In a ruling released on July 31, 2013, problem gamblers in Ontario were denied certification of a $3.5-billion class action law suit commenced against the Ontario Lottery and Gaming Corporation. The Court of Appeal's decision in Dennis v Ontario Lottery and Gaming Corporation marks the third in a string of decisions declining to certify the proposed action on the basis of its failure to overcome the hurdles of section 5(1)(b)-(e) of the Class Proceedings Act.
The putative class action was commenced on behalf of members of a group of more than 10,000 individuals who voluntarily signed self-exclusion forms asking the OLG to ban them from entry to its gaming establishments between December 1999 and February 2005. The action alleges that putative class members suffered losses after the OLGC failed to prevent them from entering its gaming sites, notwithstanding they had self-excluded.
In 2010, Justice Cullity declined to certify the action after finding that substantially all of the issues of liability surrounding the allegations turned on proof that individual class members were vulnerable, pathological problem gamblers who returned to the OLGC sites despite signing the self-exclusion forms. Justice Cullity found this determination required an individual, case-by-case assessment which was not suitable for class treatment. In declining to certify the action, Justice Cullity also noted that judicial economy might not be gained by a class action in this instance given that, as of 2010, nine individual actions had been commenced against OLGC by self-excluded individuals and settled for an average payment of $167,000 per claim. Moreover, Justice Cullity noted that the OLGC was already subject to persistent scrutiny and had taken steps to improve its self-exclusion and responsible gaming programs, likewise reducing the need for behaviour modification through class proceedings.
The Divisional Court upheld Justice Cullity's finding that issues of liability were predominantly individual in nature and declined to grant certification though there was a dissent.
The Court of Appeal's Decision
The Court of Appeal upheld the Divisional Court and motion judge's reasons, unanimously dismissing the appeal on the basis of its failure to overcome a number of procedural hurdles.
The Proposed Class Definition
The plaintiffs relied on Hickey-Button v Loyalist College of Applied Arts & Technology, where the court had certified a claim for breach of contract based on the college's failure to provide an option it had promised. In Hickey-Button, the court concluded the class definition was not overly inclusive because the contract of every student had been breached by the defendant college's unilateral decision not to provide an option it had previously promised. Liability therefore did not hinge upon the individual circumstances or conduct of the students. The Court of Appeal rejected this argument and distinguished the circumstances in Dennis from Hickey-Button, finding that unlike the students in Hickey-Button, not all of the signatories of the self-exclusion forms in this case could be viewed to be in the same position. Rather, claims were dependent on the actions of the members of the proposed class. The promise to use "best efforts" to exclude was, by its very terms, directly tied to the actions of the self-excluder, many of whom admittedly had never attempted to gain re-entry and thus had no actionable claim. Accordingly, the proposed class definition was found to be overinclusive.
The Court of Appeal held that the class was overly inclusive, emphasizing the lack of "rational relationship between the class identified by the plaintiff and the proposed common issues... Resolving the issue of whether OLG should have done more by way of enforcement of the self-exclusion forms does not make up even a very limited aspect of the liability question, given the inherently and inescapably individual nature of the claims at their core" which would "ultimately break down into individual proceedings".
The Court of Appeal's decision concluded that this action failed to satisfy section 5(1)(d) of the CPA even though there are a number of cases in which Ontario courts have determined that class proceedings are the appropriate procedure to deal with "systemic wrongs". In each of those cases, liability turned on unilateral action of the defendants and was not dependent on the individual circumstances of class members. The claims advanced against the OLGC in Dennis differed significantly. Rather than arising out of the defendant's unilateral actions, the OLGC's alleged wrongdoing was "inextricably bound up with the vulnerability of the individual class members" and arose by the class members' own actions. Putative class members had chosen to return to OLGC sites to gamble and lose money and in that regard, were notably not unlike thousands of other patrons who lost money "more often than not" after attending at OLGC gaming facilities. The Court of Appeal concluded that a general finding of "systemic wrong" in this case would not avoid the need for protracted individualized proceedings, stating: "Rather than providing an effective procedural tool to advance the resolution of the claims of the proposed class members, a class proceeding would amount to little more than a general commission of inquiry into the prevention of problem gambling."
Dennis serves as a clear reminder that claims with a deficient level of commonality should be denied certification in Ontario. In an era in which Ontario courts have been criticized for a host of plaintiff-friendly certification decisions, the recent decision by Ontario's highest court confirms that the hurdle imposed by section 5(1) of the CPA will be a meaningful one in cases advancing only tenuous claims of systemic liability. Where certification will not advance the goals of the CPA and will inevitably require resolution of a host of individual issues, Dennis suggests it will be denied.
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