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JURISDICTION - Determination of - Exclusion of - By contract

Friday, June 23, 2017 @ 2:58 PM  

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Appeal by Douez from a judgment of the British Columbia Court of Appeal. Douez was a resident of British Columbia and a member of, one of the world’s leading social networks. The respondent, Facebook Inc. (Facebook), was an American corporation headquartered in California which operated and generated most of its revenues from advertising. Douez claimed that Facebook infringed her privacy rights by using her name and profile without her consent in one of its “Sponsored Stories”, a product it had developed to advertise companies and products to other members on the site and externally. In her action, Douez alleged that Facebook contravened s. 3(2) of the British Columbia Privacy Act (PA) by using her name and likeness without her consent. Douez also sought certification of her action as a class proceeding under the British Columbia Class Proceedings Act. The proposed class included all British Columbia residents who had their name or picture used in Sponsored Stories. The estimated size of the class was 1.8 million people. Facebook sought to have the action stayed on the basis of the forum selection clause contained in its terms of use, which every user was required to click to accept upon registering as a member of the site. This clause indicated that any disputes were to be resolved in California according to California law. The chambers judge refused to stay the action, concluding that s. 4 of the PA, which provided that actions under the PA must be heard in the Supreme Court of British Columbia, overrode the forum selection clause, and that the PA provided strong reasons not to enforce it. The Court of Appeal reversed that decision, concluding instead that the clause was enforceable and that Douez had failed to show strong cause not to enforce it. On appeal, the respondent did not dispute that British Columbia courts had territorial jurisdiction. The main issue was whether Douez’s action should be stayed on the basis of the forum selection clause contained in Facebook’s terms of use. The parties also disagreed on whether the analysis of forum selection clauses should be subsumed under s. 11 of the Court Jurisdiction and Proceedings Transfer Act (CJPTA), or whether they were distinct concepts.

HELD: Appeal allowed. Section 11 of the CJPTA was never intended to codify the test for forum selection clauses. The analysis of forum selection clauses thus remained separate, despite the enactment of the CJPTA. In the absence of legislation to the contrary, the two-step common law test adopted by the Court in the Pompey decision provided the appropriate analytical framework to resolve this case. At the first step, the party seeking a stay based on a forum selection clause was required to establish that the clause was valid, clear and enforceable and that it applied to the cause of action before the court. At the second step, the plaintiff was required to show strong reasons why the court should not enforce the forum selection clause and stay the action (“strong cause”). Although the strong cause factors had been interpreted and applied restrictively in the commercial context, the consumer context could provide strong reasons not to enforce forum selection clauses. It was therefore appropriate to modify the Pompey strong cause factors in the consumer context. Specifically, when considering whether it was reasonable and just to enforce an otherwise binding forum selection clause in a consumer contract, courts were to take account of all the circumstances of the particular case, including public policy considerations relating to the gross inequality of bargaining power between the parties and the nature of the rights at stake. The burden remained on the party wishing to avoid the clause to establish strong cause. In the current case, the chambers judge incorrectly concluded that s. 4 of the PA overrode the forum selection clause at issue. The provision lacked the requisite clear and specific language to indicate a legislative intent to override forum selection clauses. With respect to the first step of the Pompey test, Facebook’s forum selection clause was enforceable, as its language was sufficiently clear and the Electronic Transactions Act permitted offer and acceptance to occur in an electronic form through “clicking” online. However, Douez had established strong reasons for the Court not to enforce the clause. The grossly uneven bargaining power between the parties and the importance of adjudicating quasi-constitutional privacy rights in the province were reasons of public policy that were compelling, and when considered together, were decisive in this case. In addition, the interests of justice, and the comparative convenience and expense of litigating in California, all supported a finding of strong cause. Accordingly, the chambers judge’s order dismissing Facebook’s application to have the British Columbia Supreme Court decline jurisdiction was restored.

Douez v. Facebook, Inc., [2017] S.C.J. No. 33, Supreme Court of Canada, B. McLachlin C.J. and R.S Abella, M.J. Moldaver, A. Karakatsanis, R. Wagner, C. Gascon and S. Côté JJ., June 23, 2017. Digest No. TLD-June192017013SCC