Two recent privacy and cyber presentations

10 Oct

It’s been a busy last couple months on a number of fronts. Here are a couple of presentations I’ve delivered recently – a privacy updated delivered to the Canadian Association of University Solicitors in beautiful Cape Breton, NS (on outsourcing to the cloud and liability for data loss and misuse) and another to the Ontario Association of Children’s Aid Societies (on the claims context for data loss claims, incident prevention and incident response). Happy thanks giving everyone!


Court approves settlement, limits recovery of class counsel fees

15 Sep

On August 29th, Justice Perell of the Ontario Superior Court of Justice approved settlement of an action brought against Home Depot following a significant 2014 payment card system intrusion. The Court approved a settlement that featured a $250,000 non-reversionary settlement fund for documented claims of “compromise” and an agreement to pay up to $250,000 in credit monitoring. It also denied payment of approximately $407,000 in (docketed) legal fees to class counsel as unjustified, approving instead, payment of $120,000 in fees.

This is a good outcome for organizations exposed to potential class action claims for data security incidents. It was driven by two factors: (1) the Court found the incident was associated with a limited risk of damage; and (2) the Court was impressed by Home Depot’s incident response.

Regarding damage, the Court assessed the risk of damage flowing from a compromise to payment card information and e-mail address information as minimal:

[46] Professor Archer outlined three heads of damage to consumers from a payment card breach:  (1) the risk of a fraudulent charge on one’s credit card; (2) the risk of identity theft; and (3) the inconvenience of checking one’s credit card statements. The so-called non-reversionary Settlement Fund of $250,000 is designed to provide compensation for these heads of damages.

[47] Of the three heads of damage, practically speaking, there is little risk of fraudulent charges because of sophisticated safeguards developed by credit card companies. Moreover, when there are frauds, the losses are almost always absorbed by the credit card company or the retailer. The credit card companies are not Class Members.

[48] In the immediate case, there is no evidence that a Class Member absorbed a fraudulent charge. Neither Merchant Law Group nor McPhadden Samac Tuovi LLP have been contacted by a putative Class Member who said that he or she suffered a financial loss attributable to the data breach.

[49] There is also little risk that the data breach, including the disclosure of email addresses, increased the risk of identity theft, because the stolen data would have been inadequate to allow a criminal to fake another’s identity.

[50] Mr. Hamel’s evidence was that for identity theft, the most important information to have is a government-issued identification number such as a driver’s licence number, social insurance number or passport number and preferably all three. In the immediate case, the data stolen from Home Depot did not include this information.

[51] As for inconvenience damages, in the immediate case, there are none, because credit card holders are already obliged to check their statements for fraudulent purchases.

(Note that the Office of the Information and Privacy Commissioner of Alberta has recognized that the loss of e-mail address is associated with a risk of spear phishing – a risk that is arguably remote.)

Regarding incident response, Home Depot had offered to pay for a number of fraud protection services following the incident – including credit monitoring, identity theft insurance and credit repair services. The Court commented that this reduced the need for behavior modification:

[100] The case for Home Depot being culpable was speculative at the outset and ultimately the case was proven to be very weak. The real villains in the piece were the computer hackers, who stole the data. After the data breach was discovered, there was no cover up, and Home Depot responded as a good corporate citizen to remedy the data breach. There is no reason to think that it needed or was deserving of behaviour modification. Home Depot’s voluntarily-offered package of benefits to its customers is superior to the package of benefits achieved in the class actions.

These two factors led the Court to place little value on the action or the settlement. Justice Perell (who is outspoken), commented, “I would have approved a discontinuance of Mr. Lozanski’s proposed class action with or without costs and without any benefits achieved by the putative Class Members.”

Lozanski v The Home Depot, Inc., 2016 ONSC 5447 (CanLII).

No privacy breach for reporting what’s on the court’s record

2 Sep

On August 10th, the Ontario Superior Court of Justice dismissed a privacy claim brought against the publishers of The Lawyer’s Weekly for reporting on the plaintiff’s involvement in a small claims court proceeding. The Court adopted the following defendant submission:

Further, recent developments in the common law regarding invasion of privacy have fallen well short of the cause of action asserted by Bresnark. On the facts of this case, there is no ‘intrusion upon seclusion’, nor even any disclosure of ‘private facts’. Indeed, the Article is wholly based on public court proceedings and the facts and findings disclosed on the record in those cases. Therefore, the cause of action asserted in paragraph 4 of the statement of claim should be struck as disclosing no cause of action. It is plain and obvious that it has no chance of success.

The Court also dismissed a defamation claim as statute-barred.

Bresnark v Thomson Reuters Canada Limited, 2016 ONSC 5105 (CanLII).

Saskatchewan health authority criticized for slow incident response

26 Aug

Good incident response involves nailing your timing – not going too fast or too slow. 

On August 17th the Saskstchewan Information and Privacy Commissioner held that a health authority breached the Saskatchewan Health Information Privacy Act by failing to respond to an incident in a timely manner. 

The Commissioner’s report does describe a dilatory response – with a discovery of “snooping” in mid October 2015, an investigation that led to a paid suspension at the end of January 2016, notification to the Commissioner at the end of February 2016, notification to the Commissioner towards the end of March that the breach was bigger than first reported and eventual notification to affected individuals in July 2016. 

Think and don’t react, and you can even pause to momentarily to gain confidence in a next critical step, but always keep the ball moving.

Investigation Report 030-2016 (17 August 2016, Sask OIPC).  

Arbitrator awards nominal damages for unwarranted breathalyser test

21 Aug

On June 25th Arbiator Surdykowski awarded $200 in damages to an employee who underwent an unwarranted breathalyser test following a safety incident. The employer administered the test based on a mistaken belief that it was required by policy even though there was no basis for believing the employee was intoxicated. The employee suffered no particular harm.

Compass Minerals Canada Corp. and Unifor, Local 16-O (Walden), Re (June 25, 2016, George T. Surdykowski Member, Ontario Arbitration) 127 C.L.A.S. 286.

BCSC orders voyeur to pay $85,000 in privacy damages

2 Aug

On May 3rd, the Supreme Court of British Columbia ordered $85,000 in damages to be paid to a young woman whose stepfather surreptitiously recorded her while she was undressed in her bathroom and bedroom.

The damages finding was driven significantly by the “thoroughly undignified and humiliating actions” of the defendant, the age of the defendant and proof that the defendant’s actions caused a significant psychological disorder that the plaintiff was still recovering from at the time of trial (which was four years after discovering the defendant’s wrong). The plaintiff was recovering, the judge also noted, as well as noting that the defendant conducted his defence with “appropriate restraint.”

The judge did not consider evidence that the plaintiff was herself provocative in his damages assessment:

The evidence establishes that the plaintiff was a confident and happy young woman. She had a strong sense of self-esteem and probably was proud of her body. She was perfectly entitled to choose what she showed of her body — and to whom, how, and when.

The Court also ordered damages to be paid for past loss of earning capacity, the cost of medication taken and health care received and the cost of future care.

T.K.L. v. T.M.P., 2016 BCSC 789 (CanLII).

IPC comments on use and disclosure of OSR in litigation

1 Aug

On June 15th, the Information and Privacy/Commissioner Ontario dismissed a privacy complaint that alleged a school board breached the Education Act and MFIPPA by producing a student’s OSR in response to his human rights application.

The Board produced the OSR and filed it in a brief of documents to be used at a pending Human Rights Tribunal of Ontario hearing, all pursuant to the Tribunal’s rules. The complainant objected, and in a preliminary hearing, the HRTO directed the complainant to consent or face dismissal of his application. The complainant did not consent, his application was dismissed and he subsequently filed a privacy complaint with the IPC.

The IPC held that MFIPPA prevails over the statutory privilege provision in the Education Act and that the IPC is therefore “not bound to consider section 266 of the Education Act in its deliberations.” It also held that the OSR was information “otherwise available” to the Board and therefore open to its use under the provision of MFIPPA that stipulates that MFIPPA “does not impose any limitation on the information otherwise available by law to a party to litigation.”

The IPC did recommend that, going forward, the Board refrain from unilaterally handling the OSR when its potential use and disclosure is in dispute: “… the Board should make efforts to seek direction from an administrative tribunal or court prior to disclosing the information contained within an Ontario School Record during the course of litigation.”

 York Region District School Board (Re), 2016 CanLII 37587 (ON IPC).