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

Abstract

Kidd v. Canada Life Assurance Company is one of the most important decisions in class action settlement 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 Canada Life from implementing it.

Instead of that motion being argued, the parties negotiated an amended settlement. Numerous class members objected. Justice Perell characterized the situation as a choice between two courses where neither was substantively, procedurally, institutionally, or circumstantially 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. On the eve of an appeal from this decision by class and defence counsel, the parties negotiated a new amended settlement, which was approved.

The case is notable for articulating a four-faceted approach to analyzing settlement fairness: a class action settlement should be substantively, procedurally, institutionally, and circumstantially 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 and the settlements that have been approved since Kidd and that purport to apply it.

Keywords: class action, settlement

JEL Classification: K41