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Background and parties
The case arises from a class action in Quebec brought by Yvon Milliard on behalf of a group of hourly, non-unionized employees of Kraft Canada (now Kraft Heinz Canada ULC) who participated in a defined benefit pension plan for the Mont-Royal plant, the Vaudreuil distribution centre and an Ontario bulk cheese plant. Following the 2015 merger of Kraft Foods Group Inc. and H.J. Heinz Company in the United States, their Canadian affiliates also merged in 2016, creating Kraft Heinz Canada ULC, which assumed Kraft Canada’s pension obligations. The relevant pension plan was registered in Quebec with Retraite Québec and subject to Quebec’s Loi sur les régimes complémentaires de retraite (LRCR) for Quebec employees, and the equivalent Ontario legislation for Ontario employees. The plaintiff class consists of participants under “Option 2” of the plan, hired before 1 January 2007, who did not receive any value for a particular ancillary benefit known as the “prestation de raccordement” or bridge benefit when the plan was terminated effective 31 December 2016.
Structure of the pension plan and bridge benefit
Since the 1970s, Kraft operated a defined benefit pension plan for its hourly, non-unionized employees at the relevant sites. In 1988, the plan was amended to create two options. Option 1 maintained the prior contribution levels (1.25% up to the YMPE/MGA and 2.5% above), while Option 2 required employees to contribute at roughly double those rates (2.5% below the MGA and 5% above). In exchange for higher employee contributions, Option 2 offered enhanced benefits, including a temporary “bridge” pension payable if an employee took early retirement between ages 55 and 65. This bridge benefit was calculated as a fixed dollar amount per year of credited service (ultimately $150 per year of service, up to a maximum) and was payable from early retirement until age 65 (or earlier death). It was designed to “top up” income for those retiring before public pension benefits typically become payable, hence the term “prestation de raccordement” or “bridge benefit.” The plan text required that, to receive the bridge benefit, an Option 2 member had to retire on an “Early Retirement Date” while still accruing continuous service, with “early retirement” defined as retirement on or after age 55 but before the normal retirement age of 65. Thus, two eligibility conditions were built into the plan language: the member had to (1) qualify for early retirement (i.e., reach age 55) and (2) still be an active employee at the time of early retirement. For employees hired after 1 June 1988, Option 2 applied automatically; earlier hires had an irrevocable choice between Options 1 and 2. Later amendments removed the bridge benefit prospectively for employees hired on or after 1 January 2007, but the class here is limited to those hired before that date, who continued to pay the higher Option 2 contributions specifically associated with the bridge and other enhanced benefits. The plan text was only in English. Most employees never saw the actual plan document and received their understanding from HR communications, summary brochures and annual benefit statements rather than the detailed legal text.
Initial 2013 notice of plan termination in 2023
In November 2013, Kraft announced that, due to economic conditions, it would replace the defined benefit plan with a defined contribution arrangement. For Quebec employees, this meant the defined benefit plan would be terminated on 31 December 2023, with a lump-sum payment of the actuarial value of accrued benefits at that date. A “Questions & Answers” sheet emphasized that the company was providing a long ten-year notice so employees would have ample time to adjust their retirement planning, and explicitly stated that the change would have “no impact” on employees who retired or left Kraft on or before 1 January 2024. In other words, employees who would reach 55 and retire before the 2023 termination date were effectively told their situation would be unchanged, creating a significant expectation that the plan would remain in place until the end of 2023 for purposes of eligibility to early retirement and the associated bridge benefit.
Advancement of termination to 31 December 2016 and employee reaction
In November 2015, in the wake of the Kraft–Heinz merger, the company advised employees that the defined benefit plan would instead be terminated seven years earlier, on 31 December 2016, as part of a corporate simplification of retirement programs. The accompanying FAQ said that benefits accrued up to 31 December 2016 would not be affected and that participants would receive the full value of their accrued retirement benefits. Shortly thereafter, during information sessions for Option 2 participants, employees were told that unless they had reached age 55 by 31 December 2016, no actuarial value would be attributed for the bridge benefit in their termination lump sum. This caused significant concern, especially among those close to age 55, who had contributed at higher rates for many years in expectation of a bridge that would support early retirement. Under pressure, in April 2016 the employer adopted a limited exception: employees who were 54 on 31 December 2016 and had at least 35 years of service would be treated as if eligible for the bridge, and the actuarial value of the bridge benefit would be included in their lump sum. An updated FAQ, however, confirmed that for all other Option 2 participants hired before 2007, the termination lump sum would not include any value for the bridge unless they had reached age 55 by the end of 2016, or met the 54-plus-35-years exception. In October 2016, Kraft Heinz sent formal termination notices stating that the plan would be wound up and that participants would receive the value of their defined benefit (DB) retirement benefits earned under the plan, after which the company would have no further responsibility for plan benefits once the assets were distributed. Individual “declaration of termination” statements in December 2016 set out each participant’s actuarial value as of 31 December 2016, but did not disclose explicitly whether the bridge benefit was included or excluded in the calculation.
Regulatory process and approval by Retraite Québec
As administrator, Kraft Heinz filed a declaration of termination with Retraite Québec effective 31 December 2016. Under the LRCR, the administrator had to have an actuary prepare a termination report that quantified the rights of each participant as at the termination date. The actuaries’ report (first filed in April 2017 and later revised) applied the employer’s position: for Option 2 participants hired before 2007, the actuarial value of the bridge benefit was included only for those who were already eligible for early retirement (age 55 or more at 31 December 2016) or who met the 54-plus-35-years exception. All other members—the plaintiffs’ core group—were attributed no value for the bridge, despite their years of service and higher contributions. At Retraite Québec’s request, a revised report added a specific column showing the existence and value (if any) of an “accrued bridge” for each member. This made it clear, at least in the regulator’s file, that members under age 55 with less than 35 years of service had no bridge amount credited. Retraite Québec reviewed the report, issued delay orders to prevent premature distributions while it completed its analysis, and ultimately approved the termination report on 2 February 2018. It authorized the administrator to pay out participants’ rights as determined in the report, in accordance with the applicable pension legislation. By March 2018, Kraft Heinz notified members that regulatory approval had been granted and that distributions could proceed, also informing them that they had 30 days to contest the approval of the plan’s termination before the Tribunal administratif du Québec (TAQ). No class member exercised that regulatory recourse. In April 2018, Kraft Heinz funded the plan’s solvency deficit (over $42 million) and distributed lump sums to participants, including to Mr. Milliard, who received large transfers to a locked-in retirement account plus a taxable cash portion. All class members accepted their payments; none reserved rights or filed objections with Retraite Québec or the TAQ.
Jurisdictional challenge and administrative law issues
In the class action, Kraft Heinz first raised an exception to the Superior Court’s jurisdiction, arguing that Retraite Québec’s approval of the termination report—combined with the unexercised right to challenge that approval before the TAQ—made the regulator’s decision final and binding. According to the company, only the TAQ could have revisited the contents of the approved report, and the civil courts were barred by res judicata and by the exclusivity of the TAQ’s jurisdiction from re-opening questions about how the bridge benefit had been dealt with at termination. Kraft relied heavily on the Supreme Court of Canada’s decision in Boucher v. Stelco, which held that where an Ontario pension regulator has statutory authority to approve benefit allocations in a wind-up, parties cannot collaterally attack that decision in civil courts. The Superior Court rejected this argument. It relied on Quebec authorities, including Newberry, Bisaillon v. Concordia University and commentary by Prof. Crête, to reaffirm that Retraite Québec is not a general adjudicative tribunal for contractual disputes over pension plan interpretation. Its role is supervisory and regulatory—ensuring compliance with the LRCR—not to decide private-law disputes about what the plan text means as between employer and members. The Court also emphasized that plan participants are not true “parties” to the regulatory approval process: they can consult the report and send written comments to the plan committee, but there is no adversarial hearing before Retraite Québec, no mandatory participation by employees, and no adjudication of competing contractual interpretations. Moreover, the notices given to employees referred only to contesting the “approval of the termination” before the TAQ, not to contesting specific contractual questions like the meaning of “accrued benefits.” Because Retraite Québec had not adjudicated such issues, its approval did not have the character of a contentious judgment and did not carry res judicata on the private-law questions now raised. Consequently, the Superior Court held that it retained jurisdiction to interpret the plan and to determine whether class members were contractually entitled to a bridge-benefit value on termination, and it dismissed the employer’s declinatory exception and motion to dismiss.
Merits: whether bridge benefits were “benefits accrued” at termination
On the merits, the core contractual question was whether, under the plan text, the bridge benefit for Option 2 members under age 55 at 31 December 2016 constituted a “benefit accrued” at that date, such that the employer could not, by terminating the plan, adversely affect employees’ rights to its actuarial value. The plaintiff pointed to arts. 7.01 and 7.04 of the plan, which allowed the employer to amend or terminate the plan, but stipulated that no such action could negatively affect any right “with respect to benefits which have accrued” immediately before the amendment/termination, and that upon plan discontinuance the fund’s assets would be allocated to provide “retirement income and other benefits then accrued under the Plan,” subject to applicable pension law. The plaintiff argued that, because the bridge formula was service-based and employees had paid higher contributions for years, the bridge had “accrued” progressively with each year of credited service, regardless of whether the member had yet reached age 55. He further contended that the plan’s use of “accrued” in this context went beyond the minimums in s. 211 LRCR (which only protects ancillary benefits if they would have been payable had the member retired the day before termination) and that the contractual promise of “benefits accrued” required the employer to recognize the actuarial value of the bridge even for those not yet eligible for early retirement. The employer, backed by actuarial evidence, countered that a benefit is “accrued” only once all conditions for entitlement have been satisfied. Because the bridge could only be paid if the member both reached 55 and retired while still active, it remained a purely conditional, ancillary benefit for members under 55 at 31 December 2016; it had not “accrued” in the sense of a vested, unconditional right. The Court approached the interpretation in two stages: first asking whether “benefits accrued” was ambiguous, then, finding ambiguity, turning to contextual, contractual and doctrinal guidance. It noted that “accrue” has two strands in English usage—“to accumulate” over time and “to become vested or due.” In the pension context, and especially in the past tense (“benefits which have accrued”), courts and commentators have associated “accrued” with rights that are fully constituted, no longer exposed to contingencies, even if not yet payable. The Court drew on Supreme Court of Canada jurisprudence (Albright and Sun Indalex Finance), as well as appellate decisions such as C.A.S.A.W. v. Alcan Smelters and Chemicals and McHayle, which treat “accrued” pension rights as those that are fully vested, with eligibility conditions satisfied, rather than merely hypothetical or contingent. That interpretation was then aligned with Quebec civil law concepts: under art. 1497 C.c.Q., an obligation subject to a suspensive condition does not truly exist until the condition occurs, whereas an obligation subject only to a term already exists but is not yet exigible. Here, the bridge benefit was subject to a suspensive condition—early retirement at or after 55 while still active—and so remained conditional and uncertain for members who had not yet reached 55 by the termination date. The Court further found, as a matter of evidence, that employees understood the bridge to be conditional and were aware that if they resigned or were dismissed before meeting the early-retirement conditions, they would never receive the bridge, regardless of years of contributions. On that basis, the Court concluded that, at 31 December 2016, the bridge benefit for members under 55 (and not covered by the 54-plus-35-years carve-out) was not an “accrued benefit” within the meaning of arts. 7.01 and 7.04. The plan’s non-retroactivity protection therefore did not extend to that still-conditional entitlement, and s. 211 LRCR did not, by itself, require Kraft Heinz to include the actuarial value of the bridge in those members’ termination lump sums.
Good faith, remuneration, and the 2013–2016 change of position
The plaintiff also framed the bridge as part of employment “remuneration,” invoking Samoisette v. IBM, where the Superior Court held that eliminating a bridge benefit in a defined benefit plan after employees made an irrevocable choice between plans was abusive and contrary to good faith. In this case, however, the Court distinguished Samoisette: here the employer did not selectively strip the bridge from an ongoing plan after inducing specific choices; instead, it exercised a recognized right to terminate the plan entirely, a possibility contemplated both in the LRCR and in art. 7.01 of the plan. The real legal pivot, the Court held, was not simply whether termination was allowed, but whether the way the termination date was advanced interacted with the conditional bridge to engage art. 1503 C.c.Q. on conditional obligations and good faith. On the general good-faith argument, the Court held that good faith does not permit rewriting the substance of the contract so as to transform a conditional, aleatory benefit into a vested right for everyone regardless of whether the eligibility condition was ever met. Employees knowingly accepted that risk when they participated in the plan and understood that the bridge would never materialize if they left the company before qualifying for early retirement. Thus, by itself, the plan’s termination at 31 December 2016 did not violate their legitimate expectations as to the bridge for members who would never have met the conditions in any event.
Devancement of termination date and article 1503 C.c.Q.
The decisive element for a portion of the class was the change from the original 2023 termination date to 2016. Under art. 1503 C.c.Q., a debtor bound under a condition who, by his own fault or in bad faith, prevents the condition’s occurrence is treated as if the condition had been fulfilled: the obligation takes full effect as though the event had happened. The Court held that Kraft’s 2013 communication, which gave a ten-year notice and explicitly stated that termination on 31 December 2023 would have “no impact” on those retiring on or before 1 January 2024, created legitimate expectations for employees who would reach 55 by that time. The rationale offered—to give employees a long window to adjust their retirement planning—reinforced that the plan would remain in place, for eligibility purposes, through 2023. When the company later advanced the termination to 31 December 2016, while only saying that it might “modify” the retirement program before 2023, the Court found this change of course inconsistent with the previously created expectations and with good faith performance. The generic reservation of a right to “modify” the program did not clearly signal the much more drastic step of an early termination that would cut off the ability of near-retirees to satisfy the bridge conditions. As a result, for employees who actually reached age 55 between 1 January 2017 and 31 December 2023, the employer’s decision to end the plan early effectively prevented the condition (reaching 55 while still under the plan) from occurring. Under art. 1503 C.c.Q., the condition is therefore deemed fulfilled at the time the employer rendered its occurrence impossible. For those employees, the Court held that the eligibility conditions for the bridge benefit are deemed satisfied as of 31 December 2016. In consequence, these members are to be treated as though they had already met the 55-year threshold at the termination date, placing them in the same position as those who actually were 55 or older at that time.
Quitclaim provisions and effect of accepting lump sums
Kraft Heinz also argued that, even if some members had an arguable entitlement to a bridge value, their rights were extinguished because they had accepted their lump sums without reservation and because the plan text provided that, once a member’s entitlements were discharged (including by purchase of an annuity), there would be “no further liability” and acceptance would constitute a full acquittal and discharge for the company and the funding agents. The Court rejected this argument for several reasons. First, it held that the quitclaim clause presupposed that the member’s true entitlement under the plan—correctly interpreted—had actually been paid. Where, as here, a specific component (the bridge) was omitted for a subgroup that should have received it (those deemed to have satisfied the condition under art. 1503 C.c.Q.), there had not been a full “discharge” of the member’s entitlement under the plan. Second, the plan itself stipulated that its text prevailed over employer communications, so general disclaimers in letters could not broaden the release beyond what the plan allowed. Third, the individualized statements sent to members did not clearly identify that no bridge value was included; without an express and contemporaneous “in full and final settlement” notation tied to the actual payment instrument, the jurisprudence on implicit remise de dette through negotiated cheques did not apply. Finally, the mere fact that employees continued to work after learning the employer’s interpretation of the bridge at termination could not be treated as a waiver of contractual rights or a bar to asserting those rights in court.
Outcome and monetary consequences
The Superior Court ultimately allowed the class action in part. It dismissed the employer’s jurisdictional challenge and held that the Court could interpret the plan despite Retraite Québec’s regulatory approval. On the substantive pension issue, it found that the bridge benefit for members under 55 at 31 December 2016 was a conditional, ancillary benefit that had not yet “accrued” under the plan; for most of the class, the employer was therefore not obliged to include its actuarial value in their termination lump sums. However, applying art. 1503 C.c.Q., the Court concluded that the employer’s decision to advance the termination date from 31 December 2023 to 31 December 2016, after promising a ten-year horizon and assuring employees that retiring by 1 January 2024 would have no impact, unlawfully prevented the fulfilment of the early-retirement condition for those who in fact reached age 55 on or before 31 December 2023. For this identifiable subgroup—138 individuals, including Mr. Milliard—the condition is deemed fulfilled as of 31 December 2016, and they are entitled to the actuarial value of their bridge benefit as of that date. The Court declared that Kraft Heinz Canada ULC must pay to each such participant the actuarial value of their bridge benefit as determined in Annex D of the joint actuarial report of Laroche and Lemieux dated 1 May 2023, together with interest and the additional indemnity provided by art. 1619 C.c.Q. running from the service of the motion for authorization of the class action. For the remainder of the class, the action was dismissed. At this stage, the judgment does not fix a specific global monetary award or quantify costs: the Court ordered a second phase of the proceedings to identify precisely which members qualify (those who reached 55 by 31 December 2023 and meet the plan criteria) and to sum the individual bridge-benefit amounts for purposes of a collective recovery. Because this calculation and the final determination of judicial costs are expressly deferred, the exact total amount of damages, interest, indemnity and costs ordered in favor of the successful subgroup cannot yet be determined from this decision alone and will only be known after the second-stage judgment.
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Quebec Superior CourtCase Number
500-06-000953-188Practice Area
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