Canada: Litigation Risk On The Rise: 3 Trends In Cybersecurity Class Actions In Canada

Cybersecurity litigation in Canada is on the rise. Given that the number of data breaches in Canada has been rising exponentially in recent years, the increase in cybersecurity litigation is unsurprising. However, the increase in the volume of breaches, coupled with privacy legislation changes, has resulted in more reporting to the privacy commissioners, attempted class proceedings, and settlements of actions.

PRIVACY COMMISSIONER INVESTIGATIONS AND CIVIL LITIGATION

An organization that has experienced a privacy breach or cybersecurity incident may be subject to mandatory reporting and resulting investigations by the federal or provincial privacy commissioner. Procedural protection for the organization in the course of such an investigation is often limited. Further, in some cases, there is no (or only very limited) legal recourse to challenge unfair or erroneous findings made in a privacy commissioner report.

Plaintiffs in privacy class actions often seek to rely on privacy commissioner reports to the extent they are critical of the security safeguards an organization had in effect at the time of a breach. In two recent decisions in Ontario, however, certification judges affirmed that such reports are not determinative of civil liability or even whether a proposed class action should be certified.

In Broutzas v. Rouge Valley Health System, the plaintiffs sought a ruling that the hospital defendant was barred from challenging the findings of the Ontario Information and Privacy Commissioner (IPC) following its investigation of the privacy breaches at issue in the action, and that these findings were conclusive of the hospital's liability. The court declined to make such a ruling, finding that it would be "egregiously unfair" to determine a class action based on the decision of an informal proceeding before an administrative tribunal.

Similarly, in Kaplan v. Casino Rama Services Inc., the certification judge confirmed that an IPC investigation report regarding the cyberattack on Casino Rama was "not determinative of legal liability." The judge went on to conduct his own analysis based on the evidence before him on the motion.

RECENT DENIALS OF CERTIFICATION IN PRIVACY CLASS ACTIONS

There have been an increasing number of privacy class actions in Canada since 2012, when the Ontario Court of Appeal first recognized the new privacy tort of intrusion upon seclusion. While many privacy class actions have been certified, the last year has seen several denials of certification:

  • Broutzas v. Rouge Valley Health System: The Ontario Superior Court of Justice refused to certify a privacy class action in which rogue hospital employees allegedly accessed patient records to sell new mothers' contact information as RESP sales leads. Among other things, the court found that a person's contact information is not "inherently private" and that the tort of intrusion upon seclusion requires some deliberate intrusion by the defendants and could not be made out by some form of "guilt by association."
  • Kaplan v. Casino Rama Services Inc.: The Ontario Superior Court of Justice refused to certify this class action brought following a criminal cyberattack on Casino Rama's networks. The certification judge found that while some of the plaintiffs' claims could survive a motion to strike, the proposed class "collapse[d] in its entirety" because there were no common issues among the class. The court also noted the defendants' prompt and comprehensive response following the discovery of the cyberattack. For further information, please see our May 2019 Blakes Bulletin: Proposed Privacy Class Action "Collapses in its Entirety" on Commonality.
  • Bourbonnière c. Yahoo! Inc.: The Quebec Superior Court refused authorization of this case, which arose out of cyberattacks against Yahoo and theft of user account data. The court found that the authorization criteria were not met because there was no evidence that anyone, including the proposed representative plaintiffs, had suffered any compensable loss as a result of the cyberattacks. As such, there was no "arguable case" with respect to the plaintiffs' claims.
  • Li c. Equifax Inc.: The Quebec Superior Court refused authorization of this case, arising out of the Equifax data breach announced in September 2017. Similar to the reasoning in Bourbonnière, the court concluded that the proposed representative plaintiff did not have an arguable case because he did not show that he had experienced any compensable damages as a result of the breach.

While we expect privacy class actions to remain commonplace in Canada for the foreseeable future, these cases suggest that courts are increasingly willing to scrutinize plaintiffs' claims to assess whether they are viable and whether a class action is the appropriate vehicle for their resolution.

SETTLEMENT TRENDS IN PRIVACY CLASS ACTIONS

To date, no privacy class action in Canada has proceeded to a determination on the merits. In the meantime, there have been several settlements, although it will remain to be seen what impact the cases referred to in this bulletin have on that trend.

While most settlements in privacy class actions to date have represented fairly low values per class member, there have been a few settlements involving more significant payments in cases where the information involved was highly sensitive and the defendant's intrusion was deliberate.

Settlement structures reflect the bespoke nature of civil privacy suits and the difficulty in assessing the losses (if any) of potential class members. Common characteristics of privacy class action settlements include:

  • Compensation for losses in the case of fraud or identity theft resulting from the breach
  • Cash payments for other proven out-of-pocket losses (e.g., steps taken to remediate the risk of fraud, lost time)
  • Amounts for continuing credit monitoring
  • Notice and administration costs
  • Honoraria for representative plaintiffs
  • Counsel fees.

CONCLUSION

Cybersecurity incidents are an ever-increasing threat for organizations of all sizes, and with it comes the threat of privacy litigation. The class actions landscape in this area is still evolving. Encouragingly, Canadian courts are turning a careful eye to these claims and scrutinizing their viability.

For permission to reprint articles, please contact the Blakes Marketing Department.

© 2019 Blake, Cassels & Graydon LLP.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions