On June 19, 2015, the British Columbia Court of Appeal stayed a proposed privacy class action in Douez v. Facebook, Inc. by enforcing a forum selection clause in favour of the courts of California. The plaintiff had sought certification of a class proceeding seeking class-wide damages against Facebook, Inc. for alleged breaches of the B.C. Privacy Act on behalf of a proposed class of B.C. residents whose name or photograph appeared in Facebook’s advertising feature, Sponsored Stories. In staying the action, the B.C. Court of Appeal sent a strong message that Canadian courts will enforce forum selection clauses in the right circumstances, including clauses that are contained in terms of use for social media platforms as well as for online businesses.

Background

The plaintiff commenced a proposed class action against Facebook in the B.C. courts, alleging that Facebook breached the Privacy Act by using her name and portrait in Sponsored Stories without her consent.

The plaintiff alleged that a Sponsored Story was a form of advertisement in which a user’s name and profile picture was republished to their friends on Facebook after he or she “liked” a post or page associated with a business, political party, charity or other entity.

Facebook’s Terms of Use included a forum selection clause requiring all disputes related to Facebook to be filed only in California courts. The plaintiff argued that the forum selection clause was not determinative in this case, as section 4 of the Privacy Act provides that “an action under [that] Act must be heard and determined by the [B.C.] Supreme Court.” As a result, the plaintiff argued that the B.C. Supreme Court had exclusive jurisdiction to hear her claim, to the exclusion of other courts worldwide. The plaintiff argued that the B.C. Supreme Court should decline to enforce the forum selection clause under the circumstances. At first instance, the chambers judge agreed with the plaintiff, finding, in effect, that section 4 of the Privacy Act “overrides” the forum selection clause. She further certified the action as a class proceeding.

Decision

In a unanimous decision on Facebook’s appeal, the Court of Appeal held that the Facebook forum selection clause should be enforced and was not overridden by section 4 of the Privacy Act.

Chief Justice Bauman, speaking for the Court, set out the approach to be followed in considering forum selection clauses in these circumstances: (i) Facebook was required to show that the forum selection clause was valid, clear and enforceable, and that it applies to this proceeding; (ii) if Facebook did so, the burden then shifted to the plaintiff to establish “strong cause” for the court to decline to enforce the clause; and (iii) if the plaintiff did so, Facebook could then submit that the court should nonetheless decline jurisdiction on the basis of forum non conveniens applying the factors under section 11 of the Court Jurisdiction and Proceedings Transfer Act.

The forum selection clause is valid, clear and enforceable, and applies to this proceeding

The Court agreed with the chambers judge that Facebook’s forum selection clause was valid, clear and enforceable, and applied to the plaintiff’s claim. The Court held, however, that the chambers judge erred in her interpretation of section 4 of the Privacy Act. Specifically, the chambers judge failed to recognize that B.C. law applies only in British Columbia. The Court held that absent evidence to the contrary, a California court must be presumed to determine for itself whether it has territorial competence over a given proceeding. A California court would presumably consider B.C. law and have due regard for principles of comity, but the laws of British Columbia cannot bind courts of California unless California law so provides. Section 4 of the Privacy Act can mean only that the B.C. Supreme Court has jurisdiction to the exclusion of other courts in B.C., not other courts worldwide.

The plaintiff failed to show a strong cause not to enforce the forum selection clause

Because the plaintiff failed to put on the record any evidence as to California private international law, the Court could not make a finding that California courts would not have territorial competence. The plaintiff failed to meet her burden, as she relied solely on the chambers judge’s erroneous interpretation of section 4 of the Privacy Act to argue that California courts lacked territorial competence.

The Court of Appeal concluded that Facebook’s forum selection clause should be enforced and thus the Court stayed the underlying action. As a result of its disposition of this threshold jurisdictional issue, the Court did not find it necessary to consider the issues of forum non conveniens or certification.

Significance

This decision will be of interest to companies based in Canada and elsewhere that conduct business in British Columbia and that rely on forum selection clauses in their terms of use or other agreements entered into with their users or customers. In its decision, the Court recognized that British Columbia does not have exclusive territorial jurisdiction over claims arising from the Privacy Act, and in doing so acknowledged the commercial certainty that forum selection clauses can provide. Moreover, the Court enforced the operation of a forum selection clause in a social media context, and thereby underscored that online terms of use will be given effect in respect of internet commerce in Canada.