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The Spokeo decision’s requirement that there be a concrete injury in order to ground privacy damages is not just a U.S. issue. Canadian courts have been wrestling for some time with the question of what damages look like in the context of privacy breaches, especially in class actions. While not definitive or binding north of the border, Spokeo may provide insight into how future statutory privacy breach actions are framed in Canada.

On May 16, the Supreme Court of the United States (“SCOTUS”) released its reasons in Spokeo, Inc. v. Robins (“Spokeo”). The case is significant because it addressed the issue of what degree of damages are necessary in order to assert standing to bring such a claim, an issue that has long troubled “privacy breach” claimants in both Canada and the U.S. The existence of a private right of action under a U.S. federal statute does not automatically suffice to meet the “real” harm standard.

The court ultimately adopted a middle-ground position, allowing the action to proceed but maintaining a narrow approach to the type of injury that will give rise to standing. Of interest, the dissent raises new questions about the legal recourse available to those who allege injury from the mismanagement or inaccuracy of their personal information.

Spokeo illustrates a contrast between privacy and consumer reporting law regimes in Canada and the U.S., and the associated legal risk exposure of organizations that manage the personal information of consumers, clients, or members of the public.

 

Background

Spokeo operates a “people search engine” that reviews a wide spectrum of databases to provide its users with information about individuals. The site markets itself as a mechanism for reuniting with lost connections, but can also be used for investigative purposes, such as evaluating job applicants.

The respondent, Thomas Robins, discovered that his Spokeo profile contained inaccurate information. He filed a federal class action complaint against Spokeo, alleging that the company failed to comply with its requirements under the U.S. Fair Credit Reporting  Act of 1970 (the “FCRA”). The FCRA requires consumer reporting agencies to “follow reasonable procedures to assure maximum possible accuracy” of consumer reports and imposes liability on “[a]ny person who willfully fails to comply with any requirement [of the FCRA]” with respect to any individual.

(Canada does not have a “fair credit reporting act” per se, but provincial statutes such as Ontario’s Consumer Reporting Act require consumer reporting agencies to “adopt all procedures reasonable for ensuring accuracy and fairness in the contents of its consumer reports.[1] In additional, Canada’s privacy legislation incorporates the principle of accuracy and a right of correction.[2])

Robins alleged that Spokeo disseminated false information related to his education, family status, and wealth, causing Robins to fear that potential employers would rely on this inaccurate information and be disinclined to consider him for employment. Spokeo argued that Robins’ fear, without more, did not constitute actual harm.

The District Court dismissed the complaint, holding that Robins had not suffered an actual injury, and therefore had not properly pleaded “injury-in-fact”, as required by Article III of the U.S. Constitution (“Article III”). As a result, he lacked standing. On appeal, a panel of the Court of Appeals for the Ninth Circuit reversed the District Court decision. The Ninth Circuit’s decision was appealed to SCOTUS.

 

The Decision

The SCOTUS panel filed a 6-2 split decision. The majority determined that the Ninth Circuit’s decision was incomplete for failing to satisfy the “injury-in-fact” requirement under the test for standing.

The test for standing before federal courts in the U.S. has a constitutional basis. Article III establishes the judicial branch of the federal government. It gives courts the authority to adjudicate “any case or controversy”. The court has developed these principles fairly narrowly. A plaintiff only has standing in federal court if they suffer a concrete and particularized injury, that is  “actual or imminent, not conjectural or hypothetical.” For an injury to be particularized, it “must affect the plaintiff in a personal and individual way”. A concrete injury must actually exist, though it can be either tangible or intangible.

Significantly, the court in Spokeo emphasized that violations of FCRA procedural rights do not necessarily result in concrete harm and that “not all inaccuracies cause harm or present any risk of harm.” SCOTUS held that a “bare procedural violation, divorced from any concrete harm,” will not “satisfy the injury-in-fact requirement of Article III.” This is likely to reign in attempts by lower courts which have taken a more lenient view of standing. In one regard, it represents a reiteration and clarification of SCOTUS’ position in Clapper v. Amnesty International USA, which stated that a “‘threatened injury must be certainly impending to constitute injury in fact,’ and that ‘[a]llegations of possible future injury’ are not sufficient.”

Clapper opened the door to much debate (and litigation) in respect of the scope of a “certainly impending” injury – a door which SCOTUS appears to be have incrementally closed. However, the court did not say outright that a plaintiff must have suffered concrete harm in order to sue. It noted that in some circumstances, a “risk of real harm” may be sufficient to satisfy the requirement of concrete harm.

In the end, the Spokeo majority ultimately concluded that the Ninth Circuit failed to fully appreciate the distinction between concreteness and particularization in its reasons, and it sent the matter back for the lower court to consider of whether “the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement.”

The dissent agreed with the majority’s analysis, but took issue with the need to remand the decision to the Ninth Circuit for an assessment of whether Robins’ injury was, in fact, particular and concrete. The dissent found that the evidence before the court had shown that Spokeo’s inaccurate information about Robins could jeopardize his candidacy for jobs he had or would apply for, and could cause potential employers to make negative judgments, based on inaccurate information, about his suitability for certain work demands. In the dissent’s view, this was far more egregious than an incorrect zip code (citing the majority’s example).

 

Privacy Damages in Canada

Spokeo raises a number of considerations for organizations that manage consumer and public data, both in the U.S. and Canada.

In the U.S., the decision raises questions about the ability of claimants to sue to enforce privacy-compliance requirements or other procedural matters under causes of action established by legislation like the FCRA. This is particularly so where the statutory right of action does not explicitly include requirements for concrete or particular injuries or where no clear harm has (yet) materialized that the plaintiff can point to.

Moreover, the split decision illustrates a divide on the SCOTUS bench over the harm that can accrue from the mismanagement of personal information and the growing importance of strong consumer privacy laws in a data-rich and networked world. While the majority characterizes the erroneous Robins profile as an error of no particular consequence, the dissent appears to be alive to the consequences and risks to individuals of poor data gathering, management, and publication where personal information is concerned.

These issues are very much alive in the Canadian privacy landscape as well. Canadian courts and legislators continue to grapple with the nature and quality of damages required to prove a claim.

Across Canada’s legislatures, there have been a patchwork of statutory suit provisions enacted for privacy complaints. For instance, the Newfoundland privacy statute explicitly includes a statutory tort, actionable without proof of damage,[3] as do the privacy acts of B.C., Saskatchewan, and Manitoba.[4]  The Quebec statute creates only administrative offences, and contains no civil right of action.[5]

Under the personal information legislation of some provinces, the statutes create a right to sue for damages only after the statutory administrative processes have resulted in an order or conviction, and then only for “for damages for loss or injury that the individual has suffered as a result of the breach”.[6] Canada’s federal Personal Information Protection and Electronic Documents Act (“PIPEDA”), takes a similar approach, but permits a court to “award damages to the complainant, including damages for any humiliation that the complainant has suffered.”[7]

Canadian courts’ struggle with these issues are evident in decisions like Chitrakar v. Bell TV:

The fixing of damages for privacy rights’ violations is a difficult matter absent evidence of direct loss. However, there is no reason to require that the violation be egregious before damages will be awarded. To do so would undermine the legislative intent of paragraph 16(c) which provides that damages be awarded for privacy violations including but not limited to damages for humiliation.

Privacy rights are being more broadly recognized as important rights in an era where information on an individual is so readily available even without consent. It is important that violations of those rights be recognized as properly compensable.[8]

An earlier decision, Nammo v. TransUnion of Canada Inc., addressed the issue as well, but took a more cautious approach:

Section 16 of PIPEDA provides that “[t]he Court may, in addition to any other remedies it may give … award damages to the complainant, including damages for any humiliation that the complainant has suffered.”  This provides the Court with exceptionally broad power to award damages.  Nevertheless, any damages awarded must be awarded on a principled basis, and be appropriate and just in the circumstances.[9]

Of note, the amendments to PIPEDA made under the Digital Privacy Act regarding mandatory data breach reporting set the reporting trigger as “real risk of significant harm” and state explicitly that “significant harm includes bodily harm, humiliation, damage to reputation or relationships, loss of employment, business or professional opportunities, financial loss, identity theft, negative effects on the credit record, and damage to or loss of property”.[10] An organization which concludes that it must report a breach may, in doing so, be inadvertently conceding a measure of damages.

© McCarthy Tétrault LLP

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[1] Consumer Reporting Act, R.S.O. 1990, c. C.33 at s. 9.

[2] See, for instance, Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5, Sch. I at “Principle 6 – Accuracy”.

[3] Privacy Act, R.S.N.L. 1990, c. P-22.

[4] Privacy Act, R.S.B.C. 1996, c. 373; Privacy Act, R.S.M. 1987, c. P125; Freedom of Information and Protection of Privacy Act, R.S.S. 1978, c. P-24.

[5] An Act respecting the Protection of Personal Information in the Private Sector, C.Q.L.R., c. P-39.1. In Québec, the right to privacy is also protected by several provisions of the Civil Code of Québec and by the Charter of Human Rights and Freedoms, and a breach of these rights to privacy can lead to broad damages awards.

[6] Personal Information Protection Act, SA 2003, c P-6.5, section 60. See Martin v. General Teamsters, Local Union No. 362, 2011 ABQB 412, at paras. 47-48, in which the Court struck portions of a Claim on this point; Personal Information Protection Act, SBC 2003, c 63.

[7] Personal Information Protection and Electronic Documents Act, S.C. 2000, c 5 at s. 16. Along with the statutory regime, there is the common law intentional tort of “intrusion upon seclusion”, developed in Jones v. Tsige, 2012 ONCA 32. However, this tort has been rejected in B.C. and Alberta, where the courts have found that the provincial privacy statute excludes a common law action for intrusion upon seclusion. See Ladas v. Apple Inc., 2014 BCSC 1821 at paras. 76-77 and Martin v. General Teamsters, Local 362, 2011 ABQB 412 at paras. 43-48.

[8] Chitrakar v. Bell TV, 2013 FC 1103 at para. 24.

[9] Nammo v. TransUnion of Canada Inc., 2010 FC 1284 at para. 66.

[10] Digital Privacy Act, S.C. 2015, c. 32 at s. 10.1(7)