Ontario Labour Relations Board
[1988] OLRB Rep. April 384
0649-87-R; 0650-87-R; 2826-87-U Southern Ontario Newspaper Guild, Local 87 the Newspaper Guild, Applicant v. The Globe and Mail Division of Canada Newspapers Ltd., Midco Trucking Service and Robert J. Lucier, Jr. carrying on business as Lucier Express, Respondents; Southern Ontario Newspaper Guild, Local 87 the Newspaper Guild, Applicant v. The Globe and Mail Division of Canada Newspapers Ltd., Midco Trucking Service, Robert J. Lucier, Jr. carrying on business as Lucier Express, Respondents; Southern Ontario Newspaper Guild, Local 87 the Newspaper Guild, Complainant v. The Globe and Mail Division of Canada Newspapers Ltd., Respondent
BEFORE: Rosalie S. Abella, Chair, and Board Members D. G. Wozniak and B. L. Armstrong.
APPEARANCES: Steven M. Barrett, Howard Law, Margaret Leighton and Paul Pelletier for the applicant/complainant; D. K. Gray and D. Barsoski for The Globe and Mail Division of Canada Newspapers Ltd.; Barry W. Earle, Eric M. Roher, Robert Lucier and David Newland for Midco Trucking Service and Robert J. Lucier, Jr., carrying on business as Lucier Express.
DECISION OF THE BOARD; April 11, 1988
1On September 26, 1986, the Globe implemented a decision made in August to divest itself of its trucking operations. This resulted in lay-off notices to about a dozen drivers, and the contracting out of their work to Lucier and Midco. The union grieved the lay-offs under the collective agreement, and eventually brought applications before the Board pursuant to sections 50, 64, 66, 67, 72, 75, 76, 80 63, 1(4) and 106(2) of the Labour Relations Act in connection with the Globe's actions, and sections 63 and 1(4) in connection with Midco and Lucier.
2The Globe has always used a combination of methods to effect delivery of its newspapers across Canada. Throughout Canada, independent agents and common carriers were used on a contract basis. For seven runs in Ontario outside Toronto, prior to September 26th, the Globe used its own employees and trucks. It is the laying off of these employees which forms the substance of the complaint before the Board. There is nothing in the collective agreement expressly prohibiting contracting out.
3The Globe started its cost-cutting programme four years ago. Many lay-offs resulted, including several in the advertising and sales staff in May 1986 and in the loading dock area in March 1986. The automation of the loading dock, resulting in 23 of 31 employees being laid-off, was what prompted an examination of the trucking operations.
4In August 1986, the Globe received a report it had commissioned from Touche-Ross outlining the financial benefits of eliminating its trucking operations. The Globe had eleven trucks, and based on this report, decided in early September to sell them to save the cost of operating a garage with mechanics, drivers and garage attendants. The trucks sat idle for at least two thirds of the day, and the loading dock area was about to be automated. The Globe concluded that they could more economically and efficiently affect the delivery process by giving to independent third parties responsibility for the six or seven Ontario highway runs currently done nightly by its own employees.
5On September 26th, in a letter to the local representative, Paul Pelletier, the Globe informed the Guild and the employees of its intentions. Pursuant to the collective agreement, meetings were arranged to discuss the plan, the first one taking place with six representatives from the Guild on September 26th. The parties discussed the changes in the loading dock area, changes in highway delivery overtime, and the Globe's intention to get out of the trucking operations. The Guild asked for and subsequently received the financial information upon which the Globe had based its decision. According to the Globe's figures, there would be an estimated saving of $361,000.
6The next meeting between the Guild and the Globe took place on October 9th, 1986. The parties met all afternoon, and discussed, among other things, whether any of the current employees in the bargaining unit could or should take over the work as independent contractors. The Guild asked whether these employees would be permitted to bid on the trucks. In its letter dated September 26th, the Globe had indicated an unwillingness to use former employees.
The relevant paragraph of the letter reads:
"The Globe has investigated the possibility of selling trucks to present employees, but financial analysis indicated that this would not generate a reasonable return on the employees' capital invested. However, the company is willing to discuss such an arrangement with any employee interested in pursuing it."
No one from the Guild objected to this possibility either at this meeting or at the subsequent ones on October 15th and 17th. In fact, it was only at the request of the Guild that this methodology was pursued by the Globe. At the October 15th meeting, the Guild proposed that three to four runs and one garage mechanic be retained, and that the rest of the runs be contracted out. The Globe rejected this as inefficient, since it would save the Globe only $200,000 annually.
7Lay-off notices were sent to the drivers on October 17th. The union grieved these lay-offs. On October 21st, a memo was sent to the laid-off employees by the Globe advising them that they could apply for the delivery runs and purchase the trucks. No one from the union objected to this memo.
8Four of the employees applied for the runs. The Globe had discussions with each of these employees with the full knowledge but in the absence of the Guild, to discuss their bids and the terms of their contracts. Terms were eventually agreed upon with all four employees and a meeting was arranged with them for the evening of November 24th to sign the contracts. At no time during these negotiations did the Guild ask to be present during the discussions with employees or express any disapproval of either the process or result of the talks.
9On the morning of November 24th, counsel for the Globe and the Guild met to discuss all outstanding grievances. During this meeting, counsel for the Guild raised the possibility that if contracts were awarded to the four former employees, the Guild might take the position that they continued to be Globe employees covered by the collective agreement. The Globe was surprised by the Guild's position, being under the impression that the Guild encouraged and approved of the drivers having access to the contracts. The Globe met later that afternoon with representatives of the Guild and informed them that unless they could be assured that the Guild would not bring proceedings to have the four men declared employees, the contracts would not be awarded to them. The Guild replied that it would undertake not to bring an application before the Ontario Labour Relations Board, but reserved to itself the right to bring a grievance under the collective agreement. The Globe informed the four employees that night of the Guild's position and explained that under the circumstances it would not sign contracts with them. The signing of the contracts was put on hold, but by December 12th, the Globe had notified the drivers by phone that the contracts would not be signed. The four drivers were then given an additional eight weeks' notice and remuneration by the Globe since they had expected to be made independent contractors imminently and had not sought other employment.
10The four employees with whom the Globe had negotiated contracts were not told by the Guild before November 24th that there was a potential problem with the signing of their contracts. Only one of the four drivers was called by the Guild as a witness and his evidence was that he only heard from the Guild about the issue after November 24th, and then only because he approached the Guild about it. Only one meeting took place between the Guild and the drivers, two or three weeks after the September 26th Globe memo. The purpose of the meeting was to discuss alternatives to the lay-offs. No one from the Guild discouraged or even discussed with them the paragraph in the September 26th memo which raised the possibility of "selling trucks to present employees or the Globe's willingness to discuss "an arrangement with any employee interested in pursuing it". And at no time did the Guild inform the drivers that it would take the position that they would still be considered employees if they were awarded the runs.
11The Guild admitted that as part of a potential settlement, it would accept contracting out of the least cost-efficient runs for the Globe. It knew from their questions in October and early November that some of the drivers were interested in bidding on the runs, and at least one driver asked the Guild what it would do if they got the runs. According to Paul Pelletier, a lawyer and the local representative for the Guild, the Guild did not have a lot to say about it, but explained to the employees that the Globe was open to their bids and to selling them the trucks, but was not sure it was financially worth their while. In mid-November, the Guild was told by the Globe that four drivers, whom they named, had made successful bids and would be given the runs. On January 28, 1987, the Guild grieved the Company's termination of the four drivers "and the manner in which they were dealt with by the Company from the time of the issuance of the notice of intent to effect economy dismissals dated September 26, 1986 until they were finally terminated on December 12". Both the lay-off and termination grievances remain outstanding.
12Both Lucier and Midco were pre-existing businesses and had for years been independent agents delivering papers for the Globe. In December, after concluding that they would not award the contracts to the four former employees, the Globe decided to use Lucier and Midco for the remaining Ontario runs. No written agreement exists between the Globe and Midco. The Globe's evidence was that it does not know or care how many trucks, or what kind, Midco or Lucier use, how many drivers they have or what they are paid, what routes they use, or what other business Midco or Lucier does with or for other companies. Midco purchased no trucks from the Globe. Lucier purchased two, both at their appraised value. No financing was extended. The sold trucks were painted, and bear the name "Lucier Express". None bears the Globe's logo. The only instructions given by the Globe to Midco and Lucier were that they were required to drop off specific numbers of papers as quickly as possible at designated locations. All but one of the six arrangements negotiated with Lucier and Midco are for the same amount as were negotiated with the four former employees. Both Lucier and Midco understand that the Globe could terminate or alter the arrangement at any time.
13The Guild does not dispute that there was a major cost-saving to the Globe, and that this was the primary reason for the laying-off of the drivers. The key decision, according to the Guild, was the decision not to give the runs to the four employees. Nor does it deny that it was aware as early as September that one of the possibilities involved selling trucks to employees. It confirms, in fact, that as early as October 19th, when it was told it would not be involved in negotiating these contracts, it knew that the possibility had materialized into a reality. But it denies either encouraging or condoning the arrangement. The Guild denies, in argument, "leading the Globe on in order to pull the plug at the last minute" and argues that their position should not have been a surprise to the Globe. The Guild asserts that it should have been invited to the meetings between the Globe and the drivers and told the financial details of the arrangements. Failure to do so violated the Guild's representation rights pursuant to sections 64 and 67. In addition, the Guild argued that the refusal by the Globe to sign contracts with the four drivers when it learned they might still be employees, was an attempt to avoid having to negotiate with the Guild over the terms of their contracts, contrary to sections 64 and 66.
14The Guild's argument pursuant to sections 72, 75, and 76 of the Act is that by making the signing of the contracts with the four drivers conditional on the Guild refraining from exercising rights they might have under the Labour Relations Act or the collective agreement, the Globe was engaged in a lockout. Although the decision to contract out was undeniably irrevocable, the decision not to hire the four drivers was revocable. Since both the right to grieve and the right to be represented by a trade union were being interfered with by the Globe, and since the Globe was trying to change the terms and conditions of employment, there is both a lock-out and an unfair labour practice.
15The union's section 80 argument is that in refusing to continue to employ the four drivers when it learned that the Guild might take legal action~ the Globe was exercising reprisals based on the drivers' participation in a proceeding under the Act.
16Because the contracts with Lucier and Midco are so similar to the ones negotiated with the drivers, and because a substantial portion of their business now comes from the Globe, the union argues that the operations are unlike those of a common carrier and are more clearly integrated. Moreover, the process used by Lucier and Midco's drivers in picking up papers from the Globe's loading dock is substantially similar to the one formerly used by the Globe's ex-employees.. The Guild argues that what has been transferred to Lucier and Midco is the delivery part of the Globe's business, and section 63 refers to "business or part of a business".
17Pursuant to section 106, the union alleges that the Globe continues to be the employer, and that Lucier and Midco are dependent contractors because the work is being performed for the benefit of the Globe as an integral part of the Globe's business. Even if we reject the union's section 106 argument, it urges the Board to exercise its discretion pursuant to section 1(4) in favour of the maintenance of bargaining rights on the grounds that the activities are under common control and direction, a joint venture exists, and the same kind of work is being performed.
18In its concluding argument, the union seeks a declaration from the Board that there has been "a massive repudiation" of the agreement, contrary to section 50 of the Act.
19The relevant portions of section 63 of the Labour Relations Act states:
- (1) In this section,
(a) "business" includes a part or parts thereof;
(b) "sells" includes leases, transfers and any other manner of disposition and "sold" and "sale" have corresponding meanings.
(2) Where an employer who is bound by or is a party to a collective agreement with a trade union or council of trade unions sells his business, the person to whom the business has been sold is, until the Board otherwise declares, bound by the collective agreement as if he had been a party thereto
Section 1(4) of the Act states:
(4) Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.
20As the Board has frequently acknowledged, the delineation of what constitutes a 'business' or 'part of a business' is often problematic. The purpose of section 63 is essentially to preserve bargaining rights where there is continuity, through a commercial disposition, of all or part of a business undertaking. Each situation calls for an examination of the reality of what has been transferred to ensure that the continuity and stability contemplated by section 63 are preserved where appropriate. But the Board has also recognized that there are those commercial arrangements which do not fall within the liberal interpretation the section demands.
21Where the arrangement, as in this case, involves the transfer not of the vendor's entire business, but rather of a part of its undertaking, the examination becomes more delicate. We are left to assess what has been transferred~ how it has been disposed of and how it is ultimately implemented. In the circumstances of this case, the Globe had an existing practice of contracting out its delivery service and was extending it to the Ontario highway runs based on what the Guild concedes was a bona fide business decision (Complete Car Care Centres, [1983] OLRB Rep. Aug. 1293). What the Globe did was not a sale to Midco and Lucier of a part of its newspaper business, it was transferring a "like function" to pre-existing business entities who had their own management, assets, employees, and customers. It was transferring work it no longer wished to perform, not part of its business. (The Corporation of the City of Stratford, [1985] OLRB Rep. June 923). The methods and equipment, other than the designation of delivery times and places were not provided by the Globe. As the Board stated in Metropolitan Parking Ltd., [1979] OLRB Rep. Dec. 1193:
"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 a "going concern". A business is not synonymous with it customers or the work it performs or its employees."
What the Globe made was a commercial arrangement which provided for the delivery of newspapers through independent carriers. (Complete Car Care Centre, [1983] OLRB Rep. Aug. 1293; Superior Sanitation Services Limited, [1968] OLRB Rep. July 395; Ontario 474619 Ltd., [1981] OLRB Rep. Oct. 1452; and The Charming Hostess Inc., [1982] OLRB Rep. Apr. 536).
22Nor do we feel that this situation involves related activities or businesses carried on under common control or direction which would warrant the exercise of our discretion pursuant to section 1(4). The Globe exercises no control or direction over the employees of Midco or Lucier, nor are they perceived by the employees to exercise any such control or direction; Midco and Lucier are responsible for setting and paying remuneration to the employees; the Globe has no disciplinary rights or duties over Midco or Lucier's employees; the employees are selected and hired by Midco and Lucier and can be terminated only by them; and Midco and Lucier clearly understood, as did the Globe, that the relationship between them and the Globe was entirely independent. The parties, in short, who exercise "fundamental control over the working lives and working environment" of the employees are Midco and Lucier, not the Globe. (Kennedy Lodge Incorporated, [1984] OLRB Rep. July 931). The degree of economic control by the Globe is negligible and there is nothing about the relationship between the Globe and these two business entities that can be characterized as the kind of "joint venture" which might lead the Board to exercise its discretion in favour of granting a declaration (Kennedy Lodge Inc. supra; Don Mills Bindery Inc., [1983] OLRB Rep. Dec. 2008; Brantwood Manor Nursing Homes Limited, [1986] OLRB Rep. Jan. 9; Penmarkay Foods Limited, [1984] OLRB Rep. Sept. 1214).
23The Guild was fully informed about each Globe decision in connection with the dismantling of the trucking operation and there was neither an attempt nor intent to hide anything from the Guild or the employees. At first, it was the Globe's intention not to award any of the contracts to its employees based on its perception that it would be uneconomical for them. It was only when the Guild encouraged the Globe to take bids from existing employees at the September 26th meeting that the Globe did so. The actual bids from four of these employees did not come until significantly after the decision was made to contract out and only after they received their lay-off notices on October 17th. The process of accepting and negotiating these bids was undertaken with the full knowledge and encouragement of the Guild. The Guild never objected to the Globe's process or solicitation of bids from these employees. The Guild's only question to the Globe in this connection was whether it would be involved in the process of negotiating the bids and was told by the Globe that it would not be. The Guild never objected to this exclusion until it launched these proceedings. Only after the November 24th disclosure by the Guild of its new position did the Globe decide not to use the four employees, and opted instead for a clearer arms-length transaction, reimbursing the four drivers for their expenses in attempting to finance or organize their prospective new businesses and giving them a further eight weeks' notice.
24We are satisfied on the facts of this case and based on our assessment of the credibility of the witnesses, that the Globe has not violated sections 66, 67 and 70 of the Act. With the full knowledge of the Guild, and only at its request and encouragement, the Globe, having made the irrevocable decision to contract out the work and lay off the drivers, entered into negotiations with four of them for the Ontario highway runs. The Guild knew the basis for these negotiations and took no steps to participate in them having been told by the Globe that they would not be invited to do so. There is no suggestion that these openly undertaken negotiations represented an attempt to frustrate the Guild's bargaining rights or to sever the relationship between these four employees and the Guild. The decision to contract out was strictly an entrepreneurial one based on, as the Guild concedes, legitimate business reasons. These discussions with the four employees flowed from that decision to close down the trucking operations.
25What is more troubling, however, is the Globe's decision not to hire these four drivers once the Guild disclosed its position that it might assert their continued status as 'employees'. Although the Guild's position may appear facially to be anomalous - that it was unlawful for the Globe to meet with the four drivers without the union, that it was unlawful to come to an agreement with them, but that it was also unlawful for the Globe not to follow through on these unlawful procedures and agreements - it raises some concern. Parties are undeniably free to negotiate the resolution of their disputes by offering alternative courses of action, including the instigation or withdrawal of a complaint (The Corporation of the City of Ottawa, [1986] OLRB Rep. Apr. 533). But where, as here, the prospect of litigation resulted in the Globe's refusal to enter into the arrangement described above with the four drivers because, among other reasons, it might have resulted in the continuation of a bargaining relationship with the union, we are not as sanguine that the Globe was simply attempting to avoid the renewed cost of an employment relationship, a cost it had attempted to avoid through its decision to contract out. In refusing to extend contracts to these drivers, it was also interfering with the possibility that the Guild would continue to be their bargaining agent.
26However, it is unnecessary to resolve conclusively that issue in the circumstances of this case as even if we were to find that it constituted a breach of sections 64, 72 and 80 the Act, we are not satisfied that it would be appropriate to grant a remedy in the circumstances of this case. The same is true of the Guild's submissions with respect to sections 50, 75, 76 and 106 of the Act. The Globe made, and immediately communicated to the Guild, a lawful decision to close down its trucking operations. During the course of negotiations over the implementation of this decision, the union requested that the Globe reverse its decision not to offer any runs to existing employees. In complying with this request, the Globe entered into discussions with four drivers. The Guild knew of these discussions, and at least until the day they were to be formalized, neither advised nor took steps with either the Globe or these employees to indicate that the contracts might be impugned. We make no comment on the tactical approach taken by the union - there is no evidence that the Guild or Pelletier had even considered the possibility of challenging these four drivers as ongoing "employees" until the Guild's lawyer raised it at the November 24th meeting. The Globe, however we might characterize its decision to refuse to sign contracts with these drivers, was left in the position of finding its original decision to close down the trucking operations in jeopardy. It could either sign the contracts and face the prospect of litigation and the ultimate undermining of its declared strategy, or it could refuse to sign and make alternate arrangements for the six Ontario highway runs. It chose the latter, and in so doing, made arrangements we earlier concluded were valid and beyond the scope of the Act. In those circumstances, we do not find it appropriate to exercise our discretion to grant any remedial relief even if we found the Globe to have contravened the Act.
27For the foregoing reasons, these applications and complaint are dismissed.