When Will the Court Consider the Distribution Proposal?
At the hearing at 9:00 AM on October 31, 2008 we will seek approval of our recommended settlement terms.
Who Will Share?
Class Counsel will propose that the net settlement amount be distributed only to persons who:
a. are members of the Western Star pension class proceeding, and
b. were, as at October 1, 2001, members of the Western Star Pension Plan or its predecessor pension plans (either pensioners, deferred vested pension plan members, or active employees with accrued pension benefits).
If you have a question about whether you are a member of the Western Star pension class proceeding, please see the definition of the Class in the Certification Order dated January 12, 2005.
For all purposes relating to distribution, individuals will be considered to have ceased to be members of the Western Star Pension Plan or its predecessor plans if, on or before September 30, 2001, they had elected to receive their interest in the pension plan by way of a commuted value payment or otherwise settled their pension entitlement and terminated membership in the Plan prior to that date.
Estates of such members who have passed away since October 1, 2001 will also be entitled to benefit.
Who Will Not Share?
No distribution will be made to any person who is not a member of the Western Star pension class proceeding. In addition, we will propose that no distribution be made to any person who ceased to have an interest in the pension plan on or before September 30, 2001. In particular, those persons who had at some time been members of the Western Star Pension Plan, or it predecessor plans but who had, on or before September 30, 2001, elected to receive the commuted value of their pension plan benefit, or otherwise settled their pension entitlement and terminated membership in the Plan prior to that date, will not share.
The actual wind-up of the pension plan proceeded on a cut-off date of January 1, 2000. However, it is proposed that the cut-off date for purposes of sharing in the distribution of the amount recovered in this class proceeding will be October 1, 2001.
Why Choose the October 1, 2001 cut-off date?
The claim in this case was in the nature of a claim to surplus existing in the plan at the time of termination, both actual surplus as well as any notional surplus which may have been created if the plaintiffs had succeeded in establishing liability on the part of the defendants for alleged misconduct in the administration of the Western Star Pension Plan.
Because a right to surplus only comes into existence at the time of termination, it is our view that the only persons with an interest in the claim are those persons who had an interest in the plan at the time of wind-up, the effective date of which was September 30, 2002. The cut-off date of October 1, 2001 will ensure that all individuals in this group will share in the settlement.
The October 1, 2001 cut-off date also has the effect of including those persons who elected to terminate their interest in the pension plan (including any surplus in the plan) after Freightliner’s decision to close the plant which was announced in October 2001. The logic of this extension is that once Freightliner made the decision to close the plant and announced it, all employee terminations and pension elections are properly considered part of the process of plant closure and wind up.
Employees who were terminated prior to learning of the decision to close the plant, (that is on or before September 30, 2001), and who chose to take their money out of the pension plan elected to terminate their interest in the plan, including any interest in a potential surplus, for reasons unrelated to the closure of the plan and wind up of the plan and cannot be considered to be persons who had a continuing interest in the plan at wind up.
This approach finds clear support in the leading Canadian text “Pension Law” by Ari Kaplan at page 581:
“Consent will also not be required from so-called “past members” of the plan, that is, employees who used to participate in the plan but on termination of employment and plan membership, elected a portability option and transferred the commuted value of their pension entitlement to a locked-in retirement savings vehicle. Such persons have no legal claim to any of the surplus assets in the plan; since they “were not at risk over the years as to the performance of the Plan and they should not now, and latterly, be able to come along and insist on receiving a portion of the benefit which the plan has generated”
(quote taken from C.F. Kingsway case).
What Distribution Formula will the Court be asked to approve?
The court will be asked to approve a process for distribution. We will ask the court to approve, firstly, the cut-off date for inclusion or exclusion of class members, and then secondly, a formula for calculating what each individual will get which will be recommended by an actuary.
The formula will be based on the actual amounts received by plan members in the actual plan windup in respect of their defined benefit pensions.
For example, if, in the actual plan windup, plan member A received an amount of $10,000 either as a cash refund, transfer to an RRSP or the purchase of an annuity and the total windup amount for all members who are eligible to share in this distribution was $20 million, the plan member’s share of the total windup liability was 0.05% of the total. Plan member A will now receive 0.05% of the total net amount available for distribution as a result of this settlement. Therefore, if the amount available for distribution in the class proceeding is $4.5 million (after legal and actuarial costs) A would receive a.05% of $4.5 million or about $2,250 less any withholding taxes or other deductions required by law.
What Specific Amount Will Individuals Receive?
This will not be known until after the Court approves the overall settlement amount, the legal fees, Mr. Gregg’s fee, the cut-off date (i.e. who will share?) and the actuary gathers needed information and calculates individual entitlement. Because of the need to gather precise information about each member who will share in the distribution, we expect that it will take some time after the Court approval before the amounts to be distributed to each individual are calculated.
Is it anticipated that any further Court Approval would be required prior to Distribution?
No. It is anticipated that class counsel and the actuary, in co-operation with defence counsel, will take all steps necessary to complete distribution to individuals.
How will the actual distribution take place?
It is expected that the agreed amount of the settlement will be held in trust pending completion of the settlement. After the actuary has gathered all the precise data about each member entitled to benefit from the settlement and completed his calculations, he will advise class counsel of the amount to be distributed to each member. Cheques will be issued to each member upon the direction of class counsel in accordance in with the Court approved formula. In the event that monies payable to any particular person or estate are not claimed within 6 months of the date of attempted first distribution, such monies will be distributed to those other persons who have received funds, proportionately, but no distribution of unclaimed money will be made if the recipient would receive less than $100. The balance of unclaimed and undistributed money will be paid to the United Way of the Central & South Okanagan/Similkameen.
What if you have questions, ideas or objections about the settlement or distribution?
Firstly, each class member can contact Dan Gleadle or Murray Tevlin for further information or to discuss ideas or objections. Each class member is entitled to attend at the court hearing scheduled for October 31, 2008 to provide their views to the Court. Anyone can engage their own legal counsel to represent them to advance their particular views in Court.
What is the result of Settlement and Distribution once approved by the Court?
Once approved, the settlement will be final and binding on all class members who did not opt out of the class pursuant to the terms of earlier orders of the Court. All claims by members of the class who have not opted out will be finally and absolutely extinguished and class members will be barred from bringing any further action against the defendants arising from or in connection with the WST Plan or any predecessor plans. This applies to all class members, whether or not they receive a share of the settlement.