Waiving Goodbye: The Rise and Imminent Fall of Waiver of Tort in Class Proceedings
| Author | H. Michael Rosenberg |
| Pages | 37-86 |
37
Waiving goodbye: The rise and
imminenT fall of Waiver of
TorT in class proceedings
H. Michael Rosenberg*
a. inTroducTion
Consumer class actions have encountered difficulty at the certification stage
because they tend to raise significant issues that cannot be resolved on a
class-wide basis. When class members must individually prove causation,
loss, or reliance, consumer claims can become unmanageable. In turn,
concerns of judicial economy will often bar certification.1 The poor perfor-
mance of consumer class actions is disappointing because the initial report
of the Ontario Law Reform Commission (OLRC) identified consumer claims
as an important procedural device to enhance access to justice and promote
behaviour modification.2
In recent years, several class actions have attempted to sidestep the
problem of lingering individual issues by pleading waiver of tort. This
arcane restitutionary doctrine holds that victims of a tort may choose
between two alternative remedies. They may either claim damages in tort,
* The author is a law clerk to the Rt. Hon. Beverley McLachlin, Chief Justice of
Canada. He can be reached at michael.rosenberg@post.harvard.edu. The author
wishes to thank Ernest Weinrib, Jacob Ziegel, Garry Watson, Albert Oosterhoff,
Joan Gilmour, Tony Duggan, and Christie Kneteman for their immensely help-
ful comments on earlier drafts of this paper. The author would also like to
thank Harvey Strosberg, Q.C., who awarded this paper with the 2009 Harvey T.
Strosberg Essay Prize. Of course, all errors remain the author’s own.
1 See, for example, Mouhteros v. DeVry Canada Inc. (1998), 41 O.R. (3d) 63 at 73
(2003), 63 O.R. (3d) 22 at 40 (C.A.), leave to appeal to S.C.C. refused, [2003]
S.C.C.A. No. 106 [Chadha]; Caputo v. Imperial Tobacco (2004), 236 D.L.R. (4th)
348, [2004] O.J. No. 299 at paras. 51–55 (S.C.J.) [Caputo].
2 Ontario Law Reform Commission, Report on Class Actions (Toronto: Ministry of
the Attorney General, 1982), reproduced in Jacob Ziegel & Garry Watson, eds.,
Class Actions: Cases, Materials and Notes (Toronto: University of Toronto Faculty of
Law, 2008) vol. 1 at 42.
38 THE CANADIAN CLASS ACTION REVIEW
which compensate them for their injuries, or they may “waive the tort” and
claim a restitutionary disgorgement of the gains that the defendant realized
from its tortious conduct.3 This latter claim is predicated on the argument
that a tortfeasor may not profit from its wrong.4 Consequently, the tortfeasor
may be compelled to disgorge its wrongful gains, regardless of the injury
suffered by the plaintiff.5 As such, waiver of tort purportedly renders it
unnecessary to prove causation or damages, greatly enhancing the viability
of consumer class actions.
Due to the uncertainty surrounding this claim, several class actions in
waiver of tort have been certified, whereas these suits would otherwise have
failed due to overwhelming individual issues. The difficulty is that certi-
fication has said nothing about the merits of the plaintiffs’ claims, except
that they cannot be struck on a preliminary motion. Because none of these
actions has proceeded to trial, both plaintiffs and defendants have been left
to settle claims without a clear understanding of their respective rights.6
This paper argues that most of the class actions in waiver of tort would
likely fail at trial. I base this contention on the idea that waiver of tort is a
two-step claim. Plaintiffs must first waive the tort, and then prove their enti-
tlement to restitutionary relief. Not all victims of a tort are able to access res-
titutionary remedies. Rather, the availability of restitutionary relief depends
on the relationship between the parties. Specifically, restitution requires a
proprietary tort, an unjust enrichment, or an equitable relationship between
the parties. Where none of these is present, the claim in waiver of tort will
likely founder.
3 See John D. McCamus, “Restitution as an Alternative to Damages in Contract
and Tort” in Law Society of Upper Canada, Law Society of Upper Canada Special
Lectures 2005: The Modern Law of Damages (Toronto: Irwin Law, 2006) 123;
Peter D. Maddaugh & John D. McCamus, The Law of Restitution, looseleaf (Aurora,
ON: Canada Law Book, 2004) c. 24.
4 See James Edelman, Gain-Based Damages: Contract, Tort, Equity and Intellectual
Property (Oxford: Hart, 2002) at 148.
5 Maddaugh & McCamus, above note 3 at 24-19.
6 At the time of writing, two waiver of tort class actions were proceeding to trial
in the Ontario Superior Court of Justice: Andersen v. St. Jude Medical Inc., [2010]
O.J. No. 8 (S.C.J.) [Andersen] and Serhan (Estate Trustee) v. Johnson & Johnson,
[2004] O.J. No. 2904 (S.C.J.) [Serhan certification]. Though Andersen was orig-
inally a standard product liability suit, the plaintiffs recently amended their state-
ment of claim to plead waiver of tort. The common issues trial in Andersen was
scheduled to begin on 8 February 2010 before Lax J., making it the first of these
suits to be heard on its merits. However, it remains to be seen if either Andersen
or Serhan will result in a final judgment.
VOLUME 6, No 1, april 2010 39
Unfortunately, most consumer class actions fall outside these recog-
nized categories of restitution. It is conceivable that the principles of restitu-
tion might be extended to meet the needs of consumer claims, yet without a
sufficient connection between the parties to firmly establish one of the three
claims mentioned above, it is difficult to understand why any particular set
of plaintiffs should be entitled to the defendant’s gains. Ultimately, I con-
clude that the doctrine of waiver of tort has only limited application in the
context of consumer class actions, and substantive reform is necessary to
ensure that these actions perform the important function that that the OLRC
had envisioned.
In the first section of this paper, I begin by placing consumer claims in
the context of the underlying rationales for class actions. In the second sec-
tion, I discuss waiver of tort as a potential solution to the problem of persis-
tent individual issues. In the third section, I explain why this cause of action
is likely to fail if it is ever brought to trial. Finally, I conclude by canvassing
the broader public policy concerns and charting the way forward.
b. class acTions in Theory and
pracTice
1) The Centrality of Access to Justice
In its seminal report on the advantages of class proceedings, the OLRC
offered three justificatory rationales: judicial economy, behaviour modifica-
tion, and access to justice.7 On the subject of access to justice, the report
recognized the financial, social, and psychological barriers that bar access
to the courts for many litigants. The OLRC’s argument was simple: the non-
viability of an individual action — because of any barrier to legal redress
— is a poor indicator of the relative importance of that claim to the person
who has been injured. The report concluded that class actions were needed
to ensure that people with important legal claims could access the justice
system.
The OLRC expected that class actions would help courts to better serve
the needs of vulnerable people whose social or psychological stigmatiza-
para. 27 [Hollick], the Supreme Court of Canada adopted the OLRC’s three justi-
ficatory rationales to decide whether a class proceeding would be the preferable
procedure for the resolution of the common issues, as required by s. 5(1)(d) of
decided the issue of preferable procedure with reference to these three factors.
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