Enforceability of Facebook's Forum Selection Clause Case Name and Courts Douez v Facebook, Inc (Supreme Court of Canada, 2017) 12

Facts Deborah Douez, the plaintiff, is a resident of British Columbia and a Facebook.com member. She claims that Facebook, Inc ("Facebook") used her name and profile picture, as well as that of other 1.8 million members, to advertise products on the website and externally in contravention of British Columbia's Privacy Act.13 She brought a class action lawsuit; however, Facebook sought to have the action stayed on the basis of the forum- selection clause contained in its terms of use, which every user must click on to accept in order to become a member of the social network. The forum-selection clause indicated that any disputes arising from the user must be filed in California.

Issue Should the court enforce the forum-selection clause in Facebook's terms of use agreement with the plaintiff and stay the action? Decision No; although the forum-selection clause was clear and reflected a binding contract between the parties, the plaintiff provided strong public policy and other reasons not to enforce it. Analysis/Application To decide whether to enforce Facebook's forum-selection clause, the Supreme Court applied the facts to a two-step test and asked the following questions: 1. Does the forum-selection clause constitute a valid, clear, enforceable, and applicable contract between the parties? 2. Can the plaintiff provide strong reasons to support the conclusion that it would not be reasonable or just in the circumstances to enforce the forum-selection clause?

All but one justice confirmed that there was an enforceable contract between the plaintiff and Facebook, and had this been a normal, commercial agreement between the parties of equal bargaining power, the Supreme Court would have granted the stay of the proceedings. However, on the second step of the analysis, the majority of the court's judges agreed with the plaintiff's differentiation between a regular commercial contract and a consumer contract and how this distinction affected enforceability. The court recognized that Facebook's terms of use constituted a contract of adhesion, which is a "take it or leave it" agreement, where the terms are set unilaterally by a more powerful party and the individual consumer has no say in the terms. While the principle of freedom to contract will normally be respected, there are circumstance when the principle will be restrained to protect either a weaker party or "the social, economic, or political policies of the enacting state in the collective interest:'14 Additionally, the plaintiff's claim aims to enforce British Columbians' quasi-constitutional privacy rights, and BC courts are better suited to adj udicate these claims since they are based on BC legislation. Also, Facebook failed to provide evidence that a California court would actually hear the claim. The Supreme Court also noted that it would be more onerous for the plaintiff to travel to Ca lifornia than for Facebook to make its records available for inspection in the British Columbia court. The cumulative effect of the public policy reasons, the interests of justice, and the comparative convenience and expense of litigating in the alternate forum weighed in favour of not enforcing the forum-selection clause.

Consultant Challenges Enforceability of Arbitration Policy:

John Smith (Smith), a seasoned Saskatchewan consultant specializing in canola and wheat agronomy, entered into an international consulting-services agreement (Agreement) with a company in Vietnam called Agro. Smith moved to Hanoi and consulted for roughly six months for the company. Smith was asked to incorporate the use of hazardous and internationally banned chemicals as part of his plan for wheat and canola production in Vietnam. He declined, and Agro terminated the agreement and refused to pay him for his services rendered up to that date. Smith filed an action in Saskatchewan, alleging that Agro had violated the terms of the Agreement. Agro moved to compel arbitration of his claim pursuant to an arbitration policy incorporated into the Agreement that excluded litigation as a dispute-resolution mechanism and mandated Vietnam as the proper location for arbitration. Smith opposed this, arguing that the arbitration policy was unfair. The arbitration policy stipulated that 1. Each party proposes a list of three arbitrators. 2. The parties alternate removing one name from the other party's list of arbitrators until only one name remains. 3. The defendant/ respondent in the dispute makes the first strike from the respective lists. 4. The sole remaining arbitrator decides the claims. The process of selection invariably results in the nomination of one of the three candidates on the defendant/respondent's list, making the entire process skewed in favour of the party that did not start the claim. Additionally, the arbitration policy stipulated that Agro may change its terms anytime and without notice and that all cost resulting from any arbitration would be borne by the plaintiff/ applicant. Critical Analysis Questions 1. Based on the Supreme Court case Douez v Facebook,30 what arguments can Smith make to persuade the court not to enforce the arbitration policy? 2. How do the facts of this hypothetical case differ from Douez v Facebook? What would persuade the Canadian courts to side with Agro to enforce the arbitration policy? 3. How can one-sided, sole-method dispute-resolution provisions hurt a company's business? 4. How would a business draft a more ethical policy that balances the company's needs with interests of other stakeholders including customers, employees, and contractors?