[1987] OLRB Rep. December 1578
3056-86-R; 3057-86-R International Association of Machinists and Aerospace Workers, Applicant v. Toledo Scale Division of Reliance Electric Limited and Masstron Scale Ltd., Respondents; International Association of Machinists and Aerospace Workers, Applicant v. Masstron Scale Ltd. and Toledo Scale Division of Reliance Electric Limited, Respondents
BEFORE: Judith McCormack, Vice-Chain, and Board Members F. C. Burnet and J. Sarra.
DECISION OF JUDITH MCCORMACK, VICE-CHAIR, AND BOARD MEMBER J. SARRA;
November 26, 1987
These matters are applications under section 63 and 1(4) of the Labour Relations Act in which the applicant alleges that Masstron Scale Ltd. ("Masstnon") is a successor employer to Toledo Scale Division of Reliance Electric Limited ("Toledo") and that the two companies are associated or related businesses under common direction and control. Among other things, the applicant has asked us to declare that Masstron is bound to a particular collective agreement between the applicant and Toledo dated October 29th, 1986.
Both respondents are engaged in the business of selling and servicing commercial scales of various types. As a result of a series of transactions, the respondents concede that as of December 1986, a sale of Masstron to Toledo within the meaning of section 63 of the Act had taken place.
The parties further agree that the respondents are associated or related businesses under common control and direction within the meaning of section 1(4). Masstron is still a separate corporate entity from Toledo. However, the respondents ask us to exercise our discretion not to issue declarations under either section on the basis that such declarations, and particularly a declaration that Masstron is bound to the collective agreement in question, would have the effect of extending, rather than merely protecting the applicant's bargaining nights. The applicant disputes this proposition and argues that declarations are necessary to prevent the erosion of its bargaining rights. In light of the Board's jurisprudence with respect to section 63, and in particular Kerr-Progress Printing, [1975] OLRB Rep. July 590, we find it more appropriate to consider this matter with reference to section 1(4).
Prior to the sale of Masstron to Toledo, Toledo employees serviced customers out of fourteen district offices in Ontario. Employees operating out of offices in London and Bane were covered by a collective agreement between the applicant and Toledo which is not in issue here. Employees operating out of a number of other offices including Sudbury and Sault Ste. Marie were not covered by any collective agreement. At that time, Toledo serviced customers in the Burlington and Oakville areas from its Hamilton district office. Customers in the Mississauga area were serviced by employees operating out of its Toronto district office, and customers in the Cambridge and St. Catharines areas were serviced by employees from those district offices respectively. Masstron serviced all of its customers in Ontario from one office in Burlington. Eighty per cent of Masstron's accounts are in the Golden Horseshoe area described below, and its employees were not covered by a collective agreement.
When Toledo acquired Masstron, it reorganized the servicing of customers so that a number of customers in the Burlington, Oakville and Mississauga areas previously serviced by unionized employees from the Toledo Toronto and Hamilton district offices were now serviced by employees from Masstron's Burlington office who, it is alleged, are not covered by the Toledo collective agreement. Some of the servicing of Masstron customers was shifted to Toledo's Toronto, Hamilton, St. Catharines and Cambridge district offices. It is difficult on the evidence before us to assess precisely the net results of this re-allocation. However, the respondents provided the Board with figures representing the re-allocation of contract customers in this area. (Contract customers are those who enter into a service contract either for a reduced rate for on-call service or for regular service visits. The respondent also has other customers who are serviced only on an on-call basis without any prearrangement as to rates.) The figures provided by the respondents show that some fifty per cent more contracts were transferred from Toledo district offices falling under the collective agreement to the Masstron office asserted to be outside the ambit of the collective agreement than were transferred to unionized Toledo offices from the Masstron office. In other words, there has been a significant net movement of work from the unionized Toledo offices to the Masstron office the respondents claim is not covered by the collective agreement. The evidence before us indicates that the volume of work transferred is proportional to the number of service contracts. The bulk of Masstron customers in the Oakville, Burlington and Mississauga area continue to be serviced from the Masstron office. The respondents plan no reduction in the Toledo work force except for a possible increase of one person in the St. Catharines district office and a possible decrease of one employee in the Toronto district office.
The nature of this dispute suggests that it is important to assess the extent of the applicant's bargaining rights prior to the sale. While it appears from Article 1.02 and 1.03 that the applicant was originally possessed of bargaining rights by virtue of four separate certificates issued by the Board, the Board was advised that these rights were consolidated into one bargaining unit under one collective agreement at a later point. The Board has said that the parties can modify the contours of their bargaining rights and that the bargaining rights delineated in the scope clause of a collective agreement will supercede those set out in an earlier certificate (see, for example, Ault Foods Limited, [1987] OLRB Rep. Jan. 12.) Thus an interpretation of the scope clause in the collective agreement between Toledo and the applicant is central to a determination of the extent of the applicant's pre-sale bargaining rights. And indeed the parties agreed that we could and should interpret that scope clause, which reads as follows:
ARTICLE 2- RECOGNITION
2.01 The Company recognizes the Union as the sole and exclusive collective bargaining agency for all employees at its Metropolitan Toronto, Hamilton, St. Catharines and Cambridge district offices, save and except Service Managers, Assistant Service Managers, persons above the rank of Service Manager and office and sales staff.
Counsel for the respondents takes the position that this clause unambiguously covers only those employees working out of the district offices listed in the clause. On this interpretation, he argues that prior to the sale, Toledo would have been free to open a new district office in southern Ontario, shift employees and customers' accounts to that new office and the collective agreement in question would no longer apply to the same employees providing the same service to the same customers. Counsel is of the view that the bargaining rights attach only to the district offices listed, and he analogizes the situation to that of an industrial plant moving outside of the geographic scope of a recognition clause. The Masstron office is the equivalent of a new Toledo office and, it is argued, is therefore not subject to the applicant's bargaining rights.
Counsel for the applicant argues that a latent ambiguity is revealed by the application of the scope clause to these circumstances and that we should use the parties' past practice to interpret the clause. The evidence before the Board indicates, and the respondents concede, that for many years both parties had accepted that the applicant "owned" certain territories by virtue of the collective agreement. Counsel for the respondents states that these territories were defined by the boundaries of the municipalities on cities in which the district offices were located. Thus, all customers situated within the boundaries of the Municipality of Metropolitan Toronto would be serviced by employees operating out of the Metropolitan Toronto unionized district office. If it became necessary to send an employee to service a customer in this area from another district office not listed in the collective agreement, he would be treated as if he fell under the agreement in terms of wages and working conditions while servicing the customer in the Toronto area.
The applicant agrees generally with this description of the parties' practice but says that the geographic territory which was treated as "union" covers a much larger group of areas surrounding the district offices including areas around Toronto, Burlington, Mississauga, Bnantford, Cambridge, Oakville, Greater Hamilton and the Niagara Peninsula which we will refer to here as the "Golden Horseshoe". The respondents concede that prior to the sale, no Toledo customers in the Golden Horseshoe area had even been serviced by employees treated as falling outside the collective agreement. Since the sale Masstron employees whom the respondents assert are not covered by the collective agreement are servicing both Toledo and Masstron customers in this area. Outside this area, for example, in the Oshawa area, it appears that customers had been serviced both by employees from offices falling under a collective agreement and by those from non-unionized district offices as well. However, in these "non-union" territories, an employee originating from a district office not listed in the collective agreement would not be treated as falling under the collective agreement. Only those from district offices listed in the collective agreement would be dealt with in this manner. When the Oshawa office opened, it was not treated by either party as falling under the coverage of the collective agreement. There was some suggestion that other new depots were handled in the same manner, but we found that evidence, which was in the nature of double hearsay, too weak and vague to be reliable. In the absence of an explanation as to why first hand evidence could not be adduced, we are not prepared to accord it any weight.
Although we agree that the respondent's position is a possible interpretation of that scope clause, it is clear that it renders the applicant's bargaining rights extremely fragile. It appears that many employees of the respondent are on the road much of the time, and some operate more out of their homes than the district office to which they are nominally attached. As a result, the nature of the respondent's business means that if the respondents' position is correct, the applicant's bargaining rights could be effectively extinguished by the stroke of a pen. Indeed, counsel for the respondents conceded that the respondents' present position might seem absurd. In these circumstances, we find it difficult to conclude that the parties intended the bargaining rights to be quite so ephemeral as the respondents now claim. Although it is not uncommon for bargaining rights to be vulnerable to some extent to good faith relocation by an employer, the respondents' interpretation would result in an unusual degree of vulnerability given the nature of their operations. It therefore appears to us a latent ambiguity arises in the clause when it is read in its proper labour relations context, and for that reason, we find it useful to turn to the parties' past practice.
The respondents suggest that there is no consistent past practice since the Oshawa office was treated as not within the ambit of the collective agreement by the applicant. In the alternative, counsel relies on the evidence described earlier with respect to the opening of other offices to suggest that the past practice supports the respondents' position. Although the evidence is not unequivocal, on balance we are not inclined to agree with either argument. The evidence indicates that the parties have defined the bargaining rights reflected in the scope clause in two ways: by the district offices listed in the clause and by the concept of work performed by employees within union or non-union territories. An employee attached to a district office listed in the collective agreement is covered by that agreement regardless of where a customer is located, while an employee from a district office not listed in the collective agreement is covered only when he is working in a union territory. While this dual system seems somewhat elaborate and the geographic configuration of those territories is anomalous, it does appear that both parties consistently honoured those boundaries. In other words, on the evidence before us the parties have without exception adhered to a particular pattern of bargaining rights. While the pattern itself is untidy, the parties' practice in adhering to it is not. For reasons described earlier, we are not prepared to rely on the evidence with respect to the opening of other offices besides the Oshawa office.
The respondents also argue that Toledo's practice of paying collective agreement wages and benefits to employees servicing customers in the Golden Horseshoe area, regardless of their district office of origin, does not suggest a tacit on de facto recognition of bargaining rights. Counsel cites Farquhar Construction Limited [1978] OLRB Rep. Oct. 914 in this regard. However, in that case the Board's decision turned at least in part, if not primarily, on the finding that the language of the scope clause was restricted to on-site construction work and thus did not cover employees engaged in manufacturing work. Moreover, the Board's comments with respect to the extension of collective agreement benefits are specifically described in terms of the practices of the construction industry. There was no evidence before us with respect to this sector which would support a similar conclusion in the instant case. There was also no evidence to suggest that the application of the collective agreement to these employees was restricted or qualified in any way.
In these circumstances while an express formal acknowledgement of the bargaining rights as reflected in the parties' past practice would be helpful, we do not find it essential. To hold otherwise would be to suggest that a scope clause is uniquely insulated from the kind of conclusions which may be drawn from past practice evidence in interpreting the other clauses in a collective agreement. Moreover, since the bargaining rights are now rooted in the collective agreement, the consistent application of that collective agreement speaks cleanly of the parties' mutual understanding with respect to the contours of those bargaining rights. On the facts before us, we find that the panties' practice amounted to an informal but consistent recognition of a particular pattern of bargaining rights. The evidence before us conforms to the principles relating to extrinsic evidence set out in the case of John Bertram and Sons Co. Ltd. (1967) 1967 CanLII 1039 (ON LA), 18 L.A.C. 362, and in light of the latent ambiguity described earlier, we are prepared to interpret the collective agreement in the same manner as the panties themselves have in the past.
Employees working out of the Masstron office are performing work in the Golden Horseshoe area, that is, in the territory treated as "union" by the parties, and the evidence before us is that employees in that office are servicing a large number of customers formerly serviced by Toledo employees. But for the fact that they are Masstron rather than Toledo employees, the scope clause as we have interpreted it would include them within its ambit. If we were to decline to issue the declarations requested, the effect would be that non-union employees would be working in an area in which employees working were previously treated by the parties as falling under the collective agreement. To that extent the bargaining nights as the panties have defined them would be eroded. Conversely, if we were to grant the declarations, the effect would be that the collective agreement which was previously applied to employees who work in this area by the panties, would continue to be applied to employees working in this area. This does not strike us as amounting to an extension of bargaining nights.
Evidence was also led by the applicant with respect to negotiations for the current and previous collective agreements. While we found this evidence inconclusive with respect to interpreting the scope clause, it did show incidentally that the applicant had tried to expand its bargaining rights in the course of negotiations to coven all of Ontario. We do not conclude from that evidence that the applicant is now using section 1(4) to avoid the certification process. Indeed, this would be a rather strained conclusion based simply on those facts. We also note that the applicant clearly viewed the bargaining rights in the Golden Horseshoe area as established and recognized at the time these proposals were made. What it sought to do in negotiations was to enlarge upon those rights so that they were recognized throughout the province. In the case before us, our declaration with respect to the respondents' status as associated or related employers would be province-wide. However, the applicant has only sought to have Masstron declared bound to the collective agreement before us, which is limited in its scope as we have interpreted it. Thus a declaration that Masstron is bound to that agreement will not have the effect of providing the applicant with the result it sought to achieve unsuccessfully in negotiations.
Counsel for the respondents argues that if we were to grant declarations in this case, the result would be to suggest that section 1(4) protects the allocation of work to employees rather than simply bargaining rights. We note the Board has found that one of the purposes of section 1(4) is to prevent existing bargaining rights from being eroded by the direction of work away from a unionized firm to a non-unionized firm (see, for example, M. J. Guthrie Construction Limited, [1982] OLRB Rep. Sept. 1332; Evans-Kennedy Construction Limited, [1979] OLRB Rep. May 388, and Joe Franze Concrete Limited, [1983] OLRB Rep. Apr. 631.) In other words, it may not be possible to draw a meaningful distinction between effective bargaining rights and the movement of work in some circumstances. However, in this case, the parties themselves had previously defined the bargaining rights at least in part in terms of work performed within a particular geographic area. Declarations in this case would continue the bargaining rights in the same form. We reject the respondents' comparison of this situation to an industrial plant relocating outside the geographic scope of a recognition clause for similar reasons. On the facts before us, the case is more analogous to a situation where a company opens a new plant within the geographic scope of a recognition clause.
We conclude that the declarations requested would operate to protect rather than extend the applicant's bargaining nights. On the basis of the evidence before us and the facts agreed upon by the parties, and pursuant to section 1(4), we find that the respondents are carrying on associated or related businesses under common control and direction, and we direct that they be treated as constituting one employer for the purposes of the Labour Relations Act. We further declare that Masstron is bound to a collective agreement between Toledo and the applicant dated October 29,1986 as if Masstron had been a party thereto.
Rather than addressing the other remedies requested at this time, the applicant asked us to allow the parties to attempt to resolve their differences in this regard first. We find this a reasonable approach. However, we remain seized with respect to other remedies and implementation, should it become necessary for us to deal with these issues.
DECISION OF BOARD MEMBER F. C. BURNET;
The company operates from depots at Windsor, London, Sarnia, Hamilton, Cambridge, St. Cathanines, Toronto, Sudbury, Sault Ste. Marie, Bannie, Cornwall, Ottawa, Brockville and Kingston.
A collective agreement exists between the parties, which recognizes the union as bargaining agent in respect specifically of employees of the Toronto, Hamilton, St. Catharines, Brantfond and Cambridge depots. London and Bane are covered by separate agreements between the parties. Other depots are not unionized.
The company purchased a competitive company, Masstron, which operated out of Burlington. This Burlington depot was retained and the company nationalized its service network by redistributing accounts between its depots. Some of the newly acquired Masstron accounts were transferred to Hamilton, Toronto, St. Catharines and Cambridge (i.e. from non-union to union depots). Burlington picked up certain accounts in Mississauga and Oakville previously served from Toledo depots in Toronto and Hamilton (i.e. from union to non-union depots). Four employees previously assigned at unionized Toledo depots were reassigned to work out of Burlington depot.
The union requests the Board under section 1(4) to declare Masstron as a successor employer, "bound by the existing collective agreement between the applicant and the respondent Toledo". The company agrees that there has been a sale and that the two companies involved are now under common direction and control but contends that the Board should not exercise its discretion under section 63(4)(d) for various reasons following.
The thrust of the union's contention is that prior to the merger the work done by Toledo from Toronto through the so called "Golden Horseshoe" to Niagara was performed almost exclusively by unionized employees covered by the group agreement described in paragraph 2; and that this constitutes a de facto voluntary recognition by the company that the work from any other depot opened or acquired in that area of south western Ontario, including specifically Burlington is therefore covered by the agreement. The union acknowledged that there has never been any request on claim of this kind put directly to the company on any discussion, but argues that the history and practice represent voluntary acquiescence by the company. The union supplements its contention with the argument that if the company can introduce new depots into south western Ontario outside of the cities named in the scope clause, then the company could effectively erode the bargaining unit.
The company contends that the scope clause of the agreement is clear and specific and applied only to the employees at the named locations; that in common with general practice, certification or recognition of union bargaining rights is geographically based, rather than work related; and that under existing law, an employer may indeed move operations from one location to another to the possible detriment on even extinction of a bargaining unit, provided that such move is motivated by business reasons and not tainted by anti-union bias; and that the instant situation is merely a continuation of a long established practice by which the company has built up a network of depots from an original base of one depot serving all Ontario, a process historically involving the transfer of customer accounts between depots, without regard to their union on nonunion status and with unionization following or not as employees themselves may initiate and decide.
The company further noted that there has been no unfair labour charge or any imputation that its motives were based on other than sound business reasons; it provided evidence that in the instant case, while accounts and staff have been transferred with "gains" and "losses" as between unionized and non-unionized depots, the total number of persons covered by the union agreement (approximately 37) will be unaffected by the Burlington acquisition (an initial decline of several unionized personnel occurred at or about the time of re-organization, by virtue of assignment of certain employees to the Burlington depot, but these are on will be replaced by recruiting at unionized depots).
The company stated that while each depot generally serves its own area, there are occasional crossovers for vacation or sick relief or special demands. In practice the company avoids sending non-union employees into a unionized jurisdiction, although it may send unionized personnel into non-union areas. It denies however that this implies or constitutes recognition of the union for all of the "Golden Horseshoe". It noted on the contrary that the union has consistently sought recognition for all Ontario in each set of negotiations and this demand has always been rejected by the company.
Conclusions
I conclude on the balance of evidence and argument that the application fails. The scope clause is clean and confines union recognition to the employees based at the designated depots. Had it been the intention when the group agreement was negotiated that it should coven the "Golden Horseshoe" (whatever that may encompass), or any depots in other cities established in future, it would surely have been so worded. On the contrary, the union admitted that it had never faced the company with a direct demand for such recognition, but only for the entire province and that was rejected. The company's understandable practice of not sending non-unionized relief personnel into unionized depots cannot be reasonably escalated into a voluntary extension of the recognition clause. Perhaps that was the union perception, but even if honestly held, such unilateral perceptions by either party are not a basis for declaring the agreement amended.
Past practice in fact supports the company's position. There has been a consistent pattern oven many years of re-organization and reassignment of customer accounts from established and unionized depots to newly opened non-unionized locations, as the company expanded, with unionization of the new location following or not as the employees decided. For example, Barnie which as initially non-union took accounts from Toronto, which was unionized; Cambridge took oven part of Hamilton's work, and so on, as the company expanded from a single depot for the province. There is nothing fundamentally different in respect of the new Burlington depot.
The fact that this was a business decision, free of anti-union animus is acknowledged and no charge of unfair labour practice has been lodged. The union simply argued that it would be vulnerable in future, but this risk, if it seriously exists, is not a new one and the union has protection under the Act against improper motivation through an unfair labour charge.
There has been no erosion of the unit. Four persons transferred to Burlington from unionized locations may represent a temporary loss of union members but these are being replaced at those locations to cope with the new accounts coming from Masstron acquisition.
The Board has consistently stated that section 1(4) is intended to prevent the erosion of existing bargaining rights but that it cannot be used to expand existing rights or to circumvent the certification processes of the Act. (See Dominion Stores Limited, [1979] OLRB Rep. June 506). There has been no erosion here, as noted. Moreover, Masstron is not the successor employer, as the union asks us to declare in its application, Toledo is. No bargaining rights existed at Burlington under Masstron management and so there were no such rights to be protected when that company merged and ceased to exist as a separate entity. It is clear that the purpose of the application is not to protect the existing unit from erosion but rather to seek to expand it. In my view, the union must use the certification processes of the Act, or the direct and open negotiation of a voluntary recognition from the company to achieve its objective.
For these reasons, I would dismiss the application.