In F.N. v. Epic Games Canada, the Superior Court of Quebec authorized a class action against the companies who were responsible for the development and marketing of the video game Fortnite (the “Defendants”). The class action was authorized on behalf of:
a) all individuals in Quebec who, since September 1, 2017, have developed an addiction, namely a loss of control over or prioritization of gambling, which has had harmful effects on their personal, family, social, educational, professional or other important areas of their lives (“Group 1”); and
b) all individuals in Quebec who made in-game purchases using Fortnite's V-BUCKS virtual currency while they were minors (“Group 2”).
Liability for the marketing of a potentially addictive product is a matter that has been previously litigated, particularly in the context of class actions against cigarette manufacturers 1 and owners of video lottery terminals. 2 However, this is the first class action in Canada, and one of the first in the world, to be allowed against a video game developer on this basis.
Moreover, this case could be the first time a Quebec court rules on the validity of purchase of virtual items (so-called “microtransactions”) by minors without parental consent.
The class action against Epic Games invokes different legal arguments than other class actions against video game developers in Canada, such as the proposed class action instituted in by Gabriel Bourgeois against several corporate defendants. In these other class actions, the plaintiffs allege that the sale of virtual items through a so-called “lootbox” is prohibited gambling by the Criminal Code.
Alleged Facts
The plaintiffs' central premise that Defendants would have designed an “addictive” game is based on the definition of “video game disorder”, that was recognized by the World Health Organization in 2018.
According to the plaintiffs, Fortnite was deliberately designed to be a highly addictive game. In support of their allegations, the plaintiffs cite a number of newspaper articles covering video game addiction issues, some of which refer to Fortnite.
As for Group 2 members, the plaintiffs allege that the transactions carried out by minors for the purchase of virtual items (skins, weapons, armour, etc.) occurred without the authorization of their parents or guardians. In their view, these microtransactions should be cancelled as they allege that there is a significant discrepancy between the amounts paid by the members and the value of the virtual items they acquired in return.
The Defendants argued that, even at the authorization stage, the facts alleged by the plaintiffs were insufficient, as they had not submitted any expert report regarding the causal link between the alleged harms and Fortnite, nor any medical records providing a diagnosis of addiction or articles concerning the adverse effects of video games.
The Defendants also relied on an article from the American Psychiatric Association to the effect that there is insufficient evidence to show that video game disorder is a distinct mental disorder, and that more research is needed on this issue.
Decision Highlights
The Superior Court concluded that even if American psychiatrists required more research, or if video game disorder is not yet a recognized diagnosis in Quebec, the Plaintiffs' claims were not frivolous or clearly without merit. The Court reached the same conclusion with respect to the Plaintiffs' claim that gambling addiction may affect some people with other disorders or predispositions to a greater degree, citing the “thin skull rule” recognized by the Court of Appeal 3 to the effect that the defendant must take the victim as they find them at the time of the alleged injury.
As for the lack of expertise, the Court concluded that this is not a determining factor since expert evidence is not required at the authorization stage of a class action, which is intended to be a screening process based on logic and not on evidence.
In light of the above, the Court concluded that there was a serious issue to be argued, supported by sufficient and specific allegations as to the existence of risks or even dangers related to Fortnite.
It should be noted that the court considered the Fortnite videogame to be “property” within the meaning of articles 899 and 907 CCQ. Thus, the Defendants could be held liable for the damages alleged by the plaintiffs if it is shown that their “property” is affected by a safety defect within the meaning of articles 1468 and 1469 CCQ due to the lack of sufficient evidence regarding the risks and dangers they entail and how to protect yourself from them. The Defendants are presumed to know the risks associated with their product as professional sellers, and the court concluded that it would be incumbent upon it, in the event that the existence of such risks were demonstrated, to show that the Plaintiffs knew or were in a position to know of such risks.
It is worth mentioning that treating software as “property” for the purposes of product liability would significantly increase the legal risks to video game developers, both in future class actions and in other types of civil litigation.
As to the plaintiffs' claim that the Defendants deliberately designed an addictive game, the court found that the articles and interviews submitted by the plaintiffs did not support their claims and were not sufficient to meet their burden of proof, however minimal it may be at the authorization stage. The court also found that a video game developer could not be faulted for creating an interesting, engaging and appealing product and that there was no evidence that the Defendants had deliberately designed an addictive game.
As for the lesionary (i.e. unconscionable or exploitative) nature of the purchases made by minors for virtual items, the court concluded that paying $6,000 for “skins” (which was the case for the son of one of the plaintiffs), raised the possibility that there was lesion within the meaning of article 1406 CCQ, i.e., the exploitation of minors in the context of these microtransactions. Ultimately, the court authorized the proposed class action on the basis of the alleged health risks and hazards to members associated with the use of Fortnite and the alleged failure of the Defendants to notify members of those risks and hazards in the case of Group 1 and on the basis of the alleged disproportionality between the parties' respective benefits for the purchase of virtual items by minors for Group 2.
Conclusion
This decision is the first time in which a Quebec court has found that a videogame is “property” in civil law and that the companies involved in its development or marketing are bound by the obligations incumbent upon manufacturers of intended goods, notably the obligation to give sufficient indications as to the inherent risks and dangers of the property and the legal warranties against hidden defects.
One might wonder about such a qualification, particularly in the case of online video games such as Fortnite. Online games are often referred to by developers as “games as a service” since they require continuous support. This support can be financed in a number of ways, including paid subscriptions, in-game advertisements, or the purchase of virtual items (microtransactions). Some might argue that a video game, and particularly an online video game like Fortnite, is not a piece of property, but rather a service, making the principles associated with product liability inapplicable. This alternative qualification is particularly relevant to game streaming services, which do not involve the installation of a local copy of the game on the user's device.
Additionally, the possibility that the Defendants may be found liable for issues related to the excessive use of Fortnite by some gamers will likely open the door to similar individual and class actions against companies involved in the marketing of video games or other digital content or services that have become part of everyday life and may be used excessively by some consumers. As with the Fortnite case, such litigation will almost certainly raise new legal, procedural and factual issues that have not been addressed by the courts to date.
Finally, this is the first time that a Quebec court has been called upon to determine in the context of a class action whether it should annul transactions entered into by minors without parental permission for the acquisition of virtual items . In this regard, the court's comments that the virtual items acquired by Fortnite players have “no tangible value” is debatable. While determining the objective value of a virtual item in a video game raises new questions, it is not self-evident that this value is necessarily zero or less than that of a physical item, especially in a context where the game allows the exchange of virtual items between players. After all, video games themselves are virtual items that have significant value.
The authors will follow the progress of this case and the development of jurisprudence concerning the liability of companies in the video game industry with great interest. If you have any questions about the issues raised above, please contact one of the authors.
Footnotes
1 Imperial Tobacco Canada Ltd. v. Conseil québécois sur le tabac et santé, 2019 QCCA 358.
2 Brochu v. Société des loteries du Quebec, 2002 CanLII 42025 (QC CS).
3 Bonneau v. RNC Media Inc., 2017 QCCA 11. Note that the Supreme Court of Canada recognized that the thin skull rule could apply to psychological damage: Janiak c. Ippolito, [1985] 1 S.C.R.. 146.
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