Douez v. Facebook, Inc.

Douez v. Facebook, Inc.
Collection
Supreme Court Judgments
Date
2017-06-23
Neutral citation
2017 SCC 33
Report
[2017] 1 SCR 751
Case number
36616
Judges
McLachlin, Beverley; Abella, Rosalie Silberman; Moldaver, Michael J.; Karakatsanis, Andromache; Wagner, Richard; Gascon, Clément; Côté, Suzanne
On appeal from
British Columbia
Notes
SCC Case Information: 36616
Decision Content
SUPREME COURT OF CANADA
Citation: Douez v. Facebook, Inc., 2017 SCC 33, [2017] 1 S.C.R. 751
Appeal heard: November 4, 2016
Judgment rendered: June 23, 2017
Docket: 36616
Between:
Deborah Louise Douez
Appellant
and
Facebook, Inc.
Respondent
- and -
Canadian Civil Liberties Association, Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic, Information Technology Association of Canada and Interactive Advertising Bureau of Canada
Interveners
Coram: McLachlin C.J. and Abella, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.
Joint Reasons for Judgment:
(paras. 1 to 77)
Karakatsanis, Wagner and Gascon JJ.
Reasons Concurring in the Result:
(paras. 78 to 118)
Abella J.
Joint Dissenting Reasons:
(paras. 119 to 177)
McLachlin C.J. and Côté J. (Moldaver J. concurring)
Douez v. Facebook, Inc., 2017 SCC 33, [2017] 1 S.C.R. 751
Deborah Louise Douez Appellant
v.
Facebook, Inc. Respondent
and
Canadian Civil Liberties Association,
Samuelson‑Glushko Canadian Internet Policy and Public Interest Clinic,
Information Technology Association of Canada and
Interactive Advertising Bureau of Canada Interveners
Indexed as: Douez v. Facebook, Inc.
2017 SCC 33
File No.: 36616.
2016: November 4; 2017: June 23.
Present: McLachlin C.J. and Abella, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.
on appeal from the court of appeal for british columbia
Private international law — Courts — Jurisdiction — Choice of forum — Forum selection clauses — Consumer contract of adhesion — Company with head office in California operating online social network — Company’s terms of use containing forum selection clause in favour of California courts — Resident of British Columbia and member of company’s online social network bringing action against company in British Columbia relying on statutory tort pursuant to British Columbia’s Privacy Act — Whether action should be stayed on basis of forum selection clause contained in terms of use — Common law test for forum selection clauses applied in consumer context — Whether analysis of forum selection clauses should be subsumed under forum non conveniens test adopted in s. 11 of the Court Jurisdiction and Proceedings Transfer Act — Privacy Act, R.S.B.C. 1996, c. 373, s. 4 — Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28, s. 11.
Privacy — Courts — Jurisdiction — British Columbia’s Privacy Act providing that despite anything contained in another Act, actions under Privacy Act must be heard and determined by Supreme Court of that province — Statute silent on contractual provisions — Whether Privacy Act overrides forum selection clauses — Privacy Act, R.S.B.C. 1996, c. 373, s. 4.
Facebook, an American corporation headquartered in California, operates one of the world’s leading social networks and generates most of its revenues from advertising. D is a resident of British Columbia and has been a member of Facebook since 2007. In 2011, Facebook created a new advertising product called “Sponsored Stories”, which used the name and picture of Facebook members to advertise companies and products to other members. D brought an action in British Columbia against Facebook alleging that it used her name and likeness without consent for the purposes of advertising, in contravention to s. 3(2) of British Columbia’s Privacy Act. D also seeks certification of her action as a class proceeding under the Class Proceedings Act. The proposed class includes all British Columbia residents who had their name or picture used in Sponsored Stories. The estimated size of the class is 1.8 million people.
Under s. 4 of the Privacy Act, actions under the Act must be heard in the British Columbia Supreme Court. However, as part of the registration process, all potential users of Facebook must agree to its terms of use which include a forum selection and choice of law clause requiring that disputes be resolved in California according to California law.
Facebook brought a preliminary motion to stay the action on the basis of this forum selection clause. The chambers judge declined to enforce the clause and certified the class action. The British Columbia Court of Appeal reversed the stay decision of the chambers judge on the basis that Facebook’s forum selection clause was enforceable and that D failed to show strong cause not to enforce it. This rendered the certification issue moot and the court declined to address it.
Held (McLachlin C.J., Moldaver and Côté JJ. dissenting): The appeal should be allowed. The forum selection clause is unenforceable. The chambers judge’s order dismissing Facebook’s application to have the Supreme Court of British Columbia decline jurisdiction is restored.
Per Karakatsanis, Wagner and Gascon JJ.: In the absence of legislation to the contrary, the common law test for forum selection clauses established in Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450, continues to apply and provides the analytical framework for this case. The forum non conveniens test adopted in the Court Jurisdiction and Proceedings Transfer Act (“CJPTA”) was not intended to replace the common law test for forum selection clauses. The analysis of forum selection clauses thus remains separate, despite the enactment of the CJPTA.
Forum selection clauses serve a valuable purpose and are commonly used and regularly enforced. However, forum selection clauses divert public adjudication of matters out of the provinces, and court adjudication in each province is a public good. Because forum selection clauses encroach on the public sphere of adjudication, Canadian courts do not simply enforce them like any other clause. Where no legislation overrides the forum selection clause, the two-step approach set out in Pompey applies to determine whether to enforce a forum selection clause and stay an action brought contrary to it. At the first step, the party seeking a stay must establish that the clause is valid, clear and enforceable and that it applies to the cause of action before the court. If this party succeeds, the onus shifts to the plaintiff who must show strong cause why the court should not enforce the forum selection clause and stay the action. At this second step of the test, a court must consider all the circumstances, including the convenience of the parties, fairness between the parties and the interests of justice. Public policy may also be a relevant factor at this step. The strong cause factors have been interpreted and applied restrictively in the commercial context, but commercial and consumer relationships are very different. Irrespective of the formal validity of the contract, the consumer context may provide strong reasons not to enforce forum selection clauses. Thus, the Pompey strong cause factors should be modified in the consumer context to account for the different considerations relevant to this context. When considering whether it is reasonable and just to enforce an otherwise binding forum selection clause in a consumer contract, courts should 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.
As the Court recognized in Pompey, legislative provisions can override forum selection clauses. In the present case, s. 4 of the Privacy Act lacks the clear and specific language that legislatures normally use to override forum selection clauses. While the legislature intended s. 4 of the Privacy Act to confer jurisdiction to the British Columbia Supreme Court to resolve matters brought under the Act, nothing suggests that it was also intended to override forum selection clauses.
With respect to the first step of the Pompey test, the forum selection clause contained in Facebook’s terms of use is enforceable. At the second step of the test, however, D has met her burden of establishing that there is strong cause not to enforce the forum selection clause. A number of different factors, when considered cumulatively, support a finding of strong cause. Most importantly, the claim involves a consumer contract of adhesion between an individual consumer and a large corporation and a statutory cause of action implicating the quasi-constitutional privacy rights of British Columbians. It is clear from the evidence that there was gross inequality of bargaining power between the parties. Individual consumers in this context are faced with little choice but to accept Facebook’s terms of use. Additionally, Canadian courts have a greater interest in adjudicating cases impinging on constitutional and quasi-constitutional rights because these rights play an essential role in a free and democratic society and embody key Canadian values. This matter requires an interpretation of a statutory privacy tort and only a local court’s interpretation of privacy rights under the Privacy Act will provide clarity and certainty about the scope of the rights to others in the province. Overall, these public policy concerns weigh heavily in favour of strong cause.
Two other secondary factors also suggest that the forum selection clause should not be enforced. First, even assuming that a California court could or would apply the Privacy Act, the interests of justice support having the action adjudicated by the British Columbia Supreme Court. The lack of evidence concerning whether a California court would hear D’s claim is not determinative. The British Columbia Supreme Court, as compared to a California one, is better placed to assess the purpose and intent of the legislation and to decide whether public policy or legislative intent prevents parties from opting out of rights created by the Privacy Act through a choice of law clause in favour of a foreign jurisdiction. Second, the expense and inconvenience of requiring British Columbian individuals to litigate in California, compared to the comparative expense and inconvenience to Facebook, further supports a finding of strong cause. The chambers judge found it would be more convenient to have Facebook’s books and records made available for inspection in British Columbia than requiring D to travel to California to advance her claim. There is no reason to disturb this finding.
Per Abella J.: This is an online consumer contract of adhesion. To become a member of Facebook, a consumer must accept all the terms stipulated in the terms of use, including the forum selection clause. No bargaining, no choice, no adjustments. The automatic nature of the commitments made with online contracts intensifies the scrutiny for clauses that have the effect of impairing a consumer’s access to potential remedies.
The operative test in Pompey for determining whether to enforce a forum selection clause engages two distinct inquiries. The first is into whether the clause is enforceable under contractual doctrines like public policy, duress, fraud, unconscionability or grossly uneven bargaining positions. If the clause is enforceable, the onus shifts to the consumer to show “strong cause” why the clause should not be enforced because of factors typically considered under the forum non conveniens doctrine. Keeping the two Pompey inquiries distinct means that before the onus shifts, the focus starts where it should, namely on whether the contract or clause itself is enforceable based on basic contractual principles.
In this case, the forum selection clause is unenforceable under the first step of the Pompey test applying contractual principles.
The burdens of forum selection clauses on consumers and their ability to access the court system range from added costs, logistical impediments and delays, to deterrent psychological effects. 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, public policy concerns outweigh those favouring enforceability of a forum selection clause.
Public policy concerns relating to access to domestic courts are especially significant in this case given that it deals with a fundamental right: privacy. Section 4 of British Columbia’s Privacy Act states that the particular protections in the Act “must be heard and determined by the Supreme Court” despite anything contained in another Act. This is statutory recognition that privacy rights under the Act are entitled to protection in British Columbia by judges of the British Columbia Supreme Court. It would be contrary to public policy to enforce a forum selection clause in a consumer contract that has the effect of depriving a party of access to a statutorily mandated court.
Tied to the public policy concerns is the “grossly uneven bargaining power” of the parties. Facebook is a multi-national corporation which operates in dozens of countries. D is a private citizen who had no input into the terms of the contract and, in reality, no meaningful choice as to whether to accept them given Facebook’s undisputed indispensability to online conversations.
The doctrine of unconscionability also applies in this case to render the forum selection clause unenforceable. Both elements required for the doctrine of unconscionability to apply — inequality of bargaining power and unfairness — are met in this case. The inequality of bargaining power between Facebook and D in an online contract of adhesion gave Facebook the unilateral ability to require that any legal grievances D had could not be vindicated in British Columbia where the contract was made, but only in California where Facebook has its head office. This gives Facebook an unfair and overwhelming procedural — and potentially substantive — benefit.
Per McLachlin C.J. and Moldaver and Côté JJ. (dissenting): When parties agree to a jurisdiction for the resolution of disputes, courts will give effect to that agreement, unless the claimant establishes strong cause for not doing so. In this case, D has not shown strong cause for not enforcing the forum selection clause to which she agreed. Therefore, the action must be tried in California, as the contract requires, and a stay of the underlying claim should be entered.
Section 11 of the CJPTA does not apply to oust forum selection clauses. Pursuant to Pompey, where the parties have agreed in advance to a choice of forum, there is no need to inquire into which of the two forums is the more convenient; the parties have settled the matter by their contract, unless the contractual clause is invalid or inapplicable or should not be applied because the plaintiff has shown strong cause not to do so. A unified test that would apply forum selection clauses as an element of the forum non conveniens test should be rejected. While the CJPTA is a complete codification of the common law related to forum non conveniens, it does not supplant the common law principles underlying the enforcement of forum selection clauses. If the test in Pompey is satisfied and the forum selection clause is inapplicable, the result is a situation where there are two competing possibilities for forum. At this point, the CJPTA which codifies the common law provisions for forum non conveniens applies. In this case, the test in Pompey is not satisfied and therefore s. 11 of the CJPTA does not assist D.
With respect to the first step of the Pompey test, Facebook has discharged the burden of establishing that the forum selection clause is enforceable and applies in the circumstances: it is established that an enforceable contract may be formed by clicking an appropriately designated online icon; the contract on its face is clear and there is no inconsistency between a commitment to strive to apply local laws and an agreement that disputes will be tried in California; and finally, s. 4 of the Privacy Act grants the Supreme Court of British Columbia subject matter jurisdiction over Privacy Act claims to the exclusion of other British Columbia courts but nothing in the language of s. 4 suggests that it can render an otherwise valid contractual term unenforceable.
While the court can refuse to enforce otherwise valid contractual provisions that offend public policy, the party seeking to avoid enforcement of the clause must prove the existence of an overriding public policy that outweighs the very strong public interest in the enforcement of contracts. No such overriding public policy is found on the facts of this case. Forum selection clauses, far from being unconscionable or contrary to public policy, are supported by strong policy considerations. They serve an important role of increasing certainty and predictability in transactions that take place across borders. And, the fact that a contract is in standard form does not affect the validity of such a clause. That is not to say that forum selection clauses will always be given effect by the courts. Burdens of distance or geography may render the application of a forum selection clause unfair in the circumstances. However, those considerations are relevant at the second step of Pompey, not the first. Here, the forum selection clause is valid and applicable and the first step of Pompey test has been met.
As to the second step of the Pompey test, requiring the plaintiff to demonstrate strong cause is essential for upholding certainty, order and predictability in private international law, especially in light of the proliferation of online services provided across borders. In this case, none of the circumstances relied on by D show strong cause why the forum selection clause should not be enforced. She has not shown that the facts in the case and the evidence to be adduced shifts the balance of convenience from the contracted state of California to British Columbia. Further, the British Columbia tort created by the Privacy Act does not require special expertise and the courts of California have not been shown to be disadvantaged in interpreting the Privacy Act as compared with the Supreme Court of British Columbia. Nothing in D’s situation suggests that the class action she wishes to commence could not be conducted in California just as easily as in British Columbia. There is also no suggestion that Facebook does not genuinely wish all litigation with users to take place in California. Finally, D has not shown that application of the forum selection clause would deprive her of a fair trial.
Applying the strong cause test in a nuanced manner or modifying the test to place the burden on the defendant in the context of consumer contracts of adhesion would amount to inappropriately overturning the Court’s decision in Pompey and substituting new and different principles. Nuancing the strong cause test by considering the factor of the consumer’s lack of bargaining power conflates the first step of the test set out in Pompey with the second step, in a way that profoundly alters the law endorsed in Pompey. It is at the first step that inequality of bargaining power is relevant. Inequality of bargaining power may lead to a clause being declared unconscionable – something not argued by D. In this case, Facebook has demonstrated that the forum selection clause is enforceable and D has failed to establish strong cause why the forum selection clause she agreed to should not be enforced.
Cases Cited
By Karakatsanis, Wagner and Gascon JJ.
Applied: Z.I. Pompey Industrie v. ECU‑Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450; referred to: Momentous.ca Corp. v. Canadian American Assn. of Professional Baseball Ltd., 2010 ONCA 722, 103 O.R. (3d) 467, aff’d 2012 SCC 9, [2012] 1 S.C.R. 359; Teck Cominco Metals Ltd. v. Lloyd’s Underwriters, 2009 SCC 11, [2009] 1 S.C.R. 321; Viroforce Systems Inc. v. R & D Capital Inc., 2011 BCCA 260, 336 D.L.R. (4th) 570; Armoyan v. Armoyan, 2013 NSCA 99, 334 N.S.R. (2d) 204; Hudye Farms Inc. v. Canadian Wheat Board, 2011 SKCA 137, 377 Sask. R. 146; Frey v. BCE Inc., 2011 SKCA 136, 377 Sask. R. 156; The Fehmarn, [1958] 1 All E.R. 333; Preymann v. Ayus Technology Corp., 2012 BCCA 30, 32 B.C.L.R. (5th) 391; The “Eleftheria”, [1969] 1 Lloyd’s Rep. 237; Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of), 2001 SCC 90, [2001] 3 S.C.R. 907; Donohue v. Armco Inc., [2001] UKHL 64, [2002] 1 All E.R. 749; Aldo Group Inc. v. Moneris Solutions Corp., 2013 ONCA 725, 118 O.R. (3d) 81; GreCon Dimter inc. v. J.R. Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401; Straus v. Decaire, 2007 ONCA 854; Expedition Helicopters Inc. v. Honeywell Inc., 2010 ONCA 351, 100 O.R. (3d) 241; Stubbs v. ATS Applied Tech Systems Inc., 2010 ONCA 879, 272 O.A.C. 386; Welex A.G. v. Rosa Maritime Limited (The “Epsilon Rosa”), [2003] EWCA Civ 938, [2003] 2 Lloyd’s Rep. 509; The “Bergen” (No. 2), [1997] 2 Lloyd’s Rep. 710; Quinlan v. Safe International Försäkrings AB, [2005] FCA 1362; Incitec Ltd. v. Alkimos Shipping Corp., [2004] FCA 698, 206 A.L.R. 558; Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494; R. v. Salituro, [1991] 3 S.C.R. 654; 80 Wellesley St. East Ltd. v. Fundy Bay Builders Ltd., [1972] 2 O.R. 280; TCR Holding Corp. v. Ontario, 2010 ONCA 233, 69 B.L.R. (4th) 175; Kelly v. Human Rights Commission (P.E.I.), 2008 PESCAD 9, 276 Nfld. & P.E.I.R. 336; Seidel v. TELUS Communications Inc., 2011 SCC 15, [2011] 1 S.C.R. 531; BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12; Lavigne v. Canada (Office of the Commissioner of Official Languages), 2002 SCC 53, [2002] 2 S.C.R. 773; Dagg v. Canada (Minister of Finance), [1997] 2 S.C.R. 403; R. v. Dyment, [1988] 2 S.C.R. 417; Endean v. British Columbia, 2016 SCC 42, [2016] 2 S.C.R. 162; Vita Food Products, Inc. v. Unus Shipping Co., [1939] A.C. 277; Avenue Properties Ltd. v. First City Dev. Corp. Ltd. (1986), 7 B.C.L.R. (2d) 45.
By Abella J.
Applied: Z.I. Pompey Industrie v. ECU‑Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450; referred to: The “Eleftheria”, [1969] 1 Lloyd’s Rep. 237; Alberta (Information and Privacy Commissioner) v. United Food and Commercial Workers, Local 401, 2013 SCC 62, [2013] 3 S.C.R. 733; GreCon Dimter inc. v. J.R. Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401; Zi Corp. v. Steinberg, 2006 ABQB 92, 396 A.R. 157; Gould v. Western Coal Corp., 2012 ONSC 5184, 7 B.L.R. (5th) 19; Ironrod Investments Inc. v. Enquest Energy Services Corp., 2011 ONSC 308; Incorporated Broadcasters Ltd. v. Canwest Global Communications Corp. (2001), 20 B.L.R. (3d) 289, aff’d. (2003), 63 O.R. (3d) 431; Takefman v. Golden Hope Mines Ltd., 2015 QCCS 4947; Nord Resources Corp. v. Nord Pacific Ltd., 2003 NBQB 213, 37 B.L.R. (3d) 115; Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69.
By McLachlin C.J and Côté J. (dissenting)
Z.I. Pompey Industrie v. ECU‑Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450; Preymann v. Ayus Technology Corp., 2012 BCCA 30, 32 B.C.L.R. (5th) 391; Teck Cominco Metals Ltd. v. Lloyd’s Underwriters, 2009 SCC 11, [2009] 1 S.C.R. 321; Viroforce Systems Inc. v. R & D Capital Inc., 2011 BCCA 260, 336 D.L.R. (4th) 570; Frey v. BCE Inc., 2011 SKCA 136, 377 Sask. R. 156; Hudye Farms Inc. v. Canadian Wheat Board, 2011 SKCA 137, 377 Sask. R. 146; Rudder v. Microsoft Corp. (1999), 2 C.P.R. (4th) 474; Berkson v. Gogo LLC, 97 F. Supp.3d 359 (2015); GreCon Dimter inc. v. J.R. Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401; Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69; Donohue v. Armco Inc., [2001] UKHL 64, [2002] 1 All E.R. 749; Atlantic Marine Construction Co. v. U.S. Dist. Court for Western Dist. of Texas, 134 S.Ct. 568 (2013); The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972); Akai Pty Ltd. v. People’s Insurance Co. (1996), 188 C.L.R. 418; Advanced Cardiovascular Systems Inc. v. Universal Specialties Ltd., [1997] 1 N.Z.L.R. 186; Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991); The “Eleftheria”, [1969] 1 Lloyd’s Rep. 237; Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23; Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572; Tolofson v. Jensen, [1994] 3 S.C.R. 1022; Ontario (Attorney General) v. Fraser, 2011 SCC 20, [2011] 2 S.C.R. 3; R. v. Bernard, [1988] 2 S.C.R. 833; R. v. Henry, 2005 SCC 76, [2005] 3 S.C.R. 609.
Statutes and Regulations Cited
Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, s. 3.
Civil Code of Québec, art. 3149.
Class Proceedings Act, R.S.B.C. 1996, c. 50.
Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28, s. 11.
Electronic Transactions Act, S.B.C. 2001, c. 10, s. 15(1).
Marine Liability Act, S.C. 2001, c. 6, s. 46(1) .
Privacy Act, R.S.B.C. 1996, c. 373, ss. 1(1), 3(2), 4.
Regulation (E.U.) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), [2012] O.J. L. 351/1, arts. 18, 19.
Securities Act, R.S.A. 2000, c. S‑4, s. 180(1).
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APPEAL from a judgment of the British Columbia Court of Appeal (Bauman C.J.B.C. and Lowry and Goepel JJ.A.), 2015 BCCA 279, 77 B.C.L.R. (5th) 116, 374 B.C.A.C. 56, 642 W.A.C. 56, 73 C.P.C. (7th) 87, 387 D.L.R. (4th) 360, [2016] 1 W.W.R. 287, [2015] B.C.J. No. 1270 (QL), 2015 CarswellBC 1671 (WL Can.), setting aside a decision of Griffin J., 2014 BCSC 953, 313 C.R.R. (2d) 254, 53 C.P.C. (7th) 302, [2014] B.C.J. No. 1051 (QL), 2014 CarswellBC 1487 (WL Can.). Appeal allowed, McLachlin C.J. and Moldaver and Côté JJ. dissenting.
Ward K. Branch, Q.C., Christopher Rhone and Michael Sobkin, for the appellant.
Mark A. Gelowitz and W. David Rankin, for the respondent.
Cynthia Kuehl and Meredith E. Jones, for the intervener the Canadian Civil Liberties Association.
Paul J. Bates, Marina Pavlovic and Jeremy de Beer, for the intervener the Samuelson‑Glushko Canadian Internet Policy and Public Interest Clinic.
Matthew P. Gottlieb, Paul Michell and Ian C. Matthews, for the intervener the Information Technology Association of Canada.
Derek J. Bell and Jason M. Berall, for the intervener the Interactive Advertising Bureau of Canada.
The following are the reasons delivered by
Karakatsanis, Wagner and Gascon JJ. —
I. Overview
[1] Forum selection clauses purport to oust the jurisdiction of otherwise competent courts in favour of a foreign jurisdiction. To balance contractual freedom with the public good in having local courts adjudicate certain claims, courts have developed a test to determine whether such clauses should be enforced. This test has mostly been applied in commercial contexts, where forum selection clauses are generally enforced to hold sophisticated parties to their bargain, absent exceptional circumstances. This appeal requires the Court to apply this test in a consumer context.
[2] Deborah Douez is a resident of British Columbia and a member of the social network Facebook.com. She claims that Facebook, Inc. infringed her privacy rights and those of more than 1.8 million British Columbians, contrary to the Privacy Act of that province. Facebook is seeking to have the action stayed on the basis of the forum selection clause contained in its terms of use, which every user must click to accept in order to use its social network.
[3] The chambers judge refused to stay the action, concluding that the Privacy Act overrides the clause, and that it provides strong reasons not to enforce it. The Court of Appeal reversed her decision, concluding instead that the clause was enforceable and that Ms. Douez had failed to show strong cause not to enforce it.
[4] Like our colleague Abella J., although for different reasons, we would allow the appeal. In our view, while s. 4 of the Privacy Act does not override forum selection clauses, Ms. Douez has established strong reasons not to enforce the clause at issue here. The grossly uneven bargaining power between the parties and the importance of adjudicating quasi-constitutional privacy rights in the province are reasons of public policy that are compelling, and when considered together, are decisive in this case. In addition, the interests of justice, and the comparative convenience and expense of litigating in California, all support a finding of strong cause in the present case.
II. Background
[5] The respondent, Facebook, Inc., is an American corporation headquartered in California. It operates Facebook.com, one of the world’s leading social networks, and generates most of its revenues from advertising. The appellant, Ms. Douez, is a resident of British Columbia and has been a member of Facebook since 2007.
[6] In 2011, Facebook created a new advertising product called “Sponsored Stories”. This product used the name and picture of Facebook members, allegedly without their knowledge, to advertise companies and products to other members on the site and externally.
[7] Ms. Douez brought an action against Facebook when she noticed that her name and profile picture had been used in Sponsored Stories. She alleges that Facebook used her name and likeness without consent for the purposes of advertising, in contravention to s. 3(2) of the Privacy Act, R.S.B.C. 1996, c. 373:
(2) It is a tort, actionable without proof of damage, for a person to use the name or portrait of another for the purpose of advertising or promoting the sale of, or other trading in, property or services, unless that other, or a person entitled to consent on his or her behalf, consents to the use for that purpose.
Ms. Douez also seeks certification of her action as a class proceeding under the Class Proceedings Act, R.S.B.C. 1996, c. 50. The proposed class includes all British Columbia residents who had their name or picture used in Sponsored Stories. The estimated size of the class is 1.8 million people.
[8] Facebook is free to join and use, but all potential users — including Ms. Douez — must agree to its terms of use as part of the registration process. These terms include a forum selection and choice of law clause requiring that disputes be resolved in California according to California law:
You will resolve any claim, cause of action or dispute (claim) you have with us arising out of or relating to this Statement or Facebook exclusively in a state or federal court located in Santa Clara County. The laws of the State of California will govern this Statement, as well as any claim that might arise between you and us, without regard to conflict of law provisions. You agree to submit to the personal jurisdiction of the courts located in Santa Clara County, California for purpose of litigating all such claims. [A.R., vol. II, p. 138]
[9] Facebook brought a preliminary motion to stay Ms. Douez’s action on the basis of this forum selection clause. Alternatively, it argued that the action should be stayed because British Columbia is forum non conveniens under s. 11 of the Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28 (“CJPTA”). In our Court, however, Facebook focused its submissions exclusively on the forum selection clause and did not argue that British Columbia is forum non conveniens.
III. Decisions Below
A. Supreme Court of British Columbia (Griffin J.), 2014 BCSC 953, 313 C.R.R. (2d) 254
[10] The chambers judge declined to enforce the forum selection clause. Although she found it to be prima facie valid, clear and enforceable, she held that s. 4 of the Privacy Act overrides forum selection clauses and provides a strong public policy not to enforce them. In her view, the British Columbia Supreme Court has exclusive jurisdiction under s. 4 to hear actions under the Act. As a result, she concluded that the plaintiff would be unable to bring her claim elsewhere if the claim was stayed.
[11] While the chambers judge’s findings on s. 4 were sufficient to resolve the motion, she also found that there was strong cause not to enforce the forum selection clause. Enforcing it would, in her view, exclude Facebook from liability because only the British Columbia Supreme Court had jurisdiction over the matter. Ms. Douez did not need to prove California courts would refuse to hear her claim. In addition, she found that the jurisdiction clause and purposes of the Privacy Act provide strong public policy reasons supporting a finding of strong cause.
[12] Lastly, the chambers judge concluded on the basis of the factors in s. 11 of the CJPTA that the courts of California would not be more appropriate than the courts of British Columbia to hear the action. She found that it would be more convenient to hear the matter in British Columbia than in California. Thus, the chambers judge refused Facebook’s request to stay the proceeding.
B. Court of Appeal for British Columbia (Bauman C.J. and Lowry and Goepel JJ.A.), 2015 BCCA 279, 77 B.C.L.R. (5th) 116
[13] The Court of Appeal reversed the decision of the chambers judge and ordered that the action be stayed on the basis of Facebook’s forum selection clause. It confirmed that the analysis of forum selection clauses is distinct from the analysis of the appropriate forum under s. 11 of the CJPTA.
[14] The Court of Appeal concluded that the chambers judge erred in her interpretation of s. 4 of the Privacy Act. In its view, the chambers judge failed to give effect to the principle of territoriality, under which provincial legislation cannot regulate civil rights in another jurisdiction. Section 4 concerns subject-matter competence, not territorial competence, and therefore it only confers jurisdiction to the Supreme Court of British Columbia to the exclusion of other courts in British Columbia. Had the legislature wanted to override forum selection clauses, it would have done so explicitly.
[15] The Court of Appeal held that the forum selection clause was enforceable, and that Ms. Douez had failed to show strong cause. In finding strong cause, the chambers judge’s analysis was tainted by her erroneous interpretation of s. 4 of the Privacy Act. The fact that a stay would extinguish a claim might provide strong cause, but Ms. Douez failed to provide evidence establishing that this would be the case here. Since the clause should be enforced, the Court of Appeal did not consider s. 11 of the CJPTA.
IV. Issues
[16] Facebook does not dispute that British Columbia courts have territorial jurisdiction. The main issue is whether Ms. Douez’s action should be stayed on the basis of the forum selection clause contained in its terms of use. The parties also disagree on whether the analysis of forum selection clauses should be subsumed under s. 11 of the CJPTA, or whether they are distinct concepts.
V. Analysis
[17] As we shall explain, the forum non conveniens test adopted in the CJPTA was not intended to replace the common law test for forum selection clauses. In our view, this case should be resolved under the strong cause analysis established by this Court in Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450.
A. The Interaction Between Forum Selection Clauses and the CJPTA
[18] At common law, forum selection clauses and the forum non conveniens doctrine command different analyses: “Each class of case has its own onus, test and rationale” (Momentous.ca Corp. v. Canadian American Assn. of Professional Baseball Ltd., 2010 ONCA 722, 103 O.R. (3d) 467, at para. 37, aff’d 2012 SCC 9, [2012] 1 S.C.R. 359). Our Court has confirmed that “the presence of a forum selection clause” is “sufficiently important to warrant a different test”, and that “a unified approach to forum non conveniens, where a choice of jurisdiction clause constitutes but one factor to be considered” may not be preferable (Pompey, at para. 21).
[19] Ms. Douez argues that the CJPTA provides a complete framework to determine the court’s jurisdiction, and that forum selection clauses should be considered as another factor within the forum non conveniens analysis under s. 11.
[20] In our view, the courts below rightly rejected Ms. Douez’s proposed approach. Section 11 of the CJPTA “constitutes a complete codification of the common law test for forum non conveniens [that] admits of no exceptions” (Teck Cominco Metals Ltd. v. Lloyd’s Underwriters, 2009 SCC 11, [2009] 1 S.C.R. 321, at para. 22 (emphasis added)). It was never intended to codify the test for forum selection clauses. Not only does s. 11 make no mention of contractual s