Jun 10, 2020

CASL survives constitutional challenge, FCA gives some insight

3510395 Canada Inc. v. Canada (Attorney General), 2020 FCA 103 (CanLII)

On June 5th, the Federal Court of Appeal held that Canada’s Anti-Spam Legislation is intra vires Parliament and Charter-compliant. In doing so it opined on the scope of numerous CASL provisions, most-notably the so called “business-to-business exclusion.”

CASL applies coast-to-coast-to-coast – passed under the federal trade and commerce power. It is known to be both strict and inelegantly drafted because it applies very broadly but carves out areas of activity piecemeal, though numerous exemptions and exclusions.

None of this caused the Court any problem. It rejected the appellant’s division of powers attack and its attack under sections 2(b), 11, 7 and 8 of the Charter. Ultimately the Court viewed CASL as addressing an important problem of national scope and focused enough to pass muster because its scope of application is tied to “commercial activity” (a concept with sufficient meaning) and because of its numerous exemptions and exclusions: “CASL thus establishes a complex legislative scheme that evinces a considerable degree of tailoring to meet its objectives.”

More practically, the Court affirmed a CRTC finding that e-mails sent by the appellant to market training courses employees of organizations did not fit within the Act’s business-to-business exclusion, which removes commercial electronic messages from all regulation if they are sent by an organization, “to an employee, representative, consultant or franchisee of another organization if the organizations have a relationship and the message concerns the activities of the organization to which the message is sent.”

Regarding the relationship requirement, the Court agreed with the CRTC that it will not be satisfied by mere proof a prior transaction with an employee of the organization to whom a message is sent. The Court used the term “partner organization” to characterize an organization that would qualify for exclusion. It also said that the requirement for exclusion is more demanding than the requirement for being in the type of business relationship that would only trigger deemed implied consent – i.e., an existing business relationship. The Court explained:

Finding an existing business relationship in the present case would permit the appellant to send CEMs to a person—an individual—who had paid the appellant for a course within the preceding two years. Finding a relationship for the purposes of the business-to-business exemption, on the other hand, would allow the appellant to send CEMs to not only the individual who took the course, or the individual who paid for the course, but to every other employee of the organization to which those individuals belong—and organizations can be very large indeed. The latter finding would expose a great many more people to the potentially harmful conduct that it is CASL’s raison d’être to regulate. This suggests, contrary to the appellant’s argument, that the evidentiary requirements for establishing a relationship for the purposes of the business-to-business exemption should in fact be more demanding than for an existing business relationship.

Although this will limit access to the exclusion, the Court did find that phrase “concerns the activities” does not limit organizations to sending e-mails that concern only the core business operations of the recipient organization.

I’ve addressed only the Court’s most significant interpretive finding. Yesterday’s decision also addresses (a) the purpose of CASL, (b) the meaning of “commercial electronic message”, (c) the relevance of one’s job title to establishing deemed implied consent and (d) the prescribed requirements for an unsubscribe mechanism.