Supreme Court of Canada (“SCC”) jurisprudence in the cartel space is rare – and therefore valuable. While not always good news, it provides definitive guidance.
On October 17, the Supreme Court of Canada, ruled that plaintiffs involved in class action proceedings against multiple gas station operators would be granted access to the Canadian Competition Bureau’s (the “CCB’s”) wiretap evidence collected during the course of its criminal investigation into the conduct. The majority decision of the SCC held that neither the Competition Act nor the Criminal Code prevented a civil court from ordering the disclosure, by the CCB, of wiretap evidence obtained in connection with a criminal investigation.
Between 2004 and 2006, the CCB conducted an investigation, known as operation “Octane”, looking into alleged price fixing of retail gasoline prices in several smaller cities in the province of Québec. The investigation led to criminal charges being laid against 54 corporations and individuals. During the course of the investigation the CCB successfully intercepted and recorded more than 220,000 private communications pursuant to seven judicial authorizations.
When the criminal investigation became known, a class action proceeding was commenced against some of the criminally accused parties, as well as additional defendants who were not charged criminally. During the course of these civil proceedings, counsel for the plaintiffs sought to obtain the transcripts and recordings of the conversations that the CCB had intercepted pursuant to wiretaps.
In July 2012, the Superior Court of Québec accepted class counsel’s request and ordered that the CCB and the Director of Public Prosecutions provide the requested recordings to the lawyers and their experts participating in the class proceedings, with the requirement that these recordings be screened to protect the privacy of third parties not connected to the proceedings. The Québec Court of Appeal declined to review the Superior Court’s decision, and the matter was then brought before the SCC.
In reaching its decision to deny the appeal and permit the disclosure of the wiretapped conversations, the SCC drew a distinction between the justification required to permit the interception of private communications and the justification required to permit the disclosure of already intercepted communications. The SCC held that, in terms of authorizing the interception of private communications, the Criminal Code provides a mechanism to protect private communications that is necessarily balanced against the right of the state to intrude on privacy to further the suppression of crime. As a result, electronic surveillance can only be authorized in limited circumstances relating to the investigation of serious crimes and the investigation of threats to Canada’s national security. However, the SCC found that once private conversations have already been intercepted, the focus of the inquiry turns to civil discovery and disclosure principles. Thus, the SCC reviewed the applicable discovery rules related to the rights of discovery in civil lawsuits, requiring the disclosure of documents relevant to an issue in the proceedings in the possession of a third party. Based on these rules of civil procedure, the SCC approved the disclosure of recorded wiretapped conversations gathered as part of a criminal investigation, subject to the restrictions imposed by the Superior Court judge.
The decision has implications for all relevant parties. There are general privacy concerns, which were addressed as discussed above. There are also considerations for the CCB. The costs of the CCB in managing the production – and deletions – ordered may be considerable. The CCB may also find that it will get less information from parties on a voluntary basis – since it is not obvious that the decision will be restricted to information gathered by wiretaps. Plaintiffs, while immediate beneficiaries, may find that they obtain more materials than they can reasonably, or economically, manage.
The biggest impact, however, will be on defendants – the subject of investigations. All other things being equal, additional information in the hands of plaintiffs is unlikely to be beneficial to them. There may also be changes in tactical considerations, including what they are willing to proffer to government investigators. As well, in the past, defendants would often seek not to come into possession of certain CCB materials, so that they need not be produced on discovery. This approach may no longer be relevant.
However much any party may be happy – or unhappy – with the decision, it is now – and for the foreseeable future will likely be – the law. Plaintiffs will have access to a wider, in some cases much wider, suite of information in cartel follow-on class actions. This may not be a whole new world, but it is a notable shift.
Until next time,
James Musgrove & Joshua Chad