U.S. Marketers:  Get Ready for Canada Anti-Spam Law (CASL) Lawsuits

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May 31, 2017 

CASLWhat is CASL?

CASL[1] was passed into law on December 15, 2010, over the vigorous objection of marketers and business owners, and became effective on July 1, 2014.  CASL can best be understood as a two-headed monster, essentially a Canadian hybrid of many of the most onerous provisions of the U.S. Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”) and the Telephone Consumer Protection Act of 1991 (“TCPA”).  CASL prohibits all commercial electronic messages (“CEMs”) that are sent to or from Canada without proper consumer consent, including e-mail, text, social media, voice and image messages.  Similar to the TCPA, CASL has a strict “opt-in” framework.

Who Can Be Sued Under CASL?

Any individual or business entity that sends, or assists in sending, a CEM to a consumer in Canada is subject to CASL.  Moreover, any CEM that is sent from, routed to or accessed from a device in Canada is subject to CASL regulations.   Corporate officers, directors and agents may be held personally liable if they directed, authorized, acquiesced or participated in the commission of a CASL violation.

What are the Penalties for Failing to Comply with CASL?

CASL provides for either actual damages or statutory damages of $200.00 per each violation, up to a maximum of C$1 million/day for individuals and C$10 million/day for corporate entities.  In determining the final amount of statutory damages to award, courts analyze the personal/corporate history of the violator(s), the financial benefit obtained and the nature and scope of the violation(s).  Considering that marketing campaigns may involve millions of CEMs, potential damages under CASL may escalate very quickly.

Class Actions Under CASL?

Effective July 1, 2017, CASL will allow individuals to file private and class action lawsuits to collect statutory damages.  Because the CASL requirements are so broad, so strict and so easily violated, U.S. marketers that send email or text messages to Canadian residents can expect to see a flood of CASL-specific class action lawsuits.  Moreover, CASL drafters did not provide any guidance as to whether the statute will allow for retroactive claims.  As such, it is an open question of whether, starting July 1, 2017, plaintiffs can only sue for CEMs sent after that date, or for those messages sent over the prior three years.  Regardless of the ultimate answer, we expect class action attorneys to take the aggressive, retroactive approach from day one.

My Company is Located in the U.S., Can We Be Sued under CASL?

Yes, as can the officers and directors of your company.  Canadian class action law firms are no doubt poised to file class action lawsuits against U.S. marketing companies, and to drag them into Canada to defend CASL class action cases.  It is also possible that Canadian plaintiffs will join with U.S. class action firms and seek to file claims in jurisdictions where the U.S. business is incorporated or has a principal place of business.

How to Defend a CASL Lawsuit?

If you are named in a CASL lawsuit, there are many factual and legal defenses that an attorney, knowledgeable and experienced in the nuances of CASL, can help you identify and assert.   For example, business-to-business CEMs and those that are purely informational in nature are not subject to CASL regulations.  Moreover, no CASL liability should attach where the CEMs are: not intended to be accessed in Canada, provided that the sender conforms to the laws of the target country; sent within six (6) months of receiving a consumer’s request, inquiry or complaint; solely consist of political content; sent to consumers with whom the sender has an existing business relationship; sent to consumers with whom the sender has a familial, personal or other non-business relationship; sent on a one-time basis to consumers referred by a person that has an existing relationship with the sender; etc.

How to Avoid A CASL Lawsuit?

As always, a penny of prevention is worth a pound of cure. If your business or your marketing firm utilizes CEMs, which you almost certainly do, you are at substantial risk that such messages could be routed to or accessed from a device in Canada, which would, thereby, subject you to CASL.  Retaining attorneys, knowledgeable and experienced in the nuances of CASL, class action defense, Internet practices and online marketing, who know the red flags that class action law firms look for, could save you substantial time and money, as well as allow you to avoid the distraction of dealing with avoidable litigation.

This topic should be of interest to any company or individual engaging in online marketing.

If you are interested in learning more about this topic, please refer to our CASL white paper and/or feel free to e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

Attorney Advertising

[1] CASL S.C. 2010, ch. 23.

David O. Klein

David O. Klein

David Klein is one of the most recognized attorneys in the telemarketing, technology, Internet marketing, sweepstakes and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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