Court of Appeal Decision of the Week

Facebook “Likes” BCCA Decision

Case: Douez v. Facebook, Inc., 2015 BCCA 279 

Keywords: class action certification, territorial competence, forum non conveniens, online contracts

Synopsis: Deborah Douez (plaintiff) commenced an action in the B.C. Superior Court alleging that Facebook (defendant) violated users’ privacy by using their names and images in paid advertisements without their consent. The plaintiff alleged this was a breach of the Privacy Act of British Columbia. The trial judge agreed with the plaintiff and granted class action certification on behalf of all B.C. Facebook users featured in the advertisements.

Facebook appealed the decision, arguing B.C. is forum non conveniens (i.e. any disputes must be settled in California, not B.C.). In a unanimous decision written by Chief Justice Bauman of the B.C. Court of Appeal, the appeal was allowed and the proceedings stayed on the grounds that the forum selection clause contained in Facebook’s terms of use should be enforced. Chief Justice Bauman held the plaintiff could always bring the action in California.

Importance: Before the Court of Appeal, Facebook submitted the judge erred in (1) interpreting section 4 of the Privacy Act to override the forum selection clause; (2) holding the plaintiff had shown strong cause to not enforce the forum selection clause; and (3) failing to decide whether California or B.C. law applied to the merits.

Chief Justice Bauman first addressed the friction between legislation and jurisprudence with respect to forum selection clauses. Section 11 of the Court Jurisdiction and Proceedings Transfer Act (CJPTA) provides a list of factors a court must consider when deciding whether to decline to exercise its territorial competence on the ground that it is forum non conveniens. This legislated list of factors must be reconciled with the common law test found in Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27 [Pompey] as to whether a court should decline to exercise its territorial competence because of a forum selection clause. The Pompey test requires the party relying on the forum selection clause to show it is valid, clear and enforceable, and that it applies to the cause of action. If proven, the burden then switches to the other party to show “strong cause” for the court to refuse to enforce the forum selection clause.

The Court of Appeal held it was bound by its previous decisions in Viroforce Systems Inc. v. R&D Capital Inc., 2011 BCCA 260 and Preymann v. Ayus Technology Corporation, 2012 BCCA 30 where it was found when the defendant relies upon a forum selection clause, the Pompey test is a separate, standalone inquiry that is conducted first. The CJPTA analysis may be conducted second, if necessary.

Chief Justice Bauman then turned to the evidentiary issues associated with the appeal. He agreed with Facebook that it was not required to adduce expert evidence indicating the California forum would have territorial competence under its own law. He found the Pompey test does not expressly or impliedly impose an evidentiary burden on the party relying on the forum selection clause. The Pompey test merely requires Facebook to show the clause is valid, clear and enforceable, and that it applies to this proceeding.

Chief Justice Bauman emphasized that forum non conveniens and territorial competence are distinct issues. After a lengthy analysis, he concluded the trial judge erred in her interpretation of section 4 of the Privacy Act in that she failed to give effect to the principle of territoriality. Namely, B.C. law applies only in B.C. and the province’s legislature is powerless to affect the law of other jurisdictions. To the extent B.C. law has any effect outside B.C., it is because other jurisdictions choose, for reasons of comity, to provide in their own law that this shall be the case.

Further, Ms. Douez failed to provide the Court of Appeal with any reason to conclude that this proceeding could not be heard in the courts of Santa Clara, California. There was no evidence in the record as to California private international law. Chief Justice Bauman held the Court of Appeal cannot conduct its own research and take judicial notice. All of the plaintiff’s submissions depended on the judge’s conclusion the courts of Santa Clara would lack territorial competence. Once this conclusion falls away, the plaintiff is left with no arguments capable of convincing the Court of Appeal to decline to enforce the forum selection clause.

In sum, it was found the trial judge’s holding that Ms. Douez had shown strong cause was undermined by the judge’s erroneous interpretation of section 4 of the Privacy Act. Ms. Douez did not make any submissions that did not depend on the same interpretation. As such, the Court of Appeal was left with no choice but to conclude that Ms. Douez did not show strong cause. The forum selection clause should be enforced.

Interestingly, this is the second high-profile case in the last two weeks emanating from the B.C. Court of Appeal (albeit with different judges) dealing with well-known technology companies and the issue of territorial competence (the other being Equustek Solutions Inc. v. Google Inc., 2015 BCCA 265). The Facebook decision should provide some comfort to online businesses that rely on terms of use in their online contracts. However, it also raises the issue of sometimes lengthy and convoluted online contracts superseding Canadian laws and protections. Canadian courts will continue to grapple with these issues as technology continues to break down borders.

Counsel for the Respondent: Craig Jones, Q.C. and Christopher Rhone (Branch MacMaster LLP, Vancouver)

Counsel for the Appellant: Mark Gelowitz and Tristram Mallett (Osler, Hoskin & Harcourt LLP, Toronto & Calgary)

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(Thanks to our summer student Neil Kennedy for his assistance in preparing this summary.)

Posted: Wednesday, June 24, 2015