Law Times

Page 8 March 19, 2018 • Law TiMes www.lawtimesnews.com Fate of controversial CASL section unknown BY MARG. BRUINEMAN For Law Times T he fate of a controver- sial section in Canada's anti-spam legislation that allowed consumers the right to sue for breaches, be- fore it was put on hold, remains unclear. The section was abruptly sus- pended last June, a month before it was to be enacted, when busi- nesses, charities and organiza- tions expressed concerns about the section, which would allow consumers to the private right of action to sue under s. 51 of CASL. Critics of the section said that allowing a private right of ac- tion would have unnecessarily exposed organizations to class actions. It is now under review and its fate remains to be deter- mined. "The private right of action in CASL perhaps created a per- fect storm for class actions," says Michael Fekete, a partner in the technology group and the na- tional innovation leader at Osler Hoskin & Harcourt LLP. The provisions in CASL that were originally proposed would have allowed people to sue busi- nesses and groups for breaches related to spam, as well as for breaches related to the Personal Information Protection and Electronic Documents Act and the Competition Act. Most components of CASL came into force in 2014. The provisions pertaining to the private right of action were to follow in July 2017, and they would have allowed awards of up to $1 million per day for sending spam. However, critics said the legislation would allow people to sue for statutory damages, meaning they would not have to prove harm. It was widely anticipated by the legal community that this would lead to a cottage industry of class actions brought against companies and organizations for non-compliance, even where no damage was done. Therefore, the current federal government put the brakes on the section related to the private right of action after hearing con- cerns from businesses and sent it to a parliamentary committee for review. The Standing Committee on Industry, Science and Technol- ogy issued a report in December 2017 after conducting a series of meetings and receiving 63 sub- missions. It concluded that the legislation and its regulations required clarifications to reduce the cost of compliance and bet- ter focus enforcement. The committee also sug- gested the government needs to consider issues related to con- sent and the effects of the private right of action created by the leg- islation. "There's always a concern when you combine statutory damages, broad standing to sue and a prescriptive law because you can find yourself as a de- fendant in a class action very easily, even if there isn't signifi- cant harm to consumers. And the fact that CASL created those conditions has led the govern- ment to reconsider bringing it into force," says Fekete. By suspending it, there is ac- knowledgement that the govern- ment is alive to concerns about whether the private right to ac- tion provisions created a huge amount of unquantifiable risk, adds Fekete. Allowing anyone to sue for al- leged violation of the legislation without requiring them to prove harm makes it difficult to clearly identify the risks and mitigate against them, says Shaun Brown, a partner with nNovation LLP in Ottawa. If an organization is trying to comply but is considered by some to be in violation of the legislation, it could quickly find itself having to defend against legal action. Brown says it's frustrating for companies that are concerned that the private right of action could leave them vulnerable to a $1-million lawsuit. "The industry is pretty much aligned on the private right of action, that it's unnecessary and unhelpful and that it should be at least altered in the legislation if it is brought into effect," he says, adding that the law is so "complex and confusing" that it's difficult for companies to navigate if they are complying properly. The federal government could tweak the legislation to follow the lead of other jurisdic- tions and limit who has standing to sue, says Brown. He also says it's possible to re- move the statutory damages. "Finding a way so that the or- ganizations, the businesses that are directly impacted by spam pursue the bad actors [who pur- posely defy the anti-spam legis- lation] does make a lot of sense," says Fekete. Another approach that may be considered in Canada is al- lowing internet service provid- ers and companies the private right of action to go after spam- mers to try to recover some of the costs they incurred by vast amounts of spam they must manage in their networks. That makes sense to Stike- man Elliott LLP privacy lawyer David Elder, who also sees a similar enforcement approach applying to malware, which is also covered by CASL. Service providers can directly attribute damages to spammers, he says, because they must invest in screening software and over- provisioning networks. They also may suffer network outages they can directly attri- bute to mass spam. Allowing the current provi- sions allowing the private right of action "really takes the imple- mentation and supervision of CASL out of the hands out of the government and effectively puts it in the hands of private parties and plaintiffs' counsel," says El- der. "I think there's too much un- certainty with the law now to do that," he says. LT FOCUS ON Privacy Law Shaun Brown says compa- nies and organizations are concerned about a section of Canada's anti-spam legis- lation that could leave them vulnerable to a $1-million lawsuit. FOCUS Nominate your choices between March 12 and April 3 V i s i t WWW.CANADIANLAWYERMAG.COM/SURVEYS MOST*NkUENTIAL TOP 2 5 Untitled-6 1 2018-03-06 2:30 PM

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