Canada: It's Not Just A "Like": Court Certifies Facebook Class Action

Last Updated: June 17 2014

Article by Joan M. Young and Natalie Cuthill, Student-at-Law

Background

In a recent ruling1 from the British Columbia Supreme Court, a class action was certified involving a claim by disgruntled Facebook users who allegedly had their images reproduced in Facebook advertising without their consent.

In January 2011, Facebook began making advertising revenue from a product called Sponsored Stories. Facebook took the names and images of Facebook users and featured them in advertisements sent to the users' contacts -allegedly without the knowledge or consent of the person featured in the ad.

The representative Plaintiff claimed that Facebook acted contrary to section 3(2) of BC's Privacy Act which provides that it is an actionable tort for a person to use the name or portrait of another person without their consent for advertising or promotional purposes. In considering whether to grant the class certification, the Court was first required to consider whether the British Columbia Supreme Court should assume jurisdiction over the Plaintiff's claim in spite of a jurisdictional clause in the Facebook user agreement which held that any claims must be made in California.

Jurisdiction

Facebook's main argument was that the Terms of Use that users agree to when signing up for Facebook contain a Forum Selection Clause that binds users to adjudicate disputes in the courts of California. The Plaintiff argued that the Privacy Act supersedes this Forum Selection Clause as it confers exclusive jurisdiction on the BC court for privacy breaches of the kind alleged.

The Court held that the two- step test from Preymann v. Ayus Technology Corp., 2012 BCCA 30 applied, and made the determination that the court should accept jurisdiction. The Court accepted that the Plaintiff had a triable argument that the Forum Selection Clause did not apply to the Privacy Act cause of action, and the Plaintiff demonstrated a strong case for not enforcing the Forum Selection Clause on the basis that the Privacy Act confers exclusive jurisdiction to the BC court. The Court was convinced by the Plaintiff's assertion that if the present claim was stayed in BC, the Plaintiff would have no other forum to bring the Privacy Act claim and be denied a right of action.

Certification

In next considering whether to certify the claim, the Court reiterated the low threshold that the Plaintiff must meet; namely, there is "some basis in fact" that each requirement of certification, other than the requirement of pleading a cause of action, has been met.

Cause of Action

The Court found a valid cause of action based on the allegation that Facebook used the Plaintiff's name or portrait and other class action members' names or portraits in their Sponsored Stories for the purposes of advertising without their consent.

Identifiable Class

The Court found that membership could be objectively determined if the persons who were featured in the Sponsored Stories otherwise fit into the definition of the class because Facebook could identify who was featured in the Sponsored Stories.

Common Issues

The requirement that the class proceeding involve issues common to members of the class was also found to be met in this case. The Court held that the following issues were common to the class:

  1. express and implied consent derived from Facebook users' online action;
  2. whether there was the misappropriation of identity from featuring class members' names or portraits in connection with Sponsored Stories;
  3. whether all or only some Sponsored Stories were for the purpose of advertising or promotion within the meaning of s. 3(2) of the Privacy Act;
  4. whether or not the Privacy Act applies despite Facebook's choice of law clause;
  5. whether or not class members are entitled to damages without individual proof;
  6. whether damages can be determined on an aggregate basis, and in what amount;
  7. the appropriateness of punitive damages; and
  8. whether or not Facebook is liable to pay interest pursuant to the Court Order Interest Act, RSBC 1998, c 79, and in what amount.

Facebook unsuccessfully argued that it obtained the express or implied consent of users to feature them in Sponsored Stories through the Terms of Use accepted by every Facebook user, and other online conduct such as user selection of privacy settings. Facebook's arguments regarding express and implied user consent, the fact that consent is an essential element of the statutory tort found in section 3(2) of the Privacy Act, and that the issue of individual consent will be the primary issue in the trial of the Plaintiff's claim, were not sufficient grounds to reject the certification motion.

Preferable Procedure and Representative Plaintiff

The Court considered that the three goals of the class action regime (judicial economy, access to justice, and behaviour modification) would be best served by a class proceeding, and the Plaintiff would fairly and adequately represent the class.

Conclusion

Ultimately, the Court rejected Facebook's application to have the Court decline jurisdiction, and accepted the Plaintiff's application that the proceeding should be certified as a class proceeding.

The Court highlighted the importance of privacy- the protection of which is consistent with Canadian values as expressed by the Canadian Charter of Rights and Freedoms - and emphasized the significant interest that BC residents have in policing privacy violations by multi- national internet or social media service providers. The Court emphasized the implications for loss of privacy are greater than ever with the creation and growth of the internet.

The variety and number of privacy based class claims continues to accelerate. Despite the subjective nature of consent present in any privacy analysis and the necessity of a series of follow up individual issues which would militate against class proceedings being the preferable procedure, this has not yet been a significant hurdle to certification. Similarly, the enforceability of terms of use, including forum selection clauses, will be a concern for those companies offering internet based services who rely on such terms to govern their and their customers conduct. Greater guidance on these two issues will need to come from appellate courts in the years to come.

Footnote

1. Douez v. Facebook, Inc., 2014 BCSC 953.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2014

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