Canada: From Motorist To Manufacturer: Adjusting To AV Litigation

Last Updated: September 25 2018
Article by Peter Vlaar

In the absence of any human input in the operation of vehicles (level 5),1 drivers are rendered passengers and any liability for causing an accident inevitably shifts from the motorist to the manufacturer; from the person to the product. This does not start only at Level 5 however – we will begin seeing this already in Level 4, Level 3 and even Level 2 autonomous vehicles as they become more popular. The more control relinquished by the driver, the more exposure is drawn to the manufacturer because of the increased likelihood that an accident was the result of the manufacturer's product (for example, erroneous programming code or faulty sensors).

In addressing what that might look like into the future and how an adjuster could handle litigation involving autonomous vehicles – both fully autonomous and semi-autonomous (level 3 and 4), I will employ a thought experiment framed around the real-life example of the Uber-pedestrian accident in Arizona. In March of this year, a self-driving Volvo XC90 SUV was being tested by Uber as part of its self-driving fleet in Arizona when it struck and sadly killed a pedestrian while the autonomous system was fully engaged. This thought experiment will employ similar facts except sometime into the future, in Ontario, the Volvo is owned by an insured, not Uber, and to make things less tragic, the pedestrian is only slightly injured. The other facts are the same – the Volvo is in autonomous mode and the pedestrian crossed the street in a non-designated area wearing dark clothing at night.

Motor vehicle litigation is going to shift to product liability involving manufacturers. However, that does not mean that plaintiffs are going to sue them directly by naming them as defendants. The injured pedestrian, in this experiment, is going to seek to recover from the most closely related party to their loss, which is the owner/operator of the vehicle. By operation of s.192 of the Highway Traffic Act (HTA),

192  (1) The driver of a motor vehicle or street car is liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle or street car on a highway. 2005, c. 31, Sched. 10, s. 2.

Accordingly, absent any changes in the legislation, it will be the defendant's responsibility to bring in the manufacturer by way of third-party claim. Knowing whether and who to bring in by way of third-party claim will be fact-dependent and will likely require the involvement of counsel and an engineer. The first question one should ask when advised of a motor vehicle accident involving an autonomous vehicle or a vehicle involving autonomous features is: did the accident happen in autonomous mode? If the answer to that question is yes, a lawyer should be immediately retained for the following reasons:

  1. Preservation of evidence will be fundamental to a fulsome defence involving autonomous vehicles; choose one who can be available to respond immediately and attend the scene of the accident if necessary to ensure the essential evidence is preserved and obtained and also to prevent others from inappropriately collecting data.

  2. Also the right lawyer can work quickly to put the appropriate team of engineers and investigators in place to conduct any necessary analysis; the benefit of doing so through counsel provides the ability to protect the engineer's report and analysis under litigation privilege, which is an important strategic advantage, especially if the findings are not entirely favourable.

  3. A lawyer can assess and make necessary recommendations with regard to litigation and can put the relevant parties on notice and coordinate global testing of the evidence in a prudent and timely manner to prepare the file for a thorough defence. For instance, it may be determined that it is not the insured's vehicle but a third party vehicle that caused the accident and should be put on notice. Or in the case of connected cars – it may be the municipality that needs to be put on notice because of defective data that was sent from the infrastructure to the car in which case both the municipality and the manufacturer would be put on notice. The question that hangs over that prospect at this moment is whether "data" can be considered a product for the purposes of product liability? One would operate on the assumption that it is but would likely need legislation to clarify.

The three main types of negligence establishing tort liability for damages or injuries caused by defective products are (1) negligent manufacture; (2) negligent design; and (3) failure to warn. It is the obligation of the plaintiff in product liability litigation to prove negligence and they must do so by establishing the following:

  1. the product was defective in that it posed an unreasonable danger or risk of harm to person or property when foreseeably used;
  2. the manufacturer owed a duty of care to the plaintiff with respect to the product;
  3. the manufacturer was negligent in failing to meet the applicable standard of care;
  4. the manufacturer's breach of the standard of care caused or contributed to the defect;
  5. the defect caused or contributed to the plaintiff's damages; and
  6. the plaintiff's damages were reasonably foreseeable.

The nuance in this thought experiment though is that it involves a pedestrian, which in Ontario means that there is a reverse onus on the defendant to prove that the damage did not arise through the negligence or improper conduct of the owner/driver:

Section 193(1) of the HTA reads:

When loss or damage is sustained by any person by reason of a motor vehicle on a highway, the onus of proof that the loss or damage did not arise through the negligence or improper conduct of the owner, driver, lessee or operator of the motor vehicle is upon the owner, driver, lessee or operator of the motor vehicle.

The defendant can rebut this presumption of negligence therefore by producing evidence that they are only partially responsible or not responsible at all for the injury or loss. Such evidence would be likely to come from the wealth of data contained in an insured's vehicle itself which the engineers have analyzed. Evidence such as video data showing the plaintiff crossing at an unmarked place in the road, wearing dark clothing or making a sudden movement into the path of the vehicle, could all be vital pieces of a defence. Or perhaps it is evidence of a failed system whereby a sensor or the software failed to properly identify the pedestrian in time, faulty transmission of data or simple errors in some lines of code. Such evidence would have the double effect of rebutting the presumption in s.192 of the HTA and proving negligence as against the manufacturer in a third party claim.

Once it is established that a manufacturer should be brought into an action, it is important to determine the proper entity to name and whether any suppliers or distributors should be included. Uber's own Volvo was equipped with forward and side-facing cameras, radars, light detection and ranging (LIDAR), navigation sensors as well as computing and data storage units, all of which came from different manufacturers and suppliers. Case law (Hans v. Volvo Trucks North America Inc., 2016 BCSC 1155;  Farro v. Nutone Electrical Ltd. (Ont. C.A.), 1990 CanLii 6775 (ON CA)), shows that manufacturers are liable for the negligence of suppliers of component parts that they installed in the final manufactured product. Thus, it would not be required to name the specific suppliers or entities involved in the component parts of the Volvo, but simply name Volvo itself as a party (e.g. the manufacturer). Often, such component suppliers will enter into private agreements with the manufacturer which include indemnification provisions in favour of the manufacturer in the event of a defect causing damage to the product and to defend and/or indemnify same from any third party claims for loss or damage. The identity of the manufacturer is also an important consideration because some of them have declared that they will accept liability for any motor vehicle accident involving their vehicle in fully autonomous mode at the time of the accident. Volvo was the first to make that announcement, followed by Google and Mercedes and may preclude the need to even commence a claim against them.2

The details of an expert engineer's report with their fulsome analysis and interpretation of the vehicle's data would not only serve to guide whether to pursue a manufacturer but will also serve to inform how best to frame the pleadings in a claim against the manufacturer. In particular, it will inform whether negligent manufacturing, negligent design, and/or failure to warn or all of the above would be alleged.

An inevitable by-product of this shift to product liability litigation is that it will result in longer, more complex and costly litigation. Policymakers in the UK have anticipated that and out of concern for drivers, have introduced new legislation guaranteeing insurance coverage. This legislation is called the Automated Electric Vehicles Act 2018. Currently in the UK, drivers may not be covered when involved in accidents in cars that are engaged in autonomous mode and this legislation extends mandatory coverage to the operator of an automated vehicle both when operated by a human driver and when the vehicle is driving itself. The purpose of this coverage is to ensure that individuals continue to go through auto insurance in order to recover damages following accidents as opposed to the product liability route to ensure that victims are compensated first. It will then be for the indemnifying insurer to subsequently recover from the liable party, such as a manufacturer. This legislation may provide a helpful framework for Ontario and Canada to consider in preparing for the full-scale deployment of autonomous vehicles and if implemented, it would make the timely preservation and collection of evidence all the more important given the likely length of time between the actual loss and involvement of the manufacturer.

While fully autonomous vehicles have not yet arrived, semi-autonomous technology certainly has and they will only be multiplying in number. It is important therefore for adjusters to be aware of the best possible manner and strategy in which to respond to claims involving this technology since it is not a question of whether they will come across their desk but when.


1 For levels of driving automation see Autonomous vs Semi-Autonomous Vehicles: The Liability Distinction, February 2017.
2 Mercedes, Google, Volvo To Accept Liability When Their Autonomous Cars Screw Up

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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