International Association of Machinists & Aerospace Workers v. Airgo Agency Limited

[1982] OLRB Rep. September 1233

0666-82-R International Association of Machinists & Aerospace Workers, Applicant, v. Airgo Agency Limited, v. Group of Employees, Objectors

BEFORE: M. G. Picher, Vice-Chairman, and Board Members W. H. Wightman and M. J. Fenwick.

APPEARANCES: Joseph Atkinson for the applicant; E. L. Stringer, Q. C., B. Crosby, J. Drake, B. Michika and J. Shenkman for the respondent; Ian W Taylor for the objectors.

DECISION OF THE BOARD; September 17, 1982

1. This is an application for certification. The initial issue is whether the respondent's business, air freight forwarding, falls within the constitutional jurisdiction of this Board. The respondent submits that it does not.

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3. The bargaining unit is not in dispute. Having regard to the agreement of the parties the Board is satisfied that all employees of the respondent in the City of Mississauga, save and except foremen and persons above the rank of foreman, office and sales staff, constitutes a unit of employees appropriate for collective bargaining. For the purposes of clarity, supervisors are deemed to be foremen.

4. The facts are not in dispute. All of the respondent's business is devoted to forwarding air freight. Except for a small segment of its business, said to be less than one per cent of its traffic out of Mississauga, the respondent's freight is shipped to destinations in other provinces and the United States. Its Toronto operation is part of a service that includes facilities in Montreal, Winnipeg, Calgary, Edmonton and Vancouver.

5. Typically, when a consignor in Toronto uses the services of Airgo Agency Limited (hereinafter "Airgo"), Airgo arranges for a local carrier to pick up the goods. It then assembles the consignor's goods with freight of other consignors and loads them into Air Canada containers. Airgo completes the necessary documentation and determines the shipment and routing.

6. The containers are then delivered to Air Canada which loads them on board its aircraft and carries them to their destination. Airgo has a contract with Air Canada for the guaranteed rental of cargo space on its flights, whether or not the space is used.

7. When goods are being shipped to a Canadian city in which Airgo has an office, its Toronto office will alert the destination office, with details of the cargo, consignor and consignee and the number of the flight. This is generally done while the goods are in transit so that the receiving office can make arrangements to take delivery of the goods. At the receiving end Airgo will either arrange delivery to the consignee through a local carrier or for a pick up of the goods pursuant to the consignee's own arrangements. If the goods are destined beyond the city in which the Airgo office is located, Airgo generally arranges further transportation and delivery through a local surface carrier.

8. Airgo also ships to Canadian centres where it does not have an office of its own. If, for example, it ships a consignment to Halifax, it will arrange with a local air freight handler in Halifax to receive the goods and arrange for their forwarding and delivery.

9. Approximately 55 per cent of Airgo's traffic is international. Its U.S. and foreign shipments are handled through a contractual arrangement with Burlington Northern Air Freight, an American freight forwarding company based in California. Airgo has a truck and a warehouse in Mississauga which are bonded under the Customs Act, and part of its service for its customers includes the preparation of customs documentation and customs clearing, both in Toronto or at further destinations. A customs inspector is employed full-time to Airgo's Mississauga warehouse.

10. In addition to "selling" its own cargo space Airgo also acts as an agent for airlines, booking other air cargo space on their behalf.

11. The respondent's air cargo forwarding business is not unlike the freight forwarding business operating in the area of rail and trucking. By leasing containers and air cargo space and providing local warehousing and transportation services, as well as services in relation to customs, Airgo provides streamlined bulk air transport services. The volume and efficiency of its operations results in costs and delivery times that could not be achieved by individual shippers.

12. Aeronautics and aviation are federally regulated pursuant to the broad federal power described in section 132 of the British North America Act (Re Regulation and Control of Aeronautics [1932] A.C. 64 (J.C.P.C.)). It is not aviation, however, that the respondent asserts as the basis for the federal regulation of its labour relations. The respondent does not claim to be an air carrier. Rather, it bases its claim to federal jurisdiction on its involvement in interprovincial transportation.

13. Counsel for the respondent submits, however, that Airgo is so involved in interprovincial and international air transport as to be an integral part of the airline industry. He submits that it falls under federal jurisdiction as a federal undertaking within the meaning of section 92(l0)(a) of the British North America Act, which provides:

In each Province the Legislature may exclusively make laws in relation to

(10) Local works and undertakings other than such as are of the following classes:

(a) Lines of steam or other ships, railways, canals, telegraphs, and other works and undertakings connecting the province with any other or others of the provinces, or extending beyond the limits of the province.

14. Section 108 of the Canada Labour Code governs collective bargaining in federal areas of activity. It provides:

This Part applies in respect of employees who are employed upon or in connection with the operation of any federal work, undertaking or business and in respect of the employers of all such employees in their relations with such employees and in respect of trade unions and employer's organizations composed of such employees or employers.

15. The Eastern Canada Stevedoring Limited case 1955 CanLII 1 (SCC), [1955] S.C.R. 529; [19551 3 D.L.R. 721 confirmed that an undertaking need not itself be one of those described in Article 92(10)(a) to be federally regulated. An undertaking or business is also federally regulated pursuant to that section if it operates sufficiently "in connection with any federal work undertaking or business". The issue in this application is whether the business of Airgo is so connected to interprovincial transportation or aviation as to fall under federal authority.

16. These issues have been previously addressed both by this Board and in the courts in railway cases. In Ottor Freightways [1975] OLRB Rep. Jan 1 the Board was called upon to determine whether a freight forwarding company operating by rail was in the federal or provincial jurisdiction with respect to labour relations. The company had terminals in Toronto and Ottawa and was involved in carrying freight to points in Quebec out of its Ottawa terminal. Goods were pooled in Toronto and loaded on freight cars bound for Ottawa, where they were unloaded and delivered in the respondent's trucks within a twenty mile radius of Ottawa, including Hull and Gatineau. The Board found that it did not have jurisdiction because the respondent's trucking operation crossed provincial lines. While it found that the company was an undertaking connecting provinces, the Board specifically rejected the alternative argument that the respondent's link to the Canadian Pacific Railway brought it within the federal jurisdiction as an undertaking integral to railways. The Board distinguished the Stevedoring case on the basis that stevedores perform a function essential to shipping and therefore are an integral part of it. It also declined to follow an earlier Board decision, HWK Forwarding Ltd. [1970] OLRB Rep. Mar. 1450, which had found a freight forwarding company to be an undertaking integrally connected with railways. The Board reasoned as follows (p.p. 4-7):

Thus, relying upon Attorney-General for Ontario et al v Winner et al, Winner et al v S.M. T (Eastern Ltd. et al 1954 CanLII 289 (UK JCPC), [1954] 4 D.L.R. 657 (J.C.P.C.); Regina v Manitoba Labour Board ex parteInvictus Ltd. (1968) 1967 CanLII 606 (MB QB), 65 D.L.R. (2d 517; Re Tank Truck Transport Ltd. (1961), 1960 CanLII 120 (ON HCJ), 25 D.L.R. (2d 161; and Regina v Cooksville Magistrate's Court, ex parte Liquid Cargo Lines Ltd. (1965), 1964 CanLII 162 (ON HCJ), 46 D.L.R. (2d) 700, we rule that the respondent's business is an undertaking that connects the Province of Ontario with the Province of Quebec and its labour relations is therefore regulated by the Canada Labour Code....

Therefore the Board must dismiss this application on the preceding basis and this basis alone. We would note that this has been the foundation to all the preceding Board decisions involving freight forwarding companies save for General Truck Drivers' Union, Local 938 and H'WK Forwarding Ltd. [1970] OLRB M.R. p. 1450; (See General Thuck Drivers' Union, Local 938 and Hendric and Co. Ltd. [1965] OLRB M.R. p. 646; Canadian Transportation Workers Union #197 and Wilson's Truck Lines Ltd. and General Thuck Drivers' Union, Local 938 [1970] OLRB M.R. p. 204; Teamsters Local Union 879 and Crown Moving and Storage, operated by Donald W Murray Movers Ltd. [1973] OLRB M.R. p. 119; and David Beaton v General Truck Drivers' Union, Local 938 and Consolidated Fastfrate Ltd. [1974] OLRB M.R. p. 269), and with all due respect, we cannot accept the reasoning outlined in the HWK Forwarding Ltd., decision supra, and cannot do so for the following reasons.

The panel in H'WK Forwarding Ltd. did not focus on the intrinsic interprovinciality of the company's activities in that case (and the nature of the business in that case did extend outside of Ontario on a regular basis) but rather rested its reasoning upon the Eastern Canada Stevedoring Co. case, supra, holding that the employees of the freight forwarder were integrally related to railways and railways are a federal undertaking in their own right. And, in fact, this is the second "leg" to the respondent's argument in the application before us today in that, Mr. Filion, counsel to the respondent, relied upon the HWK Forwarding Ltd, case, supra, as well as a more recent case of the Board — Teamsters Union, Local 938 and Centeast Auto Terminal Ltd. and Canadian Brotherhood of Railways, Transport and General Workers [1974] OLRB M.R. 67, (a case which we believe correctly applied Eastern Canada Stevedoring Co., supra, but a case involving facts that are substantially different than those before us.) But, we believe that when the constitutional law test in this area is applied to a freight forwarder's operation that exists solely within a Province, it cannot be said that such an activity forms an integral part of and is necessarily incidental to the operation of a railway as defined under the exceptions to "local works and undertakings" in section 91(l0)(a) of the British North America Act. Rather we believe that, while none are on all fours with the facts at hand, cases like Murray Hill Limousine Service Limited v Sinclair Batson et al 66 C.L.L.C. 14, 143; Re Colonial Coach Lined Ltd. et al and Ontario Highway Transport Board et al (1967), 1967 CanLII 178 (ON HCJ), 62 D.L.R. (2d 270; Underwater Gas Developers Ltd. v. Ontario Labour Relations Board et al (1960), 1960 CanLII 145 (ON CA), 24 D.L.R. (2d) 673; Bachmeier Diamond and Percussion Drilling Co. Ltd. v. Beaverlodge District of Mine, Mill and Smelter Workers' Local Union Number 913 (1962), 1962 CanLII 309 (SK CA), 35 D.L.R. (2d) 241 (Sask. C.A.); and Teamsters International Union Local 990 and North Shore Supply Co. Ltd., File No. 5791-74-R, more appropriately describe the relationship of freight forwarders vis-a-vis the railways — the relationship is one of convenience to freight forwarders and of an incidental or tertiary benefit to railways.

In Eastern Canada Stevedoring Co., supra, the company's operations consisted exclusively of services rendered in connection with the loading and unloading of ships, pursuant to contracts with seven shipping companies and the work was carried on under the authority and supervision of the ships' officers. Therefore, the work that was being done was something that the companies engaged in the federal undertaking (navigation and shipping) had to have done for them and to this end they contracted another company and that company thereby became integrally related to them. Similarly in Centeast Auto Terminal Ltd., supra, the Canadian National Railway had contracted with foreign automobile manufacturers to transport their automobiles to customers in Canada. And obviously, to fulfill this obligation Canadian National Railway had to unload and store the vehicles until they were picked up. But Canadian National Railway contracted out this integral function of their railway responsibility to a specialized concern, and the Board found, by reason of this contact — a contract that was a necessary aspect of the railway's business — that the specialized concern had become an integral part of and necessarily incidental to Canadian National Railway.

However, in the case before us Canadian Pacific Railway has not sought out the respondent and engaged it to perform an integral aspect of the railway's responsibilities. Rather, the respondent is primarily engaged in servicing its own customers (i.e., delivering their goods, etc.) and it has chosen to do this, in part, by rail as opposed to "over the road". Therefore while Canadian Pacific Railway obviously enjoys such patronage it is in no way an integral part of its operations. It is convenient but is in no way necessary or integral to the operation of a railway. In other words while it is convenient to the railways to have only one customer the primary purpose or benefit of freight forwarding is to serve the many customers who deal with the freight forwarders, and therefore the benefit flowing to the railways is only of a tertiary nature. (This perspective is very nicely developed in relation to airline limousine services in Re Colonial Coach Lines Ltd. et al and Ontario Highway Transport Board et al, supra, p. 277). Accordingly an enterprise cannot parasitically and unilaterally make itself an integral part of a federal undertaking unless it is performing a service that is of a primary value to that undertaking and requested by the federal undertaking on that basis. In the facts before us the respondent has merely agreed to transport its customers' goods to some other geographical point and has elected to do this by rail. It could have elected to do it by truck or by air but chose the rail. This election is to its own benefit and convenience and is not an integral part of Canadian Pacific Railway's activities. (Canadian Pacific Railway is only a passive medium in the relationship with the respondent.)

Or another way to phrase this same perspective is to examine the primary purpose and function of the respondent's business. This perspective forces one to look to the respondent's customers — not to Canadian Pacific Railway. The respondent delivers matters to and from railroad terminals for the customers — not the railroad. In other words it [sic] primary value, or nature of the respondent's business, is that of a parochial delivery agent and only incidentally does the railroad become involved. It is this perspective which distinguishes these facts from Letter Carriers' Union of Canada v Canadian Union of Postal Workers and M & B Enterprises Ltd. 1973 CanLII 183 (SCC), [1974] 1 W.W.R. 452 (S.C.C.), where a trucking firm had been engaged by the Canadian Post Office to handle and collect mail. There the company was working for the Canada Post Office performing one of its functions and the company was therefore an integral part of that activity; (see also City of Kelowna v Labour Relations Board of British Columbia and C.U.P.E., Local No. 338, 74 C.L.L.C. 14, 207 (B.C.S.C.). Whereas had the arrangement been one of numerous customers asking the trucking firm to deliver mail to the Post Office the relationship with the Post Office would have been quite collateral or secondary.

17. The same reasoning was applied by the Federal Court of Canada in Re Cannet Freight Cartage Ltd and Teamsters Local 419 (1976) D.L.R. (3d 473 (F.C.A.). The facts of that case more closely approximate the facts of this case. The employer did not itself engage in any interprovincial transportation, as the employer in Ottor did. It also provided loading and unloading services, as well as pick up and delivery services at both ends of an interprovincial rail shipment. The decision of Jackett C. J., quashing the decision of the Canada Labour Relations Board, contained the following reasoning:

(at pp. 473—75):

The facts are not in dispute. The applicant is a company related to Cottrell Forwarding Company Limited, which company is engaged, as its name indicates, in a business of the class sometimes referred to as freight forwarding. Cottrell solicits freight from customers in the Toronto area for forwarding to western Canada and makes the necessary arrangements with Canadian National Railway Company for the transportation of such goods in carload lots; and the applicant picks such goods up by trucks operated by independent contractors and takes them to premises leased from Canadian National where the employees in question remove them from the pickup trucks on to its dock and load and stow them in the railway cars provided by Canadian National pursuant to the arrangements made by Cottrell. Cottrell makes all arrangements with the customers and Canadian National; and arranges for unloading, etc., at the other end.

Counsel for the union and the Board supported the Board's jurisdiction on the basis that the employees in question were employed upon or in connection with the operation of an interprovincial railway and, alternatively, on the basis that they were employed on an undertaking (the freight-forwarding operation) extending beyond the limits of a Province.

The first contention was based, essentially, on the fact that the employees in question are employed, in so far as their physical activities are concerned, in the loading of freight on railway cars for transportation by Canadian National, which operates an interprovincial railway, and was supported by reference to the Reference re Industrial Relations and Disputes Investigation Act, etc. case, 1955 CanLII 1 (SCC), [1955] 3 D.L.R. 721, [1955] S.C.R. 529, as well as to the recent decision of this Court in the Butler Aviation of Canada Ltd. et al. case (Court file A-172-74 [unreported].

In my view, whether or not employees whose work is physically upon or in connection with a railway may be said to be employed "upon or in connection with" the railway within s. 108 read with s. 2 of the Canada Labour Code must be determined, keeping in mind the constitutional limitations on Parliament's powers in the labour field, having regard to the circumstances in which the work takes place. Clearly a person employed by the railway company to carry out a part of the transportation services provided to its customers falls within those words even though he does not physically come in touch with the right of way or rolling stock. Just as clearly, a person working for a local businessman in a Province does not fall within those words even though his work, in connection with that man's purely local operation, requires that he perform a large part or all of his services physically on the railway's right of way or rolling stock.

For example, if the railway has pick-up service in a city as a part of its overall transportation service, I should have thought that the employees concerned would be regarded as employed in connection with the railway. If, on the other hand, the railway merely supplies railway cars to its customers to be loaded by them and unloaded by consignees, I should have thought that the employees of the consignor, while loading the car for their employer, would continue, from a constitutional point of view, to be working upon or in connection with their employer's business and would not pro tem become railway workers.

When the problem in this case is so approached, in my view, it is clear that the employees in question were not employed upon or in connection with the Canadian National Railway. They were employees of the applicant loading freight on a railway car under arrangements whereby the car was to be loaded by the shipper and not by railway employees.

I have even less trouble with the submission that the freight-forwarding operation was an undertaking connecting one Province with another or extending beyond the limits of a Province. Even if the applicant's activities and those of the Cottrell Company are viewed as integral parts of a whole, in my view they do not constitute an "undertaking" that falls within s. 92(l0)(a) of the British North America Act, 1867 or within the definition of "federal work, undertaking or business" in the Canada Labour Code. In my view, the only interprovincial undertaking involved here is the Canadian National interprovincial railway. Clearly, a shipper on that railway from one Province to another does not, by virtue of being such a shipper, become the operator of an interprovincial undertaking. If that is so, as it seems to me, the mere fact that a person makes a business of collecting freight in a Province for the purpose of shipping it in volume outside the Province by public carrier does not make such a person the operator of an interprovincial undertaking.

18. Counsel for the respondent submits that its operations can be distinguished from Cannet's, the principal factual distinction being the location of its other offices and warehouses in several provinces and the co-ordination that goes on between them. He argues that these aspects of the respondent's operations make its Mississauga branch part of interprovincial business and not a local operation or undertaking. This is clearly not so, however, whenever Airgo forwards freight to a Canadian centre, like Halifax or Moncton, where it does not have a terminal. Its shipments in those cases are virtually identical to the rail shipments forwarded by Cannet.

19. Is there a difference in kind because Airgo also forwards freight through an air carrier to destinations where it has its own local office and warehouse? We think not. When the principles in the Ottor and Cannet cases are applied to the facts the essential nature of Airgo's operations does not substantially differ. It is not an air carrier and does not itself provide an interprovincial transportation service. It contracts for that service with air carriers on behalf of its own customers. Save for its occasional service as a sales agent of cargo space for the airlines, Airgo is employed exclusively by its own customers and not by the airlines. It does not provide a service that the airlines themselves provide and as such cannot be said to be an essential or integral part of interprovincial and international air transportation. Nor is it an integral part of aeronautics. The fact that it operates a number of freight forwarding depots in a number of Canadian cities in several provinces does not change the essential character of what it does at Mississauga, which is to operate a freight forwarding service that is a purely local undertaking within the meaning of section 92(10)(a) of the British North America Act. We are not persuaded moreover, that its involvement in customs transactions alters its fundamental status.

20. As noted above, in addition to selling the air cargo space which it leases for Air Canada, Airgo also acts as an agent for Air Canada and other airlines in the sale of their air cargo space and services. In this regard its services are not unlike those of a travel agent. Would this alternative dimension of its operations bring Airgo within federal jurisdiction? The characterization of such an employer for the purposes of constitutional law was considered by the Federal Court of Canada in Canadian Air Line Employees' Association v. Wardair Canada (1975) Ltd. International Vacations Ltd. and the Canada Labour Relations Board 1979 CanLII 4076 (FCA), [1979] 2 F.C. 91 (F.C.A.).

21. In that case International Vacations Ltd. ("Intervac") sold charter air fares as an agent for Wardair. The Canada Labour Relations Board found it had no jurisdiction over the labour relations of Intervac, which it found not to be integrally related to the federal undertaking operated by Wardair. It concluded that the sale of airline seats on an agency basis was a purely local undertaking or business. That conclusion was upheld in the Federal Court of Appeal. At pp. 97—8 Jackett C. J. distinguished between sales services being provided by the air carrier itself and being contracted out to a local agent:

If the operator of an air carrier business has its own staff to "sell" space directly to potential passengers, such selling operation would ordinarily be an integral part of the air carrier business. However, where, as here, the air carrier, as it is required to do by regulation, sells its space "wholesale" to somebody who "retails" it, the selling activities of the air carrier cease when it has sold what it has to sell and the re-sale by the wholesaler is a local activity in the province where it occurs.

While it is not too clear to me on the evidence as to how it is accomplished, what Intervac does is make arrangements with Wardair, and to a lesser extent with other air carriers, whereby it acquires the right to confer on its customers the right to be passengers on the air carrier's aeroplanes. In my view, its position, as between the air carrier and the passengers, is not different, from a constitutional point of view, from the position of any ordinary travel agency. For the reasons given in the Cannet Freight Cartage case, for holding that persons performing services for a freight forwarder are not employed on or in connection with the railway by which the forwarder carries out its engagements with its customers, I am of the view that persons employed by Intervac as "customer representatives" are not employed on or in connection with air carrier undertakings by whose aircraft Intervac's customers are carried.

22. In our view the Ottor, Cannet and Intervac decisions provide clear authority for the disposition of the jurisdictional issue in this case. Airgo is a freight forwarding company that is essentially a local undertaking that functions incidentally through the airlines. Its services are not essential to air transportation and cannot be said to be an integral part of it. Its contact with customs and with airlines do not clothe it with the status of a federal undertaking. It does not itself link one province with another or with any foreign country. Finally, the Board concludes that the agency relationship whereby Airgo sells air cargo services on behalf of airlines does not bring it within federal jurisdiction or alter its essential characterization as a local undertaking for the purposes of constitutional law.

23. For all of the foregoing reasons the Board finds that it has jurisdiction to hear and dispose of the instant application. The Registrar is instructed to list the case for continuation at the earliest available date.

ADDENDUM: September 21, 1982

1. In its decision of September 17, 1982, bearing on the issue of constitutional jurisdiction, the Board inadvertently failed to include its determination on the petition of the objecting employees and erroneously instructed the Registrar to list the matter for a continuation of the hearing. As is evident from the letter of counsel for the respondent dated September 20, 1982, no continuation of hearing is necessary.

2. Ian W. Taylor gave evidence respecting the origination and circulation of a petition in opposition to the application for certification. The evidence establishes that the petition was not management inspired or supported. Mr. Taylor learned of the union's application during his holidays, when he returned to the plant on Monday July 12th to check on the status of his vacation pay and a scheduled pay increment which he had not yet received. He was then vacationing at his grandmother's cottage on Lake Simcoe.

3. When he saw the Board's notice to employees of the application posted in the office in Mississauga he inquired of a supervisor what it meant. He was told that it was a union matter that could not be discussed by management. He then called the Board and was advised of the time limit in which a statement of opposition must be filed, the terminal date being July 14th, 1982. He drafted the petition the same day, obtaining six employee's signatures outside the plant, before returning to his family's cottage overnight.

4. The next day he returned to Mississauga to continue his efforts, spending the night at his home. He obtained two more signatures. The evidence establishes that Mr. Taylor's approach to employees was generally restricted to the parking lot of the Mississauga warehouse. The only exception appears to be with respect to the final signature which he obtained late on the 14th, having gone into the plant to tell the employee concerned that time was running out if he wished to sign the petition. That employee then came out and signed, as the others did, in Mr. Taylor's car in the parking lot.

5. There is no evidence before the Board to establish that management was aware of what Mr. Taylor was doing or in any way lent support to his efforts. Indeed the evidence before the Board is that management refused to discuss the issue of union certification with him and that he was entirely alone in his endeavors. Moreover, Mr. Taylor impressed the Board as a candid and forthcoming witness.

6. Having regard to the evidence the Board is satisfied that the petition filed by Mr. Taylor is a free and voluntary statement of the employees who signed it.

7. The Board finds that the applicant is a trade union within the meaning of section l(l)(p) of the Labour Relations Act.

8. The Board is satisfied that more than fifty-five per cent of the employees of the respondent in the bargaining unit, at the time the application was made were members of the applicant on July 14, 1982, the terminal date fixed for this application and the date which the Board determines, under section 103(2)(j) of the Labour Relations Act, to be the time for the purpose of ascertaining membership under section 7(1) of the said Act. Having regard to the evidence in support of the petition, however, the Board finds that this is an appropriate case for the confirmatory evidence of a representation vote.

9. A representation vote will be taken of all employees of the respondent in the City of Mississauga, save and except foremen and persons above the rank of foreman, office and sales staff. All employees of the respondent in the bargaining unit on the date hereof who do not voluntarily terminate their employment or who are not discharged for cause between the date hereof and the date the vote is taken will be eligible to vote.

10. Voters will be asked to indicate whether or not they wish to be represented by the applicant in their employment relations with the respondent.

11. The matter is referred to the Registrar.