Canada: Preparing For CASL's Private Right Of Action

Private Litigation


Commencing July 1, 2017, any individual or organization affected by a CASL contravention (e.g. the sending of a CEM without consent or required information disclosure or formalities) may sue the persons who committed the contravention or are otherwise liable for the contravention and seek: (1) compensation for actual loss, damage and expense suffered or incurred by the applicant; and (2) statutory (non-compensatory) damages.

Statutory damages for a contravention of CASL's CEM rules are subject to a maximum of $200 for each contravention, not exceeding

$1,000,000 for each day on which the contravention occurred. CASL requires a court to consider all relevant circumstances when determining the appropriate amount of statutory damages to be imposed on a respondent, including the purpose of the statutory damages award (i.e. to promote CASL compliance), the nature and scope of the CASL contravention, the respondent's history with previous CASL contraventions and enforcement actions, the respondent's financial benefit from the CASL contravention, the respondent's ability to pay the award and whether the applicant has received compensation in connection with the CASL contravention.

The private right of action is in addition to regulatory enforcement, and a CASL contravention might be subject to both regulatory enforcement and private litigation. However, there are limiting rules that apply to claims for statutory damages. In particular, CASL provides that: (1) a court may not award statutory damages against a person for a CASL contravention after a regulator has issued a notice of violation against the person for the contravention or the person has entered into a voluntary undertaking (settlement) with a regulator for the contravention; and (2) if a court determines that it may consider a claim for statutory damages against a person for a CASL contravention, then a regulator may not issue a notice of violation against the person for the contravention and the person may not enter into a voluntary undertaking (settlement) with a regulator for the contravention.

Class Proceedings

CASL's private right of action will likely be invoked to support class proceedings seeking compensation and statutory damages on behalf of large groups of persons affected by unlawful CEM campaigns. Class proceedings for CASL contraventions will be required to comply with existing procedures for class proceedings, which require that a proposed class proceeding be certified by a court before it can proceed. There are various requirements for certification of a proposed class proceeding, which usually include a judicial determination that: (1) the claims of the proposed class members raise common issues; (2) the proposed class proceeding is the preferable procedure for the resolution of the common issues; and (3) the applicant will fairly and adequately represent the interests of the proposed class members.

Preparing for July 1, 2017

There are a number of steps that organizations can take, both before and after July 1, 2017, to enhance their CASL compliance and mitigate the risks of CASL litigation and regulatory enforcement. For example:

  • CASL Compliance Program: An organization should review and update/improve its CASL compliance program to reduce the likelihood of CASL contraventions, and to help establish a due diligence defence and mitigate potential regulatory penalties and statutory damages if a CASL contravention occurs. The CRTC's Compliance and Enforcement Information Bulletin CRTC 2014-326 – Guidelines to help businesses develop corporate compliance programs (2014-06-19) provides helpful guidance regarding CASL compliance programs. Additional guidance may be found in decisions issued in CASL enforcement proceedings and in related compliance undertakings. For more information, see BLG bulletin CASL Compliance Programs – Preparing for Litigation.
  • Due Diligence Documentation: An organization should create and maintain a comprehensive and detailed record of all CASL compliance efforts by the organization and its directors and officers (including documented periodic reports to directors and officers) that may be used to establish a credible due diligence defence to liability for CASL contraventions. The documents should be reliable and otherwise admissible into evidence in legal and regulatory proceedings.
  • Complaint/Litigation Response Team: An organization should establish a written plan, and designate an appropriate team of internal personnel and external advisors (including legal counsel and public relations consultants), for responding to CASL complaints, private litigation and regulatory enforcement. The plan should include appropriate checklists and guidelines for: (1) internal and external communications and reporting; (2) establishing and maintaining legal privilege for legal advice and litigation-related communications; (3) giving notice to insurers; and (4) determining whether the organization should attempt to negotiate a voluntary undertaking with the appropriate regulator before the CASL contravention is subject to private litigation.

Organizations should be mindful that Canadian privacy laws regulate the collection, use and disclosure of certain kinds of personal information to send CEMs. Accordingly, organizations should ensure that their marketing activities regarding CEMs comply with both CASL and applicable privacy laws.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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