[1981] OLRB Rep. March 285
1500-80-R United Food and Commercial Workers International Union, Local Unions 175 and 633, Applicant, v. The Great Atlantic & Pacific Company of Canada Limited, A & P Drug Mart Limited, Respondents.
BEFORE: R.O. MacDowell, Vice-Chairman, and Board Members B. Armstrong and C.G. Bourne.
APPEARANCES: H. Caley for the applicant; J.A. Roffey, D. Churchill-Smith, Q.C. for the respondent.
DECISION OF THE BOARD; March 27, 1981
I
1This is an application under section 1(4) of The Labour Relations Act, involving Local 175 of the Canadian Food and Allied Workers' Union ("the union:), and a number of companies which might be loosely described as the "A & P corporate family". This corporate organization includes: a "parent" or "holding" company known as The Great Atlantic & Pacific Tea Company Limited; an "operating" company known as The Great Atlantic & Pacific Company of Canada Limited; a real estate arm known as A & P Properties Limited; and a drug company known as A & P Drug Mart Limited. The entities directly affected by these proceedings are the Canadian operating company, and the drug company. These will hereinafter be referred to as "A & P", and "the Drug Company", respectively. Section 1(4) of the Act reads as follows:
1.-(4) Where in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.
2The applicant union is the bargaining agent for some fifty-two hundred employees of A & P working in approximately one hundred stores in various locations in Ontario. The union and A & P are bound by a collective agreement, which recognizes the union as:
"the exclusive bargaining agent for all employees of the Company in its Retail Stores located in the Province of Ontario, save and except Assistant Store Managers, persons above the rank of Assistant Store Manager, Meat Department employees, persons regularly employed for not more than twenty-four (24) hours per week and students employed in off school hours and during the school vacation period."
This recognition provision is supplemented by a letter of understanding signed by a representative of both parties and reading as follows:
"This will confirm the understanding reached by the parties during negotiations with respect to the currency of the Collective Agreement dated the 18th day of January, 1979, relating to the following.
The parties agree that Pharmacists in the employ of the Company will be excluded from the Collective Agreement."
3The present application affects approximately five employees, described as "pharmacy assistants" or "assistant pharmacists", employed in what the parties refer to as A & P's "super stores". There is no dispute that these "super stores" are considered to be "retail stores" within the meaning of the parties' collective agreement. A "super store", as its name suggests, is much larger than an ordinary retail food store, and provides the public with a greater range of goods and services. A super store may employ as many as one hundred and forty employees and, in addition to having a meat, produce, grocery and health and beauty aid department, may include a snack bar, bakery, "deli", general merchandise department, service centre, and pharmacy. As in the case of smaller stores, each department occupies a separate area of the store, and is identified by appropriate signs and colour coded labelling. The feature which gives rise to the present application is that the pharmacy aspect of the A & P business is carried on through a separate corporate entity known as A & P Drug Mart Limited - an entity which was described at the hearing as a wholly owned subsidiary.
4An examination of the ownership and operations of the two companies (i.e. A & P and the Drug Company) demonstrates, beyond doubt, that they are engaged in related activities or businesses under common control and direction. F.C. Kennedy and R.W. James are the president, and secretary-treasurer, (respectively) of both companies. The Drug Company has no other officers. Samuel Hirsch, the general manager of the Drug Company since 1976, was hired by Kennedy, reports to him, and operates the drug business within the financial mandate established by A & P. Hirsh is a director, but not an officer of the Drug Company; and his status as a director is directly related to section 141 of The Health Disciplines Act, which requires that pharmacists must make up a majority of the directors of any company operating a pharmacy. It is clear that it is Kennedy and A & P who have ultimate control over the economic destiny of the Drug Company. The evidence before the Board is that all of the shares of the Drug Company are owned by The Great Atlantic & Pacific Tea Company Limited - the general holding company which controls the A & P Corporate family.
5The offices of the Drug Company are located in the A & P complex. Hirsch testified that there is no lease and no rent paid. The Drug Company hopes to move to new premises on Vickers Road. The property and premises located there are also owned by A & P.
6Hirsch is the only employee of the Drug Company who is not directly involved in retail sales. From his office in the A & P complex, he monitors the performance of the Drug Company, but lie has no technical or clerical employees to assist him. An employee of A & P prepares the payroll, and maintains such personnel records as may be required. Similarly, clerical assistance respecting invoicing, etc., is provided by an A & P employee using A & P invoicing forms and inter-store documentation as much as possible. Hirsch testified that cheque signing authority for the Drug Company is vested in an employee of A & P - although he was uncertain about to whom she reported, and did not even know the name of the employee currently fulfilling this role. Payroll cheques, documentation, or other communications respecting the Drug Company, are transmitted to the super stores in which pharmacies are operated, by means of the internal A & P mail.
7There is substantial integration and sharing of services between the two companies. Superficially, there is little to distinguish the Drug Mart from any other department of a super store. The pharmacy occupies a defined area within the super store lay-out, and is identified by signs in much the same way as any other department. The pharmacy makes use of the A & P logo and colour scheme. Pharmacy advertisements appear as part of the A & P block of "ads" appearing in daily newspapers or circulars; and there was no evidence that the Drug Company had to pay for this service. As in the case of its office space, the area occupied by the pharmacy is "rented" from A & P; but there is no lease or written agreement and the Drug Company's "charge-back" is calculated on a monthly basis depending on its sales.
8The hours of the pharmacy are somewhat different from from those of other departments in the super store, and a portion of its area can be enclosed and locked to protect the pharmacy's stock of restricted drugs; however, the pharmacy may also have separate display islands from which customers can select products in the course of their shopping, for presentation at the main cash register. The employees of the pharmacy have a distinct dress and colour scheme, and the price stickers appearing on the products also have a distinct colour; but this is also the case with other departments in the super store.
9The functions of the "pharmacy assistants" working in the Drug Mart are not unlike those of a stock clerk in the other departments of the super store - although, their hours are somewhat different, they do not punch time cards, and they are paid separately. These employees perform minor clerical functions under the supervision of the pharmacist, fill out forms, provide customer information, do pricing and shelving, and operate the cash register. No specialized training is required to carry on these duties. Mr. Hirsch was not sure whether their benefits (life insurance, health insurance, dental plan, etc.) were similar to those of the employees of A & P, however, it is clear that the dental plan forms, at least, are the same. The wages paid to these "pharmacy assistants" are substantially below those paid to the stock clerks performing similar duties in other parts of the store. It was this wage disparity which apparently brought the existence of the pharmacy assistants to the union's attention.
10The range of products provided by the pharmacy are not the same as would be provided by an entirely independent entity. A & P and the Drug Company coordinate their product lines, so as to ensure no overlap with the products sold in other A & P departments. As an example, Hirsch testified that the pharmacy did not carry "Aspirin" since that item is available through the "grocery store". Similarly, the pharmacy does not handle the range of health and beauty aids which would be available in an ordinary independent operation because these are already provided by A & P. Such products as the Drug Company does sell, it purchases direct from its own suppliers. However, except for restricted drugs which the pharmacists handles directly, bulk products are processed through the shipping/receiving area of the main store; and, as we have already mentioned the invoicing and paper-work are done at the A & P offices, by A & P employees using A & P forms where possible.
11The Board heard considerable evidence concerning the handling of the Drug Company's receipts, and its use of the cash registers and cashier provided by the main store. As we have noted above, a super store has identifiable price stickers for each department. In the case of the pharmacy, these stickers are purple or buff in colour, and bear the words "A & P Pharmacy" or "A & P Drug Mart". (The purple stickers denote products which require the initials of a pharmacist to authorize a purchase.) The main store cash registers serve all departments, and there is a specific button or "key" for the pharmacy - as there is for the produce department, meat department, etc. A significant portion of the sales of the Drug Company are processed through the main cash registers. (Interestingly enough, this contrasts with the snack bar, where A & P has made a specific effort to ensure that purchases are recorded at the cash register within the department.) All of the cash registers are "online", and linked by computer to the general office of the super store. The computer provides a daily report on the sales in each department, and the proportion of the total sales attributable to each department. In both cases, the pharmacy is included and treated as a department of the main store. In the event of a computer breakdown, sales are pro-rated per department - again including the pharmacy.
12Each morning the store cashier dispenses a cash float to the pharmacy and at the end of the day determines a cash balance. If the sums recorded do not balance, the cashier will check the "detail tape" in the cash register itself. The key to the cash register is kept by the head cashier and the store manager - not the pharmacist operating the Drug Mart. Cash receipts from the Drug Mart are mingled with the funds from other departments, given to Brinks Express, and deposited on a daily basis in the A & P bank account. It is only at the end of the week that there is a reconciliation, and a transfer of funds to the separate bank account maintained by A & P Drug Mart Limited.
II
13The criteria relevant to a "related employer" determination were succinctly set out by the Board a decade ago in Walters Lithographing Company Limited, [1971] OLRB Rep. July 406, at paragraph 21:
"21. The indicia or criteria which the Board considers relevant in making a determination as to whether the activities or businesses of one or more corporations, individuals, firms, syndicates or associations, or any combination thereof are carried on under common direction and control and therefore may be treated as one employer are - (1) common ownership or financial control, (2) common management, (3) interrelationship of operations, (4) representation to the public as a single integrated enterprise, and (5) centralized control of labour relations. No single criterion is likely to decide the issue. Rather, as has been stated, the Board's determination undoubtedly will be based on an appraisal of all of them in the light of the particular facts before it. It hardly need be said that in applying the above criteria, the greater the degree of functional coherence and interdependence which the Board finds among the associated or related activities and businesses the more probable it is that the Board will conclude that the entities carrying on these activities should be treated as one employer. We would mention here also that the indicia or criteria themselves obviously overlap. For that reason, in applying them to the facts of the instant case we have not attempted to deal with each criterion on an individual basis."
Applying those criteria to the facts present here, there is really no doubt that A & P, and the Drug Company, carry on related activities or businesses under common control or direction. Indeed, the reality of the situation is that, what might otherwise have been merely another department in the super store, must, because of regulatory legislation, be carried on through a separate corporate entity. The real question before the Board is not whether A & P and the Drug Company are "related employers", but whether the Board should exercise its discretion to so declare.
14Counsel for A & P and the Drug Company (which were not separately represented) contends that the Board should not exercise its discretion to declare that the two companies are related employers because the applicant has not exercised "due diligence" in bringing this application, and that the union should not be permitted to use section 1(4) as a "substitute for certification". It is not disputed that the union has made no attempt to organize the five employees potentially affected by this application; (although it might also be noted that these employees have not sought to intervene in this matter, and, in consequence, the Board has no direct evidence concerning their wishes).
15We have considered the respondents' arguments with respect to "foisting" a union upon a group of employees who may not wish to be represented; however, we do not think that the wishes of the employees are the only, or even the predominant, factor to be considered in a section 1(4) application. If such were the case, the very erosion of bargaining rights which triggered the proceeding, (and which section 1(4) was designed to cure) could be raised as a bar. It is entirely typical that the employees of a related company will not be union members, for it is the creation of job opportunities ostensibly beyond the scope of the collective agreement, which constitutes the "erosion" of the union's bargaining rights. But for the creation of a separate vehicle, the work opportunities associated with the related business activity, and the conditions of employment of the employees engaged in that activity, would be regulated by the collective agreement. The very purpose of section 1(4) is to ensure that the union's bargaining rights and the scope of the collective agreement will not be restricted simply because an employer chooses to expand through a new corporate vehicle rather than its existing one. Nor do we think we can attach much significance to the fact that upon learning of the existence of a related employer, a union opts to utilize section 1(4) rather than apply for certification. The statute contemplates both types of application, and if the circumstances are such that section 1(4) can be applied, we do not consider it a proper exercise of our discretion to raise a bar simply because a union might have applied for certification. Indeed, if the two corporate entities otherwise satisfy the requirements of section 1(4), there are good labour relations reasons for making a section 1(4) order so that the collective bargaining structure will accord with the economic and industrial relations reality.
16We turn then, to the respondents' contention that the union did not exercise due diligence in bringing this application.
17The collective agreement between the union and A & P recognizes the former as the exclusive bargaining agent for all employees of the company in its retail stores located in the province of Ontario. In or about 1977, the possibility of employing pharmacists within the bargaining unit arose, and as a result of the discussions between the parties, the above-mentioned "letter of intent" excluding pharmacists was concluded. This letter of intent was embodied into the 1978 collective agreement and remains in force in the current agreement. It is the union's position - a not unreasonable one in the circumstances - that the letter of intent when read with the general recognition clause, contemplates the operation of a retail pharmacy within the context of A & P's retail stores, but ensures that the professional pharmacists employed therein will not fall within the scope of the union's bargaining rights or the collective agreement. This, the union argues, suggests that employees other than pharmacists will fall within the bargaining unit description, if the pharmacy is operated as a department within the physical confines of a retail store. The union argues that to take any other view would be to ignore the plain meaning, intent, and implication of the recognition clause and the letter of intent. It was an attempt to advance this position which ultimately led to the present application.
18There are five super stores in Ontario which have drug marts on the premises. The London store opened in August 1977. A full-time pharmacy assistant was hired four to six months later, but left after about six months, leaving the outlet in the hands of pharmacists. A pharmacy assistant was not rehired at the London store until April 30, 1979. The Hamilton store opened in November 1978 and did not hire a pharmacy assistant until March 1979. Pharmacy assistants were also hired at various locations on October 11, 1979, November 27, 1979, December 1979, April 1980, and January 1981. The hours of these pharmacy assistants vary, depending upon the volume of business and the presence of pharmacists. Some of them are part-time and some are full-time. Their shifts are somewhat different to those of other employees. Typically, there has been only one pharmacy assistant in each super store, and there was nothing overt to alert the union either to the fact that A & P was not applying the agreement to them, or that the Drug Mart was operated through a separate corporate entity. Jim Crockett, a business agent for the union, testified that inquiries were made about the status of pharmacy assistants after one was hired at the London store, but by the time the question was raised, the London operation no longer employed such person, and the union had no reason until much later to suspect that there had been any alteration in the status quo. The union, of course, was operating under the assumption that if persons other than pharmacists were hired, they would fall within the scope of the collective agreement; while A & P neither accepted this position, nor made any effort to notify the union when such individuals were hired.
19The existence of pharmacy assistants to whom the agreement was not being applied, was brought to the attention of the union by a grievance filed on April 25, 1979 respecting the Hamilton location. This grievance alleged that a "part-time assistant pharmacist" was doing bargaining unit work, and, it will be observed, was filed less than a month after that individual was hired. Subsequently, grievances were filed in respect of the London location and one or two others. It cannot be said that the union "sat on its rights" or failed to take steps to protect its position when it learned that circumstances existed which might constitute a breach of the collective agreement. Moreover, in the replies to these grievances, A & P at no time questioned the arbitrability of the grievances, or alerted the union to the fact that the Drug Mart was operated by a separate corporate entity which, in the absence of a section 1(4) declaration, would not as a matter of law be bound by the parties' collective agreement. These grievances were processed through the various steps of the grievance procedure without any such indication and, since they remained unresolved, were scheduled for arbitration.
20On December 13, 1979, the parties met to discuss the problem. At this meeting those present were: Mr. Hirsch (who told the Board he had no idea that the meeting was dealing with a specific grievance and knew nothing about the collective agreement), Tom Zakrzewski, manager of industrial relations for A & P, Leo Cassaday, A & P's vice-president of personnel, W. Hanley, president of the union, and Jim Crockett, one of its business agents. The focus of that meeting was the duties of the pharmacy assistants. The parties discussed whether they performed work similar to stock clerks or, alternatively, whether their functions were of a specialized nature so as to bring them within the exclusion contemplated by the letter of understanding. It is contended that, as a result of this discussion, the union should have been aware of the existence of a separate corporate entity operating the pharmacies in the super stores; however, having heard the way in which various witnesses - including the respondents' witnesses - have described the operation, it is easy to see why the union might not have reached that conclusion.
21Crockett recalls that Hirsch was introduced as the "manager of the drug stores" and the witnesses referred to the operation of A & P Drug Mart Limited as "the drug mart", "the pharmacies", "the drug stores", "the drug operation". There may well have been references to "the Drug Company" and there is no doubt that A & P took the position that the Drug Mart was a separate operation whose employees perform different job functions than stock clerks; however, we are satisfied that neither A & P nor A & P Drug Mart Limited emphasized the separate legal identity of the pharmacy operation or challenged the arbitrability of the grievance on this basis. Indeed, it is difficult to understand why the parties would spend so much time discussing the duties and responsibilities of the pharmacy assistants (see exhibit 11 which was extensively reviewed at the meeting) if the basis of the Company's position was that the grievance was not arbitrable because of the separate legal identity of the Drug Company. We also accept the evidence of Jim Crockett that A & P suggested that the union accept a different and lower schedule of wage rates, in return for which A & P would voluntarily recognize the union for operations in which it might engage outside the physical confines of a general grocery store. Again, it is difficult to relate this evidence to the respondents' current assertion that A & P and the Drug Company are entirely separate. The very suggestion that such compromise might be made, and that a separate wage schedule might be agreed upon, obscures the legal distinction between the two entities and goes a long way to explain why the union might not have recognized that distinction. Finally, as we have already mentioned, the union did not compromise its grievances or accede to A & P's suggested settlement. Indeed, Tom Zakrzewski testified that he believed the union filed further grievances after the December 13th meeting when it discovered that the pharmacies in other super stores also employed pharmacy assistants on a full-time or part-time basis. This conduct is consistent with the evidence of Crockett that the union did not discover the separate corporate identity of A & P Drug Mart Limited until much later.
22In early June 1980, counsel for A & P notified counsel for the union that there would be an objection to arbitrability based upon the separate legal identity of the Drug Company. In follow-up discussions, counsel for the union ascertained the nature of this objection and a corporate search confirmed that, indeed, A & P Drug Mart Limited was a separate corporate entity. We are satisfied that this is the first time that the union actually became aware of the separate legal identity of A & P Drug Mart Limited, and it is only at this point that its view of the problem changed from one involving a simple (alleged) breach of the agreement, to one involving the potential application of section 1(4). Thereafter, the parties engaged in certain discussions with a view to resolving the outstanding issues and when those broke down, the union made the current application.
23The respondents contend that the union should have been aware earlier of the separate corporate existence of A & P Drug Mart Limited and should have made its 1(4) application earlier. In the respondents' submission, the union's unreasonable delay in discovering and acting upon that fact should now deprive it of the remedy available under section 1(4). The Board cannot accept that contention. The circumstances were such that the union could not reasonably have been aware that two or three employees of the more than five thousand which it represents were not being treated in accordance with the collective agreement, and immediately upon the union becoming so aware it filed grievances to protect its position. There may be no legal requirement for a company to advise a trade union about a related company which might affect the union's bargaining rights, and there may be no requirement that a company which intends to rely upon "the corporate veil" as a defence to a grievance should disclose that defence, however, it is inconsistent, in our view, for a company to take the position that the union "ought to have known" of these matters, when in response to the grievance, the Company itself did not clearly notify the union of the facts. Indeed, the presence in the Act of section 1(5) [creating an onus upon the respondents to reveal the corporate connection between them] suggests a legislative recognition that an applicant trade union generally will not be aware of the business or corporate relationships between the allegedly related businesses. In view of this explicit legislative direction, we do not think that we should adopt an unduly high standard of "due diligence", or readily apply such concept to bar a union which had no actual knowledge of the basis on which a section 1(4) application might be made. It will be noted that section 1(4) itself does not expressly contemplate any such bar.
24The reality of trade union organization - as illustrated by the applicant in this case - also suggests that the Board should not exercise its discretion to create an unreasonable high standard of due diligence. A union's resources are not unlimited, and this limitation must be considered in assessing how quickly a union should become aware of, investigate and respond to, situations which might call for the application of section 1(4). Jim Crockett, for example, acts as business agent for thirty-five stores (Loblaws, Miracle Food Mart, A & P, and miscellaneous independent companies) distributed over a geographic area from Ajax to Gananoque, including Peterborough and Lindsay. He services more than two thousand employees, and in addition, is A & P grievance chairman for all A & P stores in Ontario. Bud Adam another business agent services more than two thousand employees in forty-five stores spread out over southwestern Ontario and, in addition, services some small independent stores, plants, and serves as negotiator for the "Gordons Markets" chain. Each of the seven union business agents is in a similar situation and must be familiar with a number of stores, corporate organizations, and collective agreements. The Board must be careful lest it imposes upon them a standard of "due diligence" which is entirely unrealistic in the actual circumstances as they exist - especially when the respondents asserting that the union "should have known" or "acquiesced in the erosion of its bargaining rights", will usually have taken no steps to advise the union of the situation, and will usually have benefited (as in the present case) from the lower schedule of wages payable to employees not covered by a collective agreement. We have carefully considered the cases referred to by counsel for the respondents (see Industrial Mine Installations Limited, [1972] OLRB Rep. Dec. 1029, Inducon Construction of Canada Limited, [1975] OLRB Rep. April 399, H. Allaire & Sons Company Limited, [1974] OLRB Rep. July 457, D.L. Stevens Contracting Limited, [1978] OLRB Rep. June 531, Ellwall and Sons Construction Limited, [1978] OLRB Rep. June 535, Zaph Construction Limited, [1977] OLRB Rep. Nov. 741, Farquhar Construction Limited, [1978] OLRB Rep. Oct. 914, Harold R. Stark Limited, [1978] OLRB Rep. Oct. 945, Ado Builders Limited, [1979] OLRB Rep. June 465, and Metrus Contracting Limited, [1979] OLRB Rep. Oct. 1009), but in our view the principle espoused in these cases amounts to no more than this: if a trade union has actual knowledge that a related company is undermining its bargaining rights or the union is wilfully blind to this fact and, without cause, fails to seek a remedy under section 1(4) within a reasonable period of time, the Board may exercise its discretion not to make a 1(4) declaration.
25The circumstances of the present case are clearly distinguishable from those in any of the cases cited above. In the present case, the union did move to protect its bargaining rights as soon as it became aware that A & P was failing to apply the collective agreement to the employees of the Drug Mart. Similarly, the union filed a section 1(4) application within a reasonable period of time after it discovered that the pharmacy operation was being carried out through a separate corporate entity and that consequently, its earlier attempt to protect its position by filing grievances would be ineffective. On the basis of the evidence before it, the Board is satisfied that A & P, and A & P Drug Mart Limited, are "one employer" within the meaning of section 1(4) of The Labour Relations Act. The Board is further satisfied that there is no reason why it should not so declare. Accordingly, the Board declares that The Great Atlantic & Pacific Company of Canada Limited and A & P Drug Mart Limited are one employer for the purposes of The Labour Relations Act.