Case Report – Court says PIPEDA doesn’t apply through commercial agents

9 Jul

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.

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One Response to “Case Report – Court says PIPEDA doesn’t apply through commercial agents”

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  1. Federal Court Rules in State Farm Privacy Case | Sectorprivate's Blog - July 12, 2010

    […] argued that Canadian private sector privacy law was unconstitutional. The court issued its ruling last week, finding in favour of State Farm but not addressing the constitutional […]

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