Stefan Wittman v. Blackbaud, Inc. and Blackbaud Canada, Inc.

At a glance

Parties

Stefan Wittman (plaintiff, proposed class representative) v. Blackbaud, Inc. and Blackbaud Canada, Inc. (defendants)

Case no.

Supreme Court of British Columbia, Docket S207965; 2021 BCSC 2025

Court

Supreme Court of British Columbia (Vancouver Registry), Madam Justice Ahmad

Forum and rules

Application to stay court proceedings under s. 8 of the International Commercial Arbitration Act (British Columbia); arbitration clause providing for AAA Commercial Arbitration Rules, seat Toronto, Ontario law

Treaty

None; arbitration clause (s. 14) in the Blackbaud Solutions Agreement with BC Cancer Foundation

Sector

Cloud data management; data privacy

Outcome

Stay application dismissed (11 August 2021): the plaintiff, a donor who never signed or knew of the arbitration agreement, is clearly not a party to it.

Amount

No amounts stated; the court invited written submissions on costs.

The dispute

Blackbaud, Inc., a cloud software company based in South Carolina, provided data management services to BC Cancer Foundation under a Solutions Agreement. Section 14 of that agreement required arbitration of all unresolved disputes between the parties under the AAA Commercial Arbitration Rules; for Canadian customers the arbitration was to take place in Toronto under Ontario law. In May 2020 a cyber criminal claimed to have accessed Foundation data held by Blackbaud. Stefan Wittman, a donor whose personal information may have been affected, started a proposed class action against Blackbaud and its Ontario subsidiary Blackbaud Canada, Inc. for negligence, intrusion upon seclusion and breach of privacy legislation. Blackbaud applied to stay the action in favour of arbitration. It argued that Mr Wittman was arguably a "person claiming through or under" the Foundation, relying on equitable and direct-benefit estoppel and on foreign case law that reads that phrase broadly. Mr Wittman disputed that the arbitration agreement had been proven, denied that he was a party to it, and argued in the alternative that it was unconscionable.

Key holdings

1. Blackbaud proved that a binding Solutions Agreement, including the arbitration agreement, existed between Blackbaud US and BC Cancer Foundation. The court accepted the evidence of the Lant affidavits even though the signed contract was not exhibited. ¶¶ 49–61
2. None of the first three DNM categories for binding a non-signatory applies (incorporation by reference, agency, piercing the corporate veil). The Canadian cases Blackbaud cited rest on agency or estoppel and do not widen those categories. ¶¶ 64–67
3. Estoppel does not bind Mr Wittman. He did not knowingly seek a direct benefit from the Solutions Agreement, and his claims in negligence, intrusion upon seclusion and under privacy legislation do not depend on the contract and are not intertwined with it. Notions of fairness weigh against binding a consumer to a hidden arbitration clause he never knew about. ¶¶ 82–107
4. The foreign cases (Chloro Controls, Tanning Research) do not extend "claiming through or under" to a non-signatory with no direct relationship to the signatory. Arbitration requires a nexus because it rests on agreement freely entered into. Mr Wittman was a complete stranger to the agreement, so the argument that he is a party is not even arguable. ¶¶ 110–126
5. Because Mr Wittman is clearly not a party, the court did not need to decide unconscionability. The stay application was dismissed, and costs were left to written submissions. ¶¶ 127–130

Procedural history

1. May 2020Possible data breach of BC Cancer Foundation data held by Blackbaud US.
2. 24 March 2021Blackbaud files its notice of application to stay the action under s. 8 of the ICAA.
3. 6–7 May 2021Hearing in Vancouver.
4. 11 August 2021Oral reasons for judgment: stay application dismissed.

Tribunal, counsel and experts

For the claimant

S. Turner · R. Matheuszik

For the respondent

M. Feder · K. Booth · K. Marsh

Run a conflict check on these names →

Keywords

• stay of proceedings
• non-signatory
• claiming through or under a party
• International Commercial Arbitration Act British Columbia
• section 8 ICAA
• equitable estoppel
• direct benefit estoppel
• competence-competence
• class action
• data breach
• privacy
• Blackbaud
• BC Cancer Foundation
• AAA Commercial Arbitration Rules
• Chloro Controls
• unconscionability
• New York Convention

Summary generated with AI from the published documents — refer to the award for the authoritative text.