Unilateral modification to a pension plan/ loss of retirement benefits
The class action is now over. On November 16, 2018, Judge Duprat pronounced the closing of the file.
In December 2008, Jean Samoisette filed a motion for authorization to institute a class action against IBM Canada Ltée.
The class action alleges that IBM violated its obligations to class members by unilaterally modifying its employees’ defined benefit pension plan and health benefits on January 5, 2006. IBM removed the bridge benefit of all employees who became eligible for early retirement after December 31, 2007. It further limited the availability of its health-care spending account to the age of 65 years for employees who were hired before January 1, 2005 and had not turned 65 by December 31, 2007.
To justify its removal of these benefits, IBM relied upon a unilateral modification clause that it imposed on all class members in their employment contracts. The class action alleges that this unilateral modification clause is null and of no effect because it does not limit IBM’s power to change its employees’ pensions in any way. It further alleges that IBM’s unilateral removal of pension benefits was an abusive exercise of its unilateral modification right.
The class action seeks compensation for the retirement benefits that class members lost as a result of IBM’s illegal unilateral modification.
The class is defined as follows:
All employees of IBM Canada’s Bromont factory who on January 1, 1995 participated in the company’s defined benefit pension plan and who were only eligible for early retirement after December 31, 2007;
On September 10, 2010, the Honourable Justice Robert Castiglio of the Quebec Superior Court dismissed Mr. Samoisette’s authorization motion. After TJL appealed this decision, the Court of Appeal authorized the class action on the bench on May 18, 2012. IBM sought leave to appeal this decision but the Supreme Court of Canada denied leave on November 8, 2012.
On August 16, 2012, Mr. Samoisette initiated the merits stage of the class action by filing a motion to institute proceedings against IBM.
The trial on the merits took place before the Honourable François P. Duprat of the Quebec Superior Court over six days from November 30 to December 8, 2015.
On June 13, 2016, Justice Duprat issued a historic judgment decision that ordered IBM to pay $23,519,000 plus interest to compensate class members for its illegal removal of the bridge benefit. The victory was not total, however, as the judgment sided with IBM on its right to modify its retirement health benefits.
An agreement in principle was reached between the parties on December 22, 2016, following a mediation presided over by a judge of the Court of Appeal, the Honourable Mark Schrager. Under the terms of the agreement in principle, IBM waived its appeal and agreed to pay twenty-four million three hundred and fifty thousand dollars ($ 24,350,000), the amount of the Judgment ($ 23,519,000) and half the legal interest As at December 20 ($ 831,000). Mr. Samoisette, acting on behalf of the members, waives his appeal.
The parties have recorded the terms of their agreement in a Settlement Agreement (“Agreement”) which sets out how the Settlement Amount will be distributed among the members and how you can claim. The Agreement is conditional upon approval by the Superior Court.
The Agreement has been approved by Judge Duprat on March 27, 2017.