Canada: Retirees sue brewer Labatt over new $50K limit on lifetime health, drug benefits

Former executives are among a group of non-union Labatt retirees who launched a class-action bid, claiming the beer maker and its Brazilian parent broke a promise to provide them with almost unlimited health benefits, Canadian Press reported June 27.

In a statement of claim filed in Ontario Superior Court, the plaintiffs accuse Labatt of breach-of-contract, conspiracy and unjust enrichment by capping benefits for retirees.

"This unilateral change constituted a breach of each (employee's) contract and violates his or her vested retirement rights and health-protection benefits and those of their eligible dependants," the claim states.

Saying the company's actions were "arbitrary, callous and high-handed," the suit also seeks $50,000 in punitive damages for each member of the proposed lawsuit class, estimated at 900 retirees who were salaried and non-unionized and 700 dependants.

One retiree is Bob Smith, who was director of information technology when he left Labatt after 25 years in 2005 and then retired.

Smith, 57, a married father of two, received a kidney from his son in early 2006 and worries his benefits will be exhausted within five years because he needs expensive anti-rejection drugs.

"It's quite devastating for me," Smith said from his home in London, Ont. "I loved the company that I worked for (and) working for a company as long, you have an expectation they're going to look after you."

There was no immediate response from Labatt.

None of the claims, which also name the company's parent AmBev, has been proven in court.

In a letter last December to retirees, obtained by The Canadian Press, Labatt announced the change to their benefits effective March 1, 2007.

Key among the changes was a cap on cumulative lifetime health and drug benefits at $50,000.

The letter said Labatt's premium costs for retirees had risen 44 per cent between 2002 and 2006 and, as a result, the company had "no choice" but to impose the limits.

"Our top priority is to provide benefits that give fair and optimal coverage for everyone while at the same time managing our costs in the future," said the letter written by Marcio Froes Torres, vice-president with InBev, which controls AmBev.

"Continued premium increases of this magnitude are clearly not conducive to a sustainable business."

The letter also claims few retirees would ever exceed the limits, based on past experience.

Larry Innanen, former general counsel for the brewery where he worked for 25 years until November 2004, said any health calamity - cancer, diabetes or a serious accident out of country for example - could leave a retiree financially exposed.

"It was very disappointing, to say the least," Innanen, 56, said from his office in Mississauga, Ont.

"No one knows how much medical expenditures they're going to need in their lifetime (and) all of the salaried employees had been promised lifetime medical protection without any limits essentially."

The plaintiffs say AmBev knew the company's obligations when it acquired Labatt in 2004 as part of the merger with former owner, Belgium-based Interbrew, that created InBev and say there's no legal or moral reason to penalize them now.

A smaller group of employees in Quebec, represented by the Teamsters union, is fighting the change through the grievance procedure.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .