Ontario Labour Relations Board
[1984] OLRB Rep. September 1268
2803-83-R; 2804-83-R The International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, Local 128, Applicant, v. Townsend and Bottum of Canada Limited, Progress Fab Limited, Tuberate and Besomar Company Ltd. and Tuberate Company, Inc., Respondents
BEFORE: Ian C. Springate, Vice-Chairman, and Board Members I. M. Stamp and C. A. Ballentine.
APPEARANCES: A. J. Ahee, J. D. Carroll, J. McManus and M. Bakker for the applicant; M. Addario. D. .1. O'Connor and T A. Kelly for Townsend and Bottum of Canada Limited, Tuberate and Besomar Company Ltd. and Tuberate Company, Inc.; No one appeared on behalf of Progress Fab Limited.
DECISION OF THE BOARD; September 19, 1984
1Tuberate and Besomar Company Ltd. and Tuberate Company, Inc. are hereby added as respondents to these proceedings.
2File No. 2803-83-R is an application under section 63 of the Labour Relations Act. File No. 2804-83-R is an application under section 1(4) of the Act. Because the files relate to the same factual issues they were dealt with by way of a single set of hearings. Part-way through the proceedings, counsel for the applicant requested that the Board also treat these matters as a complaint alleging a violation of sections 49, 64 and 66 of the Act. Given the stage of the proceedings at which the request was made, however, the Board denied the request and indicated that any complaint alleging a violation of the Act would have to be dealt with by way of separate proceedings.
3At issue is the status of the applicant union's bargaining rights with respect to employees working at a shop situated at 530 Vidal Street South in the City of Sarnia. The employer involved accepts the union's claim that it is the bargaining agent for its employees at that location. However, the employer disputes the union's claim that at the time of the filing of these applications it was bound by the terms of a standard form collective agreement generally referred to as the Sarnia area shops agreement. By its terms, the Sarnia area shops agreement was due to expire on August 30, 1984. Given this fact, and the employer's acknowledgement of the union's bargaining rights, we anticipate that this decision will have only a relatively limited impact on the future bargaining relationship between the parties.
4The employer affected by these applications has at different times utilized a number of different corporate names. Counsel for the employer acknowledges that all of these corporate entities are under common direction or control, and that all of them are controlled, directly or indirectly, by an American company, Townsend and Bottum Inc. which has its headquarters in Ann Arbor in the State of Michigan. For ease of reference we will generally refer to Townsend and Bottum Inc. as well as the various Canadian corporations under its direction or control simply as "Townsend and Bottum".
5Townsend and Bottum has been active in the United States for approximately 70 years, where it is engaged in, among other things, the construction of power plants and the building and installation of pressure vessels and heat exchangers. The firm is one of the largest employers of boilermakers in the United States. The company regards itself as a union company" and for many years has had a bargaining relationship with the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers (the "Boilermakers Union").
6In August of 1982 Townsend and Bottum commenced operations in Canada, with offices on Lougar Street in the Township of Sarnia. One of the first acts of the company was to meet with Mr. John Carroll, a Canadian based International Vice-President of the Boilermakers Union. The company also signed documents which had the effect of voluntarily recognizing the Boilermakers Union as the bargaining agent for its construction field forces. The company has consistently applied the provisions of the Boilermakers provincial agreement to its construction field forces.
7When it commenced operations in Canada, the intent of Townsend and Bottum was not only to perform construction work, but also to engage in shop fabrication work. In this regard, it intended to operate a shop in the Sarnia area, which would compete for work both in Sarnia and other areas as well, most notably Western Canada. As already indicated, many of the fabrication shops in and around Sarnia were bound by the terms of the Sarnia area shops agreement. A number of shops outside the Sarnia area, however, were covered by collective agreements with the Boilermakers Union which provided for somewhat lower wage rates.
8In October of 1982, Townsend and Bottum learned that Besomar Manufacturing Inc. ("Besomar"), a company which operated a shop in Sombra, about 20 miles south of Sarnia, was in financial difficulty. After negotiations with the owners of the company, Townsend and Bottum entered into an arrangement whereby it assumed control of Besomar's operations and also acquired an open-ended option to purchase the company. Townsend and Bottum then took over the day-to-day control of Besomar and became the direct employer of the employees working in the shop. To keep the shop operational, Townsend and Bottum immediately began to put its own money into the shop. Eventually a total of some $400,000 was put into the shop. While under Townsend and Bottum's control, the Besomar shop was used for the building and repair of heat exchanges, tanks and vessels. The Besomar company had been signatory to a copy of the Sarnia area shops agreement. Because of this, when it began to operate the Besomar shop, Townsend and Bottum also signed a copy of the same agreement.
9In the summer of 1983 officials of Townsend and Bottum became aware that the Tuberate Company Ltd. ("Tuberate"), was available for purchase. This company leased a fabrication shop in the Village of Point Edward, which is immediately adjacent to the City of Sarnia. At the time, Tuberate's employees were not represented by any trade union. On August 18, 1983 Mr. Dennis O'Connor, the President of Townsend and Bottum Canada Ltd., met with John Carroll, the International Vice-President of the Boilermakers Union, to discuss the possible purchase of Tuberate. Mr. O'Connor advised Mr. Carroll that Townsend and Bottum was not interested in purchasing Tuberate if it resulted in the shop being bound by the Sarnia area shops agreement. It was Mr. O'Connor's uncontradicted testimony that Mr. Carroll replied that Townsend and Bottum would be able to negotiate a separate collective agreement for the shop, along the lines of an agreement that the Boilermakers Union had with Alan Tank, a company based in Toronto. Mr. Carroll added that if necessary he personally would come to Sarnia to negotiate such an agreement.
10In September of 1982 Townsend and Bottum purchased Tuberate, and operated its shop while continuing to operate the Besomar shop. The union contends that during this period certain work was transferred from the Besomar shop to the Tuberate shop. The only evidence relating to this contention is that the Dow Chemical company contacted the Tuberate shop with respect to three heat exchangers that required repair. Due to workload requirements, two of the exchangers were put into the Besomar shop to be worked on. The third exchanger had some initial work done on it at the Besomar shop, but was then sent to the Tuberate shop to receive a nickel overlay. As a result of concerns related to the third exchanger, the Boilermakers Union filed a section 1(4) application (File No. 1518-83-R) the purpose of which was to seek to bind the Tuberate plant to the Sarnia area shops agreement. After discussions between the parties, however, the application was withdrawn by the union. It is clear on the evidence that during the period that Townsend and Bottum operated both the Besomar and Tuberate shops, work continued to be put into the Besomar shop. Revenue from this work permitted Townsend and Bottum to pay off about $350,000 of the Besomar company's debt, although at no point did Townsend and Bottum receive a return on the money it had invested in the shop.
11As already noted, the Tuberate company's employees had not been represented by a trade union. Prior to purchasing the company, Mr. O'Connor indicated to Mr. Carroll that Townsend and Bottum favoured the idea of having the Tuberate employees represented by the Boilermakers Union, although not under the terms of the Sarnia area shops agreement. Subsequent to the purchase of Tuberate, officials from the union and Townsend and Bottum discussed how the union could become the bargaining agent for the employees. A new factor entered into these discussions on September 12, 1983 when Mr. O'Connor advised Mr. Matthew Bakker, the business manager of Local 128 of the Boilermakers Union, that Townsend and Bottum was negotiating to take over the lease of a building on Vidal Street in the City of Sarnia which had previously been occupied by a company known as Progress Fab Ltd. The shop is one of the largest in the Sarnia area and apparently had been used by Progress Fab primarily for the construction of very large towers destined for Western Canada. Progress Fab itself had ceased operations in July of 1983 due to financial difficulties. Mr. O'Connor indicated to Mr. Bakker that if Townsend and Bottom were to acquire the Vidal Street shop, all of the employees presently working at the Tuberate shop would be moved to the new location. Mr. Bakker in reply noted that Progress Fab had been signatory to the Sarnia area shops agreement, and stated that in the union's view Townsend and Bottum would become a successor employer to Progress Fab and therefore bound by the Sarnia area shops agreement. Mr. O'Connor disagreed that such would be the case. Mr. O'Connor went on to state that if this is what the union truly believed, then why did it not become certified for the Tuberate shop employees so as to later prevent a non-union company from taking over the Tuberate shop. One other event of note occurred at the September 12, 1983 meeting. Mr. Bakker made it clear that in his view any collective agreement negotiated to cover the Tuberate shop employees had to be based on the terms of the Sarnia area shops agreement.
12By late November of 1983 the union and Townsend and Bottum had reached an understanding that the union would seek to organize the employees at the Tuberate shop. Following this, Mr. O'Connor suggested to the employees that they meet with the union. The employees later met with officials of the union at a Sarnia area hotel. Subsequent to this meeting, most of the employees signed membership cards in Local 128. On December 20, 1983 the local filed an application for certification. On the date the certification application was to be dealt with by the Board, company and union officials met with a Board Officer and resolved all of the issues in dispute between them. They also agreed to waive their right to a formal hearing into the application. The written material relating to the application was then placed before a differently constituted panel of the Board. Although it is agreed that the parties meant the certification application to apply to the Tuberate shop which was located in the Village of Point Edward, in fact the Board erroneously certified the local union as the bargaining agent of employees "at Sarnia". The certificate correctly named Tuberate and Besomar Company Ltd., as the relevant employer. Tuberate and Besomar Company Ltd. was the corporate entity then being used by Townsend and Bottum to operate the Tuberate plant.
13As indicated above, by September of 1983 Townsend and Bottum was considering acquiring control of the shop on Vidal Street formerly occupied by Progress Fab. Progress Fab had a sub-lease on the property, the lease being held by Taylor-Forge Canada Limited, a subsidiary of Gulf and Western Realty Corporation in the United States. It appears that some time in September of 1983 Townsend and Bottum commenced negotiations with both Taylor-Forge and Gulf and Western. In October of 1983 the equipment owned by Progress Fab was sold at public auction. Officials of Townsend and Bottum attended at the auction and purchased about $127,000 worth of this equipment, which represented about one-third of the total value of the equipment put up for sale. Among the equipment purchased by Townsend and Bottum were three overhead cranes mounted on tracks still attached to the building. In December of 1983 Townsend and Bottum entered into a lease with Taylor-Forge Canada Ltd. whereby it was to take occupancy of the Vidal Street shop on January 1, 1984.
14In January of 1984 Townsend and Bottum moved its construction field forces as well as its management and office staff from the company's original Canadian facility on Lougar Street to the shop on Vidal Street. In early February the employees from the former Tuberate shop were also moved to the Vidal Street shop, with the lease on the Tuberate shop being allowed to lapse in March of 1984. Townsend and Bottum did not hire any of the former employees or management of Progress Fab. Further, it acquired no work in progress, inventory or customer lists from Progress Fab. It also did not acquire, or use, the Progress Fab name. From February until June of 1984 Townsend and Bottum operated both the former Progress Fab shop on Vidal Street as well as the Besomar shop in Sombra.
15The Board decision certifying Local 128 of the Boilermakers Union as the bargaining agent of the employees at the Tuberate plant was issued on January 12, 1984, shortly before the employees moved to the Vidal Street shop. On February 7, 1984 union and company officials met to negotiate a collective agreement. At this meeting Mr. Bakker, on behalf of the union, indicated that the only terms agreeable to the union were those contained in the Sarnia area shops agreement, with an addendum to deal with one specific job classification. Mr. O'Connor, on behalf of Townsend and Bottum, replied that those terms were not acceptable to the company. On February 14, 1984 the company sent a set of collective agreement proposals to the union. The union did not reply to the proposals. On March 21, 1984, approximately one month after the Tuberate employees had moved to the former Progress Fab shop on Vidal Street, the parties met with a conciliation officer, but made no progress towards a collective agreement. On April 4, 1984, the Minister of Labour advised the parties that he would not be appointing a conciliation board.
16As already noted, commencing early February 1984 Townsend and Bottum operated both the former Progress Fab shop as well as the Besomar shop. The company treated the former Progress Fab shop as a continuation of its operations at the Tuberate shop, that is, as a directly owned operation where the employees were represented by the trade union, but not yet covered by a collective agreement. The Besomar shop, however, was operated pursuant to the agreement to purchase with the Besomar company, with the Sarnia area shops agreement being applicable. This situation came to an end in June of 1984 when Townsend and Bottum advised the owners of the Besomar Company that it would not be exercising its option to purchase the company, but instead would be returning the management of the company back to its owners. Mr. O'Connor testified that by this point, Townsend and Bottum had concluded that the Besomar operation could not be made to be profitable. In all, Townsend and Bottum had put some $400,000 into the Besomar operation without any return, although it had managed to reduce the Besomar Company's debt by about $350,000. Following its decision not to continue operating the Besomar shop, Townsend and Bottum laid off all the employees at the shop, (as opposed to transferring them to the Vidal Street shop which had at one time been considered) and then returned control of the shop to the Besomar Company's owners. Approximately $ 100,00 worth of Townsend and Bottum equipment (but not any equipment owned by the Besomar Company) was transferred from the Besomar shop to the Vidal Street shop. The evidence indicates that subsequent to the withdrawal of Townsend and Bottum from its operations, the Besomar shop has been operated by the owners of the Besomar Company, presumably applying the terms of the Sarnia area shops agreement. Given all of the relevant circumstances, however, we tend to agree with union counsel that the continued operation of the Besomar shop is not something that can be taken for granted.
17As noted earlier, these proceedings arise out of applications filed under sections 1(4) and 63 of the Act. These sections provide 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.
63.-(l) In this section,
(a) "business" includes a part or parts thereof;
(b) "sells" includes leases, transfers and any other manner of disposition, and "sold" and "sale" have corresponding meanings.
(2) Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade unions sells his business, the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement as if he had been a party thereto and, where an employer sells his business while an application for certification or termination of bargaining rights to which he is a party is before the Board, the person to whom the business has been sold is, until the Board otherwise declares, the employer for the purposes of the application as if he were named as the employer in the application."
18As noted above, Townsend and Bottum utilized various corporate entities in its operations, and all of these corporations were under common direction or control. Townsend and Bottum acknowledges that it would be appropriate for the Board to apply section 1(4) in such a way as to bind its operations at the Vidal Street shop to the bargaining rights acquired by the union with respect to the Tuberate shop. The company, however, disputes the union's contention that section 1(4) should be applied so as to bind the Vidal Street shop to the Besomar operation where Townsend and Bottum acknowledges that it was bound by the Sarnia area shops agreement. The company contends that section 63 has no application at all. The union, however, takes the position that section 63 is applicable in that there has been a "sale" within the meaning of that section from Progress Fab to Townsend and Bottum. If the union is correct, then the Sarnia area shops agreement which applied to Progress Fab continued to apply to Townsend and Bottum at the Vidal Street location.
19The parties agree that when it was operating the Besomar shop, Townsend and Bottum was bound by the Sarnia area shops agreement. The company's subsequent acquisition of the Tuberate shop might under other circumstances arguably be viewed as involving an "accretion" to the union's existing bargaining rights such that the Tuberate employees should be viewed as also being covered by the agreement. If such an argument were accepted, then section 1(4) could he applied so as to ensure that the use of different corporate forms by Townsend and Bottum did not prevent such a result. In the instant case, however, we are satisfied that the union is estopped from advancing such an argument. We base this conclusion in large measure on the uncontradicted evidence that Mr. Carroll, an International Vice-President of the Boilermakers Union, assured the company that if it acquired the Tuberate shop it could negotiate a separate collective agreement for employees at the shop. At the hearing, union counsel contended that any comments made by Mr. Carroll could not serve to bind Local 128, which was the actual signatory to the Sarnia area shops agreement. We do not agree. Although Mr. Carroll holds no office in the local, he is Vice-President of the International Union of which the local forms a constituent part. Further, Mr. Carroll held himself out as being able to speak for the union, including the local union, on this issue, and in our view it would have been reasonable for officials of Townsend and Bottum to believe he had such authority. We would also note that at the relevant time Local 128 did not contend that the Tuberate shop was covered by the Sarnia area shops agreement. To the contrary, the local applied to the Board to be certified as the bargaining agent for Townsend and Bottum's employees at the Tuberate shop, an action inconsistent with any claim that the shops agreement was applicable. Given these considerations, we are satisfied that we should view the Besomar and Tuberate shops as distinct operations, the Besomar shop operating under the Sarnia area shops agreement and the Tuberate shop operating initially on a non-union basis, and then as a shop for which the union had bargaining rights but no collective agreement.
20Characterizing the situation at Vidal Street is more difficult. The union's primary contention is that Townsend and Bottum purchased the business of Progress Fab Ltd. The fact that Townsend and Bottum acquired a lease on the shop previously occupied by Progress Fab and purchased much of that firm's equipment, most notably the overhead cranes, tends to support such a contention. Several other considerations, however, suggest that while Townsend and Bottum acquired the realty and certain equipment of Progress Fab, it did not actually acquire the "business" of Progress Fab. These considerations include the fact that Townsend and Bottum did not acquire the Progress Fab name or any of Progress Fab's inventory or customer lists. Further, when Townsend and Bottum commenced shop operations on Vidal Street, it moved the employees over from the Tuberate shop, and began to do the same general type of work at Vidal Street as it had been performing at the Tuberate shop. Further complicating this whole matter is the subsequent withdrawal of Townsend and Bottum from the operations of the Besomar shop and the movement of certain of its equipment from the Besomar shop to Vidal Street. Presumably much of the work that Townsend and Bottum would otherwise have performed at the Besomar shop has been performed at its Vidal Street shop, although it is possible that some of this work has been performed by the Besomar Company after it regained control of its shop.
21The evidence taken as a whole suggests that Townsend and Bottum's current operations at the Vidal Street shop contain elements of its previous operations at both the Besomar and Tuberate shops, as well as elements of the business previously carried on by Progress Fab. On balance, however, we view the current operations at the Vidal Street shop as being primarily a continuation of Townsend and Bottum's operations at the Tuberate shop. We have reached this decision in large measure due to the fact that when Townsend and Bottum commenced fabrication work at the Vidal Street shop it ceased its operations at the Tuberate shop and apparently moved those operations, along with the Tuberate employees, over to Vidal Street. This move occurred some seven months after Progress Fab had ceased operations at the Vidal Street location, and approximately four months prior to Townsend and Bottum withdrawing from the Besomar shop.
22Given our conclusion that Townsend and Bottum's operations on Vidal Street are primarily a continuation of its previous operations at the Tuberate shop, we are of the view that it would be appropriate to maintain the same collective bargaining relationship at Vidal Street as existed at the Tuberate plant. We are also satisfied that there was not, in fact, a sale of a business within the meaning of the Act from Progress Fab to Townsend and Bottum. In these circumstances, the section 63 application in File No. 2803-83-R is dismissed. We are satisfied, however, that we should exercise our discretion under section 1(4) so as to declare that the Townsend and Bottum Company which had operated the Tuberate shop to he a common employer with the Townsend and Bottum Company now operating the Vidal Street shop.
23A somewhat complicating factor arises with respect to the geographic scope of the union's bargaining rights. The Tuberate shop was located in the Village of Point Edward. However, in error the Board certificate issued with respect to the Tuberate operations certified the union as the bargaining agent for employees in Sarnia. As it happens, the Vidal Street shop is in Sarnia. At the hearing, counsel for Townsend and Bottum indicated that notwithstanding the error in the certificate and the fact of the two different municipalities, the company does not object to a Board order binding the Vidal Street operation to the bargaining rights acquired by the union with respect to employees at the Tuberate shop. Given the position adopted by the company, and keeping in mind the rather unique circumstances of this case, we are of the view that this is, in fact, the appropriate way to proceed.
24The certificate issued to the union named the employer at the Tuberate plant as Tuberate and Besomar Company, Ltd. The Townsend and Bottum Company currently operating the Vidal Street shop is Tuberate Company, Inc. In these circumstances, and pursuant to its discretion under section 1(4) of the Act, the Board will treat Tuberate and Besomar Company, Ltd. and Tuberate Company, Inc. as a single employer for the purposes of the Act. The Board declares that the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, Local Union 128 is the bargaining agent of employees of Tuberate Company, Inc. in the City of Sarnia, and more particularly those employed at 530 Vidal Street South. The Board further declares that the conciliation procedures followed with respect to Tuberate and Besomar Company Ltd. — inclusive of the "No Board" report issued on April 4, 1984 — are applicable to Tuberate Company, Inc. at its operations in Sarnia.
25Given our findings and declarations set out above, we are satisfied that the Sarnia area shops agreement did not apply to Townsend and Bottum's operations at the Vidal Street shop. As indicated at the outset of this decision, however, the Sarnia area shops agreement stipulates that it was to expire on August 31, 1984. Accordingly, at this point in time, the union stands in approximately the same position it would have been in had the Sarnia area shops agreement applied to the Vidal Street shop, namely, in a position to negotiate for a new collective agreement applicable to the shop.
26To summarize, the section 63 application in File No. 2803-83-R is dismissed. The section 1(4) application in File No. 2804-83-R is granted in the terms set out in paragraph 24 above.
ADDENDUM OF BOARD MEMBER C. A. BALLENTINE;
I have joined in the award of the Board. I would note, however, that absent the transfer of operations from the Tuberate shop to the shop on Vidal Street, I would have found a sale of a business from Progress Fab to Townsend and Bottum.