On October 19, 2017, the Canadian Radio-television and Telecommunications Commission (CRTC) issued an important CASL (anti-spam law) related decision in Compliance and Enforcement Decision CRTC 2017-367 (CompuFinder).
In this case, CompuFinder had launched a constitutional challenge of CASL, relating to a notice of violation it received in 2015. The notice of violation alleged that CompuFinder had sent commercial electronic messages (CEMs) without recipients’ consent and had failed to include functioning unsubscribe mechanisms and imposed a $1.1 million administrative monetary penalty (AMP).
CompuFinder disputed the notice of violation before the Commission arguing, among other things, that CASL was not within federal Parliament’s power to enact (a division of powers constitutional argument) and that CASL violated CompuFinder’s freedom of expression under section 2(b) of the Canadian Charter of Rights and Freedoms (the Charter). It also argued that CASL violated sections 7, 8 and 11 of the Charter.
The CRTC dismissed CompuFinder’s challenge holding, on the substantive issues, that:
1. CASL is within federal Parliament’s legislative powers to enact and falls under its general federal trade and commerce head of power in section 91(2) of the Constitution. In coming to this decision, the CRTC reviewed the purpose clause of CASL, legislative definition of “commercial activity” and legislative history of the law (e.g., House debates for the protection of the e-economy). The CRTC rejected CompuFinder’s more narrow characterization of the nature of CASL that it merely regulates the sending of commercial information, finding that the overall nature of the legislation relates to electronic commerce: “CASL’s pith and substance is to implement a scheme to regulate certain conduct that could adversely affect the Canadian digital economy.”
2. The challenged provisions of CASL do indeed violate section 2(b) of the Charter (freedom of expression) but the infringement is justified under section 1 of the Charter. In this case, the Attorney General conceded that section 6 of CASL, which prohibits the sending of unsolicited CEMs, infringes section 2(b). The CRTC’s decision, therefore, focuses on whether this infringement is saved by section 1. In finding that it is, the CRTC held that CASL meets the 5-part test set out in R. v. Oakes,  1 S.C.R. 103. In this respect, the CRTC found that CASL is sufficiently clear to constitute a “limit prescribed by law”, the government’s regulatory objective is pressing and substantial (based on the potential threat to e-commerce) and that the challenged provisions do not impair free expression more than necessary to achieve CASL’s objectives. In finding that CASL was saved by section 1, it rejected extensive arguments made by CompuFinder relating to the significant restrictions imposed by CASL, overbroad reach, potential alternatives (e.g., the opt-out approach adopted in the United States) and vague and unclear exemptions and exclusions.
3. Violations of sections 7, 8 and 11 of the Charter had not been established. With respect to section 11 of the Charter in particular, there had been a significant amount of speculation since CASL came into force as to whether it could be challenged based on the penalties under the legislation (i.e., whether the significant potential AMPs – up to $10 million – are penal in nature, therefore triggering criminal procedural protections under section 11, such as the right to a hearing before an independent tribunal – i.e., not the CRTC, the body imposing the penalty – and presumption of innocence). The CRTC held that the challenged provisions were not criminal in nature. In coming to this conclusion, the CRTC characterized CASL as regulatory not penal in nature (based on CASL’s provisions and legislative history), reasoned that the adjudicative framework was regulatory not criminal and that significant potential AMPs alone are not necessarily sufficient to establish a statute as penal in nature.
Since CASL came into force in 2014, there has been a significant amount of commentary and speculation as to whether a successful constitutional challenge could be made to the law. The CompuFinder decision is clearly a significant setback for those seeking to have the law struck down or amended on constitutional grounds. While it is not yet clear whether this decision will be appealed, it is possible that the Federal Government may yet simplify and streamline the law following its current INDU Committee hearings studying CASL (see here).
In the meantime, there remains significant risk for marketers that send unsolicited CEMs without complying with the consent, ID and unsubscribe requirements of the law or relying on a category of implied consent or exemption.
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