Canada: Common Questions Don’t Need Common Answers To Certify Class Action

Last Updated: January 28 2014
Article by Ian Breneman

Vivendi Canada Inc. v. Dell'Aniello: Amendment of Retirement Benefits Leads to Class Action

What Happened?

Seagram Ltd. ("Seagram"), an alcohol producer and distributor, offered a health insurance plan to its employees and their spouses, during active employment and through retirement. The employees contributed to the plan during employment, but Seagram paid the full cost for retirees.

In one plan document from 1985, Seagram explicitly reserved the right to "modify or suspend" the health insurance plan.

In 2001, Seagram was acquired by another company and became Vivendi Canada Inc. ("Vivendi"). Vivendi continued the health insurance plan unamended until January 1, 2009, at which time it made several changes to the plan. By that time, Vivendi had no active employees covered by the plan, only retirees and surviving spouses.

In order to challenge the amendments to the health insurance plan, Michel Dell'Aniello wanted to begin a class action lawsuit against Vivendi in the Quebec Superior Court. The proposed class was composed of retirees and their spouses benefiting from the health insurance plan. Those employees had retired at various times throughout the operation of Seagram/Vivendi. Although it was expressed in several parts, the gist of the common question raised was whether Vivendi was lawfully entitled to unilaterally change the health insurance plan.

Superior Court Did not Approve Class Action

The Superior Court judge decided that the circumstances of members of the proposed class were not similar enough to warrant a class action. The judge found that there were five subgroups based on various dates of retirement. The judge held that since the vesting or crystallization of retirement benefits depended on the communications made by Seagram and Vivendi to the employees prior to retirement, the five groups would have received different sets of communications. As a result, this would essentially mean there would be at least five different answers to the common question, not one, thereby defeating the purpose of a class action. The Superior Court also noted that the retirees were located across six provinces, creating additional difficulty in applying the different laws in each province.

Supreme Court of Canada: Common Questions Don't Need Common Answers

The Quebec Court of Appeal and Supreme Court of Canada disagreed with the Superior Court's approach. The Supreme Court repeated the requirement of a common question from earlier cases: There must be at least one issue that must be resolved for all of the class members. Put another way, there must be a "substantial common ingredient" to the claims of all of the class members.

The Supreme Court went on to hold that a common question does not need to have a common answer. So long as the success of one class member does not equal failure for another class member, the answer to the common question does not need to be the same for the entire class. Indeed, the success of one class member does not automatically mean the same successful answer for the other class members.

As a result, the Superior Court judge was wrong to wade into the merits of the case and consider that the five subgroups of the proposed class might have different answers to the common question. Since there was a common question in this case – namely, whether the amendment to the health insurance plan provided to retired employees was valid – the analysis in that part of the test did not need to go any further. At trial, it may be revealed that the answer may have to be nuanced based on the retirement date of different subgroups, but that is not enough to vitiate the common question at the first stage of the litigation.

On the question of the class members being from six provinces, the Supreme Court reiterated that only substantial differences between different legal schemes will prevent a question from being considered common.

What Does this Mean to You?

In this case, the test for class action certification was considered under the Quebec Civil Code, which the Supreme Court held is a broader test than in other jurisdictions. Nonetheless, a similar analysis would likely be used if a class action arose in Atlantic Canada in similar circumstances.

We have previously discussed cases where an employer's decision to change retirement benefits have been challenged by retired employees in Everything You Say and Do...Another Lesson for Employers Changing Employee Benefits and Set "For Life" – Communications put employer "On the Hook" for retiree benefits costs. As with those cases, the Supreme Court's Vivendi decision reinforces the need to review all communications made to employees when considering a change to retirement benefits. Indeed, the Vivendi decision highlights that employers making such changes could be faced with a class action from retired employees, even if those employees retired at different times across decades. This makes it all the more important to retain retirement benefits materials and review that information prior to making any decisions about amending retirement benefits.

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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Ian Breneman
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