Appellate Cases 2017 – Thematic Review

With 2017 behind us, we identify several trends in appellate jurisprudence that will be relevant to in-house counsel, including those impacting privacy rights, class proceedings and cases that touch our daily use of technology.

We all do it. Sign up for any online services—Spotify, Snapchat, Twitter, you name it—and there’s a box to check agreeing to terms and conditions. Do we take the time to read them before checking the box and moving on? More importantly, do those terms and conditions, many of which involve choice of law and forum selection clauses, bind consumers? The Supreme Court of Canada suggests they may not.

Contract Interpretation: Consumer agreements and standard form contracts up in the air

In Douez v. Facebook,¹ the Court refused to enforce foreign forum selection and choice of law clauses in an online consumer agreement, otherwise known as a contract of adhesion. Instead, the court certified a class proceeding involving the alleged breach of provincial privacy legislation and allowed the action to proceed in British Columbia.

The case raises doubt about the enforceability of forum selection clauses in consumer agreements, particularly those in the online “click-wrap” contracts used by most businesses to sell goods or to provide services on the internet. By inference, there is now some doubt about the enforceability of other standard form contract clauses that limit remedies available to consumers, particularly provisions relating to indemnity, disclaimer and limitation of liability.

At the very least, Douez suggests a re-examination of the enforceability of forum selection and choice of law clauses in consumer agreements, particularly those that are concluded online. Those provisions may no longer protect commercial enterprises from multi-jurisdictional litigation the way we once thought.

We have been told to think that email communication is about as private as the message on the back of a postcard—but what about text messaging?

The approach to consumer agreements stands in contrast to the attitude toward agreements negotiated freely between sophisticated parties, including releases that purport to settle litigation. One such example is the Ontario Court of Appeal’s decision in Biancaniello v. DMCT.²

Biancaniello involved the scope of a mutual release intended to settle ongoing litigation relating to the payment of fees. The Court of Appeal held that the mutual release barred later litigation arising from the subject-matter related to the release. The court found that even though the parties could not have known about the cause of action when they executed the release—the fees in dispute were related to the work that was subsequently found to be negligent—the language and the context of the release precluded additional litigation, no matter how unanticipated.

Privacy Rights: It’s a brave new online world

For years, we have been told to think that email communication is about as private as the message on the back of a postcard: it isn’t. But what about text messaging? In addition to affirming that privacy is a quasi-constitutional right in allowing the class action to proceed in Douez, the Supreme Court of Canada also weighed in on whether any privacy rights exist in text messages in R. v. Marakah and R. v. Jones.³

The courts have continued to take a broad approach to the reach of Canadian law in 2017.

In this pair of criminal cases, the Court said that individuals can reasonably expect their text messages to remain private even after the messages have been sent to and received by another person or stored by a telecommunications provider. This expectation of privacy may exist despite a lack of control over the personal information without a contractual obligation on the part of the telecommunications provider to keep the information confidential.

The cases suggest that employers should make sure they have policies in place to ensure there is a mutual understanding about the scope of privacy expectations on the part of employees.

Jurisdiction of Canadian Courts over Foreign Claimants and Law: It’s a global village

Appellate courts continue to take an expansive approach to jurisdiction over disputes involving foreign claims or entities. Whether it was the imposition of a global injunction to enforce intellectual property rights in Google Inc. v Equustek Solutions Inc.,⁴ the rejection of forum selection and choice of law clauses in Douez v. Facebook, or foreign plaintiffs seeking remedies in Canada,⁵ the courts have continued to take a broad approach to the reach of Canadian law in 2017.

In Google, the Supreme Court of Canada allowed an injunction against a non-party on the same grounds as a party, and did so in the context of Google’s global operations. The Court recognized the world-wide reach of technology and the internet, acknowledging that an injunction limited to Canada could not prevent harm because customers were located all over the world. As a result, Google was required to de-index from all Google sites around the world. The court held that the need to prevent irreparable harm to the owner of intellectual property rights “far outweighed” any damage to freedom of expression.

In Douez, the Supreme Court of Canada certified a class proceeding alleging Facebook’s breach of provincial privacy legislation, despite the existence of a forum selection and choice of law clause in favour of California.

The British Columbia Court of Appeal in Garcia v. Tahoe Resources Inc.⁶ allowed Guatemalan plaintiffs to pursue claims against a Canadian parent company of a foreign subsidiary for actions taken against security personnel at a Guatemalan mine. In Ontario, the Court of Appeal certified Airia Brands v. Air Canada,⁷ an action involving foreign claimants alleging price-fixing with respect to freight services to and from Canada involving foreign carriers. The Court of Appeal applied the real and substantial connection test to foreign class members just as it would to Canadian class members.

Class Actions: Get on with it… but persistence can pay off

As cases like Douez and Airia Brands referred to above suggest, appellate courts continued to signal their willingness to certify class actions in all areas. However, courts have also been willing to determine the merits of those class proceedings in summary judgment proceedings. The long-running case of Keatley Surveying v. Teranet is a prime example.⁸

In 2007, Keatley Surveying Ltd. filed a class action on behalf of all land surveyors in Ontario who registered plans of survey in the provincial land registry offices. The complaint alleged that Teranet Inc., which runs the province’s electronic registry system, breached copyright. Originally, certification was refused. On appeal, the Divisional Court allowed the plaintiffs to reconceptualise their claim and the common issues, and certified the action on that basis.⁹ The Court of Appeal concurred.¹⁰ Both parties then sought summary judgment. On summary judgment, the motion judge considered—and the parties agreed—that the case turned on a single common issue. That issue was decided in favour of the defendants and upheld on appeal.¹¹

Although the action has been best-known for the court’s willingness to allow plaintiffs to re-shape their claims on appeal, the Ontario Court of Appeal’s decision in 2017 illustrates the importance of pursuing class proceedings to merits-based assessments.

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¹ See 2017 SCC 33.

²  See 2017 ONCA 386.

³ See 2017 SCC 59 and 2017 SCC 60.

⁴ See 2017 SCC 34.

⁵ See Garcia v. Tahoe Resources Inc., 2017 BCCA 39 (leave to appeal to SCC sought) and Airia Brands v. Air Canada, 2017 ONCA 792 (leave to appeal to SCC sought).

⁶ See 2017 BCCA 39.

⁷ See 2017 ONCA 792.

⁸ See 2017 ONCA 748.

⁹ See 2014 ONSC 1677.

¹⁰ See 2015 ONCA 248.

¹¹ See 2016 ONSC 1717.