cir.

1999), including a recent one that the district court cited as the governing standard

23 for fraudulent concealment, Koch v. Christie’s Int’l PLC,

(2d Cir.

2012) (hereinafter, the “Koch formulation”).

This difference in phrasing could be outcome determinative in a case where,

as here, the plaintiff discovered its cause of action within a limitations period that

began at the moment of injury. Applied literally, the Koch formulation would

deny relief to this plaintiff, solely because its discovery happened to occur “within

the limitations period.”

In contrast, the Hendrickson formulation would not

treat as determinative this aspect of the timing inquiry; so long as the plaintiff

brought suit “within four years” of when its claim was discovered, the second

element of the fraudulent concealment test would be satisfied.

.

Notwithstanding the Koch formulation, we have been clear that “when a

‘defendant fraudulently conceals the wrong, the time limit of the statute of

limitations does not begin running until the plaintiff discovers, or by the exercise

of reasonable diligence should have discovered, the cause of action.’” Pinaud v.

Cnty. of Suffolk,

, 1157 (2d Cir. 1995) (alteration adopted) (citing Keating

v. Carey,

(2d Cir. 1983)). Under this principle, we afford

significance to the date of the plaintiff’s discovery, without regard to whether it

occurred within the usual limitations period. The Hendrickson formulation does

24 the same, rendering it consistent with our case law and the purpose of the

fraudulent concealment doctrine. For that reason, Hendrickson should be applied

as the governing articulation of the second element of the fraudulent concealment

test. 7

III. Fraudulent Concealment In This Case

Turning to the crux of the parties’ dispute on appeal, we conclude that

Phhhoto has sufficiently alleged fraudulent concealment with respect to its

antitrust claim to survive a motion to dismiss. The district court erred in

concluding otherwise.

A. Phhhoto Has Adequately Pled Concealment.

To prevail on the first element of the fraudulent concealment test, the

plaintiff must establish that “the defendant concealed from [the plaintiff] the

existence of [its] cause of action.” Hendrickson,

. To plead

concealment, the plaintiff can either: (1) identify “affirmative steps” taken by the

7 Hendrickson involved, as here, a Sherman Act claim with a four-year statute of limitations.

. In Hendrickson, we therefore stated that the plaintiff must have remained in ignorance “until some point within four years” of commencing the action.

. Of course, in a case in which the claim did not arise under the Sherman Act, the “four years” in Hendrickson’s second element would need to be substituted with the appropriate limitations period for the claim.

25 defendant to conceal the plaintiff’s claim; or (2) show that the defendant’s

misconduct was inherently “self-concealing.”

In this case, Phhhoto argues

that it has done both, pointing to certain of Meta’s statements as affirmative acts

of concealment and the algorithmic feed as inherently self-concealing.

We conclude that Phhhoto has sufficiently pled that Meta “took affirmative

steps,” through its public statements about the algorithm, “to prevent [Phhhoto]’s

discovery of [its] claim.”

The statements on which Phhhoto relies, and to

which the district court alluded in its concealment analysis, include: (1) that

portion of Meta’s press release, issued in March 2016, indicating that the new

“order of photos and videos in [the user’s] feed will be based on the likelihood [the

user will] be interested in the content, [the user’s] relationship with the person

posting and the timeliness of the post,” A-114–15, ¶ 86; and (2) a statement by a

Meta representative at a 2018 press conference “disclaim[ing] that [Meta] either

hid posts in its newsfeed, engaged in shadowbanning . . . or favored a format

(photo or video), except to the extent an individual was more likely to engage with

a particular format,” A-122, ¶ 112 (emphasis omitted). We focus on the first of

these statements—the only one preceding Phhhoto’s discovery of its antitrust

26 claim—in evaluating whether Phhhoto sufficiently alleged that Meta affirmatively

concealed from Phhhoto its Sherman Act claim.

The district court answered this question in the negative for two primary

reasons. First, the district court faulted Phhhoto for failing to explain in its

amended complaint “why Meta’s algorithm,” if implemented as Meta described in

the 2016 press release, “would have optimized” rather than penalized Phhhoto’s

content on Instagram. A-199. Second, the district court found it unreasonable

for Phhhoto to have relied on Meta’s public statements, which it viewed as mere

puffery. Each of these rationales is unpersuasive.

As to its first rationale, the district court posited that because Meta never

guaranteed success to any particular content creator, Meta did not conceal the

possibility that Phhhoto’s metrics could decline under the new algorithm. But

Phhhoto’s allegations of concealment relate to the design, not the ultimate effects, of

the algorithmic feed. In its amended complaint, Phhhoto alleges that Meta’s 2016

press release was “misleading” because it failed to list suppression of competitive

third-party content as a factor driving the new algorithm. A-90–91, ¶ 10.

Meta argues that, even if its 2016 press release failed to explain “how . . . the

algorithm would treat content posted from other apps,” this omission is

27 tantamount to silence and thus cannot constitute concealment. Appellee’s Br. at

26. We disagree. Meta is correct that the 2016 press release did not explicitly

disclaim the possibility that aspects of the algorithmic feed were disfavoring

content from competitors. But the absence of an express denial does not

necessarily equate to silence. Rather, in listing three specific criteria on which the

algorithm was based, Meta implied that other factors, such as the posting

account’s status as a competitor, were not in play. See In re Polyurethane Foam

Antitrust Litig.,

(N.D. Ohio 2015) (defendants’ proffered

reasons for a price increase were “affirmative acts of concealment,” despite their

accuracy, because “a portion of the announced price increase” was due to

undisclosed “collusion with competitors”). This is Phhhoto’s argument: by

announcing the algorithm’s criteria, but only its neutral criteria, Meta downplayed

the significance of—and allayed any possible anticompetitive suspicion about—

Instagram’s shift to an algorithmic feed. Far from constituting silence, the 2016

press release was an “affirmative step[],” Hendrickson, 840 F.2d at 1083—“intended

to exclude suspicion and prevent inquiry,” Wood v. Carpenter,

(1879)—in Meta’s alleged anticompetitive scheme to suppress third-party content

and eliminate Phhhoto as a competitor.

28 Nor was Meta’s 2016 press release “inactionable ‘puffery.’” 8 City of Pontiac

Policemen’s & Firemen’s Ret. Sys. v. UBS AG,

(2d Cir. 2014). Our

precedent is clear that “general statements about reputation, integrity, and

compliance with ethical norms are inactionable ‘puffery.’”

Some courts in

this Circuit have gone further, as the district court did below, concluding that

“communications to the community at large will not generally support a finding

of fraudulent concealment.” A-200 (citing In re Merrill, Bofa, & Morgan Stanley

Spoofing Litig., No. 19-cv-6002,

, at *11 (S.D.N.Y. Mar. 4, 2021) (“In

re Merrill”), aff’d sub nom. Gamma Traders - I LLC v. Merrill Lynch Commodities, Inc.,

(2d Cir. 2022)); see also Litovich v. Bank of Am. Corp.,

,

440 (S.D.N.Y. 2021).

Even accepting that it was a “communication[] to the community at large,”

In re Merrill,

, at *11, Meta’s 2016 press release does not constitute

puffery. The contrasting facts of City of Pontiac and In re Merrill—cases to which

the district court cited in its puffery analysis and in which the relevant statements

8 To be sure, the district court’s puffery analysis only expressly pertained to Meta’s 2018 statement about shadowbanning. The district court reasoned that the 2018’s statement public and “general” nature made it puffery. A-200 (citation omitted). Because this broad reasoning would be equally applicable to the 2016 press release, we discuss it here.

29 were considered puffery—make this conclusion clear. There, the statements in

question only vaguely referenced the company’s ethical and legal obligations. In

City of Pontiac, the statements were about “compliance, reputation, and integrity,”

; in In re Merrill, they assured investors that the defendants

“maintain[ed] established procedures that ensure[d] compliance with all

applicable laws and regulations,”

, at *9 (citation omitted). The

specificity of Meta’s 2016 press release distinguishes it from these statements.

Instead of merely signaling the company’s compliance with general legal

obligations, Meta included in the 2016 press release a factual representation about

the criteria on which the algorithmic feed operated. As such, the 2016 press

release was neither “general,” nor broadly “about reputation, integrity, and

compliance with ethical norms.” City of Pontiac,

. In these

circumstances, it was reasonable for Phhhoto to “rely on the statement[] to allay

[any] concern” about Meta’s shift to an algorithmic feed. LC Cap. Partners, LP v.

Frontier Ins. Grp., Inc.,

, 155 (2d Cir. 2003). 9

9 Having concluded that Meta’s 2016 press release constitutes an affirmative act of concealment sufficient to support equitable tolling at the motion to dismiss stage, we need not now address Phhhoto’s alternative argument that the algorithmic feed is self- concealing.

30 B. Phhhoto Has Adequately Pled Lack of Notice.

As the preceding discussion makes clear, the second element of the

fraudulent concealment test requires the antitrust plaintiff to establish that it

“remained in ignorance of [its] cause of action until some point within four years

of the commencement of [its] action.” Hendrickson,

. This

element is not met, and the plaintiff’s claim of fraudulent concealment is defeated,

if the plaintiff—more than four years prior to the commencement of its action—

had either: (1) “actual notice,” or (2) “inquiry notice” of the facts giving rise to its

claim, and thereafter failed to inquire. Dodds v. Cigna Secs., Inc.,

(2d Cir. 1993). The standard for inquiry notice is objective, imputing knowledge

to the plaintiff where “storm warnings” would cause “a person of ordinary

intelligence [to] consider it ‘probable’” that the defendant had engaged in

wrongdoing. Koch,

(citations omitted). To find inquiry notice “as

a matter of law” on a motion to dismiss, there must be “uncontroverted evidence

clearly demonstrat[ing] when the plaintiff should have discovered the

[challenged] conduct.” Staehr v. Hartford Fin. Servs. Grp., Inc.,

(2d Cir. 2008).

31 The district court identified four “storm warnings” that, in its view, should

have made Phhhoto aware of Meta’s allegedly exclusionary behavior as early as

April 2016. These purported “storm warnings” parallel the components of

Meta’s alleged anticompetitive scheme: (1) the withdrawal of access to Instagram’s

Find Friends API; (2) the abandonment of its proposal to integrate Phhhoto into

the Facebook newsfeed; (3) the removal of the pre-populated hashtag capability;

and (4) the introduction of Boomerang. The district court determined that these

acts, each of which occurred prior to the algorithm’s launch, would have “aroused

the suspicions of a reasonable business in Phhhoto’s situation,” triggering a duty

to investigate whether Meta’s conduct was anticompetitive. A-205.

But none of Meta’s prior acts—whether viewed individually or

collectively—made it “probable” that Meta was engaged in an anticompetitive

scheme to destroy Phhhoto’s business. Koch,

(citations omitted).

Until at least June 2015, during the period of the purported “storm warnings,”

Meta appeared to continue to collaborate with Phhhoto, dispelling any suspicion

that Meta had an ulterior motive to exclude Phhhoto from the market. After

withdrawing Phhhoto’s access to the Find Friends API in March 2015, for example,

Hurren exchanged emails with Bennett until early June 2015 about the Facebook

32 newsfeed integration project. Based on these communications, Phhhoto

reasonably could have believed that Meta had a sincere interest in the companies’

continued collaboration, making it unlikely—and certainly not “probable”—that

Meta’s true intent was anticompetitive.

(citations omitted).

Meta also offered plausible, non-exclusionary justifications for some of its

adverse acts, making it seem improbable that they were anticompetitive. To start,

Meta explained its decision to withdraw the pre-populated hashtag capability as

based on “feedback that the pre-filled captions . . . often feel spammy.” A-111,

¶ 71. As for the Facebook newsfeed integration project, Meta repeatedly justified

its delays by citing a need for further technical specifications and potential legal

concerns. From a reasonable business’s perspective, these explanations lowered

the probability that Meta’s acts were anticompetitive, suggesting instead that Meta

was encountering legitimate roadblocks in its attempts to collaborate with

Phhhoto.

Our prior cases finding a duty to inquire based on “storm warnings”

highlight the improbability that Meta’s pre-algorithm conduct would be seen as

anticompetitive. For example, in Koch v. Christie’s International PLC, we held that

certain “storm warnings” should have alerted the plaintiff, by at least October

33 2000, to the “probability” that the defendant had fraudulently attributed certain

bottles of wine to Thomas Jefferson’s collection. Koch,

. These

“storm warnings” included that: (1) the plaintiff was aware of numerous articles

in the early 1990s casting doubt on the authenticity of the wine he had purchased;

(2) during the same period, he discovered a lawsuit against the seller alleging that

the wine was counterfeit; and (3) in October 2000, after he submitted samples of

the wine for radiocarbon testing, the testing lab reported a greater than 90%

probability that the wine was from a period other than that engraved on the bottle.

at 146–47, 153. Given these “storm warnings,” we concluded that the plaintiff

was on inquiry notice “[a]t least by October 16, 2000,” when the lab’s authenticity

report was issued.

.

None of the Koch “storm warnings” has an analogue in the present record.

Most significantly, Phhhoto did not receive—and presumably had no way to

obtain, as Meta’s elusive algorithm is not discoverable through laboratory

testing—a quantitative assessment of the likelihood that Instagram’s new

algorithmic feed was anticompetitive. Nor did information suggesting that Meta

was engaged in an exclusionary scheme emerge publicly until 2018. Phhhoto

alleges that it “did not become aware of Meta’s overall campaign against

34 competitors . . . until the release of internal Meta documents by the UK Parliament

in December of 2018.” A-91, ¶ 11. Phhhoto’s access to news articles on the

subject came even later. Phhhoto alleges that the first news report documenting

“Meta’s manipulative and deceptive conduct with respect to users’ newsfeeds”

was published in September 2021—nearly four years after Phhhoto had already

discovered this information for itself. A-123, ¶ 114. Thus, unlike the plaintiff in

Koch, Phhhoto’s co-founders did not have at their fingertips public reports

implicating Meta in an anticompetitive scheme until the algorithmic feed had been

in place for nearly two years and its exclusionary nature had ultimately been

discerned. See A-90–91, ¶ 10 (“[O]nly []after [October 2017] did further

information emerge to reveal that Meta . . . had in fact been purposely suppressing

Instagram users’ posts that contained Phhhoto content.”); cf. Staehr,

,

417–18, 421 (concluding that multiple storm warnings, including four prior

lawsuits alleging the same contingent commission scheme, widespread reporting

of those allegations in mainstream media, and publication of an article in an

industry journal highlighting the defendant’s potential involvement in this

scheme, were insufficient to give rise to inquiry notice).

35 Our holding as to the alleged “storm warnings”—that they fall short of

establishing inquiry notice—does not end the analysis. In the district court’s

view, Phhhoto should have been on notice of Meta’s exclusionary scheme for an

additional reason: the strong correlation between Meta’s adoption of the

algorithmic feed and Phhhoto’s decline in user metrics. This conclusion

overstates the inferences Phhhoto could have drawn from even a “precipitous

downturn” in its user metrics. A-119, ¶ 104.

To be sure, as soon as this decline occurred in April 2016, Phhhoto knew it

had been injured. Phhhoto may even have had reason to believe that Meta’s new

algorithm was to blame. But knowledge of an injury—and the person or entity

responsible for it—is distinct from knowledge that the injury was part of an

anticompetitive or otherwise illegal scheme.

The district court did not recognize this distinction in determining that

Phhhoto was on inquiry notice in April 2016. Instead, the district court faulted

Phhhoto for failing to investigate “whether Meta’s new algorithm[] was injuring

rather than benefitting Phhhoto” at that time. A-207. But even if Phhhoto had

done so, and concluded that its business was indeed suffering due to the

algorithmic feed, it could not have attributed this causal relationship to a probable

36 anticompetitive scheme on Meta’s part. Rather, Phhhoto could have identified

only the likely cause of its metrics decline—or, in other words, discovered the fact

of its injury and the entity responsible for it. From this information, Phhhoto

neither could have “consider[ed] it ‘probable’” that the nexus between its failing

business and the algorithmic feed was anticompetitive in nature, Koch,

(citations omitted), nor pled an antitrust claim “with sufficient detail and

particularity to survive a 12(b)(6) motion to dismiss,” Charles Schwab Corp. v. Bank

of Am. Corp.,

(2d Cir. 2018) (internal quotation marks and citation

omitted). To the contrary, Meta’s press release would have suggested more

strongly to Phhhoto that the algorithmic feed—apparently tailored to users’

interests and in line with industry trends—was implemented for reasons of

“efficiency and consumer satisfaction.” Trans Sport, Inc. v. Starter Sportswear, Inc.,

, 188–89 (2d Cir. 1992) (citations omitted).

In concluding otherwise, the district court failed to follow our precedent

requiring a “probability” of wrongdoing to trigger inquiry notice, see, e.g., Koch,

(citation omitted); Dodds,

(“[W]hen the circumstances

would suggest to an investor of ordinary intelligence the probability that she has

been defrauded, a duty of inquiry arises . . . .”), instead applying a standard more

37 akin to “reasonable suspicion,” see, e.g., A-208 (“Phhhoto’s reasonable suspicion

regarding Meta’s algorithm should have been heightened . . . .”) (emphasis

added);

(“[T]he Court cannot reasonably infer from the Amended Complaint

that until October 25, 2017 . . . Phhhoto had no reason to suspect that

the . . . implementation of Meta’s new algorithm had likely affected its user

engagement . . . .”) (emphasis added); A-205 (“[T]he Amended

Complaint . . . includes alleged acts by Meta that should have aroused the suspicions

of a reasonable business in Phhhoto’s situation . . . .”) (emphasis added). This was

error. In the circumstances of this case, the distinction between finding Meta’s

conduct suspicious—and considering it probable that Meta had engaged in

wrongdoing—decides the matter.

We agree with the district court that the rapidity of Phhhoto’s business

decline gave it reason to be suspicious of the new algorithm as the cause for the

decline. But in April 2016, that suspicion did not amount to a probability that

Meta’s algorithmic feed caused the decline through anticompetitive means. After

all, anticompetitive and procompetitive conduct often produce similar effects.

Take Meta’s creation of Boomerang as an example. In the rapidly evolving

technology industry, the release of Boomerang could have signified Meta’s effort

38 to develop a “superior product” that would boost competition in the market.

Verizon Commc’ns Inc. v. Law Offs. of Curtis V. Trinko, LLP,

(2004)

(citation omitted). Or, as Phhhoto now alleges, Meta’s creation of Boomerang

could have been an exclusionary effort aimed at undermining Phhhoto’s business

and monopolizing Meta’s power. Meta’s intent differs in each scenario, but the

ultimate effect on Phhhoto—losing at least some users to a competing app—is the

same. This example illustrates the difficulty of discerning whether a rival’s

“development . . . of a superior product,”

(citation omitted), is intended to

boost competition in the market or to “caus[e] unreasonable exclusionary or

anticompetitive effects,” Trans Sport, Inc.,

(internal quotation marks

and citation omitted).

Meta’s arguments ignore this feature of antitrust injuries. Instead of

grappling with the ways in which Phhhoto could have distinguished between

anticompetitive and procompetitive conduct, Meta urges us to conclude that

Phhhoto’s business decline was sufficient to trigger inquiry notice in April 2016.

In advancing this argument, Meta relies on our decision in SL-x IP S.à.r.l. v. Merrill

Lynch, Pierce, Fenner & Smith, Inc. and the Fourth Circuit’s opinion in GO Computer,

Inc. v. Microsoft Corporation; neither supports the conclusion Meta draws from it.

39 To start, Meta describes only part of our reasoning in SL-x IP S.à.r.l. v. Merrill

Lynch, Pierce, Fenner & Smith, Inc., Nos. 21-2697, 21-2699,

(2d Cir.

Mar. 24, 2023) (summary order). In that case, we affirmed the district court’s

holding that the plaintiffs—whose claim was that the defendants “had colluded to

engage in a group boycott of [the plaintiffs’ product], in violation of federal and

state antitrust laws”—were on inquiry notice more than four years before their suit

was filed.

.

This determination was predicated on: (1) statements that the defendants’

executives made directly to the plaintiffs’ representatives; and (2) “unusual”

aspects of the defendants’ business dealings with the plaintiffs over the course of

approximately one year.

. Meta discusses only the latter on appeal,

arguing that the defendants’ “dramatic[]” and “sudden[]” loss of interest in the

plaintiffs’ product,

at *4 n.3 (citation omitted), is akin to the “precipitous[]”

decline in Phhhoto’s user metrics that occurred in April 2016, A-116, ¶ 91.

But this “strange reversal” in the defendants’ business relationship with the

plaintiffs, SL-x,

, at *4 n.3 (citation omitted), was not the only basis

on which we affirmed the district court’s timeliness determination. Rather,

included among the “markers that something was amiss,”

, were various

40 statements clearly referencing “a conspiracy to freeze [the plaintiffs’ product] out

of the market by boycotting it,” SL-x IP S.à.r.l. v. Bank of Am. Corp., Nos. 18-cv-

10179, 19-cv-4885,

, at *9 (S.D.N.Y. Sept. 30, 2021). For example,

an executive of one broker defendant, Credit Suisse, told the plaintiffs at a

February 2013 meeting that another defendant “was like ‘the mafia run by five

crime families.’”

(citation omitted). The same executive also warned the

plaintiffs, in July 2013, that Credit Suisse would maintain its interest in their

product only “if ‘the Big Boys’ were committed to” it.

(citation omitted). We

agreed with the district court that “[t]he warnings [contained] in these statements”

would have prompted further inquiry “into the reasons why [d]efendants were

rejecting” the plaintiffs’ product.

Thus, it was the parties’ deteriorating

business relationship “together with” the defendants’ statements, implicating

themselves in an anticompetitive scheme, that triggered inquiry notice.

(emphasis added).

Meta does not—and cannot—point to analogous statements in the present

record. Far from alerting Phhhoto to the allegedly anticompetitive nature of the

new algorithm, Meta cloaked it in innocuous terms, describing the algorithmic

feed as based on neutral criteria such as user interest, user relationship with the

41 posting account, and timeliness of the post. Rather than communicating a

“warning[]” that the new algorithm was anticompetitive, Meta’s 2016 press release

allayed any possible “suspicio[n]” about its shift to an algorithmic feed.

In

our independent review of the amended complaint, we have discerned no

contrary statements, “made [by Meta] directly to [Phhhoto],” that “should have

raised red flags” about the allegedly exclusionary nature of the new algorithm.

Meta’s reliance on GO Computer, Inc. v. Microsoft Corp.,

(4th Cir.

2007), is also misplaced. There, the Fourth Circuit held that the plaintiffs’

antitrust claims were time-barred and not subject to equitable tolling, as the

plaintiffs “were on inquiry notice of their claims [more than ten years before filing

suit], when enough red flags had flown that a reasonably diligent person would

have investigated and acted.”

. Those “red flags” were threefold.

First, when the Federal Trade Commission (“FTC”) was investigating Microsoft in

1991, an investigator told GO Computer’s co-founder, Jerry Kaplan, that “[t]his

looks like a textbook case of abuse of monopoly power.”

(citation

omitted). During his next meeting with an FTC investigator in 1992, Kaplan

submitted a declaration describing “the array of obstacles Microsoft was allegedly

42 putting in GO’s way.”

Second, in a book he wrote in 1994, Kaplan “reported

specific occasions, prior to his meeting with the FTC, where hardware

manufacturers had told him about Microsoft’s restrictive licensing practices.”

Finally, Kaplan “became so suspicious” of Microsoft’s conduct that “he went to a

law firm [in 1991] to discuss an intellectual property suit” against the company,

which the law firm “thought was strong.”

In the Fourth Circuit’s view, there

was “no question that this profusion of information was sufficient, as a matter of

law, to spur a reasonably diligent person to investigate an antitrust claim.”

Here, by contrast, there was no “multiplicity and specificity

of . . . information,”

, that could have alerted Phhhoto to a probable

anticompetitive scheme in April 2016. Despite its introduction of the algorithmic

feed in March 2016, Meta was not publicly implicated in an “exclusionary scheme”

until December 2018, when the U.K. Parliament released incriminating litigation

documents. A-129, ¶ 133. It was not until December 9, 2020 that the FTC and

various state attorneys general sued Meta for antitrust violations. See New York

v. Meta Platforms, Inc.,

(D.C. Cir. 2023) (“The States filed their

Complaint on December 9, 2020, and the [FTC] filed a complaint on the same

day.”).

43 In sum, while Phhhoto could suspect that Meta’s conduct was harming its

business in April 2016, Phhhoto had no basis to suspect probable anticompetitive

wrongdoing until October 25, 2017.

C. Phhhoto Has Adequately Pled Reasonable Diligence.

To satisfy the final element of the fraudulent concealment test, the plaintiff

must establish that its “continuing ignorance” of the asserted claim “was not

attributable to lack of diligence on [its] part.” Hendrickson,

. In

this case, the district court held that “the Amended Complaint . . . directly

undermine[s] Phhhoto’s argument that it acted with” reasonable diligence from

April 2016 to October 2017, as Phhhoto failed to “investigat[e] its suspicion that

Meta’s algorithm may have been suppressing third-party applications including

Phhhoto.” A-211. We disagree.

As previously described, Phhhoto plausibly alleged that it did not have

notice, during this period, that Meta’s algorithm was probably suppressing third-

party applications. Moreover, even if Phhhoto suspected or should have

suspected that Meta’s algorithm was at least in some way related to its decline,

Phhhoto alleged that its founders “relied on Meta’s statement about the operation

of the algorithm—that ‘the order of photos and videos in your feed will be based

44 on the likelihood you’ll be interested in the content, your relationship with the

person posting and the timeliness of the post.’” A-116, ¶ 92. And while Phhhoto

was certainly aware that its business was suffering, Phhhoto alleged that “[f]or

months after the metrics dropped in April 2016, Phhhoto’s team worked tirelessly

to figure out why Phhhoto was suddenly unpopular.” A-116, ¶ 92. Phhhoto’s

founders “hypothesized various reasons the app may have suddenly dropped in

popularity,” ruling out potential causes such as “competition from Boomerang

and cyclical usage,” and “running analytics to determine if Phhhoto had bugs.”

A-116–117, ¶¶ 92–93. Phhhoto’s reasonable diligence, in the circumstances

alleged here, was adequately pled.

Meta’s argument to the contrary presumes that Phhhoto “would have

discovered the alleged issue” with the algorithm as early as April 2016 if it had

simply “looked at its own Instagram feed.” Appellee’s Br. at 30–31 (emphasis

added). But Meta frames this hypothetical discovery in the singular, ignoring

that the amended complaint alleges two “issue[s]” that were uncovered on October

25, 2017.

First, Phhhoto’s post “appeared to vanish from Bennett’s own

Instagram feed.” A-120, ¶ 105 (emphasis omitted). Second, the video

originating from Hypno, which had significantly fewer followers than Phhhoto,

45 received more views and “likes” relative to Phhhoto’s post. Even though the

amended complaint pleads each of these discoveries—and Phhhoto emphasized

both in its briefing before the district court—Meta’s argument that Phhhoto should

have “simply . . . observ[ed] how its posts appeared in the Instagram app” is

relevant only to the first one. Appellee’s Br. at 29.

We agree with Meta that Phhhoto presumably could have made the first

discovery—in which Phhhoto’s post vanished from the Instagram feed—in the

period between April 2016 and October 2017. To observe this phenomenon,

Phhhoto only needed to access its own Instagram account, and the account of any

individual, like Bennett, who followed Phhhoto. Phhhoto could have posted a

photo or video to its page and then checked the placement of that post in the

individual’s Instagram feed. But, even if Phhhoto had done so, the amended

complaint provides no basis to conclude that Phhhoto should have discerned,

from this observation alone, Meta’s probable involvement in an exclusionary

scheme.

As alleged in the amended complaint, it was the second observation—

involving the metrics discrepancy between Phhhoto’s and Hypno’s posts—

coupled with the first, that made exclusionary conduct the probable explanation

46 for Phhhoto’s decline after the adoption of the algorithmic feed. The metrics

discrepancy directly undercut Meta’s prior description of the algorithm as “based

on the likelihood [the user will] be interested in the content, [the user’s]

relationship with the person posting and the timeliness of the post,” A-114–15,

¶ 86, suggesting instead that the algorithmic feed penalized posts from

competitors’ accounts. That is, if the algorithm operated as Meta previously had

represented, Phhhoto’s post likely would have outperformed Hypno’s. When

the opposite occurred, one critical distinction between Phhhoto and Hypno

became salient: the former competed with Meta, while the latter did not. Only at

this point could Phhhoto attribute the algorithmic feed, and certain of Meta’s prior

actions, to “anticompetitive behavior,” Affinity LLC v. GfK Mediamark Rsch. & Intel.,

LLC,

(2d Cir. 2013) (summary order), rather than “efficiency

and consumer satisfaction,” Trans Sport, Inc., 964 F.2d at 188–89 (citations omitted).

To be clear, Phhhoto alleges that its discovery of the metrics discrepancy

was accidental. We express no view that the exercise of reasonable diligence

invariably would require an antitrust plaintiff in Phhhoto’s position to undertake

a comparison of the sort that occurred here by chance. But it is important to note

that any comparative metrics analysis required a comparator Instagram account

47 to which Phhhoto could post content and against which it could measure the

performance of its own posts. And, for the metrics comparison to be indicative

of exclusionary conduct, the second account needed to belong to a company that

did not compete with Meta, among other relevant criteria. The amended

complaint suggests that access to such an account was not available during the

“months” when Phhhoto’s team was “work[ing] tirelessly to figure out why

Phhhoto was suddenly unpopular.” A-116, ¶ 92. It became available only after

Phhhoto ceased operations and its co-founders rejoined Hypno. 10

Of course, Phhhoto’s allegations are not conclusive of its diligence during

this period. As with the others in the amended complaint, the allegations

concerning Phhhoto’s diligence can be disputed and potentially disproven in the

discovery process. But, at the motion to dismiss stage, the district court reached

10 Contrary to the dissent’s suggestion, Phhhoto could not have “simply created a second account under a different username to compare metrics.” Dissent at 17. Rather, the second account had to share certain similarities with Phhhoto’s for it to provide an effective comparator. Meta had explained that its algorithm was “based on the likelihood [the user will] be interested in the content, [the user’s] relationship with the person posting [the content] and the timeliness of the post.” A-114–15, ¶ 86. To isolate and test for the impact of an additional, anticompetitive variable, Phhhoto thus would have needed a comparator account that could control for as many of these neutral factors as possible. It needed an account like Hypno’s—that of another business, operating in a similar industry, whose followers would likely be interested in similar content. Phhhoto’s co-founders could not simply have created such an account.

48 the wrong conclusion as to the diligence prong. Rather than reflecting “lack of

diligence on [its] part,” Phhhoto’s “continuing ignorance” of its antitrust claim

between April 2016 and October 2017 was at least plausibly attributable to the

difficulty in discerning procompetitive from anticompetitive conduct when each

results in business decline, as well as the subtle—and sometimes, practically

undetectable—nature of algorithmic manipulation, Hendrickson Bros.,

.

CONCLUSION

Having determined that Phhhoto adequately alleged equitable tolling based

on fraudulent concealment, we hold that the district court erred by dismissing

Phhhoto’s claim for unlawful monopolization under the Sherman Act as untimely

at this stage. Accordingly, we VACATE the district court’s judgment and

REMAND for further proceedings.

49 CHIN, Circuit Judge, dissenting:

Defendant-appellee Meta Platforms, Inc. ("Meta"), the social media

company, operates Instagram, among other popular social networking

applications ("apps"). According to plaintiff-appellant Phhhoto Inc. ("Phhhoto"),

"[n]o other platforms rival Meta in the market for personal social networking

services." J. App'x at 137 (Amended Complaint ("AC") ¶ 156).

Launched in 2014, Phhhoto was a social media app that allowed

users to capture a burst of still photos and then loop them together into a video

to create a moving image, known as a "phhhoto." At its peak, Phhhoto enjoyed

"approximately 3.7 million [monthly average users]." Id. at 89 (AC ¶ 6). After

just over three operative years, however, Phhhoto shut down operations on June

20, 2017, citing Meta's "fraudulent and anticompetitive conduct" as the reason.

Id. at 127 (AC ¶ 128).

In this case, Phhhoto accuses Meta of violating section 2 of the

Sherman Antitrust Act ("Section 2"),

, based on Meta's allegedly

anticompetitive behavior toward it. Its claims accrued no later than April of

2016. Yet, it did not file suit until November 4, 2021, well more than four years

later. Phhhoto argues, however, that the district court erred when it granted Meta's motion to dismiss on timeliness grounds, declining to equitably toll the

statute of limitations under a theory of fraudulent concealment.

Applying a de novo standard of review, the majority concludes "that

the district court erred at each step of the fraudulent concealment analysis." Maj.

Op. at 17. While I agree that de novo review applies, I disagree that the district

court erred. Phhhoto's allegations in the Amended Complaint demonstrate as a

matter of law that it was on inquiry notice of Meta's anticompetitive conduct --

and thus had the requisite information to file suit -- well before October 25, 2017,

the date on which Phhhoto claims it first began "to discover [Meta's] fraudulent

and anticompetitive conduct." J. App'x at 50. Phhhoto's allegations further

undermine its claims as to the other elements of its fraudulent concealment

claim. I would affirm and, accordingly, I respectfully dissent.

I.

As Phhhoto alleges, "[n]ew entrants in the market for personal social

networking services" face a challenge because they "must convince users that

enough of their friends and family members will also engage with the social

networking platform to make use of the platform worthwhile."

(AC

¶ 164). Throughout its lifespan as a social media app, Phhhoto relied on various

2 aspects of Meta's ubiquity in the social media universe to build and maintain its

own user base. There was something in it for Meta, too, in this relationship: by

offering Phhhoto access to key bits of its own infrastructure, Meta ensured that

its users did not need to "exit the Meta ecosystem" even when those users

explored other non-Meta platforms like Phhhoto.

(AC ¶ 169).

At the beginning of Phhhoto's relationship with Meta, the companies

shared a "symbiotic relationship." Maj. Op. at 7. But over time, and through a

distinct set of adverse acts alleged by Phhhoto, Meta dealt several blows to

Phhhoto's stability as a platform, as it rescinded Phhhoto's privileges and access

to critical components of Meta's social networking ecosystem.

The first integration feature that benefited Phhhoto was Meta's "Find

Friends" Application Programming Interface ("API"). APIs are digital tools that

facilitate data-sharing, functionality, and overall integration between two

platforms. The Find Friends API allowed third-party apps like Phhhoto to access

a user's Instagram friends list. When a user linked her Phhhoto account to her

Instagram credentials, she could instantly access a list of Instagram friends who

also had Phhhoto accounts. The Find Friends API thus allowed Phhhoto users to

3 "recreate their social graph" from Instagram, thereby alleviating what Phhhoto

described as a barrier to entry for new platforms. J. App'x at 109 (AC ¶ 65).

The second feature was the "iPhone Hooks," which allowed users to

post their phhhotos, created in the Phhhoto app, directly to Instagram. J. App'x

at 163-64. Before a user publishes a post to Instagram, she has the option of

adding a written caption that appears under the post. The caption can contain

hashtags, which, when clicked, directs users to all other public posts whose

caption features that hashtag. The iPhone Hooks pre-populated captions of

phhhotos posted to Instagram with hashtags that attributed the posted content to

Phhhoto. The benefit to Phhhoto was that, when a user posted her phhhotos

directly to Instagram, the caption would contain a #phhhoto hashtag, which

directed traffic to the app and attributed the content to Phhhoto.

On March 31, 2015, Meta abruptly revoked Phhhoto's access to the

Find Friends API. Phhhoto alleges that Meta withdrew access "because [it]

viewed Phhhoto as a potential competitive threat."

(AC ¶ 66). Phhhoto

further alleged that the loss of the Find Friends API had a "negative[] impact [on]

how potential investors perceived Phhhoto."

(AC ¶ 65). A few months later,

on August 9, 2015, Meta also suspended the use of the iPhone Hooks for all third-

4 party apps, explaining that the pre-populated captions featuring the hashtags

looked "spammy" on the Instagram feed.

(AC ¶ 71). Phhhoto alleges,

however, that the "spammy" rationale "was pretextual."

(AC ¶ 72).

In addition to these integration features, Phhhoto and Meta nearly

entered into a partnership. Earlier, on February 26, 2015, Meta's Strategic

Partnerships Manager contacted one of Phhhoto's founders, Champ Bennett, to

discuss integrating Phhhoto's moving photo technology into Facebook's

newsfeed. The project was never memorialized in a contract, however, and after

some delays related to "legal conversations," Meta apparently abandoned the

integration project in June of 2015. J. App'x at 166-67.

On October 22, 2015, Phhhoto was set to launch for Android devices.

That morning, however, Meta issued its own announcement: it was launching

Boomerang -- what Phhhoto describes as "a slavish clone of Phhhoto."

(AC ¶ 77).

On March 15, 2016, Meta issued a press release announcing a change

to the order in which it sorted user's posts on Instagram. Until then, Instagram

delivered content to users chronologically -- the most recent posts appeared at

the top of the feed, and users scrolled down to see older content. Meta's switch

5 to the so-called "algorithmic newsfeed" discarded the chronological sorting in

favor of an algorithm-driven shuffling that presented posts to users "based on the

likelihood you'll be interested in the content, your relationship with the person

posting and the timeliness of the post."

(AC ¶¶ 86-87).

Shortly thereafter, in April 2016, Phhhoto noticed that its "new user

registrations declined precipitously."

(AC ¶ 91). Its ranking among

photo and video platforms in "the Apple App Store dropped from 11th place to

41st place."

The change was abrupt and unprecedented; "Phhhoto had never

before experienced such a significant decline in its ranking."

Prompted by

this sudden decline in popularity, Phhhoto "worked tirelessly" to determine the

reason behind the sharp decline.

(AC ¶ 92). Phhhoto claims it focused its

efforts on problems with its own code, in reliance on Meta's press release

statement: that "[t]he order of photos and videos in your feed will be based on

the likelihood you'll be interested in the content, your relationship with the

person posting and the timeliness of the post."

(AC ¶ 92).

On October 25, 2017, after Phhhoto shut down operations, Bennett

"sought to connect Phhhoto's remaining Instagram followers to Hypno, a

company that "had little social media presence."

(AC ¶ 104). Bennett

6 posted the same promotional video to Hypno's Instagram account and Phhhoto's

Instagram account. Phhhoto claims that, after posting the same video from both

accounts, "the post from the old Phhhoto account appeared to vanish from

Bennett's own Instagram feed."

(AC ¶ 105) (emphasis in original). This,

Phhhoto alleges, was the moment at which it discovered that Meta was engaging

in anticompetitive conduct -- namely, through suppressing Phhhoto's content on

the algorithmic feed.

II.

The district court did not err in concluding as a matter of law that

the statute of limitations should not be subject to the extroardinary remedy of

equitable tolling, as Phhhoto failed to sufficiently plead that it met the requisite

elements of fraudulent concealment.

A. Elements of Fraudulent Concealment

To succeed on a fraudulent concealment claim, a plaintiff must

establish: "(1) that the defendant concealed from him the existence of his cause of

action, (2) that he remained in ignorance of that cause of action until some point

within four years of the commencement of his action, and (3) that his continuing

7 ignorance was not attributable to lack of diligence on his part." New York v.

Hendrickson Bros.,

(2d Cir. 1988).

B. Application

Phhhoto is not entitled to the judicial remedy of equitable tolling

under a theory of fraudulent concealment because (1) it fails to plausibly allege

that Meta's March 2016 press release was concealing; (2) Phhhoto's own

allegations undermine its claim that it had no notice of a potential antitrust claim

until October 25, 2017; and (3) Phhhoto fails to allege that it acted with

reasonable diligence.

1. Concealment

To plead the first element of fraudulent concealment, Phhhoto must

plausibly allege that Meta "concealed . . . the existence of [its] cause of action."

Phhhoto can meet this burden by showing either that Meta took affirmative steps

to conceal its wrongdoing or that the wrongdoing was self-concealing.

But it

must plead elements of fraudulent concealment with particularity, in accordance

with the heightened pleading standards set forth in Rule 9(b) of the Federal

Rules of Civil Procedure. See Armstrong v. McAlpin,

(2d Cir. 1983).

Phhhoto contends that Meta engaged in fraudulent concealment when it issued a

8 press release in 2016 that announced a new algorithm for displaying posts. As

the district court concluded, however, Phhhoto failed to plausibly allege that

Meta's public announcement about the algorithm was fraudulent in any respect.

Nor does it make sense, as Phhhoto asserts, that the change in algorithm was

"self-concealing." Appellant's Br. at 33.

Fraudulent concealment requires proof of a "trick or contrivance

intended to exclude suspicion and prevent inquiry." Wood v. Carpenter,

(1879). Phhhoto has not plausibly explained how the statements in

Meta's 2016 press release constituted fraudulent concealment. This was a press

release publicly announcing a new feed that would display posts based on

metrics that measured user interest, relationship, and timeliness. Even

considering the press release in the light most favorable to Phhhoto, Phhhoto

fails to plausibly allege that there was anything in the press release that was false,

fraudulent, or misleading. Phhhoto fails to explain how the announcement

affirmatively concealed wrongdoing.

Apparently, Phhhoto contends that Meta concealed the

"anticompetitive element in the algorithm's operation . . . by making false public

statements representing how the algorithm worked." Appellant's Br. at 30.

9 Phhhoto contends, essentially, that Meta intended to harm Phhhoto and that the

press release should have disclosed these facts. But this was a press release and

Phhhoto -- and the public -- was being given notice of the change in the display

procedures. There is nothing fraudulent about that notice. And Meta made no

representation that Phhhoto would do better under the new algorithm.

Instead, Phhhoto itself acknowledges that "its own content might be

promoted or demoted by Meta's algorithm." Phhhoto Inc. v. Meta Platforms, Inc.,

No. 21-cv-06159 (KAM) (LB),

, at *16 (E.D.N.Y. Mar. 30, 2023).

But the suggestion that Meta should have disclosed to Phhhoto and others that

its new procedures might give it a competitive advantage makes no sense.

Moreover, Phhhoto fails to explain "why Meta's algorithm, 'if

actually implemented as Meta had described,' would have optimized 'Phhhoto

users' posts, rather than disfavored those posts." Phhhoto,

, at

*16 (citing J. App'x at 115-16 (AC ¶ 89)). As Meta points out, "Phhhoto does not

allege that Meta said that Phhhoto's content was not being disfavored by the new

algorithm." Appellee's Br. at 26. In my view, it is not enough that Phhhoto

alleges that it was enjoying millions of users on a monthly basis -- it does not

follow that, just because an app has many users, its posts would perform just as

10 well or better with Instagram's new algorithm. On this record, I disagree that

Phhhoto has adequately pled fraudulent concealment.

2. Notice

Phhhoto fails to allege sufficient facts supporting the second prong --

that Phhhoto remained in ignorance of its cause of action until October 2017.

Indeed, Phhhoto's own allegations demonstrate that it had notice of its claim by

no later than April 2016. Once the "plaintiff ha[s] notice of th[e] possibility" of its

claim, the "plaintiff is charged with whatever knowledge an inquiry would have

revealed." Stone v. Williams,

(2d Cir. 1992). I agree with the

majority that, to find inquiry notice as a matter of law on a motion to dismiss,

there must be "uncontroverted evidence clearly demonstrat[ing] when the

plaintiff should have discovered the [challenged] conduct." Staehr v. Hartford Fin.

Servs. Grp.,

(2d Cir. 2008). Unlike the majority, however, I think

there are such facts alleged in Phhhoto's Amended Complaint itself.

For instance, Phhhoto alleged a "precipitous" "decline" in users, a

"never before experienced" reduction in its App Store rankings, and "sudden[]

unpopular[ity]" shortly after the algorithmic feed was rolled out. J. App'x at 116-

11 17 (AC ¶¶ 90-92). This steep decline in business occurred in the context of a

litany of Meta's other adverse actions, including:

• March 31, 2015: Meta abruptly revokes Phhhoto's access to Instagram's Find Friends API; • June 8, 2015: Meta stops responding to Phhhoto about the integration project; • August 9, 2015: Meta withdraws access to the iPhone Hooks for third- party applications; • October 22, 2015: Meta announces its new app Boomerang, a clone of Phhhoto; • March 15, 2016: Meta announces change to the Instagram algorithm; and • April 2016: Phhhoto notices steep drop in new user registrations. These facts surely put Phhhoto on inquiry notice that Meta might be taking

action against it.

Phhhoto states in a conclusory fashion that it relied on the

representations in the March 2016 press release to rule out anticompetitive

behavior stemming from the algorithmic feed. I agree with the district court that

Phhhoto presents "[n]o plausible facts . . . [to] explain why the Phhhoto founders

would rule out [the aforementioned] external possibilities and ignore its duty to

inquire." Phhhoto,

, at *18.

The majority suggests that Meta's creation of Boomerang, in the

context of the parties' relationship, did not contribute to placing Phhhoto on

12 notice of anticompetitive behavior. See Maj. Opp. at 39. As the majority

recognizes, however, the law requires only a "'probability' of wrongdoing to

trigger inquiry notice."

. Phhhoto's business decline occurred only a few

months after Meta rolled out a product nearly identical to Phhhoto's, and just

one month after Meta changed its algorithm. Particularly because Phhhoto's

business success was reliant on the underlying platform created by Meta, Meta's

creation of Boomerang was another incident among many that reasonably placed

Phhhoto on notice that Meta was engaging in anticompetitive behavior.

Phhhoto's other allegations about Meta's pattern of anticompetitive

behavior further undermine its claim that it had no reason to believe Meta was

engaged in anticompetitive conduct until Bennett's happenstance discovery in

October 2017. Its Amended Complaint, which spans almost 70 pages, explains in

detail the sudden and inexplicable actions Meta took -- rescinding access to social

networking infrastructure that Phhhoto relied on, introducing a competitor on

the day that Phhhoto planned on rolling out its Android capabilities, and letting

a business relationship go cold over seemingly nothing. And Phhhoto alleges

that, from its inception, it was reliant on critical support from Meta through APIs

and other tools. Based on these factual allegations, I agree with the district court

13 that it is implausible that Phhhoto had no reason to suspect wrongdoing until

October 2017.

The Fourth Circuit's reasoning is persuasive on this point: "[w]here a

plaintiff knows of a pattern of particular actions that a defendant has taken

against him," that plaintiff "is on inquiry notice of his claim" even if "the pattern's

precise scope might be unclear and its exact legal ramifications uncertain." GO

Computer, Inc. v. Microsoft Corp.,

(4th Cir. 2007); see also Klein v.

Bower,

(2d Cir. 1970) ("[T]he statutory period . . . [must] not

await [plaintiff's] leisurely discovery of the full details of the alleged scheme.").

The majority reasons that Meta "offered plausible, non-exclusionary

justifications" for some of its changes, and therefore Phhhoto cannot be charged

with notice. Maj. Op. at 32. For example, the majority notes that Meta explained

its decision to withdraw the iPhone Hooks capability by stating that the pre-

populated hashtags felt "spammy."

(quoting J. App'x at 111 (AC ¶ 71)). But

Phhhoto specifically alleged that Meta's "professed . . . rationale" for

withdrawing the iPhone Hooks access was "pretextual." J. App'x at 111 (AC

¶ 72).

14 And perhaps most crucially, Phhhoto's own allegations show that

the algorithm was not self-concealing. Phhhoto fails to support its contention

that it could not discover or was not on notice of the algorithmic suppression

despite noticing such a dramatic drop in user engagement shortly after the

algorithm changed.

3. Reasonable Diligence

Phhhoto argues that it plausibly alleged that it acted with reasonable

diligence, which "is a prerequisite to the applicability of equitable tolling." Koch

v. Christie's Int'l PLC,

(2d Cir. 2012). Again, Phhhoto's own

allegations belie this point. As noted above, Meta abruptly revoked Phhhoto’s

access to the API; Meta stopped responding to Phhhoto about a possible joint

project; Meta withdrew access to the iPhone Hooks; Meta launched Boomerang --

a purported clone of Phhhoto's product; Meta announced the change to its

algorithm; and Phhhoto's new registrations dropped precipitously. All of these

adverse actions occurred within a span of thirteen months; Phhhoto surely

should have investigated.

Phhhoto "hypothesize[s] various reasons the app may have

suddenly dropped in popularity," but fails to allege why it did not investigate the

15 algorithm. J. App'x at 117 (AC ¶ 93). Given Phhhoto's heavy reliance on Meta's

infrastructure to conduct its own platform, Phhhoto has failed to plausibly allege

that it acted with the requisite diligence.

The majority agrees that "Phhhoto presumably could have made the

first discovery -- in which Phhhoto's post vanished from the Instagram feed -- in

the period between April 2016 and October 2017." Maj. Opp. at 46. The majority

then reasons that had Phhhoto performed the experiment earlier, it would still

not have been put on notice of Meta's anticompetitive behavior. I disagree. This

discovery, along with the many prior anticompetitive incidents by Meta, in my

view, should have led Phhhoto to discern Meta's probable involvement in an

exclusionary scheme. By not performing the simple experiment of observing a

Phhhoto post from a user account earlier, Phhhoto failed to exercise reasonable

diligence.

As to Phhhoto's second "accidental" observation involving the

metrics discrepancy, I disagree that this observation was the necessary catalyst

for Phhhoto to be placed on notice of Meta's anticompetitive behavior, and that

Phhhoto did not need to perform this experiment purposefully. First, as

mentioned above, Meta's earlier conduct was sufficient to place Phhhoto on

16 notice of its claim. Second, although the majority "express[es] no view that the

exercise of reasonable diligence invariably would require an antitrust plaintiff in

Phhhoto's position to undertake a comparison of the sort that occurred here by

chance," this reasoning undercuts the high standard equitable tolling requires

and disregards the effortlessness of performing such a simple experiment. Id. at

47. Phhhoto did not need to create another company, or wait to create another

company, to accomplish what it purportedly found by accident; Phhhoto could

have simply created a second account under a different username to compare

metrics. Bennett could have -- and should have -- posted a video to Phhhoto's

Instagram account and a different Instagram account long before October 25,

2017. Performing this experiment strikes me as the bare minimum exercise of

reasonable diligence, especially in consideration of the context of the parties'

relationship.

Finally, I respectfully disagree with the majority's statement that

"the allegations concerning Phhhoto's diligence can be disputed and potentially

disproven in the discovery process." Id. at 48. There is no factual dispute here.

Whether Phhhoto's alleged facts met the diligence prong is a legal inquiry, and I

fail to see how further discovery could suddenly demonstrate that Phhhoto acted

17 with diligence. And certainly not under the high standard that requires Phhhoto

to have pled particular facts demonstrating how it sufficiently met the diligence

prong to warrant the district court's tolling of the statute of limitations.

Accordingly, Phhhoto has not plausibly alleged that it acted with due diligence,

or that discovery could lead to a different conclusion.

III.

The district court's judgment should be affirmed because it correctly

dismissed Phhhoto's Amended Complaint as time-barred after concluding that

the extraordinary measure of equitable tolling was unwarranted as a matter of

law. This was the right result. I therefore dissent from the majority's decision to

vacate and remand.

18