On May 30, 2014, the Supreme Court of British Columbia rendered a judgment certifying a class action against Facebook Inc. (“Facebook”). In Douez v. Facebook Inc.[1], the plaintiff alleges that Facebook used the names or portraits of Facebook users without their consent in advertisements called Sponsored Stories in breach of section 3(2) of the British Columbia’s Privacy Act [2] which creates a statutory tort. This case, in a pre-certification stage, also dealt with the question of whether a court should decline its jurisdiction in presence of a forum selection clause or pursuant to the forum non conveniens doctrine.

Jurisdiction

Facebook’s application to have the Court decline jurisdiction over the case was rejected. Facebook argued that the forum selection clause contained in the Terms of Use required users to adjudicate disputes in the courts of California (the “Forum Selection Clause”), or that California was the more convenient jurisdiction for this case, based on the forum non conveniens factors in the Court Jurisdiction and Proceedings Transfer Act[3].

The Court ruled that despite the Forum Selection Clause appearing prima facie clear, valid and enforceable, a court may exercise its discretion not to enforce it by declining jurisdiction where a statute confers exclusive jurisdiction to the court and where the plaintiff has met the burden of showing “strong cause” for not enforcing the clause.  The Court found that the Privacy Act does confer exclusive jurisdiction on the Court, that the Legislature intended to override any forum selection clause to the contrary, and that there was a strong public policy reason against enforcing the forum selection clause.

The Court further concluded that British Columbia was the more convenient jurisdiction.

Certification and Issues Going Forward

The Court certified eight common issues.   The Court also recorded two key issues for determination on the merits:

  1. Consent.  The Court held consent would be central at a hearing on the merits. Facebook argued that users must first accept the Terms and Use, and then once registered and using the service, could set the “privacy setting” to limit the extent to which online information is shared with others. Moreover, by completing “online actions” such as clicking on a “like” icon, users would have given their implied consent. However, the plaintiff argued that Facebook did not obtain users’ consent since the Terms of Use did not sufficiently disclose that names or portraits of Facebook’s users could be featured in Sponsored Stories and did not sufficiently disclose how to opt-out of this through “privacy settings.”  This issue remains to be determined.
  2. Conflicts of law.  Facebook argued that the Privacy Act cannot be applied in this case because the choice of law clause contained in the Terms and Use stipulated that the law governing the parties would be California law and that its activities were outside of the jurisdiction of the British Columbia courts. The plaintiff argued that the Terms and Use stipulated that Facebook strives to respect local laws. The Court noted that Facebook’s public Form 10-K annual report contained a statement indicating that Facebook was subject to foreign law concerning policy and that breaches of foreign laws and regulations “could result in claims.”

With respect to the issue of damages, Privacy Act claims may be made without proof of damages and so the Plaintiff was not required to put forward any expert evidence to support a theory that damages could be determined on an aggregate basis.  Rather, damages could be  assessed based on the commercial advantage gained by Facebook as a result of its conduct.

Significance of the Case

This case demonstrates that a forum selection clause binding the parties is not a guarantee that any dispute arising will be managed accordingly and that courts will carefully analyze the nature as well as the legal source of a claim before they decline jurisdiction. This case also highlights that courts consider privacy rights a matter of public policy.  Multi-national internet or social media service providers should be aware that privacy breaches may constitute statutory torts in some jurisdictions, leading to lawsuits independent of the parties’ contract.

Anne-Elisabeth Simard