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What new anti-SLAPP laws could mean for Canada’s energy sector

Alberta Oil

BY GEOFFREY MORGAN | follow Geoffrey Morgan on Twitter
April 13, 2015

A collection of non-governmental organizations with – to put it mildly – acrimonious relationships with the energy industry signed a joint statement calling on Ontario’s members of provincial parliament to pass a bill that is little understood west of Kenora. Bill 83, which received its first reading in the Ontario legislature on June 4, 2013, would amend the province’s Courts of Justice Act, its Libel and Slander Act and its Statutory Powers Act “in order to protect expression on matters of public interest.” But it’s better known, at least inside the province, as a bill that would end strategic lawsuits against public participation, or SLAPPs. The David Suzuki Foundation, the Sierra Club of Ontario, Environmental Defence, Ecojustice and the Canadian Environmental Law Association all want the proposed legislation signed into law. “The passage of Bill 83 is essential to safeguard the public’s right to participate in matters of public interest and is vital to Ontario’s democracy,” a joint statement from the NGOs reads.

“Clearly, the act was designed to be used as a shield, not a sword.” – Randy Burton
That bill died on the order paper when the province went to the polls last summer, but it was re-introduced as Bill 52 in December by Ontario Attorney General Madeleine Meilleur. Its timing couldn’t have been much better given that there were renewed calls for similar legislation on the other side of the country after Kinder Morgan filed a $5.6-million civil suit against retired Simon Fraser University professor Alan Dutton and four other people for interfering with the survey work its crews were doing – or trying to do – on Burn-aby Mountain. And if that didn’t get the energy sector’s attention, well, Ontario’s passage of Bill 52 into law probably should. After all, it controls billions of dollars’ worth of downstream assets in Ontario, where residents make up a major component of the market for oil and gas produced in Saskatchewan, Alberta and B.C. Anti-SLAPP legislation would have a material impact on a company’s ability to defend itself against potentially defamatory claims made by environmental activists in the province – or, as has happened in other jurisdictions with anti-SLAPP laws, its competitors and even its own employees.

Ontario isn’t the first jurisdiction to consider implementing anti-SLAPP legislation. In an article called, “Do Not Get Slapped,” lawyer Jeff Cowan writes that SLAPP suits were first identified and discussed in the United States in the 1970s. Since Delaware became the first state to enact anti-SLAPP legislation in 1992, 28 more have followed, err, suit, including oil and gas-rich Texas, Pennsylvania and Oklahoma. Canada’s history with anti-SLAPP laws is much shorter, beginning with British Columbia’s Protection of Public Participation Act, which was passed in 2001 by the NDP government and repealed four months later, after the BC Liberals obliterated them at the polls. Politicians in Nova Scotia tabled anti-SLAPP legislation in 2003, but it never made it past the first reading in that province’s legislature. Quebec’s anti-SLAPP law has been in place since 2009 and, according to Bennett Jones partner Derek Bell, it “allows for the summary dismissal of lawsuits commenced for improper purposes.” One of the improper purposes defined in the province’s amended civil code is a lawsuit that “restricts freedom of expression in public debate.” In Quebec, Bell says, a defendant would need to satisfy the court that a suit was brought against them for improper purposes, and if the plaintiff fails to convince the court that the suit is justified in law, then the case is dismissed.

Ontario’s proposed legislation would go a step further, forcing the plaintiff to pay damages to the defendant if a case is dismissed as a SLAPP. The plaintiff, meanwhile, is not entitled to costs – even if the case is deemed not to be a SLAPP and therefore proceeds to trial. As a result, Cowan says, companies should be asking themselves before they file a motion against a critic, “Is this really going to be worth it?”

According to Bell, under Ontario’s proposed law, if a defendant shows that a proceeding relates to an expression of public interest then the judge overseeing the case must dismiss it – unless the plaintiff can show three things. First, they must show that the proceeding has “substantial merit.” Second, they must demonstrate that there are grounds to believe the defendant has no valid defense. Finally, they must prove that the damage to the plaintiff exceeds the public interest in defending the expression. So who bears the burden of proof under Ontario’s proposed anti-SLAPP laws? “The burden is initially on the defendant to show that the case relates to matters of expression and public interest, [and] then the burden shifts to the plaintiff to show that the case has merit,” Bell says.

Cowan describes the proposed legislation as being similar to the public interest defense that journalists can use in defamation cases. His views on the proposed law, however, are not shared by Richard Dearden, a partner in Gowling Lafleur Henderson’s Ottawa office. Dearden says Bill 52 represents a “sea change” in Ontario that significantly alters the risk analysis that a company should undertake before launching a proceeding against an outspoken critic. One of the major problems with the proposed law, he says, is it gives free discovery to the defendant. In meeting the three conditions, the plaintiff effectively shows the defendant what their case will be, thereby giving them a chance to prepare for a full trial with more information than they might have otherwise had.

Dearden’s criticism of anti-SLAPP legislation has also been voiced in parts of the U.S., including Texas, where lawyer Randy Burton has defended clients against anti-SLAPP motions. In one case, he says, his client was being sued by a competing company. As part of their defense, Burton alleged the ­plaintiff had engaged in business disparagement, which then allowed the plaintiff to file a motion to dismiss the defense under the state’s anti-SLAPP law. As a result, Burton says, his team had a very limited amount of time to show the merits of the countersuit in order for his client’s case not to be dismissed. “The statute is overbroad if it can be applied this way,” Burton says.

Burton wrote an article last summer called “Why Every Texas Energy Company Should Be Afraid of the Texas Anti-SLAPP Act,” in which he argues that anti-SLAPP legislation in Texas, and in general, needs to be extremely well-defined with respect to how the laws can be used. “Clearly, the act was designed to be used as a shield, not a sword,” Burton writes. “Unfortunately, the act, as drafted, has only created confusion, delay and dramatically increased legal fees.” The article also draws on a specific example, Schlumberger v. Rutherford, which is currently playing out in Texas. In this case, Charlotte Rutherford was an intellectual property lawyer for Schlumberger, who – the firm alleges – stole the company’s trade secrets. Schlumberger’s suit against Rutherford included the allegation that the former employee’s actions were “wrongful,” “defamatory” and “disparaging.” As a result of the firm’s decision to include those allegations in its suit, Rutherford filed a motion to dismiss the suit under the Texas Citizens’ Participation Act. Burton writes that the motion had the effect of “forcing Schlumberger to prove its claims up front by clear and convincing evidence or face the terrible prospect of paying $611,000 in the defendant’s legal fees and, possibly, a comparable amount in sanctions.”

Could a similar situation unfold under Ontario’s proposed legislation? Both Cowan and Dearden say there are no restrictions on who can make use of the anti-SLAPP provisions, should they be signed into law. Two pipeline companies competing to build eastbound lines to ship Albertan bitumen across Ontario, for instance, could make use of the law if either were to take legal action against the other. James Coleman, an assistant professor with the University of Calgary’s Haskayne School of Business and its faculty of law, says imposing restrictions on who can make use of anti-SLAPP legislation is extremely difficult. One way to do so would be to demand a differential in terms of the legal resources available to the plaintiff and the defendant. However, as Coleman says, “What’s good for the goose is good for the gander.”

And as the public reaction to Kinder Morgan’s suit shows, energy companies should use their legal recourse in the courts – however it might be defined – with both caution and restraint. Both Coleman and Cowan say that companies should carefully consider the optics of engaging in a suit against a critic rather than engaging with critics in an open dialogue. To the public, a case that is dismissed as a SLAPP is often seen as an attempt by a company to gag a small, independent critic. Public support tends to fall with the oppressed – whether the oppression is perceived or real.

Jurisdiction Shopping
Anti-SLAPP legislation has been considered in a wide variety of jurisdictions and enacted, in some form or another, in a few. Here’s what the lay of the legal land looks like elsewhere.

British Columbia: Following the decision in Fraser v. Saanich, a case in which the B.C. Supreme Court struck down the claim of a hospital director against the District of Saanich on the grounds that it was intended to silence or intimidate residents opposed to said director’s plan to redevelop the hospital facilities, British Columbia became the first jurisdiction in Canada to table anti-SLAPP legislation. The Protection of Public Participation Act went into effect in April of 2001, but was repealed just four months later after the BC Liberals swept into office in May.

Nova Scotia: A private member’s bill was introduced in 2001 by NDP MLA Graham Steele, who proposed a “Protection of Public Participation Act” of his own. It didn’t make it past first reading.

Quebec: The province’s Justice Minister at the time, Jacques Dupuis, tabled an anti-SLAPP bill on June 13, 2008. It was adopted by the National Assembly of Quebec almost a year later. But unlike other anti-SLAPP laws on the books in other jurisdictions, Quebec’s only permits liability for arbitrary and unlawful speech. As such, its scope is more limited.

United States: There are 28 states, along with the District of Columbia and Guam, that have enacted anti-SLAPP protections. There is no federal anti-SLAPP legislation, although in December of 2009, Democrat Steve Cohen introduced House Resolution 4364, or the Citizen Participation Act, in the U.S. House of Representatives. It remains stalled in committee.