The Federal Court issued a very significant judgement on the scope of PIPEDA application today. Mainville J. held that PIPEDA does not apply to a collection, use or disclosure of personal information merely because it is collected, used or disclosed by an agent on behalf of a principal with whom it is in a commercial relationship.

PIPEDA applies to personal information that is “collected, used or disclosed in the course of commercial activity.” Since PIPEDA came into force in the provinces, people have questioned whether it applies merely because personal information is processed by an agent that is in a commercial relationship with a principal that is engaged in provincially-regulated activity. For example, provincially-regulated employers retain a range of agents who collect, use and disclose employee personal information on their behalves for the purpose of employment administration – e.g. private investigators, payroll processing agents, benefit administrators and others.

In the matter addressed in today’s decision, State Farm retained a private investigator on behalf of an insured person who was ultimately sued by a motor vehicle accident plaintiff. The private investigator conducted video surveillance on the plaintiff, and the plaintiff sought access to the surveillance footage under PIPEDA.  Mainville J. held that PIPEDA did not apply. He said:

I conclude that, on a proper construction of PIPEDA, if the primary activity or conduct at hand, in this case the collection of evidence on a plaintiff by an individual defendant in order to mount a defence to a civil tort action, is not a commercial activity contemplated by PIPEDA, then that activity or conduct remains exempt from PIPEDA even if third parties are retained by an individual to carry out that activity or conduct on his or her behalf. The primary characterization of the activity or conduct under PIPEDA is thus the dominant factor in assessing the commercial character of that activity or conduct under PIPEDA, not the incidental relationship between the one who seeks to carry out the activity or conduct and third parties. In this case, the insurer-insured and attorney-client relationships are simply incidental to the primary non-commercial activity or conduct at issue, namely the collection of evidence by the defendant Ms. Vetter in order to defend herself in the civil tort action brought against her by Mr. Gaudet.

This is a broad and principled finding on the scope of PIPEDA application. It is not limited to any particular kind of agency relationship and will no doubt cause lawyers, insurers and provincially-regulated employers to be pleased.

Note that State Farm backed its successful interpretation ground with a ground that rested on a very broad challenge to PIPEDA’s constitutional validity. Mainville J. did not decide on this second ground. His decision also contains some findings on points of judicial review procedure and administrative law that I have not summarized.

[Hat tip to David Fraser, and a big congrats!]

State Farm v. Privacy Commissioner of Canada, [2010] FC 736.

On June 23rd, Mosely J. of the Federal Court dismissed a PIPEDA application because the applicant failed to establish a need for a compliance order (with or without notice to the public) and failed to prove his damages. In doing so, Mosely J. made the following conservative statement about the PIPEDA’s remedial provision:

Pursuant to section 16 of PIPEDA, an award of damages is not be made lightly. Such an award should only be made in the most egregious situations. I do not find the instant case to be an egregious situation.

The OPC issued a report in May 2009 in which it concluded that the respondent – a fitness club – breached the consent rule in PIPEDA by disclosing information about the applicant’s membership usage to his employer as part a corporate membership program. It recommended a change in practice, and the respondent complied.

Mosely J. held that the applicant had established a breach of the consent rule but had not established justification for a remedy. He rejected the applicant’s argument that he suffered employment-related consequences because of the breach for wont of evidence. His reasoning suggests that individuals who apply for a PIPEDA remedy must prove damages, and based on the statement quoted above, something significantly more.

Randall v. Nubodys Fitness Centres, 2010 FC 681 (CanLII).

On May 14th, Arbitrator Wayne Moore endorsed the general reasonableness of a City of Vancouver policy that requires current employees in designated positions to submit police record checks every five years but also held that it ought not apply based on fire suppression duties.

Arbitrator Moore assessed whether the policy was reasonable light of the necessity standard in section 26(c) of the British Columbia FIPPA. He started by rejecting the Union’s argument that the City needed to demonstrate an “existing problem” to justify checks on current employees:

The Union argues that in order to implement the Policy, the Employer must show evidence of an existing problem in the workplace. I find that it is not inherently unreasonable to enact a policy in anticipation of a problem so that the organization can be in a position to identify the problem and to address it. To the extent that the Union argues that actual evidence of a problem in the workplace is a pre-requsite for the establishment of a reasonable policy, I disagree. In my view, the Employer is entitled to act proactively, so long as it does so reasonably. That said, the absence of evidence of a problem can impact on both the reasonableness of a policy and the reasonableness of its application.

Then, Arbitrator Moore held that the City ought to narrow its criteria for designation to conform with the reasonableness requirement, in essence requiring a relatively strong correspondence between position duties and risk. In the result, he held that it was reasonable to designate members of the City’s fire unit as subject to the police check requirement based one or more of the following criteria:

• they have ongoing or significant unsupervised access to vulnerable people in the ordinary course of employment (where “unsupervised” means unsupervised by management or other employees)
• they are responsible for the security of people and/or material assets in “some significant way”
• they exercise significant discretion and have independent power to make decisions, such that they may be susceptible to corruption

Based on these narrowed criteria, Arbitrator Moore held that the City had improperly designated a number of positions. He held that fire suppression and the provision of emergency medical services involves insignificant contact with vulnerable persons (as distinct from the role of a paramedic who responds to a fire call) and involves an insignificant responsibility for the security of people and material assets (as distinct from the role of a site security guard). By this finding, he held that the policy ought not apply to firefighters and other positions that the City designated on the basis of fire suppression duties. Conversely, he held that the City properly designated a number of positions based on an assigned responsibility for fire safety enforcement.

Arbitrator Moore also held that they City must compensate employees for time spent, including travel time, at overtime rates and must reimburse employees for the expenses incurred in obtaining their records.

Vancouver (City) v. Vancouver Firefighters’ Union, Local 18 (Police Records Checks Grievance), [2010] B.C.C.A.A.A. No. 81 (Moore).