Former Employee Ordered to Pay Michelin Canada Legal Costs

Details of a Nova Scotia Court of Appeal decision, released November 20, confirm that retired Michelin Canada employee Everett Smith must pay some half of the tyre maker’s legal costs a dispute over pension contributions. The bill Mr. Smith now faces is said to be $300,000 (£160,000).

“As far as the bill, well, I don’t have $300,000,” the former forklift operator told the Chronicle Herald newspaper. “What they are going to do to me, I don’t know. I don’t have a clue. ” The appeals court decision confirms a March 2008 supreme court decision that Michelin did nothing wrong when it took breaks from contributing to the company pension plan between 1984 and 1988 and 1995 and 2001.

Mr. Smith voluntarily represented a group of about 600 pension plan members belonging to the Concerned Pension Group. The group claims Michelin owes the pension fund $268 million because it wrongfully used surpluses to cover pension contributions during the years in question.

“We have to read over the decision, meet with our lawyers and see what the next steps are,” said Mr. Smith, adding he is sorely disappointed about the ruling. “I worked there for 35 years and asked questions about my pension plan. I always thought the justice system was fair but apparently it is not.”

In a written decision, the three-member Appeal Court panel said that Justice Suzanne Hood of Nova Scotia Supreme Court, who originally heard the pension case, correctly interpreted the pension fund law. It also said she appropriately used her discretion when it came to a ruling on costs. “Mr. Smith sought an order that Michelin pay $268 million because Michelin allegedly breached its contract constituted by the plan, violated its fiduciary duty and committed breach of trust. The lawsuit wasn’t a flare shot skyward to illuminate the landscape. It was a missile fired at Michelin,” said the Appeal Court decision, written by Justice Joel Fichaud.

While Michelin can reimburse itself for the other half of its legal bill from the pension fund, Mr. Smith’s group cannot use the fund to pay any of its part of the legal costs, the courts have ruled. “Since 1987, Michelin is the sole contributor to the plan’s fund. If the fund pays Mr. Smith’s costs, there is less for the pension benefits that must be funded by Michelin. Effectively, Michelin would pay Mr. Smith’s solicitor-client costs for Mr. Smith’s failed adversarial claim against Michelin,” the Appeal Court decision said.

The Concerned Pension Group originally raised $300,000 to pay legal costs and agreed to make additional contributions as needed. However the group’s legal costs alone have amounted to about $944,000. Michelin earlier agreed not to seize Mr. Smith’s home or his two horses, pending the outcome of the appeal.