The federal government has issued an Order in Council today delaying the coming into force date of the private right of action under Canada’s Anti-Spam Legislation until completion of a parliamentary review “in order to promote legal certainty for numerous stakeholders claiming to experience difficulties in interpreting several provisions of the Act while being exposed to litigation risk.”
|BLG lawyer Eloise Gratton says businesses have been struggling to make sure they are complying with CASL in light of the two changes that will be coming into force — the private right of action as well as the end of the transition period.|
“I heard through the grapevine three weeks ago and I didn’t believe it — I thought it was too last minute,” says Eloïse Gratton, partner and national co-leader of the privacy and data protection practice group at Borden Ladner Gervais LLP.
Sources indicate that the Retail Council of Canada sent a notice to members yesterday signalling the Order in Council was expected today.
“Canadians deserve to be protected from spam and other electronic threats so that they can have confidence in digital technology. At the same time, businesses, charities and other non-profit groups should have reasonable ways to communicate electronically with Canadians. We have listened to the concerns of stakeholders and are committed to striking the right balance,” said Navdeep Bains, Minister of Innovation, Science and Economic Development in a press release issued today.
“If they are delaying it, that’s definitely good news for businesses. A lot of them have been struggling in the past few months to make sure they are complying with CASL in light of the two changes that will be coming into force — the private right of action as well as the end of the transition period,” says Gratton.
Inga Andriessen, founder of J.D. Andriessen & Associates, says the big message that will need to get out is that CASL hasn’t been repealed.
“CASL is still going to be in place. The government can still fine you the same way as they could before, but the good news is nobody is going to be suing you in court for any violation of CASL. If anything, it’s a time to really take a look at your CASL policies and make sure you’re still compliant or get compliant if you weren’t before.”
The government ought to be taking a “very careful review” of CASL to find out what is working and what isn’t working and determine whether CASL is really serving its purpose in a way that is respectful of the needs of all stakeholders, says Dan Glover, partner with McCarthy Tétrault LLP.
“It’s the only sane decision the government could have made,” says Glover. “With the private right of action, the really, really dangerous aspect of it is that it allowed for the combination of individual actions into class actions with extraordinarily high penalties that had nothing to do with actual harm. If you look at the language of the private right of action, it’s a statutory penalty up to $1 million a day.”
“The prospect for class actions that don’t actually connect to the guiding purposes of CASL just doesn’t make sense and doesn’t promote the goals of a more confident digital economy,” says Glover. “What would happen is people would basically take the most conservative route to communicating with the public out of fear.”
CASL first came on the scene with anti-spam provisions in July 2014, with a three year transitional period planned for commercial electronic messages. In January 2015, consent and notice rules for installation of computer programs came into force with its own three year transitional period specific to computer programs beginning. The third and final step was scheduled for July 1, with the private right of action coming into force, the first three year period for CEMs coming to an end and a mandatory review of CASL triggered.
Andriessen says the government was “getting a significant amount of pressure from small businesses, retail businesses, etc. that they’re very concerned about how this is going to play out come July 1.”
For her part, Andriessen predicted the small claims courts would have been flooded by “some individuals who believed they are smart and started keeping emails worth $200 a piece.”
Gratton notes she’s not sure how useful the private right of action will be as an incentive for people to comply with the legislation anyway.
“Under CASL, the CRTC can issue some damages and they have — they can issue monetary penalties so I think businesses are already quite motivated to comply with this legislation and I’m not sure this private right of action would motivate them more.”
Opponents of the legislation predict an increase in class actions, though multiple million-dollar settlements are unlikely. In April, the Canadian Corporate Counsel Association held its national conference in Toronto. At a panel called Get Smart: Conquering CASL and the New Private Right of Action that was covered by Legal Feeds, Peter Clausi, executive vice president corporate affairs and general counsel at GTA Resources and Mining Inc., was vocal about the risks stemming from the legislation’s new teeth.
“I have met with a couple of the plaintiff class action firms who are counting the number of sleeps until July 1,” he said. “I think they are going to wind up being the Wade Boggs of litigation — they’re going to go to the hall of fame hitting singles.”
Pushing the implementation date would be a benefit to businesses, especially small businesses that have been struggling with the legislation.
“It would allow them a bit more time to make sure they are ready and can go through the necessary steps to ensure the consent they have obtained is valid,” Gratton says.
According to her checklist she gives to clients, it would allow them to mitigate against the risk of CASL litigation and regulatory enforcement by making sure they have a CASL compliance program. “That would reduce the likelihood of CASL contravention,” she says.
It would also allow clients extra time to create and maintain a detailed record of all CASL compliance efforts which has been undertaken by the organization that may be used to establish a credible due-diligence defense, and “another thing they should be thinking about is establishing a litigation response team, having a written plan where they know internal personel, external advisors, who can respond to CASL complaints and private litigation and other type of regulatory enforcement or law suits.”
Andriessen says she has no idea what the timeline would be if the government makes the expected announcement — a parliamentary review could mean it’s being pushed off forever, she notes.
“This was obviously passed during the conservatives being in power, I don’t recall it being a campaign promise for the liberals, but in particular the personal liability for officers and directors is really onerous.
Aside from CASL, in Canada we only have personal liability for officers and directors in very narrow situations. Environmental offences for example, and certain situations where there’s fraudulent activity in a company. Are we trying to tell the world that sending an email to somebody who didn’t want to get it and apparently doesn’t know how to delete it without reading it is equal to polluting the environment?”
She says if they do suspend the right of private prosecution and do a review, she hopes the government looks at the personal liability issues and also consider the cross-border impacts.
“A lot of the consistent violation of CASL isn’t originating in Canada, it’s originating elsewhere,” Andriessen says. “So what are we doing? What are we really protecting here?”
4:40 p.m. Updated: Comments from Dan Glover of McCarthy Tétrault LLP