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Class Action (Ont) - 'Reverse'. Brewers Retail Inc. v. Campbell
In Brewers Retail Inc. v. Campbell (Ont CA, 2023) the Court of Appeal considered an appeal from a motion judge's unusual 'reverse' class action certification, where the parties together sought to use the class action distribution procedures to implement a negotiated pension indexing scheme.
In these quotes the court explains this unique class-action/pension-settlement technique, and walks through the application of class action steps in the circumstances:Settlement Negotiations and the Class Action Proposal
[16] In May 2014, FSCO informed the Committee that it would be open to the Committee and Brewers to pursue a negotiated resolution of the Indexing Issues, subject to court approval binding affected Plan members.
[17] Settlement discussions between the Committee and Brewers – which were encouraged, monitored, and facilitated by FSCO – took place from May 2014 to September 2015. During that time, Brewers and the Committee repeatedly wrote to FSCO with updates on the progress of the discussions and requests that FSCO forego regulatory enforcement action pending the outcome of the discussions. FSCO granted each request.
[18] Brewers and the Committee worked with each other and with FSCO to identify and resolve all Indexing Issues in a manner acceptable to the parties and the regulator. Their work included determining compensation for the Unknown Members and necessary revisions of the Plan provisions. In September 2015, Brewers and the Committee reached agreement on the main terms of a comprehensive settlement.
[19] As part of the settlement agreement, the parties agreed they would use a class proceeding to implement it (in effect, a “reverse” class action).[2] Through the class proceeding, the parties would seek court approval of a methodology for identifying, compensating, and binding all persons potentially affected by the Indexing Issues relating to the Plan, including the Unknown Members. They would also seek court approval of the necessary revised Plan terms.
[20] In late 2015, the Committee held meetings with potentially affected Plan members to present the proposed settlement. It also took the proposed settlement to its actuarial consultants.
[21] Over the following three years, Brewers and the Committee consulted with FSCO, exchanging numerous draft settlement agreements, the draft court order approving it, and the proposed Plan amendments to be registered. The Committee provided FSCO with a draft actuarial report to satisfy FSCO that the proposed settlement was reasonable when measured against litigation risks and recoveries, and fair between different classes of Plan members. There were extensive discussions that included FSCO’s legal and actuarial team.
[22] While the parties, working with FSCO, continued to refine the settlement and implementation agreement (the “Settlement Agreement”), and prepared to commence this litigation, each year from 2016 to 2021, Brewers made ad hoc amendments to the Plan, at a cost of over $1 million, as a good faith implementation of the benefits contemplated by the Settlement Agreement.
[23] In late 2018, Brewers and the Committee provided FSCO with the Settlement Agreement, the draft class action documents, the draft actuarial expert report prepared for the Committee, and the details of Brewers’ proposed Plan amendments.
[24] By letter dated December 3, 2018, FSCO wrote to the parties, advising them that the Settlement Agreement “resolves all [Indexing] issues” (“FSCO’s 2018 Letter”). FSCO also stated that it did not intend to participate in the court action. It further noted that it had not determined whether the proposed Plan amendments contravened s. 14.1 of the PBA but, if that turned out to be the case, contingent on court approval, it would exercise its discretion “under section 14.1(4) of the PBA to permit the continued registration of the Plan”.
[25] With the regulator’s approval in hand, the parties intended to proceed to court for approval of the Settlement Agreement.
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[33] In March 2021, with the Committee’s concurrence, Brewers began the class proceeding by issuing a notice of application (the “Application”). It then moved for certification of the class proceeding in preparation for court approval of the Settlement Agreement. It advised FSRA that it would consent to FSRA making submissions on the certification motion and on any settlement approval motion thereafter.
[34] Brewers and the Committee then brought a joint motion to the FST, seeking an adjournment of the FST hearing so the certification motion could continue. Over FSRA’s objection, on October 1, 2021, the FST adjourned its hearing to permit the Superior Court to decide the issue of jurisdiction: see Brewers Retail Inc. v. Ontario (CEO of FSRA), 2021 ONFST 15.
[35] FSRA appeared on the certification motion and sought leave to intervene. It also moved to stay the class proceeding.
[36] The motion judge made the Orders in which he granted FSRA leave to intervene, dismissed its stay motion, and granted certification for settlement purposes.
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[40] The motion judge certified the action. He found that the five requirements in s. 5(1) of the CPA were satisfied. He reasoned as follows on the common issues requirement and whether the class proceeding was the preferable procedure for resolution of the common issues.
[41] In terms of the common issue, Brewers and the Committee had proposed the following: “Is the settlement agreement executed by the parties fair, reasonable, and in the best interests of the Class?” The motion judge said that because class certification necessarily precedes settlement approval, the common issues had to refer to the cause of action and legal issues attendant on it. For that reason, he added the following, taken from the Application:. Are the 1974 and 1983 Amendments to the Plan implemented by Brewers granting indexing only to eligible Plan members who retired from active service thereafter with an immediate pension valid?
. Did the 2013 Amendment to the Plan by Brewers, which restricted the scope of indexing, comply with the PBA?
. Is Brewers released from all claims of any nature arising out of its interpretation, administration and amendment of the Plan’s indexing provisions since 1974, as made to date or which could have been made, personally or on behalf of a class of persons, by any member of the Class who does not opt-out of this proceeding in a valid and timely manner? [42] On the question of preferable procedure, the motion judge began by noting that, generally, a class proceeding is the preferable procedure where certification would serve the primary purposes of the CPA, namely, access to justice, behaviour modification, and judicial economy. He added that, more specifically, pursuant to s. 5(1.1), a class proceeding is preferable if, at a minimum, issues common to the class predominate over issues relevant only to individuals and it is superior to all reasonably available means of attaining relief or addressing misconduct.
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