An economic analysis of waiver of tort in negligence actions

The legal status, scope, and policy implications of the waiver of tort doctrine have been a prominent, controversial, and unresolved feature of many recent class action proceedings in Canada, especially in products liability cases, where plaintiffs have sought to claim disgorgement of profits or revenues as an alternative to proof of damage or injury. The doctrine in recent years has been invoked frequently by plaintiffs in negligence class actions, though its legal status in such a context remains uncertain, as it has not been judicially decided. The article assesses the waiver of tort doctrine from an economic perspective. It argues that decoupling remedies from actual damages in negligence cases generally, or in products liability cases in particular, is not well founded from an economic perspective. Theory and evidence suggests that the deterrence and insurance aspects of negligence law are best achieved by linking remedies to losses actually suffered. In many contexts, disgorgement of gains from activities entailing negligent conduct may induce socially wasteful forms of over-deterrence. Economic analysis does not support the waiver of tort doctrine.