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
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
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.
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