Executive Summary: Key Legal and Evidentiary Issues

• Jurisdiction proved decisive, as the Federal Court of Appeal held that the Federal Court lacked statutory authority over what was, in essence, a private contractual dispute.
• Enforceability of the forum selection clauses turned on the two-part test from Douez v. Facebook, Inc., which the Federal Court was found not to have properly applied.
• Whether the appellant qualified as a "consumer" under Meta's Terms of Use was a threshold question the lower court left unresolved on the requirements of clarity, validity, and enforceability.
• Three separate contractual documents — the Terms of Use, the Ad Terms, and the Commercial Terms — engaged two forum selection clauses, raising a question about incorporation by reference where a hyperlink was absent.
• Internet-based contracts of adhesion attracted the accessibility principles from Dell Computer Corp. v. Union des consommateurs, which the lower court did not consider.
• Costs were not awarded, and the appeal was dismissed on jurisdictional grounds rather than on the Federal Court's forum selection reasoning.

Facts of the case

Tatiana Gorenstein owns a luxury goods resale and consignment business that uses an Instagram account for sales and promotion, and Meta Platforms, Inc. is the corporate owner of Instagram (para 1). She created the account in November 2016 and soon began purchasing advertisements from Meta. On May 11, 2024, Meta deactivated the account based on the alleged sale or promotion of counterfeit goods; ten days later it reinstated the account and acknowledged that the deactivation had been made in error. On May 29, 2024, Meta again deactivated the account on the same basis, and reactivated it on October 2, 2024 (para 2). Gorenstein then commenced an action in the Federal Court seeking damages for economic losses. Meta moved to stay that action based on the forum selection clauses in the contractual instruments governing the creation and use of an Instagram account, and the Federal Court (Azmudeh J.) granted a permanent stay under rule 208 of the Federal Courts Rules, SOR/98-106 (Gorenstein v. Meta Platforms, Inc., 2025 FC 410). Gorenstein appealed from that decision (para 3).

The contractual clauses at issue

Three documents, engaging two forum selection clauses, were before the Court. Section 7.4 of the Terms of Use, headed "How We Will Handle Disputes," distinguishes consumers from other users: a consumer may resolve a claim in a competent court in their home country under local law, while in all other cases claims must be resolved exclusively in the U.S. District Court for the Northern District of California or a state court in San Mateo County, governed by California law (para 8). The purchase of advertisements is governed by a second document, the Ad Terms, whose paragraph 17 provides that disputes arising out of the Ad Terms are subject to the dispute resolution clause in a third document, the Commercial Terms (para 9). The forum selection clause in the Commercial Terms requires anyone residing outside the United States, or whose business is located outside it, to resolve any Commercial Claim exclusively in those same California courts under California law (para 10). Significantly, paragraph 14 of the Ad Terms contains a hyperlink to the Commercial Terms, but paragraph 17 — the provision that purports to incorporate the forum selection clause — contains no hyperlink, and paragraph 14 itself addresses a distinct issue unrelated to that clause (para 11).

The court's reasoning and analysis

After the appeal was argued, the Court requested submissions on whether, under the Federal Courts Act, R.S.C. 1985, c. F-7, the Federal Court had jurisdiction to adjudicate the issues in the statement of claim. Gorenstein conceded that the matter fell outside the Federal Court's jurisdiction, and Meta agreed (para 4). Rennie J.A. reached the same conclusion, holding that the Federal Court has no statutory jurisdiction over what is essentially a private contractual dispute bearing no link to any recognized source of Federal Court jurisdiction, and that the appeal fell to be dismissed on that basis (para 5, citing ITO-Int'l Terminal Operators v. Miida Electronics). The Court stressed, however, that this disposition should not be read as an endorsement of the Federal Court's reasons (para 6).

Turning to those reasons, the Court set out the two-part test from Douez v. Facebook, Inc., 2017 SCC 33: the party seeking a stay must establish that the clause is valid, clear, enforceable, and applicable to the cause of action, after which the onus shifts to the plaintiff to show strong reasons why it should not be enforced (para 7). Although the Federal Court correctly stated this test, it never made the findings that either clause applied to the action or that either satisfied the clarity, validity, and enforceability requirements (para 13). Its analysis of the Terms of Use focused only on whether Gorenstein was a "consumer" and did not address her argument that the clause was unconscionable, a point engaging the "strong cause" inquiry at the second stage of Douez (para 14). Concluding that she was not a consumer did not answer whether the clause met the Douez standard, a gap reinforced by conditional language in the reasons (paras 15–16). It was also unclear whether the judge was considering the Commercial Terms clause or only the Terms of Use clause, a distinction that mattered for the second-stage policy analysis (para 17). Meta's argument on appeal assumed a finding that Gorenstein had agreed to the Ad Terms, yet whether the Federal Court actually made that finding remained an open question (para 18). Finally, because internet-based contracts of adhesion attract the principles in Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34 — under which electronic access to a clause should be no more difficult than access to its paper equivalent — the Federal Court was required to consider those pertinent criteria but did not (paras 19–20).

Ruling and outcome

The Federal Court of Appeal dismissed the appeal, but on the jurisdictional ground rather than on the Federal Court's forum selection analysis, which it expressly declined to endorse (para 21). Rennie J.A. wrote the reasons, with Monaghan and Walker JJ.A. concurring. The dismissal left the result in favour of the respondent, Meta Platforms, Inc., in the sense that the stay of the action stands, yet no monetary amount was ordered, granted, or awarded to any party — the Court made no order as to costs.