Ontario Labour Relations Board

[1990] OLRB Rep. August 821

0079-90-FC National Automobile, Aerospace and Agricultural Implement Work­ers Union of Canada (CAW-Canada) and its Local 673, Applicant v. Bourque Consumer Electronics Service Inc., Respondent

BEFORE: Brain Herlich, Vice-Chair, and Board Members M. Rozenberg and P. V. Grasso.

APPEARANCES: Paul Falzone, Brian Feil, Ralph Glass, lain Farquharson and Val Di Meo for the applicant; Russel Zinn, Gino San giovanni and Peter Bourque for the respondent.

DECISION OF BRAM HERLICH, VICE-CHAIR, AND BOARD MEMBER P. V. GRASSO;

August 8, 1990

1. This is an application for a direction that a first collective agreement be settled by arbi­tration, pursuant to section 40a of the Labour Relations Act.

2. At the commencement of the hearing the respondent (also referred to as the "em­ployer" or the company") raised an issue which the parties agreed to deal with on a preliminary basis.

3. The position of the employer was that section 40a is not available to the applicant (also referred to as the "union") in this case. Although the parties have been unable to conclude their first collective agreement, the employer was party to a collective agreement with a union subse­quently displaced by the applicant. In these circumstances, argues the employer, the provisions of section 40a are not available to the applicant and the Board should therefore dismiss the applica­tion on that basis.

4. As the applicant had not been advised of the employer's position prior to the com­mencement of the hearing, the matter was recessed until 3:00 p.m. on the first day of hearing to allow the union to prepare to meet the employer's objection. The parties made their submissions at that time and on April 22, 1990 a majority of the Board, panel member Rozenberg dissenting, issued the following decision:

For reasons to follow at a later date, the Board has determined that the employer's preliminary motion is hereby dismissed. Hearing in this matter will continue on May 1. 1990.

These, then, are our reasons for that ruling.

5. The parties were able to agree on the facts necessary for the purposes of the employer's preliminary motion. The employer purchased the business in the summer of 1988 from General Electric (hereinafter referred to as "GE") and was thereby a successor employer under section 63 of the Labour Relations Act. As a result of the sale the employer became party to an existing col­lective agreement between the predecessor employer and Aerospace and Electronic Communica­tions Employee's Association (RCA-SPAR) (hereinafter referred to as the "Association"). The Association had been party to a number of collective agreements with GE and with its predeces­sor, RCA.

6. In the summer of 1988, subsequent to the expiry of the collective agreement, the Asso­ciation commenced negotiations for a renewal of the agreement with the employer. The Associa­tion and employer were unsuccessful in negotiating a collective agreement. A number of bargain­ing unit employees then approached the applicant and a certification application was filed. Subsequent to a representation vote, the applicant was certified on March 29, 1989. The applicant and respondent commenced negotiations and used the former agreement between the employer and the Association as a basis for negotiations. In addition the union tabled further demands.

7. Section 40a(1) of the Act provides:

40a.-(1) Where the parties are unable to effect a first collective agreement and the Minister has released a notice that it is not considered advisable to appoint a conciliation board or the Minis­ter has released the report of a conciliation board, either party may apply to the Board to direct the settlement of a first collective agreement by arbitration.

8. The employer asserts that there are two conditions precedent to the right of the union to apply for the direction sought. The Minister must have issued a "no board" report - there is no dispute this condition has been met. This is not, however, argues the employer, a situation where "the parties are unable to effect a first collective agreement".

9. The employer urges the Board to find that section 40a is not available where there is a history of negotiated collective agreements and where there has been a collective agreement bind­ing on the employer in respect of employees in the very bargaining unit in issue. The employer focuses on the phrase "a first collective agreement" and asserts that, given the history agreed to, the parties are not negotiating a first collective agreement. Even though this is the first time that these parties have attempted to negotiate a collective agreement, a resulting agreement would be their, not a first collective agreement. Had the Legislature intended to provide access to section 40a in a case such as the present one, the legislation would have used the phrase "their first collec­tive agreement" rather than "a first collective agreement".

10. The employer asserted that section 40a was designed to address situations involving employees organized and certified for the first time although it conceded that the factors outlined in section 40a(2)(a)-(d) would not be exclusive to such a situation.

11. The employer also submitted that to accept the interpretation advanced by the union would greatly enlarge the scope of access to first contract arbitration. Employees would be encour­aged to change bargaining agents for the sole purpose of gaining access to first contract arbitration.

12. The union asserted that what the employer is attempting to do, while not explicitly making the claim, is to ask the Board to treat the union as a successor union to the Association. It also focuses on the phrase "a first collective agreement" but asserts that in the context of the sec­tion the word their would have been redundant - it is the parties' inability to conclude a first collec­tive agreement which triggers the right to make an application under section 40a(l). The parties have no ability to conclude anything other than their first collective agreement. The mischief which section 40a is meant to address will not occur exclusively in cases where employees are organized and certified for the first time.

13. As is evident from our earlier decision, the Board is of the view that the employer's pre­liminary motion must fail.

14. We are not convinced that the interpretation urged by the union will lead to changes of bargaining agents for the sole and express purpose of gaining access to first collective agreement applications. Neither are we persuaded that this has happened in the present case and conse­quently have no need to further address the Board's ability to deal with such a case. Similarly, except to note that the applicant is not a successor to the Association, we make no comment regarding the ability of a successor union to access section 40a where its predecessor had been a party to a collective agreement.

15. The issue we must address is the interpretation of section 40a(1) and, in particular, the phrase [w]here the parties are unable to effect a first collective agreement".

16. The parties in the present case are the union and the employer, not the Association. Regardless of the collective bargaining history involving the Association, the employer and its pre­decessors, "the [present] parties" have clearly been unable to effect any collective agreement, first or otherwise. The only collective agreement which can be of any relevance for the purposes of sec­tion 40a(l) is an agreement between the parties. We thus conclude that the union is entitled pursu­ant to section 40a(1) to bring the present application.

17. We are fortified in our conclusion when we consider section 47 of the Act which pro­vides:

47.-( I) Where the Board is satisfied that an employee because of his religious conviction or belief,

(a) objects to joining a trade union; or

(b) objects to the paying of dues or other assessments to a trade union,

the Board may order that the provisions of a collective agreement of the type mentioned in clause 46(l)(a) do not apply to such employee..

(2) Subsection (1) applies to employees in the employ of an employer at the time a collective agreement containing a provision of the kind mentioned in subsection (1) is first entered into with that employer and only during the life of such collective agreement, and does not apply to employees whose employment commences after the entering into of the collective agreement.

[emphasis added]

Section 47(2) restricts availability of religious exemption applications to the first time a collective agreement (containing certain provisions) is entered into with an employer. The section is not framed in terms of the parties to the agreement. Had the legislature intended to restrict the avail­ability of first contract applications to the first time an employer is involved in collective bargain­ing, we would have expected language more similar to section 47(2) rather than the reference to "the parties" included in section 40a(1).

18. It was for these reasons that we dismissed the employer's preliminary objection.

19. On May I and 2, 1990 the hearing in this matter continued. A decision issued on May 7, 1990 wherein a majority of the Board, panel member Rozenberg dissenting, directed the settle­ment of the parties' first collective agreement by arbitration. These are our reasons for that direc­tion.

20. The Board heard the evidence of three witnesses. Brian Feil, national representative of the union, was involved in and testified to all aspects of the union's negotiations with the respon­dent. Mr. Zinn, company counsel at the hearing in this matter, was one of the company's chief negotiators during bargaining. The respondent did not call any witness directly involved in the negotiations. Pierre Bourque, who works in Ottawa and is president of the respondent company, testified with respect to his involvement in the matter. The employer also called Michel Laporte, a bargaining unit employee. Mr. Laporte chose not to participate in the strike called by the union and testified as to certain incidents which occurred during the course of the strike which com­menced in October of 1989 and was continuing at the time of the hearing.

21. We observe at the outset that, with few exceptions, there were no significant disputes between the parties regarding the essential facts giving rise to the application. Having said that, we note that to the extent that Mr. Feil's evidence regarding events at and related to negotiation was uncontested, it is accepted by the Board. We note as well that Mr. Laporte was the only witness to testify out of first-hand knowledge as to certain events related to the strike and we accept his evi­dence as well. More will be said later regarding the evidence of Mr. Bourque and his relationship to the negotiations and the company negotiators.

22. Subsequent to certification, the parties met for their first negotiating meeting on or about July 10, 1989. At that meeting the union presented its proposals. The union based these pro­posals on the former collective agreement between the employer and the Association, making changes to reflect the new bargaining agent and adding certain items to demands which the Associ­ation had previously tabled. The company expressed some surprise and satisfaction at the fact that the union was willing to frame negotiations around the former agreement.

23. The Association, in June 1988, had sought 8% and 9% wage increases in a two-year agreement. Although the union initially adopted this proposal, the parties quickly moved to discus­sion of a three-year term and the union indicated it would be content with increases of 3% in each year. (The evidence is not clear, however, on precisely when the union first communicated that position to the employer.) There has been no general wage increase since June 1987.

24. The parties met again on August 10, 1989 at which time the employer tabled a compre­hensive proposal. Substantial concessions were sought. For example, the company proposed signif­icant reductions in wages although it proposed that its wage grid apply only to employees hired after ratification. More senior employees would see a 3% reduction in their existing hourly rate (or would be paid according to the grid, whichever was greater). The proposed wage rates were to remain frozen for the duration of the three-year contract. In addition, the employer proposed that the hours of work be increased from 37'/2 to 40 per week without any corresponding change to the weekly wage - this represented a further 6.6% reduction in wages.

25. It was therefore evident from the outset that the parties were far apart on economic issues. The company indicated that it was concerned about its financial situation. It emphasized the difference between its position as a stand-alone service operation and that of its predecessors who offered customer service and repairs as merely an adjunct to a manufacturing operation. Mr. Feil was, based on his own negotiating experience, somewhat skeptical of the company's claims of eco­nomic woe and accordingly asked for the opportunity to review the company's books. This request was denied from the outset and throughout the process as it was repeated. Mr. Bourque testified that as a private company the employer had no obligation to open its books to the union. The com­pany asserted its lack of profit and, in the absence of any information provided by the union to the contrary, Mr. Bourque felt the company had no obligation to provide any further information.

26. Notwithstanding the wide gulf on economic matters, the parties were successful in resolving virtually all "language" or non-monetary items during the course of negotiations prior to conciliation.

27. Indeed, even prior to conciliation, the union thought a consensus had been reached to extend the hours of work to 40 per week and to pay overtime after 40 hours (rather than 37V2). When the parties met for conciliation on September II, 1989, it quickly became clear that the union had either misunderstood the company's position or the company had reneged on its agree­ment (we do not find it necessary to determine the appropriate characterization). The company did indeed want to extend the hours of work to 40 per week but it remained firm in (or returned to) the position that despite the increased hours there would be no corresponding increase in weekly wages. Negotiations quickly broke down and a "no board" report was subsequently issued.

28. On October 19, 1989 the union gave notice to the employer that it would commence a legal strike on Friday October 27, 1989 at 10:00 a.m. That strike commenced and continued up to the hearing date in this matter. The company has continued to operate using a combination of bar­gaining unit employees who chose not to participate in the strike and replacement employees.

29. The major issue leading to the strike was the company's demand that the work week be increased without any increase in weekly wage (henceforward referred to as "40 for 37Y2").

30. On the eve of the commencement of the strike the company sent the following letter to the union:

The company has now had the opportunity to review it [sic] bargaining position.

The company has made every reasonable attempt to negotiate and conclude a collective agree­ment with the CAW without the necessity of a strike or lock-out. The offer advanced to the union during conciliation was fair and reasonable given the circumstances as they then existed and the company's assessment of its economic position. Those circumstances have been altered considerably since that time.

The productivity of the Toronto operation has continued to deteriorate. It is an unprofitable operation. The companys financial position is less favourable than believed at the time of our final offer. The strike activity scheduled to commence tomorrow will no doubt also adversely affect the financial situation of the company. Accordingly this is to advise that effective immedi­ately the company withdraws its last offer.

We shall be formulating a new and reduced offer in the coming days and will forward it to you in due course.

31. Approximately one month later the company did forward a new and reduced offer to the union which included the following changes to the company's position:

(i) the Rand formula was to replace compulsory union membership

(ii) two floating holidays to be deleted

(iii) overtime not to be paid until after 44 hours work in a week

(iv) elimination of 4 and 5 week vacation entitlements for senior employ­ees

(v) the wage grid would now apply to current as well as new employees with general increases of 0%, 2% and 2% in each of the 3 years of the agreement.

32. The employer's offer was unanimously rejected at a membership meeting.

33. Sometime early in the new year Mr. Feil contacted Mr. Zinn with a view to resuming negotiations. The union's proposal of interest arbitration was rejected and Mr. Zinn advised Mr. Feil that unless the union was prepared to agree to "40 for 37½" there was no point in resuming negotiations. Mr. Feil then met with the striking employees and received a mandate to agree to "40 for 371/2" in order to get negotiations going. Negotiating meetings were then scheduled for February 15 and 16, 1990.

34. On February 13, 1990 Mr. Zinn transmitted the following letter by Fax to Mr. Feil:

I am informed by my client that your members on the picket line are again engaging in intimida­tion tactics and vandalism.

This morning one of the company's employees, Mike Laporte, was unable to bring his car into the company parking lot. Your members completely blocked the entrance to the driveway and would not allow him to pass. Mr. Laporte, as a consequence was required to park his car in a lot close to the company's premises. While parked in this lot his car was vandalized, the body was dented and the tires were slashed.

Also today, one of your members, Mr. Val Demeo verbally intimidated Mr. Trans as he arrived for work by stating to him, ~If you keep working there you're looking for trouble."

You and I have previously spoken with respect to these threats by members on the picket line and the property damage experienced. You and I both know, although I do not expect that you will admit it, that the members on the picket line are responsible for this violence. I and my cli­ent believed that this gratuitous violence and vandalism by the picketers had ended.

The incident this morning, two days prior to the date planned for the resumption of negotia­tions, is simply inexcusable. I am to advise you that the company is not prepared to meet with you on Thursday for the purposes of receiving your proposal unless I receive from you no later than Noon tomorrow, February 14, 1990 a written undertaking that the CAW and its members at Bourque Consumer Electronics will not engage in acts of vandalism, violence or intimidation and will allow access to the company's parking lot by motor vehicles and pedestrians. If this written undertaking is not received by Noon tomorrow, we shall not be attending at the negotia­tion session.

I trust that this makes the company's position perfectly clear on this matter. Should you wish to discuss it please do not hesitate to contact me.

35. Mr. Feil received this letter upon his return to his office the following day some 20 minutes prior to the noon deadline imposed by the letter. Mr. Feil called Mr. Zinn's office to indi­cate a response would be forthcoming. Mr. Feil then contacted Mr. Farquharson, the president of the local and concluded, as a result of that conversation, that the allegations contained in Mr. Zinn's letter were unfounded. (This conclusion was later reinforced in his mind by conversations Mr. Feil had with bargaining unit employees on subsequent days.) Consequently, later that day, Mr. Feil transmitted the following letter by Fax:

I received your fax dated February 13, 1990 today at 11:40 a.m. February 14, 1990.

I have been unable to confirm the allegations but none the less 1 can ensure you this conduct is not condoned by the National Union.

I will further ensure that I will take whatever steps are necessary to prevent this kind of conduct in the future. It is our natural objective to maintain an orderly and peaceful picket line.

We are looking forward to meeting with you tomorrow at the Skyline Hotel at 10:00 a.m. Thurs­day, February 15, 1990.

36. Later in the same day Mr. Feil received the following reply:

I received your fax dated February 14, 1990 at 1:58p.m., February 14, 1990.

You have previously given me your assurances that you would take whatever steps were neces­sary to prevent the sort of conduct referred to in letter of February 13th. Nonetheless, this con­duct is continuing to occur. Therefore, I cannot accept the assurance indicated in the third para­graph of your letter. This does not respond in a meaningful way to the letter which I forwarded to you and in particular does not give me any assurance that your members will permit motor vehicles to pass through the picket line so that they may park in the company parking lot. In these circumstances and having failed to meet the conditions outlined in our earlier correspon­dence to you, we can advise you that we will not be meeting with you tomorrow and have advised the hotel that the reservation is cancelled.

37. The scheduled negotiations did not take place and on February 21, 1990 the union sent the following letter to the company:

I received your fax dated February 14, 1990 at 4:30 p.m.

It is the Union's position that due to the Company's cancellation of our scheduled meetings on February 15 and 16, that you are violating your duty to meet with the Union and bargain in good faith.

You will be receiving a copy of our application for first contract arbitration under Section (40 A) of the Labour Relations Act.

Your actions of February 14, 1990 are tantamount to "BAD FAITH" bargaining and you will be hearing from the Board in the very near future.

Your accusations outlined in your correspondence of February 13, 1990 are completely and totally unfounded and are merely an excuse to further frustrate the bargaining process. How­ever, we do remain available to meet in an effort to achieve a collective agreement.

There was no reply to this letter and the present application was filed on April 6, 1990.

38. Section 40a(2) of the Labour Relations Act provides:

40a.-(2) The Board shall consider and make its decision on an application under subsection (1) within thirty days of receiving the application and it shall direct the settlement of a first collec­tive agreement by arbitration where, irrespective of whether section 15 has been contravened, it appears to the Board that the process of collective bargaining has been unsuccessful because of,

(a) the refusal of the employer to recognize the bargaining authority of the trade union;

(b) the uncompromising nature of any bargaining position adopted by the respondent without reasonable justification;

(c) the failure of the respondent to make reasonable or expeditious efforts to conclude a collective agreement; or

(d) any other reason the Board considers relevant.

39. The Board's general view of section 40a has been set out in Nepean Roof Truss Limited, [1986] OLRB Rep. July 1005 at para. 16:

40. It is clear from these provisions that the legislature has acknowledged the significance to the collective bargaining relationship of the first contract, and has given statutory recognition to the potential difficulties that may be encountered in achieving it. This remedy does not supplant the primacy of the free bargaining process; rather, it recognizes that the negotiation of the first agreement may sometimes be thwarted by unjustified intransigence. Although this is remedial legislation and should be given a liberal construction and interpretation, the scheme of section

40a does not envision the automatically imposed settlement of a first collective agreement in all cases where the parties are unable to negotiate one. What it provides is access to this remedy where certain conditions precedent have been met. These conditions are enumerated in subsec­tions (a)-(d) of section 40a(2).

40. The Board is required to direct first contract arbitration where it is satisfied that the process of collective bargaining has been unsuccessful because of one or more of the reasons enu­merated in paragraphs (a)-(d) of subsection 40a(2).

41. The applicant asserts that the process of collective bargaining has been unsuccessful because of the uncompromising nature of the bargaining position adopted by the respondent with­out reasonable justification or because of the failure of the respondent to make reasonable or expeditious efforts to conclude a collective agreement. The applicant also asserted that a direction should issue on the basis of section 40a(2)(d). However, in view of the conclusion we have arrived at in respect of section 40a(2)(b) and (c), we find it unnecessary to address this aspect of the applic­ant's case.

42. The respondent argues that the collective bargaining process has not been unsuccessful and, alternatively, any such lack of success is not attributable to the reasons which would justify the direction of first contract arbitration.

43. As the comments cited in Nepean, supra, indicate, first contract arbitration is not intended as a surrogate to the collective bargaining process. The parties to first agreement negotia­tions do not have automatic unilateral access to interest arbitration. It goes without saying that a collective agreement freely negotiated by the parties is preferable to one imposed by an indepen­dent third party. The Legislature has recognized, however, the pivotal importance of a first collec­tive agreement to the ongoing stability of a collective bargaining relationship and has sought to remove some selected barriers which might otherwise preclude the consummation of a first collec­tive agreement. Section 40a, however, does not relieve the obligation of both parties to make every reasonable effort to make a collective agreement. The Board will therefore not direct interest arbi­tration simply upon the request of a party. The parties must have travelled some distance along the collective bargaining route before recourse to section 40a will be available. Thus, the requirement that the conciliation process be complete and that the process of collective bargaining has been unsuccessful (for the enumerated reasons) are conditions precedent to issuance of a direction under the section.

44. The Board has dealt with the determination of what constitutes an unsuccessful collec­tive bargaining process in a number of earlier cases. Like many terms charged with legal signifi­cance, a precise and comprehensive definition of what might otherwise be viewed as an everyday and simple word like "unsuccessful" may be somewhat elusive.

45. In cases such as Teledyne Industries Canada Limited, [1986] OLRB Rep. Oct. 1441 and Juvenile Detention (Niagara) Inc., [1987] OLRB Rep. Jan. 66, the Board has dismissed first con­tract applications where it has concluded that the parties have invested insufficient energy into the bargaining process and where further negotiations appeared appropriate to deal with matters not yet fully canvassed. These cases essentially involve a determination by the Board that the applica­tions were at least premature as a result of the bargaining process not having been exhausted.

46. In the present case we have no difficulty concluding that the collective bargaining pro­cess has been unsuccessful. The parties have had the opportunity to address all issues and, from this perspective, the application cannot be called premature. A strike has been in process for sev­eral months and the gulf between the parties on economic issues has been clear from the outset of bargaining and has only broadened during the process. While there may be nothing intrinsically surprising, unlawful or unreasonable in a party's position becoming more rigid in the context of the exercise of economic sanctions, such a move may serve to highlight the impasse the parties have reached. Further, the refusal of the respondent to participate in further negotiations in the face of significant concessions by the applicant can hardly lead to conclusions other than impasse and lack of success in the collective bargaining process.

47. We must now consider whether the lack of success has been caused by any of the factors enumerated in section 40a(2). In our view, the process has been unsuccessful as a result of the fail­ure of the respondent to make reasonable or expeditious efforts to conclude a collective agree­ment. Some further and more detailed review of the evidence is required to explain our conclu­sion.

48. The employer on February 13, 1990 indicated that unless it received a written undertak­ing regarding conduct on the picket line it would not be attending the negotiating session scheduled for February 15 and 16, 1990. The employer's letter made certain allegations regarding picket line conduct.

49. This was not the first time that conduct on the picket line had been the subject of dis­cussion between the parties. On December 7, 1989 the company wrote to Mr. Feil making certain allegations regarding conduct on the picket line. Mr. Feil consequently contacted Mr. Farquharson and also met with employees. He was assured that the picket line was being maintained in an orderly fashion and explained to Mr. Farquharson and the employees that the union could not and would not condone the kinds of acts described in the company's allegations. In any event, based on his periodic observation of the picket line and information provided to him by the participants, Mr. Feil concluded that the company's allegations were unfounded. Mr. Feil advised Mr. Zinn that the union would maintain a peaceful picket line.

50. At no time during the strike (either in December 1989 or in February 1990) were any charges laid as a result of picket line incidents and neither did the company take any legal action to restrain or restrict picket line activities.

51. Apart from Mr. Feil's evidence of a number of visits to the picket line, the only direct evidence before us came from Mr. Michel Laporte, an employee who has continued to work dur­ing the strike.

52. Mr. Laporte testified as to an incident which occurred within the first few weeks of the strike. Picketers apparently attempted to prevent him from driving his car into the company park­ing lot. He was subjected to verbal abuse and a skid was thrown at his car, although whether any contact was made or damage resulted was not disclosed to us. One picketer, who was not an employee of the company, opened Mr. Laporte's car door and attempted to pull him out. Nothing further appears to have resulted from this incident - there is no evidence that any civil or criminal proceedings resulted.

53. Mr. Laporte, within the first month or two of the commencement of the strike decided, quite sensibly in our view, to avoid any possible confrontation by parking his car elsewhere when­ever employees were present on the picket line. Notwithstanding this, his car was subject to acts of vandalism (glue in door locks, punctured tires) at some unspecified times. Sometime in February Mr. Laporte found his car (which he had parked away from the company parking lot) had been subject to vandalism - a punctured tire, damage to the side marker light, a removed emblem, and a dent in the fender. This latter incident is the only evidence remotely related to the allegations con­tained in the company's letter of February 13, 1990 (cited supra).

54. We note that there is no evidence of any improprieties on the picket line on or about February 13, 1990. Further, while one may be tempted to draw inferences there is no direct evi­dence as to who was responsible for the damage to Mr. Laporte's car. The evidence simply does not disclose any substantial basis for the company's allegations. Even if it did, however, this would not alter our ultimate conclusion in this case.

55. On the strength of its allegations the company demanded a written undertaking regard­ing picket line conduct as a condition precedent to the resumption of negotiations. Even assuming that both the company's allegations and its imposition of this new condition were justified, we are of the view that Mr. Feil's written response of February 14, 1990 constituted full compliance with the company's demand.

56. Despite Mr. Feil's response, the company continued to refuse to participate in the scheduled negotiations. In determining whether a party is making reasonable and expeditious efforts to conclude a collective agreement, one should not consider events in complete isolation from the bargaining process as a whole. A single incident or moment of intransigence will not nec­essarily be sufficient to draw the conclusion resulting in the imposition of first contract arbitration. It is precisely the context in which the company decided to cancel the scheduled negotiations which so dramatically charges its refusal with significance. The major issue leading to the strike was the company's demand for "40 for 371/2". The union had been on strike for nearly four months. Not­withstanding the strike the company appeared to be conducting its business as usual. The employ­ees gave their negotiator a mandate to accept "40 for 371/2" in an effort to get negotiations going and conclude the strike. The union therefore conceded on the major issue leading to the strike. In the face of that concession the company's refusal to negotiate can hardly be called reasonable.

57. If there were otherwise any doubt in our conclusion it is entirely dissipated by consider­ation of Mr. Bourque's testimony. He conceded that he was unaware of whether or not the compa­ny's allegations were substantiated but on the basis of reports received a decision was taken to can­cel scheduled negotiations. He read Mr. Feil's reply and agreed that it indicated the union did not condone the kind of conduct alleged by the company. In examination-in-chief he testified that had the undertaking requested been provided the company would have gone to the negotiating table as scheduled. In cross-examination, when confronted with the fact that Mr. Feil had ensured that he would take whatever steps were necessary to prevent the kind of conduct alleged, Mr. Bourque responded that Mr. Feil had failed, that the picket line had been far from orderly from day one and he therefore questioned the value of Mr. Feil's undertaking.

58. Mr. Bourque's reply begs the question of why an undertaking had been requested. We are drawn to the conclusion that any response by Mr. Feil to the demand would have been deemed insufficient by company. The company's demand was tailor made to preserve its pretence for refus­ing to participate in negotiations at a crucial point in the process.

59. In summary, we are of the view that the company's refusal to negotiate in the face of the union's concession on the major strike issue constitutes a failure to make reasonable and expe­ditious efforts to conclude a collective agreement.

60. We are also of the view that the collective bargaining process has been unsuccessful because of the uncompromising bargaining position adopted by the respondent without reasonable justification. Section 40a(2)(b) requires the Board to assess the content of parties' negotiating pro­posals with a view to making an objective determination as to their reasonableness. The parame­ters of this inquiry were set out in Formula Plastics Inc., [1987] OLRB Rep. May 702 at para. 24 et seq.:

61. ... in our view, reasonable" must mean something more than simply a rational relationship between a bargaining position and a party's self-interest. This test is so minimal that it would make the relief provided by section 40a(2)(b) virtually inaccessible, a result which we find inconsistent with the remedial nature of this provision. Reviewing the section as a whole, and having regard to the Board's analysis in Nepean Roof Truss, supra, and Juvenile Detention Cen­tre (Niagara), [1987] OLRB Rep. Jan. 66, we find it difficult to conclude that the legislation was designed to do no more than ensure that parties were looking after their own interests in a logi­cal way.

62. Rather, in our view, the word “reasonable" imports an objective element into our consider­ation of the respondent's justification for its position. It is not simply a matter of whether the justification is reasonable from the respondent's point of view, or even from the applicant's. The legislation draws us into an unavoidable assessment of whether a given proposal or position is reasonable in objective terms, a task which to some extent takes the Board into uncharted waters.

63. This is so, in part, because reasonableness is a relative concept; what is reasonable depends largely, if not entirely, upon the context in which such an examination is to be made. In consid­ering section 40a(2)(b), such a context will include both the general landscape of labour rela­tions and the specific labour relationship between the parties. In many cases such an assessment will also require the weighing and balancing of the opposing interests of the parties which they seek to pursue by way of their negotiating positions.

64. Moreover, while the Board has had occasion to scrutinize negotiations in the past, notably in the course of determining bad faith bargaining complaints, the nature of our inquiry under sec­tion 40a is significantly different. The jurisprudence developed under section 15 reflects a con­scious intention to avoid reviewing the fairness or reasonableness of negotiating proposals as an exercise in itself (see for example, Canada Trustco, [1984] OLRB Rep. Oct. 1356). Rather, the Board's interest on a section 15 inquiry centers on whether a manifestly unreasonable proposal indicates the presence of bad faith on the part of a party, or a failure to make every reasonable effort to make a collective agreement. To the extent that section 40a requires us to examine the intrinsic reasonableness of a negotiating position, it represents a departure from the jurispru­dence which has evolved under section 15.

65. The variety and social authority of the competing interests involved, together with with the complex dynamics of the collective bargaining process make this task a difficult one. It requires a delicate assessment of the many differing factors which may be operating in and upon a given labour relationship, an assessment which must be approached from a perspective closely attuned to the practices and climate of labour relations at any particular point in time. Indeed, it is fair to say that this is a provision which will require the Board to draw heavily on its own expertise in labour relations.

66. The parties were able, with relative dispatch, to tentatively settle most, if not all, non-monetary items. The initial collective bargaining climate looked promising due in no small measure to the union's willingness to work from the former collective agreement between the employer and the Association. However, once the parties began dealing with monetary items, it quickly became evident that reaching an agreement would be a difficult task. Although many monetary issues eluded the agreement of the parties, it is not necessary for us to consider anything more than the employer's position on wages (including the demand of "40 for 37½") for the purposes of this decision.

67. From the outset the company indicated that it would be seeking significant monetary concessions. It asserted that as a stand-alone service operation it did not have the competitive edge of its predecessors. The company also maintained that productivity at the Toronto location was seriously lacking and that the operation was losing money. Moreover, the company tabled a wage survey of six employers employing persons performing similar work.

68. Consideration of this wage survey is a useful locus for describing some of the difficulties resulting from the evidence the company chose to call or, more importantly, not to call. The evi­dence of Mr. Bourque was the only viva voce evidence called by the company in relation to the negotiations. Mr. Bourque works in Ottawa, the bargaining unit in question is located in Toronto. Mr. Bourque gave instructions and a general mandate to his chief negotiator, Mr. Zinn. Mr. Bour­que was not involved on a day-to-day basis in either the operations of the company in Toronto or the negotiations that took place there. While there was obviously communication between Mr. Bourque and Mr. Zinn, it was clear from Mr. Bourque's evidence and, in particular, his cross-ex­amination, that Mr. Bourque was not familiar with the specific details or developments in the negotiations. For example, while Mr. Bourque testified that Mr. Zinn was under instructions to meet with the union at any opportunity, he seemed unaware (or at least declined to acknowledge) that acceptance of "40 for 371/2" had become a condition of any resumption in negotiations. In short, Mr. Bourque was unable to offer any meaningful evidence as to the step by step developments in the negotiating process.

69. Consistent with the above, neither did Mr. Bourque (nor anyone else) provide any evi­dence to explain the basis or significance of the wage survey provided to the union in negotiations. In any event, we also note that the schedule of wages proposed by the company appears to not even match what it has identified as the "industry average" based on its own survey.

70. More important, in our view, than the survey the company did provide in negotiations, is the information it failed and refused to provide. The company declined several union requests for economic data to support the company assertions. Considering the magnitude of economic con­cession sought, we view this failure as unreasonable on the company's part. So long as the com­pany refused to provide such information, the union's skepticism regarding the company's claim could hardly be expected to abate. In the circumstances of this case we find the company's refusal to be a further failure of the respondent to make reasonable or expeditious efforts to conclude a collective agreement.

71. Not only did the company fail to provide any data justifying its economic position dur­ing the course of negotiations, it also failed (apart from an assertion, later proved false, by Mr. Bourque that following a year of marginal profit throughout the entire business, the Toronto oper­ation had lost in the range of $200,000 in the six months ending October 31, 1989) to provide any such information either as part of documentation filed or evidence tendered in support of its case. It was only as a result of cross-examination by the union and the union's consent to entering in evi­dence of a document not previously filed in accordance with Practice Note 18, that any specific economic data was brought to the attention of the union or the Board.

72. The document filed was prepared internally and was a handwritten sheet of paper titled "Income Statement" for the six-month period ending October 31, 1989. It reads as follows:

73. Section 40a(2)(b) speaks of the uncompromising nature of any bargaining position adopted without reasonable justification. The employer commenced negotiations by proposing a new wage grid to apply to all new employees, current employees would have their rates red-circled subject to a 3% wage reduction. The employer's initial position fluctuated between no increases and a 2% wage increase in the third year of the contract. In addition was the demand for "40 for 37Y2" which constituted a further wage reduction of 6.6%. After the commencement of the strike the employer modified its proposal so that the new wage grid would apply to all existing employees in the technician classifications representing a wage reduction of approximately 25% for many employees.

74. While there may be nothing inherently surprising, unreasonable or unlawful in a party presenting a less generous offer in the face of the exercise of economic sanctions, we are unable to see any reasonable justification offered by the employer at any point in the bargaining process for its position on wages. The dramatic and subsequent extreme demands for concessions were such that one would have expected some economic data to have been presented to the union, particu­larly in view of its repeated requests. Neither are we of the view that the presentation of limited economic data at the hearing cures the earlier lack. Section 40a requires the Board to assess the bargaining process; just as first contract arbitration ought not to be viewed as an automatic surro­gate to collective bargaining, a respondent to a section 40a application ought not to assume that the hearing is an opportunity to cure its prior intransigence. Section 40a should create an incentive to the parties to bargain in the utmost good faith, it should not encourage either party to withhold vital information or otherwise save its "bottom line" position until such time as the matter is brought before the Board.

75. In any event, we are not persuaded that the handwritten income statement provided by the company at the hearing could provide ex post facto justification for its extreme and uncompro­mising bargaining position. The apparently hastily prepared statement covering a period of six months is simply not sufficient. The company acknowledged that the prior year had been profit­able. The statement includes a number of expenses which the evidence indicates are properly viewed as exceptional single instances. In this context we are unable to conclude that there is any reasonable justification for the uncompromising nature of the bargaining position adopted by the employer.

76. It may well be that the employer was and continues to be in serious economic difficulty. However, on the evidence provided to us, we are unable to arrive at such a conclusion. It is cer­tain, however, that apart from assertions about which the union was understandably skeptical, no such justification was provided to the union, despite its numerous requests, during the bargaining process.

77. In summary, given the magnitude of the concessions it was seeking, the employer's fail­ure to respond to union requests for financial data during the bargaining process constitutes a fail­ure to make reasonable or expeditious efforts to conclude a collective agreement; in addition, its failure to provide reasonable justification, in bargaining or at the hearing, for its uncompromising bargaining position has also contributed to the collective bargaining process being unsuccessful.

78. For all of the above reasons we concluded that the conditions set out in section 40a(2)(b) and (c) had been met and consequently directed, by decision dated May 7, 1990, that the parties' first collective agreement be settled by arbitration.

DECISION OF BOARD MEMBER M. ROZENBERG; August 8, 1990

I dissent from the majority decision on two points: (i) section 40a is not applicable to a displace­ment situation; and (ii) the evidence does not justify an order under section 40a even if I were to agree that section 40a were to apply.

Section 40a was enacted in May 1986 by the Ontario Legislature to remedy difficulties encountered in situations where employees, newly unionized and unfamiliar with the collective bargaining pro­cess, find themselves dealing with an employer who is unwilling to accept having a unionized work place, and who attempts through collective bargaining to defeat the fledging trade union before it has established itself. It was designed to be used as a shield to provide protection in situations involving employees organized and certified for the first time.

Given the history agreed to by the parties and recited in paragraphs 5 and 6 of the majority deci­sion, this is not a first collective agreement situation. There has been a history of negotiated collec­tive agreements with a predecessor union (Aerospace and Electronic Communications Employee's Association (RCA-SPAR) which had proved full trade union status before the Board in 1983. The predecessor union, which had been in a continuous existing bargaining relationship with the employer and the predecessor employers, found itself unable to obtain what it wanted through col­lective bargaining. The CAW displaced the predecessor union through a representation vote between the two unions, and then, during the course of its negotiations, the CAW found itself in the same situation as the predecessor union. The majority in its decision has granted the CAW the opportunity to use section 40a as a sword, to obtain from the Labour Board that which it could not obtain during a strike or at the bargaining table, and that which could not be obtained by the pre­decessor union because its right to first agreement arbitration was extinguished. To allow the CAW union to come to the Labour Board and get what both it and the displaced union could not get in bargaining, would be extending the application of section 40a and could encourage more displace­ment applications designed to thwart the necessity to bargain in good faith. In the best interests of public policy, it is of utmost importance to confine the use of section 40a as a shield - the purpose for which it was intended - and not to extend its use as a sword, which would be detrimental to the furtherment of harmonious relations, and to the practice of free collective bargaining.

Section 40a speaks of "parties (who) are unable to effect a first collective agreement". The "par­ties" to a collective agreement are the employer and the trade union as the bargaining agent repre­senting the bargaining unit of employees. There are, however, three principals in the relationship:

the employer; the bargaining unit of employees; and the trade union which is the bargaining agent for the unit of employees and which has institutional interests of its own. The use of the word "first" has to have some meaning. In the instant case, the employer and the bargaining unit of employees are not trying to effect their (or a) first collective agreement. That happened long ago before the CAW appeared on the scene to act as the bargaining agent. The mere change of a bargaining agent cannot change the meaning of "first". Therefore, on their face, the agreed facts do not fit within the parameters required by section 40a.

The Board has stated in previous decisions that the remedy provided by section 40a does not sup­plant the free collective bargaining process and that the scheme of section 40a does not envisage or contemplate the automatic imposition of a first collective agreement simply because the parties have been unable to negotiate one. Yet, with due respect to my colleagues, what the majority has effectively done is substitute a section 40a finding for free collective bargaining; something which the Board has said section 40a was never intended to do. First agreement arbitration was never intended to be a standard response to the breakdown of collective bargaining. Nor does the Ontario Labour Relations Act guarantee that a collective agreement must be reached. Nor does the possibility of section 40a intervention absolve either of the parties of their obligations and duty to do all that is within their power to conclude a collective agreement. I suggest that the duties and obligations of both parties must be active and not simply passive. For the one party to merely write a letter advising the other party that it remains available to meet and then to sit back and just wait, does not, in my opinion meet all of its obligations.

After hearing the evidence, the allegations appear to be more in the nature of a section 15 com­plaint (which the union actually stated to the employer written in the same aforementioned corre­spondence when it advised the employer that it applied for a section 40a direction - see paragraph 37) than in a section 40a application. In this fact situation, such facts do not justify an order under section 40a even if I agreed that section 40a should apply. The trade union in this instance short circuited the collective bargaining process by applying for a section 40a direction.

In addition it should be noted, the union did not file, under the Act, any allegations of wrong doing or bad faith bargaining against the employer at any time during negotiations or following the alleged breakdown of negotiations, or at any period during of these hearings.

The evidence submitted by the employer indicated that it engaged in collective bargaining with other unions in Calgary and Montreal and had concluded collective agreements. It was also engaged in negotiations in Vancouver and was working towards concluding a collective agreement there. Although details of these negotiations were not put into evidence, the company had taken the same pragmatic approach for economic reasons in these negotiations as it had with negotiations in Toronto. The CAW did not challenge, dispute or discount this evidence.

In summary, I am of the opinion, that the majority decision effectively makes new law by allowing section 40a to be invoked in a situation not intended by the Legislature. In doing so, the Board exceeds its jurisdiction.

Moreover, the evidence concerning the bargaining relationship between Bourque and the CAW is not such as to warrant acceding to the request for first contract arbitration even if section 40a did apply.

For all the reasons stated above, I believe the majority decision goes far beyond what was intended in the first contract arbitration legislation.