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New anti-spam legislation provides new tools for class action certification

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Capital Perspectives

Canada's new anti-spam legislation is expected to come into force some time in 2012. The law, called "An act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act" but generally referred to as "CASL," couples tough anti-spam measures with substantial statutory damages and a private right of action. The legislation, including, in particular, the private right action, provides unique new tools to plaintiff counsel to seek class certification for actions seeking millions of dollars in damages.

Key prohibitions

Subject to some limited exceptions, CASL prohibits the sending of "a commercial electronic message" unless the recipient has consented to receive the message and the message contains mandated content. CASL also restricts the alteration of message routing data, the installation of computer programs, and false and misleading representations in commercial electronic messages – to address pharming, phishing, harvesting of electronic addresses and other anti-competitive conduct. 

"Commercial electronic message" is any message that has as one or more of its purposes the encouragement of commercial activity. Significantly, this definition goes beyond email and captures text messaging, instant messaging and social media messaging. Furthermore, by mandating an "opt-in" consent regime, and expressly stating that an electronic message soliciting consent is a commercial electronic message, CASL establishes a more stringent consent regime than existing consent requirements under Canadian privacy laws and anti-spam legislation in other jurisdictions.

Satisfying the consent requirement

CASL and draft regulations stipulate that a request for express consent must be in writing and set out detailed information that must be included in the request. The act does establish a limited number of exceptions to the consent requirement for commercial email (e.g., personal or family relationship, provision of requested quote, warranty, safety and security information) and specifies when consent may be implied (e.g., existing business and non-business relationships, conspicuous disclosure of email address without disclaimer). However, while it was widely hoped that regulations under CASL would clarify and expand the exceptions to consent, draft regulations published last summer have not done so and in fact, have muddied the waters by, for example, proposing that the existence of a personal relationship requires an "in-person" meeting and "two-way communication" within the last two years.

Mandatory content

Once in force, CASL requires that all commercial email include detailed identification and contact information and an unsubscribe mechanism.

Penalties, private right of action and scope for class proceedings

The Canadian Radio-television and Telecommunications Commission (CRTC) is granted authority under CASL to levy administrative monetary penalties of up to $1 million per violation in the case of an individual and $10 million per violation in the case of a corporation. CASL also expressly provides for extended liability for aiding, inducing or procuring a breach of the act, vicarious liability of corporations for violations by employees and agents, and liability for any officer, director or agent that directs, authorizes, acquiesces or participates in a violation.

While the CRTC is actively expanding its enforcement capabilities that already exist in respect of the national do not call list, the CASL also sets the stage for active private enforcement – likely in the form of class actions. In this regard, CASL establishes a private right of action by any person affected by a contravention of the act. If a court determines that a violation has occurred, the court is not limited to ordering compensation for damages sustained by the applicant. CASL also authorizes a court to order a person to pay up to $200/contravention to a maximum of $1 million per day for breach of the prohibition on sending unsolicited commercial email and up to $1 million per day for each day a breach of the prohibitions on alteration of routing data or unsolicited installation of a computer program occurred.

A private right of action may also be brought under CASL for contraventions of the Personal Information Protection and Electronic Documents Act (PIPEDA) and the Competition Act.

A person affected by a breach of the PIPEDA requirements relating to the collection or use of a person's email address collected by a computer program designed or marketed to generate and collect email addresses, or the collection or use of personal information collected by accessing a computer system by telecommunications contrary to federal law (e.g. CASL), can bring an application under CASL for damages resulting from the breach as well as for statutory damages of up to $1 million for each day on which the breach occurred.

In addition, the sending of an electronic message (or causing such a message to be sent) for the purpose of promoting a business interest or the supply or use of a product that contains information or content, including sender information, locator information or subject matter information, that is false or misleading in a material respect constitutes reviewable conduct under a new provision of the Competition Act. CASL provides that any person affected by a contravention of this provision may bring a private action for damages incurred plus a maximum of $200 for each occurrence of the conduct to a maximum of $1 million for each day that the conduct occurred. The Competition Act does currently establish a private right of action for damages sustained as a result of a breach of the criminal provisions of the act. However, non-compliance with other reviewable practices provisions of the Competition Act (such as price maintenance, abuse of dominance, tied selling and exclusive dealing) does not give rise to a private right of action unless the Competition Tribunal or a court has issued an order in respect of the reviewable conduct and an applicant has suffered damages as a result of non-compliance with that order.

These provisions, including in particular the private right of action and the potential for hefty statutory damages, are expected to provide unique new tools to plaintiff counsel seeking class certification.

Leslie Milton is a partner in the Ottawa office of Fasken. Leslie practises primarily in the areas of communications, competition and international trade law. 
Peter Mantas is a partner in the Ottawa office of Fasken and the head of the Ottawa litigation group. A member of both the Ontario and New York Bars, he has expertise in class action and cross-border matters. 

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