The Court of Appeal rejects class action against Loto-Québec on odds of winning the jackpot

On May 9, 2019, the Court of Appeal handed down its decision in Karras v. Société des loteries du Québec in which it dismissed an application for authorization to institute a class action against Loto-Québec. In its decision, the Court of Appeal reviewed the principles governing authorization of a class action and confirmed that the authorization judge, in exercising his role as a filter, must dismiss any action that has no reasonable chance of success in light of the evidence tendered.

The facts

The plaintiff had been buying lottery tickets for over 20 years when she sought authorization to institute an action in damages against Loto-Québec on the grounds that it failed to disclose to lottery ticket buyers the actual odds of winning a jackpot. The plaintiff also alleged that Loto-Québec was making false representations since its advertising suggested the existence of a life of luxury while failing to disclose the actual odds of winning the lottery.

The plaintiff claimed that Loto-Québec violated various provisions of the Civil Code of Québec (CCQ) and the Consumer Protection Act (CPA), which provide that merchants have a duty to inform consumers about important facts likely to influence their decision whether or not to purchase a product. As a result, the plaintiff sought damages equal to the profits Loto-Québec generated on lottery ticket sales over the past three years, as well as $150 million in punitive damages.

The Court of Appeal’s decision

In a unanimous decision, the Court of Appeal upheld the trial judgment and dismissed the action in its entirety. The Court pointed out that the evidence filed by Loto-Québec clearly showed that it provides lottery ticket buyers, on its website for example, with all relevant information regarding the odds of winning for each type of product available. The Court added that the information on the odds of winning can be lengthy and that it would be unreasonable to reproduce the information on the back of every ticket. The Court also found that the information on the back of the lottery tickets was in all respects compliant with the applicable regulations.

The Court found that Loto-Québec’s advertising contained no false or misleading representations. According to the Court, the mere fact that their ads convey an appearance of happiness does not violate the provisions of the law prohibiting false or misleading representations. According to the Court, Loto-Québec is not required to reproduce on each of its ads the statistics on the odds of winning.

The Court also issued certain comments regarding the plaintiff’s role and her ability to represent the interests of all class members. The Court mentioned that, during her examination on discovery, the plaintiff acknowledged that she believed her chances of winning were around one in five million (in reality, her chances were one in fourteen million). According to the Court, the important fact for the consumer is the low likelihood of winning rather than the specific mathematical statistics.

The Court added that the plaintiff had no individual claim since consumers are required to inform themselves and that she failed to do so even though the relevant information was fully available. The Court added that the representative had not shown any interest in the issues raised in this matter until the attorney ad litem suggested she act as a representative. Lastly, the Court found that the alleged causal connection was, at the very least, problematic in this case and that the very existence of the proposed class seemed vague. In light of such circumstances, the Court of Appeal dismissed the motion for authorization to institute a class action.

Importance of the decision

The Court of Appeal’s decision confirms that it is possible to have a class action dismissed at the authorization stage when the defendant files evidence in the Court record (with its authorization) to establish that the key allegations of the motion are false and are nothing more than mere assumptions, opinions or inferences of facts that the Court should not assume to be true at the authorization stage.

* Loto-Québec was represented before the Court of Appeal by Mtre Olivier Kott Ad. E. and Mtre Dominic Dupoy from Norton Rose Fulbright.