Forum Selection Clauses and Consumer Contracts in Canada

Every day, billions of people use the online social media platform, Facebook. Facebook requires, as a condition of use, that users “accept” its terms and conditions—which include a forum selection clause nominating California as the exclusive forum for dispute resolution. In Douez v. Facebook, the Supreme Court of Canada considered whether this forum selection clause was enforceable, or whether the plaintiff could proceed with her suit in British Columbia. The Supreme Court of Canada ultimately decided that the forum selection clause was not enforceable. It held that the plaintiff had established “strong cause” for departing from the forum selection clause. The Court premised its decision on two primary considerations: the contract involved a consumer and was one of adhesion, and the claim involved the vindication of privacy rights. The Court’s analysis suffers from several major weaknesses that will undoubtedly cause confusion in this area of law. This Article will examine those weaknesses, and argue that the Supreme Court of Canada actually abandoned the strong cause test that it claimed to be applying. The consequence of the Douez decision is that many forum selection clauses—at least in the consumer context—will be rendered unenforceable. While this may be a salutary development from the perspective of consumer protection, it will undoubtedly have an effect on companies choosing to do business in Canada

Whose Law of Personal Jurisdiction? The Choice of Law Problem in the Recognition of Foreign Judgments

It is black-letter law that in order to recognize and enforce a foreign judgment, the rendering court must have had personal jurisdiction over the defendant. While the principle is clear, it is an open question as to whose law governs the question of personal jurisdiction: that of the rendering court or that of the recognizing court. In other words, is the foreign court’s jurisdiction over the defendant governed by foreign law (the law of F1), domestic law (the law of F2), or some combination thereof? While courts have taken a number of different approaches, it seems that many courts regard foreign law as relevant to the question of whether the foreign court possessed personal jurisdiction over the defendant. In this Article, I argue that U.S. courts should not be looking to foreign law (in whole or in part) to determine whether a foreign court had jurisdiction over the defendant in the original action. I present five arguments in support of this contention: (1) there is no statutory authority pointing to the application of foreign law; (2) U.S. courts are not well-positioned to apply foreign jurisdictional law; (3) re-examining assertions of jurisdiction under foreign law violates international comity; (4) an examination of foreign law is usually unnecessary because jurisdiction is also assessed according to U.S. standards; and (5) U.S. courts do not do a good job applying foreign jurisdictional law. Instead, I argue that courts should apply American law to assess whether a foreign court was jurisdictionally competent. This, in turn, raises the question: What is “American” law? I maintain that courts should apply broad federal standards of jurisdiction, and not state-based ones, to determine whether the rendering court had personal jurisdiction over the defendant. This Article also looks closely at two particular areas of jurisdiction law that are particularly complicated as they relate to the choice of law issue: submission and notice. With respect to submission, U.S. courts seem to be unclear as to whose law applies in assessing whether a defendant in a foreign action submitted to the jurisdiction of the foreign court. In particular, many U.S. courts defer to the foreign court’s interpretations as to whether the acts of the defendant constituted submission. With respect to notice, there is a lack of clarity as to how notice relates to personal jurisdiction in the context of the recognition and enforcement of foreign judgments. Here too, there is confusion as to whose law of notice applies in assessing whether a defendant received adequate notice of the proceeding. Consistent with the argument above, this Article takes the position that U.S. standards, and not foreign ones, should ultimately guide the submission and notice inquiries in the recognition context. Finally, because much of the law in this area is codified in either the 1962 Uniform Foreign Money-Judgments Recognition Act or the 2005 Uniform Foreign-Country Money Judgments Recognition Act, I propose concrete changes to the language of the uniform acts that would address the choice of law problem in the recognition of foreign judgments and would clarify the intersection between notice and personal jurisdiction in the uniform acts

Where Is Home Depot “At Home”?: Daimler v. Bauman and the End of Doing Business Jurisdiction

In January 2014, the U.S. Supreme Court decided Daimler AG v. Bauman. The case was supposed to resolve a very important question that had divided courts for decades: when, for jurisdictional purposes, can the contacts of a subsidiary be imputed to its parent? The Supreme Court dodged this question. Instead, it answered a different, but equally important, question: under what circumstances is a corporation “at home” such that a state has general jurisdiction over it? The Court had introduced the “at home” language to the discourse on general jurisdiction a few years earlier in Goodyear Dunlop Tires Operations, S.A. v. Brown, when it held that a state has general jurisdiction over a corporation if its activities within the state are so continuous and systematic as to render the corporation essentially “at home” there. At the time, courts and commentators were not one-hundred percent clear on the meaning of the “at home” language. After Daimler, they will be. Daimler reinforced the idea that the “at home” basis for general jurisdiction is intended to be exceptional. Ordinarily, a corporation is only “at home”—and therefore subject to general jurisdiction—in, at most, two places: its state of incorporation and its principal place of business. In making this pronouncement, the Supreme Court has done away with a very well established, albeit wholly under-theorized, basis for general jurisdiction: “doing business.” For the better part of a century, courts had assumed general jurisdiction over corporations on the basis that they were doing business in the forum, as evidenced by the corporation’s commercial presence in the state. This basis of jurisdiction was perceived as exorbitant by foreigners and often condemned as promoting forum shopping. Daimler officially sounds the death knell for doing business jurisdiction in the United States. In this Article, I examine the decisions of the majority and the concurrence, highlighting the critical areas of disagreement. I lay out the key implications of Daimler: the end of doing business jurisdiction in the United States, the doctrinal pressure on alternative bases of jurisdiction to fill the void left by Daimler, and the real-world consequences for litigants and courts. I also look at the critical questions that Daimler left unanswered—in particular, the standard for imputation of jurisdictional contacts from a subsidiary to a parent and the propriety of imputation where the underlying basis of jurisdiction is that the subsidiary is incorporated in the state or has its principal place of business there. The implications of the Daimler decision will be felt by both plaintiffs and defendants for years to come. Accordingly, it warrants a careful look

The Scope of Generic Choice of Law Clauses

Non-proceduralists have the perception that questions of jurisdiction or choice of law are just preliminary issues that need to be dealt with before getting to the real dispute, the things that matter. What they do not realize is that these preliminary issues are often, themselves, the real dispute. They are the lever which permits litigation to proceed or which stops a claim dead in its tracks. Thus, these procedural matters — often dismissed as technicalities — have the potential to shape the dispute in significant ways. Take for instance, a staple of commercial and consumer contracting: the ubiquitous choice of law clause. The choice of law clause in a contract usually does not matter. Until, of course, it does. When claims are viable under the law of one jurisdiction and not viable under the chosen law, the choice of law clause matters a great deal. Litigants now have the opportunity to craft a legal argument based on just a handful of words. How a court interprets these words will determine whether the gateway will be opened for litigants to advance their claims or whether they will, literally or figuratively, be sent home. The interpretation of choice of law clauses normally proceeds according to customary principles of contractual interpretation. For the most part, courts are on the same page when it comes to interpreting clauses that do not leave much wiggle-room — e.g., clauses that provide that “all disputes arising from or related to the contract will be governed by [x] law.” Where things get dicey is where parties have agreed to a generic choice of law clause. A generic choice of law clause is one that provides that “the contract” will be “governed by” or “subject to” the chosen law. Here, there is a split of authority on how to interpret such language. Some courts hold that a generic choice of law clause should be interpreted narrowly. That is, the parties’ chosen law should be applied to contractual claims and contractual claims only. By contrast, come courts interpret a generic choice of law clause in the polar opposite way. These courts hold that the parties’ chosen law should apply to any and all disputes between the parties, including, for instance, tort and statutory claims. This Article examines this interpretative debate and sides with those courts that interpret generic choice of law clauses narrowly. It examines in detail the textual arguments in support of such an interpretation and advances arguments in favor of the textual approach that courts have not considered. It also engages with the broad approach on the merits, arguing that the assumptions underpinning such an approach are questionable at best, and flawed at worst. While this is an Article that zooms in to the granular details of the technicalities, it does so based on the reality that these technicalities have profound implications for the litigants and for the broader administration of justice

Is Canada the New Shangri-La of Global Securities Class Actions?

There has been significant academic buzz about Silver v. Imax, an Ontario case certifying a global class of shareholders alleging statutory and common law misrepresentation in connection with a secondary market distribution of shares. Although global class actions on a more limited scale have been certified in Canada prior to Imax, it can now be said that global classes have “officially” arrived in Canada. Many predict that the Imax decision means that Ontario will become the new center for the resolution of global securities disputes. This is particularly so after the United States largely relinquished this role in Morrison v. National Australia Bank. Whether Imax proves to be a meaningful precedent or simply an aberration will largely depend on whether the court dealt appropriately with the conflict of laws issues at the heart of the case. No author has yet addressed the conflict of laws complications posed by the certification of global class actions in Canada; this Article seeks to fill that void. In particular, I use the Imax case as a lens through which to canvass the conflict of laws issues raised by the certification of global classes. I look at the difficult questions of jurisdiction simpliciter, recognition of judgments, choice of law, parallel proceedings, and notice/procedural rights that need to be addressed now that global classes have come to Canada

Amazon’s Dirty Little Secret

You need new earbuds because one of yours just went missing. You log onto Amazon and scroll through the endless array of options. You finally select a pair “Sold by” Amazon and click “Buy Now.” Amazon promises to have the earbuds to you tomorrow. Have you ever wondered how it’s possible for Amazon to pull off this Santa-like feat? It’s because of a little-known practice called commingling. Commingling gets you your earbuds in near record time. But commingling could also result in your getting earbuds that are duds—or, worse yet, that malfunction and cause ear damage. Commingling means that the same goods from different sellers are stored together and then sold interchangeably. The theory is great, so long as these goods are truly interchangeable. All it takes, however, is for some bad actors to co-opt the commingled supply chain and those goods are no longer interchangeable. Some goods are real. Some are fake. Some are junk. Some are dangerous. When you order something on Amazon, you don’t know what you’re going to get. You are told that goods are “Sold by” Amazon, but the actual goods you get may be from a shady third-party seller based in Shenzhen, China. How can Amazon do this and not tell its customers? Good question. In this Article, I argue that Amazon should no longer be permitted to get away with its secret practice of commingling. Telling a buyer that they are getting goods from Seller A and then giving them goods from Seller B is deceptive—plain and simple. The law should not countenance such a practice. At the very least, Amazon should be required to disclose its practice of commingling before a buyer makes a purchase. It’s time for Amazon’s dirty little secret to be exposed and to let consumers decide for themselves whether they want to continue buying from, or on, Amazon

The Scope of Generic Choice of Law Clauses

Non-proceduralists have the perception that questions of jurisdiction or choice of law are just preliminary issues that need to be dealt with before getting to the real dispute, the things that matter. What they do not realize is that these preliminary issues are often, themselves, the real dispute. They are the lever which permits litigation to proceed or which stops a claim dead in its tracks. Thus, these procedural matters — often dismissed as technicalities — have the potential to shape the dispute in significant ways. Take for instance, a staple of commercial and consumer contracting: the ubiquitous choice of law clause. The choice of law clause in a contract usually does not matter. Until, of course, it does. When claims are viable under the law of one jurisdiction and not viable under the chosen law, the choice of law clause matters a great deal. Litigants now have the opportunity to craft a legal argument based on just a handful of words. How a court interprets these words will determine whether the gateway will be opened for litigants to advance their claims or whether they will, literally or figuratively, be sent home. The interpretation of choice of law clauses normally proceeds according to customary principles of contractual interpretation. For the most part, courts are on the same page when it comes to interpreting clauses that do not leave much wiggle-room — e.g., clauses that provide that “all disputes arising from or related to the contract will be governed by [x] law.” Where things get dicey is where parties have agreed to a generic choice of law clause. A generic choice of law clause is one that provides that “the contract” will be “governed by” or “subject to” the chosen law. Here, there is a split of authority on how to interpret such language. Some courts hold that a generic choice of law clause should be interpreted narrowly. That is, the parties’ chosen law should be applied to contractual claims and contractual claims only. By contrast, come courts interpret a generic choice of law clause in the polar opposite way. These courts hold that the parties’ chosen law should apply to any and all disputes between the parties, including, for instance, tort and statutory claims. This Article examines this interpretative debate and sides with those courts that interpret generic choice of law clauses narrowly. It examines in detail the textual arguments in support of such an interpretation and advances arguments in favor of the textual approach that courts have not considered. It also engages with the broad approach on the merits, arguing that the assumptions underpinning such an approach are questionable at best, and flawed at worst. While this is an Article that zooms in to the granular details of the technicalities, it does so based on the reality that these technicalities have profound implications for the litigants and for the broader administration of justice