Facebook Inc. must defend against a class action lawsuit that it violated user privacy in B.C. court, not California, despite laying the groundwork for handling litigation in its home state in its user agreement.

That’s effectively what the Supreme Court of Canada ruled on Friday in a 4-3 decision favouring Deborah Douez in her legal fight against the social network. Doeuz originally took action against Facebook regarding a breach of the B.C. Privacy Act, saying that Facebook’s use of her name and likeness in a “Sponsored Story” ad was done without her consent.

Whether there was a violation of privacy or not hasn’t been considered by a court yet. Facebook’s Terms of Use includes a forum selection clause (also called a “choice of law” clause) that requires all disputes against it be filed in California courts only. Douez and her lawyers argued against that, saying the Privacy Act requires that the B.C. Supreme Court must hear court cases related to the provincial Privacy Act.

In July 2015, the B.C. Court of Appeal stayed Douez’s proposed class action against Facebook, ruling the case should be heard in California. The ruling was appealed by Douez to the Supreme Court of Canada, which heard oral submissions on the case Nov. 4, 2016.

In ruling against Facebook, the court determined that Facebook’s forum selection clause wasn’t sufficient in this case. While that contract item is typical in a contract outlining commercial relationships, a contract between a consumer and a large corporation is different, the court found. Other contributing factors to the decision are the quasi-constitutional nature of privacy, and the power dynamics of a large corporation offering a consumer an opt-in or opt-out option to their service, it said.

The court also considered social media’s importance for participating in a democracy and the inability of consumers to negotiate the agreement.

The court case involved multiple interveners, each making arguments about how the ruling could impact online businesses in Canada. David Messer, vice-president of policy, Information Technology Association of Canada (ITAC), for example, explains why ITAC intervened on behalf of Facebook.

“They say the choice of law clauses are good for commercial cases, but with consumers, it’s more on a case by case basis,” Messer says. “If it’s an individual that’s dealing with a large corporation, that could affect this as well. But what’s unclear is how big does it have to be before the choice of law clause doesn’t matter?”

If user agreements signed online aren’t seen as valid, then there is uncertainty for any business relying on similar user agreements, he says. The small and mid-sized business membership is interested in being protected by “forum selection” clauses inside their user agreements.

“When you’re operating out of the Canadian economy, you’re looking to scale and grow globally,” he says. “You don’t want to be held responsible for any challenge in any court around the world.”

Intervening on behalf of Douez was the Ottawa-based Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic (CIPPIC). Clinic director David Fewer says the court’s decision is more about Facebook’s position of power over individual as a large corporation with a widely used social network, not about how user agreements for all businesses are to be interpreted.

“Everyone knows there’s a tremendous imbalance of power. So the usual contract law doesn’t apply,” he says. “You have no choice to accept the terms of use and if those terms require you to give up access to Canadian courts, there’s no choice.”

While a California court hearing the case would be considering Canadian law, that’s not acceptable when it comes to matters of privacy, Fewer says. The U.S. has a fundamentally different perspective on privacy than Canadian law, which upholds it as a human right.

“We now have comfort that if we create made-in-Canada solutions to protect privacy rights, that’s going to be heard by Canadian courts and that’s going to be huge,” he says.

If a court were to hear a case in which a much smaller business had a similar user agreement, that would be considered in context to its situation, Fewer adds.

“If anyone is interpreting this case to say that forum selection clauses are invalid, that’s not correct at all. It’s saying that Facebook’s forum selection clauses are invalid,” he says.

Though Douez can now bring forward her class action lawsuit against Facebook, it hadn’t been registered at time of publication.



Related Download
The Senior Leader's Guidebook to Emergency Management and Business Continuity Sponsor: BlackBerry
The Senior Leader’s Guidebook to Emergency Management and Business Continuity

Register Now