Law Times

Page 12 August 22, 2016 • LAw times www.lawtimesnews.com Pension litigation tough slog for plaintiffs BY JIM MIDDLEMISS For Law Times W hen class action legislation was first implemented in 1992, pension liti- gation was thought to be an area ripe for growth for plaintiff law- yers. After all, many defined bene- fit plans were in surplus and fights were brewing over who owned that money, the employer or employees? Chief Justice Warren Wink- ler in Ormrod v. Etobicoke, a 2001 case involving retiree roll- backs under a benefit plan, even suggested that class actions were "tailor made" for fights involv- ing retirement plans. Fast forward to 2016, and pension litigation hasn't been the bonanza that some envisioned. Pension surpluses have gone away, and defined benefit plans are in decline, as employers abandon them in favour of less risky options. As well, investment markets have remained relatively calm and on the upswing, which takes the wind out of the litigation sails. "It certainly was a growth area when there was an issue of pension surpluses," says James McDonald, a litigator at Gold- blatt Partners LLP, whose firm has tackled a handful of pension cases. "It became less of a growth area as surpluses disappeared and interest rates declined." Kirk Baert, a class action law- yer at Koskie Minsky LLP who has been involved in multiple pension class actions, says that in the early days, most of the liti- gation focused on pensions sur- pluses, "who owned them and how do you divide it up." "There is no more of those mainly because the law got clari- fied around who owns what," he says, adding the "surpluses evap- orated." "They are not there to fight over anymore." That's not to say pension class actions are dead, but they are very event-driven. Take one of the most current cases, Alex- ander v. Ontario, in which Mc- Donald is counsel. It's a breach of undertak- ing suit involving pensions and stemmed from the Ontario gov- ernment's restructuring of com- munity homecare medical servi- ces in 1997. At the time, munici- palities or private organizations, such as the Victorian Order of Nurses, delivered homecare med- ical services. However, the province decid- ed to take over delivery of that service and created a network of Community Care Access Cen- tres across the province. About 3,000 staff belonged to various pension plans, and almost half were unionized and represented by different unions, according to the statement of claim. They were transferred to the new provincial system. Darlene Alexander, the rep- resentative plaintiff in the case, worked at a centre in Stratford, Ont. She was a member of CUPE and prior to the transfer be- longed to the OMERS pension plan, which at the time covered municipal employees. The claim alleges that the government failed to amend the OMERS operating statute to al- low non-municipal employees to belong to OMERS. Those chan- ges weren't made until 1999, but by then, it was too late. The claim alleges that the CUPE employees were enrolled in the Healthcare of Ontario Pension Plan by the CCACs with the encouragement of the government. The result is that they will receive two pen- sions upon retirement, one from OMERS and one from HOOPP. The claim alleges that pension plans calculate benefits based on the best five years of earnings, which typically occurs in the later stages of one's career. The claim alleges the dual-pension will lead to "numerous financial disadvantages" and the com- bined benefits will be lower than if the employees had stayed in the OMERS plan. That contrasts to promises made by the government in state- ments to CUPE members at the time of the transfer that the goal was to "maintain comparable pension benefits" and that "em- ployees transferred to the new CCACs will receive the same number of years of pensionable service in any new pension plan." The case is typical of the con- voluted facts around pension litigation and the complexity in- volved. A settlement hearing in the action, which was launched in 2013 and certified in 2014, was adjourned in June and is expected to come forward in the fall. Lawyers say that the biggest challenge when it comes to plain- tiff pension litigation is manag- ing the conf licts among the vari- ous groups within a plan — for example, those who are retired and receiving a pension versus those who are still working. There is also the issue of deal- ing with the f luid nature of pen- sions, investments and interest rates. One need only look at the Nor- tel insolvency to see how pension- ers end up aligned against each other in litigation when money is on the line, as Canadian, U.S. and U.K. pensioners were at odds over how funds should be divided. McDonald says there are "a lot of twists and turns. You are dealing with class members who have different interests among themselves." LT FOCUS Kirk Baert says in the early days, most pension litigation focused on pension sur- pluses. Start with Practical Law Canada – Employment Practical Law Canada – Employment offers continuously maintained, up-to-date resources that contain the legal know-how for corporate counsel to practise more efficiently and never miss a step. Our expert lawyer-editors have significant practice experience and create and maintain uniquely practical resources so you don't have to, allowing you to save time with straightforward, up-to-date resources such as: • Confidentiality and Proprietary Rights (IP) Agreement (Employment) Standard Document • Employment Agreement (Long Form) Standard Document • Independent Contractor/Consultant Agreement (Pro-Client) Standard Document • Non-compete/Non-solicit Clauses Practice Note Sign up for a FREE TRIAL now at practicallaw.ca DON'T START AT SQUARE ONE WHEN YOU NEED TO DRAFT AN EMPLOYMENT CONTRACT. © 2016 Thomson Reuters Canada Limited 00234UK-A73111-SK Untitled-2 1 2016-08-16 1:54 PM You are dealing with class members who have different interests among themselves. James McDonald

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