Israeli Judge Approves $400 Million Class Action Against Facebook for Violating Privacy

Clause in Facebook's terms of use requiring all suits to be heard in California is invalid, court rules.

Facebook CEO Mark Zuckerberg poses for a photograph in Panama City, April 2015.
Reuters

An Israeli court has approved a class-action suit against Facebook for violating users’ privacy, ruling that a clause in Facebook’s terms of use requiring all suits to be heard in California courts is invalid.

The ruling is expected to spark other, similar suits by Israelis.

The $400-million suit, filed in the Central District Court by Ohad Ben Hamo, argued that Facebook violates users’ privacy by using their private posts to determine which advertisements they should see, without obtaining their knowing consent to this policy. The suit also accused Facebook of violating Israeli law by not registering its database in the national database registry.

Facebook argued that the suit should be thrown out because, among other reasons, its terms of use – which all regular users must sign – explicitly require all suits against it to be heard by one of two specified California courts. Moreover, it said, its relationship with users is governed by California law, which would also preclude Israeli courts from hearing such suits.

But Judge Esther Stemmer, whose ruling was first reported by the journal Seventh Eye, rejected these arguments, despite acknowledging that legal precedent does award jurisdictional priority to the courts stipulated in the users’ agreement.

“Perhaps the time has come to examine the issue from a different angle, from the customer’s standpoint, especially when he’s the customer of huge international corporations that deal with customers all over the world,” Stammer explained.

An owner’s right to have legal proceedings take place on his own territory “may lose some of its weight” when his product is distributed not just to a few users, but “to most of the country’s residents,” Stemmer continued. “It’s not clear that Facebook’s right to litigate in one single place in the world, as stipulated in the uniform contracts it had users’ sign, overrides the right of all the users to readily obtain legal remedy in their own countries.

“It seems anyone who disseminates his wares must be ready to be sued in any country where he does a significant amount of business,” she wrote. “That’s especially true when there’s such a large gap between Facebook’s size in Israel, and apparently also its net worth, and each of its users, or even all of them together. The burden imposed on each of them by litigating abroad, or according to California law, is a significant one that’s liable to prevent litigation in many cases.”

Stemmer charged Facebook 10,000 shekels ($2,600) in court costs and gave it 90 days to respond to the suit.