Service Employees Union, Local 204 AFL-CIO., CLC v. Doral Construction Limited and Michael Allen

[1980] OLRB Rep. March 310

2197-79-U Service Employees Union, Local 204 AFL-CIO., CLC, Applicant, V. Doral Construction Limited and Michael Allen

BEFORE: N. B. Satterfield, Vice-Chairman.

APPEARANCES: J. Sack, S. Shrysman and T. Small for the applicant; M. P. Forestell for the respondents.

DECISION OF THE BOARD; March 19,1980

2. This is an application made under section 83 of The Labour Relations Act alleging that the respondents are threatening to call or authorize an unlawful lock-out. The applicant is seeking a declaration that the conduct of the respondents constitutes an unlawful lock­out. The applicant also is seeking, among other forms of relief, a direction that the respon­dents cease and desist from carrying out the illegal lock-out.

3. The conduct giving rise to this application was the issuing on Friday, February 5th of written individual notices of termination to the employees of Doral Construction Limited ("Doral") to have effect as of Saturday, March 1st.

4. Doral is part owner and agent-manager of the Seaway Mall in Welland, Ontario, a retail shopping mall. It is responsible to its tenants under leasing agreements to provide the cleaning and security services for the common areas of the mall and it employs its own work force for this purpose. These are the employees, six in all, to whom the notices of ter­mination have been issued. The events leading up to this action are few and uncomplicated.

5. The employees were dissatisfied with the results of their individual efforts to gain certain improvements in their working conditions and sought the intervention of the appli­cant. On Tuesday, February 12th an employee obtained application cards from the appli­cant and during Tuesday afternoon and evening all employees completed applications and paid their one dollar initiation fee for membership in the applicant. The next morning, Wed­nesday, one employee, Albert Petti, who was the collector for the applications, delivered the cards to the applicant. While Petti is referred to as the maintenance supervisor, there is no issue before me that he exercises managerial function within the meaning of section 1(3)(b) of the Act. The next afternoon, Thursday, Petti went to see his manager, Joe De­mont, about a routine work matter. During the course of this meeting he decided to raise the subject of the improvements in working conditions which the employees were seeking. He had initiated discussions of the same sort previously with Demont. This one lasted about one and one-half hours and at the end of it Petti was not satisfied with the response which he had received so he told Demont that the employees were so dissatisfied that they had taken "ex­treme" action and had joined a trade union and were applying for certification. This was a spontaneous action on Petti's part taken without the knowledge of the other employees for the purpose of trying to get Demont to improve working conditions. During Friday after­noon, February 15th, Demont started calling in employees individually and giving them their notices of termination which were worded as follows:

"I regret to inform you that as of March 2, 1980, the maintenance of the Seaway Mall will be contracted out to a maintenance firm and you are hereby notified that your employment with Doral Construction Limited as a maintenance man in the Seaway Mall will be terminated as of Saturday, March 1, 1980.

We appreciate your past year of good service but unfortunately cur­rent economic conditions dictate this decision."

Petti learned of this action before he started his own shift that day, came into see Demont who confirmed that the action was being carried out and gave Petti his own notice. Petti asked Demont if anything could be done to alter the decision but Demont did not reply. This is consistent with the evidence of Mark Lariviere, the second of three witnesses for the ap­plicant, who had been present with Petti during some of the previous discussions with De­mont about wages and working conditions. Lariviere testified that, while Demont was crit­ical of him and the other employees for being "led down the garden path" by the person whom Demont considered to be the instigator, Demont said nothing about the conditions which would have prevailed had the employees not joined a trade union.

6. Demont following his meeting with Petti on Thursday, February 14th, immedi­ately contacted the respondent, Michael Allen who is President of Doral and Demont's su­perior. Allen returned to the office and he and Demont discussed the situation, held a tele­phone conference with legal counsel and decided upon the ensuing action. By mid-day on Friday, Demont had made arrangements to contract out the cleaning to one firm and the se­curity to another. When these arrangements had been made, he began issuing the notices of termination referred to in paragraph 5.

7. The respondents maintained in their respective replies that the decision to con­tract out the work in question was for economic reasons only and that the decision was made before they had any knowledge of an application for certification. (There is no evidence be­fore me that an application for certification had been made, but it is matter of Board record that the applicant in this matter filed an application for certification on February 19, 1980.) In so doing, the respondents are contending that their actions fall within the saving provi­sions of section 68 of the Act which provides as follows:

"Nothing in this Act prohibits any suspension or discontinuance for cause of an employer's operations or the quitting of employment for cause if the suspension, discontinuance or quitting does not constitute a lock-out or strike."

At the hearing into this application, the respondents elaborated on their position that the decision was made on economic grounds. Demont, who was hired by Doral as manager of the mall on May 15, 1979, first inquired in August into the relative cost of continuing to do the cleaning work with Doral's employees and contracting it out. While it appeared favoura­ble to contract out the work, he decided to wait until the complete 1979 costs would be avail­able in an audited statement before deciding one way or the other. In January 1980, instead of waiting for that statement, he states that he prepared a cost comparison using direct la­bour costs from Doral's routine monthly financial reports and concluded that some $25,000 annual savings were available. He maintains, therefore, that he made the decision to contract out the cleaning work and obtained Allen's approval on or about January 20th, but de­cided to defer implementation until his calculations could be checked against the audited costs. When Demont learned, however, that his employees had joined a trade union he de­cided to implement his decision (without awaiting the audited costs) for fear that he would not be able to contract out the work once a trade union had been certified. While cost com­parisons which purported to show that a substantial cost savings could be achieved by con­tracting out the cleaning work were filed in evidence, none of the documents from which the costs were said to have been extracted were available for examination. Having regard to that circumstance and for the manner in which the evidence in respect of the cost comparisons emerged in the hearing, I am not prepared to accept the respondent's position that the deci­sion to contract out was taken in January and implemented February 15th. I find, therefore, that the decision to contract out the cleaning and security work was taken on February 15th when Demont obtained acceptable terms from the two contractors. Furthermore, while there may be sound business reasons for Doral to contract out the work in question, in the absence of conclusive evidence to that effect, I am not prepared to find that the decision to terminate the employees was for "purely economic reasons" as contended by the respon­dents. To the contrary, I find on the evidence that the decision to terminate the employees was a direct response of the respondents to learning of the presence of a trade union. The is­sue before me is whether that action taken in all of the circumstances extant in this case con­stitutes an unlawful lock-out.

8. The Act defines a lock-out in the following terms in section 1(1)(i):

"(1) In this Act,

(i) 'lock-out' includes the closing of a place of employment, a suspen­sion of work or a refusal by an employer to continue to employ a number of his employees with a view to compel or induce his em­ployees, or to aid another employer to compel or induce his em­ployees, to refrain from exercising any rights or privileges under this Act or to agree to provisions or changes in provisions respect­ing terms or conditions of employment or the rights, privileges or duties of the employer, an employers' organization, the trade union, or the employees."

That definition, as the Board stated in Ralph Milrod Metal Products Limited, [1977] OLRB Rep. Feb. 79, ..... comprises both an objective and a subjective element."; the objective el­ement being the action taken (i.e. the closing of a place of employment, a suspension of work or a refusal by an employer to continue to employ a number of his employees) and the subjective element being the purpose or motive underlying the action (i.e. to compel or in­duce employees to refrain from exercising rights or privileges under the Act or to agree to provisions or an altering of provisions respecting terms or conditions of employment). Both elements must be present before a lock-out may be said to exist or to have occurred. As fur­ther pointed out in Ralph Milrod , supra, there are two distinct purposes encompassed in the subjective element of the lock-out definition: the purpose of compelling or inducing em­ployees to agree to terms of employment more favourable to their employer; and, the pur­pose of compelling or inducing employees to refrain from exercising rights or privileges un­der the Act. The actions contemplated by the objective part of the definition only become a lock-out if taken for one or the other of the purposes embraced by the subjective element of the definition. There is nothing in the evidence before me from which the first purpose can be ascribed as the motivation for the respondents' action, so it remains to be determined if the evidence reveals the second purpose (i.e. to compel or induce employees to refrain from exercising rights under the Act) to be the motivation.

9. There can be no doubt on the evidence in this case that the respondent's actions were the product of an anti-union sentiment and have contravened more than one section of the Act dealing with unfair labour practices. Even were one to accept Demont's contention that he had merely decided to implement on February 15th a sound business decision made prior to his knowledge of the union's presence, the implementation decision was inspired, on his own admission, by the knowledge that employees had exercised their rights under section 3 of the Act. If these actions also constitute a lock-out, then it would clearly be an unlawful one since the conditions which section 63(2) requires be met are not satisfied. While it is clear that the employer has responded to the presence of the union in a manner which is of itself an unfair labour practice, was it for the purpose of compelling or inducing the employees to refrain from exercising rights under the Act?

10. The answer to that question turns on whether the evidence intimates directly or inferentially that Doral might retain all or some of the employees if they were to refrain from exercising rights under the Act. There is no intimation in the direct evidence that Doral was prepared to alter its decision, in fact the little direct evidence that there is tends to suggest the contrary. Demont was silent when Petti asked him if anything could change the decision to contract out the work and Lariviere stated that Demont said nothing to suggest that things would have been any different if the employees had not been "led down the gar­den path". Since there is no direct evidence which establishes that Doral's conduct was mo­tivated by the purpose of getting employees to yield their rights or privileges under the Act, is such motive inferred by that very conduct?

11. Applicant counsel contended that the respondents' conduct clearly reveals such motive and argued that the circumstances of this case were on all fours with those in Joyce and Smith Plating Company Limited of Hamilton, 56 CLLC ¶18,048, in which the Board found an unlawful lock-out. The Board in that case found that the employer's refusal to con­tinue to employ some 25 of its employees upon learning that they had attended a union meaning was for the purpose of getting them (and employees who had not attended the meeting) to agree, as a condition of continued employment, to desist from becoming or con­tinuing to be members of the union. The Board found such purpose to be captured by the lock-out definition then contained in the Act, which did not include the words"... to refrain from exercising any rights or privileges under this Act . .". In April 1957, six months after the decision, the definition of lock-out was amended by adding those words. Since then the Board's cases show that it has consistently looked to whether the employer's decision was revocable and, if found to be, the Board has usually been able to infer from that situation that the employer's refusal to continue to employ is a device for compelling or inducing em­ployees to accept alteration of working conditions or to refrain from exercising rights and privileges under the Act. The leading case in that respect is Harry Woods Transport, [1976] OLRB Rep. July 341. In that case the Board relied on earlier actions of the employer and the contents of individual notices of termination to find that the employer had not made an irrevocable decision to close its business and was attempting to use those notices to pressure employees to have the collective agreement re-negotiated. In other words, that the employ­er's action of giving notice that the business was being closed was motivated by the employer's objective of having the collective agreement re-negotiated, the condition for remaining in business. If the decision is found not to be revocable, the situation in the instant case, it is more difficult to imply that the impugned action was designed to cause employees to accept a change in working conditions or to refrain from exercising rights and privileges.

12. A recent decision of the Board in Rondar Services Limited, [1977] OLRB Rep. Oct. 655 addresses this problem. The Board was dealing with the argument of trade union counsel that"... even an irrevocable decision to terminate which is motivated by a desire to impair rights under the Act is a lock-out.". Counsel was relying on an obiter statement in Ralph Milrod , supra, that the statutory definition of lock-out".., would appear to include any situation in which the employer's refusal to employ employees is grounded in an unfair labour practice . . .". The Board in Rondar was faced also with the opposing argument from respondent counsel that there was no lock-out proven because the applicant had failed"... to establish that the employees who received notice of termination had been compelled or induced to refrain from anything.". (These arguments express the same relative positions of the parties before me). In the process of resolving the competing arguments in Rondar, supra, the Board examined the statutory definition of lock-out against the backdrop of the public policy aspect of the Act which, in the Board's words, is to"... maintain industrial and economic peace during the term of a collective agreement and pending utilization of the conciliation process." and, as well, analyzed the Board jurisprudence (see paragraphs 12 through 16 of the decision). The Board concluded at paragraph 15 that, indeed, there were circumstances where an irrevocable decision to terminate employees was captured by the statutory definition of lock-out and stated:

The definition contemplates and catches an irrevocable decision taken by an employer to refuse to continue to employ some of his em­ployees with a view to compel or induce other employees to refrain from exercising rights under the Act etc. This is clear from a reading of the definition and fits within the policy considerations referred to above. It is within this context that the statement in the Milrod deci­sion, sup ra, must be read. If it can be shown that an employer's refusal to continue to employ a number of his employees is rooted in an anti-union animus and if there are other employees who may be influenced within the meaning of the definition, an inference can be drawn that the motive for the employer's action falls within the statutory definition of 'lock-out'. It can be inferred that the employer's decision is designed, at least in part, to modify or alter the behaviour or conduct of those em­ployees who remain within his employ."

The Board then summarized its conclusions as to the scope of the statutory definition of lock-out at paragraph 17:

"In summary, the definition of lock-out is designed to encompass em­ployer initiatives which are motivated by a desire to compel or induce a modification or alteration in employee behavior vis-a-vis rights or privileges under The Labour Relations Act or in the terms of employ­ment. If the initiatives are revocable, then clearly an inference can be drawn as to motive which will bring the initiatives within the meaning of the definition. If the initiatives are irrevocable but it is established that an anti-union animus has given rise to the refusal to continue to employ and there are other employees who could be influenced to refrain from exercising rights etc., then an inference can also be drawn as to motive which will bring the employer initiatives within the meaning of the defi­nition."

Since the scope of the statutory definition requires that, for an action to constitute a lock­out, an underlying motive for the action must be to compel or induce an alteration either in employee behavior or conditions of employment (i.e. to extract a concession from employ­ees), an irrevocable decision cannot fall within the definition unless it is established that its purpose was to compel or induce those employees not directly affected by the decision to re­frain from exercising rights under the Act (or alter working conditions). There is no evi­dence before me that the respondents' action was devised for the purpose of compelling or inducing other employees to forego rights or privileges under the Act or to agree to an alter­ation of conditions of employment. In other words, there is no evidence that the respon­dents' actions were devised for the purpose of "bargaining" a concession from employees in respect of rights and privileges under the Act or employment conditions. Therefore I must conclude that the respondents' actions do not constitute a lock-out within the meaning of sec­tion 1(1)(i) of the Act.

13. In reaching this decision the Board is not saying that Doral was lawfully entitled to take the action to terminate its employees and contract out the work which they had been employed to do, it is only finding that this conduct, in the circumstances of this case, cannot be characterized as a lock-out within the meaning of the Act. The Board was asked to deter­mine whether Doral had called or authorized an unlawful lock-out and the Board has found it had not. This does not mean, however, that the applicant or the employees are necessarily without recourse to remedies under section 79 of the Act if they wish to pursue them. That is not the matter which I was called upon to determine.

14. The application is dismissed.