Eniko Rakosi v. State Farm Mutual Automobile Insurance Company, 2011 ONFSCDRS 119

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2011 ONFSCDRS 119

Appeal P11-00027

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ENIKO RAKOSI Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Ms. Dimple Verma for the Appellant, Ms. Eniko Rakosi Ms. Joanna Cox for the Respondent, State Farm Mutual Automobile Insurance Company

HEARING DATE: By written submissions received by December 5, 2011

PRELIMINARY APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. This appeal from a preliminary arbitration order is not rejected pursuant to Rule 50.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated – August 2011).

2. The issue of the requested stay of the Arbitrator’s order is deferred, as set out within, the Appellant in the interim to copy and preserve every page from her Facebook account posted from May 5, 2008 to May 5, 2010.

3. The legal expenses of this preliminary appeal decision are deferred to the conclusion of this appeal proceeding, subject to any further or other order of an appellate officer.

December 20, 2011

Lawrence Blackman Director’s Delegate Date

REASONS FOR DECISION

I. BACKGROUND AND NATURE OF THE APPEAL

The Appellant, Ms. Eniko Rakosi, was injured in a May 5, 2008 motor vehicle accident and applied to her first-party insurer, the Respondent, State Farm Mutual Automobile Insurance Company, for statutory automobile accident benefits under the Schedule.¹

The parties came before Arbitrator Bujold (the “Arbitrator”) at a March 24, 2011 pre-hearing discussion. The Arbitrator confirmed the disputed entitlement issues for the hearing scheduled for November 2011, including income replacement benefits (“IRBs”) and attendant care.

The parties were unable to agree on production of the Appellant’s photographs on her Facebook account. Upon receiving written submissions, the Arbitrator’s August 23, 2011 letter decision, reasons released October 24, 2011, ordered the Appellant to produce all photographs with her image posted to her Facebook account (including any limited-access or private portion) from May 5, 2008 (the accident date) to May 5, 2010 (the end of her IRB and attendant care claims).

The Arbitrator held that:

The test at this stage is not whether the moving party has established clear relevance between the documents sought and the issues in dispute, but whether the documents have a rational connection or semblance of relevance to the issues in dispute. Indeed, in the absence of formal discovery, a party may not be able to establish relevance to a higher standard without first gaining access to the documents or files.

The Arbitrator was persuaded that photographs of the Appellant, posted on another social networking account showing the Appellant engaging in various social and recreational activities, had at least a semblance of relevance to her employment and self-care disability claims. The Arbitrator found this sphere of production comparable to pre-accident clinical notes and records and adjusters’ log notes where, regardless of whether the produced documents might ultimately disclose anything of import, the requesting party was not precluded from access to a class of documents having a rational connection to the issues in dispute.

The Arbitrator found that there were no special circumstances weighing against production. Citing Murphy v. Perger [2007] O.J. No. 5511, the Arbitrator was not persuaded that the Appellant had an expectation of privacy, having provided access to 332 on-line friends. Nor was the Arbitrator persuaded that the time, cost or practicalities of compliance or any reliability concerns outweighed the Respondent’s right to access the photographs.

The Appellant relied, in part, on Prete and State Farm Mutual Automobile Insurance Company, (FSCO A09-002996, January 13, 2011), where the insurer had requested disclosure from the insured person’s Facebook account. Arbitrator Ashby denied the production request, finding the potential relevance of the posted images too remote when weighed against such factors as sensitivity and practicality, and held that the insurer had failed to establish a reasonable relationship between the images sought and the issues in dispute.

Arbitrator Ashby found that the nature of social networking forums made the disclosure of posted images procedurally burdensome, that it “would be a procedural quagmire to set guidelines for the preservation and production of these images in a manner that would render them reliable evidence in a process that is required to provide a speedy, accessible and fair process for dealing with disputes relating to the Schedule.”

The October 28, 2011 Notice of Appeal sought leave to appeal a preliminary or interim order and to stay the arbitration hearing set to begin November 8, 2011. The form of the Notice of Appeal states, both for a stay and for leave to appeal, that the reasons should be as complete as possible, providing boxes to be ticked off if extra pages are being attached. The Notice of Appeal filed provided minimal or no reasons regarding the leave and stay requests.

My November 7, 2011 letter stated that the requested stay of the hearing was no longer an issue, given Arbitrator Kominar’s November 1, 2011 adjournment of the hearing. As to whether this appeal should be rejected, applying Rule 51.2(d) of the Dispute Resolution Practice Code (Fourth Edition, Updated – August 2011) (the “Code”), the Appellant was to provide sufficient submissions to allow the Respondent to meaningfully respond.

The Appellant’s November 16, 2011 amended Notice of Appeal now sought a stay of the Arbitrator’s October 24, 2011 order. No reasons were given in support. Regarding the leave to appeal, the Appellant argued that the Arbitrator had erred in law in failing to follow prior case law that there must be a reasonable relationship between the issues in dispute and the requested production. The Appellant submitted that the Arbitrator had lowered the threshold for production to allow an unnecessary, unreasonable and prejudicial fishing expedition.

The Respondent submitted that this appeal should be rejected as premature, the Appellant not identifying or explaining the prejudice she would suffer if the appeal was rejected. Further, if the appeal were accepted, the arbitration hearing would be unreasonably and unfairly delayed.

II. ANALYSIS

Rule 50.2 of the Code provides that a party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute have been finally decided, unless ordered otherwise. Rule 51.2(c) states that an appeal may be rejected if it is from a preliminary or interim order that does not finally decide the issues in dispute.

In Allstate Insurance Company of Canada and Torok, (FSCO P01-00021, May 29, 2001), Delegate Makepeace stated that the purpose of what is now Rule 50.2 “is to facilitate the most cost-effective resolution of disputes by minimizing the time and money spent on procedural or collateral matters. Allstate Insurance Company of Canada and Tesfay, (FSCO P99-00023, June 21, 1999), Allstate Insurance Company of Canada and Al-Obaidi, (FSCO P99-00009, May 2, 2000) and Torok hold that the decision whether to hear an appeal from a preliminary or interim order is discretionary, the relevant criteria to include:

(a) the apparent strength of the appeal;

(b) the importance or novelty of the issue raised;

(c) whether rejecting or hearing the appeal will prejudice either party;

(d) the preference of the parties;

(e) whether the ruling represents a departure from the approach taken in prior cases; and,

(f) whether rejecting or hearing the appeal would provide the quickest, most just and least expensive way of disposing of the issues between the parties.

Regarding the prejudice in the arbitration being delayed, the hearing has already been adjourned, with no new hearing date set. The initial arbitration hearing was set for a date eight months later, while this appeal can be heard expeditiously. The possible delay of the arbitration hearing has been considerably lessened, if not minimized.

On the other hand, Arbitrator Kominar’s November 1, 2011 adjournment letter notes that this production issue is “of increasing importance in arbitrations at FSCO,” with arbitrators having expressed differing views on the issue. While both the Arbitrator herein and the arbitrator in Prete note the appeal decision (pertaining to production of adjusters’ notes) in Al-Obaidi, they part company regarding their approach to this production issue.

A number of recent court decisions have addressed the question of Facebook production, including Murphy noted above, as well as Leduc v. Roman 2009 CanLII 6838 (ON SC), [2009] O.J. No. 681 (S.C.J.) cited by the Arbitrator, and Frangione v. Vandongen [2010] O.J. No. 2337 and Wice v. Dominion of Canada General Insurance Co. 2009 CanLII 36310 (ON SC), [2009] O.J. No. 2946 further noted by Arbitrator Ashby. However, this is a novel issue for appeals at the Commission.

Delegate Makepeace, in Al-Obaidi, stated that whether to defer appeals from a preliminary or interim arbitration order is a “case-by-case determination.” Given the novelty and increasing importance of this production issue versus the limited prejudice in terms of delay of the arbitration, I exercise my discretion under Rule 51.2(c) of the Code to not reject this appeal.

Regarding the requested stay of the Arbitrator’s order, [s]ubsection 283(6) of the Insurance Act, R.S.O. 1990, c. I.8, provides that an appeal does not stay an arbitrator’s order, unless decided otherwise. Delegate McMahon, in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), thus confirmed that an appellate officer’s discretion to stay an order is the exception, not the rule. Delegate McMahon adopted the following criteria from Canadian Home Assurance Company and Scavuzzo, (OIC P-000626, May 18, 1992), as to whether a stay should be granted:

1. the bona fides of the appeal;

2. the substance of the grounds for appeal; and,

3. the hardship to the respective parties if the stay is granted or refused.

The onus is on the party seeking a stay. As the Respondent notes, the Appellant did not initially seek a stay of the Arbitrator’s order and then failed to provide any submissions in support. This was notwithstanding the prompts in the Notice of Appeal form itself for full and complete reasons and my letter noting the insufficiency of the initial Notice of Appeal.

On the one hand, in the absence of a stay order, this appeal is rendered simply academic if the disputed documentation is produced. On the other hand, there are concerns regarding the preservation of evidence. Brown J., in Leduc, notes that on the initial return of the motion, Master Dash ordered the plaintiff to copy and preserve every page from his Facebook profile until the main hearing of the motion.

The question of the requested stay is deferred pending confirmation by the Appellant whether, since the Arbitrator’s August 23, 2011 letter decision, there have been any deletions or alterations of photographs on her Facebook account posted from May 5, 2008 to May 5, 2010. The Respondent will then have fourteen days to serve and file any additional submissions regarding the requested stay. In the interim, the Appellant shall copy and preserve every page from her Facebook account for the period May 5, 2008 to May 5, 2010.

The following time table is set for the exchange of appeal written submissions:

1. Pursuant to Rule 54.1 of the Code, the Appellant has thirty days from the date of this decision to serve on the Respondent and file with the Commission (with a Statement of Service in Form F) her written submissions.

2. The Respondent, pursuant to Rule 54.3 of the Code, has twenty days from the date the Appellant’s written submissions are received to serve on the Appellant and file with the Commission (with a Statement of Service in Form F) its written submissions.

In the interim, the Appeals Case Administrator will be contacting the parties to arrange an early date for oral submissions.

III. EXPENSES

The legal expenses of this preliminary appeal decision are deferred to the conclusion of this appeal proceeding, subject to any further or other order of an appellate officer.

December 20, 2011

Lawrence Blackman Director’s Delegate Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.