Australian Competition and Consumer Commission v Facebook, Inc
[2021] FCA 244
•18 March 2021
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Facebook, Inc.
[2021] FCA 244
File number(s): NSD 1339 of 2020 Judgment of: GRIFFITHS J Date of judgment: 18 March 2021 Catchwords: PRACTICE AND PROCEDURE – alleged
contraventions of the Australian Consumer Law – application for interim suppression and non-publication orders under s 37AI of the Federal Court of Australia Act1976 (Cth) – application for service outside of Australia under the Hague Convention pursuant to rr 10.42, 10.43(2) and 10.44 of the Federal Court Rules 2011 (Cth) (2011 FCRs) – application for substituted service under r 10.24 of the 2011 FCRs – applications grantedLegislation: Competition and Consumer Act 2010 (Cth), ss 5(1)(g), 155; ss 29(1)(g), 33-34, 224, 226 of Sch 2 (Australian Consumer Law)
Evidence Act 1995 (Cth), ss 77, 144(1)
Federal Court of Australia Act1976 (Cth), ss 19(1), 37AF, 37AG(1)(a), 37AI, 37M
Judiciary Act 1903 (Cth), s 39B(1A)
Federal Court Rules 2011 (Cth), rr 5.02, 10.24, 10.42-10.44, 10.49
Cases cited: Australian Competition and Consumer Commission v Yellow Page Marketing BV [2010] FCA 1218
Australian Information Commission v Facebook Inc [2020] FCA 531
Commissioner of Taxation v Caratti (No 2) [2018] FCA 1500
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 47 Date of last submission/s: 3 March 2021 Date of hearing: Determined on the papers Counsel for the Applicant: Mr J K Kirk SC with Ms C van Proctor Solicitor for the Applicant: Webb Henderson ORDERS
NSD 1339 of 2020 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
AND: FACEBOOK, INC.
First Respondent
ONAVO, INC.
Second Respondent
FACEBOOK ISRAEL LTD
Third Respondent
ORDER MADE BY:
GRIFFITHS J
DATE OF ORDER:
18 MARCH 2021
THE COURT ORDERS THAT:
1.Pursuant to s 37AI of the Federal Court of Australia Act1976 (Cth), on the ground set out in s 37AG(1)(a), until the conclusion of the first case management hearing at which the first, second or third respondents appear, or further order, the information in Confidential Exhibit TLB-2 to the affidavit of Tom Lawton Bridges affirmed on 2 March 2021 and paragraphs 14(a)-(g) of the applicant's written submissions is not to be disclosed or published other than to the Court, the parties and their legal representatives.
2.Pursuant to rr 10.42, 10.43(2) and 10.44 of the Federal Court Rules 2011 (Cth) (2011 FCRs), the applicant be granted leave to serve the following documents on the first respondent in the United States of America by sending the documents to the registered address of the first respondent by international registered post in accordance with art 10(a) of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, concluded at The Hague on 15 November 1965 (Hague Convention):
(a)the originating application and concise statement filed on 16 December 2020;
(b)the interlocutory application dated 2 March 2021;
(c)the affidavit of Tom Lawton Bridges affirmed on 2 March 2021 (without exhibits);
(d)the applicant's written submissions; and
(e)the Court’s orders and the reasons for judgment
(together, the Court Documents).
3.Pursuant to rr 10.42, 10.43(2) and 10.44 of the 2011 FCRs, the applicant be granted leave to serve the Court Documents on the second respondent in the United States of America by sending the Court Documents to the registered address of the second respondent by international registered post in accordance with art 10(a) of the Hague Convention.
4.Pursuant to rr 10.42, 10.43(2) and 10.44 of the 2011 FCRs, the applicant be granted leave to serve the Court Documents on the third respondent in Israel by sending the Court Documents to the registered address of the third respondent by international registered post in accordance with art 10(a) of the Hague Convention.
5.Pursuant to r 10.24 of the 2011 FCRs, the applicant may serve the Court Documents on the first respondent by sending the Court Documents by email to Ms Peta Stevenson ([email protected]) and Mr Wayne Leach ([email protected]) of King & Wood Mallesons.
6.Pursuant to r 10.24 of the 2011 FCRs, the applicant may serve the Court Documents on the second respondent by sending the Court Documents by email to Ms Peta Stevenson ([email protected]) and Mr Wayne Leach ([email protected]) of King & Wood Mallesons.
7.Pursuant to r 10.24 of the 2011 FCRs, the applicant may serve the Court Documents on the third respondent by sending the Court Documents by email to Ms Peta Stevenson ([email protected]) and Mr Wayne Leach ([email protected]) of King & Wood Mallesons.
8.The first, second and third respondents file a notice of address for service in accordance with r 5.02 of the 2011 FCRs within 14 days after service upon them of the originating application.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
GRIFFITHS J:
Introduction
The Australian Competition and Consumer Commission (ACCC) has commenced proceedings in the Court against Facebook, Inc. (Facebook) and two wholly-owned subsidiaries (Onavo, Inc. and Facebook Israel Ltd, together Onavo). Each of the respondents is located overseas and the law firm which represented them in the ACCC investigation leading up to the present proceeding (King & Wood Mallesons) has declined to accept service.
The ACCC alleges that the respondents made false, misleading or deceptive representations that a product known as Onavo Protect would keep users’ personal activity data private, protected and secret, and that such data would not be used for any purpose other than to provide Onavo Protect services. Onavo Protect is a free downloadable software application (the Onavo Protect App) providing virtual private network (VPN) and, for selected users, data management services (together, the Onavo Protect Services). The ACCC alleges that, in fact, a key purpose and use of Onavo Protect, which utilised Facebook’s servers, was for Facebook and Onavo to collect significant personal activity data, including about users’ internet and app activity, for Facebook and Onavo to use for their commercial benefit, including to support market analytics, and related activities such as identifying future acquisitions.
By an interlocutory application dated 2 March 2021, the ACCC seeks orders under rr 10.42, 10.43(2) and 10.44 of the Federal Court Rules 2011 (Cth) (2011 FCRs) granting leave to serve various documents on the respondents in accordance with art 10(a) of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, which was concluded at The Hague on 15 November 1965 (Hague Convention). The documents comprise the originating application and concise statement filed on 16 December 2020, the interlocutory application dated 2 March 2021, the affidavit of Tom Lawton Bridges affirmed on 2 March 2021 (without exhibits), the ACCC’s written submissions in support of the interlocutory application, and any orders of the Court on the hearing of the interlocutory application, together with any reasons for judgment (the Court Documents).
The ACCC also seeks orders for substituted service under r 10.24 of the 2011 FCRs, as well as interim suppression and non-publication orders under ss 37AF and 37AI of the Federal Court of Australia Act 1976 (Cth) (FCA Act).
By email correspondence dated 15 March 2021, the ACCC indicated that it was content for the interlocutory application to be determined on the papers without an oral hearing.
The ACCC’s evidence summarised
The ACCC relied upon Mr Bridges’ affidavit in support of the interlocutory application. Mr Bridges described the ACCC’s investigation, including various notices issued under s 155 of the Competition and Consumer Act 2010 (Cth). He also described extensive correspondence between the ACCC and King & Wood Mallesons which, as noted above, acted for various Facebook companies during the course of that investigation. Mr Bridges also described the practical difficulties presented by COVID-19 in achieving service overseas.
Mr Bridges deposed that the proposed method of service on the first and second respondents, each of which is incorporated in the United States of America, is by serving the originating application and concise statement on both those companies:
(a)in the United States of America, in accordance with r 10.43 of the 2011 FCRs and art 10(a) of the Hague Convention; and
(b)in Australia, in accordance with r 10.24 of the 2011 FCRs.
As to the proposed method of service on the third respondent, which is a company incorporated in Israel, Mr Bridges said that it is proposed to serve the originating application and concise statement:
(a)in Israel, in accordance with r 10.43 of the 2011 FCRs and art 10(a) of the Hague Convention; and
(b)in Australia, in accordance with r 10.24 of the 2011 FCRs.
The Court has issued a Practice Note, Overseas Service and Evidence Practice Note (GPN-OSE), which requires the party applying for leave to serve a document in a country other than Australia to include in its application information obtained from the Australian Government Attorney-General’s Department in relation to the appropriate method of transmitting documents for service in that country.
Mr Bridges’ affidavit described information obtained from the “Private international law section” of the Australian Government Attorney-General’s Department website, including an associated fact sheet, in relation to the appropriate method of transmitting documents for service in accordance with the Hague Convention.
The proposed methods of service are in accordance with the requirements of the Hague Convention, as set out in the materials annexed to Mr Bridges’ affidavit.
Exhibit 2 to Mr Bridges’ affidavit contained information which he understood to be, or is likely to be, subject to a claim for confidentiality by the first respondent. Certain paragraphs of the ACCC’s outline of written submissions in support of the interlocutory application were also redacted on the basis that they contained commercial-in-confidence material. The material in those paragraphs and in Exhibit 2 is the material which is the subject of the ACCC’s application for an interim suppression or non-publication order.
I am satisfied that Mr Bridges’ affidavit complies with r 10.43(3).
Consideration and determination
(i) Interim suppression or non-publication order
Under s 37AI of the FCA Act, the Court has the power to make an interim suppression order, without determining the merits of the application, which is to have effect until the application is determined. The ACCC has sought a non-publication order under s 37AF of the FCA Act, on the grounds specified in s 37AG(1)(a). This is sufficient to engage the requirement in s 37AI that there be an application for a suppression or non-publication order.
Based on Mr Bridges’ affidavit, I am satisfied that it is appropriate to make interim orders under s 37AI, which will operate until the conclusion of the first case management hearing at which the respondents are required to appear. In coming to that view, I take into account submissions which were made by King & Wood Mallesons to the ACCC in relation to various s 155 notices and claims made there that the responses contained confidential and commercially sensitive information regarding Facebook’s business that is not available in the market and would provide competitors with significant insights into Facebook’s business.
(ii) Service outside Australia and substituted service
Rule 10.42 of the 2011 FCRs provides that, subject to r 10.43, an originating application may be served on a person in a foreign country in a proceeding that consists of, or includes, any one or more of the kinds of proceeding mentioned in the table in the rule.
Rule 10.43(2) provides:
A party may apply to the Court for leave to serve an originating application on a person in a foreign country in accordance with a convention, the Hague Convention or the law of the foreign country.
Rule 10.43(4) provides that, for r 10.43(2), the party must satisfy the Court of three matters, namely that:
(a)the Court has jurisdiction in the proceeding;
(b)the proceeding is of a kind mentioned in r 10.42; and
(c)the party has a prima facie case for all or any of the relief claimed in the proceeding.
Rule 10.43(3) provides:
The application under subrule (2) must be accompanied by an affidavit stating:
(a)the name of the foreign country where the person to be served is or is likely to be; and
(b)the proposed method of service; and
(c)that the proposed method of service is permitted by:
(i) if a convention applies - the convention; or
(ii) if the Hague Convention applies - the Hague Convention; or
(iii) in any other case - the law of the foreign country.
Rule 10.44 similarly provides for a party to apply for leave to serve a document, other than an originating application, filed in or issued by the Court.
The first and second respondents are located in the USA; the third respondent is located in Israel. These countries, and Australia, are member States of the Hague Convention.
It is appropriate to consider each of the three requirements set out in r 10.43(4) in turn.
(a) The Court has jurisdiction in the proceeding
I am satisfied that the Court has jurisdiction to entertain this proceeding in circumstances where the ACCC’s claims arise under the Competition and Consumer Act. The Court has original jurisdiction in any matter, inter alia, arising under any laws made by the Parliament: see s 39B(1A) of the Judiciary Act 1903 (Cth). The claims, which are made under the Australian Consumer Law (see Sch 2 to the Consumer and Competition Act), therefore falls within the original jurisdiction of the Court pursuant to s 19(1) of the FCA Act.
(b) The proceeding is of a kind referred to in r 10.42
I am satisfied that the proceeding is of a kind mentioned in r 10.42, as it has the following character (any one of which suffices):
(a)the proceeding is based on a cause of action arising in Australia (item 1);
(b)the proceeding is based on a contravention of an Act that is committed in Australia (item 12);
(c)the proceeding is in relation to the construction, effect or enforcement of an Act (item 14);
(d)the ACCC seeks relief or a remedy under an Act (item 15); and
(e)the proceeding is one in which the person to be served is a corporation, and it carries on business in Australia (item 18(b)).
Specifically with respect to items 14 and 15, the ACCC seeks as against all three respondents both declaratory relief under the FCA Act, and civil penalties and the establishment of a compliance program under ss 224 and 246 respectively of the Australian Consumer Law. Thus both items 14 and 15 are satisfied.
As to the other three items, I find that they are satisfied for the reasons addressed further below with respect to the prima facie case requirement. I note, however, that it is not necessary to examine them in more detail here, given that satisfaction of any one item is sufficient to meet the r 10.42 requirement (see Australian Competition and Consumer Commission v Yellow Page Marketing BV [2010] FCA 1218 at [23] per Gordon J).
(c) The ACCC has a prima facie case
The ACCC provided affidavit evidence and written submissions in support of its interlocutory application, which addressed the requirement that there be a prima facie case against the respondents. Those materials will be included among the Court Documents (but not including Exhibit 2 to Mr Bridges’ affidavit, which I accept are commercial-in-confidence).
The relevant principles applying to the requirement that an applicant seeking leave to serve documents outside Australia must demonstrate a prima facie case are relatively well settled. They were helpfully summarised recently by Thawley J in Australian Information Commission v Facebook Inc [2020] FCA 531 at [30]-[32] (emphasis in original):
30The requirement to demonstrate a prima facie case in the context of an application for leave to serve documents outside Australia is “not particularly onerous”: Yellow Page Marketing at [25]. It is relevant to assess whether sufficient material is placed before the Court to show:
(1)that findings of fact are available, and inferences are open to be drawn, which would support the relief claimed: Australian Securities and Investment Commission v Axis International Management Pty Ltd [2008] FCA 1605 at [14] (Gilmour J), citing Bell Group Ltd (In Liq) v Westpac Banking Corporation (1996) 20 ACSR 760 at 763;
(2)the existence of a controversy that warrants causing a proposed respondent to be involved in litigation in Australia: Century Insurance (in provisional liquidation) v New Zealand Guardian Trust [1996] FCA 376 (Lee J); Ho v Akai Pty Ltd (in liq) (2006) 247 FCR 205 at [10] (Finn, Weinberg and Rares JJ); Israel Discount Bank Limited v ACN 078 272 867 Pty Ltd (in liq) (formerly Advance Finances Pty Ltd) (2019) 367 ALR 71 at [47] (Yates, Beach and Moshinsky JJ).
31Section 75 of the Evidence Act 1995 (Cth) is relevant to the assessment of the sufficiency of the material adduced, because it provides that the hearsay rule does not apply in an interlocutory proceeding, if the party adducing the evidence also adduces evidence of the source of the hearsay evidence – cf: Bray at [56] and [58] (Carr J); Yellow Page Marketing at [25] (Gordon J).
32The Commissioner only need establish a prima facie case in relation to one cause of action or remedy: Israel Discount Bank at [48]…
The ACCC alleges that, by making certain representations, the respondents:
(a)engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of s 18(1) of the Australian Consumer Law;
(b)made false or misleading representations that Onavo Protect had particular performance characteristics, uses or benefits, in contravention of s 29(1)(g) of the Australian Consumer Law; and
(c)engaged in conduct that was liable to mislead the public as to the characteristics and suitability for purpose of Onavo Protect, in contravention of s 33 (alternatively, s 34) of the Australian Consumer Law.
The representations are alleged to have been made through statements on the Onavo Protect website, the Apple App Store, the Google Play Store, the Onavo Protect App and in advertising for Onavo Protect. It is alleged that the respondents:
(a)expressly and impliedly represented to consumers in Australia that Onavo Protect would keep users’ personal activity data private, protected and secret;
(b)impliedly represented to consumers in Australia that Facebook and Onavo would not use users’ personal activity data for any purpose other than to provide the Onavo Protect Services for consumer use; and
(c)impliedly represented to consumers in Australia that Facebook and Onavo would not use users’ personal activity data for the commercial or other benefit of Facebook or anyone else,
(the Representations).
The ACCC alleges that the Representations were false or misleading and that the conduct engaged in by the respondents was misleading or deceptive or likely to mislead or deceive. The ACCC relies on statements made by the respondents which are referred to in Mr Bridges’ affidavit. Those statements are commercial-in-confidence and it is inappropriate to describe them more extensively at this stage of the proceeding.
The impugned Representations are subject to the Australian Consumer Law because they were directed to consumers, including consumers in Australia, many of whom downloaded the Onavo Protect App. Such Representations directed over the internet to consumers, including consumers in Australia who then develop a relationship with one or more of the representors, constitutes conduct by each of the respondents in Australia in the relevant sense. (For similar reasons, I consider that the proceeding is also based on a cause of action arising in Australia, and based on contraventions occurring in Australia, sufficient to establish items 1 and 12 of r 10.42 of the 2011 FCRs.)
Alternatively, s 5(1)(g) of the Competition and Consumer Act provides that the provisions of the Australian Consumer Law relevant to this litigation extend to “the engaging in conduct outside Australia by… bodies corporate incorporated or carrying on business within Australia”. The second and third respondents had numerous customers in Australia, entered into contracts with consumers in Australia to provide services through the Onavo Protect App, including the software application’s VPN and data management services (i.e. Onavo Protect Services), and collected and used data from those consumers. Facebook, while not the entity with whom consumers contracted with to receive the Onavo Protect Services, was in fact the registrant of the onavo.com domain name and published advertisements on the Facebook digital platform to consumers in Australia containing representations about the Onavo Protect App and the Onavo Protect Services. Such evidence suffices to establish that they carried on business in Australia.
In unrelated proceedings, Thawley J recently found that, on a prima facie basis, Facebook carried on business in Australia (see Facebook Inc). It is true that the activity the subject of that proceeding is different from the sort of activity the subject of the present proceeding. But that does not matter. The question posed by s 5(1)(g) of the Competition and Consumer Act is whether the entity carries on business in Australia simpliciter. It is not whether it carries on business in Australia in undertaking the conduct the subject of the proceeding.
For these reasons, I am satisfied on the basis of the material before the Court that the ACCC has a prima facie case in respect of the relief sought in the originating application.
The Hague Convention
Rule 10.43(2) of the 2011 FCRs relevantly provides that a party may apply to the Court for leave to serve an originating application on a person in a foreign country in accordance with the Hague Convention.
An application under rule 10.43(2) must be accompanied by an affidavit in accordance with r 10.43(3) (as set out at [18] above).
As set out in Mr Bridges’ affidavit, the first and second respondents are located in the United States of America and the third respondent is located in Israel. The ACCC proposes that each of the respondents be served pursuant to art 10(a) of the Hague Convention.
Article 10(a) of the Hague Convention is described as the “postal channel” and, in circumstances where the United States and Israel have not opposed art 10(a), service by that channel is permitted by the Hague Convention.
The ACCC proposes to serve the respondents by international registered post, which is consistent with the Hague Convention. As developed below, the ACCC also seeks leave to effect service by email by way of substituted service.
Substituted Service
Rule 10.49 of the 2011 FCRs provides that an application may be made for substituted service in the event that service on a person in a foreign country is unsuccessful. However, that rule does not preclude the Court from making an order for substituted service in relation to a person outside Australia under r 10.24, if “it is not practicable” to serve a document in a way required by the 2011 FCRs (see Commissioner of Taxation v Caratti (No 2) [2018] FCA 1500 at [10] per Colvin J, as applied in Facebook Inc at [67] per Thawley J). The expression “not practicable” in r 10.24 does not have a more constrained meaning than “impractical”.
Alternatively, an order for substituted service may be made under r 10.49, with a dispensation under r 1.34 from any implicit requirement to attempt service.
In considering whether substituted service is justified, I consider that it is open to the Court to take judicial notice under s 144(1)(a) of the Evidence Act 1995 (Cth) of the fact that COVID-19 is presently spreading globally. It has been declared a pandemic by the World Health Organisation and is directly affecting the United States of America and Israel, the two jurisdictions in which the Court Documents are sought to be served. The ACCC’s evidence adequately addresses these matters. Mr Bridges attached to his affidavit copies of various documents which describe the practical difficulties created by the COVID-19 pandemic in achieving service by way of international post, including articles which describe lockdowns in both countries and the closure of airports.
I accept the ACCC’s contention that, given the constantly changing nature of the COVID-19 pandemic globally, it may not be practicable to serve the respondents in accordance with the Hague Convention. Further, in the current circumstances, service by email is more efficient than service by (say) post, and more consistent with the overarching purpose identified in s 37M of the FCA Act.
Given the prior involvement of King & Wood Mallesons in the ACCC’s investigation leading up to the present proceeding, the Court is confident that service of the Court Documents on that law firm will result in the matters being brought to the respondents’ attention.
For similar reasons, Thawley J ordered substituted service in Facebook Inc (see [24] ff).
Conclusion
For all these reasons, I am satisfied that orders should be made as sought in the interlocutory application.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Griffiths. Associate:
Dated: 18 March 2021
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