CITATION: Service Employees International Union v. The Participating Nursing Homes, 2013 ONSC 4650
DIVISIONAL COURT FILE NO.: 488/12
DATE: 20130716
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SWINTON, SACHS AND GRACE JJ.
B E T W E E N:
SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 1 CANADA
Applicant
- and -
THE PARTICIPATING NURSING HOMES and MARTIN TEPLITSKY, Q.C.
Respondents
Douglas J. Wray, for the Applicant
David M. Golden, Irv Kleiner, and Marco Falco, for the Respondents
HEARD at Toronto: June 27, 2013
Swinton J.:
Overview
[1] The Service Employees International Union, Local 1 Canada (“the Union”) has brought an application for judicial review seeking to set aside the interest arbitration award of Martin Teplitsky, Q.C. (“the arbitrator”) dated September 27, 2012 affecting the Union and 98 nursing home employers across Ontario, the respondent Participating Nursing Homes.
[2] For the reasons that follow, I would dismiss the application, as the arbitrator’s award was reasonable.
Factual Background
[3] Employees of nursing homes are not allowed to strike as part of the collective bargaining process. If their union and employer cannot agree on the terms of a collective agreement, the Hospital Labour Disputes Arbitration Act, R.S.O. 1990, c. H.14 (“HLDAA”) requires that outstanding issues be determined by interest arbitration, usually by a tripartite arbitration board made up of union and employer nominees and a neutral chair.
[4] In coming to a decision on the terms of a collective agreement, an interest arbitrator is required to apply s. 9(1.1) of HLDAA, which sets out criteria for an interest arbitrator to consider. It states:
In making a decision or award, the board of arbitration shall take into consideration all factors it considers relevant, including the following criteria:
The employer’s ability to pay in light of its fiscal situation.
The extent to which services may have to be reduced, in light of the decision or award, if current funding and taxation levels are not increased.
The economic situation in Ontario and in the municipality where the hospital is located.
A comparison, as between the employees and other comparable employees in the public and private sectors, of the terms and conditions of employment and the nature of the work performed.
The employer’s ability to attract and retain qualified employees.
[5] The arbitrator in the present case has been involved in all but two of the interest arbitrations between the parties since 1986. In the current round of negotiations, he first mediated the dispute and then arbitrated the remaining issues. He awarded a zero salary increase for the first two years of the collective agreement, as well as a lump sum of 15 cents per hour worked, payable in the final week of each of the first two years of the agreement. He ordered a wage reopener in the third year of the agreement.
[6] In his reasons, the arbitrator noted that the employer was not arguing that it lacked an ability to pay. He concluded that that “ability to pay is relevant only if the employer seeks to reduce an increase otherwise appropriate because of its financial circumstances”. He stated that he would not award an increase just because an employer had an ability to pay, and, therefore, he ignored the ability to pay factor in s. 9(1.1)1 of HLDAA.
[7] The arbitrator observed that Ontario’s economy was not robust (s. 9(1.1)3 of HLDAA). He also stated that the task of interest arbitrators is to replicate the results of free collective bargaining. Therefore, in accordance with the criterion of comparable settlements (s. 9(1.1)4 of HLDAA), he found that a settlement between the Red Cross and the SEIU in the home care sector was a compelling comparable, because the settlement was achieved in a strike/lockout regime and involved a large group of employees with the same principal classification as the employees in the present case.
[8] The arbitrator also noted that since 2000, nursing home employees have bargained or been awarded increases which follow public sector awards. For at least two years, zero increases would be the norm in the public sector. He also noted that there were private sector increases of zero, citing settlements in the automotive industry as illustrative.
The Issues in this Application
[9] The Union argues that the award is unreasonable and should be quashed for the following reasons:
The arbitrator acted unreasonably by failing to consider the employer’s ability to pay, thereby ignoring s. 9(1.1)1 of HLDAA.
The arbitrator acted unreasonably in concluding that the economic situation in Ontario was not robust, given the evidence placed before him.
The arbitrator acted unreasonably in finding the settlement between the Union and the Red Cross in the home care sector was a compelling comparable settlement.
The arbitrator acted unreasonably in referring to settlements in the automotive sector in support of his conclusion about salary increases in nursing homes.
The Standard of Review
[10] The standard of review of reasonableness applies in this type of case, where a party challenges the terms of a collective agreement awarded by an interest arbitrator (Ross Memorial Hospital v. Canadian Union of Public Employees, Local 1909, [2007] O.J. No. 3673 (Div. Ct.) at para. 2; Victoria Hospital Corp. v. London and District Service Workers Union, Local 220, [1996] O.J. No. 4009 (Div. Ct.) at para. 4).
[11] An interest arbitrator applies the criteria set out in HLDAA in order to arrive at the terms of a collective agreement for the parties, a statute with which interest arbitrators in hospital labour disputes have particular familiarity.
[12] As well, interest arbitrators exercise a broad discretion, as they are not interpreting a collective agreement, as do rights arbitrators. Rather they are settling the terms of the agreement, a task that has been said to be analogous to a legislative function in which arbitrators draw on their labour relations expertise (Canadian Union of Public Employees (C.U.P.E.) v. Ontario (Minister of Labour), 2003 SCC 29, [2003] 1 S.C.R. 539 at para. 53).
[13] Accordingly, a high degree of deference is to be accorded to the arbitrator’s application of the factors in s. 9(1.1) and to his or her conclusions about the appropriate terms of the collective agreement.
Analysis
Was the arbitrator’s interpretation of s. 9(1.1)1 of HLDAA reasonable?
[14] The Union argues that the arbitrator erred in ignoring s. 9(1.1)1 of HLDAA, the employer’s ability to pay. The Union argues that an employer’s healthy financial situation is a relevant factor in free collective bargaining, both in terms of what the employer will be prepared to pay and what the union might reasonably demand.
[15] The arbitrator concluded that this factor was not relevant to his analysis. I see no error on the part of the arbitrator. The Union has not cited any case in which an arbitrator has increased an award because of an employer’s ability to pay.
[16] Looking at the reasons as a whole, it is evident that the arbitrator placed more weight on comparable settlements and trends in settlements ( as he was entitled to do), and there was ample evidence to support his conclusion that a zero increase was appropriate.
Was the arbitrator’s finding on Ontario’s economic situation unreasonable?
[17] While the Union filed a report from economist John O’Grady to support its position about the state of Ontario’s economy, the arbitrator had extensive evidence from the respondents illustrating the troubled state of Ontario’s economy and rebutting Mr. O’Grady’s report. Given this evidence, it cannot be said that the arbitrator’s conclusion that Ontario’s economy was “not robust” was unreasonable.
Was the arbitrator’s choice of the Red Cross settlement as a comparable unreasonable?
[18] The Union argues that the Red Cross settlement was not a comparable, as the right to strike in the home care sector is illusory. The Union also submits that it was unreasonable to choose a comparator at the bottom of the health care sector hierarchy. This hierarchy places hospitals at the top, followed by nursing homes, retirement homes and then home care providers. As well, the Union argues that the arbitrator was bound by the previous award of Arbitrator Weatherill in the last interest arbitration between the parties, which rejected the Red Cross as a comparable.
[19] I note that Arbitrator Weatherill did not reject the Red Cross settlement outright; rather, he stated that the value of home health care settlements as comparators “is diminished”, in part because “the real value of the right to strike is, at least in the present economic circumstances, somewhat illusory” (Award, September 8, 2011 at p. 61 of the Application Record). That is, he chose to give different weight to this settlement than the arbitrator in the present case.
[20] The arbitrator in the present case was not bound by the Weatherill award. This was not a rights arbitration, where the arbitrator may be interpreting language in a collective agreement identical to that considered in a prior award. Even then, an arbitrator would not be strictly bound by the prior award, although arbitrators tend to respect the decision of an arbitrator on the same issue unless it is clearly wrong (Canadian Union of Public Employees, Local 4000 v. Aramark Canada Ltd., 2011 ONSC 5640 (Div. Ct.) at para. 21). However, in an interest arbitration, arbitrators are not applying collective agreement language to resolve a dispute. Rather, they weigh the various factors in HLDAA and consider the evidence before them to determine the appropriate terms of the collective agreement. They are not required to give the same weight to a particular comparable that another arbitrator gave in another round of bargaining.
[21] The arbitrator’s reasons, while brief, adequately explain why he found the Red Cross settlement was a significant comparable. Among other things, the Red Cross settlement involved the same union and the same primary classification of employees (that is, personal support workers). As well, the settlement was reached in a setting where the employees had the right to strike.
[22] While the Union argues that it was wrong in principle for the arbitrator to look outside the nursing home sector, it is evident that these parties invoke workplaces as comparators that are outside their sector – for example, the Union here sought to rely on hospital settlements. In the record before the arbitrator, there were numerous comparators cited that were outside the nursing home sector. It was the arbitrator’s task to assess the evidence and to decide which comparators he found useful. This was particularly the case because the arbitration award between the Union and the respondents is the leading case or benchmark in collective bargaining in the nursing home sector, setting the pattern for settlements and awards in the sector. It was reasonable to look outside the sector to identify trends in settlements.
Was the reference to the auto settlement unreasonable?
[23] The Union argues that it was unreasonable to refer to the auto industry settlements as a comparator, given that they arose in a different industry and the arbitrator failed to take note of the very large lump sum payments included in those settlements.
[24] In my view, the reference to the auto settlements was made to illustrate the point that there were many workplaces where a zero increase was to be expected over the life of the parties’ collective agreement. It does not render his salary award unreasonable. The arbitrator also referred to trends in the public sector where zero increases were to occur in the next two years. It was reasonable for him to look to these public sector trends.
Conclusion
[25] The arbitrator’s reasons, read as a whole, demonstrate his path of reasoning and the weight he accorded to the various factors in HLDAA. The award on wages, while troubling to the Union, was within a range of possible, acceptable outcomes. Accordingly, the application for judicial review is dismissed.
[26] The Union submitted that costs awarded in a judicial review application in the field of labour relations are usually in the range of $4,000 to $5,000. The respondents sought higher costs for the present application because of the extensive record that was filed to show the range of evidence before the arbitrator. The Union’s record for this application included a detailed affidavit to which the respondents had to reply.
[27] In the circumstances of this case, given the extensive record and the affidavit evidence, a higher award of costs should have been within the reasonable contemplation of the Union. Therefore, I would award costs to the respondent Participating Nursing Homes of $10,000 inclusive of HST and disbursements.
Swinton J.
Sachs J.
Grace J.
Released: July 16, 2013
CITATION: Service Employees International Union v. The Participating Nursing Homes, 2013 ONSC 4650
DIVISIONAL COURT FILE NO.: 488/12
DATE: 20130716
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SWINTON, SACHS AND GRACE JJ.
B E T W E E N:
SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 1 CANADA
Applicant
- and -
THE PARTICIPATING NURSING HOMES and MARTIN TEPLITSKY, Q.C.
Respondents
REASONS FOR JUDGMENT
Swinton J.
Released: July 16, 2013