When feds wiretap, who else can listen in, Canada’s Supreme Court to decide

23 April 2014. By Richard Vanderford.

Canada’s Supreme Court will hear arguments Thursday on whether private litigants should gain access to wiretaps that competition regulators obtained in a gas price-fixing investigation.

The case, which pits privacy against the courts’ truth-seeking function, could reshape the country’s antitrust enforcement.

Defendants are pushing the high court to overturn an order from a Quebec trial judge that would supply class-action plaintiffs with about 5,000 wiretapped conversations obtained as part of an investigation into gas retailers in Quebec’s Eastern Townships region.

The defendants argue that an affirmation of an order to turn over intercepted calls would dramatically curtail privacy rights. Civil plaintiffs, they argue, shouldn’t have access to evidence, normally reserved for criminal investigations, gathered in such an invasive manner.

Canada’s Competition Act, though, explicitly relies on private litigants to help with enforcement, making the Supreme Court’s task of balancing the defendant rights against public policy concerns a tricky one.

“The evidence only comes into existence as a result of highly invasive powers. To just make that available willy-nilly to plaintiffs in civil suits is potentially quite problematic,” said Michael Osborne, a partner at Affleck Greene McMurtry LLP.

“In favor of disclosure is the equally very strong idea that the courts are seekers of truth, “and evidence should be made available for that purpose.”

The disputed decision, issued in June 2012 by a Quebec trial judge, would provide plaintiffs access to wiretaps obtained in 2005 and 2006 against gas sellers in four Quebec communities east of Montreal. Individuals allegedly passed information
on planned price movements over the telephone.

Canada’s Competition Bureau used the wiretaps — it gathered some 220,000 after a career criminal prosecutor leading the investigation suggested they tap phones— to direct tactics for stakeouts of gas stations suspected of involvement in the conspiracy and evidence for raids on 88 premises.

More than 50 businesses and individuals were ultimately charged in 2008 and 2010, and as of August 2013, 33 individuals and seven companies had pleaded or been found guilty.

Quebec Superior Court Judge Dominique Belanger ordered that civil plaintiffs who sued later be given access to about 5,000 of the wiretaps, all of which had already been disclosed to the defendants, finding that the Competition Act allowed “certain measures” be taken to ease the burden on private litigants.

That decision was a mistake, the defendants have argued.

Canada’s wiretapping laws allow “the state, and only the state, to resort to electronic surveillance, but only for investigating specific crimes in cases of true necessity while respecting strict conditions and under judicial control,” gasolinestation chains Couche-Tard, Irving Oil, Ultramar and other defendants said in a brief to the Supreme Court.

Violations of the right to privacy should be limited to cases where important government objectives are at play, such as the fight against crime and maintenance of national security, they said.

A decision for the defendants could have serious implications not just for privacy but also on the Competition Bureau’s own immunity program, under which applicants can reveal anticompetitive conspiracies in exchange for protection from prosecution.

If the bureau is required to turn over wiretaps — and potentially other investigative materials — for use against defendants in civil cases, cartel members might rethink using the program, undercutting the bureau’s law enforcement effectiveness.
“To make the whole criminal regime work well, having a confidential process is important,'” said Richard Annan, a competition lawyer at Goodmans LLP who worked at the bureau for 22 years.

“If you change that calculus and have the state basically compelled to turn over all that evidence to civil litigants, it makes it more difficult to make the call to go into the program in the first place,” he said.

Law enforcement agencies across the country, already resource-strained, might find themselves additionally taxed if the Supreme Court makes one of their job functions sifting through and producing evidence for civil discovery.

Canada’s federal prosecution service has cautiously endorsed aspects of Belanger’s reading, saying the law doesn’t prohibit the disclosure of intercepted communications to a private litigant involved in a court case.

“It is in the interest of the administration of justice in general that litigation, civil and otherwise, be able to be decided on the basis of a complete proof,” the Public Prosecution Service of Canada wrote in a brief.

Contrary to what the appellants argued, Canadian law allows the fruits of electronic surveillance to be disclosed to a private party, it said.

But the service urged “caution and restraint” given the privacy implications and potential burden on law enforcement.

Ontario’s attorney general, who has intervened in the case, took a similar tack, saying that the law allows wiretap information to go to private litigants but urging the Supreme Court to require restraint by trial judges in doling it out. The federal prosecutors and Ontario AG will both make arguments at the court.

For the plaintiffs, the issue is simple: fairness for Canadians scammed by cartels. “Despite legislators’ efforts, Canada like many other western countries has faced numerous cartels in the past years, among them chocolate, DRAM, air freight, gasoline, polyurethane foam, car parts and vitamins,” they said in a written
submission to the court.

“Conspiracies and other forms of arrangements between competitors at the root of cartels’ very existence are serious economic crimes that have to be treated accordingly,” they said.

	Eliot Gao

Receive MLex Editor's Picks in Your Inbox

Complete this form to receive emails from MLex with selected highlights from our global coverage of regulatory risk and opportunity, as well as upcoming events, special reports and exclusive interviews.