On November 29, 2021, the Superior Court of Quebec handed down an interesting decision in Option Consommateurs c. Société des loteries du Québec (Loto-Québec)1 dealing with the preservation of confidentiality and the sealing of documents belonging to the defendant and a third party, the disclosure of which could harm their respective commercial interests.
This decision is both a reminder and a rare application of the legal principles relating to the preservation of confidentiality and restrictions on the open court principle in commercial matters, the implementation of which will depend on proof on a balance of probabilities.
I. The dispute
In 2016, Option Consommateurs (the “Plaintiff”) instituted a class action against the Société des loteries du Québec (“Loto-Québec”). The Plaintiff alleged that the Slingo game falsely led people to believe that its operation and gameplay are entirely governed by chance, when in fact the outcomes are predetermined by the acquisition of a game card.
Once the class action was authorized, the parties entered into a confidentiality agreement to govern and preserve the confidentiality of the documents they were likely to exchange during the proceedings (the “Agreement”). In accordance with the Agreement, Loto-Québec disclosed various documents during the proceedings, including documents pertaining to the marketing and operation of lottery games, which were central to the dispute (the “Confidential Documents”). The Plaintiff subsequently informed Loto-Québec of its intention to use these documents publicly for the purposes of the proceedings, despite the provisions of the Agreement.
Loto-Québec therefore applied to the Court for an order of confidentiality and the sealing of the Confidential Documents and all references thereto. Only the lawyers involved in the litigation and their respective experts would have access to these documents, to the exclusion of any other person, including the class members involved in the class action.
It should be kept in mind that the purpose of a confidentiality order (non-disclosure or non-publication) is to allow for relevant information to be filed in the Court record for discussion and consideration by the Court to the exclusion of the public or even a party. A sealing order, on the other hand, is intended to ensure that the public or third parties do not have access to the documents filed with the Court.
II. The Superior Court judgment
A. Applicable legal framework
In a judgment written by the Honourable Johanne Mainville, J.S.C., the Superior Court reiterated the cardinal principle of our justice system, namely the open court principle, in accordance with the precepts of the Canadian Charter of Rights and Freedoms2 and Quebec’s Charter of Human Rights and Freedoms.3
However, article 12 of the Code of Civil Procedure provides that the court may make an exception to the open court principle, particularly if it considers that public order, including the protection of substantial and legitimate interests, justifies prohibiting or restricting access to a document or to the information contained therein.
The burden of proving that access to a document or piece of information would interfere with a substantial and legitimate interest rests with the party seeking the protective order. This party must lead evidence that satisfies the cumulative criteria established by the Supreme Court of Canada:4
a) court openness poses a serious risk to an important public interest;
b) the order sought is necessary to prevent this serious risk to the identified interest because reasonable alternative measures will not prevent this risk; and,
c) as a matter of proportionality, the benefits of the order outweigh its negative effects.
Once it has been demonstrated that these criteria have been met, the Court has the discretion to issue an order limiting access or disclosure of information or documents, depending on the circumstances.
B. Adjudication of the dispute regarding the Confidential Documents
Notwithstanding the relevance of the Confidential Documents to the dispute, the orders sought by Loto-Québec would have the effect of limiting access to these documents by the public, the representative plaintiff and other members of the class, which would undermine the openness of the court proceedings.
The orders sought by Loto-Québec were based on two sworn statements. One came from the third-party company that developed the Slingo game, while the other came from a person responsible for marketing the game at Loto-Québec, which made it possible to establish the following elements in particular:
a) The Confidential Documents contain information about the code, game scenarios, functionality and possible outcomes of the Slingo game;
b) The Slingo game is available to other public and private entities in Europe and North America;
c) The Slingo game is operated under a license granted to Loto-Québec, which provides for its confidentiality and the obligation to protect all information relating to the game;
d) Loto-Québec and the company that developed the Slingo game have always considered the related information to be highly confidential and commercially sensitive, both with respect to other companies in the gaming industry and with respect to the users of the Slingo game, who would be harmed by the disclosure of such information.
For its part, the Plaintiff did not submit any evidence in response to the orders sought by Loto-Québec, nor did it question the authors of the above-mentioned statements.
Despite the Plaintiff’s claims that the rules and different outcome scenarios of the Slingo game are publicly available because any player or business interested in the game could identify them, the Court must consider the uncontradicted evidence submitted by Loto-Québec, which cannot simply be dismissed based on representations at the hearing.
In this case, the evidence shows on a balance of probabilities that the Confidential Documents have always been treated as such by Loto-Québec and are covered by a confidentiality agreement that would be breached by the disclosure of said documents. Moreover, disclosure of the Confidential Documents would be likely to harm the vital commercial interests of the company that developed the Slingo game as well as those of Loto-Québec.
Consequently, the Court was satisfied that the Confidential Documents relate to an important commercial interest that would be seriously threatened by the public release of these documents. Furthermore, the Court was satisfied that, in the circumstances, there was no reasonable and effective alternative to the orders sought by Loto-Québec. It also found that the scope of the orders was not disproportionate or unreasonable given that the parties to the dispute, their counsel and experts will be able to access the Confidential Documents for the purposes of the litigation.
The Court therefore granted the orders sought by Loto-Québec and issued both a confidentiality order and a sealing order with respect to the Confidential Documents.
The decision in Option Consommateurs c. Société des loteries du Québec (Loto-Québec) is a useful reminder of the principles relating to the preservation of the confidentiality of commercial interests and documents in a commercial context. This decision also reminds parties seeking similar orders of the importance of providing compelling evidence of the confidentiality of the information at issue in order to justify an exception to the open court principle.
Furthermore, it is clear from the Superior Court’s decision that the fact that this dispute is a class action is not in itself a relevant consideration in determining whether or not to restrict the disclosure or public release of information.
1 Option Consommateurs c. Société des loteries du Québec (Loto-Québec), 2021 QCCS 4954.
2 Constitution Act, 1982, Schedule B to the Canada Act 1982 (UK), 1982, c. 11.
3 CQLR, chapter C-12.
4 Sherman Estate v. Donovan, 2021 SCC 25.