"Problem Gamblers" denied certification of proposed class action against the OLGC

15 décembre 2011

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In Dennis v. Ontario Lottery and Gaming Corporation, the proposed representative plaintiffs, Mr. Dennis and his wife, sought to represent a primary class of approximately 10,428 individuals who signed a voluntary self-exclusion contract from gaming venues, and a secondary class of individuals claiming under the Family Law Act.  The Divisional Court upheld the decision of the motions judge which denied certification of the class action claiming damages for breach of contract, negligence, breach of the Occupiers Liability Act, and in the alternative, disgorgement of revenues by waiver of tort  arising from the Ontario Lottery and Gaming Corporation’s (OLGC) alleged failure to deny the proposed plaintiffs entry to its gambling venues pursuant to voluntary self-exclusion contracts.

The appeal centered on the motions judge’s treatment of the proposed common issues under s. 5(1)(c) of the Class Proceedings Act, 1992 (CPA) and his determination under s. 5(1)(d) of the CPA that a class action was not the preferable procedure.

The voluntary self-exclusion contracts, executed by each member of the proposed class provided that each self-excluder would not enter the OLGC’s gambling venues and that the OLGC would use its best efforts to deny entry.  The self-exclusion contracts also contained a release in favour of the OLGC “from any and all liability, causes of action, claims and demands whatsoever in the event that one failed to comply with the voluntary ban”. 

With respect to the breach of contract allegations, the Court held, among other things, that even if the interpretation of the self-exclusion contract was a common issue, entry without ejection by each class member was an individual issue. Further, the issue of unconscionability was found to be an individual issue dependent on the vulnerability of each class member and the degree to which they may have been victims of unequal bargaining power.  Accordingly, the Court held that a finding of liability with respect to the plaintiffs’ claim for breach of contract was not a common issue that significantly advanced the litigation.

For the plaintiff’s claim in negligence, the pleadings alleged that a special duty of care arose out of the OLGC’s knowledge of the class members’ illness and vulnerability. The Court held that the presence of illness, its degree and the consequent vulnerability in each class member was a factual issue that could only be decided on an individual basis and, therefore, whether a duty of care was owed to each class member was not a common issue.

In making this determination, the motions judge was presented with expert evidence opining on whether those who entered into the self-exclusion contracts were pathological gamblers and that they would have returned to gambling venues. The Divisional Court upheld the motions judge’s finding that the expert evidence was not relevant to the issue of whether liability is a common issue and that it was not appropriate to consider this expert evidence in its analysis as the CPA does not permit the requirement of commonality to be avoided by statistical estimates of probability.

With respect to whether the OLGC owed the class members a duty as an occupier of land to detect and remove primary class members who entered the gambling venues involved two questions: first, whether gambling is a “dangerous” activity within the meaning of the Occupiers Liability Act, and second, whether in respect of each class member, gambling was in fact a dangerous activity. The Court held that danger in the activity of gambling is related to the presence of illness in the particular class member, and the fact of signing the self-exclusion contract alone did not constitute proof of illness nor knowledge by the OLGC of illness.  Accordingly, this issue was not found to be a common issue that significantly advanced the litigation.

The issue of whether damages can be determined on an aggregate basis, and if so, how they should be distributed, was one which arose only in respect of those class members to whom the OLGC would have been found liable.  The Court held that the question was irrelevant to those class members in respect of whom breach is not proved.

Similarly, the Court noted that with respect to the proposed common issue of whether the primary class members could elect to “waive the tort” and require the OLGC to account for gross revenues of net profits, it was arguable “that only those class members in favour of whom liability is found [had] a right to elect to waive the tort.  The question [was] inapplicable to class members who [could] not show breach or in respect of whom there [was] a complete defence” and accordingly, it was not a common issue.

The question of whether the secondary class members sustained damages pursuant to s. 61 of the Family Law Act and the quantum thereof was found to be first, an individual issue, and second, was held not to be an issue in the absence of a finding that the OLGC has liability to the primary class member to whom the derivative member is associated.

Given the Courts’ determination that there are numerous individual issues going to the root of a liability determination, the Court held that a class proceeding would be complex and unmanageable to an extent that would far outweigh the benefits to be obtained from a class proceeding and, therefore, a class proceeding was not a preferable procedure.

The Dissent

Justice J. Wilson, in a lengthy dissent, examined the proposed common issues as simplified by the motions judge and ultimately held that the signing of the self-exclusion contract created an identifiable class and that signing put the OLGC on notice that the class members were problem gamblers. In Justice Wilson’s view, there was no requirement to determine the degree of illness and vulnerability of each class member for to meet the test of commonality under s. 5(1)(c) of the CPA. Once individual vulnerability is presumed by the act of signing the self-exclusion contract, Justice Wilson was of the opinion certification as a class proceeding was appropriate. 

Notably, on the issue of “waiver of tort” Justice Wilson commented that it is still unsettled in Canadian law whether waiver of tort is a cause of action or whether it is simply an alternative remedy to a breach of an established tort, but that it does require some wrongdoing the scope of which is unclear, for example, whether it must be a wrong in equity.  Her Honour stated:

Waiver of tort could potentially resolve some individual damage issues on a common basis, since the plaintiffs would not have to prove the quantum of their loss.  It allows a plaintiff who can establish wrongdoing to make an equitable claim for a constructive trust or a personal remedy for an accounting or disgorgement of profits without having to prove a loss causally related to the defendants conduct.

Her Honour went on to hold:

Implicit in the allegations of the Appellants is that OLGC, a crown corporation with public duties, made a deliberate decision not to improve a deficient memory based system of exclusion to reap continued financial profits from vulnerable problem gamblers.  This harsh allegation needs to be tested, but I conclude that the low threshold of some basis in fact has been met.  Therefore, the question of whether there is a wrongdoing to found a finding of waiver of tort should also be certified as a common issue.

Justice Wilson held that while the rigorous analysis of the profits gleaned from self-excluders was an issue that could be dealt with by the common issues trial judge, at this stage, there was enough evidence to certify the common issue of waiver of tort “as either an independent cause of action or a form of restitution.”

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