As an exercise in advocacy, The Commissioner of Competition v. Chatr Wireless Inc. and Rogers Communications Inc. has it all: first-rate counsel and firms, a sense of urgency, a unique procedure, a high profile, deep-pocketed clients, public-interest considerations, business reputations at stake, complex expert evidence, as well as tough judgment calls and strategic decisions.
“The case is a model of how a trial should be conducted, demonstrating that aggressive advocacy and civility are not mutually exclusive,” says Kent Thomson of Davies Ward Phillips & Vineberg LLP's Toronto office, who with colleagues Anita Banicevic, Jim Bunting and Sean Campbell, represented Rogers and Chatr. “There was an enormous level of cooperation at every phase.”
The case also featured an experienced and capable trial judge, (now Associate Chief) Justice Frank Marrocco of the Ontario Superior Court, who case-managed the tortuous proceedings throughout.
“We occupied a courtroom whose walls were lined with all the various briefs,” says Tom Curry of Toronto's Lenczner Slaght Royce Smith Griffin LLP, who teamed with the firm's Jaan Lilles and Paul-Erik Veel to represent the Commissioner. “Although there were a tremendous number of issues, counsel cooperated in every respect to make the trial efficient and the trial judge's job easier — and certainly not every long case can make that claim.”
This being said, however, neither was any party giving up an inch that really mattered.
It all began on November 19, 2010, when the Competition Bureau of Canada issued a press release announcing that it had begun legal proceedings against Rogers Communications Inc. to stop “misleading advertising” of Rogers' Chatr discount cell phone and text service. The Canada-wide ads claimed that consumers would experience “fewer dropped calls than new wireless carriers” and that Chatr customers “have no worries about dropped calls.” The Competition Bureau's press release maintained, however, that there was “no discernible difference” in dropped call rates between Chatr and its competitor.
“We take misleading advertising very seriously,” Melanie Aitken, then Commissioner of Competition and now in the Washington, DC office of Bennett Jones LLP, said in the press release. “Consumers deserve accurate information when making purchasing decisions and need to have confidence they are not being misled by false advertising campaigns.”
The Competition Act is one of the advertising laws in Canada that you can learn more about here.
The news came as a shock to Banicevic, who had been advising Rogers and communicating with the Bureau during its two-month investigation, but who received just seven minutes' notice of the imminent press release. Then, some 20 minutes after the press release went public, downtown elevator broadcasting systems carried the false news that Rogers had already been ordered to pay a $10-million fine, “the largest in Canadian history.” The CBC repeated the allegation later that evening but retracted it before Aitken appeared on the broadcaster's national news program. She also appeared on BNN and gave several print interviews. The upshot of her comments was that Rogers had engaged in misleading advertising, was not cooperating and had refused to enter into a consent order, forcing the Bureau to take action to avoid harm to consumers.
Find out what is the penalty for misleading advertising in Canada in this article.
“We got caught flat-footed because we had not expected the scope of the media initiative by Melanie,” Banicevic says. “The massive publicity campaign was a huge reputational hit for Rogers, giving the company a massive black eye by accusing it of egregious conduct without notice to us.”
Particularly galling to Rogers was the insinuation that the company had not been cooperating with the Bureau. Indeed, Rogers had gone so far as to withdraw the impugned ads six weeks before the Bureau commenced proceedings and had never been asked for a consent order.
“We withdrew the ads not because we were wrong but because the company didn't want to pick a fight with the Bureau,” says Thomson, who has been one of Rogers' principal outside litigators for some 20 years. “We also gave the Bureau particulars of a new ad campaign and asked for comments, but what we got in return was silence and the press release.”
The Competition Bureau, clearly, was not on a frolic of its own. The complainants were none other than Chatr's competitors, Wind Mobile, Public Mobile and Mobilicity, three of the “new” entrants to the wireless market after bidding successfully at a wireless services spectrum auction conducted in 2008 by a federal government intent on delivering on its promise to increase competition in the industry. Existing large carriers, including Rogers, were precluded from bidding on certain licences reserved for the new entrants.
After the auction, Rogers concluded that the new entrants would be competing in the discount market. In response, it launched Chatr. Soon afterward, Wind Mobile, Public Mobile and Mobilicity among them made two complaints to the Bureau and one to the CRTC. The CRTC dismissed the complaints under the Telecommunications Act brought by Wind Mobile and Mobilicity. An abuse of dominance claim instigated by Wind Mobile and Public Mobile faded away. Only Wind Mobile's false advertising complaint remained.
Know more about your rights under the false advertising law in Canada and how to raise your complaints through the different regulating bodies.
“As far as I'm concerned, these complaints were a pre-emptive strike to stop Chatr from entering the market,” Thomson opines. “The complainants went so far as to publicize their complaints and claimed credit for instigating the case.”
Mobilicity went further. It sent the Mobilicity “Magenta Militia” marching down Bloor Street to Rogers' corporate headquarters in Toronto, where the troupe staged a rally advocating unlimited wireless service — a sight still available on YouTube.
Given this backdrop, it was soon apparent that no one was going to budge: settlement was not in the cards. A nasty, if not ugly, battle was inevitable.
“In view of the blanket media coverage, Rogers had no choice but to get vindication by setting the record straight at a trial on the merits,” Thomson says. “From a reputational perspective, however, we wanted to do so as quickly as possible and we would never have got there as fast as we did had the matter proceeded in the traditional way.”
The Bureau was also in it for the long haul. “The case came to us by way of an RFP,” Curry recalls. “The Commissioner was interested in a firm that could take the case to trial and had the skills to prosecute it on a compressed timetable because she didn't consider it likely that the case could be resolved.”
As expected, the case did run its course to judgment. Nearly three years after the Bureau brought its application – surprisingly quickly on lawyers' time for a proceeding of this magnitude – and with some 50 days or 10 weeks of hearings behind him, Justice Marrocco ruled that Rogers' advertising claims were not false or misleading. Indeed, the testing Rogers had done before the representations were made adequately supported the allegations in the ads.
Justice Marrocco did find, however, that Rogers had not conducted adequate and proper tests before making certain representations in Calgary, Edmonton and Montreal, allegations added to the proceedings by amendment almost six months after the original application was brought. Although the Bureau initially sought an administrative monetary penalty of $10 million and other sanctions, Justice Marrocco chose to impose a much lesser fine of $500,000, at least partly because tests conducted after Rogers made the original representations in Calgary, Edmonton and Montreal showed that they were in fact accurate.
But the nastiness that sometimes characterizes hard-fought, high-stakes litigation never materialized. Chatr, in fact, turned out to be nothing less than a best practices guide to modern advocacy.
“Tom Curry and his team were fair-minded, sensible and courteous, resulting in a tremendous level of cooperation at every phase,” Thomson says. “There wasn't a single day when we didn't look forward to going to court.”
Curry is also satisfied with the way the proceedings progressed. “I was pretty pleased with the timetable when you consider that we amended our case to include the inadequate testing allegations, that there was a complicated issue relating to the confidentiality of the complainant's documents, and that Rogers developed a constitutional challenge,” he says. “Also, given that Rogers removed the impugned representations from the market, we ended up dealing with a legacy issue that relieved a bit of the timing pressure.”
Curry's clients, it seems, were also pleased with the Superior Court. Since Chatr, the Commissioner has initiated two more advertising cases there.
From the outset, Chatr had departed from the norm. Historically, misleading advertising cases of a civil nature were heard by the Competition Tribunal, although the Commissioner had the right to have these cases heard in Superior Court as well. So it came as something of a surprise that the Bureau for the first time opted for the courts, more particularly the Ontario Superior Court's Commercial List.
“We were looking for a tribunal that could move rapidly because things were evolving very quickly in the industry and there was real significance to achieving a timely solution for complainants who were trying to compete fairly in an emerging market,” Curry says. “We also knew that Toronto was the proceeding's centre of gravity because both counsel for Rogers and most of the witnesses were from Toronto.”
So Ottawa, the seat of the Tribunal, would have been inconvenient. On the other hand, the Commercial List, with its reputation for quality, informality and dispatch in dealing with cases, seemed ideal.
But there was another factor, more personal in nature, which likely contributed to the decision. Curry, a veteran commercial litigator, had never appeared before the Competition Bureau but was intimately familiar with the vagaries of the Commercial List.
“Without experience at the Tribunal, I didn't have a sense of whether it moved quickly,” Curry says. “On the other hand, I had confidence in the Commercial List's timetable, and that was important because everyone wanted to get this case decided even sooner than it was.”
Getting on the Commercial List, however, required consent from the court. While the Practice Direction relating to the list included Competition Act cases as eligible proceedings, Curry could find only one precedent for trying such a case on the List.
“But it wasn't a difficult hurdle to clear,” Curry says. Justice Geoffrey Morawetz, now Regional Senior Judge of the Toronto Region, “who had been studying problems with the justice system, didn't have any trouble seeing the benefit of accepting.”
As it turned out, things might have worked out better for the Bureau if the Tribunal had heard the matter.
“We were surprised at that decision because by going to court the Bureau lost the advantage of a whole body of case law that allowed the Bureau to assert public interest privilege to shield communication from complainants and potential witnesses from disclosure,” Kent Thomson says. “Going to court allowed us to take a fresh shot at that privilege.”
The privilege argument proved vital to Rogers' case. But more on that later.
Getting on the Commercial List didn't quite satisfy all of counsel's requirements. Both Curry and Thomson wanted a judge who would agree to be both the case management judge and the presiding judge at the trial.
“There's a movement afoot to mimic the US practice of having the same judge case manage and try the case, despite the fact that most civil cases in the US are heard by a jury,” Thomson says. “Doing that streamlines the system, reduces the scope for interlocutory wrangling by creating a powerful disincentive to behave badly for fear of offending the trial judge, keeps costs down, and avoids having to reinvent the wheel in court because the judge knows all about the case by the time it reaches trial.”
Justice Marrocco, who practised in Gowling Lafleur Henderson LLP's Toronto office before his appointment, seemed the ideal candidate to both sides. An experienced trial lawyer and judge, he had earned a widespread reputation for fairness combined with the skills required to run a case efficiently.
Curry and Thomson went to see him directly. “He agreed to both case manage the proceeding and try it,” Thomson says. “And his attitude to interlocutory proceedings was simple: come see me in my Chambers if you have to sort something out and bring a formal motion only if we can't resolve it there.”
Justice Marrocco, it turned out, was better than his word. “He made himself fully accessible,” Thomson says. “Most of the time, there was no need to engage the court administration process. We just emailed him and he would usually make himself available at five, even when he was engaged in the Nortel criminal trial [R. v. Dunn].”
The first issue to confront Justice Marrocco was to define the nature of the proceeding. The Commissioner had started it by application, but neither party wanted the presentation of the evidence to be solely on a written record. What they couldn't agree on, however, was at what point the witnesses should be cross-examined.
“My position was they should only be cross-examined at trial, while Tom wanted them cross-examined both before and at trial,” Thomson says. “But there was no formal motion. We appeared before Marrocco for about 35 minutes, and he issued a brief endorsement confining the cross-examinations to the trial.”
A full trial would have entailed full pleadings, full production and full trial testimony. Once the parties had sorted out their differences, what emerged was a hybrid trial where witnesses filed affidavits that served as the basis for a brief examination-in-chief at trial, followed by a fulsome cross-examination. “As for production, we agreed to confine it to written requests for documents,” Bunting says.
At this point, the waters looked smooth, at least in theory. “The case turned out to be a marvellous example of the benefits of case management, one of which is that the parties think carefully about what motions they'll bring and what they'll argue,” Tom Curry says.
In other words, things went as well as could be expected. As usual, however, interlocutory matters, especially the spat over the degree of confidentiality the complainants could enjoy, and two constitutional attacks involving the Competition Act, intervened.
“Even the best case management can't anticipate or resolve everything summarily,” Curry says.
The confidentiality issue arose regarding certain information provided by the complainants to the Commissioner to which Rogers wanted access. Tom Curry applied for a sealing order, also called a confidentiality order. Justice Marrocco, not bound by Tribunal precedent, issued a partial sealing order that, however, excluded information about “dropped call” rates which, according to the court, had to remain transparent because they were at the “very heart” of the application.
“That information was vitally important to us in establishing our defence at trial,” Thomson says.
Although the Competition Bureau was unable to fully protect the complainants' information, the order was not so wide as to affect most of the complainants' cooperation. In the one instance where one potential witness, Vidéotron, refused to cooperate further after partial disclosure was ordered, Curry was able to force an examination under oath.
“After the confidentiality reasons came out, we knew that we had access to the information we needed to prove our case,” he says. “Although the complainants were not happy that we were unable to protect all the information, we did not lose any of them other than Vidéotron and we found a solution to that problem.”
From the constitutional viewpoint, Rogers argued that the civil misleading advertising provisions violated the Charter right to freedom of expression. Although Curry conceded that there was a violation, he and his team persuaded Justice Marrocco that the provisions were a demonstrably justifiable and reasonable limit that was saved by s. 1 of the Charter.
The irony, says Thomson, is that Rogers never wanted to win the case on this argument. “We wanted to win on the merits,” he says. “But given that the Bureau conceded that the Competition Act provisions did infringe on freedom of expression, the Bureau was also forced to concede that the requirements in the Act were easily satisfied in order to support their s. 1 submission that the provisions interfered as little as possible with the right — something we relied on all the way through the case.”
Rogers also argued unsuccessfully that the administrative monetary penalties of up to $10 million for a first offence and up to $15 million for subsequent violations found in the Competition Act were “penal consequences” that engaged the full protections afforded criminal proceedings under s. 11 of the Charter.
“This was the first time that AMPs had been challenged since the maximum penalty was raised from $100,000 to $10 million,” Veel says.
Neither constitutional argument was a purely legal one. Both sides called evidence, including evidence as to how the US had regulated similar conduct. Curry also enlisted “enormous support” from the federal Department of Justice, which dealt with constitutional arguments regularly.
“Rogers made out a strong case on the Charter issues so we were very pleased with the results because they engaged matters of real significance to the Bureau and its programs,” Curry says.
The case was no less challenging on the merits, involving as it did technical evidence about how wireless networks worked, what the “dropped call” and other statistics proffered in court really meant, and whether the “drive testing” method or expedited drive testing method, both used by Rogers, were capable of adequately testing dropped call claims.
Other contested issues included the nature of the consumer whose perspective formed the basis of whether material was false or misleading; the interpretation of the representation, including whether the claims regarding dropped calls were to be assessed on a national scope or in each locale where Chatr operated; and whether belief in technological fact satisfied the adequate and proper test requirement. “The issues were so complex that Marrocco gave Rogers leave to call eight expert witnesses,” Tom Curry says.
For its part, all the experts called by the Bureau but one were employees of new wireless carriers. That created a special sort of pressure for Curry's team. “We were always aware that the employees' assistance in the trial intruded on the new carriers' ability to focus on the business,” Curry says. “We had to have access to them not only to give evidence for us but to advise us when Rogers' experts were testifying.”
Chatr also featured all the other psychological pressures on counsel that characterize a long trial, one complicated by the fact that the 10 weeks of trial were spread over 18 months, with one break approaching eight months.
“It's sometimes difficult to maintain the energy level of the team, to avoid distractions, to maintain focus, and to keep playing over a full 60 minutes when you have a long trial that's so spread out,” Curry says. “It's something you get better at all the time, including trying to outwork your opponent in the down time.”
Were the results worth the effort?
No doubt Rogers and its legal team were pleased having successfully defended the main allegations and having to pay a relative pittance for the testing violations. Banicevic says that, for the most part, the team achieved what it set out to do: restore Rogers' reputation.
“The initial complaints said Rogers had no idea at all about the comparative performance of the network regarding dropped calls,” she says. “We showed that to be false.”
The feelings of Curry and his team were more mixed. Naturally, they were pleased that they had succeeded on the testing issue, but disappointed that the Bureau hadn't satisfied the onus on the “false and misleading” allegations.
“Still, quite apart from the final result, there were quite a few issues that went the Commission's way, validated the Commissioner's approach to the legislation, and that will endure in future cases,” Curry says. “From the Bureau's perspective, there can be benefits to its programs whether it wins, loses or draws, because a decision can bring clarity to the Act and the industry involved. That's certainly what happened here.”
Julius Melnitzer is a freelance legal-affairs writer in Toronto.