CITATION: Guzzo v. Randazzo, 2017 ONSC 1845
DIVISIONAL COURT FILE NO.: DC-16-693 and DC-16-695
DATE: June 27, 2017
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
SACHS, STEWART AND SPIES JJ.
BETWEEN:
NANCY Guzzo on her own behalf and on behalf of ALL MEMBERS OF LABOURERS INTERNATIONAL UNION OF NORTH AMERICA, LOCAL 1110
Plaintiffs/Appellants
– and –
PAULA randazzo, KIM BOYLE, KIM LEBLANC, DIANE TAYLOR, TONY IANNUZZI, on his own behalf and on behalf of ALL MEMBERS OF THE CARPENTERS’ DISTRICT COUNCIL OF ONTARIO, UNITED BROTHERHOOD OF CARPENTERS and JOHN MOSZYNSKI
Defendants/Respondents
Michael D. Wright and Amanda Darrach, for the Plaintiffs /Appellants
Dan J. Shields and Hendrik Nieuwland, for the Defendants/Respondents
HEARD at Hamilton: February 6, 2017
Stewart J.
Nature of the Appeal
[1] The Appellants, Nancy Guzzo on her own behalf and on behalf of all members of Labourers International Union of North America, Local 1110 (“Local 1110”), bring this appeal from the trial judgment of Whitten, J. dated December 9, 2015 and his subsequent costs decision of April 20, 2016.
[2] Following a trial, the Appellants’ action was dismissed as against Tony Iannuzzi, on his own behalf and on behalf of all members of the Carpenters’s District Council of Ontario, United Brotherhood of Carpenters and John Moszynski (the “Carpenters”).
[3] The trial judge made findings of liability and assessed damages as against the Defendant Paula Randazzo in the amount of $15,000.00, and as against the Defendants Kim Boyle, Kim LeBlanc and Diane Taylor in the amount of $7500.00 each.
[4] In his costs judgment, the trial judge ordered that each of the parties were to bear their own costs.
[5] The Appellants submit that the trial judge erred in not finding that Randazzo was a fiduciary and that she breached that fiduciary duty to Local 1110. They also argue that the damages awarded to be paid by certain Respondents to the Appellants do not reflect the damages caused by their conduct. They also submit that the Appellants should be awarded their partial indemnity costs.
[6] Randazzo, Kim Boyle, Kim LeBlanc, Diane Taylor and the Carpenters cross-appeal from the trial judgment. They submit that the trial judge erred with respect to his findings of liability against Randazzo, Boyle, LeBlanc and Taylor based on a breach of duty of loyalty. They submit that no damages were either sustained by Local 1110 or proven at trial and therefore no judgment for any amount ought to have been awarded to it.
Jurisdiction
[7] Pursuant to s.19 of the Courts of Justice Act, R.S.O. 1990, c.C.43, this court has jurisdiction to hear an appeal from a final order of a judge requiring a payment in the amount that was ordered by the trial judge in this case.
Standard of Review
[8] The standard of review applicable to an appeal from a final order of a judge has been set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. On questions of law, the standard is correctness. On questions of fact, the standard is palpable and overriding error. On questions of mixed fact and law, there is a spectrum. Where there is an extricable legal principle, the standard of review is correctness. However, with respect to the application of the correct legal principles to the evidence, the standard is palpable and overriding error.
Background Facts
[9] The facts of this case, which involves ardent trade unionists at odds with each other, provide significant context to the legal issues raised by the parties. The trial judge described the facts of this dispute as being “almost operatic with drama and intrigue.” Accordingly, they are set out in some detail below.
[10] Randazzo was appointed Business Manager of Local 1110 after it was chartered as a provisional local union of the Labourers International Union of North America (“the Labourers”) on June 13 1997. Local 1110 of the Labourers represents workers in the health care field.
[11] Due to the provisional nature of Local 1110, its charter could be revoked, amended, and consolidated by the General Executive Board of the Labourers, of which Joseph Mancinelli held the position of Vice President, Central and Eastern Canada. Mancinelli appointed all Executive Board members of Local 1110, including Randazzo.
[12] Generally, once a local union of an international union becomes financially independent, it also becomes independent in its management from the international union. Elections then are authorized. By 2006, Local 1110 had become financially independent and could hold elections.
[13] Randazzo testified that in 2007 she pressed Mancinelli to hold such elections but was rebuffed by him. In 2011, she raised the issue of elections again, but was left with the clear impression from Mancinelli that her employment would be in jeopardy were she to continue to press the subject.
[14] Randazzo also experienced personal conflicts with Mancinelli and his various representatives. In 2010 she was encouraged by Manny Bastos, Mancinelli’s “special assistant”, to abandon various labour grievances she had initiated at one of their unionized facilities. In a meeting with Bastos, she was openly criticized for his assessment of the overly high number of grievances she pursued.
[15] In that same connection, Randazzo also testified that she was concerned that the Labourers had placed itself in a conflict of interest in its relationship with Chartwell Care, an employer of many of the health care worker members of Local 1110. The Labourers had invested financially in several long term care facilities and had retained Chartwell Care to manage them.
[16] In Randazzo’s view, the union organization thus had an interest in earning higher profits at these facilities and in keeping expenses, including labour costs, down. At the same time, the workers at these same facilities were represented by Local 1110, whose job it was to increase wages and benefits for the betterment of workers.
[17] Randazzo testified that due to her tenuous relationship with Mancinelli she felt she could not press these concerns with him for fear of losing her job.
[18] Randazzo’s concerns grew as she witnessed Mancinelli’s growing power and his willingness to eliminate any opposition in what she viewed as a ruthless manner. Between July and September 2011, Mancinelli supported certain individuals as replacements for the Labourers Local 183’s Executive Board. Approximately 100 employees who had openly supported the losing incumbents were then fired.
[19] Mancinelli’s power became even more entrenched at the Labourers convention in September 2011. At that time, its constitution was amended to provide that Mancinelli could not be removed except by a decision of the Executive Board.
[20] In that same month of September 2011, Randazzo’s brother had his legal services retainer with Local 1110 terminated by Mancinelli. This also resulted in her brother’s resignation as President of Local 1110’s Executive Board. Following her brother’s departure, Randazzo said she was advised by other union officials to “watch her back”.
[21] Randazzo became increasingly concerned about her continued employment with Local 1110. As a result, she tried unsuccessfully to initiate terms of separation with Mancinelli. Instead, she was told by Bastos to “get over herself and control her girls.”
[22] On October 11 2011, Randazzo received a letter from Mancinelli which referred to her for the first time as the “Acting” Business Manager. Mancinelli also told her that he had appointed Tony Pietrangelo to replace Randazzo’s brother on the Local 1110 Executive Board, now described as the “Advisory Board”, and that she would report to Pietrangelo regarding all legal expenditures.
[23] Randazzo testified that this letter simply served to substantiate her fears that she was on her way out. As a result of its contents she believed she had been effectively demoted. She then started to shift into what was referred to as “survival mode”.
[24] Neither Mancinelli nor Bastos gave evidence at the trial. Randazzo’s evidence as to the events leading up to the October 11, 2011 letter and her appraisal of their meaning therefore stood basically unchallenged at trial.
[25] Due to this sequence of events, the trial judge found that Randazzo had been constructively dismissed by Local 1110, even though no claim for damages for constructive dismissal had been advanced by her. This conclusion is not being appealed.
[26] On October 22 2011, Randazzo acquired a new private email address and phone number to communicate with other unions to find a new position.
[27] Randazzo began to meet with other labour organizations to discuss possible alternative employment opportunities. Among those persons approached was John Moszynski of the Carpenters.
[28] Randazzo knew of the historically acrimonious relationship between the Labourers and the Carpenters, but nevertheless determined that the Carpenters would be the best fit for her interests.
[29] Following her contact with Moszynski, Randazzo agreed to work on a business plan for the development of a new local union of the Carpenters. The trial judge found that the business plan created by her was “strikingly similar” to documents generated by Randazzo while in the employ of Local 1110. In the proposed business plan, Randazzo set out her strategy for the staffing and generation of membership for a new union local to be established. Its staff were to include some of the former Local 1110 staff; its proposed members were to be as many current members of Local 1110 as could be persuaded to join.
[30] The goal of Randazzo and the Carpenters was to start organizing the new union local in November 2011 and to attempt to move those members of Local 1110 who were employed by four health care facilities (Westmount, Waterford, Woodhaven and Wynfield, referred to collectively as the “4Ws”) to the Carpenters.
[31] Randazzo described this campaign as being a 3-to-5 year plan to systematically raid such members of bargaining units as their contracts come into the open period when raiding of this nature is permitted.
[32] Randazzo also approached employees of Local 1110 who reported to her (with the exception of Nancy Guzzo and Tana Torch) and told them that she was considering leaving Local 1110. These persons included Boyle, LeBlanc and Taylor. Randazzo asked those individuals if they would consider leaving with her.
[33] While Randazzo was having these discussions, she asked Torch to provide a union membership list to her. As a result, Randazzo was provided by Torch with a copy and a memory stick containing the requested membership list. Randazzo kept these items in her possession until mid-November, 2011 but testified that she did not actually use the information because she “did not have to”. The Appellants accept this finding and submit that it is evident that over her fourteen years with the Local 1110, Randazzo had gained knowledge of who the key industry personnel and union stewards were so she had no real need for the list.
[34] On October 28 2011, Randazzo, Boyle, LeBlanc, Taylor and another Local 1110 employee, Susie Camara, had lunch at a local restaurant. The group discussed leaving Local 1110 and going to the Carpenters. Randazzo confirmed to the group the details of her plan regarding departure. She also told them about the proposed creation of the new Carpenter’ local, as well as its aim to become the bargaining agent for current Local 1110 members.
[35] The lunch was charged up to Local 1110 on the pretext that it was a birthday lunch for Camara. At trial, Randazzo admitted that this was not appropriate expenditure to assign to Local 1110.
[36] On November 3 2011, the members of the Executive Board of Local 1110 (including Randazzo) met and discussed Mancinelli’s letter of October 11, 2011. The Executive Board wrote to Mancinelli asking for clarification.
[37] On that same day, Randazzo drafted her letter of resignation and sent it to Moszynski for his review.
[38] On November 4 2011, Randazzo asked a Local 1110 employee to book a room at the Holiday Inn in Oakville for a meeting. That meeting was to be with officials from the Carpenters and concerned the formation of the new Carpenters union local. Nancy Guzzo learned of this planned meeting and informed Mancinelli.
[39] Effective November 4 2011, the General President of the Carpenters established the Healthcare Office and Professional Employees Union Local 2220 (“HOPE”) and appointed its interim officers.
[40] Also on November 4 2011, and while still employees of Local 1110, Randazzo, Boyle, LeBlanc and Taylor (the “HOPE Defendants”) conducted meetings with the union stewards of the 4Ws. At those meetings, the union stewards were informed of the intention of the HOPE Defendants to leave Local 1110 and work for the new union local.
[41] On the evening of November 4 2011, Mancinelli wrote to Randazzo assuring her that her employment and the employment of the other employees was “safe”. Randazzo forwarded this email to Moszynski. Instead of providing comfort, these “assurances” from Mancinelli were considered by Randazzo to be rather ominous and were described by her as having “shaken some people”.
[42] On November 5 2011, the HOPE Defendants met at the Holiday Inn in Oakville. The requisite documents were ratified to formally establish the new local. After the meeting, each of the HOPE Defendants faxed a letter to Local 1110 resigning her employment.
[43] The HOPE Defendants then went directly to the 4Ws to begin recruiting members and signing cards. The HOPE Defendants admit that they were able to identify targets, and gain access to the premises through knowledge gained by them while in the employ of Local 1110. The Appellants point out that the trial judge did not make reference to this admission in his reasons for decision.
[44] That same day, Mancinelli sent a letter to Randazzo and the other HOPE Defendants terminating their employment. He instructed them to return all membership records, files and all property belonging to Local 1110.
[45] It was admitted by the Respondents that Randazzo had exercised access to some documents on her laptop computer including Local 1110 organizing plans, collective agreements, wage grids, and contact information. However, Randazzo and the other HOPE Defendants testified at trial that they did not really need to use this information. As mentioned above, the trial judge found that Randazzo had accumulated a vast array of contacts gathered during the course of her employment with Local 1110, knew who they were and how to contact them.
[46] The HOPE organizing campaign continued throughout the fall of 2011.
[47] On December 7 2011, HOPE was elected by the employees of the 4Ws to replace Local 1110 as their union.
[48] On June 21 2012 the Ontario Labour Relations Board certified HOPE as bargaining agent of the 4Ws. As part of the certification proceedings, the Board had conducted a hearing of Local 1110’s challenge to the certification. That challenge was ultimately unsuccessful. The Board determined that Randazzo, Boyle, LeBlanc and Taylor had not improperly influenced the vote to elect HOPE as bargaining agent or otherwise violated their obligations under the statutory regime.
[49] In 2012 employees of two additional bargaining units, Bella Senior Care Residence and Specialty Care Granite Ridge, also voted to have HOPE replace Local 1110 as their bargaining agent.
[50] When the relevant raiding period and Board proceedings were finally concluded, HOPE became the bargaining agent for all of the employees within the six bargaining units.
[51] Local 1110 claimed, among other things, that it was forced by the conduct of the Respondents to reduce its union dues to compete with HOPE and to try to seek to win back the bargaining units that had been raided. Their alleged resulting costs, past and future, in lost revenues and other expenses for which it argued that the Respondents (including the individual HOPE Defendants) should be liable amounted to a claim for damages against the Respondents in excess of $6,000,000.00.
Decision of the Trial Judge
[52] After a nine-day trial, the majority of Local 1110’s claims were dismissed.
[53] The trial judge found that Randazzo was not a fiduciary of Local 1110. He also found that there had been no breach of confidence committed by any of the HOPE Defendants.
[54] However, the trial judge found that the HOPE Defendants had engaged in a breach of their duty of loyalty to their employer by soliciting Local 1110 stewards before they had actually resigned their employment and given notice to Local 1110 of their planned departure.
[55] The trial judge also found that the HOPE Defendants were under a duty not to actively compete with Local 1110 while still employed by the union local and within their applicable notice period. The trial judge found that applicable notice period to be two weeks.
[56] The trial judge assessed damages for these breaches so found by him in the amounts of $15,000.00 as against Randazzo and $7,500.00 against each of Boyle, LeBlanc and Taylor.
[57] The trial judge dismissed all claims against the Carpenters and Moszynski due to the absence of proof of any actionable tort on their part.
[58] The trial judge ordered all the parties to bear their own costs of the trial.
A. Did the trial judge err in concluding that Randazzo was not a fiduciary of Local 1110?
[59] On the evidence before him, the trial judge concluded that Randazzo was not a fiduciary and consequently not liable for damages to the Appellants for breach of any fiduciary duty or for damages calculated on any basis that would reflect the existence of such a duty.
[60] In order to reverse the trial judge’s conclusion in this regard, it must be shown that he made a palpable and overriding error in applying the relevant law to the evidence.
[61] The Appellants argue that the trial judge made such a palpable and overriding error in failing to find Randazzo to be a fiduciary. In support of their position, they point to several decisions made in a variety of labour contexts which have impressed union officers with fiduciary obligations (see: St. Denis et al. v. Manoni, 2011 ONSC 3308; UFCW v. Cashin, 1996 11537 (NL SC), [1996] N.J. No. 343 (S.C.); Canadian Union of Public Employees and Martell v. Deveau et al.,(1976) NSR (2d) 44 (Sup Ct), aff’d (1977) 1977 3241 (NS CA), 19 NSR (2d) 24 (CA)).
[62] It is undisputed that there exists jurisprudence to support the general conclusion that officers of a union may hold a fiduciary position with respect to the union and its members.
[63] However, the Respondents argue that it was quite appropriate in this case for the trial judge to adopt a practical and realistic approach to the evidence in this case, given its facts. In doing so, he examined both the expected characteristics of “key employees” and “vulnerability” in light of the facts of this case. (see: Lac Minerals Ltd. v. International Corona Resources ltd., 1989 34 (SCC), [1989] 2 S.C.R. 574; Imperial Sheet Metal Limited v. Landry, 2007 NBCA 51; Canadian Aero Services Limited v. O’Malley, 1973 23 (SCC), 1973 CarswellOnt 236 (SCC); Smith; Hodgkinson v. Simms,1994 70 (SCC), 1994 CarswellBC 438 (SCC)).
[64] This was also the approach taken by the court in GasTOPS v. Forsyth, a decision upheld by the Court of Appeal (see: GasTOPS Ltd. v. Forsyth, 2009 66153 (ON SC), [2009] O.J. No.3969 (SCJ), aff’d 2012 ONCA 134). As was observed in that decision, courts have provided guidelines for determining whether a fiduciary relationship exists but have stopped short of defining any strict test.
[65] To find a fiduciary relationship, what is generally required is evidence of a mutual understanding that one party has relinquished her own self-interest and agreed to act solely on behalf of the other party. Such relationships are often characterized as power-dependency relationships where one party gains a position of overriding power and influence over another (see: Hodgkinson v. Simms, supra, at para. 33-34).
[66] Fiduciary obligations tend to be imposed only where one party is, in reality, at the mercy of the other and places total reliance and dependent on the fiduciary.
[67] As a result, whether a fiduciary obligation exists must be decided based on the particular circumstances of each case. As was noted by La Forest J. in Hodgkinson v. Simms (at para. 37): “there is no substitute in this branch of the law for a meticulous examination of the facts.”
[68] In the decision under appeal, the trial judge considered that even the fact that an employee may be a key employee or the fact that the employer may be vulnerable are not absolutely determinative of the imposition of a fiduciary relationship and the obligations that flow from that designation. Those are simply two factors among many to be considered.
[69] The trial judge made several findings of fact, supported by the evidence, which serve to characterize Randazzo’s power and influence over the Appellants as being quite limited.
[70] Randazzo was the Business Manager of a local union with a provisional charter, appointed directly by Mancinelli to the Executive Board. Given the provisional nature of Local 1110’s charter, it could be amended, revoked and consolidated abruptly and without notice. Although the Executive Board tended to agree with any recommendations made by Randazzo it was not obliged to do so.
[71] Randazzo had no cheque-signing authority. Although she had employees reporting to her, she could not employ or dismiss employees, set employment policies or rates of pay, or establish budgets without approval of the Executive Board. Randazzo was not directly responsible to the local union membership.
[72] In addition, although Randazzo could appoint stewards and was in charge of field representatives, she was not the only contact for Local 1110 bargaining unit members, given the presence of many stewards, service representatives, and organizers. Although Randazzo was knowledgeable as to the provisions of the relevant collective agreements, it must be observed that these are public documents. Although she may have been knowledgeable with respect to labour law practices, including the conduct of grievances, such knowledge is neither unique nor proprietary to Local 1110.
[73] In contrast, Mancinelli had broad powers concerning Local 1110, and he exercised those powers without much restraint. Mancinelli was the person in control of Local 1110. When these events occurred, Randazzo was its newly-demoted “Acting” Business Manager.
[74] As noted, Mancinelli caused Randazzo’s brother to have his retainer terminated, which resulted in his resignation as President of Local 1110. On October 11, 2011 Mancinelli appointed Tony Pietrangelo to replace Randazzo’s brother and directed Randazzo to report to Pietrangelo with respect to all legal expenditures.
[75] On October 11, 2011 Mancinelli unilaterally changed Randazzo’s title from Business Manager to Acting Business Manager. At the same time he changed the name of the Executive Board to the “Advisory Board”, thus further consolidating his power.
[76] I do not accept the Appellant’s submission that the trial judge erred by considering the provisional nature of Local 1110 and, in any event, his ultimate finding did not depend on this.
[77] I also do not accept that the fact that the trial judge’s references to the Uniform Constitution of the LIUNA District Council ( a body that I accept is not involved in these matters) renders his conclusion that Randazzo was not a fiduciary one that cannot be sustained on appeal. When his reasons are read as a whole, it is clear that in coming to the conclusion that he did the trial judge relied on the powers and roles that the key players actually played in the running of Local 1110, not on how those powers or roles were set out in any particular document.
[78] Furthermore, I do not agree that the trial judge reached his conclusion that Randazzo was not a fiduciary purely on the basis that there was someone senior to her or she had a reporting obligation. Rather, the trial judge made findings of fact as to Randazzo’s powers in context and within the particular organization in which such powers could be exercised. The facts set out, as found by the trial judge, amply support his conclusion that Local 1110 was not at the mercy of, reliant on, or dependent on Randazzo.
[79] As the trial judge noted, in this factual scenario in reality Randazzo was the one who was vulnerable and at the mercy of Mancinelli who, in turn, controlled Local 1110. The evidence amply supports his conclusion.
[80] I consider that no palpable and overriding error has been demonstrated with respect to this finding. Accordingly, I would not give effect to this ground of appeal.
B. Did the trial judge err in finding that Randazzo, Boyle, LeBlanc and Taylor had not breached any duty of confidence owed to Local 1110?
[81] As the trial judge noted, what is confidential information is a determination to be made in the context of the circumstances. It must be considered in light of what items a departing employee rightfully may be able to take away from employment which include general skills and knowledge acquired on the job (see: Imperial Sheet Metal Limited v. Landry, 2007 NBCA 51).
[82] Although the trial judge found that it would have been preferable for the HOPE Defendants to leave all equipment and documents behind when they left, mere possession of these items is not a breach of confidence. The trial judge found that the Appellants were unable to specifically prove what information had been either used or misused, or how (see: Aon Consulting Inc. V. Watson Wyatt & Co., 2005 CarswellOnt 3706).
[83] The trial judge also found that Randazzo’s creation of a business plan for the Carpenters, using a report that she had prepared previously for Local 1110 as a guide and using information that was publicly available and not confidential, was only an incident of “precedent usage” and not a breach of confidence.
[84] In general, the trial judge found that the material said to have been retained by the HOPE Defendants lacked any “aura of confidentiality” and was generally available to the public. He made this finding after examining the material in detail and, as already noted, absent a palpable and overriding error, his findings are entitled to deference. In this case, the findings made were available to the trial judge on the evidence before him.
[85] For these reasons, I would not give effect to this ground of appeal.
C. Did the trial judge err in finding that Randazzo, Boyle, LeBlanc and Taylor had breached their duty to Local 1110 not to compete during the period of their employment?
[86] Randazzo did not begin looking for other employment until after she had received Mancinelli’s letter of October 11, 2011. The letter was the culminating incident amounting to her constructive dismissal. As noted, this finding by the trial judge has not been appealed.
[87] The duty of loyalty makes it a breach of that duty for an employee to engage in competition with that employer while still employed. However, a discharged or former employee is free to compete against his or her former employer following departure, barring any special duty or contractual bar. No such special duty or non-competition agreements apply here.
[88] The trial judge found that Randazzo had not breached any duty to her employer by meeting with several unions, including the Carpenters, in her search for new employment or by preparing a business plan that described opportunities to raid Local 1110 bargaining units.
[89] The trial judge also found that Randazzo had not breached any duty by advising co-workers of her intention to leave Local 1110 and start a competing healthcare local with the Carpenters Union. These co-workers were free agents, capable of making decisions for themselves, to stay with the existing local or otherwise. Likewise, those co-workers were free to resign their own employment and voluntarily leave.
[90] However, the trial judge found that the HOPE Defendants had engaged in competition with Local 1110 in violation of their obligations as employees and duty of loyalty by meeting with shop stewards on November 4, 2011 while still employed. The trial judge held that this contact amounted to a solicitation of Local 1110’s customers. This was therefore competition during their employment and a breach of their duty of loyalty to their current employer at the time.
[91] The Respondents argue that, in the union context, it is not a breach of any duty of loyalty for union members to persuade fellow members to change unions. Labour relations statutes guarantee the right to bargain collectively through one’s choice of representative. They characterize their conduct as being in furtherance of this entitlement.
[92] The Respondents argue that the application of this common law duty of loyalty by the trial judge to these facts was inconsistent with the values supported by the Canadian Charter of Rights and Freedoms. They submit that Section 2(d) of the Charter protects the right to a meaningful collective bargaining process containing the essential feature of employee choice, the hallmark of which includes the ability to form and join new associations and to change representatives.
[93] The Respondents further submit that the values promoted by s. 2(d) include human dignity, equality, liberty, respect for the autonomy of the person, and the enhancement of democracy in the workplace. They say that these values outweigh the values underlying the common law duty of loyalty which “seeks to protect the employer’s financial interests by means of repressing competition”. While this may be justified in private sector commerce, it is not the prime objective of entities such as trade unions whose statutorily protected vocation is the organization and representation of workers.
[94] Accordingly, the Respondents argue that common law duty of loyalty should be modified to permit the conduct which occurred here.
[95] The Appellants agree that the freedom to form a union and to participate in its activities is fundamental. They also agree that this is the type of activity that is protected by s. 2(d) of the Charter.
[96] However, as the Appellant points out, this is not a case where the Appellants brought claims against the Respondents because they were exercising their Charter rights. No unreasonable road blocks were thrown up on the way to establishing HOPE. The Respondents were free to form and support HOPE, and the trial judge recognized that right. However, the Respondents were not free to breach the duty of loyalty while doing so.
[97] The HOPE Defendants were employees of Local 1110. Before they had left their employment, they competed with Local 1110 in furtherance of their own interests and contrary to those of their employer. In my view, whether or not damages can be shown to have resulted, they nevertheless breached their duty of loyalty to Local 1110 by their conduct. The fact that they happened to be employees of a union local does not eradicate their obligations to that local or diminish their breach of duty in that regard.
[98] The facts and law cited by the trial judge support his conclusion that the HOPE Defendants breached their duty of loyalty to Local 1110 by engaging in the solicitation described. As a result, I would not give effect to this ground of the cross-appeal.
D. Did the trial judge err in his findings and assessment of damages?
[99] The trial judge awarded damages to Local 1110 roughly equal to the salaries that the HOPE Defendants had earned from HOPE Local 2220 over the two week period following their resignations on November 5, 2011. These damages were for the breach by the Hope Defendants of their duty to give reasonable notice of resignation and to exercise good faith and loyalty toward Local 1110. This quantification of damages appears to be based on his finding that two weeks’ notice ought to have been given by the HOPE Defendants to Local 1110.
[100] The evidence at trial was that Randazzo was directed to leave Local 1110 immediately after submitting her resignation. The same summary removal was effected with respect to the other HOPE Defendants. In the labour union context, it was argued that this is common practice and often to be expected by those involved.
[101] As a result, I consider that the trial judge erred in assessing damages in this way. Further, and though it may be a somewhat academic observation, that measure of damages should logically have been reduced by what Local 1110 would have had to pay the HOPE Defendants over their theoretical obligatory two weeks’ notice period. In any event, and given the facts of this case, I am of the view that the application by the trial judge of a notional notice period to the assessment of damages in these circumstances was incorrect and a reversible error.
[102] In particular, with respect to Randazzo, having found that Local 1110 terminated her employment relationship by constructively dismissing her when they demoted her on October 11, 2011, it is logically inconsistent to find that she was required to give her employer notice of her intention to resign. An employee who has been constructively dismissed is entitled to a reasonable period of time to think over whether she will accept the immediate termination of her employment. In this case there was no finding that Randazzo through the passage of time accepted the demotion that was imposed on her by her employer. Thus, she was entitled to leave without giving notice (see: Restauronics Services Limited v. Forster, 2004 BCCA 130 at para. 35; Garcia v. Newmar Windows Manufacturing, 1996 CarswellOnt 4973 at paras 14-16 (Gen. Div.)).
[103] On the cross-appeal, it is argued that the Appellants did not prove that any damages were actually caused to Local 1110 by any of the breaches so found. Thus, even if Randazzo and her colleagues breached their duty of loyalty in soliciting union members before they had resigned, only nominal damages should be awarded.
[104] It is argued on behalf of the HOPE Defendants that it would have been lawful for Randazzo and her colleagues to resign from Local 1110, to set up HOPE Local 2220, and to engage in raids of members of bargaining units during the raiding season.
[105] Randazzo’s evidence was that she, being an experienced organizer in the labour movement, could run an organizing campaign quickly. The majority of such campaigns are not lengthy. Three weeks of campaigning, as was done by HOPE Local 2220, is typical.
[106] I agree that there can be either no or very limited liability where a competitor union would have brought a quick certification application in any event. The evidence at trial supports a conclusion that Local 1110 would have experienced raiding of its bargaining units by HOPE Local 2220 very quickly, even in the absence of the specific and narrow breach of duty by the HOPE Defendants. At most, HOPE Local 2220 got a very modest head start.
[107] The assessments of damages in the cases of Restauronics Services Limited v. Forster, supra, and UFCW v. Cashin, supra, provide some guidance for assessing damages in this case.
[108] In UFCW v. Cashin, $40,000.00 was awarded to the plaintiff to be paid by union officers who attempted to destroy the union by disaffiliation prior to resigning and who, after resigning, set up a competitor union that successfully raided nearly all of the former union’s bargaining units.
[109] In Restauronics v. Forster, supra, the employee involved breached a duty of loyalty by competing with her employer for a contract during her working notice period. However, the employee did not use any confidential information or trade secrets in doing so. The employer lost the contract for reasons unrelated to the employee’s breach of her duty of loyalty. Consequently, the court held that the employer was entitled only to nominal damages, and awarded $500.00.
[110] Having agreed with the trial judge that the HOPE Defendants breached their duty of loyalty by soliciting union stewards prior to submitting their resignations, I consider that the facts in this case are more akin to those in Restauronics than in Cashin. The damages said to have been sustained by Local 1110 were not caused by the conduct of the HOPE Defendants. Since the Appellants’ damages were not shown to have been actually caused by this comparatively minor conduct while employed, only nominal damages should be awarded.
[111] In light of the above analysis, I consider that the damages in the amounts awarded are not justified and should be set aside.
[112] The amounts awarded to the Appellants for damages from the HOPE Defendants should therefore be adjusted to $500.00 each. This amount falls into the nominal damages category which I consider to be more appropriate in these circumstances.
E. Did the trial judge err in his decision as to costs?
[113] On the above analysis, legally recoverable damages sustained by the Appellants as a result of the conduct of the Respondents have been reduced to a nominal amount. Nevertheless, the trial judge’s finding that there was a breach of a duty of loyalty by the HOPE Defendants remains unchanged.
[114] It is a trite observation that the determination of costs is a highly discretionary one.
[115] Given the sequence of events and the ultimate finding on this appeal and cross-appeal which results in only a limited adjustment of the result, I am of the opinion that the trial judge’s determination of costs should not be interfered with.
Conclusion
[116] For these reasons, the main appeal is dismissed.
[117] The cross-appeal is allowed only insofar as the damages awarded to the Appellants as against Randazzo and the other HOPE Defendants is concerned. Damages are assessed at $500.00 as against each.
[118] The appeal of the judge’s determination of costs is dismissed.
Costs
[119] At the conclusion of the hearing of this appeal and cross-appeal, counsel for the parties provided the panel with their respective Bills of Costs.
[120] The main appeal failed. The cross-appeal achieved only modest partial success.
[121] In view of the result, I consider that the Respondents should receive costs of the appeal and a contribution toward their costs of the cross-appeal which we fix in the aggregate amount of $25,000.00 inclusive of all disbursements and applicable taxes.
Stewart J.
I agree _______________________________
Sachs J.
I agree _______________________________
Spies J.
Date: June 27, 2017
CITATION: Guzzo v. Randazzo, 2017 ONSC 1845
DIVISIONAL COURT FILE NO.: DC-16-693 and DC-16-695
DATE: June 27, 2017
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
NANCY Guzzo on her own behalf and on behalf of ALL MEMBERS OF LABOURERS INTERNATIONAL UNION OF NORTH AMERICA, LOCAL 1110
Plaintiffs/Appellants
– and –
PAULA randazzo, KIM BOYLE, KIM LEBLANC, DIANE TAYLOR, TONY IANNUZZI, on his own behalf and on behalf of ALL MEMBERS OF THE CARPENTERS’ DISTRICT COUNCIL OF ONTARIO, UNITED BROTHERHOOD OF CARPENTERS and JOHN MOSZYNSKI
Defendants/Respondents
REASONS FOR DECISION
Stewart J.
Released: June 27, 2017