Facets of Fairness: Kidd v Canada Life Assurance Company and the Approval of Class Action Settlements

• Author: John C Kleefeld
• Pages: 33-80

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FACETS OF FAIRNESS:

KIDD

v CANADA LIFE ASSUR ANCE

COMPANY

AND THE A PPROVAL

OF CLASS ACTION SETTLEMENTS

John C Kleefeld

Abstract: Kidd v Canada Life Assurance Company is one of the

most important decisions in class action sett lement law since

Dabbs v Sun Life Assurance Co of Canada. After an extensive

campaign to secure class support, a pen sion surplus action

was certif‌ied and settled. Shortly thereafter, it came to light

that the actuar ial assumptions on which the parties had

proceeded were incorrect. On the basis that the sett lement

was no longer workable, class counsel moved to enjoin Can-

ada Life from implementing it. In stead of that motion being

argued, the parties negotiated an amended settlement. Num-

erous class members objected. Justice Perell characterized

the situation as a choice between t wo courses where neither

was substantively, procedurally, institutionally, or circum-

stantially fair. He rejected the amended settlement, f‌inding

that it would be inconsistent with the court’s responsibilities

to approve an unfair settlement just because it is the better of

two unfair choices. O n the eve of an appeal from this decision

by class and defence counsel, the parties negotiated a new

amended sett lement, which was approved.

The case is notable for articul ating a four-faceted approach

to analyzing settlement fairne ss: a clas s action settlement

should be substantively, procedurally, institutionally, and cir-

cumstantially fair. The author, after providing a pension law

primer and a summary of the proceedings, discusses wh at the

fourfold fairness test means in the context of both Ki dd itself

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and the settlements that have been approved since Kidd and

that purport to apply it.

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FACETS OF FAIRNESS:

KIDD v CA NADA

LIFE ASSUR ANCE COMPANY

AND

THE APPROVAL OF CLASS ACTION

SETTLEMENTS

John C Kleefeld*

A. OV ERVIEW

In Kidd v Canada Life Assurance Company,1 the Ontario Supe rior Court re-

leased one of the most import ant decisions in class action settlement law

since that court’s decision in Da bbs v Sun Life Assurance Co of Canada.2

Justice Paul Perell’s reasons touch on most aspect s of the law and give new

guidance on asse ssing settlement fairness. Kidd is also the most potent

evidence to date of a chang ing class actions milieu in Ca nada. That milieu

may be one in which two forces — high ly motivated objectors and a cad re

of judges with exper tise in analyzing cla ss action settlements — are com-

bining to breathe new life into the class action cal l for “access to justice.”

Simply put, the complex claims in the case are about who owns Can-

ada Life Assurance Company’s pension plan surplus and whether Canada

Life could look to the plan to be reimbur sed for plan exp enses. After years

* Assist ant Professor, University of Sask atchewan College of Law and member

of the British C olumbia and Saskatchewan ba rs. I thank Professor Cat herine

Piché of Université de Mont réal for her review and comments on a n early

draft, as we ll as two anonymous reviewer s for their comments and sugges tions

for revisions on l ater drafts. Any errors, t hough, are solely my own. I have at-

tempted to state th e law as of 1 September 2014.

1 As usual, the re are multiple proceedings: 2010 ONSC 1097 [Kidd 2010] (de-

claring t hat the court had juris diction to consent to vary ing the pension plan

trust on beh alf of spouses of certa in plan members); 2011 ONSC 6324 [Kidd

2011] (certify ing class action); 2012 ONSC 740 [Kidd 2012] (approving f‌irst

settlement); 2013 ONSC 1868 [Kidd 2013] (rejecting second settlement); 2014

ONSC 457 [Kidd 2014] (approving thi rd settlement). For convenience, I call

the latter th ree the f‌irst, second, and th ird settlements. The actual s ettlement

comprises a si ngle, and extensive, “Surplu s Sharing Agreement” wit h several

amending agr eements. The proceedings, plead ings, and many of the other

related document s are on the website of the lead cla ss co-counsel, Koskie Mi n-

sky LLP, online: ww w.koskiemin sky.com. See als o the Canada Life Can adian

Pension Plan Member s’ Rights Group website, online: w ww.clpens.com/class-

action.htm.

2 (1998), 40 OR (3d) 429 (Gen Div) [Dabbs].

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