Gordon Knowles et al. v. United Food and Commercial Workers International Union, Local 175, 1990 CanLII 5786

[1990] OLRB Rep. September 968

3085-89-U Gordon Knowles, Joan Lepage, Sue Lamonthe and Don Wade, Complainants, v. United Food and Commercial Workers International Union, Local 175, Respondent v. Steinberg Inc., Intervener

BEFORE: M. G. Mitchnick, Chair, and Board Members R. W. Pirrie and P. V. Grasso.

APPEARANCES: Donald Wade, Gordon Knowles, Joan Lepage, Sue Lamonthe, Muriel Harvey and Peter Lapatina for the complainants; Harold F. Caley, James Crockett, and Barry Baily for the respondent; Ann Burke and Alain Bilodeau for the intervener.

DECISION OF THE BOARD; September 21, 1990

1. This is a complaint under section 89 of the Labour Relations Act, alleging that the respondent Union and its named officers have failed in their duty to represent the complainant employees (stated on the face of the complaint to include "the Membership of Local 175 -Ottawa") in accordance with the requirements of section 68 of the Act. Section 68 provides:

2. A trade union or council of trade unions, so long as it continues to be entitled to represent employees in a bargaining unit, shall not act in a manner that is arbitrary, discriminatory or in bad faith in the representation of any of the employees in the unit, whether or not members of the trade union or of any constituent union of the council of trade unions, as the case may be.

3. While the intervener Steinberg Inc.'s main presence is in the province of Quebec, and the Montreal area in particular, it also operates stores under that name in Ontario. The 11 stores in eastern Ontario (Ottawa, Cornwall and Brockville) are operated as part of the Quebec Division, and have been covered by their own collective agreement with the respondent Union. In October of 1989 the Union entered into a collective agreement with the company to cover potential franchised stores in the area that was less generous in salaries and hours of work than the existing "corporate" stores agreement. That collective agreement was signed without proposals for its terms being elicited from the membership, and without it being referred to the membership for subsequent ratification. It is in these latter respects that the complainants argue that the Union has failed in its duty of fair representation to the membership.

4. The most recent collective agreement for the 11 eastern Ontario stores prior to the events in question was due to expire on September 30th, 1988. In the normal course the Union would of course have compiled a list of employees' demands and proceeded through negotiations in 1988 to realize as many of them in the renewal of the collective agreement as it could. This particular year did, however, produce a very different round of bargaining. In 1987 the company was expressing public concern over the lack of profitability of its stores both in Ontario and in Quebec. In the eastern Ontario stores alone the loss on operations was reputed to be in the millions, and, as the Union was well aware, the company's share of the market had declined significantly (primarily to franchised stores of M. Loeb Limited operating under the label of "IGA"). There had, as well, been a widely-publicized falling-out amongst the sisters who owned Steinberg's, and the press was full of reports of prospective buyers of the company, some of whom were interested only in the "break-up value" or real property of the company, and were expected to close out the stores if successful in their bids.

5. It was against this backdrop that senior members of the company's management toward the end of 1987 requested a meeting with the Union to discuss the future of the Steinberg's operation in eastern Ontario - as indeed, the company had already been doing with the Union's sister Local, Local 500 in Montreal, with respect to the continuation of operations in Quebec. Outlining the company's financial situation with regard to the supermarkets, the company made it clear that something drastic had to be done to improve profitability if the stores were to remain open. The company then tabled with the Union a multi-pointed proposal for renewal of the collective agreement, the cornerstone of which was a 6-year "labour peace" plan, during which there could be no strikes or lock-outs. Beyond that the company's "survival" program called for, most notably:

• a dollar an hour wage decrease at the outset, together with an increase in the work week;

• subsequent increases of 50 cents an hour in each of June 1989 and

1990;

• a two-tier wage system allowing for new part-time hires to be paid at lower than the regular job-rates.

Alternatively to the above, the parties could take the matter of wages to an arbitrator, with the arbitrator being instructed to look at conditions of employment in "similar operations". That, the Union recognized, meant that non-Union supermarket operations would be included in the comparison as well. Even with those provisions, however, the company insisted that it had to have flexibility in converting non-profitable stores to other types of operations, in particular to the Steinberg's Plus (referred to as "conversion stores") operation carried on by a subsidiary of the company under that name, or alternatively to "franchise" operations carried on by third party franchise-holders. In either case, the company made it plain that what it was looking for was the opportunity to sit down and negotiate lower grades of collective agreements to cover each of those two groups of stores, in accordance with similar collective agreements then being negotiated with Local 500 in Montreal. That latter requirement was set out by the company in the document which it tabled as Article 3A, and read:

3. COMPANY'S BUSINESS PLAN AND SEVERANCE PROGRAM

A. To fulfill its business mission the Company will pursue its rationalization plan that may include closings, conversions or franchising of existing stores. It is agreed that existing corporate stores affected by conversions or franchising will be unionized and covered by their own collective agreements, the content of which will be negotiated by the Parties in keeping with similar agreements reached with U .F. C.W., local 500.

The Union took the company's document back to the membership, but in light of the extent of the concessions being sought, urged the membership to reject it. The membership did so, by a majority of 65 per cent. One of the stewards, Gord Knowles, testified that the main point he understood being raised against the agreement by Barry Baily, the Union's Eastern Region Director, was that this breaking-up of the stores into separate agreements would dilute the Union's bargaining strength. Mr. Baily does not recall making such a statement, but we are prepared to accept that, in the context of speaking against the whole agreement, that might well have been one of the points Mr. Baily raised against it. For reasons which will appear later, nothing in this complaint turns on such a statement having been made.

5. The tabling of that first company document took place in May of 1988, and with its rejection the company and the Union went back to the bargaining table. The outcome of those further meetings, attended by the Union officers in consultation with the eight store stewards (serving as an ad hoc negotiating committee), was a document presented by the company in July of 1988. That document provided for:

• 5 rather than 6 years of "labour peace";

• no wage cuts or work-week increase.

In addition, a different formula for determining the corporate stores' annual wage increases was provided by way of Final Offer Selection for years one, three, four and five of the agreement, and (of particular significance to the Union) it was agreed for year two of the agreement to adopt whatever increase came to be negotiated in "the industry". Article 3A (the "Business Plan") continued to be a part of the company's document, (i.e. looking ahead to "conversion" or "franchising" of some or all of the stores under their own yet-to-be-negotiated collective agreements) but with it now went options to bump into other full-time jobs if an employee's own store was converted to a Steinberg's Plus or franchised, or to revert to part-time status in the corporate stores, or to remain with the store under the new owner. In the latter cases provision was made for a relatively generous severance or "buy-out" plan for each affected employee, calling for $500 per year of service if a "conversion" store, and $1,000 per year of service if a franchised store. The company indicated to the Union that acceptance of this new proposed agreement would mean that virtually none of the stores (other than those too far gone to save) would be closed, and that the company would cease to entertain any bids from outside interests calling for a break-up or piecemeal sale of the chain.

6. As Mr. Knowles, giving the main evidence on behalf of the complainants, pointed out, this was not the first time the Union had encountered talk of possible store closings from Steinberg's when sitting down to negotiate a renewal of the collective agreement. Apart from the very different level of publicity over the company's business difficulties this time, however, there was a very concrete development in Montreal which, the Board accepts from Mr. Baily's evidence, had a dramatic impact on the Ontario negotiations, and the rising concerns of the membership over their jobs. This was the announcement by the company in June of 1988, at the very time that the continued negotiations on a better company document were taking place, of the closing of 10 of the Montreal area stores. Then-company President Irving Ludmer did not fail to point out to the Union executive in the ongoing Ontario negotiations that 10 stores represented no more than a "spit in the bucket" for the overall Steinberg's operation, and that the company could just as easily make a decision to close out the entire (11-store) area of eastern Ontario, if it did not see real prospects for otherwise putting an end to that drain on the company's resources. In the face of all that was happening, in any event, Mr. Baily, the Eastern Region Director of the Local, and presumably then-President William Hanley, (who, although he did not testify, was involved in the negotiations at that point) concluded that the "July" document tabled by the company as a survival plan was the best that the employees were going to see, and that acceptance of it was necessary if the employees were desirous of preserving their jobs in those stores.

7. The Union thus decided that it was prepared to take that second document back to the membership for acceptance, beginning with a meeting of the stewards. Mr. Knowles testified that at that meeting he spoke against the second document on the basis that it still contained the paragraph (3A) that Mr. Baily had explained would allow the company to dilute the Union's bargaining strength, but says that he was "shouted down" by others in attendance. Mr. Knowles explained that he reluctantly then agreed with the other stewards to recommend acceptance of the document, and a meeting was arranged of the membership for that purpose. Mr. Knowles testified that he and three other (of the eight) stewards subsequently had second thoughts about their decision to support the recommendation. Talking about what they should therefore do at the membership meeting, Mr. Knowles indicated that the four of them considered standing up and declaring their opposition and then walking down from the platform (upon which they would be seated, along with the executive officers of the Union, in presenting the recommendation to the membership). In the end, Mr. Knowles testified however, the four stewards in question elected to take no action whatever; rather, he and the other three stewards decided they would remain seated with the rest of the executive at the front, and simply say nothing (either way). Every employee who attended the meeting was given a copy of the company's proposal (the "July" document), and Mr. Baily went through it point by point. Mr. Baily advised the employees that the company had said there would be stores likely converted or franchised at some point during the agreement, but that no timetable had yet been developed for any of that. There was a great deal of ongoing publicity and inter-Local contact over the parallel situation occurring with the Steinberg's stores in Quebec, and Mr. Baily testified that Ontario employees were well aware of the kind of conversion and franchise collective agreements being worked out with the company to save the stores represented by Local 500 in Montreal. At the end of the meeting a secret-ballot vote was held on the company's proposal for renewal of the eastern Ontario collective agreement, and out of the 400-plus employees in attendance, only 160 voted to reject the document put forward by the company.

8. Toward the end of 1988 the Union elected a new President to replace the retiring Mr. Hanley, and that was former Regional Director for Mid-northern Ontario, Jim Crockett. To Mr. Crockett therefore, as of January 1, 1989, fell the task of completing the implementation of the terms agreed to with Steinberg's in the new collective agreement ratified by the membership in July of that preceding year. In discussing that agreement with Mr. Hanley just before assuming office, one of the first questions that Mr. Crockett had for Mr. Hanley was whether it was contemplated that these further collective agreements covering future conversion or franchise operations, to be negotiated "along the same lines as those being worked out by Local 500 in Montreal", were contemplated by the parties to be submitted once again to the membership for "ratification". Mr. Hanley responded that that was not the understanding, but rather that the membership had been given the opportunity to vote on the terms of the "survival" program in July, and that it was now up to the Union to implement the terms of the ratified agreement. Indeed, as Mr. Baily in his own evidence further elaborated, the company had made it clear in discussing the "Business Plan" from the outset that it had to have the certainty of an agreed-to model collective agreement for franchised stores before it could even start the process of canvassing for operators. Mr. Baily noted as well that until a franchise operator was actually found and a store officially transformed to the new status, it could not even be identified which employees would be affected by the "franchise" agreement that the Union was to negotiate.

9. By the time that Mr. Crockett took office in January, the wage increase for the first year of the collective agreement had, according to Mr. Baily and Mr. Crockett, been determined according to industry settlements to be 70 cents across the board, and that increase was to have been put into effect under the "corporate" agreement (which at that point was still being applied to all of the stores) as of October 1, 1988. It is also apparent that by that first month of Mr. Crockett's assumption of the presidency, the parties were very close to having come to terms on a collective agreement to cover the Steinberg's Plus stores - that agreement in fact having provisions relating both to the wage schedule and to benefit plans which were, in the Union's view, improvements on the agreement negotiated by Local 500. The terms of an acceptable "franchise" agreement, however, continued to be the stumbling-block between the parties. On January 27, 1989, Alain Bilodeau, Steinberg's Group Vice-President, Human Resources and Industrial Relations, accordingly wrote to Mr. Crockett as follows:

WITHOUT PREJUDICE

Dear Mr. Crockett:

Please find enclosed our position on the outstanding issues with regard to the Steinberg Plus contract negotiations. It represents the best Company efforts to resolve this contract in a mutually agreeable way. I wish to stress, however, that these proposals are made in all good faith with a view to arriving at a negotiated settlement, but without any prejudice to our right to apply the agreement reached between us in July 1988, duly recommended by the Union and ratified by a membership vote held on July 11, 1988, in the eventuality that you should not accept the proposals attached herewith.

The Parties are indeed bound by a collective agreement which, among other things, stipulates that:

"the Company will pursue its rationalization plan that may include closings, conversions or franchising of existing stores. It is agreed that existing corporate stores affected by conversions or franchising will be unionized and covered by their own collective agreements, the content of which will be negotiated by the Parties in keeping with similar agreements reached with U.F.C.W., local 500."

This collective agreement also includes a generous voluntary buy-out program with which we have fully conformed at great cost to our company. Last year's agreement was arrived at in the most trying of circumstances and with a view to help a financially troubled company return to the road of profitability and consequently, prevent the loss of many jobs.

In the particular case of the Ottawa Local, the situation was and still is quite severe and requires that we proceed to make important changes, including conversions and franchising of stores. We have had a very honest and up-front communication on this subject and it is reflected in the deal that was ratified last summer.

After months of delays which were not caused by us, but which cost us dearly, it is now time to resolve all the components of last year's settlement as we intend to proceed rapidly with implementing the Steinberg Plus' conditions (store # 06 has now been converted for several weeks) and the franchising of some stores.

In particular, we need to resolve the Steinberg Plus contract and the franchise contract, as well as the wages and benefits for our corporate supermarkets. According to our 1988 collective agreement, we have an obligation to negotiate "in keeping with similar agreements reached with U.F.C.W., Local 500". I hope you will appreciate that in the case of Steinberg Plus, we have gone over and above that obligation and that you will agree to the enclosed position, so that we can proceed to implement its terms.

With regard to the terms of the franchise contract, I have already given you a proposed document for discussion. The negotiation of such a contract is also a component of last year's agreement and we need to complete such negotiation promptly as well, just as we need to attempt to resolve the wages for our corporate supermarket employees prior to resorting to arbitration. Every day that passes adds to our financial burden and we are now obliged to act in order to mitigate our losses.

I am available at your earliest convenience and I would appreciate if you could devote all your attention to these matters.

Jim, please understand that this is important to the survival of our business in the Ottawa area, and consequently to your membership as well. I await your reply.

Yours very truly

Four days later Mr. Bilodeau wrote again, stating, in particular:

With regard to the wages in the Steinberg corporate stores, we are prepared to come to an agreement with you within the shortest possible delay. However, as explained in my letter of January 27, it is absolutely imperative that we negotiate a "franchise contract", since we intend to franchise some of our stores in the Ottawa area, and this is a key element in our dealings with any potential franchisee. You will easily understand that the cost of labour is one major component that a potential franchisee needs to know before committing himself to any franchise agreement with us. Before exercising our right to have a franchisee proceed "in keeping with a similar agreement reached with U.F.C.W., local 500", we feel that we should negotiate and agree on a "franchise agreement." The delay in doing so is causing us grave damages, in an area where we are losing large amounts of money.

A draft agreement having been submitted to you, we must now move rapidly. We would not want to do so unilaterally unless you give us absolutely no other choice. At least, this would mitigate our damages. Jim, our Company truly seeks cordial and harmonious relations with all locals of U.F.C.W. You must, however, realize our position must be redressed while treating people humanely. We made a deal which was ratified and consequently, we request that you gave [sicl effect thereto, failing which we must reserve all our legal recourses in the circumstances.

10. The first Steinberg's Plus store, #6, had in fact been converted in September of 1988, but with no "modified" agreement for such conversion stores yet finally agreed to by the parties, the company was continuing to apply the terms of the original "corporate" agreement to it. By mid-February, however, it appears that all of the terms of the new collective agreement that was to apply to any converted Steinberg's Plus stores had been agreed upon, and the company continued to be anxious that the parties get together and sign the new "conversion" agreement; Mr. Baily testified, however, that the company had, in the Union's view, pulled back from its commitment to implement the "industry" settlement on 1988 wage rates for the corporate stores, and the Union accordingly declined to meet to finalize the "conversion" agreement. Mr. Bilodeau, as a result, further wrote to Mr. Crockett on April 26th as follows:

Dear Mr. Crockett:

It has now been almost ten (10) months since the agreement regarding our stores in the Ottawa, Cornwall and Brockville areas has been ratified by the membership, which in fact caused our Board of Directors to maintain Steinberg's food operations and put an end to the negotiations to sell its Canadian supermarkets.

In this collective agreement as well as in numerous discussions we have had with your Local since, we have clearly indicated that the Company would proceed to convert or franchise existing corporate stores, that each of these new vehicles would be covered by their own collective agreements, and we have also clearly spelled out the options that would be available to the employees affected by the conversion or franchise of their store.

We have converted store no. # 06 into a Steinberg Plus in September 1988. You were appraised several times of our difficult financial situation in this area. We were to move quickly to resolve between us three components of the 1988 settlement:

1. the wages for corporate store employees;

2. the Steinberg Plus collective agreement;

3. a model agreement that would apply to a franchisee of an ex-corporate store.

After long and what we consider undue delays, we were finally able to agree on the terms of the Steinberg Plus collective agreement on or about February 8th, 1989. Unfortunately, the two other components have not been resolved as yet, due mainly to your extreme reticence to resolve the model "franchise agreement" and despite the fact that I have made myself consistently available to do so in addition to submitting twice to you a complete draft proposal for a model franchise agreement, the whole as appears from my letters of January 27th, February 1st, February 6th, 1989 (all sent by FAX) and April 11th, 1989 (sent by courier).

I gather from our telephone conversations of April 20th, that you are not really interested to meet and resolve the "franchise agreement", and that as far as the corporate store wages are concerned, you may want to use the Final Offer Selection procedure provided for in the collective agreement. With regards to the latter, I cannot object since this is indeed the appropriate procedure to be used according to our collective agreement in the event that the Parties are unable to settle the wages by mutual agreement. We will then expect your application to form a Board of Arbitration and will submit our Final Offer to the Board in due time in conformity with the rules of our Agreement.

With regards to Steinberg Plus and to franchising, we sincerely believe that we have done everything in our power to negotiate in all good faith the relevant agreements, and tolerated a much longer delay than should have been necessary. As mentioned in previous letters, such delay is obviously costing us much and each week that passes adds to the damages we are suffering. We have a business to run and we must now proceed with it, as per our business plan and as spelled out in the collective agreement.

Consequently, and giving effect to the 1988 settlement, we will announce shortly the franchising of a first store in Ottawa. When the official announcement is made, and you will be the first to know, we will communicate properly with the employees affected, introduce the franchisee, and give them all the options which they will be entitled to according to the collective agreement. As to the franchisee, he will be unionized and governed by a collective agreement which terms and conditions will be "in keeping with similar agreements reached with U.F.C.W. Local 500."

Jim, I think it is unfortunate that the matter has been dragging for so long and that we have to proceed this way, when it should be fairly easy for two parties with experience and with a long lasting relationship to resolve in the light and the spirit of the 1988 settlement. However, I am sure you will understand the urgent need for our Company to move ahead with the plans announced several months ago and to take measures which are very much needed to redress our economic situation in a very competitive market.

Once again, I wish to reiterate my availability and the one of my colleagues at Steinberg Quebec to meet and resolve the matter amicably, if that is of interest to you and at your convenience.

Yours very truly

11. Mr. Crockett's immediate response to that letter was to notify Mr. Bilodeau of his intention to refer the issue of the corporate store wages to arbitration. Mr. Bilodeau responded:

Dear Mr. Crockett:

Thank you for your letter dated April 28, 1989

I take good note of your desire to submit the question of wages to arbitration in accordance with the terms of our 1988 agreement.

As to your invitation to meet, I would be pleased to do so, provided however that we may discuss not only the opportunity to implement whatever wages we agree upon for our corporate stores, but also the working conditions to apply to a franchise operation. We would indeed like to put all the 1988 agreement into effect and not only part thereof, as explained in several previous letters. If you wish to do this, I am available at your convenience within the suggested time frame.

However, if you are proposing to meet solely to have us agree to implement the increases which you propose, but not to resolve the other components of the 1988 agreement, let me say that it is probably a better idea to go to arbitration on wages. In that regard, I will be more than happy to accommodate you and we will act promptly to appoint our representative to the Tribunal and submit our position on wages to you and the Board in due course.

Please keep in mind that you will shortly be required to comment on the franchise agreement, in any event, as we are obliged to proceed with the implementation of the 1988 agreement. Our losses in the Ottawa area and our legal rights under the 1988 agreement do not permit further delays.

I shall await your prompt reply.

Yours very truly

Mr. Crockett on May 9th wrote as follows:

Dear Mr. Bilodeau:

Further to your letter of April 26, it appears to me that there is some confusion regarding your facts of the Steinberg Plus Agreement and the Franchise Agreement.

In my opinion, there were no long undue delays in reaching a tentative settlement with the Steinberg Plus Agreement. I was first involved in early December with that agreement and we were able to reach a tentative agreement on February 8, 1989. This agreement would have been taken to the membership for ratification if you had agreed to implement the Ontario wage settlement in the Ottawa region, as you had indicated you would.

If you wish to go ahead and implement the Steinberg Plus Agreement, in any of the existing stores, that will be your choice. We, in turn, would take the position that the existing contract would stay in effect until such time as a new agreement had been ratified by the members affected.

Regarding the Franchise Agreement, I indicated to you at our last meeting that we could fine tune the tentative Steinberg Plus Agreement as the new Franchise Agreement.

I asked that you separate from the Steinberg Plus Agreement the articles that would be acceptable to you and have them sent to Barry Baily. We could then meet and discuss the other articles you felt needed change.

After approximately seven weeks, I contacted you to find out what you had done with regard to the Franchise Agreement. You apologized for the delay and within a week I received a complete Franchise Agreement from you rather than the document I had asked for.

If there has been any delay in these negotiations, I'm afraid I cannot shoulder the blame.

Should you wish to continue to attempt to negotiate the Franchise Agreement, I would be more than willing to do so but under the original terms.

Meanwhile, should you decide to franchise a store, please contact me first. I would expect that the existing collective agreement for the store would stay in effect until such time as an agreement is reached between the parties.

With regard to the wage rates, we have already applied for final offer selection and have submitted our representative to the tribunal and would expect you to do the same without undue delay.

The enclosure that we refer to on page 2 was the existing collective agreement. I did not believe you needed a copy of the collective agreement.

I understand that a Franchise Agreement was signed on March 31, 1989 with Local 500 covering Steinbergs stores in Montreal. Would it be possible to have a copy of the agreement in English.

Yours very truly,

That prompted a further letter from Mr. Bilodeau on May 10th, which read, in its material parts:

….We feel that between July 1988 and April 1989, there should have been ample time to resolve all the components resulting from the 1988 settlement and the failure to do so was certainly not attributable to our lack of trying and pushing relentlessly for months and months. In fact, our Company is the one that suffers the damages and this is why we must now finally proceed as explained in my letter of April 26.

On the question of "ratification", we feel that there is no need for any ratification since the 1988 settlement is clear and was duly ratified on July 11, 1988 by the membership. In fact, any change of heart by the membership would most certainly result in grave damages and considerable litigation.

Regarding the conversions of stores into Steinberg Plus (ex. store no. # 06), or to a franchised status, please note that once the employees will have been given their options according to the collective agreement and/or the franchisee will have taken possession of the store as the case may be, the working conditions to apply from day one will certainly not be those applying to corporate stores but rather:

1. the terms already agreed upon for Steinberg Plus;

2. a model franchise agreement "in keeping with U.F.C.W. Local 500", as adjusted for Ontario, or as otherwise agreed upon between the parties. To that effect, I think it would be worthwhile for you and me to try to meet again one more time to resolve the matter. Should you agree, please call.

3. By this time the parties clearly were becoming exasperated with each other, and in July the company filed an unfair labour practice charge against the Union, alleging that it was refusing to bargain in good faith on the follow-through of the July '88 agreement, and that agreements ultimately negotiated by Local 500 for both conversion and franchise stores in Montreal had been forwarded to the Union for its action. The company at the same time persisted in its position that it was costing it too much money to wait for the Union any longer, and would have to implement the comparable agreements in eastern Ontario unilaterally. The Union responded to all of this by filing an unfair labour practice charge of its own against the company in August, making it clear that it felt the company had no lawful right whatever to put into effect new collective agreements for the conversion or franchise stores without those agreements having been negotiated with the Union.

4. Finally, after some further skirmishing and exchanges of proposals, an agreement for the prospective franchise stores was arrived at, and Mr. Bilodeau wrote to Mr. Baily evidencing that. At the same time the company agreed to implement the two-year wage increases (the second-year increase had by this time been determined by industry negotiations as well) for the corporate stores, and the letter from Mr. Bilodeau dated September 11,1989 provided as follows:

Dear Mr. Baily:

Following our recent agreement in principle and as requested, please find enclosed for your review and approval two (2) copies of the Steinberg Plus collective agreement in force from May 8, 1989 to May 7, 1991, and two copies of the model franchise agreement to apply to each corporate store that may be franchised in eastern Ontario in the future.

With regard to the Corporate stores Agreement and as per our discussion, I am confirming that the wage increase will be .7Ot the first year (October 1, 1988 to September 30, 1989) and .55¢ the second year (October 1, 1989 to September 30, 1990). The .70¢ increase will be retroactive to October 1, 1988 for all employees still employed in our corporate stores as of the date of payment. For employees working at Steinberg Plus, it will be paid for hours worked between October 1, 1988 to May 6, 1989. Payments will be made only after the three (3) above collective agreements will have been duly signed.

Would you kindly confirm to me that all documents are in order, so that we can arrange a signing date in Ottawa in the nearest future.

I thank you for your cooperation and remain,

Yours very truly

14. At that point the Union received notice from the company of its plans to franchise the first of the eastern Ontario stores, being Store #91, and the Union, consistent in fact with statements that had been made in its membership newsletter (and the action it had taken with respect to the Steinberg's Plus agreement when the first of those stores was actually ready for conversion), on October 10th posted notice of a "ratification" meeting for the employees of Store 91. The notice read:

WE HAVE COME TO A TENTATIVE AGREEMENT WITH THE COMPANY REGARDING A FRANCHISE AGREEMENT. THE PURPOSE OF THIS MEETING IS TO DISCUSS THIS AGREEMENT AND CONDUCT A SECRET BALLOT VOTE FOR RATIFICATION.

PLEASE BE SURE TO ATFEND THIS VERY IMPORTANT MEETING!

The company subsequently advised the Union, however, that the franchising of that store was not being proceeded with, and the Union cancelled the meeting with the following notice of October 11th:

DUE TO THE FACT THAT THE COMPANY HAS PUT OFF FRANCHISING STORE 91 INDEFINITELY, THE EXECUTIVE BOARD OF YOUR UNION HAVE DECIDED TO PUT OFF RATIFICATION OF THE FRANCHISE AGREEMENT UNTIL SUCH TIME AS THERE IS A DEFINITE DATE FROM THE COMPANY AS TO WHEN THE STORE WILL BE FRANCHISED.

THERE WILL BE NO MEETING ON OCTOBER 22ND.

On October 23, 1989, the company and Union met together and formally executed both the model Steinberg's Plus agreement and the model franchise agreement. It is not clear from the evidence exactly what occurred between those two dates, but the evidence is that there was at least a telephone call from Mr. Knowles to Mr. Baily, complaining that as no stores had yet in fact been franchised, all corporate employees should have been invited to the meeting to vote on the franchise agreement. It may have been at that point that Mr. Crockett through Mr. Baily first began to get an inkling that the "franchise agreement" might be in trouble.

15. In any event, in February or early March of 1990 the company advised the Union that it was once again ready to proceed with the franchising of a store, as of the 21st of March, and Mr. Crockett instructed Mr. Baily to make arrangements for a meeting hall so that the employees of the store could be advised of the terms of the new "franchise" agreement. That was not, however, to be a "ratification" meeting, in terms of the employees' acceptance or rejection of the newly-negotiated "franchise" agreement. As noted, Mr. Crockett had talked to both Mr. Hanley and Mr. Baily previously (as well as legal counsel), and knew that their understanding of the 1988 renewal agreement was the same as the company's: i.e., that the model collective agreements for conversion and franchise stores, the content of which was to be "in keeping with similar agreements reached with U.F.C.W. Local 500", were not subject, following the July vote, to further "ratification" by the employees. Notwithstanding that, however, the Union from the outset of negotiations on the conversion and franchise agreements had taken the position with the company that in its view both of those agreements did have to be submitted to the membership for approval. Mr. Crockett explained in his evidence, as did Mr. Baily, that the Union's reasons for doing that were twofold: one, such a posture gave the Union somewhat more leverage with the company in trying to squeeze out of the negotiations the best deal possible; and two, as Mr. Crockett put it in his testimony, it is always better to get an agreement ratified by the employees when you can, because "it makes life easier for everyone". That, he explained, is the reason why the "conversion" agreement was taken to the membership and voted on (the Union at that point knew there would be no difficulty persuading the membership to vote in favour of that agreement), and the same went for the Union's thinking early in October of 1989, when the first of the company's stores was supposedly on the way to being franchised.

16. At some point subsequent to that, however, it had become clear to Mr. Crockett and Mr. Baily that the "mood" in the stores had changed. No stores had been closed, and some employees, apparently believing from the size of the then-in-place wage increases that the Union had been successful in achieving for the corporate stores that the company must be better off than it had been saying, seemed, in Mr. Crockett's words, to be experiencing a "change of heart" about the July deal. Word of the Union having already signed the model franchise agreement in October had in fact come to the employees by February of 1990, and a number of them had immediately "petitioned" Mr. Crockett for a meeting to explain what was going on. Mr. Crockett readily admitted before the Board that he himself had, over the course of those several months, changed his mind about the advisability of putting the model "franchise" agreement to the employees for a vote, and articulated in detail the thought process he had gone through. The prospect of the franchise agreement being voted down by the employees who would turn out for the meeting had, Mr. Crockett explained to begin with, become a real one, and he had to think through what it would mean to the employees if that were allowed to happen. Under the overall agreement arrived at and ratified in July of 1988, he recognized, many of the employees, whether leaving or staying with a converted or franchised store, had already been in receipt of the severance payment that was part of that deal. And in doing so, all had been required to sign the company's standard form of release before the company was prepared to make those payments (which well exceeded the minimum payments provided for under the Employment Standards Act of Ontario). In the case of Mr. Knowles, for example, the release provided:

STEINBERG INC.

RELEASE

It is agreed that the signing of this release entitles me to the following separation pay:

Separation pay amount ($16,000)

I request that this amount be paid to a Retirement Registered Savings Plan (as per applicable fiscal regulations) based on completed TD2 forms.

In addition, I will be entitled to the vacation pay owed at the time of departure. This amount will be paid directly to me and it cannot be transferred to an R.R.S.P. Plan. [Plus sick leave owed]

I agree that such payment will constitute the final and total settlement of all lawsuits, claims and petitions of any nature whatsoever that I have or could have against Steinberg Inc., its directors or officers as a result of my employment with Steinberg Inc. and of its termination thereof as of 14-4-90 and I give release accordingly.

I hereby authorize the employer to recover from such amount any sum owed to Steinberg Inc. (including WCB advances)

As of the final day of evidence in these proceedings, in fact, employees in the 5 stores that had by then been franchised had been paid severance pay by the Company in excess of a million and a half dollars, again pursuant to the "July deal" of which the "conversion" and "franchise" agreements formed a part.

17. More compellingly, however, Mr. Crockett testified, he had to consider what was likely to happen if he went back to the company and told them the franchise agreement was rejected by the employees and that he wanted to negotiate a better one. Mr. Crockett was of the view that the company was highly unlikely to look favourably upon that suggestion. So where, he wondered, would that leave the employees? By the July '88 agreement, they had foregone the right to strike for five years. Thus the only way to obtain a "better" agreement was for the Union to take its chances at arbitration. Mr. Crockett was, however, anxious to retain for the employees the improved conversion and franchise agreements the Ontario Local had negotiated for its members over those of Local 500, and at arbitration he felt the company would have a very strong case against the Union based on the collective agreements that Local 500 in similar circumstances had in fact agreed to; thus, Mr. Crockett concluded, his own members would more likely than not do worse at arbitration than had been obtained by the Union through its direct negotiations. Weighing all of the considerations, as Mr. Crockett stated, "I had a judgment to make, and I made it", deciding in what he believed to be the best interests of his members to follow through with the franchise agreement as negotiated, and simply "take the heat" at any meeting with the employees.

18. And take the heat he did. There were 147 employees in attendance at the March 18th meeting (out of a membership potential of 1000), and the mood was decidedly hostile. The meeting lasted some 2 to 2-1/2 hours, during which Mr. Crockett reviewed the terms of the July '88 collective agreement that the employees had ratified. He explained as best he could the obligations on the Union that he believed had arisen out of that, as well as the unfair labour practice charge that the company had filed against the Union over the conversion and franchise agreements. Mr. Crockett testified, however, that the employees remained antagonistic throughout the meeting, and that it was clear that the only thing that was going to satisfy them would have been for him to tear up the franchise agreement at the conclusion of the meeting. Mr. Crockett was not prepared to do so.

19. The argument of the complainants, presented by Mr. Wade, was well articulated and straightforward. Under the agreement approved by the membership in July of 1988, he notes, the collective agreements to cover future franchise operations were left to be "negotiated by the parties", and that, in the complainants' view, means not simply the company and the Union (as those two parties have purported to interpret it), but rather the individual franchise owner and the membership at each store. Mr. Wade submits that that is underscored by the fact that both Mr. Baily and Mr. Crockett agreed with him in cross-examination that the "Union" is "the membership". Yet, he submits the Union decided to arbitrarily effect substantial changes in the corporate store contract, as it would be applied to any franchised store operations, without membership input, without the appointment of a negotiating committee, and without ratification by the members - all contrary to the Union's practice in negotiating collective agreements with the company in the past, and indeed, contrary to the Union's own Constitution. In that latter regard Mr. Wade points to Article 23 of the International's Constitution, which provides in specific terms as follows:

(D) 1. The affected membership may submit initial proposals for a collective bargaining contract or renewal of such a contract to the President of the Local Union involved or to a representative or committee designated by such President prior to the commencement of negotiations. Initial proposals shall be referred to the affected membership or a committee of the affected membership for approval, as directed by the President of the Local Union.

2. Following the approval of such initial proposals by the affected membership or a committee of the affected membership, the President of the Local Union involved or his or her designated representative or committee shall meet with the employer and endeavor to arrive at an agreement. The current status of such meetings with the employer shall be reported as regularly as practical to the affected members.

3. The proposal judged by the President or negotiating committee to be the employer's final proposal for a collective bargaining contract or renewal of an existing contract shall be submitted to the affected membership for its consideration. A majority vote of those present and voting shall be necessary to accept or relect the proposal.

The Union's manner of dealing with the franchise agreement, Mr. Wade notes further, can be contrasted with the Union's action regarding the Steinberg's Plus agreement, where the members in the individual store converted were given the opportunity to accept or reject the agreement. Indeed, Mr. Wade points out, the latter is exactly the way the Union, in its own newsletter as well as other statements, advised the membership that the franchise agreement, once concluded with the company, would be dealt with. The Union in fact had made arrangements to do just that on October 22nd, 1989, with respect to Store 91 that initially was going to be franchised at that time, but pulled back - only to sign the agreement with the company on October 23rd, without any word to the membership, until the membership found out for themselves through conversations with the Store Managers the following February. Mr. Wade asserts that the company has been threatening the membership with store closures for the past ten years, and that rather than accede to such arguments this time, the Union should have pursued its rights to take the company to Court [or arbitration]. Mr. Wade submits that no credit should be given to the Union for negotiating a severance plan, since the employees were in fact being terminated by Steinberg's, and were doing no more than complying with their obligations under the law. Also under the law, being section 72(5) of the Labour Relations Act, Mr. Wade adds, the Union had an obligation to put the terms of the new franchise agreement to the membership for ratification. Mr. Crockett testified that he had a judgement to make and that he made it in what he felt was the best interests of the members; but, says Mr. Wade, if Mr. Crockett really wanted to act in the best interests of the members, he should have adhered to the provisions for negotiating and obtaining the approval of collective agreements set down in the Union's Constitution. To do otherwise, and have acted in the arbitrary and secretive way in which the Union did, concludes Mr. Wade, was a betrayal of the membership, and a denial of its right to self-determination under the Labour Relations Act and the Union's own Constitution. Based on all of this, Mr. Wade asks on behalf of the complainants that the "model" franchise agreement executed by the company and the Union on its own be dissolved, and that the full terms of the "corporate" stores agreement be found to have continued to apply to such franchised stores (and the members compensated retroactively on that basis) until a new agreement for such stores is properly negotiated. And the "proper" way, the complainants say, of negotiating such agreements is for each store to have its "own" collective agreement, as they say is called for by Article 3A of the 1988 July agreement, worked out between the individual store operator on the one hand, and the Union and its members in that store on the other.

20. In assessing this matter it is important to note to begin with that neither section 72(5), nor any other section of the Labour Relations Act, makes it a requirement that a Union hold a ratification vote prior to making a decision to accept and enter into a collective agreement with an employer. That specific section of the Act provides, together with its adjacent sections:

72.-(4) A strike vote or a vote to ratify a proposed collective agreement taken by a trade union shall be by ballots cast in such a manner that a person expressing his choice cannot be identified with the choice expressed.

(5) All employees in a bargaining unit, whether or not such employees are members of the trade union or of any constituent union of a council of trade unions, shall be entitled to participate in a strike vote or a vote to ratify a proposed collective agreement.

(6) Any vote mentioned in subsection (4) shall be conducted in such a manner that those entitled to vote have ample opportunity to cast their ballots.

About these sections the Board in, for example, K-Mart Distribution Centre, [1981] OLRB Rep. Oct. 1421 observed:

15. It might be noted at this point that the Labour Relations Act does not specifically require that a trade union conduct a ratification vote. Had the union simply signed the agreement, there might well have been no basis for the present complaint.

In that case the Union was having a difficult time negotiating a "first" agreement with the company, with both sides apparently being fully aware that many of the employees in the newly-certified bargaining unit simply had no appetite for enforcing the demands of the Union by engaging in a strike which the company seemed likely to "win". A proposal for a complete three-year agreement had been put forward by the company in September of 1980 and, at the urging of the Union, rejected by the members of the bargaining unit by a vote of 29-0. Nevertheless, the Union, after further unsuccessful attempts to wring concessions from the employer, concluded that that offer of the company was the best one it was going to see, and at a meeting of the membership in December, finally recommended its acceptance. The employees at the meeting, many of whom were openly opposed to the Union continuing to represent them, voted against the offer by a narrow margin of 18-17. The Union considered the result of the vote, but nonetheless proceeded to accept and enter into the collective agreement on the terms proposed by the company. A number of disgruntled employees in the bargaining unit sought to have the agreement set aside by alleging a violation of the "duty of fair representation", section 68 again, of the Labour Relations Act.

21. The Board reviewed the rationale put forward by the Union in deciding to act as it had as follows:

22. All of the members of the bargaining committee acknowledged that the agreement was not a good one - in fact, it differed very little from the package which had been put before the employees on previous occasions. Now, however, the members of the bargaining committee, and the union officials urged acceptance. While the agreement left much to be desired, there were certain non-monetary benefits, and the union would be established. It could solidify its position, and seek improvements in the next round of negotiations.

23.... Serious consideration was given to abandoning the bargaining rights, but this would necessarily mean abandoning its members - some of whom had remained committed to the union throughout the 1976 strike and had actively assisted in the 1979 campaign....

The Board then noted, following upon its earlier comments on the effect of section 72 of the Act, that the question of whether or not the Union decides to hold a ratification or strike vote is, under the law of this province, "left to the union to be determined in accordance with its constitution and/or its own appraisal of the tactics of the situation". After referring to the Diamond Z case, [1975] OLRB Rep. Oct. 791, to which we will return, the Board at paragraph 35 stated its conclusions as follows:

There is no doubt that the union carefully considered the options open to it, and weighed all of the circumstances including the collective bargaining reality of the situation, the terms of its constitution, and the motivation of its opponents. There was no "bad faith" in the sense of personal animus against the employees in the unit. Indeed we were impressed by the sincerity of the respondent's witnesses and their obvious concern as they grappled with a difficult decision.

The complaint against the Union was accordingly dismissed.

22. A similar result was reached by the Board subsequently in the case of T. Eaton Company Limited, [1985] OLRB Rep. Aug. 1309. Indeed, the facts there in many ways provide more of a parallel to our own. Although on strike for a first collective agreement, the Union was in the difficult position of trying to negotiate a collective agreement for only six of the many stores of the the retail giant, and accordingly, as in K-Mart, both sides once again were sharply aware of the limitations on the Union's bargaining power. And once again there was as well a significant faction amongst the employees bent on terminating the Union's bargaining rights, in this case the lines being even more sharply drawn between those employees committed to supporting the strike in the hope of gaining a Union foothold, and those employees crossing the picket-line and going to work. The Union was running out of time in consummating a collective agreement before the six-month limitation period for protecting their members' absolute right to return to their jobs would expire under the Act, and its opponents in the circumstances attempted to take the tactical initiative by submitting to the Union a petition "that a ratification vote be held on any proposal before it is accepted by the union as a collective agreement". The Union nonetheless proceeded to enter into a collective agreement with the Company without referring the matter to the employees making up the store bargaining units. The dissident employees responded by seeking to have the agreement set aside by the Labour Board under the provisions of section 68 of the Act.

23. The Board in considering the matter noted that, although the Act did not make mandatory the holding of a ratification vote, the Union in the case before it nevertheless acknowledged that it was its practice, almost without exception, to do so. In addition, it was agreed by the parties that:

"During the (organizing) campaigns, union organizers from time to time in explaining the bargaining process to prospective members included in their remarks references to ratification votes."

The Board observed that the Union subsequently, however, in deciding not to submit the employer's offer to a ratification vote, was concerned over the express possibility that a majority made up of non-striking employees might vote it down, and that the "petition" calling for the holding of such a vote prior to any collective agreement being entered into was one of the factors that led the Union's officers to conclude that ratification votes in the various bargaining units affected would not be appropriate in this case.

24. The Board nevertheless concluded that the Union was entitled under the law to proceed with the course of action that it did. In reaching that conclusion the Board explained its thinking as follows:

25. The complainants contend that the union acted in bad faith, and thereby violated section 68, by denying employees an opportunity to participate in a ratification vote after advising employees during its organizing campaign and at the time of the strike vote that a ratification vote would be held. As noted above, although the parties agreed that the union did not actually promise employees that a ratification vote would be held, nevertheless, union officials when describing what they understood would happen indicated orally and in writing that a ratification vote would be held. It is not disputed that these comments were made in the good faith belief that ratification votes would be held. The only issue is whether the subsequent decision not to hold ratification votes demonstrated bad faith on the part of the union.

26. At the time that the union decided upon the method by which it would ratify the proposed collective agreements it was in a most unenviable situation. It was the view of Mr. Collins, who had responsibility for coordinating negotiations on behalf of the union, that the company was not likely to make a better offer unless the strike and associated consumer boycott continued for an extended period of time. However, striking employees faced the real possibility that they might lose their jobs if the strike continued much longer. Although at the time the striking employees had not yet been asked if they desired to return to work, from Mr. Collins' evidence it is clear that he suspected that many of them did not wish the strike to continue. In addition, unless collective agreements were entered into fairly quickly it was quite possible that employees who did not support the union might file termination applications. On top of all of this, the union was concerned that if it held ratification votes, non-striking employees might vote down the proposed agreements and put the union in a situation where it had no agreements and no chance of getting any. The Labour Relations Act contemplates that the result of collective bargaining will be a collective agreement. The purpose of a ratification vote is to allow employees to indicate whether certain proposed terms for a collective agreement are acceptable to them as opposed to possible other terms. The union felt that if ratification votes were held in this case, and the proposed agreements defeated, its bargaining rights would be effectively destroyed. The Act, however, stipulates that votes to terminate a union's bargaining rights are to be conducted in response to proper and timely termination applications. They are not to be conducted in the guise of ratification votes. Given these considerations, we do not believe that the union acted in bad faith when it decided not to follow the normal ratification procedures that had previously been described to employees. The reality of the matter was that this was not a normal situation.

27. More broadly, the Board in discussing its limited supervisory role under section 68 of

the Labour Relations Act has had this to say, for example, in the Diamond Z case, at paragraphs

13-14:

13. ... There is no dispute that the duty of fair representation owed employees in a bargaining unit is just as relevant during the negotiation of a collective agreement as during its term of operation once concluded. It is also without dispute that the pivotal period anticipated in the collective bargaining process is the conclusion by the parties of a collective agreement. The supervisory jurisdiction of the Board as expressed in the Act in connection with the conduct of both union and employer during negotiations is restricted to the requirement that the parties ~shall bargain in good faith and make every reasonable effort to make a collective agreement". Save for this mandatory requirement the Board in applying a standard owing employees in the bargaining unit during the negotiating process is conscious that it must not interfere with the wide discretion conferred the employees' "exclusive bargaining agent" to reach a settlement. The Board is cognizant, especially during the negotiation of a first agreement that the period preceding the making of a collective agreement is often when employees' hopes for improved terms and conditions of employment are at their height. Indeed the trade union may have induced these expectations by representations made during the course of an organizational campaign or at the twilight of an agreement about to expire. The realities of the negotiating process however may often result in some measure of employee disappointment with respect to the ultimate settlement. The synthesis contemplated in the bargaining process where the initial positions of the parties are subjected "to the give and take" of compromise and concession is bound to cause some measure of alteration in those positions. In this context the trade union representative must be at his most adroit. He must convince the rank and file that the sacrifice of long term benefits for immediate gains is desirable having regard to the particular circumstances. The employees must be convinced that the benefits not included in a settlement are merely deferred benefits until the onset of the next bargaining sessions. In the same context the employer's strategy of containing the more excessive demands of the trade union may have resulted in the avoidance of a work stoppage by virtue of acceding to the minimal requirements that constitute in the circumstances a fair settlement. Achieving this mutual accommodation requires the unfettered discretion of the representatives of the parties to explore all avenues of accommodation without the intervention of this Board in setting standards of conduct that may be characterized as an unwarranted intrusion in their private affairs. We are of the view that the representative trade union despite its obligation to employees in complying with the duty of fair representation must necessarily have "a free hand" in setting strategies that will best forward employees' interests irrespective of their expectations. (See: The Nicholas E. Erderly case OLRB M.R. September 1972 844).

14. What then ought to be the minimum expectation of employees with respect to their union's compliance with the duty of fair representation during the negotiating process? We do not intend by raising this question to prescribe a standard of conduct that could be construed to interfere with the internal procedures of trade union. A Union may have adopted its own procedures, whether governed by regulations contained in its constitution or by past practice, for communicating business matters to its constituents. Some trade unions as a matter of general practice will seek the approval of the rank and file prior to concluding a formal collective agreement; whereas, other unions may be authorized by their principals to enter into an agreement without prior consultation. Of those trade unions that do refer tentative settlements to the rank and file some may require the recommendation of their representatives; others may not. In other words the practice that is adopted by a trade union in negotiating process is not intended to be assessed in determining whether a breach of the duty of fair representation has occurred. Matters pertaining to that issue ought to be resolved privately by the parties having regard to their particular needs. (See; The Arthur Joseph Roberts case OLRB MR. March 1974 169 at p. 172; The General Impact Extrusions case OLRB M.R. August 1972 798; The Canadian Textile and Chemical case OLRB M.R. August 1971 469 at p. 470 for Board expression of its concern in interfering in internal union affairs). What the Board is concerned about in measuring the conduct of union representatives during the negotiating process is whether the employees affected have been treated honestly and in good faith. The adequacy of the settlement and the formal processes adopted in order to arrive at an accommodation are not necessarily in issue. What is in issue is whether the trade union by its conduct has acted fairly in the interest of employees in dealing with the employer with respect to their terms and conditions of employment.

15. Clearly, the situation facing the Union in the case before us here was not, to use the words in the T. Eaton Company case, "a normal situation" either. We recognize that the employer here may well have, in the past, made reference in negotiations to the economics of the company's situation, and the prospect of closures of some or all of the stores if a "satisfactory" collective agreement were not able to be worked out. In the lead-up to the 1988 round of bargaining, however, there were in fact elements confronting the Union which understandably might have had an impact on the seriousness with which it regarded the statements of the company. Focus on the question of the company's viability or willingness to remain in the supermarket business was receiving unprecedented attention, and the rift between the sister-owners of the company had made sale and closure of the stores an active possibility. Even in the face of that, however, it is apparent that Local 175 was not prepared to give the company a "free ride"~ and made a strong recommendation to the membership that the proposal originally put together by the company in March be turned down. By June, however, there came a development that, in terms of the seriousness of what the company had been saying to the Union and its members, could not be ignored, and that was the chilling announcement that the company was closing 10 of its stores in the Montreal area. That is virtually the size of the whole eastern Ontario group of stores, and that announcement, as Mr. Baily noted, had "serious repercussions" on the thinking of those involved in the Ontario stores at the time.

16. That was the backdrop for the July proposal taken back to the membership, and while the Union at that point decided to recommend it for ratification, it should also be noted that that package was substantially better than the one the company had been disposed to table in March. Certainly for the stores which remained within the corporate chain the terms of that renewal agreement were far less concessionary, and indeed, as it turned out, there was relatively little activity of a "conversion” nature, and certainly of a "franchising" nature, prior to the last six months of the initial two-year collective agreement. In addition, there was a clear recognition that employees who ultimately did come to have their store converted or franchised were in fact being "terminated" as employees of the parent company, Steinberg Inc., and generous severance allowances, in excess of those required by the Employment Standards Act, were provided for as a result. But the quid pro quo still demanded by the company in return for all of that was a recognition that if the stores ultimately were going to be able to continue to operate on a "viable" basis, they had to be allowed to do so under collective agreements, first for "Steinberg's Plus" stores, and then for franchised stores, that were less expensive than the collective agreement theretofore applying to the corporate stores. And that was the deal ratified by the employees, with the question of their own job survival in the stores squarely before them, at the meeting convened with the full membership in July. By then, as we are told, fully half the stewards, including Mr. Knowles, had had second thoughts about the wisdom of the deal, but elected to maintain their place at the front of the hall, and to say nothing, rather than place themselves in the position of encouraging the employee group to adopt the risk of rejecting the company's proposal. The ratification vote thus proceeded, and the employees by a wide margin gave their approval to what was to be the "blueprint" for the maintenance of the supermarket chain in eastern Ontario into the future. And there was no secret that an integral part of that blueprint was the future "negotiation" of separate collective agreements for both the conversion and franchised operations: explicit reference was made to that in Article 3A of the document that was handed out to each employee at the July 1988 meeting, the content of such collective agreements to be

"in keeping with similar agreements reached with U.F.C.W., local 500".

The ratified document, in other words, on its face locked the Union and its members into acceptance of collective agreements for the conversion and franchise agreements that would be essentially no better than those that came to be negotiated by Local 500 in Montreal (just as they were locked into accepting the result of an arbitrator's award, if necessary, for the setting of wages for the corporate stores). The decision to "ride the coat-tails" of Local 500 appeared, Mr. Crockett testified, to be a sensible approach at the time, because that was by far the bigger Local with respect to the representation of Steinberg's stores, and the one therefore likely to have the most clout with the employer. In the end, as it turned out, Local 175 managed to hold out for terms in some respects even better than those agreed to by Local 500. But that is not the significant point. The significant point is that the employees, after having the opportunity to ask any questions they chose about the July document, including the reference to subsequent collective agreements "in keeping with similar agreements reached with U.F.C.W. Local 500", overwhelmingly decided that it was in their own interest to ratify it, and did so.

28. On the basis of that ratification the company then proceeded with its "rationalization" plan, including the payment of the agreed-upon severance allowances where applicable. And the Union also proceeded, however haltingly, to consider the question of the conversion and franchise agreements, in conjunction with the developments taking place in that regard with Local 500 in Montreal. It is clear that the Union at that stage had it in mind to put the finished product before the membership for acceptance (as it had begun to do before the plans to franchise Store 91 were cancelled) simply on the basis that, as subsequent events have so aptly proven, "it makes life easier for everyone", and especially the Union's leadership. But by the time the company had a store actually ready for franchising, the Union officers had discerned a momentum against such concessions, and were thus placed in a position where they had to make a difficult choice. Having considered all of the options, and what the various ones would likely mean for his membership, President Crockett came to the conclusion that it was simply too late in the process, in light of the renewal agreement ratified by the employees in July of 1988, for employees to change their mind, and he decided not to adopt the course of putting the model franchise agreement before store employees for a further vote.

29. That decision was taken by Mr. Crockett, once again, on the basis of a belief that that July 1988 renewal collective agreement permitted him to do that. That certainly was the company's view at the time of the July negotiations (as repeatedly evidenced in their position subsequently). We should make it clear, however, that it is not the role of the Board in the section 68 proceeding before us to purport to interpret that collective agreement. The only question we have to ask ourselves is whether the interpretation put on that agreement by the Union, and specifically Mr. Crockett, was a "reasonable" one, insofar as that helps the Board to decide whether the belief he says he held was in fact held by him, honestly and in good faith. And we believe that it was. The whole context of the unusual negotiations that were going on in July of 1988 makes it entirely reasonable to conclude that what was being authorized by the employees was not simply a further negotiating process the product of which would once again be put before the membership for its approval or rejection. Steinberg's at that point was making the decision whether to continue with the operation of its supermarkets, and to pull away from all ongoing negotiations for the sale of its store assets piecemeal (they subsequently were sold, but as a group), and proceeding rather with its plans to transfer the operation of stores within the area to Plus or franchised operations. Indeed, as Mr. Baily noted, it was recognized that it would not even be possible to solicit and negotiate deals for the assumption of a franchise on any store without being able to lay out for a prospective operator what the specific terms of the applicable collective agreement would be - at least at the outset. We say at the outset because we note that after the term of that initial collective agreement, the terms of any subsequent collective agreement are, under the July agreement, left to be worked out between the individual franchise operator and the individual store bargaining unit - as the complainants in their remedy are seeking. In the face of all of that, we do not, as we have said, find it unreasonable, or unworthy of belief, that the Union would have taken the company in the July document not to have left the ultimate disposition of the franchise or conversion collective agreements to the unfettered whim of further employee ratification. Rather, we are satisfied that the Union's officers honestly and reasonably believed that the July document specifically authorized them to proceed on their own (if they chose) to enter into collective agreements for conversion and franchise stores that were "in keeping with similar agreements reached with U.F.C.W., local 500" (and there is no allegation that the agreements ultimately entered into by Local 175 were not).

30. That is the only determination that the Board has to make under section 68 of the Act, and the provisions of the Union Constitution before us in this matter do not change that. As the Board has stated on numerous occasions, the Board has, once again, only a limited role to play with respect to the interpretation or enforcement of a Union's constitution. See, for example: Gold Crest Products Ltd., [1973] OLRB Rep. Aug. 436; Labourers, LS27 and Frank Manoni, Lise Manoni, [1981] OLRB Rep. Dec. 1775; Auto Workers, L525 and Sylvia Colalillo, [1982] OLRB Rep. July 1066; Labourers, L1089, Rocco D'Andrea and Luciano D'Alessandro and Donato Marinaro, [1987] OLRB Rep. July 986; Sutherland, Keith MacLeod, [1983] OLRB Rep. July 1219; Labourers, L527 and Nello Scipioni, Bernardino Carrozzi and Frank Manoni, [1983] OLRB Rep. Aug. 1344; Plasterers, L598 and Angelo Moro,[1983] OLRB Rep. Aug. 1354 and Intl. Operating Engineers, L793 and Ronald Lewszoniuk, [1984] OLRB Rep. Jan. 48. The only relevance of the Constitution for us is that an obvious departure from its terms (or from the Union's practice in general), might well call for an explanation from the officers involved in order to rebut any inference of arbitrariness, discrimination, or bad faith. Here, once again, we have been satisfied that the Union's leadership were genuinely of the belief, on reasonable grounds, that the requirements of the Constitution for "ratification" had been met when the full "5-year Plan" was explained to the membership and voted on in July of 1988, and the inquiry before this Board extends no further.

31. On the basis of all of the evidence, therefore, including the detailed and credible testimony given before this Board by Mr. Baily and Mr. Crockett, the Board cannot conclude that the respondent Local 175 has acted in a manner that is arbitrary, discriminatory or in bad faith toward the employees it represents in the stores of the eastern Ontario area, and the complaint is dismissed.