Appeal Court Confirms Class Action Plaintiffs Cannot Elect Disgorgement To Sidestep The Need For Evidence Of Loss

Key takeaways

• The Ontario Divisional Court dismissed the appeal from a decision denying certification in Donegani v. Facebook, Inc.
• The Court confirmed that some evidence of compensable loss is essential for class certification.
• The Court confirmed that disgorgement is only available where other forms of relief are inadequate and is not available at the plaintiffs’ election.

On August 12, 2026, the Ontario Divisional Court dismissed the plaintiffs’ appeal of Justice Akbarali’s decision denying class certification in Donegani v. Facebook, Inc.¹ A panel of Justices Varpio, Vermette and Brownstone affirmed the motion judge’s findings, reinforcing key principles about the limits of class proceedings where there is no evidence of compensable loss. We previously wrote about the motion decision in our October 2025 blog article: “Ontario court reaffirms that compensable loss is a ‘fundamental prerequisite’ to certification of a class action”.

Background

As discussed in our earlier blog, the plaintiffs alleged that Facebook breached its user contracts by sharing user data with various third-party applications and device makers. After a certification process spanning multiple hearings, Justice Akbarali issued two sets of reasons² denying certification based on her findings that the plaintiffs had failed to satisfy the class definition and preferable procedure requirements.

Divisional Court affirmed denial of certification

The Divisional Court affirmed the motion judge’s findings on the common issues and preferability criteria. Given these findings, the Court found that certification was properly denied and that it was unnecessary to rule on the motion judge’s assessment of the class definition criterion.

The Divisional Court specifically rejected the pursuit of a disgorgement remedy in the circumstances of this case, relying on the Supreme Court of Canada’s statement in Atlantic Lottery Corp. Inc. v. Babstock, that “disgorgement for breach of contract is exceptional relief that is not available at the plaintiff’s election.”³ Rather, disgorgement is only available where other forms of relief are inadequate, based on the nature of the claimant’s interest.⁴ The Divisional Court found that the plaintiffs’ lack of evidence on the existence of compensatory damages resulted in problematic ambiguity, which was compounded by the plaintiffs’ positions in their statement of claim and at the hearing of the certification motion, which “always kept the option of compensatory damages open.”

On the breach of contract common issue, the Divisional Court applied the Supreme Court of Canada’s guidance in Rumley v. British Columbia,⁵ holding that the proposed question: “Did the defendant breach the contracts? And, if so how?”, was framed in “very general and broad” terms that would ultimately break down into individual proceedings, including into whether a particular class member’s data was actually shared or made accessible to third parties.

Finally, the Court affirmed the motion judge’s finding on preferable procedure, emphasizing that the exercise of discretionary judgment on this criterion attracts “special deference” on appeal.

Summary

This appeal decision confirms valuable principles for class action defence, including:

• plaintiffs cannot elect disgorgement and disclaim other relief as a strategy to sidestep issues proving loss.
• some basis in fact for the existence of compensable loss remains a fundamental prerequisite to certification. As the motion judge explained, without compensable loss, a class proceeding will not be the preferable means to advance the goals of access to justice, judicial economy or behaviour modification.

Footnotes

1. Donegani v. Facebook, Inc., 2026 ONSC 4657.

2. Donegani, 2024 ONSC 7153; 2025 ONSC 6020.

3. Donegani, 2026 ONSC 4657 at para 74 citing Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19 at para 61.

4. Donegani, 2026 ONSC 4657 at para 66 citing Atlantic, 2020 SCC 19 at paras 53, 59-61. 

5. Rumley v. British Columbia, 2001 SCC 69.