It had the potential to be an extremely costly and damaging matter to Telus and its brand, but the internal team in the company’s litigation department tackled it with an innovative approach in a high-stakes claim involving customers.
In September 2012, following a protracted investigation, the Competition Bureau commenced an enforcement proceeding in the Ontario Superior Court against the three leading wireless companies in Canada — Rogers Communications Inc., Bell Canada and Telus Corporation — as well as the Canadian Wireless Telecommunications Association, under the deceptive marketing provisions of the Competition Act.
The bureau alleged the defendants had permitted misleading representations to the public by facilitating access to “premium-rate digital content” marketed by third parties (such as ringtones, quizzes and trivia) that consumers “did not intend to purchase and for which they did not agree to pay.”
“This claim against Telus in some respects went to the heart of our ‘customers first’ approach,” says Alan Dabb, vice president, litigation, legal services. “It was also significant in that the bureau was seeking significant claims against Telus in addition to an order that Telus refund its customers.”
The bureau’s enforcement proceeding tested the limits of the responsibility of the wireless companies for statements made by independent third parties over their networks, and it had potential broad implications for the marketing of digital content in Canada. The stakes were high. In its statement of claim, the bureau sought the maximum civil penalties available under the Competition Act from the three companies — $10 million each — as well as full customer refunds and $1 million from the CWTA.
Telus planned a vigorous defence and assembled a legal team that consisted of both internal resources and outside counsel. The Telus defence team was led by Dabb and included representatives of Telus’ senior legal leadership (including Monique Mercier, chief legal officer, and Andrea Wood, senior vice president, legal services, Ted Woodhead, senior vice president, federal government and regulatory affairs) as well as members of Telus’ litigation team (Jaclyn Leong, counsel, legal services, and Kate Sokolan, litigation paralegal, legal services).
“We had to be particularly innovative in this case in relation to the settlement discussions we had with the bureau,” says Dabb. “In my experience, there are two ways to managing our external counsel — one is where external counsel can largely run the file and we have just an oversight role. The other is to become more directly engaged in a particular litigation matter, working hand in hand with external counsel to resolve the litigation.”
In this case, Dabb says given the implications for the Telus brand he decided to take a very direct role in negotiating terms of settlement with the bureau.
From the beginning of the bureau’s proceeding, Dabb and the Telus team were focused on achieving an innovative path to resolution — including the implementation of creative protocols for managing the discovery process as well as the exploration of ideas for resolution that avoided civil fines and penalties.
“With significant foresight, leadership and diligent execution, Alan and the Telus team were able to manage an enormous discovery project and were able to find a path to resolution through a creative settlement structure — and their innovative efforts are worthy of external recognition,” says Chris Naudie, partner, litigation with Osler Hoskin & Harcourt LLP, who nominated Telus for the award.
In particular, in defending this matter, Naudie says Dabb and the Telus team were able to demonstrate innovation in litigation management in three particular areas.
Efficient handling of discovery
The complex case involved an enormous pool of documents. To meet the commissioner’s document demands, roughly a million documents had to be collected, reviewed and screened — a process that had the potential to be not only time consuming but expensive. Dabb and the Telus team succeeded in controlling and managing these costs by leveraging their internal resources effectively and engaging an external service provider to screen the documents based on pertinent search terms. The number of relevant documents was whittled down to approximately 48,000 — a much more manageable figure from both a strategic and cost perspective.
During negotiations, Dabb personally engaged the commissioner’s management team and explained Telus’ history of implementing measures to protect consumers in respect of these services, as well as Telus’ steps in terminating its relationship with certain third parties that were the subject of certain complaints.
“In contrast to some in-house counsel who sit on the sidelines, Alan and members of the Telus team played a direct role in settlement negotiations with the commissioner,” Naudie said.
Dabb had an active hand in steering the matter to a successful resolution and achieved a settlement that did not include any penalties and was premised on a refund process.
“We were faced with a few challenges in coming up with a solution. One was in record keeping — many of the records we needed to process refunds to customers were in the possession of third parties, so we had to get creative in terms of figuring out how to put money back in the hands of our customers in a manner that put our customers first and satisfied the bureau’s concerns,” says Dabb.
As an integral part of the settlement, and as an alternative to other remedies, the TELUS team proposed the payments to charitable organizations that conducted research on issues such as consumer education regarding wireless providers and the collection of personal data in the wireless industry, as well as the role that the law plays in ensuring that consumers receive accurate information.
Ultimately, by negotiating the settlement, Dabb and the Telus team were able to avoid a costly and contested litigation proceeding based on a creative settlement that was premised on a refund process for current and former customers as well as based on charitable payments that were specifically targeted to address cutting-edge issues relating to digital privacy in the wireless industry.
This was a significant matter for Telus, one that had the potential to result in lengthy, costly court proceedings. By reaching an agreement with the bureau, Dabb and his team managed to avoid exposing Telus to a substantial penalty as well as the legal fees that would have been incurred in a protracted proceeding.
The settlement was announced at the end of 2015. Under the terms of the agreement, Telus will provide refunds for current and former wireless customers for certain premium text messages programs subject to a detailed claims process.
In its press release, the bureau stated the refund program is the largest ever reached by the bureau. In addition, Telus will donate $250,000 for research on consumer issues related to the wireless industry to three institutions. Telus is not required to pay any fines, penalties or legal costs under the agreement.