Western University Scholarship@Western Electronic Thesis and Dissertation Repository 7-12-2016 12:00 AM Resolving Dilemmas in Canadian Class Actions by Reconsidering Private Law Principles Stephanie Sugar The University of Western Ontario Supervisor Professor Stephen GA Pitel The University of Western Ontario Graduate Program in Law A thesis submitted in partial fulfillment of the equirr ements for the degree in Master of Laws © Stephanie Sugar 2016 Follow this and additional works at: https://ir.lib.uwo.ca/etd Part of the Torts Commons Recommended Citation Sugar, Stephanie, "Resolving Dilemmas in Canadian Class Actions by Reconsidering Private Law Principles" (2016). Electronic Thesis and Dissertation Repository. 3848. https://ir.lib.uwo.ca/etd/3848 This Dissertation/Thesis is brought to you for free and open access by Scholarship@Western. It has been accepted for inclusion in Electronic Thesis and Dissertation Repository by an authorized administrator of Scholarship@Western. For more information, please contact [email protected]. i Abstract Class actions cases illuminate the theoretical underpinnings of private law in a way that traditional two-party litigation does not. Many class actions deal with plaintiffs who have not suffered a large loss (or a quantifiable monetary loss at all), or the defendant has made profits that are disproportionately greater than the plaintiffs’ compensable loss (if any). Applying orthodox principles of private law and negligence to these cases results in barring plaintiffs from recovery despite their rights being violated and defendants not disgorging profits made from wrongdoing. The solution resolving these dilemmas should not be to create separate law only applicable to class actions. Rather, the traditional interpretations of damage and disgorgement must be reconsidered generally. By refocusing on a view of negligence as serving to vindicate litigants’ rights and reconsidering orthodox principles, class actions dilemmas can be resolved in a way that is consistent with, and clarifies, the private law. Keywords Law; Private law; Rights; Torts; Negligence; Obligations; Remedies; Disgorgement; Damages; Civil Procedure; Class Actions; Statutes ii Acknowledgements This work would not have been possible without the guidance and support of my supervisor, Professor Stephen Pitel, to whom I owe an immense debt for much of my professional success. From my first day as a naïve law student, through working in practice, to embarking on an academic career, his resolute encouragement and unparalleled intelligence have enabled and inspired me – I am deeply grateful. I also owe many thanks to my second reader, Assistant Professor Zoë Sinel, who has provided invaluable feedback and continues to challenge me. Professor Sinel’s infectious zeal and passion for the law unquestionably drives innovation and I am thankful for her motivating influence. All that I am and everything I have achieved is because of the love of my family. To my father for supporting me unconditionally, to my sister for always listening to me, to my nagymama for encouraging me to follow my dreams, and to my nagypapa for instilling in me that I should always try and do something useful – thank you. This is for you. This research was supported by the Canada Graduate Master’s Scholarship awarded by the Social Sciences and Humanities Research Council of Canada. iii Table of Contents Abstract ............................................................................................................................... i Acknowledgements ........................................................................................................... ii Table of Contents ............................................................................................................. iii Chapter 1 ........................................................................................................................... 1 1. Introduction ................................................................................................................ 1 1.1 Overview ............................................................................................................................ 1 1.2 Dilemmas Illuminated by Canadian Class Actions ........................................................ 5 1.2.1 The problem of loss and the need to reconsider the concept of damage ..................... 9 1.2.2 The problem of profits and the need to reconsider disgorgement ............................. 13 1.2.3 The problem of individual issues as motivating impermissible changes to the requirements of negligence ........................................................................................ 17 1.2.4 Convergence of the three dilemmas resulting in the waiver of tort problem ............ 21 1.3 Methodology .................................................................................................................... 27 1.3.1 An interpretive, rights-based theory of private law ................................................... 27 1.3.2 Limitations in scope ................................................................................................... 32 1.3.3 Jurisdictional focus .................................................................................................... 33 Chapter 2 ......................................................................................................................... 35 2. Reconsidering Damage in Negligence .................................................................... 35 2.1 Introduction ..................................................................................................................... 35 2.2 Controversial Cases ........................................................................................................ 43 2.2.1 Exposure cases ........................................................................................................... 44 2.2.2 Failure to diagnose or inform cases ........................................................................... 47 2.2.3 Pharmaceutical cases ................................................................................................. 49 2.2.4 Medical device cases ................................................................................................. 51 2.3 Reconsidering the Definitional Framework ................................................................. 54 2.3.1 Separating injury, damage, and loss .......................................................................... 54 2.3.2 Two categories of risk ............................................................................................... 56 2.4 Reconsidering the Relationship Between Damage and Injury ................................... 59 2.5 A Narrow Definition of Damage .................................................................................... 65 2.5.1 Challenging the narrow approach .............................................................................. 68 2.6 Arguing for a Broad Definition of Damage .................................................................. 81 iv 2.6.1 Answering objections to the broad approach ............................................................ 87 2.6.2 A note about loss of chance and risk of harm ............................................................ 91 2.7 Reconciling Controversial Cases with a Broad Approach to Damage ....................... 93 Chapter 3 ......................................................................................................................... 95 3. Reconsidering Disgorgement and its Availability in Negligence ......................... 95 3.1 Introduction ..................................................................................................................... 95 3.2 Separating Disgorgement and Waiver of Tort ............................................................. 98 3.3 Definitional and Conceptual Framework ................................................................... 102 3.4 The Availability of Disgorgement Damages as a Remedy to Vindicate Rights ....... 109 3.4.1 Re-interpreting the orthodox rationale for disgorgement damages ......................... 109 3.4.2 Extending the availability of disgorgement damages to negligence ....................... 118 3.4.3 Justifying the valuation of a right based on the defendant’s gain ........................... 126 3.5 The Availability of Disgorgement as Deterrence Damages for Negligence ............. 132 3.5.1 A hierarchy of purposes served by damages ........................................................... 133 3.5.2 Disgorgement as deterrence damages ...................................................................... 134 3.5.3 The availability of deterrence damages for negligence ........................................... 140 3.6 Conclusion ..................................................................................................................... 141 Chapter 4 ....................................................................................................................... 144 4. Resolving Class Actions Dilemmas ....................................................................... 144 4.1 Conclusion ..................................................................................................................... 149 References ...................................................................................................................... 151 Curriculum Vitae