Illinois Supreme Court Debates Effect of Improper Venue in Administrative Review Cases

Construction E-Note - April 9, 2014

E.K.D., by her next friend Melissa K. DAWES, and C.M.D. v. FACEBOOK. Inc. - Class Certification

Facebook has earned millions through the sale of targeted advertising and is the on line leader in this field. The following case involves a dispute over the use of Pliantiffs allege that Facebook's practice of misappropriating their names and likenesses for commercial endorsements violates their right of privacy under the laws of various states. This case came before the Court on a motion to transfer brought by Defendant Facebook, Inc. ("Facebook"). Plaintiffs E.K.D., by her next friend Melissa K. Dawes, and C.M.D., by his next friend Jennifer E. Deyong have responded to the motion. Facebook earns revenue primarily through the sale of targeted advertising that appears on a users' profile page. Plaintiffs challenge one of Facebook's advertising services in particular, known as "sponsored stories," which Facebook launched on January 25, 2011, and which was enabled for all facebook.com users. A sponsored story is a form of paid advertisement that appears on a facebook.com user's profile page and that generally consists of another friend's name, profile picture, and an assertion that the person "likes" the advertiser. A sponsored story may be generated whenever a facebook.com user utilizes the website's post, like, or check-in features, or uses an application or plays a game that integrates with facebook.com, and the content relates to an advertiser in some way determined by Facebook.  Plaintiffs, who are minors residing in Illinois and users, allege that Facebook's practice of misappropriating their names and likenesses for commercial endorsements violates their right of privacy under the laws of various states. Federal subject matter jurisdiction is proper in this case on the basis of 28 U.S.C. § 133.

The proposed class is defined as follows:

All facebook users, who during a time that facebook records identified them to be under the age of 18, had their name used in connection with a facebook advertisement. (the "Class" or "Class Members").

Alternatively, Plaintiffs seek certification of a class defined as follows:

898*898 All facebook users, who during a time that facebook records identified them to be under the age of 18 and a resident of California, Ohio, Nevada, Illinois, or Indiana and had their name used in connection with a facebook advertisement. (the "Class" or "Class Members").

Facebook has moved for transfer of this case to the United States District Court for the Northern District of California pursuant to a forum-selection clause in Facebook's TOS. The clause advises users of facebook.com:

You will resolve any claim, cause of action or dispute (claim) you have with us arising out of or relating to [these TOS] or Facebook exclusively in a state or federal court located in Santa Clara County[, California]. The laws of the State of California will govern [these TOS], as well as any claim that might arise between you and us, without regard to conflict of law provisions. You agree to submit to the personal jurisdiction of the courts located in Santa Clara County, California for the purpose of litigating all such claims.

The Court then turned to FACEBOOK's Forum selection clause.  Settled law holds that a mandatory forum-selection clause is "prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). With respect to the unreasonableness of a forum-selection clause,

The Supreme Court has construed this exception narrowly: forum selection and choice of law clauses are unreasonable (1) if their incorporation into the contract was the result of fraud, undue influence or overweening bargaining power; (2) if the selected forum is so gravely difficult and inconvenient that the complaining party will for all practical purposes be deprived of its day in court; or (3) if enforcement of the clauses would contravene a strong public policy of the forum in which the suit is brought, declared by statute or judicial decision.  Bonny v. Society of Lloyd's, 3 F.3d 156, 160 (7th Cir.1993) (citations, brackets, and quotation marks omitted). See also Hugel v. Corporation of Lloyd's, 999 F.2d 206, 210-11 (7th Cir.1993). This is true even if the contract was never negotiated and in effect was dictated by one party to the other party. See Carnival Cruise Lines, Inc. v. Shute,499 U.S. 585, 593-95, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991). A forum-selection clause is mandatory where its "language is obligatory" and "clearly manifests an intent to make venue compulsory and exclusive." Paper Express, Ltd. v. Pfankuch Maschinen GmbH, 972 F.2d 753, 756 (7th Cir.1992).  The clause at issue here provides, "You will resolve any claim, cause of action or dispute ... you have with us ... exclusively in a state or federal court located in Santa Clara County[, California]." Doc. 63-1 at 5 § 15(1).  The clause is mandatory. See Muzumdar v. Wellness Int'l Network, Ltd., 438 F.3d 759, 761 (7th Cir. 2006) (a clause providing that "JURISDICTION AND VENUE OVER ANY DISPUTES ARISING OUT OF THIS AGREEMENT SHALL BE PROPER ONLY IN THE FEDERAL OR STATE COURTS IN DALLAS COUNTY, TEXAS" was mandatory). The Court turned then to the matter of the reasonableness. 

Facebook's TOS, including the forum-selection clause at issue, are contained in a so-called "browsewrap agreement."   persons wishing to join facebook.com must attest that they have read Facebook's TOS, which are made available through a hyperlink. Also, Facebook's TOS are hyperlinked on every page accessed by afacebook.com user in underlined, blue text that contrasts with the white background of the hyperlink. Accordingly, the Court concludes that Plaintiffs were reasonably put on notice of Facebook's TOS. See PDC Labs., Inc. v. Hach Co., No. 09-1110, 2009 WL 2605270, at *3 (C.D.Ill. Aug. 25, 2009) (a browsewrap agreement was sufficiently conspicuous to users of a website where a hyperlink to the agreement was included on multiple pages of the website in underlined, blue, contrasting text). Whether or not Plaintiffs actually read Facebook's TOS is irrelevant, of course, to the matter whether Plaitiff's read them or not.  Second, the selected forum does not make it "so gravely difficult and inconvenient that [Plaintiffs] will for all practical purposes be deprived of [their] day in court." Bonny, 3 F.3d at 160.  

Finally, enforcing the forum-selection clause would not contravene any strong public policy of the State of Illinois. In general, the public policy of Illinois is gleaned from its statutes, judicial decisions, constitution, and the practices of its government officials.See American Home Assurance Co. v. Stone, 61 F.3d 1321, 1324-25 (7th Cir.1995)(citing Zeigler v. Illinois Trust & Sav. Bank, 245 Ill. 180, 91 N.E. 1041, 1046 (1910));O'Hara v. Ahlgren, Blumenfeld & Kempster, 127 Ill.2d 333, 130 Ill.Dec. 401, 537 N.E.2d 730, 734 (1989); McClure Eng'g Assocs., Inc. v. Reuben H. Donnelley Corp., 95 Ill.2d 68, 69 Ill.Dec. 183, 447 N.E.2d 400, 402 (1983); Smith v. Board of Educ. of Oswego Cmty. High Sch. Dist., 405 Ill. 143, 89 N.E.2d 893, 896 (1950); Hyatte v. Quinn, 239 Ill. App.3d 893, 180 Ill.Dec. 427, 607 N.E.2d 321, 324 (1993). The enforcement of forum-selection clauses offends no public policy of Illinois.

The United States Court of Appeals for the Seventh Circuit routinely affirms the dismissal of lawsuits under Rule 12(b)(3) of the Federal Rules of Civil Procedure due to forum-selection clauses.

The Supreme Court of the United States has held that a "forum-selection clause, which represents the parties' agreement as to the most proper forum, should receive neither dispositive consideration... nor no consideration ..., but rather the consideration for which Congress provided in [28 U.S.C.] § 1404(a)." Stewart Org., Inc. v. Ricoh Corp.,487 U.S. 22, 31, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988). In the Seventh Circuit, the "consideration for which Congress provided in § 1404(a)" has been held to reflect the view set forth by Justice Kennedy's concurring opinion in Stewart, namely, that "a valid forum-selection clause is given controlling weight in all but the most exceptional cases."Id. at 33, 108 S.Ct. 2239 (Kennedy, J., concurring). See also Heller Fin., Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1290-91 (7th Cir.1989) (quoting M/S Bremen,407 U.S. at 15, 92 S.Ct. 1907) ("[A] forum-selection clause should control unless there is a strong showing that it should be set aside." Northwestern Nat'l Ins. Co. v. Donovan, 916 F.2d 372, 378 (7th Cir.1990) (citations omitted).

Facebook's motion for transfer  was GRANTED. Pursuant to 28 U.S.C. § 1404(a), this action was TRANSFERRED to the United States District Court for the Northern District of California. The following motions pending in this case were be carried with the case for resolution in the transferee court:Facebook's Motion to Dismiss for Failure to State a Claim (Doc. 12); Facebook's Motion for Judicial Notice (Doc. 15); Plaintiffs' Motion to Certify Class (Doc. 51); Plaintiffs' Motion to Intervene (Doc. 90); and Plaintiffs' Motion for Protective Order (Doc. 92). The Clerk of Court is directed to transmit the complete file in this case to the Clerk of the United States District Court for the Northern District of California and to close this Court's file in the case.

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885 F.Supp.2d 894 (2012) E.K.D., by her next friend Melissa K. DAWES, and C.M.D., by his next friend Jennifer E. Deyong, individually and on behalf of all others similarly situated, Plaintiffs, v. FACEBOOK, INC., Defendant. Civil No. 11-461-GPM. United States District Court, S.D. Illinois. March 8, 2012.

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