Canada: Facebook's Terms Of Use Does Not Give California Court Jurisdiction Over The Privacy Rights Of British Columbians

Last Updated: August 18 2017
Article by Karen R. Zimmer

All users of Facebook agree to its Terms of Use as part of the registration process. When doing so, users agree to submit to California courts when litigating any claim arising, and that the laws of California will govern. Hence, when Deborah Douez brought a proposed class action alleging that Facebook used her, and potentially 1.8 million other British Columbians', name and picture without consent in contravention of the British Columbia Privacy Act, Facebook responded with a preliminary motion to stay the action.

Last month, a slight majority of the Supreme Court of Canada in Douez v. Facebook, 2017 SCC 33 ruled that the forum selection clause relied upon by Facebook will not be enforced. The Plaintiff Douez will now be able to continue her breach of privacy claim – which has been certified as a class action – in our B.C. Court. Three reasons for judgment were issued, two of which formed the majority of four Justices. The three dissenting Justices would have ousted British Columbia's jurisdiction over the claim, to allow the California court to decide whether, and if so how, to apply the quasi-constitutional privacy rights set out in the British Columbia Privacy Act.

Each of the three reasons applied the same test as set out in ZI Pompey Industrie v. ECU-Line NV, 2003 SCC 27. Pursuant to this test, the defendant seeking the stay must first establish that the clause is enforceable pursuant to contractual law doctrines, such as public policy, duress, fraud, unconscionability, or gross unequal bargaining power. If the clause is found to be enforceable, the onus shifts to the plaintiff to show "strong cause" as to why it should not be enforced. In exercising discretion under the second part of the test, the court is to consider all of the circumstances, including the convenience of the parties, fairness between the parties, and the interest of justice. Public policy can also be an important consideration.

Three Justices forming part of the majority found that the forum selection clause was enforceable under contractual law doctrines, but that the Plaintiff Douez had met her burden of establishing a strong cause not to enforce it. A key public policy reason cited in support of the strong cause was the gross inequity of bargaining power between Facebook and the individual consumer, particularly where "[h]aving the choice to remain 'offline' may not be a real choice in the internet era." Submissions made on behalf of the intervener Canadian Civil Liberties Association were cited, including submissions about how "access to Facebook and social media platforms, including the online communities they make possible, has become increasingly important for the exercise of free speech, freedom of association and for full participation in democracy." In this context, the difference in bargaining powers between the parties was significant.

The other key public policy reason cited to establish the strong cause was that the rights at issue were the privacy rights of British Columbians which have quasi-constitutional status as per Lavigne v. Canada (Office of the Commissioner of Official Languages), 2002 SCC 53. The grossly uneven bargaining power together with the importance of adjudicating quasi-constitutional rights in the Province weighed "heavily in favour of strong cause."

The interest of justice was also considered. These three Justices found that it was in the interest of justice for our Court to make the determination of whether the choice of laws clause ousted the application of our Privacy Act to a British Columbian while on Facebook.

Madam Justice Abella also formed part of the majority but wrote her own reasons in which she found that the forum selection clause did not make it past the first stage of the test. Her reasons reflect some of the same principles as the majority judgment but did so at the first part of the test rather than the second.

In finding that the clause was unenforceable pursuant to contractual law doctrines, she relied on public policy and unconscionability. Either was sufficient on its own to rule the clause unenforceable. When relying on both grounds, she intertwined the online consumer nature of the contract with the fact that it was quasi-constitutional rights at issue.

In deciding that the clause was unenforceable for public policy reasons, she turned her mind to whether "values favouring enforceability are outweighed by values that society holds to be more important". On this, Abella stated:

"[104] In general then, when online consumer contracts of adhesion contain terms that unduly impede the ability of consumers to vindicate their rights in domestic courts, particularly their quasi-constitutional or constitutional rights, in my view, public policy concerns outweigh those favouring enforceability of a forum selection clause."

She found that the two requirements for establishing that a provision is unenforceable on the grounds of unconscionability were met, namely inequality of bargaining power and unfairness.

The three dissenting Justices, on the other hand, found that the clause was enforceable pursuant to contract law doctrines and that the Plaintiff had failed to establish the requisite strong cause. They looked to principles of private international law to support the enforcement of forum selection clause, citing both certainty and predictability in cross-border transactions. The dissent expressed that there was "no evidence that foregoing Facebook equates with being offline." They were quick to dismiss the notion that the British Columbia tort created by the Privacy Act require special expertise, finding that the "Courts of California have not been shown to be disadvantaged in interpreting the Act as compared with the Supreme Court of British Columbia."

The dissenting position that a foreign court is as suited to determine our quasi-constitutional privacy rights as our own Court is difficult to accept. It is becoming more and more apparent that privacy rights vary significantly on the international landscape. They vary in status around the globe, from having no constitutional status to fully entrenched status, and also in importance, particularly when weighed against other rights such as the right to freedom of expression. A case in point is how astonishing it is to Canadians to see what is happening in the European Union with the developing right to be forgotten jurisprudence.

What will the implications be of this Supreme Court of Canada decision?

There is no doubt that one must now be cautious about relying on the enforceability of forum selection in the online consumer context. The question is, to what extent? Based on the judgment of the four Justices forming the majority, the clause was not enforceable because of two intertwined factors: (1) the unequal bargaining power due to the online consumer, take-it-or leave it, context, and, (2) the forum selection clause would have allowed another court to determine whether to apply, and if so how to apply, a British Columbian's quasi-constitutional privacy right.

Outside of this context, we can nonetheless expect counsel rely on the two majority reasons in attempt to further develop the jurisprudence challenging the meaning of consent when one clicks to agree to a take-it-or leave it contract.

There is also no doubt that when using the personal information of individuals residing in other jurisdictions that one must also be cognisant of the privacy legislation and common law rights granted in that jurisdiction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Karen R. Zimmer
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