Summaries Sunday: OnPoint Legal Research

One Sunday each month OnPoint Legal Research provides Slaw with an extended summary of, and counsel’s commentary on, an important case from the British Columbia, Alberta, or Ontario court of appeal.

LACEY V. WEYERHAEUSER COMPANY LIMITED, 2013 BCCA 252

1. CASE SUMMARY

Areas of Law: Employment Law; Pensions; Vested Rights

~Health benefits in pension program held to be vested contractual entitlement of retirees which could not be changed unilaterally by employer~

Discussion: Reductions in pension benefits may seem a significant source of savings for many companies, but altering benefits paid to retired employees requires care in determining the nature of the entitlement. This decision also highlights the value of a written pension benefits contract, which could avoid some of the pitfalls of entitlements granted in the vague language of human resources materials.

In this case, “in order to sustain the viability and affordability of [their] retiree plans”, Weyerhaeuser had reduced its contribution to its retirees’ provincial Medical Services Plan payments, from 100% to 50%. It characterised these benefits as a gratuitous and discretionary perk of employment. The plaintiff group of retirees objected that their retirement benefits were part of a contract with the company, which had vested on their retirement, and could no longer be changed without their consent.

The Court first noted that, in the absence of employment contracts, Weyerhaeuser’s communications to its employees were the most appropriate source of evidence regarding the nature of the employees’ entitlement to pension benefits. Management’s internal discussions regarding their intentions were less relevant as these were not communicated to the other parties. Despite the fact that the communications materials stated that the employer “reserve[d] the right to modify, amend or terminate the plan at any time”, other statements that benefits “represent[ed] a significant and valuable part of [employees’] compensation”, to which they were “entitled”, established that the benefits were a form of compensation, and not a gratuitous perk of employment.

The benefits were characterised as part of a unilateral contract between Weyerhaeuser and the retirees, which Weyerhaeuser had published in its benefits materials, and the retirees had accepted by fulfilling the terms of eligibility. The Court referred to Bennett v. British Columbia, 2012 BCCA 115 (at paragraph 27), to support the principle that Weyerhaeuser’s “communications constituted a promise or an offer to current employees that it would provide premium-free insurance on retirement if they should continue their employment until their retirement and should elect such coverage,” and that an employee’s fulfilment of those conditions “would constitute an acceptance of the offer and would supply the necessary consideration to bring a contract into being.” Once the employee retired, the rights were vested and Weyerhaeuser could not unilaterally modify them. Benefits packages could be changed before an employee retired, but not afterwards: Sloan v. Union Oil Company of Canada Ltd., [1955] 4 D.L.R. 664 (B.C.S.C.). In the present circumstances, where there was no written contract of employment, proof of mutual intention set out in clear and express language was not required to establish vesting of the rights.

Accordingly, the retirees had a contractual and enforceable right to receive, as part of their pension benefits, 100% of their Medical Services Plan payments for the rest of their lives.

2. COMMENT BY COUNSEL FOR THE RESPONDENT, S. LOGAN, David Rosenberg, Q.C.:

This case may be of interest to the profession and particularly those who practice in the area of class actions. It raises some interesting procedural issues about the best method of providing notice to potential class members once an action has been certified. In this particular case, which concerns liability for damages arising from the provision of a medical product, two important applicable principles come into conflict and have to be reconciled.

On the one hand, access to justice favoured disclosure of names and contact information of those who were injected with the medical product. In a certified class action the representative plaintiff has an obligation to notify class members of their legal rights. Notification allows potential class members to decide to opt in or opt out of the action. Access to justice is the applicable principle that guides the court’s determination as to the appropriate form of notice, and the court is mandated to consider a number of factors which determine the best form of notice in the circumstances. In the present case, the uncontested evidence was that a traditional media campaign would be very expensive and ineffective and the best and least expensive form of notice would be mailing an approved form of Order to potential class members. The Court ordered that the names and contact information would be provided by the doctors and clinics who injected the medical product, Dermalive, into their patients as part of a plan that would allow dissemination of the Notice of Certification to those patients.

On the other hand, the courts have zealously protected the confidentiality of the doctor/patient relationship and the privacy rights of those who seek medical treatment. The right to privacy is the principle that generally guides the courts in prohibiting disclosure of confidential information. The doctors and clinics that had the names and addresses of those who were injected with the allegedly defective product refused to provide the contact information on the grounds that to do so would amount to an invasion of the confidentiality and privacy rights of those patients.

In a medical products liability case which is certified as a national class action, can the representative plaintiff obtain access to the names and contact information of users of the medical product in order to provide them with notice of the action, or do the privacy interests of those individuals prohibit access to their names and contact information?

In this case, in the exercise of his discretion, the learned chambers judge, who was also the case management judge, decided that the interests of justice favoured disclosure and ordered that the clinics and doctors provide the representative plaintiff with the names and contact information of those individuals who were injected with Dermalive, a cosmetic filler, which is alleged to have caused granuloma, a medical condition. This was for the sole purpose of notifying those individuals of their rights to opt in or opt out of the certified class action.

It is clear from the Reasons of Justice Sewell that he considered the privacy issue and considered access to justice. He exercised his discretion in making the impugned order. He specifically addresses the competing interests and concludes that the order should be granted in this case. He defines the issue as whether the interest of class members in receiving effective notice outweighs the interest of patients in preserving the confidentiality of their communications with treating physicians. He states there can be no doubt that the competing interests which come into conflict on the application are both important and worthy of the protection and respect of the court. He is influenced by the limited nature of the disclosure being sought, only contact information. He also considers that the disclosure would be limited to plaintiff’s counsel and there would be attached confidentiality obligations.

The Court of Appeal’s decision to overturn the Order is arrived at by weighing the competing interests differently. In fact, the Court of Appeal specifically refers to giving “full weight” to the privacy issue as the basis for reaching a different conclusion.

The interesting issues that are raised in this case and the importance of those issues weigh heavily in favour of an appeal to the Supreme Court of Canada. However, the trial has already been adjourned once to allow the Court of Appeal to consider these issues and an appeal to the Supreme Court of Canada would no doubt result in further adjournments of the scheduled trial date. In this case, it is in the interests of the representative plaintiff and members of the class that the action proceeds without any further appeals so that the merits of the action can be determined within a reasonable time.

In the future, the same issues may arise in a different legal context. If the patient of a doctor does not become aware of her rights to opt into the class action because the doctor would not disclose the contact information of the patient, will that doctor be subject to potential claims and liability for the patient’s loss if she has failed to opt into the class action? What is the obligation of the doctor to inform his patient if he knows about a medical products liability case and the doctor supplied the product? Does it make a difference if the doctor or clinic has legal counsel? These interesting questions remain to be determined in future litigation.