Alternative Dispute Resolution

Court Invalidates Result of Rock-Paper-Scissors Match

Or, as the Japanese knew it in 1809, "slug, frog, snake." (public-domain image via Wikipedia)

On April 17, Québec’s Court of Appeal refused to enforce an outcome reached via that time-honored dispute-resolution mechanism often known as “rock, paper, scissors.” Unfortunately for me and those who unwisely rely on me for international news, the decision is in French and there’s no official English version. Not that this will stop me from commenting, of course.

This report tells us the result (in English) but is otherwise insufficient. According to the report, Edmund Hooper and Michel Primeau held a rock-paper-scissors match in 2011, and Primeau won. This might not be newsworthy, or grounds for litigation, except for the amount: $517,000 (US$368,000). Hooper had to take out a mortgage to pay the debt, in fact. The parties signed a contract, but Hooper later sought to void it under a Québec law that limits “gaming and wagering” contracts. The lower court ruled in Hooper’s favor, and on April 17 the Court of Appeal agreed.

Possibly due to the language barrier, the report does not tell us nearly enough about the background here, so for that I have turned to the Google Translate version of the superior court’s decision.

It might make more sense in the original French, but on the other hand, it might not.

According to the superior court, “[t]he factual framework in this case is nebulous and punctuated by many contradictions.” Especially nebulous is the nature of the relationship(s) between and/or among Hooper, Primeau, and Hooper’s wife, Susanne Iwanow. This is not directly relevant, but Hooper claimed it was, and it’s weird so let’s discuss it anyway.

The opinion says Primeau and Iwanow were childhood friends, but lost touch. Hooper and Primeau met in college, but then they lost touch. Hooper and Iwanow met at some point after that, and got married in 1994. In 1995, all three connected when Iwanow invited her old friend to the yacht club, as one does, and then … well, something happened: “The two men and Ms. Iwanow developed from this moment a sustained and constant relationship, the nature of which remains ambiguous.” It sure does. Google plainly has trouble with French verb tenses and pronouns, but then so do I, so let me just give you this excerpt from the translation:

Starting in 1995, Mr. Primeau occupied an important place in the lives of Mr. Hooper and Ms. Iwanow and the three met regularly until 2014.

Over the years, Mr. Hooper considers Mr. Primeau to be a family friend, a confidant and a business and personal advisor. He has great confidence in him and often resorts to his advice and services.

As for Ms. Iwanow, the evidence shows that she spends a lot of time with Mr. Primeau: he serves as a driver and advisor; does him a lot of service and does some of his shopping. Ms. Iwanow also receives mail at his home, including targeted advertising.

The context makes clear that at least the second paragraph should be in the past tense.

Hooper claimed the other two had been having an affair, which they denied. The court did not find Hooper’s evidence credible, however. I personally would have given some weight to the evidence that Ms. Iwanow was getting mail at Primeau’s house, but then none of this is directly relevant, is it? To the extent it matters, the court said it believed that “from 1995 to 2014, Mr. Primeau, Mr. Hooper and Ms. Iwanow dated, all three, on a regular basis.” On the other hand, this may be Google trying to spice things up a little. The French version of that last part is se fréquentent, tous les trois, sur une base régulière, which is similar to an earlier passage that, in translation, did not even suggest they were “dating” tous les trois. I think the court was just saying they “socialized” on a regular basis, but anything’s possible.

Let’s just say they were all very close, at least for a while.

Whatever was going on personally, there may have been some financial hanky-panky. Hooper ran a company called DigiScreen, which declared bankruptcy in 2010. By 2011, it was apparent he was going to owe a lot of money in taxes. Coincidentally, or not, this is when Hooper and Primeau allegedly make their agreement: Hooper “acknowledges” that he owes Primeau $517,000 (source undefined), and as security, he gives Primeau a “mortgage” on his house. Hooper agrees to pay $1,000 a month, and, oddly, to let Primeau live in the house. Also oddly, the agreement says Hooper is single, which he is not, and in the space where Primeau’s address should appear they instead write the address of Hooper’s mother.

So.

Hooper makes the payments for a year, but stops in late 2012. At the same time, he tells his wife he wants a divorce. He has been seeing someone else, it turns out, and “Ms. Iwanow will learn in the summer of 2013 that Mr. Hooper is expecting a child” with this woman. “The relations between Mr. Hooper and Ms. Iwanow,” not too surprisingly, “then become acrimonious.” She locks him out, but he later gets an order allowing him to evict her and Mr. Primeau, who have both been living in the house, although, again, their relationship is strictly platonic, according to them.

In the meantime, Hooper sued to invalidate the 2011 agreement, arguing it was only a “simulation.” Under Québec law (it’s the same word in French), a “simulation” is when parties say one thing in a public agreement but their “real will” is expressed in a secret contract or “counter-letter.” If a third party relies on the public version, the contracting parties must honor it. But between themselves, the secret version controls. Why this is allowed this isn’t entirely clear to me, but I guess there could be reasons. A potential problem, though, is that it may be hard to prove there was a “secret contract” if you didn’t write it down. And here, they did not. Hooper testified the arrangement was intended to keep the government from taking the home to pay his tax debt, and that he never really had a debt to Primeau at all. But—maybe because that seems a little shady?—Primeau testified that yes, there was a debt, and that this debt of $517,000 was, in fact, the result of a series of “rock, paper, scissors” matches.

What?

Yes.

Primeau testified that he and Hooper routinely wagered on such matches, and that the $517,000 was the result of a double-or-nothing match at a time when Hooper already owed Primeau $258,500 in rock-paper-scissors debt. Now, plainly, they had not been doing double-or-nothing all along starting from $1, because you can’t get to $258,500 that way. But we don’t know how the earlier matches went. And in any event, I’d prefer to waste your time with a paragraph on the history of rock-paper-scissors.

Or shoushiling, as Wikipedia claims the ancient Chinese called it. More specifically, a Ming-dynasty writer claimed in the 17th century that it already dated back almost 2000 years. From China, it allegedly spread to Japan, where it was generally referred to as sansukumi-ken, which translates to something like “the three fists who are afraid of one another.” The three fists were originally frog, slug, and snake (see above), but by the time this practice spread to the West in the 19th or early 20th century, it had transformed into the more industrial rock, paper, and scissors. Wikipedia offers some examples of this being used in “real-life scenarios,” one of which is the famous 2006 order in Avista Management directing lawyers to resolve a discovery dispute this way, and another being a 2005 match in which Christie’s beat Sotheby’s, thus winning the right to sell a $20 million art collection (and to earn a big commission).

So RPS has been used to resolve even larger disputes than the one allegedly involved here. This does not mean, however, that Primeau’s explanation for the “debt” is plausible. Hooper denied it, no documents supported it, and it is, of course, very goofy. Having heard six days of testimony, the court found that “neither Mr. Hooper nor Mr. Primeau seems completely frank” about what happened, and “there is clearly a part of the story that escapes the Tribunal.” But “between [the] two versions full of improbabilities,” it concluded, “the theory of gambling debt appears the most likely.”

That (at last) brings us to the question of whether a debt incurred this way is enforceable.

Under Québec law, gaming and wagering contracts are valid if the underlying activity involves “only skill or bodily exertion” (à la seule adresse des parties ou à l’exercice de leur corps) and the amount at stake is not too high:

Les contrats de jeu et de pari sont valables dans les cas expressément autorisés par la loi.
Ils le sont aussi lorsqu’ils portent sur des exercices et des jeux licites qui tiennent à la seule adresse des parties ou à l’exercice de leur corps, à moins que la somme en jeu ne soit excessive, compte tenu des circonstances, ainsi que de l’état et des facultés des parties.
Gaming and wagering contracts are valid in the cases expressly authorized by law. They are also valid where they are related to lawful activities and games requiring only skill or bodily exertion on the part of the parties, unless the amount at stake is immoderate given the circumstances and in view of the condition and means of the parties.
Civil Code of Québec art. 2629. Hooper, who didn’t want to pay, argued that the agreement was invalid because a rock-paper-scissors match involves no skill, but rather is “random.” The court correctly rejected this bogus argument:
[A] game of “rock-paper-scissors” can, in certain specific circumstances, call upon the skill of the parties, in particular the speed of execution, within the meaning of observing or implementing a strategic sequence. This is all the more true when, as in this case, the game in question aims to determine the winner following a series of three games.

Maybe, but that doesn’t answer the question. RPS plainly involves at least some “skill,” so Hooper is wrong. But the law says gaming contracts are invalid unless they require only skill, so the question is whether there is any random element. The superior court dodges this question, holding instead that the contract is invalid because (among other things) the amount at stake was “excessive” (or “immoderate”). This meant Primeau was out $517,000, and he appealed.

On April 17, the Court of Appeal held that neither condition was met: RPS does not involve only skill, and the lower court’s “excessiveness” finding was not clearly erroneous. Neither court says much to explain what makes an amount legally “excessive,” and so this seems like a very subjective and therefore non-interesting factor. The more interesting question, is whether RPS involves any truly random element. The Court of Appeal held that it does:

[A] game of “rock-paper-scissors” does not depend solely on the parties’ skill. I agree, like the judge [below], that the game calls for a certain amount of skill. However, it seems obvious to me, and ex officio knowledge makes it possible to conclude, that the game also involves a great deal of chance, so that it does not depend “only on the skill of the parties” within the meaning of Article 2629.

Ex officio knowledge! In other words, the court took judicial notice of the “fact” that RPS involves “a great deal of chance.”

Well, we could certainly debate the amount of skill v. chance involved, but life is short and this is already too long. The legal question is whether there is any chance involved, and the answer to that has to be yes. Of course, you could argue that even flipping a coin isn’t “random”—we just can’t effectively predict the outcome because we don’t know all the variables. But that seems to be the point of this law: a contract should not be enforceable if the subject matter involves something that is effectively random from the contracting party’s point of view. And although you can certainly make predictions about what your opponent will do, and that involves at least some skill, I doubt those predictions are much better in most RPS cases than flipping a coin would be. At least in Québec, a contract based on either one is unenforceable, at least for now.

In the future, science may provide more guidance, and I look forward to that day. But not yet:

For the fundamental model system of Rock-Paper-Scissors (RPS) game, classic game theory of infinite rationality predicts the Nash equilibrium (NE) state with every player randomizing her choices to avoid being exploited, while evolutionary game theory of bounded rationality in general predicts persistent cyclic motions, especially for finite populations. However, as empirical studies on human subjects have been relatively sparse, it is still a controversial issue as to which theoretical framework is more appropriate to describe decision making of human subjects.

Emphasis added. Maybe cure the coronavirus first, but after that RPS should be at the top of our list.