Facebook Contracts Out of BC Privacy Laws
British Columbia’s highest court has blocked a class action lawsuit brought against Facebook Inc. from proceeding because its Terms of Use forbid users from resolving any claim, action or other dispute outside Santa Clara County, California. Even though Facebook users in B.C. expect B.C.’s privacy laws to protect them, the Court has held that the Terms of Use allow Facebook to contract out of the province’s privacy laws. This decision should give peace of mind to companies whose terms of use determine where legal disputes against them can be heard; and should serve as a warning to anyone who clicks “I Accept” before reading the fine print.
The Case
The class action was brought on behalf of Facebook users in B.C. whose names or pictures were used in Facebook’s advertising product called “Sponsored Stories”. These advertisements would notify contacts on a user’s friend list when the user would “like” a post associated with a business, political party, charity or some other entity advertising through Facebook’s Sponsored Stories. Facebook users weren’t notified when these advertisements were displayed on their friends’ newsfeeds, nor would they be asked for consent.
The party suing Facebook was relying on B.C. privacy laws that prohibited a company from using the name or picture of a person in advertising without first obtaining their consent. The laws stated that the case should be held in B.C., but Facebook’s Terms of Use said it such a dispute must be resolved in California. At the heart of the case was the issue of whether online terms of use could override the protections put in place by domestic privacy laws.
The Ruling: Online terms and conditions can override domestic legal protections.
The B.C. Court of Appeal has sided with Facebook, saying the terms each user accepted were “valid, clear and enforceable”. The Court held that the user suing Facebook did not demonstrate a “strong cause” for the Court to supersede Facebook’s terms.
Implications for companies:
The Court upheld the concept of freedom of contract and the ability for two parties to enter into an agreement that “contracts out” of certain statutory protections. This is a big opportunity for companies engaged in commercial litigation to manage their risk profiles when offering services online to users worldwide. One of the arguments that the B.C. Court of Appeal rejected was that the B.C. Privacy Act was intended to trump valid contracts. Consequentially, the terms of a company’s contract with its consumers are not necessarily subordinate to the law. So long as the terms are “valid, clear and enforceable”, and the claimant fails to show “strong cause” for the court not to enforce them, the contract can stand supreme.
Implications for consumers:
Be careful with what terms you accept when scrolling past the fine print! You may be unwittingly accepting terms that limit the protections you have from local laws. Keep in mind that the implications of this ruling are not limited just to users of Facebook or other social media platforms. Using the services of any company makes you subject to their terms of use, regardless of where you are. More resources on “How To Sign A Contract” can be found here.
Chris Dittrich is current studying law at the University of Ottawa. We had the pleasure of having Chris join our office as a student intern this summer and wish him the best in his continued studies.
