Canada: Did Bringing A Class Action Over Changes In Post-Retirement Benefits Just Get Easier?

On January 16, 2014, the Supreme Court of Canada released its long-anticipated decision in Vivendi Canada Inc. v. Dell'Aniello. The decision affirmed the Quebec Court of Appeal's 2012 judgment certifying a class proceeding by retirees of Vivendi Canada (formerly Seagram) and their beneficiaries over the company's unilateral reductions in their post-retirement health and welfare benefit coverage.

Prior to Vivendi, the question of whether or not a group of retirees could successfully bring a class proceeding against their former employer for changes in post-retirement benefits was, to quote Donald Rumsfeld, a "known unknown". Different courts across the country had reached different conclusions. Because these claims so often rely on different versions of plan documents, presentations and statements made to employees and retirees, sometimes over the span of decades, some courts have found the claims to be so individualized that a class proceeding is simply not the appropriate way to move forward. Other courts have disagreed.

The stakes can be high. Following a class proceeding, an unsuccessful company could be on the hook for damages to each and every retiree affected by a reduction in post-retirement benefits, even if only a small and vocal group of retirees made the initial claim.

In Ontario, the results have been mixed. In Nadolny v. Peel (Region) (2009), the Superior Court declined to certify a class proceeding against the defendant government for its decision to unilaterally raise retiree benefit premiums. It was not clear to the Court whether all of the members of the class had received the same or similar documents and statements that the purported representative plaintiff claimed she had relied on. The Superior Court reached an opposite result and granted class certification to a group of retirees challenging benefit reductions in its 2011 decision in O'Neill v. General Motors of Canada Limited (2011).

All of this brings us back to Vivendi. The dispute here involved a series of unilateral reductions that Vivendi made to its post-retirement benefit coverage and the validity of the contractual provision that purported to give Vivendi the ability to do so. Mr. Dell'Aniello sought to bring a class proceeding on behalf of all employees of the company and its predecessor Seagram who had retired between 1971 and 2003.

Based in part of the array of benefit plan texts, booklets and statements in issue, the Quebec Superior Court found that the claims were too individual-specific to proceed by way of class action. The Court of Appeal and Supreme Court each held otherwise.

According to the Supreme Court, the retirees' claims raised a sufficiently "identical, related or similar question of law or fact" such that the resolution of this question would move the action forward (one of the requirements for certification under Quebec's Code of Civil Procedure). The Court held that Qucbec's "commonality requirement" is flexible and that the criterion for commonality "may be met even if the common questions raised by the class action require nuanced answers for the various members of the group".

So what does Vivendi mean for employers in Ontario? Companies are increasingly reexamining their post-retirement benefit plans with a view to cost savings. Sky-rocketing drug costs, longer lifespans and the prolonged economic downturn have combined to make many of these plans unsustainable. But whether or not a company can make changes to these arrangements, and if so, to what extent, has long been a complicated legal question. When individual retirees have challenged these decisions en masse, employers at least had the chance, according to decisions like Nadolny, to argue that a class proceeding was not the appropriate means to do so.

Vivendi may change that. While the Supreme Court's decision depended on the particular wording of Quebec legislation, Ontario courts will no doubt consider its comments on the commonality requirement when faced with similar claims over post-retirement benefits. The fact that such claims allege that a number of former employees each relied on different versions of booklets, brochures, PowerPoints and statements over many decades may no longer be enough to defeat a motion for class certification.

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