Common sense prevailed in heavyweight showdown. Further to my post on April 8, the Federal Court of Canada ("FCC") issued its ruling a few days ago, ending the battle between State Farm Mutual Automobile Insurance Company ("State Farm") and the Privacy Commissioner of Canada. The FCC's conclusion provides significant guidance on PIPEDA's application to litigation and to other areas where whether or not something is a commercial activity is fuzzy. The FCC found that PIPEDA does not apply to the collection of evidence on a plaintiff by an individual defendant in order to mount a defence to a civil action. This result is based on the conclusion that such activity is not considered to be 'commercial activity,' as contemplated by PIPEDA, when a finding of 'commercial activity' is a prerequisite for the application of PIPEDA. Where 'commercial activity' starts and stops, particularly in a context of litigation, has been the cause of numerous legal opinions and great conjecture and of course significant legal fees. If PIPEDA applied to information gathered in the defence of a claim against an individual, that information becomes subject to a whole set of rules governing consent, access and disclosure obligations that some argue are nonsensical in a litigation context. The background of the State Farm's action is as follows: State Farm had been subject to a number of privacy challenges by various persons relating to its collection of personal information in the course of State Farm acting on behalf of and providing a defence for its insured. The Privacy Commissioner of Canada had issued a number of findings that the information State Farm collected was 'in the course of commercial activity' and therefore subject to PIPEDA's jurisdiction. State Farm had enough, and brought a court challenge. Briefly, the facts of the specific matter brought before the FCC are that 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. of the FCC held, in a very common sense decision, that PIPEDA did not apply. He said (emphasis added): "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. … 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. [X] in order to defend herself in the civil tort action brought against her by Mr. [Y]." In reading the judgement there appeared times when strict application of facts to case law and principles were stretched a bit, but you can't help but come away from the decision feeling that the judge was trying to bring order to a potentially absurd result. The claim brought by State Farm also challenged the constitutionality of PIPEDA in its application to provincially-regulated organizations. As anticipated (see April post), issue of PIPEDA's constitutionality was not determined by the Federal Court because it was able to dispose of the matter on other grounds. It's not clear whether the FCC would have come to the same conclusion regarding the nature of commercial activity had it been a plaintiff (and not a defendant) who engaged a private investigator to prove his or her allegations. Would the FCC afford the same protection to someone who chooses to bring an action and then engages a private investigator to snoop around in the defendant's life? In the meantime, we can sit back and smile just a bit knowing that a small amount of order and a whole lot of common sense shone down on private sector privacy laws in Canada.
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