Law Times

Law Times • may 15, 2017 Page 11 www.lawtimesnews.com Potential damages could be lucrative for class action bar More criticism arises over anti-spam law BY MICHAEL MCKIERNAN For Law Times C anada's anti-spam law is facing a fresh wave of criticism from long- time opponents as the third anniversary of its procla- mation approaches. This year, CASL's birthday on July 1 not only kicks off the statutory three-year Parliamen- tary review baked into the law, it also coincides with the coming into force of its private right of action provisions, which allow individuals and organizations to take legal action themselves against spammers. The eye-watering level of potential damages — the law al- lows courts to award $200 per violation, up to a maximum $1 million per day — are the stuff of dreams for class actions law- yers and of nightmares for busi- nesses that engage in online marketing. Toronto competition lawyer Steve Szentesi says many of his clients have wanted CASL re- pealed since the day it entered the statute books. And while that goal may be unrealistic, he says, the man- datory review presents a good chance to clear up the uncer- tainties that remain. "The government needs to simplify and streamline the law and make it more intelligible for businesses so that they can actu- ally apply it in practice," Szen- tesi says. "The government can still achieve consumer protec- tion while making it more user- friendly." Hans Parmar, a spokesman for Innovation, Science and Economic Development Can- ada, said in a statement to Law Times that his ministry, which is responsible for the regulations governing CASL's enforcement, is under pressure from several corners of industry. "Various businesses and technology associations have expressed concern with the pri- vate right of action and some have suggested delaying its com- ing into force until after CASL's three-year statutory review, due in 2017," Parmar said. "We have reached out to stakeholders for their views on this and are actively reviewing how best to support consumer trust in the online market, while not unduly burdening legitimate business," he added. One of the groups to throw in its two cents was the Canadian Bar Association. Three of its sections, repre- senting in-house, competition and privacy lawyers, teamed up in February to urge the minis- try in a letter to hold off on the launch of the private right of ac- tion, claiming the mandatory review would allow the govern- ment an opportunity to reassess its appropriateness "in the con- text of CASL as a whole." "Any areas of concern could then be addressed — through legislative amendments follow- ing the review or other means — reducing unnecessary risk to organizations acting in good faith," the CBA letter added. Canada was initially slow out of the blocks on the anti- spam front. When CASL finally cleared Parliament in December 2010, the country became the last G-7 nation to enact legisla- tion on the issue. However, it made up for lost time with one of the strictest re- gimes the world has seen, since the act prohibits all unsolicited commercial electronic messages unless the recipient has given explicit or implied consent to re- ceive them. Although it sounds like a simple concept, Szentesi says, lawyers advising clients on com- pliance for specific marketing activities or campaigns need to go through reams of regulations and interpretations issued by the three federal agencies respon- sible for enforcing the act: the Canadian Radio-television and Telecommunications Commis- sion, the Competition Bureau and the Office of the Privacy Commissioner of Canada. "The law is supposed to be technologically neutral, but it's a constant challenge to under- stand how it applies to new me- dia and social media platforms for businesses that are pushing digital marketing boundaries," Szentesi says. "The result is a chilling effect that is affecting competitiveness for companies that are worried about technical violations and fearful of enforcement." Hopes for a light-touch ap- proach in the early days of CASL enforcement were quickly dispelled when the CRTC an- nounced its first action in early 2015: issuing a $1.1-million fine to Compu-Finder. The CRTC found the Que- bec-based management training company had committed four CASL violations in emails sent without consent and without a working unsubscribe function to addresses found by scour- ing websites. Since then, online dating agency Plentyoffish Me- dia and food company Kellogg Canada are among the higher- profile companies to have paid fines for CASL offences. Late in 2016, the CRTC is- sued its first decision in a con- tested case, where the accused violator challenged the findings of an investigation. Blackstone Learning Corp. was initially handed a monetary penalty of $640,000 for alleged violations in nine marketing campaigns where the company sent a total of nearly 400,000 promotional emails, which re- sulted in 60 complaints. After demonstrating that such a large fine risked killing the business, as well as a commit- ment to future compliance, the penalty was reduced to $50,000. "It was a notable decision, be- cause it shows that you can fight these penalties and achieve quite a good result," says Kelly Fried- man, a litigation partner in the Toronto office of DLA Piper Canada LLP. The second decision, issued in March this year, attracted in- terest for different reasons, ac- cording to Friedman. "A lot of the public cases so far have involved some larger com- panies, but this one is the first time we have seen the CRTC go- ing after an individual," she says. This time, the CRTC upheld its initial penalty assessment, imposing a $15,000 fine on Wil- liam Rapanos for 10 CASL viola- tions stemming from 58 emails sent to advertise his f lyer design and delivery business. "That's a lot of money for not a lot of spam activity," Szentesi says. "It's sobering for small busi- nesses, because it highlights the genuine concern that if you FOCUS Kelly Friedman says predictions of an ava- lanche of class actions in relation to CASL's private right of action provisions may prove unfounded. See Outcry, page 12 The concern is that a lot of legitimate businesses could get caught up in actions that will not result in any benefit to society. Jonathan Bitran This is more than a phone book. 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