|The famous case brought by Maximilian Schrems against Facebook Ireland in Austria, aimed to become an international and large data protection class action, led on 25 January 2018 to a ruling from the CJEU on two main points:
JUDGMENT OF THE COURT (Third Chamber) – 25 January 2018 – C-498/16
Background: Austrian proceedings
Mr Schrems (domiciled in Austria) has been a Facebook user since 2008. He initially only used it for personal purposes. In 2011, he opened a Facebook page to inform internet users about (among other things) his legal proceedings against Facebook Ireland, his lectures, participation in panel debates, and his media appearances and to collect money to fund such actions.
Mr Schrems claims that Facebook Ireland has committed various infringements of European and Austrian data protection provisions. More than 25,000 people worldwide have assigned their claims to him.
The claimant brought the claim in the Regional Civil Court in Vienna on the basis that it would have jurisdiction under Article 16(1) of Regulation No. 44/2001, which states that a “consumer” may bring proceedings against the other party to a contract either in the courts of the member state in which that party is domiciled or “where the consumer is domiciled”.
Mr Schrems’ claim also concerns the rights of seven other Facebook users (also consumers) residing in Austria, Germany or India who have assigned rights to him.
Facebook Ireland objected to the jurisdiction of the Austrian Court, notably, to hear the assigned claims. The Austrian Supreme Court stayed the proceedings and referred the issue of jurisdiction to the CJEU.
Questions referred for preliminary ruling
Question 1: can a “consumer” lose his or her status of “consumer” after the comparatively long use of a private Facebook account, where he/she’s published books, given lectures, collected donations and was assigned the claims of numerous consumers for the purpose of their enforcement?
Finding: No. The activities of publishing books, lecturing, operating websites, fundraising and being assigned the claims of numerous consumers for the purpose of their enforcement do not entail the loss of a private Facebook account user’s status as a “consumer”.
The CJEU found that the status of a “consumer” should be viewed separately from the knowledge and information which the person concerned may actually possess. The expertise gained or knowledge acquired during the consumer’s use of a service (in the case of Mr. Schrems fundraising/publicising books), where the contract was entered into as a consumer does not have the effect of depriving that person of their status as a consumer.
The CJEU also considered that Article 169(1) Treaty on the Functioning of the EU (TFEU) seeks to promote the rights of consumers to organise themselves in order to safeguard their interests (including data protection). It would run contrary to that provision if a consumer were to lose his or her status as a consumer by virtue of publishing books, fundraising and being assigned claims – all of which Mr. Schrems would argue were for the purpose of defending consumers’ rights.
The CJEU nevertheless leaves it to the Austrian courts to determine whether Mr Schrems can still be considered a user of Facebook for non-professional use. The Court underlines that for social networks, the evolution over time of one person’s activity should be taken into account to assess whether a contract which was initially concluded mostly for personal purposes has not subsequently become predominantly professional.
Question 2: does the right of the consumer under Article 16 of Regulation 44/2001 to choose to bring a claim either in the consumer’s home court or the defendant’s home court extend to claims which have been assigned to him or her where those other individuals are domiciled (i) in the same jurisdiction; (ii) jurisdictions of other member states; and (iii) jurisdictions of non-member states?
Finding: No. In answering this question the CJEU recalls, as usual, the general structure of Regulation 44/2001 which, as a general rule, confers jurisdiction on the member state’s courts where the defendant is domiciled. As such, all other rules which derogate from that principle should be strictly construed. In consumer disputes, Articles 15 to 17 of the Regulation aim to protect the weaker party and so derogates from both the general rule and the specific rule applicable in contract matters (where jurisdiction is given to the place of performance of the contractual obligations)
Keeping in mind the objective of consumer protection and the need for a strict interpretation of Article 16 of the Regulation, the CJEU highlights that the jurisdiction rule relies upon the existence of a contract between the consumer and the other party. Consequently, a consumer’s right in the second part of Article 16(1) to choose their home court is a personal right which is conferred on the individual. Applicants who are not themselves parties to the consumer contract in question cannot enjoy the benefit of the jurisdiction relating to consumer contracts. As a result, the CJEU found that this personal right could not extend so as to create a forum for assigned claims, i.e. Article 16(1) did not extend to incorporate the claims assigned to Mr. Schrems. The CJEU explains that the exclusion from assigned claims is necessary for the attribution of jurisdiction to be predictable, which is one of the objectives of the Regulation.
This is an important decision for collective actions in the European Union. Even though this ruling was rendered into the first purported data protection class action in Europe, the CJEU’s decision on Question 2 is of relevance to any entity which engages in the provision of services or goods to consumers. The bundling of consumer claims by assignment is not possible in the “consumer jurisdiction” provided for by Regulation 44/2001. Yet, this does not mean that claims cannot be gathered into one court: the defendant’s home court would have jurisdiction over both direct and assigned claims pursuant to the general rule set out in Article 2(1) of Regulation 44/2001. If the CJEU had decided the case the other way then it could have resulted in EU-wide (and potentially global) collective actions being brought in a member state on the basis of the domicile of a single EU-national. The CJEU’s ruling appears to have prevented this from happening (for now). The findings of this decision are of particular interest in the context of the rise of class actions in Europe, in data protection matters, but also more generally in consumer matters.
For the full judgment, please click here.