Waiver of Tort in Class Actions

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It is fashionable for class counsel to plead “waiver of tort” as a common issue alleged to be certifiable in product liability class actions. Waiver of tort refers to a plaintiff’s election at a common issues trial to have recovery quantified not by provable tort damages but rather by the defendant’s gain arising from the alleged tortious act.

As merits-based classes defined by injury are impermissible in common law provinces, waiver of tort is the glue to hold together a claim on behalf of all users of a product — without regard to whether it is defective or causes injury. The plea is a sentinel that the plaintiff and an overwhelming majority of class members have not suffered any compensable injury. Where a plaintiff is injured, tort damages will never be waived. Any profit will necessarily be miniscule compared to the loss from bodily injury.

In no Canadian case has waiver of tort been allowed to proceed as a stand-alone claim, which might have the practical effect of protecting the class representative from documentary production.

To succeed at trial, a class claiming waiver of tort will likely have to show fraud or something akin to a total failure of consideration, based on wrongful conduct going well beyond negligence.

There is no Canadian authority for the proposition that a class can refuse to prove loss and instead claim profits by waiving the tort [see Serhan (Estate) v. Johnson & Johnson, 2004 CanLII 1533 (ON S.C.), rev’d 2006 CanLII 20322 (ON S.C.D.C.), leave to appeal denied]. The issue may be tried for the first time in 2010. To the degree profit disgorgement were to be ordered without a corresponding loss, the award would arguably conflict with Canada’s rules limiting punitive damages [see Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595, 2002 SCC 18].

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