Pension plans and class actions: the Vivendi case.

• Author: Charette, Louis
• Position: Canada - Reprinted from International International Ass'n of Defense Counsel Committee newsletter, April 2014 - Reprint

This article originally appeared in the April 2014 International Committee newsletter.

ON January 16, 2014, the Supreme Court of Canada (1) affirmed the judgement of the Quebec Court of Appeal (2) which had authorized the class action brought against Vivendi Canada Inc. ("Vivendi"). This important decision confirms, among other things, that the rules for authorizing class actions in Quebec are more liberal than those in the common law provinces.

1. The Facts

   Seagram Ltd. ("Seagram"), which was established in 1857, over time became one of Canada's leading producers of wine and spirits. Its head office and principal place of business were in Montreal, Quebec.

   In 1977, Seagram set up a supplemental health insurance plan for its management and non-unionized employees (the "Plan"). The Plan covers eligible employees both while employed and after they retire.

   Over the years, the Plan was modified on a number of occasions. In 1985, Seagram amended the document describing the terms of the Plan, adding a unilateral amendment clause pursuant to which it reserved the right to modify or suspend the Plan at any time.

   In December 2000, Vivendi S.A. acquired Seagram, which had over 700 employees at the time. In December 2001, Seagram's assets relating to the production of wine and spirits were sold to Pernod Ricard and Diageo, and Seagram ultimately became Vivendi.

   In September 2008, Vivendi told the retirees and beneficiaries that amendments to the Plan would take effect on January 1, 2009 (the "Amendments"):

   * the annual deductible retirees and beneficiaries had to pay would be substantially increased;

   * only prescription drugs on the list of drugs for the province of residence of retirees or beneficiaries would henceforth be reimbursed;

   * a lifetime maximum of $15,000 for all coverage under the Plan would be introduced whereas there was none before.

   In 2009, Michel Dell'Aniello applied to the court for authorization to institute a class action and asked that he be ascribed the status of representative of the following persons:

   [translation] All retired officers and employees of the former Seagram Company Limited who are eligible for postretirement medical care under Vivendi Canada Inc.'s health care plan ("Plan") and eligible dependents within the meaning of the Plan ("beneficiaries"), as well as, with regard to the damages claimed, the successors of any such officers, employees or beneficiaries who have died since January 1, 2009. Mr. Dell'Aniello sought, among other things, a declaration that Vivendi illegally amended the Plan, and to have the Amendments cancelled and the Plan reinstated as it was before the Amendments. The proposed group includes some 250 retirees or surviving spouses of retirees who worked in six provinces--134 in Quebec, 82 in Ontario, 3 in Alberta, 16 in British Columbia, 2 in Saskatchewan and 13 in Manitoba.

2. The Quebec Superior Court Decision (1)

   On August 3, 2010, the Quebec Superior Court dismissed Mr. Dell'Aniello s motion for authorization to institute a class action. Contrary to what Vivendi claimed, the judge held that, pursuant to article 3148 (3) of the Civil Code of Quebec ("C.C.Q."), Quebec authorities have jurisdiction to hear the action provided the class action is authorized. The court found that it is easier and more convenient to institute the class action in Quebec since over half of the potential group members (57%) live in Quebec.

   The Court refused to authorize the class action, finding that it raises...