Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-23-00763/USCOURTS-ca2-23-00763-0/pdf.json

Parties Involved:
Darren Bush
Amicus Curiae
Peter C. Carstensen
Amicus Curiae
Edward D. Cavanaugh
Amicus Curiae
DOES NOs. 1-7

Josh Davis
Amicus Curiae
Harry First
Amicus Curiae
John B. Kirkwood
Amicus Curiae
Robert H. Lande
Amicus Curiae
Christopher R. Leslie
Amicus Curiae
Meta Platforms, Inc.
Appellee
PHHHOTO Inc.
Appellant
The Committee to Support The Antitrust Laws
Amicus Curiae

Document Text:

1 

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. 

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(“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) 

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(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, 15 U.S.C. § 2. 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 

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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. ACase 23-763, Document 117-1, 12/10/2024, 3638188, Page4 of 49
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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. Id. ¶ 106. 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 

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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 Background2

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, 898 F.3d 243, 252 (2d Cir. 

2018) (alteration adopted and citation omitted).

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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 

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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.” A99–100, ¶ 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.” Id.

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 

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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,” id., 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 

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

social graph “provides the foundation for users” to interact with one another. A130–31, ¶ 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. 

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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 

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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 

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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 

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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 

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“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 

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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 

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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., 455 F.3d 118, 

119 (2d Cir. 2006); see also Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (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. 

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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, 76 

F.4th 64, 70 (2d Cir. 2023) (internal quotation marks and citation omitted). “[W]e 

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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, 990 F.3d 264, 268 (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., 723 F.3d 144, 149 (2d Cir. 2013) (citation omitted), or where the 

“asserted error is legal in nature,” Clark v. Hanley, 89 F.4th 78, 104 (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, 723 F.3d at 149 (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, 489 F.3d 499, 509 (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.

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

challenges the district court’s “legal conclusion[s]” on appeal, Doe, 76 F.4th at 70, 

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

Clark, 89 F.4th at 104. 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, 76 F.4th at 71. “The law 

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

missing.” Id. 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.”).

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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, 723 F.3d at 

149 (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, 

490 F.3d 201, 207 (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 

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22 

injures a plaintiff’s business.” Higgins v. N.Y. Stock Exch., Inc., 942 F.2d 829, 832 

(2d Cir. 1991) (quoting Zenith Radio Corp. v. Hazeltine Rsch., Inc., 401 U.S. 321, 338 

(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. Id. (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, 208 F.3d 13, 17 (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., 840 F.2d 1065, 1083 (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.” Id. The plaintiff must plead the 

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23 

fraudulent concealment with particularity, in accordance with Federal Rule of 

Civil Procedure 9(b). See Armstrong v. McAlpin, 699 F.2d 79, 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., 420 F. Supp. 2d 253, 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”). 840 

F.2d at 1083 (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.” 154 F.3d 56, 60 

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

in subsequent cases, see Corcoran v. N.Y. Power Auth., 202 F.3d 530, 543 (2d Cir. 

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

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24 

for fraudulent concealment, Koch v. Christie’s Int’l PLC, 699 F.3d 141, 157 (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.” Id. 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. 840 F.2d at 1083. 

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, 52 F.3d 1139, 1157 (2d Cir. 1995) (alteration adopted) (citing Keating 

v. Carey, 706 F.2d 377, 382 (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 

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25 

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, 840 F.2d at 1083. 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. 840 F.2d at 1069. In Hendrickson, we therefore stated that the plaintiff must 

have remained in ignorance “until some point within four years” of commencing the 

action. Id. at 1083. 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. 

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

misconduct was inherently “self-concealing.” Id. 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.” Id. 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 

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27 

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

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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., 152 F. Supp. 3d 968, 1006 (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, 101 U.S. 135, 143 

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

and eliminate Phhhoto as a competitor. 

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

Policemen’s & Firemen’s Ret. Sys. v. UBS AG, 752 F.3d 173, 183 (2d Cir. 2014). Our 

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

compliance with ethical norms are inactionable ‘puffery.’” Id. 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, 2021 WL 827190, 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., 

41 F.4th 71 (2d Cir. 2022)); see also Litovich v. Bank of Am. Corp., 568 F. Supp. 3d 398, 

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

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

In re Merrill, 2021 WL 827190, 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. 

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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,” 

752 F.3d at 183; in In re Merrill, they assured investors that the defendants 

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

applicable laws and regulations,” 2021 WL 827190, 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, 752 F.3d at 183. 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., 318 F.3d 148, 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 selfconcealing.

Case 23-763, Document 117-1, 12/10/2024, 3638188, Page30 of 49
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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, 840 F.2d at 1083. 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., 12 F.3d 346, 350 

(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, 699 F.3d at 151 (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., 547 F.3d 406, 427 

(2d Cir. 2008). 

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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, 699 F.3d at 151 (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 

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33 

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. Id. (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 

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34 

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

bottles of wine to Thomas Jefferson’s collection. Koch, 699 F.3d at 153. 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. 

Id. 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. Id. at 153. 

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 

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35 

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, 547 F.3d at 408, 

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). 

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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 

Case 23-763, Document 117-1, 12/10/2024, 3638188, Page36 of 49
37 

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, 699 F.3d at 

151 (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., 883 F.3d 68, 95 (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., 

964 F.2d 186, 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, 

699 F.3d at 151 (citation omitted); Dodds, 12 F.3d at 350 (“[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 

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38 

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

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

added); id. (“[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 

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39 

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

Verizon Commc’ns Inc. v. Law Offs. of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (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,” id. (citation omitted), is intended to 

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

anticompetitive effects,” Trans Sport, Inc., 964 F.2d at 188 (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. 

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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, 2023 WL 2620041 (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. Id. at *2, *4. 

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. Id. at *4. Meta discusses only the latter on appeal, 

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

plaintiffs’ product, id. 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, 2023 WL 2620041, 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,” id. at *4, were various 

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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-cv10179, 19-cv-4885, 2021 WL 4523711, 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.’” Id. (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. Id. (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. Id. Thus, it was the parties’ deteriorating 

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

themselves in an anticompetitive scheme, that triggered inquiry notice. Id. 

(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 

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42 

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. Id. 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. 

Id.

Meta’s reliance on GO Computer, Inc. v. Microsoft Corp., 508 F.3d 170 (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.” Id. at 172. 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.” Id. at 178 (citation 

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

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

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putting in GO’s way.” Id. 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.” Id. 

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.” Id. 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.” Id.

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

of . . . information,” id. at 179, 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., 66 F.4th 288, 295 (D.C. Cir. 2023) (“The States filed their 

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

day.”). 

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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, 840 F.2d at 1083. 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 thirdparty 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 

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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. Id. 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, 

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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 

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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, 547 F. App’x 54, 57 (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

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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. 

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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., 840 F.2d at 

1083. 

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. 

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