Privacy Advisor

CANADA—Cases Underscore Importance of Structured Privacy Program

April 1, 2013


By John Jager, CIPP/US, CIPP/C, CIPP/G

As a society, Canadians have long prided themselves in being more restrained in legal matters than our southern neighbour, the United States of America. Almost every significant personal information security breach in the U.S. is immediately followed by one or more class-action lawsuits in which affected individuals attempt to allege harm and seek compensation or other damages for the alleged harm.

However, the Canadian landscape may be changing and “victims” of breaches in Canada are now becoming more aggressive in taking action against organizations which experience such security breaches. When memory sticks containing personal information of 2.4 million voters were lost by Elections Ontario in early July 2012, only a few weeks later a province-wide class action lawsuit was filed against Elections Ontario. Early in 2013, another such proceeding was launched against the federal government after the loss of an external hard drive containing personal information collected as part of the Canada Student Loans Program (CSL) was reported in January. The time lapse between the announcement of the breach event and the filing of a class-action lawsuit could be measured in days, rather than weeks or months.

In the CSL breach, a hard drive containing the personal information of clients—including information such as students’ names, Social Insurance Numbers, dates of birth, contact information, information about the students’ parents and loan balances—was reported as missing. The lawsuit alleges, inter alia, that the personal information was maintained by the federal government in a careless and insecure manner which could result in the personal information being lost, taken or stolen and used in a manner to cause harm to the plaintiffs and that the government should have should have encrypted and secured its hard drives; drafted, adopted and maintained an adequate digital-information security policy contemplating the storage of information on an external hard drive; properly trained and supervised employees on the importance of protecting personal information, and conducted timely, ongoing checks, balances and/or reviews of data storage systems to determine if the personal information was being secured and protected.

The CSL class-action lawsuit is seeking the following relief: damages for breach of privacy and intrusion upon seclusion; breach of contract; breach of statutory duty; breach of trust, negligence and intentional breaches of privacy; damages pursuant to section 24(1) of the Charter of Rights and Freedoms; aggravated, punitive and exemplary damages; special damages; interest; a declaration that the Defendant is vicariously liable for the actions of its employee; costs, and such further and other relief as deemed just, equitable and appropriate in the circumstances.

Whatever the final results of these two cases may be, they reflect a growing risk for organizations. Where in the past a privacy breach may result in the expenditure of signification amounts of money to mitigate the breach—including notification to affected individuals and/or changes in systems and business practices)—in negative media attention and may have had an impact on customer retention, the growing appetite for class-action suits will drive additional financial risk to organizations. Even if the cases themselves are unsuccessful, the cost of litigating is an additional and unwelcome burden for organizations.

These cases underscore the importance that every organization must have a structured privacy program in place, properly train employees of their respective privacy responsibilities and ensure that the appropriate security processes are in place to mitigate the reasonably foreseeable technical and physical risks to personal information.

John Jager, CIPP/US, CIPP/G, CIPP/C, is vice president of research services at Nymity, Inc., which offers web-based privacy support to help organizations control their privacy risk. He may be reached at john.jager@nymity.com.