IT.CAN Newsletter – May 17, 2012

Blackberry Use to Download Confidential Employment Data

The Ontario Superior Court of Justice has issued an injunction in Corona Packaging Inc. v. Singh based on the defendant’s use of a blackberry to download nearly 8500 confidential and proprietary files from his employer’s computer system on his second last day of work. The defendant Singh, along with another defendant, Cascioli, had worked for Corona Packaging for several years. Corona made plastic bottles, and nearly 50% of its business came from a contract with a single customer, Guest Supply Inc.. Singh and Cascioli had both signed contracts upon joining Corona which included the requirement of confidentiality for proprietary corporate information and the obligation to not compete with Corona and not solicit Corona's customers for a three-year period following upon the expiry of employment.

After leaving Corona, Singh and Cascioli started their own company, Aura Packaging, to make plastic bottles. Becoming suspicious, Corona engaged a forensic IT specialist who discovered that Singh had used his laptop to download the nearly 8500 documents to a device like a Blackberry. These documents included every product produced by Corona, including all of the technical specifications, price lists, gross profit margins, machine cycle times, and input costs; the blue print for the final bottle products, with all the specifications for those products; "Bottle Drawings" which included the final form bottle specifications; the Price List Notification which included the proprietary formula to determine the price list; product-related documents such as quality control testing, sample lists and packaging layouts; work place policies; confidential customer information including customer-owned mould specifications; and financial and administrative documents.

Upon receiving court documents concerning the injunction, Singh contacted an IT specialist at Corona and acknowledged that he had downloaded documents. At Singh’s request the Corona IT specialist logged on to the Aura Packaging server and deleted those document: that specialist then notified his employers at Corona that he had done so. At the injunction hearing, the defendants acknowledged that they now had a contract with Guest Supply Inc. to manufacture one million plastic shampoo bottles for it, which it was halfway through completing.

The motions judge concluded that the evidence suggested the defendants were in breach of their common law duty to their former employer not to disclose or use trade secrets and confidential information, as well as being in breach of the restrictive covenant not to compete with Corona for a three-year period following upon leaving their employment. Further, Corona faced irreparable harm because the defendants were doing business with Corona’s major client. Finally, the balance of convenience favoured Corona, even though issuing the injunction meant that the defendants would have to stop fulfilling their contract with Guest Supply: they could not have entered into that contract had it not been for the confidential proprietary data the defendant had downloaded.

Web Postings Belying Claims of Illness

In Jamieson v Canada the appellant had launched an appeal of his tax assessments for various years, but had not diligently pursued the appeals: they had been postponed for a total of nearly four years, on various requests by the appellant claiming ill-health, absence from the country, and the inability to receive communications other than by mail forwarded to him in the Turks and Caicos, which he represented would take four to six weeks to reach him. The Tax Court Judge dismissed the appeals because of the appellant’s failure to reasonably and diligently pursue the appeals. The judge relied on a number of considerations, among them the fact that during the period that the accused claimed to be too ill to participate, he was actively involved in producing music videos and posting them to the web. The appellants’ website had posted nine videos to his own website during 2011, as well as posting various news releases. The Tax Court Judge also noted that although the appellant had at one point sent the respondents letterhead referencing the Turks and Caicos Islands, the fax stamp on that letter showed it to be sent from a UPS store in Edmonton.

Supreme Court Hears Appeals in Law and Technology Cases

The Supreme Court of Canada has recently heard appeals of several significant decisions for technology issues. The appeal in A.B. (Litigation Guardian) v. Bragg Communications Inc. was heard on May 10, 2012. The case concerns a teenage girl who became aware of a fake (and libelous) Facebook profile purporting to be her, and who sought an order from the respondent to disclose the identity of the person who had set up the page, as well as an order allowing her to proceed by way of a pseudonym (see the IT.Can newsletter of March 9, 2011 for a report of the Nova Scotia Court of Appeal decision in the matter). The Supreme Court reserved judgment.

On May 15, 2012, the Supreme Court heard the appeal in R. v. Cole. The accused in that case was a teacher who was found by a school computer technician to have a nude photograph of a female student in the school on his laptop. Further searches of the computer were conducted by the school board and by the police, and the legality of those searches was at issue (see the IT.Can newsletter of March 23, 2011 for a report of the Ontario Court of Appeal decision in the matter). The Supreme Court also reserved judgment in this case.

Ontario Privacy Commissioner Warns of Employment Dangers of Social Network Sites

The Ontario Privacy Commissioner has released a report entitled Reference Check: Is Your Boss Watching? The report notes the growth in the use of social networking sites as a means by which employers look for background information on job candidates. It notes the trend (more pronounced in the United States) for employers to ask potential employees to “friend” someone in the company’s human resources department, or even to disclose a username and password. Social networking sites make it possible, the report notes, for employers to obtain information which human rights statutes prohibit them from explicitly asking about. It also notes that due to websites such as the Wayback Machine, even old versions of websites can be accessed, and so it can be very difficult to remove any information once it has been posted. The report concludes by noting:

We have to say it again, but it bears repeating – the Internet, the Web – is a fundamentally public place. If you can’t get rid of something, you must assume that it’s going to be seen, so get ready to explain it. Better still, think before you post!

The Charter applies to Universities when disciplining students for online conduct

The Alberta Court of Appeal has held, in Pridgen v. University of Calgary, that the Canadian Charter of Rights and Freedoms applied to regulate the ability of the University of Calgary to discipline students for expressive activities carried out online.

The Appeal Court decision begins by concisely setting out the questions before it:

[1] Are students at public universities entitled to use social networking to criticize the instruction they receive? The University of Calgary (the University) said “no”, and disciplined the students who did. The students sought judicial review, arguing the University acted unreasonably and infringed their right to freedom of expression guaranteed by the Canadian Charter of Rights and Freedoms.... The chambers judge agreed with the students. The University appeals, arguing that its students do not have the right to freedom of expression because the Charter does not apply to it or to universities generally.

[2] This appeal raises an important issue, namely whether a university campus is a Charter-free zone. In arguing that the Charter does not apply to it, the University relies on two concepts which it says immunize it from the scrutiny of the Charter, institutional independence and academic freedom; two concepts that, it says, effectively shield universities from government or other outside influences, including the obligation to protect Charter rights.

The case came before the courts as a result of a group of students using Facebook to complain about a particular professor. The professor complained to the University and the Dean concluded that the students were guilty of non academic misconduct. A sanction of probation was imposed.

The students involved sought judicial review of the University decision, arguing that the discipline infringed their Charter-protected right to freedom of expression. Among the three judge panel, there was unanimity that the application for judicial review should be granted, but only one judge based her reasons on the Charter. Paperny JA wrote:

[105] Applying the Eldridge analysis to the facts of this case is one possible approach. However, I find that the nature of the activity being undertaken by the University here, imposing disciplinary sanctions, fits more comfortably within the analytical framework of statutory compulsion. The issue is whether in disciplining students pursuant to authority granted under the PSL Act, the University must be Charter compliant. The statutory authority includes the power to impose serious sanctions that go beyond the authority held by private individuals or organizations. Those sanctions include the power to fine, the power to suspend a student’s right to attend the university, and the power to expel students from the university: PSL Act, section 31. Accordingly, Charter protection for students’ fundamental freedoms, including freedom of expression, applies in these circumstances. This goes to the fundamental purpose of the Charter as noted by Wilson J. at 222 of her dissent in McKinney, where she stated that those who enacted the Charter “were concerned to provide some protection for individual freedom and personal autonomy in the face of government’s expanding role”.

[112] ... In exercising its statutory authority to discipline students for non‑academic misconduct, it is incumbent on the Review Committee to interpret and apply the Student Misconduct Policy in light of the students’ Charter rights, including their freedom of expression.

The other two judges on the panel agreed that the University's decision was unreasonable and could be dealt with solely on administrative law groups, so the Charter analysis was not necessary to reach the appropriate conclusion. In the result, the chambers judge’s decision to quash the discipline was upheld.

Contempt finding upheld for counselling destruction of evidence

In Fuller Western Rubber Linings Ltd. v Spence Corrosion Services Ltd., the Alberta Court of Appeal considered an appeal from a finding of contempt related to allegations that a former employee had taken a confidential manual of his former employer (that was an important part of the underlying action) and sent it to an outside consultant. After having been served with a statement of claim by his former employer, the individual allegedly contacted the outside consultant and urged that the manual be deleted. The chambers judge found that the former employee was in contempt for counselling the consultant to delete the manual, for the purpose of interfering with the administration of justice. The Court of Appeal gave deference to the chambers judge’s findings of fact and observed:

[18] ... Based on the uncontested facts, we see no reviewable error in the finding of contempt. Counselling the destruction of documents in the face of litigation in order to conceal that they were once in one’s possession is a serious matter.

[19] As a remedy for the contempt, the chambers judge ordered that the individual appellant pay the cost of the application on a full indemnity basis. While acknowledging that “in the present case no information has been lost”, he nevertheless ordered a full computer forensic investigation. The chambers judge speculated that “it is unclear what else may have been deleted”. The contempt application was based entirely on the efforts to delete the HSE Manual. No allegation was made of the destruction of any other document, nor is there any evidence of any other destruction. Embarking on an expensive fishing expedition at this stage of the litigation is unwarranted. Should the discovery process produce evidence of other problems, further applications for relief can be brought.

[20] The second appeal is accordingly allowed in part, in that the remedy of a forensic audit of the computers is deleted. In order to ensure an effective sanction, the appellants will have to pay the costs of the contempt application, and the contempt appeal, on a full indemnity basis.

Alberta Court of Appeal finds applying provincial privacy law to picket-line activities unconstitutional

In September of last year, the Alberta Court of Queen's Bench declared portions of the province's Personal Information Protection Act to be unconstitutional when applied to the conduct of video surveillance at a picket line. The case was appealed and the Court of Appeal, which upheld the decision of the Court of Queen’s Bench in United Food and Commercial Workers, Local 401 v Alberta (Attorney General).

The Court of Queen's Bench had found that the exception in the Act for journalistic collection was too narrowly drafted, as it required that the collection of personal information be for journalistic purposes and for no other purposes. This was an unreasonable restriction; if the collection were, in part, for journalistic purposes, then the Act should not restrict or regulate it. The Court of Appeal, in contrast, concluded that the purposes were not really journalistic, but were nevertheless constitutionally protected freedom of expression.

[58] The Act contains no general exemption for forms of expression that are constitutionally protected. To the extent that the exemptions in the Act are not sufficient to permit the type of collection and use of information engaged in by the union, its constitutionality should be analyzed directly, not indirectly through an artificial screen of journalistic purposes. Whether the restrictions on the union’s expression are demonstrably justified in a free and democratic society should not be based on the premise that a journalistic purpose was involved. The issue is whether it is justifiable to restrain expression in support of labour relations and collective bargaining activities such as existed here.

[59] In summary, it is not helpful to analyze this situation as “journalism”. Not every piece of information posted on the Internet qualifies. If the union wished to publish information about the activities on the picket line in a newspaper or on television, that would likely qualify as journalism. But that need not be decided here, because that is not what the complaints were about.

The collection of information at a picket-line is inherently expressive and is limited by the Act:

[67] It is clear that there are many aspects of the Adjudicator’s order that had a direct impact on the right of the union to free expression:

  • Newsletters and strike leaflets are entirely expressive; preventing the use of the images in them was a serious infringement on free expression;
  • Spreading news of the existence of the strike, and attempting to dissuade people from entering the casino are essentially expressive activities;
  • The use of the vice president’s image was also expressive. Satire has always been a powerful form of persuasion;
  • Education of union members, and providing information to other unions is expressive at its core.

Dissuading people from crossing the picket line, enhancing morale of the strikers, deterring violence and threats, and achieving a favourable end to the strike are all legitimate purposes supported by the right to free expression. Persuading people to think or act in a certain way is a direct purpose of free expression.

[72] The union has established a prima facie breach of its s. 2 Charter rights. Are the provisions of the Act demonstrably justified in a free and democratic society? Is the Adjudicator’s decision unreasonable because its effect on the union’s expressive rights is disproportional? To paraphrase Doré at para. 66, the appellant must demonstrate that the Adjudicator’s decision gave due regard to the importance of the expressive rights at issue, both in light of the union’s right to expression and the public’s interest in open discussion.

In order to determine if the infringement of the freedom guaranteed in s. 2 of the Charter is justified, the Court carried out the traditional Oakes test and found the legislation wanting in the proportionality branch of the test:

[77] There is, however, a problem relating to proportionality. The constitutional problems with the Act arise because of its breadth. It does not appear to have been drafted in a manner that is adequately sensitive to protected Charter rights. There are a number of aspects to the over-breadth of the Act:

  • It covers all personal information of any kind, and provides no functional definition of that term. (The definition of “personal information” as “information about an identifiable individual” is essentially circular.) The Commissioner has not to date narrowed the definition in his interpretation of the Act in order to make it compliant with Charter values.
  • The Act contains no general exception for information that is personal, but not at all private. For example, the comparative statutes in some provinces exempt activity that occurs in some public places.
  • The definition of “publicly available information” is artificially narrow.
  • There is no general exemption for information collected and used for free expression.
  • There is no exemption allowing organizations to reasonably use personal information that is reasonably required in the legitimate operation of their businesses.

This appeal clearly demonstrates the impact that the Act can have on protected rights. The legitimate right of the union to express itself and communicate about the strike and its economic objectives have been directly impacted by the Adjudicator’s order. The appellant has not demonstrated why this heavy handed approach to privacy is necessary, given the impact it has on expressive rights.

The result is that the Court declared the application of the Act to the union's constitutionally protected activities was unconstitutional.

It's also notable that the decision contains the following observation, quoted above but worth restating: "There is no exemption allowing organizations to reasonably use personal information that is reasonably required in the legitimate operation of their businesses." This statement was not necessary for the determination of the case under appeal, but potentially has significant consequences for the future.

This newsletter is intended to keep members of IT.CAN informed about Canadian legal developments as well as about international developments that may have an impact on Canada. It will also be a vehicle for the Executive and Board of Directors of the Association to keep you informed of Association news such as upcoming conferences.

If you have comments or suggestions about this newsletter, please contact Professor Robert Currie, Director of the Law & Technology Institute, at robert.currie@dal.ca.

Disclaimer: The IT.CAN Newsletter is intended to provide readers with notice of certain new developments and issues of legal significance. It is not intended to be a complete statement of the law, nor is it intended to provide legal advice. No person should act or rely upon the information in the IT.CAN Newsletter without seeking specific legal advice.

© 2012 by Robert Currie, Stephen Coughlan and David Fraser. Members of IT.CAN may circulate this newsletter within their organizations. All other copying, reposting or republishing of this newsletter, in whole or in part, electronically or in print, is prohibited without express written permission.

Le présent bulletin se veut un outil d´information à l´intention des membres d´IT.CAN qui souhaitent être renseignés sur les développements du droit canadien et du droit international qui pourraient avoir une incidence sur le Canada. Le comité exécutif et le conseil d´administration de l´Association s´en serviront également pour vous tenir au courant des nouvelles concernant l´Association, telles que les conférences á venir.

Pour tous commentaires ou toutes suggestions concernant le présent bulletin, veuillez communiquer avec le professeur Robert Currie á l´adresse suivante : robert.currie@dal.ca.

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