Case Report – Court says duty to preserve doesn’t spring from mere happening of adverse event

On December 7th, the Ontario Superior Court of Justice dismissed a motion for an adverse inference based on the destruction of hospital records.

The hospital destroyed, during a routine purge, a medical chart related to a minor’s labour and delivery more than ten years after the procedure but less than ten years from the minor’s 18th birthday. The Court held that the destruction of the chart was inadvertent rather than intentional. Its reasoning is very fact-specific but for the following comment on one of the bases the plaintiff raised in support of an inference:

He also submitted that the fact of an adverse outcome [in the medical procedure at issue] is sufficient to suggest motivation to destroy records. I reject these submissions. Many medical procedures and hospitalizations may not have the desired outcome, but that does not automatically lead to the conclusion there will be litigation.

This is a (thankfully) forgiving take on the duty to preserve.

Gutbir v. University Health Network, 2010 ONSC 6752 (CanLII).

Case Report – Spoliation remedy granted in favour of bereaved dog owner

On May 21st, the Ontario Superior Court of Justice held that a kennel failed to meet it’s standard of care based on an inference it drew because of a missing record.

The plaintiff brought an action against the kennel after her dog needed to be euthanized shortly after its stay. Her theory was that the kennel should have been more attentive to her dog’s physical deterioration and intervened. The kennel argued that the deterioration occurred rapidly. However, it was hampered in making this argument because it had lost its record of the dog’s care.

The deputy judge did not make an express finding of bad faith, but did note that the owner’s evidence on the loss of the record was was “vague.” The record’s probative value being apparent, he drew an adverse inference and held that its loss “tipped the balance” in favor of the plaintiff on the issue of care.

This case is not earth-shattering, but is a nice scenario for raising the issue about whether negligent or reckless loss of a record is enough to support a spoliation remedy. In light of the Alberta Court of Appeal’s Black & Decker decision, the vague evidence finding was likely essential to the remedial award in this case.

Arnold v. Bekkers Pet Care Inc., [2010] O.J. 2153 (S.C.J.).

Case Report – Strong deference to search process demonstrated in “e-FOI” case

On March 30th, the Information and Privacy Commissioner/Ontario upheld the reasonableness of an institution’s search for responsive e-mails. The IPC held that searching for e-mails held by a key custodian alone was reasonable and sufficient: “…it is not unreasonable that the University’s search for records, both in electronic and hardcopy format, would begin and end in the Office of the Dean, for which responsive records were either sent and received.” It made this finding despite a request to “retrieve and search for any emails which may have been deleted” and and a finding based on the institution’s backup e-mail backup policy that deleted e-mails would not likely exist.

As with this recent Alberta Court of Queen’s bench decision, this order demonstrates a significant degree of deference to a process chosen to search for electronic records. These two decisions and others could be evidence of a general approach, though I’m yet to read any dicta in Canadian FOI jurisprudence that expressly addresses the need to maintain balance in light of the inflationary potential associated with the search and retrieval of electronic records.

Order PO-2880, 2010 CanLII 15935 (ON I.P.C.).

Case Report – Court says duty to preserve doesn’t spring from gravity of potential dispute

On March 30th, the British Columbia Supreme Court held that a gaming company had no duty to preserve betting slips redeemed by an individual to whom it denied a prize claim for over $6.5 million.

The plaintiff claimed he submitted 20 to 25 betting slips into the gaming company’s redemption machine, and that the machine retained five to 10 tickets as winning slips. The machine then produced a voucher for $6.5 million, which the gaming company would not pay based on a claim that the voucher was produced in error. It based this conclusion on an examination of a winning slip that was stamped by the machine as associated with a $6.5 million win but that did not reveal a winning wager at all. At the time it denied a payout, the gaming company also denied the plaintiff’s request to see his other slips that were retained by the machine. The gaming company destroyed these slips in the ordinary course of its business a week or two later, well before the plaintiff threatened or commenced an action.

The Court held that the gaming company had no duty to preserve when it destroyed the records. It said:

While perhaps it may have been prudent for the defendants to have contacted Mr. Patzer before the betting slips were destroyed, I cannot accede to Mr. Laxton’s submission that they had a positive duty to do so. I appreciate that the error of issuing a cash voucher for such a large amount of money is significant. I accept that Mr. Patzer asked to see his betting slips on November 6, 2004 but he did not follow up this request further. More importantly, if Mr. Patzer was not satisfied with the explanation he had been given, he should have advised the defendants. They would then have been at least put on notice that the matter had not been put to rest.

…

Here, the slips were destroyed in the ordinary course of business before the defendants were aware that Mr. Patzer was considering litigation or even challenging their explanation for the error. While it is unfortunate that they were destroyed so soon after the event, the defendants did not intentionally destroy the winning betting slips in an effort to suppress the truth. Accordingly, there is no basis to apply the doctrine of spoliation.

As there is no common law duty to preserve property which may possibly be required for evidentiary purposes and given these findings, the plaintiff’s claim based on the defendants’ destruction of the betting slips must fail.

Patzer v. Hastings Entertainment Inc., 2010 BCSC 236 (CanLII).

“Zubulake Revisited” a warning to Canadian litigants, but our law is different

On January 11th, Judge Schira Scheindlin of the United States District Court, Southern District of New York issued an opinion she entitled “Zubulake Revisited” – named after a series of landmark spoliation opinions she issued six years earlier. Since Zubulake, the Canadian law on spoliation has clearly diverged from that in the United States. While Judge Scheindlin’s recent dissection of corporate preservation processes contains excellent learning for Canadian organizations charged with meeting their preservation duties, it should not be the basis for assessing the merits of Canadian spoliation claims given our more forgiving remedial approach nor should it draw Canadian litigants to distraction from the merits of their litigation.

Judge Scheindlin’s most recent judgment is called The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities, LLC, et al. She orders an adverse inference instruction and costs against six plaintiffs who she finds grossly negligent in meeting their preservation duties and costs against seven other plaintiffs she finds guilty of mere negligence. In doing so, Judge Scheindlin describes how a court should use its inherent jurisdiction to control its process to deal with negligent preservation.

Judge Scheindlin says the purpose of a spoliation sanction is to (1) deter litigants from “engaging in spoliation,” (2) shift trial risks to the responsible party and (3) cure prejudice. She holds that a party who negligently destroys records in breach of a preservation duty may face a “severe sanction” such as dismissal, preclusion or imposition of an adverse inference if the other party proves prejudice. In cases of gross negligence, Judge Scheindlin argues for a rebuttable presumption of prejudice.

Compare this to the Canadian position as described by the Alberta Court of Appeal in its October 2008 Black & Decker decision:

In addition [to an inference of fact drawn from willful spoliation], the courts have a broad discretion to fashion remedies to avoid abuse of process, and the court’s rules of procedure are designed to assist the parties in ensuring trial fairness. Obviously, where the goal is to award remedies to even the playing field, the reason for destruction is less important. Generally such remedies are covered, and should be covered, through application of existing practice rules (or the development of further rules) and the exercise of the court’s discretion to avoid an abuse of process or award costs. Intention may not be necessary in those circumstances. But the unintentional destruction of evidence is not spoliation, and it is not appropriate to presume that missing evidence would tell against the person destroying it where the destruction is unintentional and the trier of fact cannot draw the adverse inference that the evidence was destroyed because it would tell against the spoliator.

Black & Decker is the current leading Canadian case on the remedies that flow from the breach of the duty to preserve. Unlike Judge Scheindlin, who says remedies should be granted (at least in part) to deter culpable conduct, the Alberta Court of Appeal suggests that the maintenance of trial fairness should be the primary guide to the exercise of discretion. Furthermore, it warns that that the striking of an action is an extraordinary remedy that must rest on willful misconduct: “While the court always has the inherent jurisdiction to strike an action to prevent an abuse of process, it should not do so where a plaintiff has lost or destroyed evidence, unless it is beyond doubt that this was a deliberate act done with the clear intention of gaining an advantage in litigation, and the prejudice is so obviously profound that it prevents the innocent party from mounting a defence.”

Ironically, Judge Scheindlin does express concern about litigation becoming “a ‘gotcha’ game rather than a full and fair opportunity to air the merits of the dispute.” Our own law has developed in a manner that more fully addresses this concern.

Big hat tip to Dominic Jaar of Ledjit for passing on this decision. For more on Canadian conservatism and the duty to preserve, see this Slaw article.

POSTSCRIPT. Following the publication of this post, Judge Scheindlin withdrew her originally-issued order and issued a revised order with clarifications that do not alter the point made in this post. The amending order is here and the consolidated amendment is here. Hat tip to Ralph Losey for covering the breaking news here.

Case Report – Manitoba sunglasses at night case illustrates key requirement for spoliation inference

A June 30th Manitoba Court of Queen’s bench decision nicely illustrates that an adverse inference for spoliation requires proof of intentional misconduct.

The Court held that the plaintiff contributed to her slip and fall injury because she was wearing her sunglasses at dusk. The defendant’s evidence supporting this conclusion went in through a witness who viewed the incident as it occurred via feed from a surveillance camera and testified that the plaintiff was wearing her sunglasses. The defendant also adduced a photo frame taken from the surveillance tape that showed the plaintiff holding her sunglasses in her hand after the accident. The defendant destroyed the tape itself, however, even though it had made a preservation request to its security department.

The Court rejected the plaintiff’s argument for an adverse inference because it had not proved the tapes were destroyed intentionally (citations omitted):

…there is no evidence that the tape was intentionally or deliberately destroyed so as to justify any spoliation inference, i.e., the presumption that intentionally destroyed evidence would tell against the spoliator. I cannot infer that the evidence was destroyed to affect the litigation. There is no indication that Ms. Park had anything to do with the tape being unavailable (the only evidence the court heard in this regard was hearsay – Ms. Park was told it was taped over). Nor can I conclude that the unavailability of her notes was due to any deliberate act. In any event, Ms. Park saw the incident as it occurred through the camera and she was subject to cross-examination. She maintained that Ms. Kulynych was wearing sun-glasses. I found her to be convincing in her evidence and forthright and reliable.

The Court did not consider whether a remedy should be granted under the abuse of process doctrine in consideration of the apparent prejudice to the plaintiff, though the Alberta Court of Appeal’s leading Black & Decker case suggests that an abuse of process remedy will also only be available if there is proof of intentional spoliation.

Kulynych v. Manitoba Lotteries Corp., 2009 MBQB 187 (CanLII).

Today’s “e-mail law” presentation

I was at the Osgoode PDP Electronic Evidence seminar today. There were great presentations all around, and I’ve included my notes at this Twitter feed. I was very honoured to co-present with John Gregory, whose knowledge of electronic evidence issues is deep. Our presentation is really about the law of e-mail, with a mix of content on access to e-mail on corporate systems, e-mail production and e-mail admissibility and weight. Here are the slides.

We also provided a handout with case citations and a summary sheet on the CGSB Standard on Electronic Records as Documentary Evidence.

I hope this is useful!

Managing your privacy obligations and my records retention and destruction presentation

I spent the last two days at the Canadian Institute “Managing Your Privacy Obligations” conference.

It was a very informative conference. with advanced content and discussion led by a faculty of many I admire. It was also a pleasure to finally meet and speak with fellow privacy law bloggers and contemporaries David Fraser and Brian Bowman. I took notes live on Twitter in a stream posted here. (Read from the bottom up.)

My own presentation was on the law of records retention and destruction. I used it as an opportunity to go a little beyond privacy and walk through all the legal and practical underpinnings of a retention rule. Here are my slides:

I’ll also offer a link to my paper, which I’d still characterize as a work in progress. If you have any comments or thoughts, please feel free to post them here or e-mail.

Thanks to the the Canadian Institute, conference organizer Sandra Bernstein and co-chairs David Fraser and Amanda Maltby. I was very pleased to be involved.

Case Report – Court rejects complaint about intelligence gathering through corporate e-mail system

On February 18th, the Federal Court dismissed a PIPEDA application that alleged an executive had unlawfully collected personal information by sending an e-mail to members of his firm to inquire about the applicant.

The facts leading to the application are twisted. Martha McCarthy, a prominent family law lawyer in Ontario, had represented the applicant’s wife in a contentious family law dispute. The judgement reports that Ms. McCarthy told her brother, Peter McCarthy, that she had received two threatening phone calls from the applicant. Mr. McCarthy, a Vice-President at J.J. Barnicke, e-mailed the company’s sales force for information. His subject line stated “Mark Waxer” and his e-mail stated, “Does anyone know what firm Mark is with?” Mr. Waxer complained to the federal Privacy Commissioner and subsequently filed his application.

These facts raise a good issue about PIPEDA application, but the Privacy Commissioner took jurisdiction over the complaint and the court application did not address whether the collection at issue was made in the course of J.J. Barnicke’s commercial activity or for Mr. McCarthy’s personal purposes. (Query whether a finding of jurisdiction is consistent with the Federal Court’s recent Johnson v. Bell Canada ruling.)

The Court dismissed the unlawful collection complaint because the applicant had not proven that Mr. McCarthy had actually collected personal information as result of his request. Notably, the Court gave no weight to the applicant’s argument that it should infer that Mr. McCarthy’s inquiry was fruitful from the respondent’s failure to adduce evidence of a thorough search of its computer system (including a search of e-mail archives and back-up tapes). It was satisfied with Mr. McCarthy’s sworn denial, which the applicant did not challenge in cross-examination .

The Court also declined to award damages for breach of PIPEDA’s accountability principle. The Privacy Commissioner had concluded that J.J. Barnicke did not have appropriate privacy policies in place nor did it have a designated privacy officer accountable for compliance as required by the Principles 4.1 and 4.1.4 of Schedule 1 to PIPEDA. The company complied with the Commissioner’s recommendations, and she therefore deemed the complaint to be “well-founded and resolved.” Without re-visiting the question of breach, the Court held that it was not proper to award damages in the circumstances. It held the applicant could not claim damages for the stress of the proceedings themselves and held that the he had not otherwise proven any other humiliation or embarrassment that would warrant a damages award. It noted that the applicant’s aggressive and assertive position throughout the litigation was inconsistent with his damages claim.

Waxer v. J.J. Barnicke Limited, 2009 FC 168 (CanLII).

Information Roundup – 15 February 2009

Another Roundup brought to you mostly by Twitter, which remains a wonderful distraction. I’ve also found a few new blogs, including one by Winnipeg privacy lawyer Brian Bowman. I look forward to following Brian’s writings and meeting him in person when we both speak at a Toronto privacy conference this May (details to come).

Here are some recent developments in the domain that you may find noteworthy. They are about monitoring and auditing employee computer use, government e-mail management and consent rules in privacy statutes.

Monitoring and auditing employee computer use

On June 8th I’ll be speaking at the OBA’s Hot Issues in Privacy Law seminar and have promised a paper on monitoring and auditing employee computer use. My yet-to-be proven thesis is that we Canadians are moving from period in which a blunt employer-friendly rule prevailed – one relying on systems owner rights – to a period in which Courts and labour arbitrators will impose a balancing rule. There’s early indication in Canadian case law that supports this thesis – the Daniel Potter case on privilege waiver and the University of British Columbia spyware case, for example. There’s not much recent Canadian case law though, so I’m planning on reviewing American case law, including the much-discussed Quon v. Arch Wireless case.

Quon made the news a few weeks back, when on January 27th the United States Court of Appeals for the Ninth Circuit denied a petition for rehearing en banc. The Court thereby endorsed its previous finding that a California police department violated an officer’s Fourth Amendment rights by auditing his text messages to determine why he and others were consistently exceeding monthly character limits.

While I make no comment on American law, I do think the facts in Quon illustrate why having a standard computer use policy is not necessarily enough to immunize employers from employee challenges now that most permit or condone some degree of personal use. This shift is likely to pressure Canadian courts and labour arbitrators to go behind broad “no expectation of privacy” statements in policy, leaving employers who tolerate personal use with a choice: (a) fight against an expectation of privacy by clearly and consistently communicating the details of a routine monitoring and periodic audit program through multiple means or (b) reckon with an expectation of privacy and implement controls to ensure that all searches are likely to withstand a reasonableness challenge.

Thank you to the Proskauer Rose privacy law group for their excellent coverage of Quan. For more on this topic, law student and blawgger Omar Ha-Redeye posted a related piece at Slaw just today and I wrote a paper in 2007 on the the basics of employee surveillance law. These rough ideas to be developed and more to come.

Government e-mail management

Employers are not the only ones who face challenges associated with e-mail management and communication systems that are used for mixed purposes. The Executive Office of the (United States) President’s challenges are detailed nicely by Joan Indiana Rigdon in an article published in this month’s DC Bar magazine. She outlines how legitimate attempts at segregating personal and political e-mails from official e-mails have led to widespread abuse of presidential record keeping legislation. Very interesting, and hints at the challenge of enforcing single purpose communication systems in organizations.

Consent rules in privacy statutes

And finally, knowledge management consultant Peter West sent me a link to this January 2009 paper by the Center for Democracy & Technology. (Thank you!) It contains the Center’s policy position on personal health information protection. Notably, the Center has changed its position on the role of informed consent, reasoning that an over-reliance on consent can harm privacy protection. It explains:

The ability of individuals to exercise control over their personal health inforamtion is one important element of privacy protection, and a comprehensive privacy and security framework should set out circumstances where patient consent or authorization must be obtained. However, consent is not a panacea. As appealing as it may seem in concept, in practice over-reliance on consent puts the burden for data privacy on csonumers and provides very weak protection for personal health information in a digital envrionment.

In isolation, without other legal limits, mandating consent is more likely to lead to overbroad information-sharing than to the protection of patietn privacy. Over-reliance on consent can confer disproportaionate bargaining power on providers and othes seeking approval for disclosure. This is especially true if patients are offered all-or-nothing disclosure options in circumstances in which they are unlikely to withold consent, or even to understand the choices they are making. In particular, when patients are seeking care or applying for insurance, they often authorize disclosures without a full appreciation of the scope of their consent and with an inadequate understanding of how their privacy is being protected.

This rings true.

One of the challenges with our commercial privacy legislation, PIPEDA, is that it features a very absolute (though contextual) consent rule. Organizations faced with PIPEDA compliance can get distracted by the consent rule and equate achieving compliance with obtaining consent. I have been coaching to this misunderstanding recently by using a concept I call the “three pillars of privacy protection” – informed consent, reasonable and proportional use and reasonable safeguards. If I had to explain what informational privacy legislation does in 10 second or less I’d describe the three pillars. I see this idea reflected in the Center’s paper, and am happy for it.

On a personal note, I just got back from a very short surf trip to Halifax. As a Torontonian, I’m allowed to say that it’s the best city in Canada – hands down. Here are a couple of pics from the first of two good but cold surf sessions, both of my good buddy Alex. Getting in the water has made me feel human again!

See ya!

Dan