United Food and Commercial Workers International Union, Local 175 v. 561270 Ontario Inc., 1984 CanLII 992

2476-83-R United Food and Commercial Workers International Union, Local 175, Applicant, v. 561270 Ontario Inc., c.o.b. as St. Laurent I.G.A., Respondent, v.

Group of Employees, Objectors

Certification Where Act Contravened — Interference in Trade Unions — Unfair Labour Practice — Three managers obtaining signatures on petition opposing trade union — Constituting unlawful interference — Whether managers acting on own behalf or conduct attributable to employer — Contravention can be rectified by remedial order — No certification without vote

BEFORE: Ian C. Springate, Vice-Chairman, and Board Members I. M. Stamp and L. Collins.

APPEARANCES: Harold F Caley and John Hurlev for the applicant; Walter T Lan glev, Tim

Laplante and Ed Cheung for the respondent, no one appearing for the objectors.

DECISION OF IAN C. SPRINGATE, VICE-CHAIRMAN, AND BOARD MEMBER I.

M. STAMP; May 25. 1984

1. The name of the respondent is amended to read: "561270 Ontario Inc., c.o.b. as St. Laurent I.G.A."

2. This is an application for certification.

3. We find that the applicant is a trade union within the meaning of section l(l)(p) of the Labour Relations Act.

4. Having regard to the agreement of the parties, we further find that all employees of the respondent at its stores in Ottawa, save and except full-time meat department employees, department managers, head cashier, office and clerical staff, store manager and persons above the rank of store manager constitute a unit of employees of the respondent appropriate for collective bargaining.

5. On the date of the making of the application there were a total of eighty-five employees in the bargaining unit. The applicant filed evidence of membership with respect to thirty-nine, or slightly over forty-five per cent, of these employees. Given the proportion of employees for whom it submitted membership evidence, for the applicant to be certified pursuant to the general certification procedures set out in the Act, it would first have to receive the support of a majority of employees casting ballots in a representation vote.

6. Rather than have the Board follow the general certification procedures and conduct

a representation vote, the applicant requests that it be certified outright pursuant to the provisions of section 8 of the Act. Section 8 provides as follows:

"Where an employer or employers' organization contravenes this act so that the true wishes of the employees of the employer or of a member of the employers' organization are not likely to be ascertained, and, in the opinion of the Board, a trade union has membership support adequate for the purposes of collective bargaining in a bargaining unit found by

746

the Board pursuant to section 6 to be appropriate for collective bargaining, the Board may, on the application of the trade union, certify the trade union as the bargaining agent of the employees in the bargaining unit."

7. At the commencement of the hearing into this application the parties specifically agreed that in assessing the applicant's request that it be certified pursuant to the provisions of section 8 of the Act, the Board could rely on information obtained from three separate sources. One of the sources was viva voce evidence led before this panel of the Board. A second source was certain facts set forth in a letter to the Board dated January 30, 1984 from counsel for the applicant. Counsel for the respondent agreed that the facts in the letter were correct and could be relied on by the Board, except to the extent that certain specific points might be amplified or contradicted by direct evidence. In fact, no evidence was led to either amplify or contradict any of the material set forth in the letter. The parties also agreed that we could rely on evidence led before a differently constituted panel of the Board chaired by Vice-Chairman M. Mitchnick. This other panel had dealt with a related certification application in File No. 2320-83-R.

8. The only witness to testify before this panel of the Board was Mr. John Hurley, an organizer with the United Food and Commercial Workers International Union. Mr. Hurley testified that the International Union was initially contacted by an employee who works in the respondent's grocery store located in the City of Ottawa. This initial contact led to a meeting on January 9, 1984 attended by Mr. Hurley and approximately forty-eight of the respondent's employees. After some discussion, most of the employees present signed a union membership card. The employees signed membership cards with respect to two different locals of the International Union. Those employees working in the respondent's meat department signed membership cards in Local 633, a local which represents craft units of meat department employees in a number of grocery stores. Employees from all other departments (at times referred to as the "grocery employees") signed membership cards in Local 175. At the meeting, over fifty-five per cent of the full-time employees in the respondent's meat department signed membership cards in Local 633. Having regard to the provisions of section 7 of the Act, this meant that Local 633 was in a position to meet the statutory membership requirement for automatic certification. The employees who signed membership cards in Local 175, however, represented only a minority of the respondent's grocery employees. In the hopes of being able to acquire membership evidence on behalf of more than fifty-five per cent of the grocery employees, at the meeting on January 9th Mr. Hurley handed out blank membership cards in Local 175 with the understanding that some of the employees present would seek to convince other employees to sign the cards.

9. On Tuesday, January 10, 1984 Mr. Hurley filed an application for certification on behalf of Local 633 with respect to the meat department employees (Board File No. 2320-83-R) as well as an application for certification on behalf of Local 175 with respect to the grocery employees (Board File No. 232 l-83-R). The two bargaining units initially proposed by the union encompassed the managers of the various departments within the store. Before this panel of the Board, Mr. Hurley testified that in his experience different I.G.A. stores give different levels of responsibility to department managers, such that in some instances they are appropriately included in a bargaining unit, whereas in other instances they are appropriately excluded as persons who exercise managerial functions. Mr. Hurley also explained that the union's general practice was to file certification applications on behalf of bargaining units which included department managers, but if it subsequently appeared that the department managers

747

exercised managerial functions, then the union would agree to their exclusion. The respondent in this case filed a reply to both certification applications on or about January 17, 1984. In both replies, the respondent took the position that its department managers should be excluded from the applied for bargaining units in that they exercised managerial functions. With respect to the application dealing with the grocery employees, the respondent's reply expanded on the contention that the department managers exercise managerial functions with the comment that they "have hiring and firing privileges within their respective departments and are privy to confidential financial statements, profit figures and operating objectives".

10. The Board set January 19, 1984 as the terminal date for both certification applications. In accordance with the Board's practice and Rules of Procedure, the union had until January 19, 1984 to file additional membership cards. This date also became the deadline for any employees to file statements of desire in opposition to the two applications. As noted earlier, at the meeting on January 9, 1984 certain union supporters took blank membership cards in Local 175 for the purpose of approaching other employees to get them to sign. Mr. Hurley testified that he expected that a number of additional grocery employees would sign membership cards, but none did. Mr. Hurley further testified that he had made arrangements to meet with certain of the respondent's employees on January 17, 1984 in order to discuss matters relevant to the two applications, but that none of the employees showed up at the meeting place. On the following day, January 18, 1984, statements in the form of "petitions" expressing opposition to the two certification applications were signed by nine meat department employees and fifty-four grocery employees. These petitions were filed with the Board on January 19th, the terminal date. On that same day Mr. Hurley wrote to the Board to withdraw the certification application filed on behalf of Local 175. Mr. Hurley testified that he withdrew the application because he had not received any additional membership cards.

11. The application for certification by Local 633 with respect to the respondent's meat department employees came on for hearing before a Board panel chaired by Mr. Mitchnick on January 27, 1984. Before this panel of the Board, Mr. Hurley testified that on the day prior to the January 27th hearing he had attempted to get certain employees to meet with him respecting the application, but without success. During the course of the hearing on January 27th, the respondent outlined its management structure to the Board, following which the union agreed with the respondent's contention that the meat department manager exercised managerial functions and hence should be excluded from the bargaining unit. The Board then announced the "count" indicating that Local 633 had filed membership cards with respect to more than fifty-five per cent of the employees in the meat department bargaining unit. The Board then turned to consider the petition in opposition to the application signed by nine meat department employees.

12. In instances where a union has met the statutory requirement for automatic certification by filing membership cards on behalf of more than fifty-five per cent of the employees in a bargaining unit, the Board still retains a discretion to direct the taking of a representation vote. The Board's practice is to direct such a vote where sufficient numbers of union members have voluntarily indicated that they have had a "change of heart" about being represented by a union. Before it will direct the taking of a vote, however, the Board seeks assurances that a document expressing opposition to the union does in fact represent a truly voluntary signification on the part of employees who signed it. In instances where members of management have been involved in the origination or circulation of such a document, the Board's practice is not to give the document any weight. This is due to a concern that union members may

748

have signed the document not as a result of any real change of heart about the union, but only to avoid revealing their union support to management. Evidence led at the hearing on January 27, 1984 indicated that the petitions filed in opposition to both the Local 633 and Local 175 applications had been drafted at the instance of the same people, and that signatures on both documents had been acquired at the same time. The evidence further indicated that three department managers had been active with respect to the origination of the petitions and obtaining employee signatures on them. After this evidence had been tendered, the group of employees who had been relying on the petition in opposition to the Local 633 application formally withdrew the petition. The Board then announced that it would be certifying Local 633 as the bargaining agent of employees in the respondent's meat department.

13. At the hearing before this panel of the Board, Mr. Hurley testified that the evidence led at the hearing on January 27, 1984 caused the union to re-evaluate its position insofar as it related to the grocery employees. As a result of this re-evaluation, on January 30, 1984, Local 175 filed a second application for certification, which is the one now before us. This application specifically excluded department managers from the applied for bargaining unit. In support of its second application Local 175 filed the same membership cards as it did in its earlier application. However, in support of its application to be certified under section 8, the local also relies on the facts surrounding the origination and circulation of the petitions filed with respect to the earlier applications.

14. Before proceeding further, we would note that in response to the second application for certification by Local 175, a new statement of desire in opposition to the application signed by twelve bargaining unit employees was filed. No one attended at the hearing in support of this statement and neither of the other parties sought to rely on it in any way. Accordingly, we are not prepared to give the document any weight, and will not refer to it again in this decision.

15. Local 175 would be entitled to be certified outright pursuant to the provisions of section 8 of the Act if the Board were satisfied that:

(a) the respondent has violated the Act;

(b) The true wishes of the respondent's employees are not likely to be ascertained either from its membership cards or in a representation vote; and

(c) in the Board's opinion the Local has support adequate for collective bargaining.

16. Given the Board's jurisprudence, there is little doubt but that the Board would not have given any weight to the petitions obtained by the three managers as being voluntary expression of employees' desires. In this case, however, we are required to go farther and deal with two additional issues. The first is whether the actions of the managers involved a violation of the Act on the part of the respondent. The second is whether the action of the department managers, as well as any other relevant matters, resulted in a situation where employees were not able to express their true wishes during the union's organizing campaign and would not now be able to express their true wishes in a Board conducted representation vote.

749

17. We turn now to consider in some detail the involvement of the three managers with the anti-union petitions. The three managers involved were Mr. Jacques Lalonde, the manager of the respondent's deli department, Mr. Jean Guy Raccine, the manager of the meat department and Mr. James Broome, the manager of the produce department. The letter of January 30, 1984 sets out the functions of the managers as including:

"(i) the effective hiring and firing of staff;

(ii) disciplining of employees in own department;

(iii) they have access to financial statements and personnel documents;

(iv) they are involved in budget discussions;

(v) the issuing of reprimands to employees;

(vi) attend management meetings."

18. As indicated earlier, Mr. Hurley met with a number of employees on Monday, January 9, 1984, at which time they signed membership cards. On that same evening, at least one of the department managers overheard some employees discussing the union. When giving evidence before the Board panel chaired by Mr. Mitchnick, Mr. Raccine, the meat department manager, testified that on January 10, 1984 he went to see Mr. T. Laplante, the store manager, to advise him that employees were discussing the union. According to Mr. Raccine, Mr. Laplante's reply was that he was already aware of this fact. Mr. Raccine testified that during his meeting with Mr. Laplante there was no talk of a petition.

19. On or about Tuesday, January 16, 1984, the Board's "Notice to Employees of Application for Certification and of Hearing" (commonly referred to as the "green form") was posted with respect to the two initial certification applications. The applied for bargaining units described on the forms indicated that the union was seeking to include departmental managers within the bargaining units. Subsequent to the posting, Mr. Raccine had a discussion with Mr. Laplante. The material before us, however, is silent on the question of whether they talked about a petition. On Wednesday, January 18, 1984 Mr. Raccine, Mr. Lalonde and Mr. Broome began to obtain signatures on the petitions in opposition to the two applications. There is very little material before us related to the origination of the petitions. However, what material there is indicates that the petitions were drafted by a lawyer who had met with Mr. Raccine and possibly the other two managers. The petitions had a typed heading with space left under the heading for employees to sign their names. Below the space for employee signatures was typed the following:

"This statement of desire is filed on behalf of the above noted employees by:

Name Signature Mailing Address

1021 St. Laurent

Boulevard

Jacques Lalonde

750

Jean Guy Raccine 1021 St. Laurent Boulevard

James Broome 1021 St. Laurent Boulevard"

When filed with the Board, the two petitions contained the signatures of the three managers in the spaces indicated. The address, 1021 St. Laurent Boulevard, is the address of the respondent's store in Ottawa.

20. Employees signed the petitions in the respondent's staff lunchroom. Employees were approached individually by either Mr. Lalonde, Mr. Raccine or Mr. Broome during xvorking hours and directed to go to the lunchroom. Once in the lunchroom, each employee was asked by either Mr. Lalonde or Mr. Broome to sign a petition. In all, forty-five of the eighty-five grocery employees signed a petition. At the hearing before this panel, Mr. Hurley testified that although he had no personal knowledge of the matter, it was his understanding that Mr. Laplante, the store manager, had also interviewed employees in connection with the union. This hearsay evidence was not supported by any direct evidence led before this panel of the Board, the panel chaired by Mr. Mitchnick, or the facts set forth in the letter of January 30, 1984. Accordingly, we are not prepared to give Mr. Hurley's evidence on point any weight. However, given the manner in which employees were directed to the lunchroom by the three department managers during their working hours, and the total time that the three managers were likely involved with the petitions, we feel it reasonable to conclude that Mr. Laplante was probably aware of their activities. Under normal circumstances, one would have expected Mr. Laplante to take steps to ensure that employees and the three department managers spent their working hours attending to their normal duties. However, it appears that Mr. Laplante took no such steps. We would note at this point that in contemplation of the hearing before this panel of the Board, Mr. Hurley arranged to meet with five bargaining unit employees on February 15, 1984, but none of them turned up at the arranged meeting spot.

21. It is the applicant's position that the conduct of the three department managers violated a number of sections of the Act. The most relevant of these is section 64 which provides as follows:

"No employer or employers' organization and no person acting on behalf of an employer or an employers' organization shall participate in or interfere with the formation, selection or administration of a trade union or contribute financial or other support to a trade union, but nothing in this section shall be deemed to deprive an employer of his freedom to express his views so long as he does not use coercion, intimidation, threats, promises or undue influence."

22. We are satisfied that the action of the three department managers in seeking to get employees to sign an anti-union petition involved an interference on their part with the selection of a trade union by employees. Generally, the actions of managerial personnel, even those at the bottom of the management hierarchy, can be automatically attributed to their employer, such that a violation of the Act by any managerial person will involve a violation of the Act on the part of the employer. In the instant case, however, the respondent contends that the three department managers were not acting on behalf of the respondent, but rather

751

on their own behalf. In support of this position the respondent relies on the fact that the bargaining units originally applied for by the union included the department managers. We acknowledge that there might well be instances where it could appropriately be held that a member of management was not acting on behalf of management. On balance, however, we are satisfied that this is not such a case. Whatever their original motivation might have been, the three department managers utilized their management status in getting employee signatures on the petitions by directing employees during their working hours to go to the lunchroom. Further, notwithstanding that the three managers made use of their management status and also took a considerable amount of time off work in connection with the petitions, neither the store manager nor anyone else in management took any steps to stop them. In our view, the action of senior management in permitting the department managers to use their managerial authority to solicit opposition to the union during working hours meant that the respondent approved and essentially adopted their actions. It might be noted that the store manager and the three department managers attended at the hearing before this panel of the Board with representatives of the respondent, but were not called to testify so as to further clarify any of these matters. Given these considerations, we are of the view that the actions of the three department managers should appropriately be viewed as the actions of the respondent. We accordingly find that the action of the three department managers in interfering with the selection of a trade union by employees involved a breach of section 64 of the Act on the part of the respondent.

23. As the wording of section 8 makes clear, automatic certification is not the appropriate response to every employer violation of the Act committed in response to a union organizing campaign. The intended purpose of the section was summarized in Ex-Cell-O Wildex Canada [1977] OLRB Rep. June 370 at p. 373 as follows:

"Section 7a (now section 8) allows the Board to certify a trade union as bargaining agent without the membership percentage usually required for outright certification. It is not surprising, then, that the Legislature has placed a number of legal restrictions on its use. As the wording of the section makes clear, it is not enough that the employer has engaged in conduct prohibited by the Labour Relations Act. This conduct must have resulted in a situation where the true wishes of the employees are not likely to be ascertained from the results of a representation vote. As well, the trade union must, in the opinion of the Board, have membership support adequate for the purposes of collective bargaining in the unit found appropriate by the Board.

The logic of these requirements is clear enough. The premise of the Act's certification procedures is that collective bargaining is to be afforded only when it is the choice of the majority. Accordingly, the grant of automatic certification to a trade union, in the absence of documented evidence of majority support, should only be permitted where the true wishes of the employees are not likely to be ascertained through the normal procedures and where the union has sufficient support among the employees in the unit to bargain collectively with the employer."

752

24. In a number of cases the Board has applied section 8 where an employer has violated the Act by indicating to employees, directly or by implication, that continued job security depended on the union not being certified. See: Dylex Limited [1971] OLRB Rep. June 357 and DI-AL Construction Limited [1983] OLRB Rep. March 356. The Board has also applied the section where the cumulative effect of a range of unlawful employer activities, none of which taken separately might call the section into play, have had the effect of undermining the rule of law such that employees could not feel confident that the protections of the law would guarantee them a free choice in deciding whether or not to be represented by a trade union. See: Radio Shack [1979] OLRB Rep. March 248 and Skyline Hotels Limited [1980] OLRB Rep. Dec. 1811. In certain cases where an employer has violated the Act, however, the Board has declined to apply section 8 because it felt that the violation was not of the type that would deprive employees of the ability to express their true wishes in a representation vote. See: Homeware Industries Limited [1981] OLRB Rep. Feb. 164 and The Globe and Mail Division of Canadian Newspapers Company Limited [1982] OLRB Rep. Feb. 189. One of the factors the Board looks at in assessing whether employer breaches of the Act affect the ability of employees to express their wishes so as to justify certification without a vote is whether effective remedies for those breaches can be fashioned so as to create a climate in which a representation vote might successfully ascertain employee wishes. See: Seven-Up/Pure Spring Ottawa, a Division of Seven-Up Canada Inc. [1984] OLRB Rep. Jan. 87 and the cases cited therein.

25. In the instant case, no member of management threatened the job security of employees or made any other threat to employees. Further, there is no evidence of on-going improper conduct on the part of the respondent. Notwithstanding these facts, the role of the three department managers in improperly obtaining employee signatures on petitions against the union on January 18, 1984 would likely have had some impact on employees. This impact may well have resulted in some employees not signing union cards on January 18th and 19th, the last two days they could have done so. It may also have been at least part of the reason why on January 26th no employee would meet with Mr. Hurley to discuss the application pertaining to the meat department and why no employee met with him with respect to the instant application. However, the failure of any employees to meet with Mr. Hurley on or before January 17th could not have been due to the same reason. Neither can the fact that no grocery employees signed union cards between Mr. Hurley's meeting with employees on January 9th and the events of January 18th. When all these considerations are taken into account, we do not believe that this is an appropriate case in which to certify the applicant outright. Rather, we believe that the adverse impact of the respondent's contravention of the Act can be rectified in such a way as to enable the true wishes of employees to be ascertained in a representation vote. In order to rectify the breach of the Act, we direct that the respondent:

26. Cease and desist violating section 64 of the Labour Relations Act.

27. Post the attached notice, in the French and English languages, as supplied by the Board, on its premises where they are likely to come to the attention of the employees and to leave such notices posted uncovered by any other material, until the conclusion of the representation vote.

28. Give a representative of the applicant reasonable physical access to its premises at reasonable times so that the applicant can satisfy itself that the posting requirements are being complied with.

753

4. Provide two representatives of the applicant with an opportunity to address the employees in the bargaining unit referred to in paragraph 4 above, out of the presence of any member of management, during normal working hours without loss of pay, for a minimum of one hour. Such meeting will be at least three full days prior to the date of the representation vote.

5. We direct that a representation vote be conducted among the employees of the respondent in the bargaining unit described in paragraph 4 of this decision. Those eligible to vote are 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.

6. Voters will be asked to indicate whether or not they wish to be represented by the

applicant in their employment relations with the respondent.

28. The matter is referred to the Registrar.

29. The decision of Board Member L. Collins will be issued at a later date.

[Editor's Note: The French translation of the Notice to Employees has been omitted]

Appendix

The Labour Relations Act

NOTICE TO EMPLOYEES

Posted by Order of the Ontario Labour Relations Board

WE HAVE POSTED THIS NOTICE IN COMPLIANCE WITH AN ORDER

OF THE CNTARIO LABOUR RELATIONS EOARD ISSUED AFTER A HEARING ARISING OUT

OF THE EFFORTS OF UNITED FOOD & COMMERCIAL WORKERS INTERNATIONAL UNION LOCAL 175

TO REPRESENT CERTAIN OF OUR EMPLOYEES. THE ONTARIO LABOUR RELATIONS BOARD

FOUND THAT WE VIOLATED THE LABOUR RELATIONS ACT BY INTERFERING WITH THE RIGHTS

OF OUR EMPLOYEES TO SELECT A BARGAINING AGENT OF THEIR CHOICE,

THE ACT GIVES ALL EMPLOYEES THESE RIGHTS:

To ORGANIZE THEMSELVES.

To FORM, JOIN AMD PARTICIPATE IN THE LAWFUL

ACTIVITIES OF A TRADE UNION.

To ACT TOGETHER FOR COLLECTIVE BARGAINING.

To REFUSE TO DO ANY AND ALL OF THESE THINGS,

IF THEY WISH.

WE ASSURE ALL OF OUR EMPLOYEES THAT WE WILL NOT DO INTERFERES WITH THESE RIGHTS,

THE LABOUR RELATIONS BOARD HAS DIRECTED THAT A

REPRESENTATION VOTE BE HELD AMONG THE EMPLOYEES

SOUGHT TO BE REPRESENTED BY LOCAL 175. PRIOR

TO THE TAKING OF THE VOTE WE WILL ENSURE THAT

ANYTHING THAT

REPRESENTATIVES OF THE UNION WILL BE ABLE TO MEET

WITH EMPLOYEES DURING WORKING HOURS, IN THE

ABSENCE OF MANAGEMENT, WITHOUT LOSS OF PAY.

561270 ONTARIO INC., C.O.B. AS ST. LAURENT I,f3.A.

This is an official notice of the Board and must not be removed or defaced.

DATED thl 25 dayof MAY is8~

755

0064-84-R Retail, Wholesale and Department Store Union, AFL:CIO:CLC:, Applicant, v. T. Eaton Company Limited, Respondent, v. Group of Employees, Objectors

Bargaining Unit — Department store maintaining "business centre" as self-contained dept. for computer and office equipment for businesses — Employees having specialized technical skills and not inter-changeable — Paid solely on commission basis — Whether excluded from unit for lack of community of interest

BEFORE: M. G. Mitchnick, Vice-Chairman, and Board Members J. W. Murray and B. L. Armstrong.

APPEARANCES: Hugh Buchanan and Carole Currie for the applicant; Cohn Morley and Ronald A. Hubert for the respondent; Greg F Bowes for the objectors.

DECISION OF THE BOARD; May 7, 1984

1. This is an application for certification.

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

3. This application, which has been split into a "full-time" and a "part-time" unit, essentially involves the sales staff of the Eaton's store located in the Scarborough Town Centre. Following the pattern established in the certifications already granted the applicant at other Eaton's locations (Board File Nos. 2620-83-R and 3015-83-R), the parties were able to reach almost full agreement on the description of the appropriate bargaining units. The one exception concerned the sales staff employed in the "Eaton's Business Centre". This Centre represents a recent innovation in the services which Eaton's makes available to its customers. While the intention is to extend the service across many of Eaton's stores, it presently is contained in only a few, and has not had to be dealt with in any of the prior applications before the Board.

4. The Business Centre at the Scarborough Town Centre store presently employs five persons, and is physically designed as a self-contained department within that store. It is conceded that this is not the only sales department in that store so designed. The focus of the Centre is on the provision of computer and other office equipment for small businesses. This involves equipment of a sophisticated nature, and the specialised technical skills required of persons hired into the department (apart from the intensive four-week training which Eaton's provides) are not the same as those required in any of the other sales departments. One consequence of this has been the inability of the respondent to staff this department from amongst any of the other personnel in the store. The other consequence, the respondent is probably correct in conjecturing, is that individuals coming into this department are not likely to do so with a view to moving into other sales areas in the store as openings arise. The salesmen in the Business Centre operate entirely on commission, and that commission is structured in a way that is distinct from any other departments in the store. The fact remains, however, that other departments in the store do have staff that operate entirely on commission. Given the time often required to ultimately consumate a sale with Business Centre customers, as well as the need to continue to advise the customer on the application of the company's equipment,

756

the sales staff of the Centre generally spend more time away from the store (up to 30 per cent) than do the sales staff of other departments, and are comparatively flexible in their hours. Once again, however, it is conceded that a flexibility in hours generally exists as well for other sales staff at the store operating on commission. And as one reflects upon the various departments in an Eaton's store, one sees parallels as well, for example, with the home consultation process of the Interior Design departments.

5. While the respondent's desire to maintain flexibility within this new and sophisticated sales area is understandable, the ramifications for collective bargaining of the submissions it puts forward are a concern. The Board in recent years has embarked on a deliberate course of steering away from classification or departmental bargaining units, because of the high potential for fragmented bargaining which that creates. See, for example, Cryovac Division W R. Grace & Co. of Canada Limited, [1981] OLRB Rep. Nov. 1574; Thronto East General and Orthopoedic Hospital Inc., [1981] OLRB Rep. Nov. 1672; University of Ottawa, [1981] OLRB Rep. Feb. 232; Westeel-Rosco Company Limited, [1979] OLRB Rep. Nov. 1125. Even in the newspaper industry, where departmental unionization had existed in the ultimate, the Board in 1981 signalled its intention to reverse the entrenched organizing patterns of the past, in favour of broader-based bargaining. In the Hamilton Spectator case, [1981] OLRB Rep. Aug. 1177, the Board observed:

6. As a general practice the Board does not grant certification on a departmental basis. For historical reasons exceptions were made in the newspaper and printing industry. Those industries were traditionally organized by craft unions at a time, long pre-dating the existence of this Board, when the printing trades were distinguished by specialized skills that gave rise to clear distinctions along craft lines. (See, Zerber The Development of Collective Bargaining in the Toronto Printing Industry in the 19th Century (1975) 30 IR/RI 83. From its earliest days the Board granted certificates in the newspaper industries reflecting the traditional craft designations. (See, e.g. The Ottawa Citizen, [1944] OLRB Rep. Aug.; The Star Publishing Company of Windsor, Limited, (1945) CLLC ¶10,424. The traditional preponderance of craft units in the newspaper industry tended to produce more fragmented bargaining structures than would be encountered in other industrial settings. That may explain why, over the years, the Board often acceded to the agreement of the parties to departmental units of employees who did not possess craft skills. Generally in an industrial setting the Board would, apart from any special craft units, contemplate a breakdown of employees for collective bargaining purposes into office and clerical employees on the one hand and production employees on the other. When a plant is substantially organized along those lines any union seeking to obtain certification for a departmental unit is normally required to take a tag end unit of all unorganized employees. The obvious reason is to avoid undue fragmentation in collective bargaining.

7. In the instant case the parties were unable to refer the Board to any precedent decisions in which the practice of permitting departmental bargaining units in the newspaper industry was fully explained. A review of the Board's prior decisions suggests that the practice has evolved more

757

as a matter of deferring to the agreement of the parties in the industry, an obviously critical consideration, rather than by the application of normative collective bargaining principles in disputed cases. If in the past the Board has acceded to agreements establishing the non-craft departmental units in the newspaper industry, it has not done so without some guarded concern.

6. In the present case, some differences do exist between the sales staff of the Business Centre and those of other departments. But these are differences essentially in degree, and the most distinctive of the Business Centre's working conditions are not without parallels, as discussed above, in some or other of the sales departments already encompassed within the agreed-upon units for this store. Nor does an apparent lack of interest in lateral transfers form a compelling basis for compartmentalized bargaining: the same could be said for many of the technically-skilled and higher-paid departments within an industrial production facility, yet the Board has not viewed as appropriate a proliferation of self-contained skilled-trade or similarly specialized units within a plant. While the question before us in the present application is whether to accede to the request of the employer to allow this one small group to remain outside the broad-based sales unit, viewing the matter from the point of view of its corollary better illustrates the problem. If the 5-man sales unit of the Business Centre is appropriate for exclusion from the broader sales unit now before us, it presumably would also be found appropriate as a self-contained bargaining unit at another store, where no other union organizing may yet have taken place. That is not the kind of piecemeal organizing or collective bargaining which the Board would be anxious to foster in this industry. While the needs of the Centre may require certain accommodations, we are not persuaded on the facts that those accommodations cannot be made within the broader context of the varyingly specialized and commissioned/non-commissioned sales unit.

7. Having regard to the foregoing, therefore, and to the agreement of the parties generally, the Board finds:

(1) All employees of the respondent at its retail store in the Scarborough Town Centre, Municipality of Metropolitan Toronto, save and except sales managers, merchandise presentation managers, food services managers, operating services managers, maintenance managers, and foremen, persons above the rank of sales manager, merchandise presentation manager, food services manager, operating services manager, maintenance manager or foreman, employees of Eaton Travel Ltd., employees of Eaton Bay Financial Services Ltd., office and clerical staff, management trainees, security staff, medical services nurse, persons regularly employed for not more than twenty-four hours per week, students employed during the school vacation period and students employed on a co-operative program with a school, college or university (unit #1); and

(2) All employees regularly employed for not more than twenty-four hours per week and students employed during the school vacation period of the respondent at its retail store in the Scarborough Town Centre, Municipality of Metropolitan Toronto, save and except sales managers, merchandise presentation managers, food services managers,

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operating services managers, maintenance managers, and foremen, persons above the rank of sales manager, merchandise presentation manager, food services manager, operating services manager, maintenance manager, or foreman, employees of Eaton Travel Ltd., employees of Eaton Bay Financial Services Ltd., office and clerical staff, management trainees, security staff, medical services nurse, and students employed on a co-operative program with a school, college or university (unit #2),

constitute units of employees of the respondent appropriate for collective bargaining.

8. The Board notes by way of clarity that the applicant has agreed to the exclusion of "personnel staff" on the basis that there are two persons employed in the personnel department of this store, and that these two persons would be "office" rather than "sales" staff in any event. The issue of employment in a confidential capacity simply does not arise in the present case.

9. The Board further notes by way of clarity that employees of the respondent headquartered or working out of other locations who work in the Scarborough Town Centre are not within either bargaining unit.

10. Based on all of the material before it, the Board is satisfied that more than fifty-five per cent of the employees of the respondent in each bargaining unit at the time the application was made were members of the applicant on April 17, 1984, 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.

11. A certificate will issue to the applicant for each bargaining unit.

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1800-81-U;1971-82-R Mann Ahokas and 75 other employees, v. The Canadian Union of Public Employees, Local 87, Canadian Union of Public Employees, Grace Hart-man, C. LeBel, Eileen Okerlund, William McFarlane, Gloria Welch, Arlene Parker and Eileen Rice, Respondents; The Municipal Technicians Association of the City of Thunder Bay, Applicant, v. The Corporation of the City of Thunder Bay, Respondent, v. Canadian Union of Public Employees, Local 87, Intervener

Bargaining Unit — Certification — Duty of Fair Representation — Evidence — Practice and Procedure — Remedies — Unfair Labour Practice — Misrepresentation and maneuvering breach of Act by union — Carving out of group not receiving representation last resort — Not necessary in circumstances — Restructuring of bargaining committee directed to provide input from affected group — Damages, refund of dues and costs not granted — Evidence allowed as to steps taken by union to remedy situation subsequent to finding of breach

BEFORE: M. G. Picher, Vice-Chairman, and Board Members J. A. Ronson and W. F. Rutherford.

APPEARANCES: F I. W Bickford for the complainant and applicant; S. R. Hennessv for the respondent union and intervener.

DECISION OF M. G. rICHER, VICE-CHAIRMAN AND BOARD MEMBER W. F. RUTHERFORD; May 4, 1984

1. By its decision dated May 31, 1983, reported at [1983] OLRB Rep. May 781, the Board determined that the respondent trade union in the section 68 complaint violated the duty of fair representation. We remained seized for the purpose of hearing further submissions with respect to the issue of remedy, reserving the right to deal with outstanding issues in respect of the application for certification as part of the same proceedings. To that end a further hearing was held in Thunder Bay at the which the parties to both the section 68 complaint and the application for certification made full submissions on all issues then outstanding. Those issues are the remedy appropriate to redress the violation of section 68 by the respondent union and the merits of the application for certification, having particular regard to the composition of the bargaining unit. As our earlier decisions have noted, the employees, some 76 in number, who were complainants in the section 68 proceedings have formed a separate employees' association representing technical and professional employees employed by the City. Their application for certification seeks to allow them to break away from the existing bargaining unit of inside municipal employees.

2. At the hearing devoted to the outstanding issues the respondent union sought to adduce evidence relating to the content of a collective agreement concluded since the complaint was filed as well as relating to the newly constituted executive. The purpose of its evidence was to establish that there has been a change of individuals responsible for bargaining on behalf of the unit of inside employees. Counsel for the complainant employees objected to the admission of that evidence, and his objection was overruled. During the hearing of the complaint we proceeded on the understanding that initially evidence and argument would be adduced going solely to the issue of the merits of whether there had been a violation of the duty of fair representation. It was understood that we would remain seized of the larger issue

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of the remedy, and the parties marshalled their evidence pursuant to that understanding. In our view it would be manifestly unfair to now prevent the union from adducing evidence which could establish some mitigation of the damage to the complainants or a bona fide attempt by the respondent union to make adjustments with a view to protecting them in the future. Labour relations realities are not frozen on the date of a given complaint. It is well established that the Board will, in any section 89 complaint, consider the conduct of the parties both before and after a complaint has been filed with a view to fashioning the most appropriate remedial response. A union could not, for example, object to the admission of evidence establishing that employees discharged for anti-union animus have been reinstated by the employer since the complaint was filed. Developments of that kind are significant facts which the Board can and should take into account in the overall determination of a remedy. For the foregoing reasons the Board allowed the union to adduce the evidence which it proposed to call.

3. Counsel for the complainants then indicated that he wished to call evidence to establish what he alleged was a recent violation of the duty of fair representation against a technical employee, Mr. William Kuzik. It appears that Mr. Kuzik was unsuccessful in an application for local union funds to attend a CUPE conference in Toronto. It is alleged that the person sent to the conference by the local was less directly involved in technical and professional matters than Mr. Kuzik and was selected as a result of discrimination or bad faith.

4. For several reasons, we declined to allow that evidence to be adduced. Firstly, Mr. Kuzik is not and never has been a complainant in these proceedings. As the evidence establishes, he remained active in the respondent union, retaining an executive office as part of the bargaining committee well after the split between the respondent union and the employees represented by Mr. Roy and Mr. Zapior. Secondly, and more importantly, as the Board noted in its earlier decision the duty of fair representation relates to the representation of individual bargaining unit members in their relations with their employer. It does not involve scrutiny of the political give and take internal to a union, save in the narrow exception where union conduct may involve intimidation and coercion in violation of specific provisions of the Labour Relations Act. In the principal hearing the Board specifically overruled the attempt of counsel for the complainants to adduce evidence with respect to alleged irregularities in the allocation of funds for a union convention in Winnipeg. See The Corporation of the City of Thunder Bax', [1983] OLRB Rep. May 781 at 811-12. For the same reasons we declined to hear the additional evidence respecting Mr. Kuzik, who is not a complainant in these proceedings.

5. Counsel for the complainants, who are also the members who constitute the applicant in the request for certification, made a number of alternative submissions. Firstly, he maintains that the Board should certify the Municipal Technicians' Association as a separate bargaining unit because of the quality of representation which they have received in the past, the separate community of interest which he maintains they have and, lastly, the aggravated division between the technical and professional employees and the clerical employees arising out of the violation of section 68. Secondly, he seeks damages in relation to the wages which he maintains were lost to the complainants by virtue of the violation of section 68 by the the respondent union. Thirdly, he asks for an order for the payment of legal costs to the complainants in the section 89 complaint. Fourthly, he maintains that the complainants should be refunded all dues which they have paid to Local 87 since the date of the complaint, with interest. Finally, and in the alternative, he submits that if the Board does not accept that the existing bargaining unit should be divided in a way that would remove part of it from the

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hands of the respondent local, the Board should order the local to assign that part of its bargaining rights for the technical and professional employees to the applicant association on condition that it receive a charter as a local from CUPE's national.

6. Counsel for the complainants stresses the erosion of the differential in wages which has marked the history of the existing bargaining unit, noting that in 1970 the employees in the higher rated categories had a wage differential of 122.5 per cent over the the employees, chiefly clerical and secretarial, in the lower rated groups. That margin was reduced to 63 per cent by 1981. He argues that while that does not disclose a violation of section 68 it does support the submission that there has been a marked deficiency in the quality of representation of the technical and professional employees who have felt compelled to form their own association. Pointing to the efforts of Mr. Roy to explain to the general membership the severity of the ongoing erosion of the position of the higher rated employees, counsel for the complainants emphasizes that the respondent union fully appreciated the problems of the higher rated employees and deliberately ignored them. He submits that even though there has been a re-composition of the union executive, majoritarian domination by the clerical employees will continue. In his submission, for that reason there is no reason to believe that the situation will improve in the future. In this regard counsel for the complainants also notes the apparent inability of the respondent national union to correct or substantially influence the course of events within Local 87.

7. With respect to the argument on community of interest, counsel for the applicant association stresses the standards established by the Board's Usarco decision, [1967] OLRB Rep. Sept. 526. He submits that the nature of the work performed by the technical and professional employees, their conditions of employment, their skills, the administrative framework in which they are employed, the geographical location of their employment and their functional coherence and inter-dependence all would support the conclusion that they have a separate community of interest from the clerical and secretarial employees. He maintains that the development of new technologies, particularly in the area of computers, has produced a wider gap between the professional employees and those in the clerical ranks, so as to justify still further their separate treatment for the purposes of collective bargaining.

8. Counsel for the applicant association submits that its certification for a separate unit of clerical and professional employees would be the most adequate form of redress for the violation of the duty of fair representation found by the Board to have occurred. He argues that that would be the surest guarantee against the failure of representation which he submits has occurred to date. In the alternative, he maintains that if the Board is not prepared to sever the existing bargaining unit so as to remove it from the hands of the incumbent union, it should order Local 87 to invoke those procedures under the national constitution of the Canadian Union of Public Employees which would permit it to transfer part of its jurisdiction to the applicant association, thereby allowing the association to gain the status of a new local under CUPE, subject to the approval of the national.

9. With respect to the payment of compensation, the first submission of counsel for the complainants is that the Board should order the respondent local to pay to each of the complainant employees the difference between the amount of wages which were adopted by the general membership at its meeting of May 4, 1980 and the higher rate of wages which

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was then contained in the alternative offer of the City which the Board has found was wrongfully concealed from the general membership. That is the difference between the wage increase across the board of 67C an hour in the first year coupled with 9% in the second year and the more beneficial wage from the standpoint of the higher rated employees, which was the alternative offer of a wage increase of 8-1/2 per cent across the Board in the first year and 9% in the second. Counsel for the complainants maintains that that difference should be the measure of economic redress for the complainants, calculated with interest from January 1, 1980 to the present. Upon questioning from the Board counsel for the complainants indicated, as at the date of hearing, that the global sum of compensation payable pursuant to that formula would be approximately $152,000.

10. On behalf of the complainants, counsel also urged the Board to order the payment of legal costs, maintaining that the monies expended to obtain redress before the Board should be paid to the complainants to make them whole. He also submitted that, given the alienation of the complainants from the mainstream of Local 87, which he maintains actively worked against their interests throughout this complaint, they should be refunded all union dues which they have paid from the inception of the complaint.

11. Counsel for the respondent union argues emphatically that there should be no compensation paid to the complainants in the instant case. He expresses that there is no basis to conclude that if the violation of the duty of fair representation found by the Board had not occurred that the complainants would have succeeded in having the general membership ratify a collective agreement whose terms would be more favourable to them. Counsel for the respondent notes that the general membership had previously discussed the relative merits of percentage increases as opposed to dollars and cents across the board and had given the bargaining committee a mandate based on the general rejection of percentage increases in both years of the collective agreement. He also stressed that the parts of the City offer which was not disclosed at the general meeting were subsequently made known by the City in advance of the final ratification meeting. That knowledge made no difference to the outcome. In other words, according to the respondent union, the breach of the duty of fair representation which occurred when the members of the bargaining committee failed to candidly respond to questions from the general membership has not been shown to have caused any real economic loss to any of the complainants. At most, it is submitted, they lost the opportunity to make full argument to the general membership on the merits of the undisclosed alternative offer from the City. Since that formula had already been rejected after full discussion by the general membership, and was not embraced after the City's disclosures, the respondent union maintains that no causal link is established in the evidence to show that any financial loss has resulted to the complainants.

12. Counsel for the union also stresses the more generous provisions of the most recent collective agreement, made after the complaint was filed, as it affects the technical and professional employees. He emphasizes that the present collective agreement contains a wage provision incorporating a sliding scale for wage increases in the initial year, with a substantial extra benefit to the higher rated employees. The second stage of the wage package incorporates a percentage increase across the Board. Counsel for the respondent union submits that both of these wage factors in the new collective agreement represent important gains for the complainants and demonstrate the willingness of the local to rectify the wage compression which they have experienced.

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13. Counsel also points to the conduct of the complainants themselves as a further basis for denying any compensation. He notes that the actions of Mr. Zapior and Mr. Roy, particularly in their disregard of the mandate of the bargaining committee, contributed to the climate of suspicion which eventually led to the impugned actions of the union's executive. Counsel for the respondent argues that the deliberate withdrawal of Roy and Zapior, as well as the complainants who sympathized with them, from the mainstream of the union contributed in large measure to their own misfortune. He submits that they withdrew from active participation in the local at their own peril, and should not now be heard to complain about their limited involvement in the executive structure over the last two years. Lastly, it was submitted on behalf of the respondent that the delay in the bringing of this complaint, which the Board has found to have occurred between June of 1980 and July of 1981 has not been adequately explained by the complainants and was in fact without any justification. Counsel for the respondent submits that to award compensation for that period of time would unduly prejudice the union.

14. On behalf of the respondent local it was argued that the sole form of redress in this complaint should be an order of the Board requiring the restructuring of the bargaining committee. Counsel for the union notes that the inside employees are fairly evenly distributed across the wage classifications from Group 2 through Group 11. He therefore proposes that the Board fashion an order which would require the respondent local to establish a five-person bargaining committee with one representative to be elected from each of Groups 2 and 3, Groups 4 and 5, Groups 6 and 7, Groups 8 and 9 and Groups 10 and 11 respectively. According to counsel for the respondent union that would ensure a representation of the interests of the employees in each level of the wage classifications. More importantly, it would allow the complainants the opportunity to elect their own representative to the bargaining committee from the higher rated wage classifications in which their numbers predominate.

15. We turn to consider the merits of the submissions made to the Board. Of paramount concern is the possibility of severing the existing unit of office and clerical employees, or "inside employees", as they are generally known. In any application for certification it is the obligation of the Board to consider what deliniation of employees will be suited to collective bargaining as a group. While the Board has noted that it must not necessarily select the ideal bargaining unit designation, it does strive, insofar as possible, to fashion and preserve the most comprehensive unit of employees which will constitute a viable bargaining structure. The wish for self-determination on the part of a group of employees is a factor to be considered among others, but it is not the determining factor in all cases. (McDonald's Restaurants of Canada Ltd., [1974] OLRB Rep. Oct. 755; Ponderosa Steak House, [1974] OLRB Rep. Nov. 7; Canada Trustco Mortgage Co., [1977] OLRB Rep. June 330 and see also Parnell Foods Ltd, [1969] OLRB Rep. Apr. 38; Stratford General Hospital, [1976] OLRB Rep. Sept. 459.)

16. This is not the first time the Board has been requested by a group of technical and professional employees to give them separate representation for the purposes of collective bargaining. In the Stratford General Hospital case (supra) the Board examined at some length the merits of fragmenting bargaining units to accommodate the perceived separate interests of professional and para-professional employees. While that case dealt with technical and professional employees in a hospital setting, the collective bargaining concerns raised in the instant case are not dissimilar. One important difference is that in this case the bargaining structure

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incorporating the professional and technical employees along with the office and clerical employees has held for a substantial number of years, apparently without serious difficulty prior to the specific circumstances giving rise to this complaint.

17. We are also satisfied that the lines of distinction between the technical employees and the clerical employees in the instant case is, if anything, less significant than the lines which the Board found uncompelling as a basis to separate the various groups of professional and para-professional employees in the hospital setting in the Stratford case. We find it difficult, for example, to distinguish between the senior utilities clerk, who is in charge of collecting water bill arrears and is proposed to be included in the unit of technical employees, and the tax clerk, who collects business tax accounts and is sought to be excluded by the applicant. Even where broader distinctions are found, such as between a draftsman and a clerk typist, or between a social worker and a bookkeeper, the Board's overall sense is that they share fundamental employment interests that transcend the differences in their specific duties and responsibilities. Moreover, it is not without significance that the range of employees found in the existing bargaining unit of inside employees were represented together, apparently without incident for a substantial number of years, prior to the specific flare up that precipitated this case. In these circumstances the Board would be disposed to disturb the established bargaining unit only as a last resort, if it were satisfied that the failure of representation which occurred could not be corrected by some less drastic form of remedial redress.

18. Has there been a fundamental failure to represent the professional and technical employees that would justify the termination of the inside bargaining unit in its present form? In our view, the events giving rise to this complaint and application for certification can fairly be characterized as more of a skirmish than a war, more of a contest of personalities than groups. As we noted in our prior decision the decade between 1970 and 1980 saw some compression of wages in the higher rated categories of employees in the bargaining unit. While the Board does not disregard the impact of that development on the complainant employees, it should be noted that it was the City, and not the employees themselves, that initiated bargaining proposals to correct the imbalance. While the initial effort by the City was not successful, evidence respecting the most recent collective agreement indicates that substantial initiatives have been undertaken to restore the wage differentials in the inside bargaining unit in Thunder Bay to some reasonable comparability to differentials found in other municipalities in the province. In other words, while a tension may have developed over the issue of compression and the initial attempt at corrective action was not successful, the beginnings of a restorative process seems nevertheless to be under way within the framework of the existing bargaining unit.

19. On the whole, the dispute before the Board stems primarily from the conflict between several individuals in relation to one set of events. It is, in other words, a conflict more personal than institutional. Much of the mistrust and misunderstanding which precipitated this complaint originated in the bitter personal conflict between Mr. Roy and Mr. Zapior, on the one hand, and Ms. Rice and Ms. Parker on the other. The evidence now establishes that Ms. Rice and Ms. Parker, whose actions we found to be in breach of the duty of fair representation, no longer hold any union office. While the feud among these individuals did spread its bitterness to others in the bargaining unit, it appears to the Board that the new union executive is in a position to heal the old wounds and make a new beginning. We are fortified in that conclusion by the catch-up provisions for the complainant employees reflected in the sliding scale wage formula incorporated into the most recent collective agreement.

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20. While the improvements of one agreement may not be conclusive proof that the dissident employees will henceforth get representation more sensitive to their interests, it is a positive indication that the existing wounds can be healed. The collective bargaining process, including the section 68 complaint, appears to have led to some substantial correction in the wage differential of the higher rated employees in the bargaining unit. The Board is not unmindful that the instant complaint may have been instrumental in redirecting the course of events in a way favourable to the complainant employees. We do not believe that that should be held against the respondent union. Corrective action in the face of a complaint should always be hoped for. That very development is within the scheme of accommodative solutions to disputes contemplated in the provisions of the Labour Relations Act. There is, on the whole, substantial evidence to suggest that the bargaining unit as it is presently constituted can and will function effectively to represent the various interests of the employees within it.

21. Of natural concern for the Board is the viability of a bargaining unit restricted in its membership to technical and professional employees of the City of Thunder Bay. Presently the City bargains with three units of employees, being the inside and the outside work force and the library employees. For the Board to accept the position of the applicant for certification would create a fourth bargaining unit composed of one segment of inside employees. That unit would be created at the expense of virtually halving the present bargaining strength of the office, technical and clerical employees. The viability of a unit so fragmented is in serious question. Of equal importance, the City would be required to incur the time and expense of a fourth set of negotiations and ongoing relations with yet another bargaining agent as collective agreements are successively renewed.

22. A separate concern is the jeopardy to job mobility inherent in a two unit structure. It is not disputed that a number of the employees characterized by the applicant as technical or professional have no professional training or qualifications, and have themselves been promoted through the lower rated clerical ranks to the positions of responsibility which they now hold. The establishing of two different units, with separate seniority lists and protective promotion and job posting barriers could substantially reduce the job mobility of numbers of employees in the existing bargaining unit. By the same token, it would limit the flexibility which the employer now has in promoting a broader career path for its inside employees.

23. One final concern is the interest of industrial stability in the operations of a substantial public sector employer. A municipality such as the respondent in this application provides a range of services to the public. Some of the services it provides are critical to local industrial and commercial activity. While these are not legislatively designated as essential services, nevertheless a labour board dealing with municipal bargaining units must be mindful of preserving rational and comprehensive bargaining structure which will conduce to a minimum of interruptions of service. Doubling the number of bargaining units for the inside workers, with the attendant risk for greater disruptions of service in the event of strikes, raises serious concerns for the general public interest (cf. lnsurance Corporation of British Columbia, [1974] 1 C.L.R.B. Rep. 403 (B.C.L.R.B.); B.C. Ferry Corporation, [1977] 1 C.L.R.B. Rep. 526). Uncertainty in respect of the stability of bargaining is further raised by both the recent proliferation of technical and professional specializations, and the already segmented nature of municipal management (see, generally, Adams, "Collective Bargaining by Salaried Professionals" (1977) 32 I.R. 184; Kochan "City Employee Bargaining with a Divided Management" (1971, University of Wisconsin Press) and Simmons "Collective Bargaining at the

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Municipal Government Level in Canada", (Draft study for the task force on labour relations, Privy Council Office, 1968)).

24. The Board does not view these as attractive alternatives. If we were satisfied that the interests of the complainant employees could not be fairly represented within the context of the larger bargaining unit we would not shrink from adopting the bargaining structure proposed by the applicant association. On the whole of the evidence before us, however, we are not satisfied that that formula, fraught as it is with difficulties, is either necessary or appropriate in the circumstances of this case. We are satisfied that the interests of the technical and professional employees who are complainants in the section 68 complaint can be adequately redressed by a significant remedial order under section 89. We cannot conclude on the material before us that there has been an overall failure of representation so fundamental that the bargaining unit itself should be permanently dismantled. We are satisfied that the unit as presently constituted remains the unit appropriate for collective bargaining. Given that the membership evidence submitted by the applicant association represents less than forty-five per cent of the existing bargaining unit on the date of the application, the application for certification must be dismissed.

25. We turn to consider the remedy appropriate to redress the violation of section 68 found to have been committed by the respondent union and the members of its executive. We deal firstly with the issue of compensation. The Board finds substantial merit in the submission of counsel for the respondent union that the evidence falls short of establishing any meaningful causal link between the wage settlement finally adopted by the union and the actions which we have found to be inconsistent with the duty of fair representation. As noted in the Board's earlier decision on the merits of the complaint, Mr. Roy and Mr. Zapior had every opportunity to persuade the general membership of the merits of an across the board percentage increase. This in fact was done at a general meeting which subsequently rejected the view which they advanced, and conferred a different mandate upon the bargaining committee. There is little, if any, reason to believe that the general membership would have come to any different conclusion if there had been a disclosure at the subsequent general meeting of the alternate offer of the City for a wage increase in terms of percentage across the board. We are fortified in that conclusion by the fact that when the City itself made its alternate offer known directly to the employees in advance of the union's final ratification vote, it made no significant difference.

26. While the Board has indicated that where appropriate compensation will be awarded in respect of lost opportunity, the value of the opportunity lost must be realistically assessed, and the amount of compensation awarded must be a fair reflection of that value. Compensation for lost opportunity, like all heads of compensation, should not amount to punitive or exemplary damages, nor should it be a windfall which would not in any event have been enjoyed by the complaining party.

27. We are compelled to conclude, on the balance of probabilities, that no practical difference would have resulted if Ms. Rice and the other members of the bargaining committee had disclosed the alternative offer when they were asked about it in the general membership meeting by Mr. Roy and Mr. Zapior. In other words, we are satisfied, on the preponderance of the evidence, that the wage outcome affecting the complainants did not flow from the violation of the duty of fair representation. We also doubt the remedial value of making an order of compensation which would, in effect, amount to a transfer of money from one group of

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employees to another. The wage compression itself was not a violation of the Act. The duty of fair representation was breached by the misrepresentation and procedural maneuvering of a small group of individuals who have since forfeited their office. In these circumstances, the payment of damages sought by the complainants would be tantamount to compensating them for their losses resulting from wage compression. Moreover, given our conclusion that the bargaining unit should not be severed, we must have additional concerns. Any compensation ordered would be paid by the members of the Local. In these circumstances we seriously doubt the wisdom of an order whose practical effect will be to take money from one group of employees — who did not themselves commit the unfair labour practice — and put it into the pocket of the complainants. Quite apart from the impropriety of that order, it would in all likelihood exacerbate rather than heal the differences between these two groups. It would have a negative effect from a labour relations standpoint. In light of the Board's conclusion on the issue of compensation it is not necessary to deal with the alternative argument of the respondent union in respect of delay.

28. We have more difficulty still with the submission of counsel for the complainants that they should be reimbursed for union dues paid since the inception of their grievance. There is no evidence to suggest that they have not continued to have the benefit of union representation during that time. On the contrary, as noted above, a collective agreement with substantial special benefits for the complainant employees has been concluded in the interim. If the complainants withdrew from active involvement in the day-to-day affairs of the respondent local, they did so at their own risk. The collection of dues is essential to the successful operation of any union, and to allow that head of recovery would, in our view, unduly penalize the respondent union and its members and would confer a windfall on the complainants. For reasons elaborated in previous Board decisions, we are also not of the view that this is a case in which the Board should make any order in respect of costs. (Repac Construction & Materials Ltd., [1976] OLRB Rep. Oct. 610; The New Gregory House Inc., [1980] OLRB Rep. June 873 at pp 874-75).

29. A remedial order under section 89 of the Act should be fashioned to respond to the particular circumstances of the case. The many kinds of problems and complaints that can arise in the collective bargaining context are not susceptible to redress by a limited number of boilerplate remedies, (Radio Shack, [1979] OLRB Rep. Dec. 1220). In this case the Board concludes that the problem is one of communication and trust. For the reasons elaborated in the Board's earlier decision, a segment of employees in the bargaining unit have lost confidence in the truth of what they are being told by the members of the inside bargaining committee and have consequently lost faith in the ratification process conducted by the local. The extent of that concern caused some 75 employees to form a separate association, file a complaint under section 68 of the Act and seek certification as a union in their own right. While, as the Board has noted, we do not feel that this is an appropriate circumstance to fragment the existing bargaining unit, we are equally satisfied that the legitimate concerns of the complainant employees can be satisfactorily protected by a remedial order pursuant to the section 68 complaint.

30. The collective bargaining problems underlying the complaint and application for certification are not unprecedented. The technical and professional employees of the City feel that their special interests have not been sufficiently appreciated and protected by the respondent local, principally because it has been influenced by the majoritarian interests of the clerical employees. The concern of the minority group in this case is analogous to the special concerns

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of skilled employees in established crafts who form part of a larger bargaining unit of production employees represented by an industrial union. The tension between industrial and craft interests has been a recurring theme in the history of the North America labour movement, although the old rivalries between craft and industrial unions substantially abated with the merger of the A.F.L. and C.I.O. in the United Stated and the emergence of the C.L.C. in Canada. More recently, the issue of accommodating the interests of skilled trades within an industrial bargaining unit has come to be resolved within the framework of the individual trade unions. Some unions have responded by giving to skilled members a number of guaranteed seats on their general policy-making bodies. Others have made constitutional provisions for the participation of special representatives of the skilled trades in the negotiation of collective agreements, notably in the auto industry. In some circumstances craft participation in industrial union government has been implemented by setting up separate locals for some categories of skilled employees. The mainstream of the union movement, however, appears to favour the representation of the skilled trades within the context of larger industrial bargaining units, with special provisions to protect their interests. (See, generally, Webber "The Craft-Industrial Issue Revisited: A Study of Union Government", (1963) 16 Industrial and Labour Relations Review, 381.) While the circumstances of the instant case may not precisely parallel those that led to corrective action to protect the interests of the skilled trades within the industrial unions, we find the history of industrial bargaining units helpful in thinking about the problems that have led to this complaint. Experience has shown that divergent employee interests can be accommodated within a comprehensive bargaining structure. The lessons learned in the blue collar sector may be instructive in resolving comparable problems that may arise among white collar employees.

3 1. The remedial challenge in the instant case is to restore trust and accountability in the process surrounding the negotiation and ratification of the collective agreement. The Board agrees with counsel for the respondent union that this can be best achieved by implementing special protections for the complainant employees at the level of the bargaining committee structure. A system of proportional representation, requiring that the bargaining committee be composed of five members separately elected from different tiers of the wage grid should be implemented forthwith. That will insure that the complainants, who are the minority in the overall unit but are an overwhelming majority in the higher paid wage categories, will have a meaningful place at the bargaining table.

32. In a bargaining committee so structured the employees in the higher rated groups will be assured representation of their interest in a number of important ways. ThroLgh their own representatives they will be involved from the outset in the formulation of the union's bargaining objectives. They will have a hand in framing the positions and responses which are adopted by the union as bargaining progresses. They will have input into the way in which the union's demands and arguments are put to the employer's bargaining representatives. Perhaps most importantly for the concerns of the complainants in this case, they will witness firsthand the employer's responses and will be privy to the terms of any offer which it makes. Lastly, they will be in a position to insure faithful reports to the general membership on the state of negotiations and the terms of any outstanding offer. They will, in short, be in a position to insure that the events which led to this complaint do not happen again. The bargaining committee so structured will avoid the possibility of either deliberate or indifferent misinformation of the technical and professional members of the bargaining unit in the negotiation of a collective agreement.

769

33. A Board remedy should, insofar as possible, not interfere unduly with the long term prerogatives of an employer or a union to manage its own affairs. In our view, however, the adjustment in the composition of the bargaining committee suggested by the local should be implemented on a permanent basis to ensure adequate representation of the interests of all employees in the bargaining unit.

34. We are also of the view that this is an appropriate case to order a posting. A public statement posted and mailed to all members of the local, signed by its president, acknowledging the violation of the Act found by the Board and undertaking to observe the duty of fair representation in the future should contribute substantially to restoring the confidence of the complainants in the willingness and ability of the union to fairly represent them.

35. It is the Board's judgement that the foregoing remedies will redress the excesses and mistrust of the past and that the prognosis for the future of the bargaining unit is good. That view is fortified by the substantial special wage gains which the local made for the complainant employees in the last round of negotiations and, secondly, the complete change in the composition of the local's executive which has taken place since the events giving rise to this complaint. In light of these events we have every reason to believe that the complainants will be fairly represented in the future. Should our confidence in this regard prove wrong, more extreme corrective measures will be available.

36. For the foregoing reasons, therefore, the Board orders as follows:

(1) (a) The bargaining committee of the local shall be restructured to be composed of five representatives with one representative from each of classification Groups 2 and 3, Groups 4 and 5, Groups 6 and 7, Groups 8 and 9 and Groups 10 and 11 respectively. Should the foregoing classifications be changed, a similar formula to insure proportional representation shall be adopted, mutatis mutandis.

(b) Ballots for the election of each group representative shall be cast exclusively by employees within the affected groups. The five representatives so chosen shall be voting members of the committee. They shall elect a chairperson from among their number as well as such other officers as the local may, through its bylaws, deem appropriate. The foregoing provisions shall not abrogate or limit the attendance at bargaining committee meetings of such other observers or resource persons as may be provided in the constitution and by-laws of the Local union.

(2) A notice in the form of "Appendix A", signed by the President of the local, shall be sent by the respondent Local 87 by prepaid mail to each member of the inside bargaining unit and shall be prominently posted for 60 consecutive working days on any notice board in the workplace normally used for the posting of union notices or bulletins.

770

36. The Board remains seized of this complaint in the event of any dispute between the

parties with respect to the interpretation or implementation of its remedial order.

DECISION OF BOARD MEMBER J. A. RONSON;

1. In my earlier decision in this matter I concluded that the complainants sustained real and substantial harm when the local union removed Messrs. Zapior and Roy from the bargaining committee and then compounded the harm by refusing to disclose to the local membership the full offer made by the employer. I found there was a fundamental failure by the local union to represent the complainants and protect their bargaining rights.

2. We are dealing not just with a conflict between personalities, but with a conflict between philosophies — i.e., who deserves the bigger slice of pie. Within the confines of a union bargaining unit, there can hardly be a conflict that is more "institutional" in nature.

3. But for one aspect (which I will come back to) I agree with the remedies ordered by my colleagues. But I do have reservations: given the attitude of the persons who testified and human nature being what it is, there is going to have to be a marked changed in those attitudes by all concerned in order for collective bargaining to work. Having tried to work within the rules framework of their local union, and having been clubbed by the majority of their fellow employees in total disregard of those same rules, the complainants will be most concerned at having to bargain within the same majoritarian framework. The resolution of the problems in this local will require the fastidious exercise of good faith between the local union and the complainants and between all groups of employees in the particular bargaining unit.

4. I would go further than my colleagues and award the complainants damages for the harm suffered. The recent decision of the Board in Consolidated Bathurst Packaging Ltd. [1984] OLRB Rep. Mar. 422 reiterates the Board's position about assessing the loss of opportunity to negotiate a collective agreement when that loss was occasioned by a breach of the Act. In order to award damages in such a situation the Board applied the reasoning of the Supreme Court of Canada in Kenkel et al v. Hyman et al 1939 CanLII 7 (SCC), [1939] 4 D.L.R. 1 found at page 7:

"For my part I can find no authority in either Chaplin v. Hicks or Carson v. Willits justifying any Court in awarding any more than a nominal sum as damages for loss of a mere change of possible benefit except upon evidence proving that there was some reasonable probability of the plaintiff realizing therefrom an advantage of some real substantial monetary value."

(emphasis added).

The reasonable probability of monetary advantage must be assessed as of the instant immediately preceding the unlawful actions by the local union. To consider what occurred shortly thereafter is to allow the local union to benefit from the illegality.

5. Is there evidence from which it can be concluded that the complainants had a reasonable possibility of concluding a better deal for themselves in the collective agreement? I so conclude based on the following:

771

(a) the employer agreed with the efforts of Zapior and Roy to alleviate the wage compression;

(b) if the local union felt the membership would not act to reduce compression, why did it withhold the full offer from its members; and

(c) the most recent collective agreement contains more generous provisions as it affects the technical and professional employees.

6. There is no reason why the Board should hesitate to award damages in this case on the same basis as in Consolidated Bathurst Packaging Ltd., supra, unless it is for some policy reason as alluded to by the Board in Canada Cement Lefarge Ltd., [1981] OLRB Rep. Dec. 1722. If so, the applicable parameters of that policy should be delineated.

7. I would further award the complainants the damages calculated as set out in paragraph 9 of my colleagues' decision, totalling approximately $152,000 with the Board remaining seized should the parties not be able to agree on the exact quantum of damages.

Appendix A^M

The Labour Relations Act

NOTICE TO EMPLOYEES

Posted by Order of the Ontario Labour Relations Board

WE, LOCAL 87, CANADIAN UNION OF PUBLIC EMPLOYEES, HAVE ISSUED THIS NOTICE IN COMPLIANCE WITH AN

ORDER OF THE ONTARIO LABOUR RELATIONS BOARD ISSUED AFTER A HEARING IN WHICH WE PARTICIPATED. THE

ONTARIO LABOUR RELATIONS BOARD FOUND THAT WE VIOLATED THE LABOUR RELATIONS ACT AND HAS ORDERED US TO

INFORM ALL EMPLOYEES IN THE INSIDE BARGAINING UNIT OF THE CITY OF THUNDER BAY OF THEIR RIG~4TS:

THE ACT GIVES INDIVIDUAL EMPLOYEES THESE RIGHTS:

To BE REPRESENTED BY A TRADE UNION AND TO

PARTICIPATE IN ITS LAWFUL ACITIVTIES.

To BE REPRESENTED BY A TRADE UNION IN A WAY

THAT IS NOT ARBITRARY, DISCRIMINATORY OR IN

BAD FAITH.

WE ASSURE ALL EMPLOYEES IN THE INSIDE BARGAINING UNIT OF THE CITY OF THUNDER BAY REPRESENTED BY LOCAL 87 OF THE CANADIAN UNION OF PUBLIC EMPLOYEES THAT:

WE WILL NOT DO ANYTHING THAT INTERFERES WITH

THESE RIGHTS.

WE WILL NOT ENGAGE IN MISREPRESENTATION OR

PROCEDURAL MEASURES THAT RESTRICT THE RIGHTS

OF ANY EMPLOYEES TO PARTICIPATE IN THE PROCESS

OF COLLECTIVE BARGAINING.

WE WILL NOT ENGAGE IN ANY CONDUCT THAT IS

ARBITRARY, DISCRIMINATORY OR IN BAD FAITH IN

THE REPRESENTATION OF ANY EMPLOYEES.

WE WILL IMPLEMENT THE RESTRUCTURING OF THE

BARGAINING COMMITTEE FOR THE INSIDE BARGAINING

UNIT AS ORDERED BY THE BOARD.

LOCAL 87, CANADIAN UNION OF

PUBLIC EMPLOYEES

PER: _____________________________________ PRESIDENT

This is an official notice of the Board and must not be removed or defaced.

This notice must remain posted for 60 consecutive working days.

DATED this 4TH day of MAY .1984.

773

1463-83-R Retail Wholesale and Department Store Union Local 414, Applicant, v.

555190 Ontario Ltd. carrying on business as Valencia Foods, Respondent

Sale of a Business — Dominion closing store and surrendering — Valencia obtaining lease of closed premises and purchasing some of Dominion's assets in unrelated and unconditional transactions — 4 1/2 month hiatus before opening of Valencia store — No management or employees of Dominion absorbed — Store similar to pre-existing Valencia stores — Acquisition of premises of retail food store not conclusive of sale of business — No sale but expansion of existing business

BEFORE: Owen V. Gray, Vice-Chairman and Board Members J. A. Ronson and W. F. Rutherford.

APPEARANCES: David I. Bloom and Bob Mackay for the applicant; Roy C. Filion, Q. C. and Robert E. Salisbury for the respondent.

DECISION OF THE BOARD; May 9, 1984

1. The name of the respondent is amended to read: "555190 Ontario Ltd. carrying on business as Valencia Foods".

2. This application focuses on a building in Martingrove Shopping Centre, a small shopping plaza in the City of Etobicoke in the Municipality of Metropolitan Toronto. For many years, Dominion Stores Limited ("Dominion") operated a retail food store in that building. That store closed April 30, 1983. The respondent opened a retail food store in the same premises on September 14, 1983. The applicant trade union says that Dominion has sold to the respondent that part of its business formerly conducted in the subject building. It asks for a declaration that, pursuant to section 63 of the Labour Relations Act, the respondent is bound by the terms of the applicant's current collective agreement with Dominion, which applies to all employees of Dominion at its stores in various municipalities including the Municipality of Metropolitan Toronto. The respondent denies that there has been a sale of business within the meaning of section 63 of the Act. A group of its employees filed a petition opposing this application. Several employees attended on the first day of hearing. They were asked by the Board whether they wished to take any formal part in the proceedings. None asked to intervene; one told the Board that the employees were content to leave the defence of the application to the respondent.

3. Martingrove Shopping Centre consists of two buildings connected by a mall and surrounded by a parking lot, occupying together a site of approximately three acres bounded on all four sides by municipal streets. One building contains about 12,400 square feet of retail space at ground level, occupied at the time the application was heard by a barber shop/beauty parlour, bakery, ladies' wear store, dry cleaners, video movie retail outlet and Chinese restaurant; this building also has a second storey of about 7,700 square feet subdivided into a half dozen offices. The other building contains approximately 16,000 square feet. It was leased by Dominion in 1968 for a 20-year term, with four consecutive options to renew for further 5-year terms at the original rent. Only escalation of property taxes was the subject of any "pass through" to the tenant under that lease. By 1976, when Victern Developments Limited ("Victern") bought the plaza and became Dominion's landlord, this lease was financially unattractive from a landlord's perspective and promised to be increasingly so as the years went

774

on. Sid Sitzer, the principal of Victern, took this into account when negotiating the price paid for the plaza. At that time, Sitzer believed the premises would become increasingly uneconomic for Dominion, despite the attractive rent. To his knowledge, a typical Dominion store operation in 1976 occupied 40,000 or more square feet. There would, he thought, be diseconomies of scale in trying to conduct a full Dominion store operation in 16,000 square feet of space. He thought Dominion would be ready to give up the lease before the end of its term.

4. Mr. Sitzer's initial impression was borne out. As time went on it appeared that Dominion was not devoting much energy or attention to the promotion of business at this location. Sitzer could see that customer traffic in the Dominion store was light. The ancillary retail tenants were complaining that the Dominion store was doing nothing to attract business; their sales were down as a consequence, as Sitzer knew because their rent (unlike Dominion's) was tied to their gross sales. Sitzer wrote to Dominion in July, 1982. He said he had in mind renovations to Martingrove Shopping Centre which would require demolition of the building occupied there by Dominion. He invited Dominion to discuss the terms of a surrender of lease. Dominion was receptive. By November, 1982, Dominion had agreed in principle to a surrender, on terms still to be negotiated. The most substantial outstanding term was the amount to be paid by Victern for the surrender. Negotiations continued in the new year. and concluded on March 17, 1983, in an oral agreement between A. D. Titherington on behalf of Dominion and Annette Ross, Sitzer's sister and Victern's property manager, on behalf of Victern. The agreement fixed the amount to be paid by Victern to Dominion, and required that Dominion remove its trade, fixtures and equipment from the location and deliver vacant possession of the premises in a "broom-swept condition" by May 20, 1983. This agreement was reduced to writing in a letter dated March 22, 1983 from Dominion to Victern.

5. In late 1982, after Dominion had agreed in principle to a surrender of its lease and before the terms of the surrender were settled, Sitzer began to hear rumours from Eiis other tenants that Dominion was moving out, and Victern began receiving inquiries about the Dominion store space. He had by this point abandoned his earlier plan for major reconstruction of the plaza. He now contemplated renovating and subdividing the Dominion store space into smaller units for which he intended to seek a butcher, a baker, a fruit and vegetable shop, and similar operations as suitable tenants. His discussions with Dominion were ongoing, however, and Victern was unable to tell any prospective tenant that all or any of the [)ominion store space was or would later be available. It was at this point that Valencia Foods first entered the picture.

6. Valencia Foods is a trade name used by the respondent and its two sister companies:

359906 Ontario Limited and Valencia Foods Inc. The shares of all three companies a~e owned by members of the Troiani family, of which Pompeo Troiani is the patriarch. Valencia Foods has operated a 13,000 square foot supermarket on Sheppard Avenue near Jane Street in Metropolitan Toronto for approximately six years; a second supermarket of about 10,0(10 square feet was opened in February, 1980 in a plaza near Highway 7 and Islington Avenue ~n Woodbridge, just to the north of Metropolitan Toronto. Both locations cater particularly to what was described as the "Italian" market. Pompeo Troiani has been doing business in the food industry "in the Italian way" since 1956. Valencia Foods' stores carry the products Mr. Troiani believes Italian people want. The stores carry more and different products than would be found in a conventional food store of the same or even larger size; this is especially so with respect

775

to cheeses, meats, fruit and fresh produce. The predominant language spoken in Valencia Foods' stores between staff and customers is Italian.

7. As head of the family, Pompeo Troiani is in charge of seeking out locations for new Valencia Foods' stores. He looks for locations near Italian neighbourhoods. In very early 1983, he noticed that houses were going up in an area near where he lives and, it turns out, near the shopping plaza in question. One day in February, 1983, he went to an Italian real estate office to ask what sort of people were buying those houses. He was told that 90 per cent of the purchasers were Italian. He spent more time exploring the area. He saw the Martingrove Shopping Centre, and went in to take a look. He noticed that the barber was Italian and engaged him in conversation, asking how business was. The barber said that business was dead, that the Dominion Store across the mall was closing and no one seemed to want to come into the shopping centre. Troiani asked how the barber knew that the Dominion Store was closing; the barber said there was a rumour to that effect. Troiani asked who the landlord was, and the barber gave him Victern's telephone number and Annette Ross' name. When he got back to his office, Mr. Troiani asked his son, Frank, to call Victern. Frank Troiani contacted AnnetteRoss by telephone. He asked about the availability of the Dominion Store space in the Martingrove Shopping Centre. Ms. Ross said there was no space available at that time. As there were no signs at the plaza to prompt such an enquiry, Ms. Ross asked Frank how he had heard about the centre. Frank told her about the barber's rumour. Frank followed up with a letter confirming the interest of Valencia Foods in renting space in the Martingrove Shopping Centre. He requested a meeting. Ms. Ross was impressed, and arranged to meet with Frank and Pompeo Troiani on February 17, 1983.

8. At the meeting of February 17, 1983, the Troiani's told Ms. Ross about the Valencia Foods operation, its size and existing locations and the amount of business done in those locations. Ms. Ross concluded that Valencia Foods was a desirable prospective tenant, and had it in mind to attract them to this or some other location managed or developed by Victern. While rumours about the Dominion Store space had prompted many inquiries, there had been only one other approach which Ms. Ross had taken seriously, and that was by a real estate agent acting on behalf of an as yet undisclosed client. Ms. Ross did not negotiate terms of lease of the Dominion store premises with Valencia at this meeting. Those premises were not yet available. Moreover, Sitzer was still planning to subdivide the Dominion store space; Valencia, on the other hand, wanted at least 12,000 square feet, and preferably the full 16,000 square feet, if the Dominion store premises became available. Sitzer was leaving in late February on an extended trip out of the country. Ross thought he should meet the Troiani's before he left.

9. Sitzer met the Troiani's briefly on or shortly before the day he left the country. In

this or the earlier meeting with Ms. Ross, the Troiani's made it clear that their operation would include a bakery, a fresh produce section and a full service meat counter. These were elements Sitzer had in mind for subdivided units in the Dominion store space, once that space became available. The Troiani's were trying to persuade Sitzer that he could accomplish his objectives by renting to them when the space became available. Neither Ross nor Sitzer made any commitment to the Troiani's at this meeting, which was quite short. Sitzer was impressed with the Troiani's however. While subdivided space would attract more rent per square foot than undivided space, there were other factors for Sitzer to consider. On balance, Sitzer decided he would be prepared rent the entire Dominion store space to Valencia when it came available, if the price were right. He made this decision after his meeting with the Troiani's and before

776

March 17. Sitzer gave Ross instructions on the negotiations with Dominion before he left the country, and in periodic telephone conversations thereafter. By the same means, and before March 17, he also instructed her on the position to take with Valencia.

10. Victern had no further contact with Valencia until after March 17, 1983, when Ross concluded the surrender terms with Dominion. Annette Ross then contacted the Troiani's, met with them and negotiated the terms of a lease of the space Dominion had agreed to surrender. An offer to lease was prepared on Victern's standard form and sent to Valencia for execution on March 22, 1983. Mr. Troiani amended the document in accordance with his lawyer's advice, executed it, and returned it to Victern. It was not signed on behalf of Victern until after Victern received the letter from Dominion of March 22, 1983, confirming the terms of the surrender agreement. The tenant named in the agreement to lease is "359906 Ontario Limited trading as Valencia Foods". The Board was told that the respondent's sister company executed the agreement because the respondent had not yet been incorporated for the purpose of operating the Valencia Foods store at the subject location. The formal lease, prepared later, was executed by the respondent itself. The parties are agreed that we should ignore the separate existence and involvement of the intermediary, and deal with these facts as though the actions of the Troiani's were actions on behalf of the named respondent at all material times.

11. After the agreement to lease was entered into, Mr. Troiani started making plans to equip and renovate the subject premises. In early May he became aware from his refrigeration supplier that Dominion was selling some of the equipment it had used at the subject premises, as well as equipment located at a Victoria Park store which Dominion was also closing at that time. The Troiani's submitted to Dominion a list of the equipment Valencia wanted to buy, then learned that some of that equipment had already been sold. On May 9, 1983, Valencia purchased a great deal of the equipment which remained unsold at the subject premises, for a price of $56,000. This amount was less than 15 per cent of the total amount paid by Valencia to equip and renovate the building for operation as a Valencia Foods store. Victern played no part in the dealings between Valencia and Dominion. Victern only became aware of those dealings when it received Dominion's draft surrender of lease, in which Victern's requirement that the premises be left in a broom-swept condition had been modified by Dominic.n to give it the right to leave on the premises the fixtures it had sold to Valencia.

12. The respondent's new Valencia Foods store opened September 14, 1983. The store's store manager, bookkeepers, department heads and a number of its senior clerks, a total of 15 employees, came from Valencia Foods' other two operating stores. The balance of the 50 full-time and part-time employees ultimately employed at the store were hired from among persons who responded to a sign put up in the store premises two or three weeks before the opening. Between fifty and one hundred people responded to that sign by submitting job applications. None of those applicants listed the subject Dominion Store as a prior employer.

13. Since the opening, Valencia Foods has operated the new store in the same manner as its other two stores. The new store advertised in local weekly newspapers in the English language. The other two stores are mentioned in that advertising. All three stores advertised and still advertise in Italian language print and electronic media: Corriere Canadese and CHIN Radio. All three stores enjoy common administration, and centralized purchasing for all but a few small items.

14. The applicant did not name Dominion Stores Limited as a respondent; no one gave

777

evidence on Dominion's behalf. The applicant subpoenaed and interviewed Mr. Titherington, the Dominion employee most familiar with the lease surrender negotiations. Mr. Titherington was not called as a witness. The applicant also subpoenaed and interviewed Mr. Field, the Dominion employee familiar with the sale of store fixtures to Valencia. Mr. Field was not called as a witness. About Dominion's operations at Martingrove Shopping Centre prior to the surrender of the lease, we have only Mr. Sitzer's observations. About Dominion's operations following the surrender, we know from Mr. Troiani that after he opened the store in the Martingrove Shopping Centre he found that there was a Dominion store operating a couple of miles south of Albion Road on Kipling Avenue, which we note would be a drive of about 4 miles from the subject site. From the cross-examination of the applicant's business agent, Robert McKay, we know that employees of Dominion at the closed store were absorbed into other Dominion stores pursuant to the provisions of the applicant's collective agreement with Dominion. Although Mr. McKay thought there might have been some employees who had been denied that opportunity or did not qualify for it, he was unable to name one.

II

15. Counsel for the respondent argued that the opening of his client's store in the Martingrove Shopping Centre represented the expansion of its existing, parallel business, not the purchase of a part of Dominion's business. He emphasized the differences between the Dominion operation and the respondent's "Italian" operation, and noted that the managerial skills necessary to run the operation came entirely from the existing Valencia Foods operations, not from Dominion. He argued that the surrender of lease from Dominion to Victern, the lease from Victern to Valencia and the sale of fixtures from Dominion to Valencia were all independent transactions no one of which had been conditional on any of the others. He suggested this was one of several critical distinctions between the facts of this case and the facts in More Groceteria Limited, [1980] OLRB Rep. Apr. 486. Counsel noted that the origin of managerial skills and the unrelated nature of the succession of transactions by which the alleged successor obtains a business location were both important elements in the board's decision in Calmil Enterprises, [1980] OLRB Rep. Apr. 401.

16. Counsel for the respondent also argued that the facts in this case are on all fours with the facts in Sunnybrook Food Market (Keele) Limited, [1974] OLRB Rep. Jan. 47. In that case, A & P had operated a supermarket in Brampton from premises it occupied pursuant to a 10-year lease which included three extension options of 5 years each. Six months before the end of the initial 10 year term, A & P gave notice to the lessor that it would not be exercising its options. The reason A & P gave for this decision was that the premises were small and outmoded, and only marginally profitable. The respondent Sunnybrook came into the picture when it leased from A & P's landlord the premises occupied by A&P for a term commencing upon the expiry of A & P's lease. Sunnybrook had no dealings with A&P before committing itself to a lease of the premises, and there was no corporate relationship between A & P and either Sunnybrook or the landlord. A week after committing itself to the premises, Sunnybrook received a letter from A&P offering for sale the fixtures located in the subject premises. Sunnybrook accepted the offer, and acquired those fixtures. The Board rejected an application for a declaration that these transactions amounted to a sale to Sunnybrook of A & P's business. At paragraph 24 of the decision, the Board said:

We do not agree with the sweeping proposition advanced by counsel for the applicants that in the retail food market business, the business adheres

778

in the premises. In our view, the sale of fixtures by A & P to the respondent, in the circumstances of this application, was merely the sale of unwanted assets and was not the sale of a business within the meaning of section 55 [now 63] of the Labour Relations Act.

17. Counsel for the respondent also emphasized the 4-1/2 month hiatus between the closing of the Dominion store and the opening of the Valencia Foods store. He noted that such a hiatus had been an element considered by the Board in other retail food store cases including Darrigo Consolidated Holdings Inc., [1980] OLRB Rep. Jan. 29, although he conceded that the hiatus in that case was greater than the hiatus here.

18. Counsel for the respondent noted that Dominion was still doing business in Etobicoke near the location in question. Noting also the applicant's failure to put Dominion's side of the story before the Board, he asked the Board to conclude that that side of the story would not have assisted the applicant in persuading the Board that a sale of business had occurred.

19. Counsel for the applicant observed that Dominion operated, and Valencia Foods operates, a retail food store. He emphasized the similarity of the work performed before and after the change in tenants, a consideration which he submitted is always given great weight, citing Culverhouse Foods Limited, [1976] OLRB Rep. Nov. 691. He pointed out that we have no evidence from which to assess what portion of the Valencia Foods operation is uniquely Italian and what portion involves the sale of goods similar to those sold in any supermarket operation. He cited Yesteryear Grocers Inc. [1982] OLRB Rep. Dec. 1975 for the proposition that a change in marketing concept should not lead to a finding that there had been a substantial change in the business. Counsel dwelt at length on the timing of the transactions between Victern and Dominion on the one hand, and between Victern and Valencia on the other. He likened Victern's role to that of a receiver, and suggested that its interest in these transactions had been more substantial than that of a landlord only. He argued it was important that during the negotiations between Victern and Dominion there had been occasional suggestions that various rights of first refusal might be granted to Dominion, and asked the Board to note that this possibility had been abandoned by Dominion when it finally made its agreement to surrender the lease.

20. Counsel for the applicant argued that the result and reasoning in Calmil E~iterprises is to be confined to the unique facts of that case. He submitted that the Sunnybrook case could be distinguished on the basis that the landlord there had not actively solicited a surrender of lease by A&P. Responding to the argument that Dominion had remained in the market, counsel for the applicant argued that the market to be examined was the market in the immediate vicinity of the subject location, and did not extend so far as to include the Dominion store referred to in evidence by Mr. Troiani. He suggested that the More Groceteria decision supported an analysis of this sort, which he said should lead to a finding of sale of business on the basis of the locational analysis in Dutch Boy Food Markets, 65 CLLC ¶ 16,051. He argued that a hiatus of 4-1/2 months was not sufficient to impede a finding of sale of bustness, observing that longer periods of 7 months and 11-1/2 months had been involved in Zehr 's Markets Limited, [1974] OLRB Rep. May 331 and Darrigo Consolidated Holdings Inc., supra, respectively.

21. One of the points respondent's counsel dealt with in reply was the question of substantial change. He conceded that the differences between an operation like Valencia's and an

779

operation like Dominion's are not so substantial as to warrant an order pursuant to section 63(5) terminating bargaining rights if the Board found the respondent otherwise bound by such rights as a result of a sale of business. While not substantial in that sense, those differences were nevertheless relevant and significant, he argued, in assessing whether there had been a sale at all.

III

22. The relevant provisions of section 63 of the Act are as follows:

63.-(l) In this section, (a) "business" includes a part or parts thereof;

(b) "sells" includes leases, transfers and any other manner of dis­- position, 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.

(3) Where an employer on behalf of whose employees a trade union or council of trade unions, as the case may be, has been certified as bargaining agent or has given or is entitled to give notice under section 14 or 53, sells his business, the trade union, or council of trade unions continues, until the Board otherwise declares, to be the bargaining agent for the employees of the person to whom the business was sold in the like bargaining unit in that business, and the trade union or council of trade unions is entitled to give to the person to whom the business was sold a written notice of its desire to bargain with a view to making a collective agreement or the renewal, with or without modifications, of the agreement then in operation and such notice has the same effect as a notice under section 14 or 53, as the case requires.

23. Section 63 preserves the collective bargaining and collective agreement rights of persons employed in a business when there is a change in the real or nominal ownership of that business. A sale of an incorporated business can come about by means of a sale of assets or by a sale of shares. Even without section 63, collective bargaining and collective agreement rights of employees would not be affected by a sale of shares of an incorporated business, because the legal identity of the corporate employer would remain unchanged. If the sale of business is accomplished by a sale of assets, the legal identity of the employer does change. The new employer is not named in the certificate or recognition agreement from which bargaining rights flow, nor in any existing collective agreement, and on general principles of

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commercial law alone the new employer would not be bound or affected by any of those documents. This would be so even if the real beneficial or underlying ownership of the business remained unchanged, as where a sale of assets occurred between two corporations with identical shareholders. The choice between sale of assets and sale of shares as a means of transferring ownership of a business may have little effect on the continued day-to-day functioning of the business. Apart from section 63, however, the choice of form would affect collective bargaining and collective agreement rights of the employees engaged in those day-to-day operations. The object of section 63 is to ensure that the effect on these rights is uninfluenced by the choice of form. If a sale of assets is the form adopted for what is, in substance, a transfer of ownership of a business, section 63 imposes on the asset transaction the same labour relations result as obtains in a sale of shares, by imposing the vendor's bargaining and agreement obligations on the purchaser of the business: the purchaser stands in the shoes of his vendor for labour relations purposes. Of course, ownership of an unincorporated business can be transferred only by transferring assets. Significant as the legal form of ownership and control may be for commercial law purposes, it is not relevant to the purposes served by the Labour Relations Act. The form of ownership should be no more critical to continued collective bargaining and collective agreement rights than the form a transfer of ownership may take. Thus, section 63 prescribes the same labour relations result for unincorporated businesses as for incorporated ones: the purchaser of the business stands in his vendor's shoes. (For other statements on the purposes of section 63, see Aircraft Metal Specialists Ltd., [1970] OLRB Rep. Sept. 705 at ¶¶5 and 6; Marvel Jewelry, [1975] OLRB Rep. Sept. 733 at ¶8; and Metropolitan Parking Inc., [1979] OLRB Rep. Dec. 1193 at ¶¶18 to 26.)

24. Section 63 takes effect only if there is a "sale" of a "business". A sale of business will always involve the transfer of assets of some kind from one legal entity to another, whether the assets transferred are shares or assets used in the business; however, a transfer of assets will not always constitute a sale of business. When section 63 is invoked, the Board must determine whether there has been a "sale", a concept broadly defined in the statute and liberally interpreted by the Board: Thorco Manufacturing Ltd., 65 CLLC ¶16,052. In determining whether there has been a sale, the Board is more concerned with the substance of transactions than with their form. Two or more transactions or events may, together, constitute a sale. As the Board noted in Metropolitan Parking inc., supra, at ¶28:

The Board has found a transfer of a business through a "chain" transaction, or sequence of sales (Culverhouse Foods Ltd., [1976] OLRB Rep. Nov. 691; Trenton Riverside Dairies, [1964] OLRB Rep. May 72), a corporate reorganization and merger, (Eaton Yale Ltd., [1971] OLRB Rep.

Oct. 667; Westeel-Rosco Ltd., [1966] OLRB Rep. Dec. 718) and through the offices of a receiver where "the business" has been transferred as a going concern (Marvel Jewelry Ltd., [1975] OLRB Rep. Sept. 733; Field-Price Ltd., [1973] OLRB Rep. Oct. 543; Parnel Foods Ltd., [1971] OLRB Rep. Nov. 715.) The manner of disposition is irrelevant so long as a transfer has, in fact, taken place. The interposition of a third party, acting as an agent or conduit, does not affect the result.

25. The identification of a "sale" is usually less difficult than the determination whether the subject matter of the sale constitutes a "business" or "part of a business". In a "textbook" business acquisition by asset purchase, the purchaser seeks from the vendor the tangible and intangible assets employed in the business, assurances of continued commercial

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relations with suppliers and customers, and covenants of the vendor with respect to various matters, including non-competition. Where all the textbook elements are present, it is not difficult to conclude that a sale of business has occurred. Some elements may be absent because, in the particular circumstances, those elements are not necessary, or because the parties or their advisors have not read the "textbook", or because the parties intend to convey a business but do not wish it to appear so. Elements may also be absent because the parties have no desire or intention to convey a business. Not infrequently, the parties to a transaction are focusing simply on the effective conveyance of certain assets, and do not ask themselves whether the assets sold together constitute a business. That question is, however, one which the Board is regularly obliged to address. As the Board said in Culverhouse Foods, [1976] OLRB Rep. Nov. 691 at ¶16:

... In each case the decisive question is whether or not there is a continuation of the business.. . .the cases offer a countless variety of factors which might assist the Board in its analysis: among other possibilities the presence or absence of the sale or actual transfer of goodwill, a logo or trademark, customer lists, accounts receivable, existing contracts, inventory, covenants not to compete, covenants to maintain a good name until closing or any other obligations to assist the successor in being able to effectively carry on the business may fruitfully be considered by the Board in deciding whether there is a continuation of the business. Additionally, the Board has found it helpful to look at whether or not a number of the same employees have continued to work for the successor and whether or not they are performing the same skills. The existence or non-existence of a hiatus in production as well as the service or lack of service of the customers of the predecessor have also been given weight. No list of significant considerations, however, could ever be complete; the number of variables with potential relevance is endless. It is of utmost importance to emphasize, however, that none of these possible considerations enjoys an independent life of its own; none will necessarily decide the matter. Each carries significance only to the extent that it aids the Board in deciding whether the nature of the business after the transfer is the same it is was [sic] before, i.e. whether there has been a continuation of the business.

In Grand Valley Ready Mixed Concrete Supply Limited, [1981] OLRB Rep. June 663, the Board described the appropriate analysis in this way:

.In most section 55 [now 63] applications, whether involving the alleged sale of the whole business or a part thereof, the nature of the alleged predecessor's business organization provides the ultimate answer. The Board identifies its essential elements and determines if sufficient of these have been transferred to the successor as to allow the business and the employment which it generates to continue. See Thunder Bay Ambulance Service, [1978] OLRB Rep. May 467 and Culverhouse Foods Limited, [1976] OLRB Rep. Nov. 691. However, if as in Canada Cement Lefarge, [1977] OLRB Rep. Jan. 5, and Darrigo Consolidated Holdings, [1980] OLRB Rep. Jan. 29, assets have been disposed of which are peripheral or unrelated to the business organization to which the bargaining

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rights at issue attach, the Board will not find that there has been a sale of a business within the meaning of the section.

20. The exercise becomes more complicated where, as in this case, the alleged successor has carried on a parallel business. Where the alleged successor has carried on a parallel business the result of the transaction may as easily be an expansion or alteration of his business as the transfer of the alleged predecessor's business. An employment opportunity which flows from an expansion or alteration of the business carried on by the alleged successor prior to the section 55 transaction does not trigger the operation of the section. The union's bargaining rights attach to the predecessor's business and their preservation is contingent upon a transfer and continuation of that business.

21. In Metropolitan Parking Inc., sup ra, the Board observed that continuity of the work performed is not by itself a conclusive test for applicability of section 63:

For a transaction to be considered a "sale of a business" there must be more than the performance of a like function by another business entity. There must be a transfer from the predecessor of the essential elements of the business as a block or as a "going concern." A business is not synonymous with its customers or the work it performs or its employees. Rather, it is the economic organization which is used to attract customers or perform the work. The Legislature could have provided for the continuation of bargaining rights whenever there is a continuity of the work performed, but it did not do so. Bargaining rights are continued only when the employer transfers his business. The use of the active verb and possessive pronoun is not insignificant.

Section 53 of the British Columbia Labour Code and section 144 of the Canada Labour Code are similar to section 63 of the Labour Relations Act. Both the B.C. and Canada Labour Relations Boards have recognized that the language and purpose of these provisions require more to support a declaration than similar work, as appears from the following passage from the B.C. Board's decision in Canadian Odeon Theatres Limited, 82 CLLC ¶16,139, [1981] 3 Can. LRBR 372, at pages 374 and 375:

As the Board pointed out in Lyric Theatre, [[1980] 2 Can. LRBR 331], the similarity of work performed before and after the transfer is not sufficient of itself. The Canada Board put it best in Radio CJYQ Limited and Newfoundland Broadcasting Ltd. and National Association of Broadcasting Employees and Technicians, [1978] 1 Canadian LRBR 565 at 574:

But continuity of the work done is not sufficient alone to satisfy section 144. There must be some nexus between the two employers other than the fact that one employed persons to do certain work that the other now does or will do, before one can be declared the successor of the other. Otherwise a loss of work to a competitor employer would result in a successorship. There must be some continuity in the employing enterprise for which a union holds bargaining rights as

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well as continuity in the nature of the work. The two go hand in

hand.

27. Dutch Boy Food Markets, 65 CLLC ¶ 16,051 is one of the first cases in which the Board had an opportunity to assess an alleged sale of business in the retail food industry. In that case, Kitchener Foods offered to buy all of the leasehold improvements and fixtures on the premises from which Steinberg's then conducted its sole retail operation in Kitchener. The offer was conditional on the assignment to Kitchener Foods of Steinberg's leasehold interest in those premises. Steinberg's accepted the offer. The parties entered into a written agreement which contained no restrictive convenant by Steinberg's and expressly excluded "goodwill" from the purchase price. The Board rejected the argument that these features of the agreement precluded a finding that there had been a sale of business:

Had Kitchener Food only purchased the contents of the premises at 274 Highland Road and moved them into other premises we would have no difficulty in finding that the transaction was only the sale of assets. In the instant case, however, Kitchener Food acquired not just assets, but Steinberg's entire interest in the premises. Stated another way Steinberg's disposed of its entire operation in the Kitchener area which obviously must have had some effect on its operations in Ontario. If by the terms of the transaction Steinberg's had been restricted from carrying on business in the same area we would have no hesitation in saying that there was a sale of a "business" within the meaning of section 47a of the Act. The absence of such convenant, however, is not by any means conclusive that there was not a sale of a "business".

A retail food supermarket, unlike some other businesses, has no customer orders or lists which can be transferred to a purchaser who intends to carry on the same type of business. By the very nature of a retail food business, with the exception of the name, a vendor has no goodwill which he can effectively give or withhold from a purchaser. The success of a food supermarket is dependent, on large measure, upon the support of the people who live in the area in which the store is located. Accordingly, any goodwill consists in the habit of customers of the vendor continuing to patronize the food market located on the same premises. If there was any goodwill to be acquired by Kitchener Food it was inherent in the premises themselves in which Steinberg's had carried on the same type of business as that carried on by Kitchener Food. Accordingly, the exemption of goodwill from the purchase price, in our opinion, has no real meaning.

Similar arguments were similarly rejected in L & M Food Markets (Ontario) Limited, [1965]

OLRB Rep. Sept. 440 and Leader's Clover Farms Food Market, [1966] OLRB Rep. Nov. 636, both cases in which the successor acquired in a single transaction the predecessor's premises, fixtures, and equipment along with considerable stock-in-trade: all but the brand-name inventory in the L & M case, and all but the meat, frozen food, damaged stock and brand-name inventory in Leader's. The successor supermarkets opened 3 and 16 days, respectively, after their predecessors' supermarkets closed. The Board in Dutch Boy found a hiatus of 7 weeks'

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duration did not make the transaction there any less the sale of a business. It is perhaps noteworthy that, on the facts before it, the Board in that case was able to make a positive finding that the parties before them intended to engage in a sale of business:

Viewing the transaction more positively, we find it most significant that the wording of the Offer to Purchase itself clearly contemplates the sale of a "business". More particularly, the second paragraph of Article 2 on page 3 reads:

This transaction of purchase and sale is to be completed on or before the 31st day of December, 1964 on which date vacant possession of the business and premises of the Vendor is to be given to the Purchaser. (The underlining is added for emphasis.)

In our opinion, the above wording makes it abundantly clear that it was

the intention of the parties that Kitchener Food acquire by sale the "business" of Steinberg 's.

(emphasis added)

In assessing whether a sale of business has taken place, the absence of "textbook" elements becomes less critical if it is clear the parties thought they were engaged in a sale of business in a commercial sense.

28. Subsequent Board decisions all acknowledge, expressly or impliedly, the importance of the store premises as an element of a business in the retail food trade, and the significance of the inclusion of that asset in a putative "sale of business" transaction. The cases also reiterate the need to assess even that important factor in the context of all the surrounding circumstances, including the corporate relationship, if any, of vendor and purchaser, the continued presence or relocation of the vendor within the relevant market area, continued involvement of key personnel, the length of and reasons for the hiatus between the vendor's closing and the purchaser's opening, and any post-sale effort by the purchaser to identify its location by reference to the vendor prior operation: Super City Discount Foods Limited, [19'70] OLRB Rep. Apr. 118; Gordons Markets, [1978] OLRB Rep. Dec. 1102; Zehrs Markets Limited, [1974] OLRB Rep. May 331; Dominion Stores Limited, [1979] OLRB Rep. 626; Darrigo Consolidated Holdings Inc., [1980] OLRB Rep. Jan. 29; More Grocerteria Limitcd, [1980] OLRB Rep. Apr. 486. The importance of each factor is likewise a function of surrounding circumstances. The importance of both location and hiatus depend on the nature of ihe market served. The habit addressed in Dutch Boy is the habit of patronizing a business which has become identified with a location, and not just the tendency, all other things being equal, to shop near home. A hiatus in operation will diminish the force of that habit at a rate and to an extent which depend, presumably, on the nature of the shopping alternatives available, the regularity of resort to those alternatives, and the extent to which vendor or purchaser behaviour encourages or discourages any impression that the discontinuance of supermarket operations is temporary. It is not realistic to suppose that the relationship and application of these factors can be reduced to an algebraic formula. This is in part because when one goes beyond obvious generalities, the description and prediction of shopping behaviour cease to be the

785

proper subject of judicial or administrative notice and become a matter for empirical and expert evidence of a nature seldom, if ever, placed before the Board in these cases. More importantly, the attempt to reduce these matters to a formula, through expert evidence or otherwise, would be of limited use; answers to these questions about the retail market are not ends in themselves, but merely one of the means employed in assessing the still highly qualitative question whether a "business" has been sold. The lesson of the cases is that while location and premises are important elements of a retail food business, they are not themselves the business; even location and premises can be or become mere "surplus assets" which alone, or even in combination with other assets, can lack the dynamic or organic quality which distinguishes a business from an idle collection of assets: Sunnybrook Food Market (Keele) Limited, [1974] OLRB Rep. Jan. 47; and see More Groceteria Limited, supra, at ¶¶21-24.

IV

29. We are satisfied that Mr. Sitzer and Ms. Ross were totally candid with the Board on all the matters on which they testified. We accept at face value their description of the actions they took and their reasons for those actions. We agree with counsel for the applicant when he says that Victern was acting throughout in economic self-interest; we find nothing sinister in that. We find nothing suspicious about a landlord's becoming increasingly serious about prospective tenants as the prospect of having space to rent matures. We would have been suspicious if a sophisticated commercial landlord had told us that, in the circumstances of this case, he would give prospective tenants no attention at all until he had a concluded agreement by the existing tenant to surrender its lease. We do not find that the interests in which Victern acted went beyond the interest of a commercial landlord of retail space. In particular, we find nothing in these facts to suggest that Victern was seeking to become a broker in the sale of Dominion's retail business. We do not agree that Victern played here a role analogous to that played by receivers in such cases as Marvel Jewelry, sup ra, and Field-Price Ltd., [1973] OLRB Rep. Oct. 543. The role played by Victern here is indistinguishable, for our purposes, from that of the landlord in Sunnybrook. The important question is not whether it was the former tenant or the landlord who initiated the question of a surrender of lease, but whether there was anything more to their dealings than a surrender of lease. In that regard, we do not find it significant in these circumstances that options or rights of first refusal on space were mentioned and then dropped as potential terms of an agreement to surrender Dominion's lease. This was mere tinkering with the substantial bundle of rights whose surrender was under discussion. Had Dominion been interested in selling its business at the subject location, it could have set out to find an assignee for the lease and made the assignment conditional on the assignee purchasing fixtures. Dominion did not seek out Valencia or other potential supermarket assignees, any more than Valencia sought out Dominion. Both sought to deal with the landlord; neither did so on any conditional basis. Dominion's surrender was not conditional on its finding a purchaser for any of its assets; indeed, it had no assurance that any new tenant or tenants would have any desire to purchase Dominion's equipment or, for that matter, any need for such equipment. Equally, Valencia's obligation to Victern was not conditional on its obtaining anything from Dominion. We are unable to discern from Valencia's behaviour any interest in, or intention to acquire, part of the business of Dominion. What Valencia set out to do was to expand its existing business into a new location because of the market potential there for an Italian-style supermarket. What evidence there is of Dominion's involvement in these transactions does not support an argument that a sale of business transaction was involved or intended.

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30. The absence of evidence that the parties intended to engage in sale of business in a commercial sense does not determine the question under section 63. The objective result of transactions can be a "sale of business" despite the neutral or even contrary subjective intent of the parties to those transactions. That is not the result here. The absence of former Dominion employees among the Valencia workforce at this location is a neutral fact where, as here, Valencia has neither sought out nor avoided them. The coincidence of location and similarity of operation by themselves would favour a sale finding. However, the independence, each from the others, of the surrender of lease, the lease and the equipment purchase, the independence of the parties to those transactions and the length the premises remained vacant all weigh against finding a sale, as do the existence and similarity of Valencia's preexisting operation and its role as the source of management and key employees at the new location. On balance, we do not find a sale of business in the facts of this case. In our view, the presence of Valencia at Dominion's former location represents the expansion of a parallel business in which some assets of Dominion came to be used. Those assets did not alone constitute a business or part of a business, and it cannot be said in this case that an existing business has expanded by purchasing a competitor's business and refurbishing it. This application is, accordingly, dismissed.

31. In the course of the Board's hearing, counsel for the applicant requested reasons for one of our procedural rulings. We would be content to reduce those reasons to writing if counsel renews his request in writing, after considering whether those reasons would be of assistance.

2493-83-R International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, (U.A.W.), Applicant, v. X-Pert Metal Finishing Limited, Respondent

Bargaining Unit — Practice and Procedure — Employer disputing inclusion of chemical control supervisor in unit on grounds of managerial function — Whether permitted to change ground of objection to lack of community of interest at commencement of officer examination —Alteration allowed where no objection raised by union counsel present at examination

BEFORE: Robert D. Howe, Acting Chairman, and Board Members W. G. Donnelly and F.

S. Cooke.

DECISION OF THE BOARD; May 29, 1984

1. In a decision dated February 17, 1984 in respect of this application for certification, the Board noted that the parties had reached agreement on all matters in dispute between them, with the exception of the issue of whether the classification "chemical control supervisor" should be included in or excluded from the bargaining unit. Paragraph 4 of that decision reads:

The parties are in partial agreement with respect to description of the bargaining unit. The language upon which they have agreed is:

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all employees of the respondent in the City of Burlington, Ontario, save and except foremen, persons above the rank of foreman, office and sales staff.

The respondent contends that the classification of "chemical control supervisor" should also be excluded from the bargaining unit by virtue of section l(3)(b) of the Act. The applicant opposes that requested exclusion.

In view of that dispute, the Board appointed Board Officer S. Nicholson "to inquire into and report to the Board on the duties and responsibilities of S. Stevenson, classified by the respondent as chemical control supervisor."

2. At the beginning of her report dated March 30, 1984, Ms. Nicholson apprised the Board of the following information:

Prior to the commencement of the examination, the respondent indicated that it would not be challenging the witnesses' job as being managerial, but rather that the job and the working conditions of an incumbent in that job had no community of interest with the production employees. The witness was therefore examined on the basis of community of interest.

The applicant was represented at the examination by Clare Meneghini and Jack Pawson. Since neither of them raised any objection when it was announced that the respondent intended to substitute "community of interest" as the basis for the proposed exclusion, the examination proceeded on that revised basis. Mr. Meneghini was given full opportunity to examine Ms. Stevenson (following her examination by Ms. Nicholson) and to re-examine Ms. Stevenson (following her examination by the respondent). He availed himself of those opportunities by asking a number of questions pertinent to the issue of community of interest.

3. In a letter dated April 6, 1984, Lorna J. Moses, the applicant's Canadian Co-ordinator of Organizing wrote to the Board as follows:

I am responding on behalf of the Applicant in the above noted case [File No. 2493-83-R] which is before the Board.

In this written submission, I wish to comment on the preamble, page 1, of the document as submitted by S. Nicholson dated March 30, 1984.

The final paragraph on page 1 states: "Prior to the commencement of the examination, the Respondent indicated that it would not be challenging the witnesses' job as being managerial, but rather that the working conditions of an incumbent in that job had no community of interest with the production employees."

The area that I question is the Respondent's change of argument from that of exclusion for managerial purposes to that of the basis of community of interest. Perhaps if this had been made known to the Applicant at the outset when the Application for Certification was before the Board

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on February 17, 1984, all parties concerned could have been spared time, effort and expense.

All correspondence should be directed to the address appearing on this letterhead to the attention of Ms. Lorna I. Moses.

The Applicant does not request a hearing before the Board in connection with this case. The Board should make its finding based on the report submitted by S. Nicholson, Board Officer.

4. In some circumstances the Board has refused to permit a party to alter the basis upon which it seeks a bargaining unit exclusion. In Weight Loss lnc., [1980] OLRB Rep. Dec. 1841, the employer, at the initial certification hearing and at the Board Officer's examination meetings, sought to exclude Assistant Director Sarah Bethune on the ground that she exercised managerial functions or was employed in a confidential capacity in matters relating to labour relations, within the meaning of section 1 (3)(b) of the Labour Relations Act. However, after the Officer's report had been issued to the parties, the employer sought to obtain the requested exclusion not only on that basis, but also on the basis that the individual in question lacked a community of interest with the other employees. In holding that the employer could not alter its grounds for the requested exclusion at that stage in the proceedings, the Board wrote, in part, as follows:

5. Having regard to the submissions of the parties with respect to this matter, the Board is of the view that in the circumstances of this case, Ms. Bethune must be included in the bargaining unit unless the Board is of the opinion on the basis of the Labour Relations Officer's report that she exercises managerial functions or is employed in a confidential capacity in matters relating to labour relations. The delineation of the scope of the issues to be inquired into and reported on by a Board Officer is not merely a technical matter. If that process is to be viable, it is essential that the Officer and the parties appearing before the Officer know with certainty in advance of the examination the precise scope of the issues which are to be dealt with; otherwise, it would not be possible for the representatives of the respective parties to properly prepare for and participate in the examination process. Thus, principles of fairness and natural justice require that each party know a reasonable time prior to the examination the nature and scope of the issue or issues to which the examination will pertain. A number of the questions asked by a Board Officer in an examination in which section l(3)(b) is in issue are different than those asked in an examination in which the issue is that of community of interest. Furthermore, the questions asked and additional evidence introduced by the respective parties could also differ materially depending upon which of those matters was in issue. Indeed, the respective questions put to Ms. Bethune by the representative of the applicant and the representative of the respondent following her initial examination by the Labour Relations Officer confirm that the representatives of both parties understood the issue with respect to the inclusion or exclusion of Ms. Bethune to be confined to section 1(3)(b).

789

5. There is no indication in the present case that the respondent provided the applicant with any indication prior to the date of the examination that it intended to change the basis for the requested exclusion of Ms. Stevenson from a section 1 (3)(b) issue to a community of interest issue. Alteration of the grounds for exclusion at that time could in some instances take the other party by surprise and preclude it from participating in the examination process in a meaningful and effective manner. In such circumstances, the Board might well not permit an alteration of that type. However, in the instant case, the applicant's representatives raised no objection when it was announced that the respondent intended to substitute "community of interest" as the basis for the proposed exclusion of the classification in question, and the examination proceeded on that revised basis. Moreover, although Ms. Moses criticizes the respondent's change of argument in her letter of April 6, 1984, and suggests, not unreasonably, that all parties might have been spared time, effort and expense if the applicant had made its position known earlier in the proceedings, she also expresses the view that the Board "should make its finding based on the report submitted by S. Nicholson". Under the circumstances, the Board is prepared to determine the matter of Ms. Stevenson's inclusion or exclusion on the basis of community of interest.

6. Ms. Stevenson, who described herself as a "lab technologist", takes samples from cleaning and plating tanks in the plant and chemically analyzes them in the respondent's laboratory, where she spends most of her working day. Approximately 25 per cent of her time is devoted to various clerical functions including filling out "add sheets" and other records. She reports directly to the respondent's Vice-President, Brian Calver, who trained her to do the job in question and is the only other person in the employ of the respondent capable of performing it. Unlike the respondent's production employees who punch a time clock, work regular hours on shifts scheduled by the respondent, and earn an hourly rate, Ms. Stevenson does not punch in or out, is permitted to set her own hours, and is paid a salary. Although she was working from 7:15 a.m. to 3:15 p.m. at the time of the application, it was her un-contradicted evidence that in previous years she has chosen to work a split shift in order to accommodate her responsibilities as a parent. It was also her uncontradicted evidence that in the summer-time she often elects to work from 6:00 a.m. till 2:00 p.m. She spends more time in the front office than she does in the plant and has very little interaction with bargaining unit employees. If she encounters problems with plant personnel in relation to chemical additions, she speaks with Mr. Calver or a foreman.

7. Having carefully reviewed and considered the Officer's report, we have concluded that, on balance, Ms. Stevenson is a technical employee who has a greater community of interest with the respondent's office and sales staff than with its production employees in the bargaining unit.

8. Having regard to the foregoing and to the agreement of the parties, the Board, pursuant to section 6(1) of the Act, finds that all employees of the respondent in the City of Burlington, Ontario, save and except foremen, persons above the rank of foreman, and office, technical and sales staff, constitute a unit of employees of the respondent appropriate for collective bargaining.

9. For the purpose of clarity, the Board notes that Chemical Control Supervisor Sandy Stevenson is a technical employee excluded from the bargaining unit.

790

10. A certificate will issue to the applicant for the bargaining unit described above.