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yyzdub
30th Jun 2004, 17:25
Found an interesting article today....

Air Canada sifted WestJet garbage ...


Air Canada went to the extraordinary length of hiring private investigators to sift through a WestJet Airlines Ltd. executive's garbage, pieces of which were then sent on to be digitally reconstructed, according to court documents that shed new light on the cloak-and-dagger fight playing out between the rival air carriers.

The documents filed by Air Canada acknowledge for the first time that the airline hired investigators who hauled away the curbside trash of the executive it suspected of improperly tapping into its computers for confidential information. Some of the shredded or fragmentary documents they retrieved were sent to a company in Texas for digital scanning.

The confirmation came in an affidavit filed with the Ontario Superior Court in connection with a multimillion-dollar lawsuit Air Canada launched in early April against its Calgary-based rival alleging it had engaged in corporate espionage by secretly accessing an employee website to steal confidential flight information and using it to schedule competing flights.

The lawsuit is unfolding as Air Canada nears the end of a complex and costly restructuring. It is set to emerge from bankruptcy protection Sept. 30.

None of the allegations in the lawsuit has been proved in court.

WestJet fired back late yesterday, saying it plans to counter-sue.

WestJet announced that it plans to seek leave to counter-sue Air Canada and its private investigators for the alleged “unlawful seizure of WestJet's confidential financial information,” which, it said, was contained in the garbage they took away from the executive's house.

The company also said it will file a statement of defence today arguing that the information on the Air Canada web site is not confidential and is available to the public through many sources, including other public websites and through counting passengers at airports.

The loss of revenue and profit Air Canada alleges it has suffered “arises not from any use of information on the website, but from Air Canada's mismanagement of its business, its decision to persist in selling seats on flights for less than cost, its high cost structure and the poor treatment of its customers,” WestJet alleged.

At a hearing set to begin in Toronto July 8, Air Canada is to ask the court for an injunction prohibiting WestJet from using any of the information it has allegedly gleaned from its larger competitor's website, or from destroying any related documents. A trial date for the main action has not yet been set.

The affidavit was sworn by Jasper Smith of Vancouver, who identifies himself as director of investigations for IPSA International Inc., a provider of “investigative consulting services.”

Mr. Smith said IPSA was hired by Lerners LLP, a Toronto law firm that is acting for Air Canada in the suit, which was launched April 7.

He said that on both March 22 and April 5 of this year he and other IPSA employees went to the Victoria residence of Mark Hill, a co-founder of WestJet and its vice-president of strategic planning, “to retrieve curbside trash discarded by Mr. Hill.”

He also asserts that in order to comply with the law, they neither trespassed onto Mr. Hill's private property nor retained any documents that appeared to be of a personal nature or irrelevant to the investigation.

They took the contents of garbage containers at the curbside away in their truck and sorted them later, Mr. Smith said in the affidavit.

He also said that he subsequently sent a number of shredded or fragmentary documents to a company in Ottawa, Forensic Document Examination Services, to be reconstructed. However, this company said it could not handle all the work and recommended that Mr. Smith instead hire Church Street Technology of Houston, which had access to digital scanning technology.

On April 7, Mr. Smith said in the affidavit, he flew to Houston and “personally delivered” the shredded documents to the Texas company, which, in turn, subsequently provided him with images of the reconstructed documents on three compact discs. He does not say what was in the documents.

Mr. Hill is one of two WestJet employees named, along with their company, in the Air Canada lawsuit. WestJet put both of them on paid leaves of absence shortly after the suit was launched.

Mr. Smith's affidavit represents the first public confirmation that Air Canada hired investigators to go through Mr. Hill's garbage.

In the weeks before the lawsuit was launched, he complained privately to several people about garbage bags being removed from outside his house in Victoria's exclusive Oak Bay district by unauthorized workers driving a pickup truck that had been rented in Richmond, B.C. He took several photographs of the event.

Mr. Hill also said a police investigation was under way into the matter, and Oak Bay's police chief subsequently confirmed to The Globe and Mail that “an investigation similar to what you described” had occurred, although he would not identify the complainant.

Air Canada, which is seeking $5-million in damages, is alleging in its lawsuit that a former employee who now works at WestJet allowed his employee code to be used thousands of times a day by the Calgary airline to gain entry to the confidential information between May, 2003, and March of this year. It alleged in its statement of claim that the “ongoing, unlawful exploitation of [its] confidential information, has caused [Air Canada] substantial loss, including loss of revenue, profits, and goodwill.”

In transcripts of a cross-examination of Mr. Hill by Air Canada's lawyers also filed with the court, the WestJet executive confirmed to Air Canada lawyer Earl Cherniak that he had become aware someone was checking his garbage “when the two clowns lied to my neighbour that they were with Oak Bay municipality collecting garbage.”

Mr. Hill also confirmed that he gained access to the website in the way Air Canada has alleged, and that an employee in WestJet's information technology department developed a program that enabled the company to do this automatically.

However, he repeatedly contends that the information was of no competitive value to WestJet and was available publicly.

Asked at one point by Mr. Cherniak whether he has any regrets about accessing the website in the way he had, Mr. Hill replied that, “at the end of the day, you know, frankly it was an intellectual exercise by an information junky” and “had very little use.”

This is the same tack WestJet has taken in several affidavits filed with the court. It has not specifically denied tapping into the Air Canada website, but in the affidavits, one of its executives contended that the information was in fact available to “anyone with a Web browser.”

As well, a U.S. airline industry consultant WestJet hired contended that it was “entirely without foundation” to suggest that, if it had gained information from the website, it could have used the information to its competitive advantage.