Canada: Quebec Superior Court Authorizes National Class Action For Damages Arising From Lost Personal Data

In a judgment that maintains the liberal trend in authorizing class actions in Quebec, a trend reinforced by the Supreme Court decisions in Infineon Technologies (2013) and Vivendi (2014), the Superior Court of Quebec recently authorized (certified) a class action potentially comprising some 240,000 members across Canada.¹

TD Auto Finance Services (formerly DaimlerChrysler) shipped a data tape by commercial courier from its US office to Quebec. The tape contained the name, address, social insurance number and birth date of Canadians who had financed a car purchase through DaimlerChrysler. Though the tape could only be read using specialized equipment, the data was not encrypted. DaimlerChrysler also had not advised the courier that the tape contained personal information.  

The inevitable happened—the tape disappeared en route. It was never determined how it disappeared or what became of it. DaimlerChrysler sent a notice of the loss to everyone whose data was on the tape, but indicated it had no reason to suspect the data had been accessed by any unauthorized person.  

Soon after receiving notice of the lost data tape, the plaintiff, Mr. Belley, discovered he had been the victim of identity theft. Several cars had been purchased in his name, and he suffered serious inconvenience and prejudice through the theft. Eventually he learned that the fraud had been perpetrated using a void cheque he had given to DaimlerChrysler. He sought authorization to start a class action on behalf of everyone whose data was on the lost tape, claiming compensation for various fees or costs incurred as a result of the data loss and for inconvenience, and a punitive damages award.

Appearance of right

The main contentious issue in the case was whether the facts alleged by the plaintiff "seem to justify the conclusions sought" (art. 1003(b), Code of Civil Procedure).

Causal link

DaimlerChrysler argued there was no evidence linking the void cheque, which was the immediate cause of the fraud perpetrated on Mr. Belley, to the loss of the data tape. The only connection was that the identity theft occurred soon after the tape was lost. The court held that the temporal link gave the plaintiff an "arguable case," sufficient for the purpose of authorization. The existence of an actual causal link between the identity theft and the data loss is, according to the judgment, a question to be decided at trial.  

Existence of a group

There was no evidence that any member of the group other than Mr. Belley had been the victim of identity theft similar to Mr. Belley. Again, the court held that it would be unfair and premature to conclude that other members of the group had not suffered damages similar to Mr. Belley.   

Punitive damages

The court also rejected DaimlerChrysler's argument that the allegations were insufficient to support a claim for punitive damages. The court, here too, held that it would be premature for it to rule, based on the allegations, that the members of the class would not be entitled to punitive damages.

Quebec's jurisdiction

DaimlerChrysler has an establishment in Quebec. However, that alone is insufficient to give Quebec courts jurisdiction. For there to be jurisdiction, the dispute must relate to that establishment's activities. The court acknowledged that "there remain questions about the type of connection between the Quebec establishment and the dispute." However, it held that a liberal interpretation of the law on jurisdiction is necessary and more in keeping with the reality of modern business decision-making. According to the authorizing judge, this is particularly true because the lost personal information was used for Canada-wide business purposes and the members of the proposed group are spread across the country. Consequently, the court concluded that it has jurisdiction to hear the case, and authorized a national class action.

Conclusion

This judgment reflects the low evidentiary and legal threshold required for the authorization of a class action in Quebec. It should also serve as a reminder of the class action risk faced when businesses fail to take adequate care to ensure the security of data.  

Footnote

1. Belley c. TD Auto Finance Services Inc., 2015 QCCS 168 (Mr. Justice Louis Lacoursière, J.S.C.). Note that the term "authorization" used in Quebec is the equivalent to "certification" in most common law jurisdictions.

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