Former Workers Sue Brewer over Retirement Benefit Cutbacks

June 29, 2007 (PLANSPONSOR.COM) - Three former employees of a London, Ontario, brewing company have taken the company to court over its plans to limit lifetime health care benefits for employees who retire before January 1, 2009.

A Business Insurance news report said the suit was filed this week in theOntario Superior Court of Justice against Labatt Brewing Co. and its parent company, Sao Paulo, Brazil-based AmBev. AmBev, which acquired Labatt in 2004, told the Canadian firm to make the move as a cost-cutting program, the lawsuit said.

The ex-employees charged that, by slashing retiree health care benefits, Labatt breached its employment contract with the retirees. The suit asks the court to order the benefits reinstated and to prevent any such moves in the future, according to the news report.

Labatt said in a December 2006 letter that, starting March 1, 2007, it would impose a $50,000 Canadian ($46,751) lifetime cap on health benefits for current and future retirees with a retirement date before January 1, 2009, according to the complaint. In contrast, the company imposed a $1 million Canadian ($935,016) lifetime limitation for health care coverage for employees who remained active up to that date, the lawsuit said.

Before March 2007, Labatt provided its non-unionized salaried retirees with health and insurance policies that provided, among other things, 100% prescription drug coverage with a low annual deductible without caps. The company also provided several other benefits, including dental coverage, which were reduced.

The lawsuit asks the court to award punitive damages of $50,000 per plaintiff – the suit asks that the matter be declared a class action – and reimbursement of any costs the retirees incurred as a result of the changes to the benefits program.