In This Issue
Aggregate Damages 101: Ontario’s First Class Action Aggregate Damages Award Gets Passing Grade from the Court of Appeal
By Carly Cohen
In its recent appeal decision in Ramdath v. George Brown College of Applied Arts and Technology, the Ontario Court of Appeal provided clarity on section 24 of Ontario’s Class Proceedings Act.1 The lower court decision marked the first award of aggregate damages at trial under section 24 of the Class Proceedings Act in Ontario. Glenn Zakaib wrote about the lower court’s decision here.
The concept of “aggregate damages” refers to the court’s ability to determine monetary damages at a class-wide level based on the total monetary damage caused by the defendant’s wrongdoing. The individual class members’ entitlement to a share of the aggregate award is left to be determined later.
Section 24 of the Class Proceedings Act allows the Court to assess and award aggregate damages where:
a) monetary relief is claimed on behalf of some or all class members;
b) no questions of fact or law other than those relating to the assessment of monetary relief remain to be determined in order to establish the amount of the defendant’s monetary liability; and
c) the aggregate or a part of the defendant’s liability to some or all class members can reasonably be determined without proof by individual class members.
While not a product liability case, Ramdath will have an impact on all areas of class action litigation.
Background to the Case
Ramdath is a class action commenced by students enrolled in a post-graduate program in International Business Management at George Brown College. The class action arises from a statement in the school’s course calendar stating that graduates would have the “opportunity to complete three industry designations/certifications” in addition to a graduate certificate. In reality, the court found that students were required to complete additional courses and/or work experience as well as exams at their own expense in order to fulfill the requirements for the industry designations.
The Lower Court Decision
The students commenced a class action against George Brown for negligent misrepresentation, breach of contract and breaches of Ontario’s Consumer Protection Act and sought an award of aggregate damages against the school under the Class Proceedings Act. The class was comprised of three cohorts of students.
The class action proceeded in stages: the certification stage; a common issues trial in which George Brown was found to have made negligent misrepresentations and breached the Consumer Protection Act, and, finally, the damages trial.
At the damages trial, the main issue was whether, and to what extent, the class should be awarded aggregate damages. The Court ultimately awarded aggregate damages for the statutory cause of action under the Consumer Protection Act, but removed the third cohort of students from the class.
George Brown appealed the aggregate damages award and the plaintiffs appealed the changes to the class composition. The Court of Appeal ultimately affirmed the aggregate damages award, reinstated the third cohort and referred the assessment of damages for the third cohort back to the trial judge.
Key Take-Away Principles
The Court of Appeal decision in Ramdath provides four key take-aways on aggregate damages that are applicable across all class-actions, including those related to product liability:
1. Damages in a class proceeding can be assessed on an aggregate, class-wide basis and not merely on an individual basis.
2. Aggregate damages are desirable where the criteria under section 24 of the Class Proceedings Act are met in order to make class actions an effective instrument to provide access to justice.
3. A determination of aggregate liability is assessed on a ‘reasonableness’ standard, determined by:
a. whether the non-individualized evidence presented by the plaintiff is sufficiently reliable;
b. whether use of the evidence will result in unfairness or injustice to the defendant, such as overstatement of its liability; and
c. whether the denial of an aggregate approach will result in a “wrong eluding an effective remedy” and a denial of access to justice.
4. Even if the quantification of damages is not an originally certified common issue, a trial judge has discretion to invoke the aggregates damages provision after finding liability.
While it remains to be seen whether and to what extent aggregate damages may be appropriate in product liability class actions, the Court of Appeal’s approval of the lower court’s finding in Ramdath will likely encourage plaintiffs to seek such awards in future cases.
1 2015 ONCA 921, <http://canlii.ca/t/gmphr> [Ramdath].
One Step Back: Nova Scotia Retreats from Ontario’s Progress on Waiver of Tort
The Nova Scotia Supreme Court recently released its certification decision in Sweetland v. GlaxoSmithKline LLC, a pharmaceutical class action, in which the plaintiffs claimed negligence and waiver of tort in respect of a diabetes medication alleged to have caused adverse cardiac events.
The Sweetland decision took a practical approach to the controversial claim of "waiver of tort" in product liability class actions.2 In doing so, the Court synthesized several waiver of tort certification decisions into a single approach to dealing with the claim, but avoided adopting the most recent Ontario law. Unfortunately, the Nova Scotia court’s approach appears to be a step back from recent Ontario jurisprudence encouraging the resolution of waiver of tort claims at an early stage.
Waiver of What? A Brief Primer
“Waiver of tort” is an ancient, obscure procedure that generally allows a plaintiff to collect any profits a defendant may have earned through wrongfully using the plaintiff's property, instead of accepting compensation for that wrongful use.3 Over the past two decades, plaintiffs have sought to repurpose the arcane doctrine to suggest that a plaintiff may be entitled to the defendant's profits as a result of proving any wrong, regardless of whether they were derived from the plaintiff’s property.
That development has been a windfall for the class action plaintiffs’ bar, because if damages can be measured by a defendant's profit rather than a plaintiff's injuries, then the individualized issues that typically complicate a class action become irrelevant and several of the challenges of certifying a class action disappear. For more than ten years, courts have certified but declined to rule on the merits of these “waiver of tort” claims despite the entreaties of defence counsel to resolve the issue at an earlier stage.
A Step Back: Nova Scotia Charts a Different Course
The Court in Sweetland held that availability of, and liability for, waiver of tort claims should be determined at the common issues trial and the issue of quantification would be put off even further, to the individual issues trials. This approach was based on the application of two lines of Ontario case law holding, first, that the validity of waiver of tort as a cause of action cannot be resolved at the pleadings stage;4 and second, that if waiver of tort were to be a certified common issue, the issues of liability and quantum of restitution ought to be bifurcated at trial.5
The approach endorsed in Sweetland threatens to be a massively expensive and frustrating procedure for defendants, especially since the Ontario Superior Court recently moved away from the authorities cited in Sweetland, calling for a re-evaluation of the practice of certifying waiver of tort claims as a matter of course6 and encouraging the determination of the issue without waiting for a full trial record.7 While Sweetland made reference to decisions in those proceedings, the court did not mention those directives for earlier resolution.
Key Take-Away Principle
The recent Ontario decisions on waiver of tort claims are promising, as they suggest that waiver of tort can now be resolved before the claim causes any costs in discovery. In Sweetland, however, the Nova Scotia court required a defendant to go all the way to trial before having the chance to challenge the validity of waiver of tort as a cause of action. One hopes that the Sweetland decision, despite offering a clear-cut procedure, does not gain traction and reinforce the troublesome recent history of delaying valid defences on a purely legal issue until a hearing that, more often than not, never comes.
2 2016 NSSC 18 <http://canlii.ca/t/gmxh1>.
3 For further reading on the historical development and modern application of waiver of tort, please see: J.M. Martin, “Waiver of Tort: An Historical and Practical Survey” Canadian Business Law Journal, Vol. 52, 473 <http://www.casselsbrock.com/files/file/FINAL%20-%2052%20CBLJ%20473.pdf>.
4 Heward v. Eli Lilly & Co.,  O.J. No. 404 (S.C.).
5 Goodridge v. Pfizer Canada Inc., 2010 ONSC 1095; Parker v. Pfizer Canada Inc., 2012 ONSC 3681 (“Parker”).
6 Parker, supra note 4.
7 Andersen v. St Jude Medical, Inc., 2012 ONSC 3660.
Hardwood Humidity Headache: Ontario Divisional Court Imposes a Duty To Disclose On Product Retailers
In Swern v Amazon Hardwood Centre Inc.8, the appeal of an Ontario Small Claims Court decision, the Divisional Court found that product retailers have a duty to disclose product information in the context of an ordinary contractual relationship between a retailer and a consumer.
Background to the Case
In June 2011, the defendant, Amazon Hardwood Centre Inc. (Amazon), sold a hardwood product manufactured by Mercier Wood Flooring Inc. (Mercier) to the plaintiffs. In order to avoid degradation, hardwoods must be exposed to humidity on an ongoing basis. The product purchased by the plaintiffs had above-average humidity requirements that differed from industry standards. Following installation, the plaintiffs’ flooring began to cup and crack due to the overly dry environment of the plaintiffs’ home.
The plaintiffs initially brought this action claiming damages from Mercier, Amazon and the general contractor who installed the flooring. Following a two-day trial, the Small Claims Court dismissed the plaintiffs’ claims against Mercier and the general contractor but found Amazon liable for failing to advise the plaintiffs of the need to maintain higher than ordinary levels of humidity on an ongoing basis following installation in order to protect the flooring. Amazon appealed this decision to the Divisional Court.
The Decision of the Small Claims Court
The Small Claims Court accepted the plaintiffs’ evidence that they were not aware of the required humidity levels for the flooring and rejected Amazon’s submission that the respondents had actual knowledge of this information. The Court found that the three principal documents, which the appellant argued advised the respondents of the correct humidity levels, did not discharge Amazon’s duty to communicate such information.
The Divisional Court Upholds the Decision of the Small Claims Court
On appeal, Amazon argued that imposing a duty of care to direct prospective purchasers to prudent purchases imposes too high a standard on retailers. In upholding the Small Claims Court’s decision, the Divisional Court stated that the effect of the decision is not to impose a duty to direct purchasers to prudent purchases, but rather to require “disclosure of information that is unique to a particular product and therefore would not be known to a reasonable consumer.”
Key Take-Away Principle
While this decision is limited to a specific issue – the disclosure of product-specific information that veers away from industry standards - it does raise some challenges for retailers. What information is considered to be unique to a particular product? What does a reasonable consumer know or not know about a particular product? Does the retailer have a duty to analyze and further explain to the consumer the meaning of the manufacturer’s warnings? Unfortunately, these questions were not addressed by either the Small Claims Court or Divisional Court and remain to be answered. One thing is for sure - going forward, retailers should carefully consider what information they disclose about their products, whether considered to be unique or not, in light of this decision.
8 2015 ONSC 7590, <http://canlii.ca/t/gmnv>.
Regulating Risk: Keeping You Up-To-Date on Product Regulation
Here’s a look at what’s new with the Canada Consumer Product Safety Act and regulations to the Food and Drugs Act and Controlled Drugs and Substances Act.
1. New Incident Reporting Forms On Their Way
Health Canada has announced that it will be replacing the PDF forms used to report consumer product incidents under the CCPSA, cosmetic notifications under the Cosmetics Regulations and to provide additional documents.
The forms will be replaced with HTML, which are expected to be released this summer. Once the new forms are released, it will not be possible to submit the PDF forms online. We will circulate links to the new forms once they become available.
2. Update on Administrative Monetary Penalties
The CCPSA regime provides Health Canada with the power to require companies to pay financial penalties called administrative monetary penalties (AMPs) for failing to comply with certain Health Canada-issued orders. The amount of an AMP is determined on the basis of whether violation is “minor,” “serious” or “very serious” having regard to specific factors spelled out in the Administrative Monetary Penalties Regulation. These factors address both the type of violation and the company’s history of compliance.
AMPs range from $1,000 to $5,000 for non-profit organizations or any other person for non-commercial purposes. They range from $10,000 to $25,000 for all other cases. Each day on which non-compliance continues constitutes a separate violation, so these AMP amounts can quickly escalate.
Health Canada has recently issued its first AMP Report with respect to a Notice of Violation. The company in question was determined to have committed “serious” violations in 2015 and 2016 by failing to comply with a recall notice in respect of improperly packaged and labelled cleaning products and not providing requested information regarding customers, etc. The company was assessed AMPs of $15,000 to $20,000 per violation (for a total of $95,000). Health Canada's reports on this matter can be found here and here.
3. Postponement of Tamper-Resistant Properties of Drugs Regulations
Health Canada has announced that it will not move forward with the previously proposed Tamper-Resistant Properties of Drugs Regulations on which consultations were conducted last summer.
Health Canada has released guidance to drug manufacturers seeking claims of tamper-resistance, which can be found here.
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