In Douez v. Facebook Inc., the Supreme Court of British Columbia recently certified a class proceeding against Facebook Inc. in relation to alleged breaches of B.C.’s Privacy Act involving unauthorized commercial use of users’ names and likenesses. In doing so, the court exercised its jurisdiction over the claim despite the fact that Facebook’s standard terms of use contain a forum selection clause requiring Facebook users to adjudicate disputes in California. This case exposes the limits of a company’s ability to control the method of adjudication of disputes in connection with services it provides over the Internet and across different jurisdictions. It should also act as a cautionary tale to companies that they should be mindful of the laws of the places where their customers are using their services despite the particular terms of the contract under which these services are provided.

In Douez, the plaintiff sought to certify the class proceeding on behalf of all Facebook users whose name or portrait was used by Facebook for advertising through a product called “Sponsored Stories.” Sponsored Stories were advertisements bearing the name and likeness of a Facebook user along with the logo or other information of the entity that purchased the advertisement. The Sponsored Stories were sent to users’ contacts without the knowledge of the user whose likeness was used. The plaintiff alleges that Facebook did not seek or obtain consent from Facebook users to use their names or pictures in the Sponsored Stories. Such consent is required by section 3(2) of the Privacy Act, which makes it a tort, actionable without proof of damage, for a person to use the name or portrait of another for advertising of other such commercial purposes without consent.

Facebook brought an application for an order that the court decline jurisdiction over this claim and stay the action. Its primary argument in support of this application was that Facebook’s standard terms of use contained a forum selection clause whereby the user agreed to resolve any claim, action or other dispute in relation to these terms, or to Facebook, exclusively in the state or federal court located in Santa Clara County, California. At issue was whether this clause was enforceable given that section 4 of the Privacy Act mandates that actions under the same must be heard and determined by the B.C. Supreme Court. The court found that the potential implications associated with the loss of privacy are greater than ever as a result of the creation and growth of the Internet. Further, the court found that by conferring exclusive jurisdiction of such claims to the B.C. Supreme Court, the legislature intended to override any forum selection clauses to the contrary and that this is a strong policy reason against enforcing such clauses.

The court ultimately refused Facebook’s application to have it decline jurisdiction, noting that the strongest factor was that the claim is brought by a B.C. resident, is based on a B.C. statutory cause of action unique to B.C., and for which only the B.C. Supreme Court has jurisdiction.

Douez reveals that forum selection clauses may not provide protection for companies seeking to guard against actions being brought in foreign jurisdictions where their products or services are used. As a result, it is important for companies to understand the local laws in the jurisdictions of the end user of their goods or services, and to ensure that they are complying with applicable laws, privacy or otherwise.