Since the introduction in Canada of the Personal Information Protection and Electronic Documents Act (“PIPEDA”), lawyers advising organizations involved in civil litigation sometimes have struggled with the “rules of the road” to apply in terms of requests for disclosure of records containing personal information. While PIPEDA permits organizations to refuse requests for access to personal information that is subject to solicitor-client privilege, it is silent on refusals to disclose information subject to litigation privilege. A broader question is whether PIPEDA even applies to personal information gathered against the opposing party in the course of litigation since PIPEDA regulates personal information collected, used or disclosed “in the course of commercial activities” – is it a “commercial activity” to defend oneself in a lawsuit? Common sense would indicate that it is not.

PIPEDA is also a one-sided statute that gives complainants a means by which to apply to the Federal Court of Canada in respect of their complaints. In addition, PIPEDA grants certain rights to the Privacy Commissioner of Canada (the “Privacy Commissioner”) to appear in respect of complaints that the Privacy Commissioner did not initiate. However, PIPEDA grants no such rights to organizations that are the subject of privacy complaints to challenge the complaint or the Privacy Commissioner’s findings or process.

The Federal Court of Canada has recently come to the rescue of organizations on all of these issues.

State Farm Mutual Automobile Insurance Company v. Privacy Commissioner of Canada and Attorney General of Canada 2010 FC 736 (released July 9, 2010) concerned the defence by State Farm of one of its insureds, Jennifer Vetter, who was involved in a car accident in New Brunswick with one Gerald Gaudet. State Farm hired private investigators to conduct video surveillance on Mr. Gaudet before and after the commencement of a tort action by Mr. Gaudet against Ms. Vetter in the New Brunswick Court of Queen’s Bench in 2005. Prior to commencing the action, Gaudet’s lawyers made a PIPEDA request of State Farm, asking for any and all information that State Farm had collected on Gaudet, including copies of any surveillance reports and tapes. State Farm declined the request claiming that PIPEDA did not apply.

Once the tort action was commenced, Ms. Vetter’s lawyers, retained by State Farm, delivered a draft affidavit of documents, and claimed litigation privilege over the written surveillance reports and the associated videotapes. Gaudet then made a complaint to the federal Privacy Commissioner claiming that the denial was a violation of PIPEDA because he had been denied access to his personal information, the information was disclosed to a third party without his consent and State Farm had not provided adequate safeguards to protect his personal information. State Farm took the position that the Privacy Commissioner had no jurisdiction in the matter and eventually brought an application for judicial review challenging the jurisdiction of the Privacy Commissioner to carry out an investigation under PIPEDA and compel access to information that is covered by solicitor-client or litigation privilege in the New Brunswick Courts.

By way of background, State Farm and the Privacy Commissioner were involved in several similar complaints that the Privacy Commissioner had agreed would be stayed pending the resolution of the Gaudet complaint. The Privacy Commissioner, though required by PIPEDA to issue a report within one year of the filing of a complaint, had not yet actually done so in the Gaudet matter. Bearing this situation in mind, and noting State Farm’s inability to seek any type of redress or resolution of its position under the terms of PIPEDA itself, the Federal Court, pursuant to section 18 and 18.1 of the Federal Courts Act, permitted State Farm to challenge the Privacy Commissioner’s assumption of jurisdiction in the matter and to have State Farm’s constitutional arguments heard in the Federal Court.

On the question of whether the collection of evidence by an insurer when defending one of its insureds is a “commercial activity” under PIPEDA, the Court discussed the history and purpose of PIPEDA, noting in particular that the long title of PIPEDA emphasizes the intent to support and promote electronic commerce. The Court said, at paragraph 105 of the judgement: “The collection of information in order to properly defend a civil tort action has little or nothing to do with these purposes.” The Court also said that, where an activity is exempt from PIPEDA, if third parties are retained to carry out that activity on a person’s behalf, then the activity remains exempt from PIPEDA.

With respect to the question of litigation privilege, the Court referred to a previous ruling of the Supreme Court of Canada that held that the Privacy Commissioner had no right to access solicitor-client documents even to determine if the privilege is properly claimed1 and to a prior ruling of the Federal Court stating that the Privacy Commissioner had no authority under PIPEDA to require that an organization justify its assertion of privilege.2 The Court noted that case law had already established that principles applicable to solicitor-client privilege also applied to litigation privilege in the context of a PIPEDA complaint. As a result, the Court held that the Privacy Commissioner had no authority to take jurisdiction over the matter or to require State Farm to justify its litigation privilege claims.

This is a good news story on several counts for any organization that faces a multitude of PIPEDA requests for personal information related to litigation. The ruling clarifies that: (1) organizations on the receiving end of PIPEDA requests do have recourse to the Federal Court of Canada to pro-actively challenge decisions or positions taken by the Privacy Commissioner; (2) the collection of personal information about a plaintiff for the purpose of defending a lawsuit from that plaintiff is not a “commercial activity” to which PIPEDA applies; and (3) the Privacy Commissioner has no jurisdiction to demand documents or an organization’s justification arguments in order to assess privilege claims, whether they be solicitor-client or litigation privilege claims – that assessment is strictly a matter for the Federal Court of Canada.

Unfortunately, the Court was able to dispose of the matter without addressing State Farm’s constitutional arguments challenging the authority of Parliament through PIPEDA to regulate anything beyond the federal undertakings sector. That interesting argument will have to wait for another battle on another day.