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This far and no further

Facebook ruling shows courts are putting a high price on privacy
|Written By Paul W. Taylor
This far and no further

What is one instance of spam worth? What about 4,366,386 spam messages? This is the question that Facebook sought to have answered when it commenced an action against Adam Guerbuez and his company. The answer — $873,277,200 (U.S. — slightly over a billion dollars Canadian at the time of issue). As Guerbuez is a Montreal resident, Facebook applied to a Quebec court to have the California Northern District Court judgment in Facebook Inc. v. Guerbuez enforced. Justice Lucie Fournier of the Quebec Superior Court enforced the judgment Sept. 28.

Guerbuez is an excellent illustration of the substantial danger in not contesting foreign litigation. While the Quebec judgment indicates, as translated from the French, “Guerbuez did not explain why he did not contest the action in California,” it is likely that this was due to the cost of defending the claim in the U.S. court system. While legal costs put civil litigation out of the hands of many, this case had serious consequences for Guerbuez.

Interestingly, Guerbuez maintains he has never admitted to sending the 4,366,386 spam messages. However, as he did not contest the application for default judgment leading to this order, this is of little consequence. Since Guerbuez gave up his right to a trial on the merits of his case, his only option was to argue that the judgment could be enforced in Quebec.

The main issue in the Quebec case was whether or not the California order was “contrary to public order as understood in international relations,” which, under the Civil Code, would make it unenforceable. Guerbuez sought to rely on a previous Quebec case, Cortas Canning and Refrigerating Co. c. Suidan Bros. Inc/Suidan Frères Inc., that did not enforce a Texas judgment. The judgment with respect to the enforcement hearing indicated that the Texan order was “disproportionate as to what would be allowed in similar circumstances by Canadian courts and is therefore contrary to public order as understood in international relations.”

Fournier found the comment paraphrased above was obiter dictum and, in any case, the California judgment was not out of line with the penalties one would face in a Canadian context. Before the summer recess, bill C-28, the proposed fighting Internet and wireless spam act, which would allow statutory damages of up to $200 per instance, passed first reading.

In media commentary after the Quebec order was made, Guerbuez’s lawyer indicated the fine does not reflect the damages suffered by Facebook. Indeed, this appears to be correct as in the judgment Fournier indicates “the sole reference to the damages suffered by Facebook is the following: ‘Defendant’s conduct has caused a loss to Facebook during a one-year period aggregating at least $5,000.’” That is a far cry from a billion dollars.

However, in a time when increasing value is placed on individual’s privacy, that is the nature of statutory damages. The 4,366,386 messages Guerbuez sent infringed upon the privacy of users of the site and made it appear as though one’s friends sent these messages. While common sense is helpful (none of my actual Facebook friends have sent me messages offering to provide me low-cost medication to deal with erectile dysfunction), deleting the message and moving on does not take away the feeling, and the fact, that one’s privacy has been violated.

This, it seems, is what lies at the heart of this case. Guerbuez filed for bankruptcy a few months before the Canadian decision was rendered and Facebook will be lucky if it sees a penny on the dollar from this judgment, so the case is likely about more than Facebook’s immediate pecuniary interests.

Internet users now spend more time on Facebook than any other web site. This makes providing a positive user experience, including stopping hackers from spamming its users, key to retaining the customer loyalty of its users (and the ad revenues that come with that loyalty). To echo the words of my favourite Starfleet captain in Star Trek: First Contact, Facebook appears to be saying, “The line must be drawn here. This far and no further.”

Fournier appears to agree: “[I]t was after the repeated and intentional actions of Guerbuez that the judgment was rendered. It was not an arbitrary award.” This judgment is a line in the sand that one hopes will serve as a deterrent to would-be spammers against infringing on the privacy of Internet users for their commercial purposes.

 As Parliament moves closer to passing similar legislation, this case will certainly serve as a starting point for the actions that are brought under it.

There appear, then, to be two main lessons to be drawn from this case: while foreign litigation can be expensive, default judgments can be more expensive; and courts are willing to place a value on privacy. And it’s high.

As time goes on, a third point could arise from this case as well. Guerbuez appears to be of the view that filing for bankruptcy will protect him from most of the negative consequences of this order (aside from being barred from using Facebook). In Internet posts and media articles, he often gloats that Facebook made him famous (he’s also been seen living the high life in Las Vegas).

In order to ensure the line drawn by Facebook withstands the likes of individuals such as Guerbuez, one assumes that further measures will be taken to pursue him. Time will tell, but the chances are looking pretty good — according to a quote in The Globe and Mail from Facebook’s chief security officer, “This case isn’t done.”

Paul W. Taylor is a lawyer at Borden Ladner Gervais LLP and was called to the bar of Ontario in 2008. He focuses his practice in the area of corporate-commercial law, including privacy law. Please note all translations in this article are his own and are therefore by no means perfect or to be relied upon. Any views expressed in this article are his own and should not be construed as those of BLG or as legal advice.