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

AuthorJohn C Kleefeld
Pages33-80

FACETS OF FAIRNESS:
KIDD
v CANADA LIFE ASSURANCE
COMPANY
AND THE APPROVAL
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 pension surplus action
was certif‌ied and settled. Shortly thereafter, it came to light
that the actuarial assumptions on which the parties had
proceeded were incorrect. On the basis that the settlement
was no longer workable, class counsel moved to enjoin Can-
ada Life from implementing it. Instead 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 two 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 fairness: a class 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 what the
fourfold fairness test means in the context of both Kidd itself
ccar 10.indb 331/19/2015 9:09:48 AM

and the settlements that have been approved since Kidd and
that purport to apply it.
ccar 10.indb 341/19/2015 9:09:48 AM

FACETS OF FAIRNESS:
KIDD v CANADA
LIFE ASSURANCE COMPANY
AND
THE APPROVAL OF CLASS ACTION
SETTLEMENTS
John C Kleefeld*
A. OVERVIEW
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 Dabbs 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 assessing 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 call 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].
ccar 10.indb 351/19/2015 9:09:48 AM

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