California Dreamin’: British Columbia Court of Appeal Enforces Facebook Forum Selection Clause, Requires Provincial Privacy Class Action to be Brought in California Court
July 7, 2015
By Catherine Lovrics and Tamara Céline Winegust
In Douez v Facebook, Inc., the plaintiff, Douez, sought to certify a class action seeking damages under section 3(2) of the BC Privacy Act for the unauthorized use of Facebook users’ names and images as part of Facebook’s “Sponsored Stories” feature. The feature resulted in advertisements featuring a user’s name and image appearing on the user’s friends’ newsfeed when the user pressed the “like” button for a business.
Section 3(2) of the BC Privacy Act prohibits “use [of] the name or portrait of another for the purpose of advertising or promoting the sale of, or other trading in, property or services, unless that other, or a person entitled to consent on his or her behalf, consents to the use for that purpose”. Violation of this provision gives rise to a private cause of action in tort, and is actionable without proof of damage.
The lower court agreed that the forum selection clause was valid, clear and enforceable, but sided with the Plaintiff, concluding that section 4 of the Privacy Act “overrode” the clause and gave the BC courts exclusive jurisdiction over Privacy Act claims to the exclusion of other courts worldwide. In the alternative, the court also held that Ms. Douez made a strong case not to enforce the clause, since—due to BC courts having exclusive jurisdiction over the claim under section 4—enforcing the clause would essentially derive the Plaintiff of her claim and this would be contrary to the legislative intent behind the Privacy Act.
The BCCA disagreed, finding section 4 did not “override” the forum selection clause and grant the BC courts exclusive territorial jurisdiction over such claims, and that the Plaintiff failed to show a strong reason not to enforce the clause.
First, respecting whether the forum selection clause could be enforced, the BCCA applied the test from ZI Pompey Industrie v ECU-Line NV, 2003 SCC 27, and answered yes. Under the Pompey test, the defendant must first show the forum selection clause is valid, clear, and enforceable, at which point, the burden switches to the plaintiff who must show a strong cause for the court to decline to enforce the clause. If such strong cause is shown, a defendant may nevertheless ask the court to decline the case on the basis of forum non conveniens in accordance with the factors set out at section 11 of the BC Court Jurisdiction and Proceedings Transfer Act. In this case, the parties agreed, and the lower court accepted, that the clause was prima facie valid, clear, and enforceable.
The BCCA overturned the lower court’s finding that section 4 gave the BC courts exclusive territorial jurisdiction over Privacy Act claims, overriding an otherwise enforceable forum selection clause. The Court based its decision on the principle of “territoriality”—i.e. that laws only apply within the territory where the legislators making such laws have competence (in this case, BC). On one hand, the Court recognized that technology has required a more nuanced approach to territoriality that focuses more on the relationship between the parties than their physical location. Nevertheless, the BCCA held that, as a general rule, provisions in BC statutes do not apply extraterritorially, and thus section 4 could not operate to deprive non-BC courts of territorial jurisdiction to hear claims against Facebook. In any event, section 4 was a rule regarding subject matter, rather than territorial, competence. The Court also suggested that section 4 could not operate to render void a contractual forum selection clause since it only applied to “anything contained in another Act”, rather than anything contained in a contract.
Second, respecting whether the forum selection clause should be enforced, the BCCA held that the Plaintiff failed to meet its burden and show any reason why the proceeding could not be heard in the California courts, since, in light of section 4 not applying outside BC, a California court would not be precluded from hearing the Plaintiff’s claims. Further, the Plaintiff did not submit any evidence or argument that it would be otherwise precluded from making such claims before a California court.
Consequently, the BCCA allowed Facebook’s appeal and granted the stay.
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