Video game loot boxes the subject of proposed B.C. class action

A B.C. man's effort to bring a class action lawsuit against a major video game developer over its use of "loot boxes" moved slightly closer to reality this week.

In a decision issued Tuesday, B.C. Supreme Court Justice Margot L. Fleming found that some of the allegations against Electronic Arts Inc. and its subsidiary Electronic Arts (Canada) Inc. constituted a valid "cause of action" for the lawsuit. 

Fleming rejected other allegations in the lawsuit, but gave proposed representative plaintiff Mark Sutherland the opportunity to amend his claim.

Whether the lawsuit will ultimately be able to move forward as a class action remains to be decided at a later date.

DECEPTIVE PRACTICES

The portion of Sutherland's claim that Fleming accepted centres around allegations of deceptive practices.

As summarized in the decision, his filings argue that EA misleads players of its games about the availability and scarcity of rare and valuable items in loot boxes that it encourages players to purchase using real money.

Sutherland also alleges that the company controlled the probabilities of certain items appearing in loot boxes without disclosing what those probabilities were, or without providing sufficient information about those probabilities.

EA is also accused of deliberately using vague language to describe the content of the loot boxes and their odds, and of setting "vanishingly small" odds for the most desired items, meaning players could "pay hundreds or even thousands of dollars in real currency or their equivalent in virtual currency, trying to obtain them."

These allegations have not been proven, and Fleming's decision does not reach a conclusion on whether they are true or false.

Rather, the judge concluded that these allegations, if true, would be a valid issue for a future trial.

In its defence, EA argued that Sutherland's claim did not contain any allegations of actual deceptive practices on its part, an argument that Fleming rejected.

"In my view, the defendants’ argument overstates the requirements for a deceptive act or practice, implying among other things that a positive statement is required," the judge wrote in her decision.

"More importantly, they have not accounted for my obligation to read the pleading both generously and as a whole."

"When I do so, it is apparent the pleading alleges the defendants mislead class members by omission by failing to disclose, or inadequately disclosing, that they structured loot boxes to make obtaining valuable or desirable items difficult or nearly impossible, while at the same time promoting the purchase of loot boxes to improve game performance and enjoyment, with the effect that class members were deceived or mislead into spending money in a fruitless attempt to obtain those items."

UNCONSCIONABILITY AND UNLAWFUL GAMING

Sutherland's claim also alleged that EA had engaged in "unconscionable" acts or practices by violating Criminal Code provisions regarding illegal gambling.

Fleming rejected this assertion on multiple grounds. First, unconscionable acts and practices – in the context of B.C.'s Business Practices and Consumer Protection Act – have two components that must be alleged: "an inequality of bargaining power and a resulting improvident bargain."

Alleging that EA had broken the law did not demonstrate either of those components, according to the decision.

Further, Fleming reviewed the allegation of "unlawful gaming" under the Criminal Code and found it lacking.

While Sutherland argued that purchasing loot boxes satisfied the code's "wagering" requirement, the judge disagreed, finding that because EA provides no way to "cash out" an in-game virtual currency, purchasing a loot box is fundamentally different from placing a bet.

Fleming didn't dismiss the unconscionability argument in its entirety, however. She noted that some of the behaviour Sutherland alleged on EA's part could, if true, amount to an improvident bargain based on an inequality of bargaining power.

She granted Sutherland leave to amend his claims around unconscionability, "leaving aside the claim based on illegality."

LITIGANTS REACT

Slater Vecchio – the law firm representing Sutherland and a plaintiff in a proposed class action in Quebec – issued a statement reacting to Fleming's decision Wednesday.

"This decision is the first step towards addressing the legal issue of loot boxes in video games, and the negative effect it can have on consumers," said Sam Jaworski, a partner in the firm, in the statement.

"This is likely to be a long road but is one in which we will continue to advance the interests of consumers."

EA also responded to the decision, touting the judge's dismissal of the Criminal Code allegations as a win.

“We’re pleased that the trial court rejected, as a matter of law, the allegations of unlawful gaming," the company's statement reads.

"This further affirms our position that nothing in our games constitutes gambling. We don’t believe the remaining claims have any merit either, and will continue to vigorously defend against this opportunistic action." 

REQUIREMENTS FOR CERTIFICATION

To be certified as a class action, a lawsuit must include pleadings that "disclose a cause of action" – essentially a set of alleged facts that, if proven true, would cause a court to rule in the plaintiff's favour.

By finding that Sutherland's claim of deceptive practices on the part of EA is not bound to fail, Fleming has determined this first requirement for a class action has been met.

The judge did not weigh in on the other requirements for certification in her decision, because she granted both parties more time to make further submissions to the court on the unconscionability element of Sutherland's claim.

Once a decision is reached on whether the unconscionability claim discloses a cause of action, there will be four other elements for the court to consider before certifying the class action and allowing it to proceed.

Class actions must have an identifiable class of two or more people. In Sutherland's case, the proposed class is all B.C. residents who have paid directly or indirectly for loot boxes in more than 70 EA video games since 2008.

Further, to be certified, class actions must also:

• Raise common issues shared by all members of the class
• Be preferable to individual cases for "the fair and efficient resolution of common issues"
• And there must be a representative plaintiff who adequately represents the class, has a plan for the proceeding that is "workable" and does not have an interest that is in conflict with those of other class members.