Canadian Court Certifies Facebook Class Action Over 'Sponsored Stories'

This post was written by Mark S. Melodia and Frederick Lah.

The British Columbia Supreme Court recently certified a class action against Facebook in connection with its Sponsored Stories program.  Under that program, advertisers paid Facebook for Sponsored Stories, which would in turn generate ads featuring a user’s name and profile picture based on which products and companies the user “liked.”  We previously analyzed a California privacy class action brought over the program.  Since the publication of our previous article, the California court granted final approval to a $20 million settlement that required Facebook to make small payments to class members.  That settlement is currently being challenged in the Ninth Circuit Court of Appeals by a public interest group. 

In the Canadian case, one of the main issues was whether Facebook users have the protection of BC’s Privacy Act, or instead, whether Facebook’s online Terms of Use overrode these protections.  Facebook’s Terms of Use contained a forum selection clause that bound users to adjudicate disputes in California.  Interestingly, despite the Court finding a “prima facie basis” for the “validity, clarity and enforceability” of the forum selection clause in the Terms of Use, it still rejected the clause.  Instead, the Court pointed to section 4 of B.C.’s Privacy Act, which states that an action under the Privacy Act “must be heard and determined by the Supreme Court.”  Per the Court, claims brought under the Privacy Act could not be brought in California, and held that “the Forum Selection Clause must give way to the Privacy Act.” 

After holding that it had jurisdiction, the Court then certified the class, defining it as all B.C. residents who are or have been Facebook members at any time between January 2011 and May 2014, and whose name or picture was used as part of the Sponsored Stories.  The Court rejected Facebook’s argument that the class definition was overly broad and that it had several problems, including that the class definition: (i) has no temporal limitations; (ii) does not address the fact that many users use false names or unidentifiable portraits; (iii) does not address the fact that Sponsored Stories were used for non-commercial entities as well as for businesses; (iv) does not  address the necessary element of lack of consent; and (v) includes people who do not have a plausible claim, as well as people will not be able to self-identify whether they are in the class.  Per the Court, “[h]ere, the tort [ ] of the Privacy Act seems tailor-made for class proceedings, where the alleged wrongful conduct was systemic and on a mass scale, and where proof of individual loss is not necessary or sought. Without the assistance of the [ ] class action procedure, the plaintiff and proposed class members’ claims based on [ ] the Privacy Act would be unlikely to have access to justice. Furthermore, the sheer number of individual claims, given the reach of Facebook, would overwhelm the courts unless a class proceeding was available.”

It is becoming increasingly clear that the risk of privacy class actions in Canada is growing.  This case shows us that even if a Canadian court acknowledges the enforceability of a website’s online terms and conditions, the court’s interest in protecting the privacy of its own citizens and upholding its own law will control.  While various news outlets have reported that Facebook plans to appeal the ruling, there’s no denying the fact that Facebook is now in the thick of the fight in the Canadian judicial system, whether it “likes” it or not.
 

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