ARCHIVED - Compliance and Enforcement Commission Letter addressed to Dufresne Hébert Comeau

Ottawa, 15 November 2017

Notices to produce: 9102-2015-00415-003, 9102-2015-00415-004 9102-2015-00415-0059102-2015-00415-006, 9102-2015-00415-007, 9102-2015-00415-008, 9102-2015-00415-008, 9102-2015-00415-008, 9102-2015-00415-009

BY COURIER

Dufresne Hébert Comeau
800, rue du Square-Victoria, bureau 4500
C. P. 391, Montréal QC H4Z 1J2
representing 9118-9076 Québec Inc., 9310-6359 Québec Inc., Mr. Frank Leith, Ms. Lyne Hamel,
and Le groupe des techniques de commerce en ligne Inc., Mr. Richard Dorais, and 9172-8394 Québec Inc.

Re: Application for review of the notices to produce referred to above

On 1 December 2015, pursuant to An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act (the Act or Canada’s Anti-Spam Legislation [CASL]), a designated person for the purpose of section 17 of the Act served five notices to produce (NTPs) on 9118-9076 Québec Inc., 9310-6359 Québec Inc., Mr. Frank Leith, Ms. Lyne Hamel, and Le groupe des techniques de commerce en ligne Inc. (Le groupe T.C.L. Inc.). On 15 July 2016, the designated person served two additional NTPs on Mr. Richard Dorais and 9172-8394 Québec Inc. The seven NTP recipients are referred to hereafter as “the Applicants”. In the NTPs, the Applicants were requested to provide information related to the sending of commercial electronic messages (CEMs) promoting the sale of tickets related to events in metropolitan areas.

While portions of the NTPs have been fulfilled, the Applicants requested that the Commission find that the remainder of the documents are not required to be produced. Due to the number of NTPs issued and the dispersed nature of the applications for review, this letter will respond to the first five NTPs together followed by the last two NTPs.

NTPs 9102-201500415-003 to 9102-201500415-007

Part 1 of the first five NTPs required the Applicants to provide information related to, among other things, alleged CEMs sent between 1 July 2014 and 15 July 2016, in the form of short message service (SMS) and email messages that solicited ticket sales for events located in metropolitan areas such as Montréal, Ottawa and Toronto.

The Applicants submitted information in batches during the period from 15 January to 18 August 2016. On 15 July 2016, the designated person sent them a letter stating that certain information was unclear and certain requests were unanswered, including the following:

• Part 1, section b.: all records of CEMs sent
• The designated person noted that 33 Excel files were submitted, all with the same naming convention, tmp_histo_page**, where the page numbers ran from 1-62 with 29 of the numbers missing in no apparent order. With these missing files, the designated person noted corresponding time gaps in the message logs.
• In four of the files (_page6, _page27, _page40,and_page41) the data does not match the corresponding dates. In a fifth file, the Date column is mostly empty.
• The originating telephone numbers that sent the SMS messages were not provided in any of the files.
• Part 1, section i.: a detailed description of the organizational structure of 514 Billets and its relationship to xi. Clinique de massothérapie Chrysalide Inc. (Chrysalide). The designated person noted that the Applicants had previously stated Chrysalide had been inactive for several years and had no connection to 514 Billets, yet the Quebec Business Registry indicates the company is still active and used the name 514 Billetsbetween 14 June 2002 and 12 July 2004.
• Part 1, section i.: a detailed description of the organizational structure of 514 Billets and its relationship to i. 9118-9076 Quebec Inc., vi. 9310-6359 Quebec Inc., and xviii. Le Groupe T.C.L. Inc., including the names and responsibilities of every employee and administrator.
• Part 1, section k.: audited financial statements for 514 Billets, including balance sheets, statements of operations (income statements), and cash flow statements for the years 2012, 2013, and 2014, and a summary of significant accounting policies and other explanatory information. If unavailable, unaudited statements including Notice to Reader, Review Engagement, and the name, title, and professional qualifications of the person who prepared the statements.

In their 18 August 2016 submission, the Applicants provided a collective response to the outstanding questions, but requested a Commission review of the four items listed above.

Application for review

The Applicants submitted that the Commission should withdraw the requests to produce the documents identified in Part 1, sections b., i., and k. of the first five NTPs on the grounds that the requests are unreasonable, in accordance with subsection 18(2) of the Act.

With regard to the message log information, the Applicants submitted that it is unreasonable to request information that has already been submitted or is not in the Applicants’ possession. The Applicants also submitted the following regarding a number of the designated person’s specific requests:

• they have submitted all the information they possess, and referred to a previous letter dated 7 April 2016 in which they specified what information is kept on record.
• the information in the files was submitted in exactly the same format as it was kept and extracted from the database; and
• they do not possess the records of originating telephone numbers from which the SMS messages were sent.

The Applicants submitted that the organizational structure of Chrysalide relates to years that fall outside the applicable period of the Act. The Applicants also argued that they had provided sufficient information on this company in their previous correspondence dated 7 April 2016.

On the organizational structures of 9118-9076 Québec Inc., 9310-6359 Québec Inc., and Le Groupe T.C.L. Inc., the Applicants argued that this information had already been submitted to the designated person. They also argued this request concerns individuals for which no violation has yet been determined, and that asking for employees’ names violates the Quebec Act Respecting the Protection of Personal Information in the Private Sector.

The Applicants submitted that the request for financial documentation for 514 Billets falls outside the provisional powers of section 17 of the Act, and that this request concerns a period outside that which is stipulated in the NTPs (before 1 July 2014). The Applicants also opposed the proposed list (Annex I of designated person’s letter of 15 July 2016) of relevant documents that could be provided on the grounds that the request is vague, ambiguous, exaggerated, abusive, and infringes on personal privacy rights.

Designated person’s representations

The designated person filed representations in response to the application, pursuant to subsection 18(3) of the Act.

In response to the missing or discrepant information in the message logs, the designated person stated this was not a repetition of a request for information that had already been produced, but a request for an explanation of missing files, incongruent or missing dates from five files, and missing originating numbers from which the messages were sent.

The designated person also cited two documents, the liste de consentement and the liste d’exclusion, which the Applicants referred to in their first response to the NTPs, dated 15 January 2016. These documents were never provided, and the designated person considered that they would be relevant since the Applicants themselves explained in a letter dated 7 April 2016 that all the records of telephone numbers consenting to or denying receipt of CEMs were contained in these two documents.

In their submission dated 7 April 2016 the Applicants stated that screenshots explaining the general procedures for collecting information, recording consent, and effecting unsubscribe requests would be submitted in the following days. The designated person noted that no such information was ever received.

With regard to the organizational structure of Chrysalide, the designated person stated that he was not requesting the same information that had already been submitted, but was looking for a clarification of two different responses. In their submission dated 7 April 2016, the Applicants stated that Chrysalide had no affiliation with the name 514 Billets, but stated in their 18 August 2016 submission that Chrysalide no longer had any affiliation with this name. The designated person indicated that he was seeking an explanation for this apparent discrepancy in responses.

In response to the Applicants’ claim that the designated person was requesting information for the period of June 2002 to July 2004, which falls outside the applicable period of the Act, the designated person stated that the purpose of requesting historical documents is not to establish violations committed before the Act came into effect on 1 July 2014, but to obtain a global picture of 514 Billets’ activities and structure.

With regards to the request for the organizational structures of 9118-9076 Québec Inc., 9310-6359 Québec Inc., and Le Groupe T.C.L. Inc., the designated person was of the view that an NTP can include a request for information before it has been established that violations were committed, and by whom they were committed. He further stated that while he was requesting the same information again, it was because it had not yet been fully submitted, which is why he defined “structural organization” to include the full name, title, and responsibilities of each administrator and employee.

The designated person argued that the NTP’s requirements did not unfairly target individuals for whom no violations had yet been established because the NTP is allowable for the purpose of determining whether an individual or an organization has committed any violations of the Act. The designated person also argued that the request for names, titles, and responsibilities is not an infringement of personal privacy rights because the Civil Code of Quebec allows for personal information to be disclosed to an organization if that organization is trying to determine violations of a law that is applicable in the province of Quebec. As a federal law, the Act is applicable in Quebec.

The designated person stated that the request for financial documents related to ability to pay a penalty was outlined in the 15 July 2016 letter, and was not part of the original NTP. The designated person stated that the information would assist him in determining the Applicants’ ability to pay if an administrative monetary penalty (AMP) were to be imposed, and acknowledges the many factors in determining a penalty.

The designated person also stated that Annex I is composed of a list of suggested documents as examples, and is not a requirement in its entirety. He submitted that it was not unreasonable to provide the list to the Applicants.

In addition, the designated person stated that

• the requested information did not surpass his powers because the request falls within section 17 of the Act;
• the information requested in the NTPs is not unreasonable because they were issued for a permitted purpose as set out in sections 3 and 17 of the Act; and
• it was reasonable to believe that the Applicants possessed the requested information; otherwise, an explanation for why the information was not available could be accepted.

Commission’s analysis and determinations

The Commission must decide whether the requirement to produce was, in the circumstances, reasonable or not. Pursuant to subsection 18(3) of the Act, the Commission may

1. allow the application;
2. deny the application; or
3. vary, in any manner that the Commission considers reasonable in the circumstances,
   1. the requirement to produce, or prepare and produce, a document, or
   2. any condition imposed in the notice.

Under subsection 17(2) of the Act, an NTP is permitted only for the purpose of

1. verifying compliance with the Act;
2. determining whether sections 6 through 9 have been contravened; and
3. assisting an international investigation under laws similar to those of sections 6 to 9.

After reviewing the NTPs and considering the Applicants’ and the designated person’s representations, the Commission denies the application for review; however, it finds that the requirements to produce the message logs (Part 1, section b.), the organizational structure of Chrysalide (Part 1, sections i. and xi.), and the financial statements (Part 1, section k.) have been fulfilled.

The Commission determines that the liste de consentement, the liste d’exclusion, and the document of screenshots specified above must be produced, because these documents are reasonably expected to be in the Applicants’ possession and will support the designated person’s investigation to determine whether any of sections 6 to 9 of the Act have been contravened.

With regard to the organizational structures of 9118-9076 Québec Inc., 9310-6359 Québec Inc., and Le Groupe T.C.L. Inc., the Commission notes that the designated person’s request to include the full name, title, and responsibilities of each administrator and employee has not been fulfilled. The Commission considers this information pertinent to determining if there were any violations of the Act and, if so, who is responsible for such violations. Therefore, this information must be produced.

The Commission notes that subsection 17(2) of the Act does not preclude the designated person from requesting information concerning persons for whom violations have not yet been determined, and considers the designated person’s requests to be reasonable.

Further, the Commission considers that the Applicants’ general allegation with respect to potential privacy issues under Quebec’s Act Respecting the Protection of Personal Information in the Private Sector is not supported by any rationale or any specific section of that provincial legislation. Even if the Commission were to consider the application of the provincial legislation in the context of an investigation under CASL, an NTP would fall under the following exception set out in subparagraph 18(6) of the provincial legislation:

A person carrying on an enterprise may, without the consent of the person concerned, communicate personal information contained in a file he holds on that person […] to a person or body having the power to compel communication of the information if he or it requires it in the exercise of his or its duties or functions.

Regarding the production of audited financial statements for 514 Billets, the Applicants provided financial documents for 9118-9076 Québec Inc. and 9172-8394 Québec Inc. for the years 2012, 2013, and 2014. They indicated that the former used the name 514 Billets until October 2014 and that the latter is a holding company that owns 9118-9076 Québec Inc.

Beyond this submission, the Commission notes that 514 Billets is not itself a registered company but rather a business name used by a multitude of persons (individuals, corporations, etc.). The Commission considers that the Applicants are not obligated to respond further to the request for financial statements.

NTPs 9102-201500415-008 and 9102-201500415-009

On 15 July 2016, the designated person issued two additional NTPs: one to Mr. Richard Dorais, the co-owner of a company currently operating under the business name 514 Billets, and one to 9172-8394 Québec Inc., owned equally by Mr. Dorais and Mr. Frank Leith. Neither entity was the subject of the preceding NTPs.

Pursuant to subsection 18(1) of the Act, the Applicants requested in writing on 18 August 2016 that the Commission review the NTPs.

Part 1 of the NTP to Mr. Dorais required him to produce information related to alleged CEMs that were sentbetween 1 July 2014 and 15 July 2016, in the form of SMS and email messages that solicited ticket sales for events located in metropolitan areas such as Québec, Montréal, Ottawa, and Toronto. In particular, the following information was requested:

• Mr. Dorais’ title, position, and the nature of his responsibilities within all companies that have done business under the name 514 Billets since 1 July 2014;
• all information related to how he obtained telephone numbers to which alleged CEMs related to the activities described above were sent, as well as Mr. Dorais’ involvement in decisions and actions made around these activities;
• all documents and information related to Mr. Dorais’ personal financial affairs; and
• all information concerning any other business with which Mr. Dorais was affiliated between 2013 and 15 July 2016.

Part 1 of the other NTP required 9172-8394 Québec Inc., doing business as Gestion D.L., to produce information related to the company’s structure and its scope of control and management of all companies conducting business under the name 514 Billets. In particular, the following information was requested:

• a detailed description of the organizational structure of 9172-8394 Québec Inc., including the names, titles, and responsibilities of each administrator and employee, as well as the reporting structure, for the period of 1 July 2014 to 15 July 2016;
• a detailed description of lines of supervision and the financial links between 9172-8394 Québec Inc. and 9118-9076 Québec Inc., 9310-6359 Québec Inc., and any other company currently or previously doing business under the name 514 Billets, as well as any other company that 9172-8394 Québec Inc. owned, controlled, or supervised, from the period of 1 July 2014 to 15 July 2016;
• audited or unaudited financial statements for 9172-8394 Québec Inc. for 2015, and other supporting information; and
• certain additional financial information.

Application for review

The Applicants submitted that they should not be required to produce the outstanding documents required under the two NTPs on the grounds that the requests are unreasonable.

In particular, the Applicants argued that

• the requested information in both NTPs surpasses the permitted purposes of section 17;
• the information concerns a period outside the one stipulated in the NTPs; and
• the request for financial documents in Annex I attached to the designated person’s letter dated 15 July 2016 is vague, ambiguous, exaggerated, abusive, and an infringement on personal privacy rights.

Additionally, the Applicants indicated their intent to cooperate with the investigation and comply with the Act. They reiterated their willingness to meet in person to expedite closing the file.

Designated person’s representations

The designated person filed representations in response to the application for review, pursuant to subsection 18(3) of the Act.

Permitted purposes of section 17

The designated person argued that the information requested in the two NTPs does not surpass the provisional powers under section 17 because the documents requested all relate to the Applicants’ professional and financial status, and that it is reasonable to believe the Applicants are in possession of or responsible for such information.

The designated person considered that the documents requested will identify the organization of the persons involved in 514 Billets’ business activities, how revenues from these activities are distributed and who benefits, and who is responsible for any violations deemed to have been committed.

Stipulated time period

With regard to the claim that some of the requested information concerns a period outside the one stipulated in the NTP, the designated person noted that the time frames related to NTP requests need not adhere to the same time period prescribed in other NTPs related to the same investigation. The relevant time period is determined for each individual request in each NTP, independent of previous requests.

The designated person noted that the relevant period covers 2013, 2014, and 2015 for the final two information requests. These documents were requested to verify (i) compliance by following the movement of assets within the 514 Billets organizational structure, and (ii) to what extent Mr. Dorais is implicated or a financial beneficiary. Additionally, the documents will help determine his capacity to pay a penalty, if applicable.

Due to the fact that different individuals have been involved with 514 Billets since 2012, the designated person stated that it is necessary to review information dating back three years to gain a full financial picture.

Annex I request

The designated person noted that the NTPs in question do not contain an Annex I. He assumed that the Applicants were referring to the list of financial documents included in the 15 July 2016 letter that pertained to the first five NTPs, and that the Applicants were appealing the list of financial documents requested in Part 1, section c. of the NTPs, which is very similar to the list contained in Annex I of the 15 July 2016 letter;

The designated person stated that the requests do not infringe on privacy rights because the Civil Code of Quebec allows for personal information to be disclosed to an organization if that organization is trying to determine violations of a law that is applicable in Quebec. As a federal law, the Act is applicable in Quebec.

Commission’s analysis and determinations

While the designated person’s arguments in response to the applications for review of the two NTPs were identical, the information requested in each NTP was not; therefore, an analysis for each NTP will be presented separately.

As noted above in the Commission’s analysis of the other NTPs, the Commission must decide whether the requirement to produce was reasonable or not in the circumstances.

After reviewing the NTPs and considering the Applicants’ and the designated person’s representations, the Commission denies the application for review and considers that the documents sought in the two NTPs will provide information relevant to the designated person’s investigation.

NTP 9102-201500415-008 – Mr. Richard Dorais

Permitted purposes of section 17

The Commission considers that the NTP to Mr. Dorais was issued for a permitted purpose under section 17 of the Act.

The Applicants stated in a previous letter to the designated person that only Mr. Dorais was responsible for managing the sending of SMS and emails. Further, both the Applicants and the designated person have stated that at least two different companies have used the name 514 Billets, both of which have either been co-owned by Mr. Dorais or by a holding company co-owned by Mr. Dorais.

The collection of Mr. Dorais’ personal business records and financial documents does not unfairly target Mr. Dorais but is grounded on a reasonable understanding that Mr. Dorais is, to an unknown extent, personally involved in the  activities referred to in Part 1 of the NTP. The information requested will contribute to the investigation into potential violations of the Act by showing how these activities are organized, how revenues are distributed, and who the beneficiaries are, so that it can be determined who is responsible for any potential violations.

Stipulated time period

Regarding the permissible time period, all four requests for information in the NTP to Mr. Dorais were issued for the purposes of determining Mr. Dorais’ role in the alleged sending of CEMs between 1 July 2014 and 15 July 2016. While the third and fourth requests for personal financial information and corporate affiliations extended back to 2013, the designated person argued that this information would help determine who is responsible for any violations by establishing the organizational structure within which the violations were committed, and would identify persons within the organization who might have benefitted from those violations.

The Commission does not consider it unreasonable under the circumstances to request information dating back to 2013, one year before the relevant activity began, since such information could help in understanding the broader financial structure and the cash flow routines associated with the activity.

Annex I request

Regarding the Annex I list of financial documents, this list was not provided to the Applicants formally through an NTP, nor was it attached to the NTP to Mr. Dorais. Its contents reflect a list of items suggested to fulfil a request from the designated person, not a requirement of the NTP.

NTP 9102-201500415-009 – 9172-8394 Québec Inc.

Permitted purposes of section 17

The designated person argued that the NTP to 9172-8394 Québec Inc. was issued to better understand the hierarchy of bodies operating under the name 514 Billets, to trace the revenues generated by the relevant activities, to identify any financial beneficiaries, to identify who is responsible for any violations, and to determine the recipients’ ability to pay if and when violations are determined and a notice of violation is issued. The required information is therefore necessary to verify compliance or determine whether sections 6 through 9 of the Act have been violated.

The Commission considers that the NTP to 9172-8394 Québec Inc. was issued for a permitted purpose under section 17 of the Act, which allows the designated person to issue a notice that is not limited to the person that is the direct subject of an investigation.

The purpose of an NTP is to verify compliance with the Act and to determine whether violations have been committed; as such, the designated person should be able to inquire about money associated with the relevant activity to establish whether and to what degree 9172-8394 Québec Inc. and the persons operating under the name 514 Billets have benefitted from or may be responsible for that activity. For this reason, it is pertinent to analyze the financial information of 9172-8394 Québec Inc., its organizational structure, and the scope of control and management of all companies linked to 9172-8394 Québec Inc. and conducting business under the name 514 Billets.

Stipulated time period

The Commission notes that the NTP itself does not set out a time period, though the first two requests specified 1 July 2014 to 15 July 2016, and the year 2015 was specified in the third request. The fourth information request was supplementary to the third and can reasonably apply to the same year. The Commission considers that the requested information does not go beyond any period stipulated by the NTP, nor does it exceed the applicable period of the Act.

Annex I request

The Commission considers that the Annex I list of financial documents contested by the Applicants was not issued formally through a NTP, nor was it attached to the NTP to 9172-8394 Québec Inc. Its contents reflect a list of items suggested to fulfil a request from the designated person, not a requirement of the NTP.

Conclusion

In light of the above, the Commission considers that the requirement to prepare and produce the documents specified in the NTPs by the stated deadline is not unreasonable in the circumstances. Therefore, the Commission denies the applications for review by 9118-9076 Québec Inc., 9310-6359 Québec Inc., Mr. Frank Leith, Ms. Lyne Hamel, Le Groupe T.C.L. Inc., Mr. Richard Dorais, and 9172-8394 Québec Inc. However, as noted above with respect to NTPs 9102-201500415-003 to 9102-201500415-007, the Commission considers that the requirements to produce the message logs (Part 1, section b.), the organizational structure of Chrysalide (Part 1, sections i. and xi.), and the financial statements (Part 1, section k.) have been fulfilled.

The Commission specifies that the required documents must be produced under the following conditions, which replace those described in Part 3 of each of the NTPs:

The documents must be produced in writing and include the file number mentioned above. The documents, marked as “Confidential,” are to be sent to the attention of Maxime Brassard by any of the means authorized by the Commission below:

By mail to the following address:

Canadian Radio-television and Telecommunications Commission (CRTC)
Compliance & Enforcement Sector
Electronic Commerce Enforcement Division
Les Terrasses de la Chaudière
1 Promenade du Portage
Gatineau, Quebec  J8X 4B1
By email to the following address:
lcap-casl-inv@crtc.gc.ca

The recipient has to receive the documents no later than 6 December 2017 at 16:00 Eastern Time.^Footnote1

This decision is served on each of the Applicants by the receipt of a copy of this decision, in accordance with subsection 18(5) of the Act.

Pursuant to subsection 18(5) and section 27 of the Act, the Applicants have the right to appeal this decision by bringing an appeal in the Federal Court of Appeal within 30 days after the day on which the decision is made. An appeal on a question of fact may be brought only with the leave of the Federal Court of Appeal, an application for which must be made within 30 days after the day on which the decision is made. An appeal with leave may not be brought later than 30 days after the day on which leave to appeal is granted.

Original signed by

Scott Hutton
Acting Secretary General

Date modified:

2017-11-15