Are product liability insurers ready to face mass torts?

Class action lawsuits have long been drivers of social inflation for insurers that provide product liability overage. But now a new legal vehicle, the ‘mass tort,’ looks to be waiting in the wings.

Unlike class actions, in which one plaintiff represents a class of people with a similar complaint about a product, mass torts assemble large numbers of individual legal actions, in which multiple plaintiffs file separate lawsuits over a product’s alleged faults and may receive individual settlements.

That can leave insurers defending multiple individual legal actions at once.

“Instead of dealing with just a single action, you’re now dealing with 10, 20, 50 or 150 actions, all in relation to the same claim,” said Grant Worden, a partner in Torys’ litigation department in Toronto.

The rise of mass torts could be due to their ability to help plaintiffs avoid long wait times and high costs associated with resolving certification motions for class actions, said Worden. Plus, they may help ease situations in which two different plaintiffs’ counsels issue similar class action claims in the same jurisdiction.

“They have to go to court and debate in front of a judge as to who should have carriage of a proposed class,” he said. “What we’re seeing now is that some plaintiffs’ firms, particularly those that specialize in personal injury, are issuing one claim per client rather than commencing class actions.”

Typically, complaints are identical in how defendants and product faults are characterized, “except obviously for the section…that relates to the individual plaintiff’s circumstances,” Worden added.

The growing popularity of mass torts is likely linked to their procedural advantages over class actions, since individual claims may be easier to advance than class actions, Worden noted.

The shift also could be driven by changes in 2020 to Ontario’s Class Proceedings Act that raised the bar on certification tests and made it somewhat easier for defense lawyers to narrow the scope of class actions.

“Where we are seeing the mass tort claims is in the context of pharmaceutical drugs and medical devices and it’s difficult to say specifically why they’re focusing on those industries,” Worden added.

“It may be that there’s some coordination among plaintiffs’ counsel, between U.S. attorneys and Canadian attorneys, either formal or informal. A lot of the cases that we see in the medical device space in Canada typically follow similar litigation in the U.S. by approximately six to 12 months.”

Class actions update

Along with mass torts, class actions “are a growth industry,” Don Dear, a partner at Clyde & Co. in Calgary told Canadian Underwriter. “Things like airbag litigation, where an airbag is defective across various auto manufacturers. And there are, and have always been, pharmaceutical actions, which is sort of its own subset of product liability.”

Plus, Dear sees signs many plaintiffs’ lawyers are moving their practices to class action claims.

“It would certainly explain some of the social inflation we’re seeing, which we see a little less of in Canada, but as with most consumer-related matters we’re behind the United States. The [question] is by how many years?” he said. “If there’s an issue with face cream causing rashes in the United States, that same claim should have legs in Canada – subject to our population being only 10% as big.”

A review of the Canadian Bar Association’s national class action database showed a wide range of suits brought by consumer classes against goods and service providers.

Respondents include automakers, software companies, healthcare providers and pharmaceutical companies.

A count of cases appears to show increased class actions in 2021 and year-to-date in 2022 compared with prior years. But legal experts speaking with CU stressed law firms’ participation in the database is voluntary.

In most cases, class actions are settled out of court. “It’s somewhat of a rarity to see these go to trial, because of the expense and the potential exposure,” said Dear.

This article is excerpted from one that appeared in the December 2022-January 2023 issue of Canadian Underwriter. Feature image by iStock.com/Zerbor