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05.23.13

TEAM/Local 161 Makes Historic Appearance at the Supreme Court of Canada

On May 16, 2012, TEAM-IFPTE Local 161 appeared before the Supreme Court of Canada in its effort to overturn the Manitoba Court of Appeal's decision, that reversed the Court of Queen's Bench's $100 million monetary award to members of the Defined Benefit Pension Plan.

Prior to privatization, MTS employees were members of the provincial government pension plan established under the Civil Service Superannuation Act (CSSA). .The hallmark of the CSSA plan is the 50/50 cost sharing arrangement that funds benefits. Employee contributions go into a trust fund: the Civil Service Superannuation Fund (CSSF). All of the money in the CSSF is employee money. 50% of the retirees' monthly pension benefit is paid from the CSSF; the other 50% is paid by the employer. Any surplus in the plan belonged to the employees.

On privatization, MTS plan members' assets in the CSSA plan were transferred to the new MTS plan. It was known at the time that plan members were contributing more than their 50% share of the costs of the new plan benefits, the "initial surplus". The amount was later calculated to be approximately $49M.

The government, MTS and plan member representatives entered into a Memorandum of Understanding (the "MOU"), agreeing on how the initial surplus would be protected. MTS also promised that it would not use the initial surplus to reduce its costs or share of contributions to the pension plan. The government of the day then passed a law requiring the Provincial Auditor to appoint an "independent actuary" to ensure that benefits in the MTS plan were equivalent in value to those of the CSSA plan.

Despite the MOU and assurances provided to plan members, MTS' cost or share of contributions to the plan was reduced by the amount of the initial surplus.

The trial was to recover the initial surplus and to retain the same level of control over the pension plan that plan members enjoyed prior to privatization. The trial judge held that the money represented an initial employee owned surplus of money the plan members paid into the MTS Plan over the amount MTS paid into the Plan, after MTS privatized on January 1, 1997. He ruled:

"As a result of the privatization of Manitoba Telephone System (MTS) and its subsidiaries, their employees/retirees were forced to change pension plans. They were assured by the Government of the Province of Manitoba (Government) and by MTS that the new pension plan (New Plan) would have benefits which were at least equivalent in value to those enjoyed under the old pension plan (Old Plan) -that the New Plan would "mirror" the Old Plan. Moreover, as the employees/retirees were transferring more assets into the New Plan than was MTS, they were promised that "initial surplus" would be used for their benefit and would not be used by MTS to reduce its cost or share of contributions to the New Plan.

Ultimately, the initial surplus resulted in a financial status for the New Plan which enabled MTS to take contribution holidays for several years after the plan's inception. That was precisely what they and the Government agreed not to do and what they told the employees/retirees would not happen."

The Manitoba Court of Appeal overturned this decision, agreeing with MTS that the lower court had erred in its findings of fact whereas its decision focused on pension law as it applies to private pension plans, ignoring or dismissing important trial findings regarding the origins and history of the plan.

The Supreme Court of Canada video webcast of TEAM et al. v. MTS et al. (SCC File No. 34763) is available here.

The hearing took a little over two hours. Our legal team went first, followed by MTS (126:20), and closed with a five-minute reply from our side.

Our lawyers did an excellent job in representing us before a panel of seven Supreme Court justices. At several points MTS' lawyer seemed to have difficulty responding to the questions, and was admonished by Justice LeBel (162:15) "...I would appreciate if you would address our questions a bit more directly without always trying to evade them...", "...since the beginning of your presentation this morning, I trust that at several points you have been skating around the facts".

The Supreme Court typically renders a decision within six to eight months of hearing a case.

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