Carpenters' District Council of Toronto and Vicinity v. 270915 Ontario Limited, 1987 CanLII 3053

[1987] OLRB Rep. July 1003

2172-84-R Carpenters' District Council of Toronto and Vicinity on behalf of Carpenters Local Union 27, United Brotherhood of Carpenters and Joiners of America, The Ironworkers District Council of Ontario, and International Association of Bridge, Structural & Ornamental Iron Workers, Local 721, Applicants v. 270915 Ontario Limited, and 556347 Ontario Limited c.o.b. Hardrock Forming Com­pany, Delform Construction Limited, Ilena Construction Limited, Respondents v. The Form Work Council of Ontario, and Labourers' International Union of North America, Local 183, Intervener

BEFORE: R. 0. MacDowell, Alternate Chair, and Board Members J. A. Ronson and Sean O'Flynn.

APPEARANCES: M. A. Church, J. Cartwright and K. Ball for Carpenters' District Council and Local 27; David Starkman, Susan Ursel and Stan Arsenault for Ironworkers' District Council and Local 721; Jeffrey Davies for Hardrock Forming Co.; Richard J. Nixon and Carlo Delle Donne for Delform Construction Limited; Robert I. Goldin and John DiLorenzo for Ilena Construction Lim­ited; B. Fishbein and R. Lotito for Labourers' International Union of North America Local 183, and the Form Work Council of Ontario.

DECISION OF THE BOARD; June 30, 1987

I

1. This is an application under section 1(4) of the Labour Relations Act. For ease of expo­sition, the parties will be referred to in abbreviated form as: "the Carpenters", "Hardrock", "Del­form", "Ilena", "Local 183", and "the Ironworkers". The term "related" when used with ref­erence to one or more of the respondents, means that they meet the statutory requirements for a section 1(4) "related employer" declaration.

2. The Board notes that partway through these proceedings, the Ironworkers withdrew their application and indicated that they had no further interest in the matter. The Board further notes that the Carpenters abandoned their alternative claim for relief under section 63 of the Act, and their challenge to the validity of the collective agreement between Delform and Local 183. Section 1(4) reads as follows:

Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syn­dicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declara­tion or otherwise, as it may deem appropriate.

3. It is not disputed that Hardrock is bound by the Carpenters' provincial agreement cov­ering the ICI sector of the construction industry. Ilena and Delform are bound by a collective agreement with the Formwork Council of Ontario ("the formwork agreement") which includes Local 183. The Carpenters argue that Hardrock, Ilena and Delform are all "related employers" within the meaning of section 1(4) and that the Board should declare them to be one employer for the purposes of the Act. The effect of such declaration would be to bind all three companies to the Carpenters' Provincial Agreement, and, at the same time, make Hardrock a party to the "form­work agreement" with Local 183. The respondents maintain that, whatever may have been the case in the past, Hardrock and Ilena are not now related nor is either of them related to Delform. In the alternative, the respondents argue that even if they are related, the Board should not so declare, because such declaration would create a conflict with Local 183's established bargaining rights and would immediately precipitate a jurisdictional dispute, because the parties would be bound by conflicting collective agreements.

II

4. The hearings in this matter consumed many days as counsel traced the history of what came to be referred to colloquially, as the "John diLorenzo family of companies". In the Carpen­ters' submission, Mr. diLorenzo was either the principal or real economic force behind a network of corporate and commercial relationships which has been extended, most recently, to include Del-form. Accordingly, we heard considerable evidence about Mr. diLorenzo's active companies, hold­ing companies, payroll companies, personal shareholdings, family trust, and business activities over the years, as well as those of his partners and business associates from time to time. Indeed, in order to follow this evidence it was sometimes necessary to refer to diagrams or flow charts. How­ever, we do not think that it is necessary to reproduce those details here. It will be sufficient to out­line the corporate history, focussing specifically on the evolution of the parties' collective bargain­ing relationships.

5. Ilena was incorporated on July 15, 1971 and was immediately active in the residential concrete forming business, in and around Metropolitan Toronto. It was a time of booming residen­tial construction - particularly apartment buildings. Ilena prospered, and was soon joined by a vari­ety of sister companies: Felmar Forming Limited, Rail Forms Limited, (an equipment rental busi­ness), and Lerima Construction Limited, - all of which were controlled by John diLorenzo or his family through their holding company EMLI Holdings Limited.

6. Ilena signed its first collective agreement with Local 183 on September 24, 1971; and whether or not this first agreement was restricted to the residential sector (the language is some­what ambiguous) subsequent agreements clearly were not. Nor did Ilena confine its activities to residential construction. As its business grew, it began to take on ICI jobs. That is what precipi­tated the first clash with the Carpenters and Ironworkers, and led to the incorporation of Har­drock.

7. In 1973 Ilena was engaged to do the form work on a commercial plaza in Rexdale. In accordance with its established practice, and its collective agreement, it used members of Local 183 to do the work. The Ironworkers and Carpenters protested that ICI form work was customarily done by their members, and "put heat" on DiLorenzo to recognize them. The exact nature of the "heat" was not specified in detail but apparently involved pressure on the general contractor to remove Ilena from the job, and replace it with a company with collective agreements with the Car­penters and Ironworkers. Ironworkers Local 721 also filed a jurisdictional dispute, requesting the Board to direct that some of the work in question be assigned to its members. In that regard, it is interesting to note that at paragraph 8 of the Board's decision in the jurisdictional dispute (re­ported at [1974] OLRB Rep. Nov. 775), the panel notes the existence of Hardrock and the possi­ble application of section 1(4):

"Although the numbered company was not added as party, nor was any claim made that Ilena and the numbered company are one employer within the meaning of section 1(4) of the Labour Relations Act, the agreement does indicate that an agent of Ilena Construction, John diLorenzo, was prepared to recognize that the collective agreement with Labourers Local 183 had limita­tions in terms of performing commercial construction in the Toronto area. Indeed, Hardrock Forming, the name under which the Numbered Company subsequently operated has performed work on commercial projects".

8. Hardrock was incorporated on May 22, 1973 and entered into collective bargaining rela­tionships with both the Ironworkers and Carpenters covering ICI form work. We were told that the Carpenters' collective agreement was concluded on October 11, 1973. The so-called "ICI agreement" has been replaced by a number of subsequent agreements: first through direct negotia­tions with an employer association, and, more recently, pursuant to the provincial bargaining scheme established in 1978.

9. That was the origin of Hardrock, but it is not the whole picture, nor entirely accurate today. Over the years, diLorenzo brought key employees into the Hardrock business, gave them an equity interest, and, to some extent, withdrew from direct involvement in the day-to-day affairs of the firm. We need not decide whether this withdrawal is sufficient to warrant a finding that Har­drock and Ilena are no longer related. Of more significance is the fact that the dichotomy between Hardrock and Ilena - the former doing ICI work and the latter doing residential work - was not maintained uniformly. There were a number of instances in which Ilena bid and performed ICI jobs using Local 183 members. When those jobs came to the Carpenters' attention, as they did on several occasions, the Carpenters' representatives took action on the site to have Ilena removed from the job and replaced by a firm in contractual relations with the Carpenters union. Usually the replacement was Hardrock. No claim was made under section 1(4) of the Act because, we were told, it was too time-consuming and expensive to launch proceedings before the Board - although section 1(4) claims were made with respect to certain other diLorenzo companies (CDC Forming Limited, Gold Structural Limited, and Bendar Forming Limited). Of course, had such claim been made vis a vis Ilena, the Carpenters would have undoubtedly been met with the argument that no 1(4) declaration should be made because they had knowingly acquiesced in a situation which could lead to an erosion of their work opportunities in favour of Local 183 whose bargaining rights pre­ceded their own.

10. The most recent actor on the scene is Carlo Delle Donne, whose company "Delform" was incorporated in December 1982 while he was still a key employee of Rilli Brother Forming ("Rilli"). Rilli is a competitor of both Hardrock and Ilena. Mr. Delle Donne had worked for Rilli for a number of years and was becoming increasingly dissatisfied because, despite his contributions to the business as a skilled estimator, he had no equity interest. His demands for participation in the Rilli business were repeatedly rebuffed. He left Rilli in February 1983, and after a short-lived joint venture with another individual, was hired by Ilena.

11. At the time, diLorenzo urgently needed someone of Mr. Delle Donne's caliber. DiLar­enzo ' s own expertise lay in securing and financing the jobs. Ordinarily, he did not do the estimat­ing, nor did he play much of a role in organizing the work flow or supervising the jobs. He usually left that to others; but in 1983 there were real problems. DiLorenzo welcomed the opportunity to hire Delle Donne, who, he knew, had, been a valued employee of Rilli for many years. DiLorenzo hoped that Delle Donne could "turn things around for Ilena". He did.

12. Delle Donne came to Ilena on the understanding that he would receive both a salary and a 15% equity interest in the business. The promised equity interest never materialized. Nor did a proposed partnership with Ilena to be known as Ilena-Delform. Delle Donne soon found

himself in the same position he had been in at Rilli: running important aspects of the business, but without any equity interest or direct participation in the profits he was helping to generate.

13. Delle Donne left Ilena after 16 months on the understanding that he would continue to monitor and help complete the projects in which Ilena was then engaged. In return, Ilena and Mary diLorenzo made certain pledges and short-term guarantees to the bank which assisted Mr. Delle Donne to get started in his own business. The guarantees were never called upon and have now long since lapsed. There is no evidence that diLorenzo plays any active role in the running of Delform; although Delform rents space in a "diLorenzo building" where Ilena has its offices, rents equipment (at market rates) from Rail, and has occasionally used, and paid for, the services of an office clerk who also works for Ilena. Mr. diLorenzo is not an officer, director or shareholder of Delform, nor is there any evidence that he or any of his companies participate in the profits gener­ated by Delform.

14. In order to ensure access to a pool of experienced form workers, Delform entered into a collective agreement with Local 183 and with Local 793 of the International Union of Operating Engineers ("the Form Work Council of Ontario"). Because of his years in the forming industry, Delle Donne was familiar with both the unions and quite a number of the members who would be referred, from time to time, from the union hiring hall. Likewise, from past experience, Delle Donne knew a number of the foremen and site supervisors working in the industry. It is hardly sur­prising that some of the formworkers or their supervisors who had worked for Ilena, ended up working for Delform from time to time - especially since Ilena was winding down its operations.

15. Delform does not confine its activiies to the residential sector of the construction indus­try. It bids on, or seeks to secure, both residential and ICI work. The evidence does not establish that diLorenzo provides any assistance in this regard. Quite the contrary. This application was filed when the Carpenters discovered Delform working on an ICI job at 40 Eglinton Avenue East. DiLorenzo was quite angry that Delle Donne had put in a bid through his own company, Delform.

16. The Carpenters urge the Board to find that Delform is "the new Ilena", which is now being used to actively undermine its bargaining rights with Hardrock. The Carpenters argue that, through Ilena, Delform is related to Hardrock, and that the Board should declare all three compa­nies to be one employer for the purposes of the Act. The objective is to bind Delform to the ICI agreement which currently binds Hardrock. If that were accomplished, Delform would have to hire carpenters for its ICI formwork and pay them the provincial rates (we leave aside, for the moment, the obvious problem that Delform is already required to hire members of Local 183 to perform that kind of work, and is obliged to pay them the rates prescribed in the Local 183 collec­tive agreement). Ilena is currently inactive.

17. The difficulty with the Carpenters' proposition is that if Delform really is "the new Ile­na", the union is seeking a remedy against Delform which it would not get in respect of Ilena itself. The Carpenters have never represented the employees of Ilena. In 1973, they were content to enter into an arrangement with Hardrock which guaranteed them rights in respect of the work opportunities flowing to that company, but left their bargaining rights exposed in respect of work opportunities which could be channelled to Ilena which the Carpenters knew had a pre-existing rel­ationship with Local 183. When those alleged "encroachments" did in fact occur, the Carpenters did not seek relief under section 1(4), but only sought to enforce their contractual "no subcontract­ing" arrangements with ICI general contractors. More fundamentally, however, a related employer declaration with either Delform or Ilena would immediately raise a conflict with Local 183's established bargaining rights and would immediately precipitate a jurisdictional dispute. In effect, the combined entity would become bound by conflicting collective agreements with two unions involving the same work and Delform would be drawn into a jurisdictional dispute between them. That is a recipe for collective bargaining discord which we should not lightly condone; more­over, the Board has always been reluctant to make a "related employer" declaration when the effect is to create a conflict with established bargaining rights held by another union (See: Al Smith Plastering and Partition Co. Ltd. [1981] OLRB Rep. Feb. 129). Even assuming, without finding, that Hardrock and Ilena are related and that Delform is related to Ilena as well, (a doubtful propo­sition), we do not think that a section 1(4) declaration is warranted in the circumstances of this case.

18. The application is therefore dismissed.