We have learned that Catalyst has recently made written offers to employees to attempt to settle the claims we have made in this proposed class action. It is interesting that Catalyst made no attempt to settle any of these claims during the period of time we were waiting for the Court to appoint a judge to hear the class action certification application. We applied for a case management judge in June, 2010 and finally received notice that a judge had been appointed on October 13th, 2010. Several days later, Catalyst seems to have decided to pay attention to this issue.
The proposed class action lawsuit seeks to recover moneys on behalf of all eligible salaried Catalyst employees. In the class action compensation is sought on behalf of each eligible person. Damages are claimed for Catalyst’s refusal to pay earned 2009 STIP award, removal of vacation/vacation pay, removal of post-retirement benefits, 2% reduction of contributions to Defined Contribution Pension Plan, and closure of Defined Benefit Pension Plan and substitution of less valuable Defined Contribution Pension Plan.
The fact that Catalyst is now proposing to offer some compensation specifically in return for employees opting out of the class action indicates to us that Catalyst recognizes that it has significant exposure to these claims. To date, Catalyst has elected not to even file a defence to these claims so we are unable to say that Catalyst has even an arguable defence to these claims.
Ultimately, as individuals, you must make the decision that is best for you. You will have some idea of what your 2009 STIP payment should have been compared to what Catalyst is now offering you to settle all of your claims.
Taking the example of pension rights, many of you were long term members of a defined benefit pension plan. In a defined benefit pension plan, when you retire, Catalyst must pay you a specific amount each month for the rest of your life. That amount is governed by your years of pensionable service and your best years of earnings.
In our experience, the financial consequences of removal of an individual from a Defined Benefit pension plan to a Defined Contribution plan can be signficicant. Prior experience indicates that he value of a well paid senior executive’s DB pension benefit can be in the range of $2,500 per month. That is for each month of notice a well paid senior executive is entitled to, the value of not being in the pension funds for that month may be as much as $2,500 or more. DC participation at 5% of base earnings is normally MUCH less. Also, you do not personally bear any investment risk. In a defined contribution pension plan (which you have now been moved to), your pension benefits in this plan are subject to the returns of investments in the market. If these returns generate a fund that runs out before you die, you are out of luck.
Catalyst estimated that it saved $4.2 million annually by pushing salaried employees into a defined contribution pension plan and rolling back other benefits. The proposed class action lawsuit seeks to enforce a promise made by Catalyst to salaried employees. Catalyst believed that it could break those promises because individual employees did not have the strength and resources to stand up for what they had been promised. Now that Catalyst realizes that these employees can effectively seek a remedy through a class action lawsuit, Catalyst is again trying to find the least expensive way to limit this liability.
If you believe that the current offers made by Catalyst will adequately compensate you for what you lost as a result of Catalyst’s decision to not pay the 2009 STIP and your loss of pension and other benefit rights, you should accept that offer. But by doing so, you will lose the right to participate in a court action where the real value of your loss will be carefully examined with access to the calculations Catalyst has thus far refused to produce.
By our rough estimate of what has been offered to some employees, it appears that Catalyst is attempting to settle the STIP claim and the pension and benefit rollback claim for less than ½ of the value of the STIP claim alone.