Teamsters Local Union No. 419 v. Steinberg Inc., 1995 CanLII 9919

[1995] OLRB Rep. October 1309

1346-90-R; 1347-90-R; 11617-90-U; 1830-90-U Teamsters Local Union No. 419 affiliated With the International Brotherhood of Teamsters, Chauffeurs, Ware­housemen and Helpers of America, Applicant v. Steinberg Inc. (Miracle Food Mart Division) and The Great Atlantic and Pacific Company of Canada Limited, Respondents v. Retail, Wholesale and Department Store Union, AEL CIO CLC, and its Local 414, Intervenor; R. Carniel et al, Complainants, v. Steinberg Inc. (Miracle Food Mart Division) and The Great Atlantic and Pacific Company of Canada Limited, Respondents; Teamsters Local Union No. 419 affiliated With the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Complainant v. Steinberg Inc. (Miracle Food Mart Division) and The Great Atlantic and Pacific Company of Canada Limited, Respondents.

BEFORE: Susan Tacon, Vice-Chair, and Board Members G. 0. Shamanski and R. R. Montague.

APPEARANCES: J. James Nyman and Robert McGibbon for the applicant in Board Files 1346-90-R and 1347-90-R; Paul Jarvis for Steinberg Inc., D. J. Shields and Tom Zakrzewski for The Great Atlantic and Pacific Company of Canada Limited; Bernard Hanson, Susan Ballantyne and Robert McKay for the intervenor in Board Files 1346-90-R and 1347-90-R; David Moore and Michael Battista for the complainants in Board File 1617-90-U.

DECISION OF SUSAN TACON, VICE-CHAIR, AND BOARD MEMBER G. 0. SHAMANSKI; October 2, 1995

1. The applications and complaints herein were filed prior to the amendments to the Labour Relations Act in 1991 and 1992. For convenience, references utilize the section numbers in effect prior to those amendments without specific notation. Board Files 1346-90-R and 1347-90-R are applications pursuant to section 63 and 1(4) of the Act, respectively. Board File 1617-90-U is a complaint pursuant to section 89 of the Act, alleging violation of sections 15, 64 and 66. Board File 1830-90-U is a complaint pursuant to section 89 of the Act, alleging violation of sections 15, 64, 66 and 70.

2. Also for convenience, the parties are referred to as: the "Teamsters" [Teamsters Local Union No. 419]; the "individual complainants" [R. Carniel et al.]; "Steinberg" [Steinberg Inc. (Miracle Food Mart Division)]; "A & P" [The Great Atlantic and Pacific Company of Canada Limited]; the "RWDSU" [Retail, Wholesale and Department Store Union and its Local 414]. Near the conclusion of the hearing, counsel for Steinberg noted that the name of the company was changed to 2841-1585 Quebec Inc.; however, for ease of reference, the name Steinberg is used throughout. Without objection, the RWDSU was added as an intervenor with respect to Board Files 1346-90-R and 1347-90-R. The RWDSU is the bargaining agent for the A & P distribution centre employees. The RWDSU and A & P are parties to separate collective agreements in respect of the full and part-time employees. Also near the conclusion of these proceedings, counsel for the RWDSU indicated that the proper name of the intervenor was: Retail Wholesale~ Canada, Cana­dian Service Sector Division of the United Steelworkers of America, Locals 414, 422, 440, 448, 461, 483, 488, 1000, 1688. All parties were afforded the opportunity to fully participate in the com­plaints and applications, which were heard together.

3. The matters raised in the above complaints and applications are usefully sketched at this juncture. This is intended to give an overview of the issues and, hence, is somewhat simplified in its description. The matters are dealt with in more detail infra. In Board Files 1346-90-R and 1347-90-R, the Teamsters asserted that Steinberg sold its distribution business as well as its retail opera­tion ("Miracle Food Mart stores") in the Province of Ontario to A & P, notwithstanding the fact that Steinberg closed its distribution centre in Ontario and the Miracle Food Mart stores were sup­plied through the existing A & P warehouses. It was argued that a sale of a business declaration should issue and, thereby, bind the respondent A & P to the Teamsters collective agreement. In the alternative, the Teamsters submitted that a section 1(4) application should be granted. The individual complainants supported these applications. Relief in addition to the declarations was also sought by the Teamsters and the individual complainants. In Board File 1617-90-U, the indi­vidual complainants asserted that the structure of the sale transaction was motivated by an anti-union animus against the Teamsters and the individual complainants by reason of their member­ship in the Teamsters. Further, it was asserted that the respondent A & P breached the Act in refusing to hire or consider for employment the current Steinberg distribution centre employees because of their membership in the Teamsters. As against Steinberg, the individual complainants asserted that Steinberg had bargained in bad faith in concluding the collective agreement in March 1989 allegedly on representations of ensuring job security in return for concessions and then in sell­ing the Ontario operations and closing the distribution warehouse in the Summer and Fall of 1990. The allegations in Board File 1830-90-U by the Teamsters mirror those in Board File No. 1617-90-U of the individual complainants.

4. It is necessary to briefly summarize the adjudication of these matters to date. On Octo­ber 4, 1990, the Board (differently constituted, in part) made a number of rulings regarding sched­uling and related matters, reflecting discussions and agreements amongst the parties. In March 1991, the Board dealt with a dispute regarding production of documents. In February 1992 [reported at [1992] OLRB Rep. Feb. 223], the Board also issued a ruling regarding the obligation of the respondent Steinberg to produce a witness to lead viva voce testimony to satisfy the statu­tory duty under section 64(13). By June 1992, there had been over twenty-five days of hearing and it appeared that the remaining dates scheduled in June would complete the evidence and submis­sions of the parties. However, at that time, counsel for the respondent Steinberg indicated that an order under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the "C.C.A.A.") had been signed by Judge Denis of the Quebec Superior Court on May 31, 1992, the effect of which, it was asserted, was to stay the instant Board proceedings: see [1992] OLRB Rep. July 860. Following submissions, the Board ruled that the court order did operate to stay the instant pro­ceedings as against Steinberg. The Board outlined the options available to the Teamsters and the individual complainants to await the expiration of the stay order, to obtain a modification of the stay order or to withdraw the complaints pursuant to section 89 against Steinberg and confirm that no relief was sought against Steinberg in the section 64 application. In the event, the resumption of the hearing awaited the expiration of the stay order. Because of the stay order and, when the hear­ing did reconvene, the illness of the final witness, these proceedings were not completed until late June 1994. In total, there were over thirty days of hearing.

5. The Board next sets out it factual findings. In doing so, the Board has weighed and assessed the testimony, in view of the usual factors relating to credibility of the witnesses, and in the context of the documentary evidence and what is reasonably probable in the circumstances. Twelve witnesses testified. As well, over one-hundred and sixty documents were filed in evidence. The Board has not attempted to recount the voluminous evidence in detail but has focused on those matters considered relevant to the various issues. With respect to credibility, the Board notes that the witnesses were testifying to matters which had occurred, in some cases, many months or years in the past and, in the Board's view, were giving their evidence to the best of their ability in the circumstances. Where necessary, the Board has resolved conflicts in the testimony, although such conflicts were relatively rare. Any specific comments regarding credibility are given at the appropriate point in the factual findings or analysis.

FACTUAL FINDINGS

Background

6. The respondents in these complaints and applications are Steinberg and A & P and con­cern the transaction between them which culminated in what is described as an asset sale and purchase in July 1990. There is no dispute that a "sale" occurred between the parties with respect to a number of "stores" formerly operated by Steinberg and that A & P accepted its status as a succes­sor employer with respect to the employees of those stores. What is in dispute, in part, is whether the warehouse operated by Steinberg was included in the "sale" and whether the deal was specifi­cally structured to exclude the warehouse because of anti-Teamster animus. For convenience, the term "sale" is used in describing the transaction in July 1990 without implication as to the legal consequences of the transaction with respect to the applications and complaints until the Board expressly deals with those allegations infra. It should also be noted that the terms "warehouse" and "distribution centre" are used interchangeably, although the "distribution centre/warehouse" actually comprises several locations in the Toronto area for both A & P and Steinberg.

7. Steinberg had its origins as a family controlled business in Quebec. Prior to July 1989, the corporation continued to be controlled by the Steinberg family but had expanded to include supermarket chains in Quebec and Ontario under various banners, considerable real estate hold­ings and investments in other food related operations (such as, Valdi, Price Club Canada, Lantic Industries, and Smitty's in the United States). This thumbnail description is not intended to cap­ture the extensive and diversified components of the Steinberg operations. The retail food opera­tion had been unionized for many years and collective agreements were negotiated and renewed.

8. The Ontario retail food operation included about seventy retail grocery supermarkets in its Miracle Food Mart Division ("MFM") under the banners of Miracle, Ultra Mart and Basics. The employees in the stores, both in Ontario and Quebec, were represented by various locals of the United Food & Commercial Workers ("UFCW"). Steinberg utilized four distribution centres in the Toronto area to service the stores, although the major centre was located at 75 Rexdale Blvd. Steinberg also operated a fleet of tractors and trailers to deliver product to the stores. In Ontario, there were approximately 10,000 employees represented by the UFCW in the stores; apparently, the UFCW also represented roughly 45 employees in maintenance.

9. The Teamsters, as noted, represented the approximately 375 warehouse employees, including the roughly 100 drivers of the delivery fleet but excluding the maintenance employees. The distribution centre employees bargained independently of those in the stores. The distribution centres were physically separate from the stores and the head office at 65 Rexdale. The reporting lines for the distribution centres also differed from those at head office and the stores.

10. A & P also operates a retail supermarket chain in Ontario. The Canadian corporation is controlled, as a wholly-owned subsidiary, through its American parent which is, in turn, controlled by the Tenglemann Group of Germany. Prior to the transaction in question, A & P operated over two hundred stores under two banners (A & P and Dominion). The Dominion stores were acquired in 1985. The retail supermarket employees of A & P (and of the acquired Dominion stores) were represented by the UFCW, the RWDSU and, at some locations, by the United Steel­workers of America. The stores were serviced through distribution centres located at The West Mall and Vickers Road. The warehouse employees were also represented by the RWDSU (Local 414) in full and part-time bargaining units. At the relevant time, the approximate number of employees in those units was 500 and 120, respectively. Prior to the instant transaction, the work force totalled roughly 21,000 employees. It should be noted that, in the United States, A & P also has bargaining relationships with the Teamsters.

11. It is useful to briefly describe the distribution centres of A & P. The West Mall provided roughly 1,000,000 sq. ft. of space, including dry grocery, frozen food and a truck court. At Vickers Road, there was over 160,000 sq. ft. for produce, dairy and meat. As well, as a result of the Dominion purchase and resulting centralization of warehouse facilities, A & P had an additional 300,000 sq. ft. of warehouse space at its head office. That space was not being utilized as a ware­house facility and was subject to a short-term lease.

12. A & P, unlike Steinberg, does not deliver product to the distribution centres from the suppliers and from the distribution centres to the stores using its own fleet of trucks and trailers. Rather, that function is contracted out to Wilson Transport or suppliers deliver directly to the dis­tribution centres and/or the stores. Product may also be delivered directly to stores by wholesalers (such as the Oshawa Group) rather than individual suppliers. The only departure from this format since at least 1987 was for the year following the acquisition of the Dominion stores. For that period, the Dominion fleet was retained but then was sold and the drivers transferred into the warehouse in accordance with bargaining unit seniority.

13. Prior to the sale in July 1990, A & P and Steinberg operated competing retail supermar­ket chains in Ontario. As between the two companies, there was no common ownership, directors, management or financial control. As a result of the sale, while a few management personnel asso­ciated with MFM were offered positions with A & P, there continued to be no common ownership, directors, management or financial control. Nor were the operations of A & P and Steinberg prior or subsequent to the sale inter-related. For a brief period proximate to the scheduled closing, there was a transition team intended to facilitate completion of the sale. Thereafter, A & P acquired the majority of the retail supermarket stores operated by the MFM division of Steinberg in Ontario and operated those stores as part of its own business. The transaction included an agreement that Trillium Meats (a division of Steinberg) continue to supply meat and deli products to those stores acquired by A & P for a defined period of time. That arrangement was terminated in January 1992. A & P was never involved in the operation, management or ownership of Steinberg's warehouse operations prior to the sale. Nor was A & P involved in the management or operation of Trillium Meats.

14. Given that the allegations commence with the negotiations in 1988 between Steinberg and the Teamsters, it is appropriate to begin the narrative in late 1987. The events follow a chrono­logical order but within functional headings and are cross-referenced.

15. It is useful to here note the names and positions of various individuals involved in the events as participants and/or witnesses. The list is not exhaustive but serves to set the '.'cast of char­acters". With respect to Steinberg, the relevant names include: Irving Ludmer, president and CEO; Alain Bilodeau, group vice-president, human resources (later, senior vice-president, corpo­rate affairs following the Socanav take-over); Pierre Guilbault, (senior vice-president, finance, comptroller and treasurer). Michel Gaucher, president of Socanav, acquired the controlling inter­est in the Steinberg empire in July 1989 in a highly leveraged buy-out. For A & P, the main figures consisted of: James Wood, Chairman and CEO (U.S.); Robert Ulrich, senior vice-president and corporate counsel (U.S.); John Dunne, president and CEO (Can.); Nigel Byars, executive vice-president and chief financial officer; Brian Burden, assistant director of warehousing and distribu­tion. John Peardon transferred to A & P as a result of the sale; he held the position of director of labour relations, first with Steinberg and then at A & P.

Final Offer Selection and Labour Peace

16. The Steinberg empire was founded by "Sam" Steinberg. By late 1987, his family was feuding over the continued operation of the business. The family dissension was widely reported in the newspapers and was the topic of considerable speculation with respect to the possible impact on the continued operations of the firm. As well, the retail supermarket operation was in some dif­ficulty. At that point the labour costs in the Quebec operations were appreciably higher than their major competitors and the company had been subject to a series of costly strikes and labour unrest. Of particular note was a month-long strike in the Montreal warehouse in September 1987.

17. At this point, two initiatives were launched which operated in parallel for a time. On the one hand, in early 1988, the Steinberg board of directors concluded that it was "in the interest of all shareholders to seek firm offers from third parties to acquire all of the equity shares of the Corporation and to consider other possible methods of maximizing shareholder values". Those offers and any other alternatives would be compared with the prospects of continuing the opera­tional status quo. The investment firm of McLeod Young Weir was retained to solicit offers. There had been an earlier unsolicited offer from the Oxdon consortium which had been rejected by the Steinberg board and which had prompted a law suit by one of the Steinberg daughters. That crisis was resolved by the retaining of McLeod Young Weir. On the other hand, in late 1987, Irving Lud­mer, president and CEO, charged Alain Bilodeau, group vice-president, human resources, with devising a strategy to enable Ludmer to convince the Steinberg board to continue operations.

18. The company had to address the wage and benefit discrepancy and productivity figures to "level the playing field" with its competitors. But also, of critical import in Bidodeau's view, was the acceptance by the various unions of a collective agreement which provided for long term labour peace through the use of final offer selection ("FOS") if negotiations failed to produce an agreement. That is, the unions would give up the right to strike in return for arbitrated settlements if the parties were unable to agree. Both Bilodeau and Ludmer viewed the acceptance of the con­cept as critical to turning around the company's fortunes in the retail supermarket business. Both actively sought to persuade the unions that such an approach to labour relations was in their com­mon interest in that, with labour peace, Ludmer could convince the Steinberg board to continue the company as a "going concern" and the unions would thereby preserve jobs for their members. FOS was regarded as a mechanism to secure labour peace for a lengthy period. Ludmer and Bib­deau originally conceived of the duration of the "peace" as ten years. The deal was described as "nothing less than a treaty, a pact that will guarantee to both of us [Steinberg and the unions] a fair labour peace for at least ten (10) years to come".

19. By late 1987, Bilodeau had met with the presidents of the various UFCW locals to dis­cuss the concept of labour peace. The UFCW represented the overwhelming majority of Stein­berg's 25,000 employees in the retail supermarket operation in Ontario and Quebec. Without the support of the UFCW, there was no future for the concept. Negotiations for the renewal of their collective agreements occurred in the spring of 1988. Final offer selection and labour peace were included in the company's proposals. The negotiations were carried out in the open knowledge that the company was actively considering the sale of the retail supermarket operation. Steinberg emphasized in bargaining that the FOS concept and improved competitiveness would enable the company to continue as a "going concern". Newspaper articles in that period noted the negotia­tions and possible sale; Ludmer was quoted as stating that, absent an agreement on FOS/labour peace, it was likely that the company would be sold off piece-meal.

20. Bill Hanley, president of UFCW, Locals 175/633, indicated to Ludmer in a letter dated April 6,1988, their willingness to address the company's concerns with long-term management-la­bour peace and operational flexibility. He cautioned that any resulting agreement would require ratification by the membership. Further, the union was insisting that the provincial bargaining unit structure must be maintained and the FOS period be five years.

21. Bilodeau did not contact the Teamsters in Ontario regarding FOS and labour peace until February 1988. The trigger for raising the issue was a wildcat strike at the distribution centre. The chief steward had been fired as a result of his participation in the wildcat strike. Frank Gri­maldi, local president and business agent, contacted Ludmer seeking a meeting to reinstate the chief steward. In that context, Ludmer informed Grimaldi in a telephone conversation that the company was "in play" and that Bilodeau would be discussing an option to retain the operational status quo. That matter was further elaborated at a meeting in Montreal where Ludmer reiterated to Grimaldi (and another union official) that the Steinberg board was actively seeking offers but that Ludmer was hoping to demonstrate to the Steinberg board that it was preferable to continue operations. Should Ludmer fail, the Teamsters' 320 jobs were at risk. Grimaldi indicated that he was prepared to be flexible to protect the jobs.

22. On February 24, 1988, Bilodeau forwarded to Grimaldi a copy of the FOS language already proposed to the UFCW. As the Teamsters negotiations were not scheduled to commence until the end of the summer, the proposal was presented outside of formal negotiations. At a meet­ing in March 1988, Grimaldi indicated to Bilodeau that the FOS procedure, in principle, was acceptable. Grimaldi pressed his own concerns regarding negotiations. Grimaldi indicated that he needed "a buck and a buck" on the wages side and wanted to reschedule the expiry of the new col­lective agreement to May 1991 rather than November 1990 so that the Steinberg bargaining would follow the conclusion of the Oshawa Foods negotiations. Informally, Bilodeau indicated that Gri­maldi's objectives would be acceptable. In these conversations, there was no mention of future job guarantees or assurances the company would not be sold if FOS was adopted. During this period, Grimaldi also sought assurances regarding the employee's pension plan if the company was sold; Ludmer replied in writing that Steinberg was seeking actuarial advice and intended to comply with all legal requirements.

23. In March 1988, in a letter to union members, Grimaldi, in part, commented on the sta­tus of Steinberg. It was noted that the company was for sale and the risks to the union if Steinberg was sold "piece by piece".

24. In April 1988, Grimaldi sent a telegram to Bilodeau which reiterated the Teamsters' cooperation in an attempt to keep the company together. That telegram read:

"Teamsters Local 419 will full co-operate with Steinbergs in an attempt to keep the company together. We are prepared to negotiate a package which includes final offer selection. This will apply only to Steinbergs, and not to any subsequent buyer. we would also expect a commitment from the company on job security as a result of these negotiations. Trust this is satisfactory."

25. There was no dispute between Grimaldi and Bilodeau that the company's response at this point to Grimaldi's concerns gave no such assurances with respect to job security or the caveat sought regarding a subsequent buyer. Grimaldi, in writing, subsequently accepted the company's position, subject to membership ratification at the appropriate time. Grimaldi agreed to FOS as an alternative to strikes where the parties could not negotiate a settlement; the period of labour peace was to be that agreed upon by the store employees. Further, should Trillium Meat discontinue the FOS process and a strike ensue, the warehouse employees would not refuse to cross a picket line.

26. In May 1988, the proposed collective agreements were placed before the UFCW mem­bership in Ontario and Quebec. Written communiques from Ludmer emphasized the seriousness of the situation but also the company's hope that, with ratification of the package which included FOS, labour peace and productivity gains, Steinberg could become "once again, Canada's pre-emi­nent food retailer". The UFCW locals in Ontario ratified the proposed collective agreement; the Quebec locals rejected the proposal. Newspaper articles reported extensively on the rejection and the likely impact on the future of Steinberg. The company commenced closing some stores in Que­bec. After further negotiations which included the intercession of the Quebec Premier's Office, a collective agreement which incorporated FOS and labour peace was accepted in June 1988.

27. In July 1988, the Steinberg board of directors adopted a motion to continue its retail supermarket operation and end negotiations with third parties concerning the sale, in some form, of those operations. It appeared Ludmer had convinced the Steinberg board, as he had hoped to do, to continue the company as a "going concern". A Steinberg press release noted, in part,

"According to Mr. Ludmer, 'the Board believes it is in the Company's best interest to maintain its Canadian supermarket operations considering that the large majority of Steinberg's union­ized food employees, in Quebec and Ontario, ratified agreements that will allow the Company to achieve its long-term strategic objectives with improved competitiveness and a lengthy labour peace'."

28. Again, the matter received considerable press coverage. Ludmer was quoted as saying the objective was "to stay in business for at least another 100 years". Several articles bore head­lines to the effect that the acceptance of the collective agreements meant that the stores would not be sold. However, Ludmer was quoted, with respect to the company's rejection of the Oxdon bid earlier that year (for $980 million): "The family decided not to tender the control block [of vot­ing shares]... If somebody was to come in and make an offer that was potentially higher, the family would again have to decide whether it would accept that offer or not."

29. It is useful to note here that, while the solicitation of offers for the Canadian retail supermarket operation was ended in July, the Steinberg board, in September 1988, did decide to pursue the possible sale of Smitty's (an American supermarket chain) and, to that end, solicited offers. Nothing came of those efforts prior to the take-over by Socanav, as noted below.

30. At that point, the UFCW collective agreements had been resolved with the inclusion of FOS and labour peace. In June, in what was described as a "straw vote", the Teamsters rejected the FOS and labour peace language. Following that vote, Grimaldi did not retract his agreement, in principle, with the FOS concept. As noted, Grimaldi had sought, without success, assurances regarding job security and "subsequent buyer" language. Grimaldi had been given positive indica­tions with respect to his agenda of "a buck and a buck" and a change to the duration of the collec­tive agreement so that would expire after the Oshawa Group negotiations.

31. A pre-bargaining meeting was held in late August 1988. Grimaldi reiterated his agree­ment with FOS and labour peace provided the duration of the agreement and wages were as he wished. At a later meeting, Peardon confirmed this framework and raised a question regarding flexibility with regard to part-time employees. In this period, there is no suggestion that there were discussions or assurances regarding job guarantees or that the company would not again be put up for sale.

32. Several formal bargaining sessions were held in September 1988. The negotiations or the provisions in the resulting collective agreement need not be outlined in any detail. Peardon headed the Steinberg team. Grimaldi was chief spokesperson for the Teamsters. Peardon and Gri­maldi testified. The union negotiating team included Brian Payne, John Ricchio and Michael Ursini. The testimony of Peardon and Grimaldi did not differ significantly with respect to the negotiations. The Board prefers their testimony to that of Payne, Ricchio Ursini whose recollec­tions, in the Board's view, are less accurate and conflict with one another. Peardon explained the company's intention to expand the warehouse business into wholesaling so as to service other stores, such as Valdi, Beckers and Macs, as well as the Steinberg locations. If successful, the result­ing increased volumes would require more employees, particularly part-timers to handle peak peri­ods. The efforts of Steinberg's in that regard are noted infra.

33. The parties successfully concluded their negotiation on October 18, 1988 after a number of bargaining sessions. The resulting collective agreement was ratified by the membership with a large majority in support of the deal. The FOS/labour peace provisions were included as articles 18 and 19. If the parties were unable to negotiate a renewal agreement, their dispute would be sub­mitted to a consensual arbitration panel which would select the position of one of the parties, with­out modification. The criteria for choice as between the two positions consisted of the current col­lective agreement and the working conditions prevailing among the competition in the region concerned. Article 19 contained a provision guaranteeing industrial peace for a period of 5 1/2 years; any impasses in bargaining were to be resolved through FOS. The "buck and a buck" that Grimaldi wanted was agreed to by the company as was the expiry date of May 1991. That agree­ment did not include job guarantees or increased severance payments, despite Grimaldi's efforts.

34. Peardon's notes of the negotiations were tendered in evidence. It is necessary, at this juncture, only to focus on the severance pay issue. The union's initial proposal sought severance pay at three times the Employment Standards Act ("E.S.A.") rate. The company rejected that pro­posal. The union's second proposal, on September 21, 1988, sought $1,000 per year of service in severance. Union witnesses testified that they proposed, during bargaining, a "bona shida" pay­ment. The term apparently refers to an Italian severance system which is extremely costly. Peardon rejected the concept and the matter was quickly dropped. On October 12, the union maintained its position regarding severance; the company continued to resist. Then, in its offer on October 18, the union withdrew its position on severance. In the context of the discussion regarding job secu­rity, Peardon pointed to his thirty year pin and commented to the effect that, if the company was successful in expanding into the wholesale line, the future looked bright and everyone would be around for another thirty years; there would be additions to the warehouse personnel, not job losses. The Board does not accept as credible testimony that Peardon promised life-time job secu­rity.

35. In the months following the conclusion of negotiations, the company did proceed with a number of steps intended to facilitate a wholesaling operation. For example, an inventory billing system ("N.I.B.S.") which was begun in late 1988 was continued to completion in March 1990. A vacuum system was installed in the warehouse, orders were printed at 75 Rexdale (rather than at head office) and inventory clerks at 75 Rexdale focused on wholesaling duties. As well, new refrig­eration was installed at the distribution centre and the produce warehouse facilities improved. On a broader level, Steinberg purchased several wholesale operations in Quebec and entered negotia­tions to acquire another wholesaler, the Knetchel Group.

Negotiations with A & P

36. While this section focuses on the negotiations between A & P and Steinberg, it should be noted that other parties were interested in acquiring parts of the Steinberg empire and were pursuing their own enquiries during this period. Those offers are referred to at appropriate points. Some of the approaches were to A & P directly, in an effort to explore possibilities for a joint ven­ture.

37. In connection with the retaining of McLeod Young Weir to solicit offers in 1988, A & P received an information package. A & P was interested in acquiring Steinberg's retail store opera­tions in Ontario. The Steinberg store locations would increase A & P's presence in Ontario and provide a third banner for its operations. Additionally, given the excess capacity at the distribution centres, there were opportunities for "synergies" in that area as well as in administration. Those synergies added to the attractiveness of the business opportunity. Early on, A & P was aware of the bargaining agents with respect to the store and distribution centre employees and that the head office employees were not unionized. A & P made an initial offer to Steinberg in March 1988. That offer excluded Steinberg's distribution centres and transportation operations. Byars (executive vice-president and chief financial officer for A & P Canada) testified that A & P was not interested in acquiring the distribution or transportation operations as A & P had sufficient existing ware­house capacity to serve the expected increase in volume and A & P, as noted earlier, did not main­tain its own distribution fleet. That first offer was rejected by Steinberg.

38. The documentary evidence before the Board included memos and handwritten notes from the various A & P officers involved in the prospective acquisition, termed "Project 100". The internal documents explore a variety of options with respect to the offers to Steinberg and address the potential attractions or "synergies" of the acquisition. In that regard, the additional location (and third competitive vehicle) and the excess capacity at the West Mall are noted as the most sig­nificant factors. It is not necessary to deal with those documents in detail; relevant aspects are noted infra. It is appropriate to note here that, at one point in the internal documents, with respect to the stores, A & P was prepared to retain bargaining unit employees but wished to be selective about non-bargaining unit employees with a 90 day "turn back" provision if thought unsuitable.

39. One other document should be noted at this point. In 1988, in examining the McLeod Young Weir offering circular, Byars jotted down his thoughts as he proceeded through the mate­rial, assessing the various negatives of any deal to acquire part of the Steinberg Ontario operation. The document obliquely refers to the Teamsters contract under "other" after an extensive listing under "rents" and "equipment". The "other" category itself notes that the meat operation is non­economic and has union bumping rights to the stores and the office facility is redundant, as is the grocery warehouse. The union bumping rights reference is not to the Teamsters. Byars testified that, in referring to the Teamsters contract as a negative, he was concerned about the fact that the RWDSU scope clause covered the same geographic area.

40. Senior executives of A & P and Steinberg met in Montreal on May 5, 1988 to discuss their respective positions. Attending on behalf of A & P (U.S.) were James Wood, James Rowe (vice chairman), and Robert Ulrich; on behalf of A & P (Canada), John Dunne (president and CEO), Nigel Byars; on behalf of Steinberg, Irving Ludmer, Arnold Steinberg (executive vice-pres­ident, finance) and Bill Cleman (president, Ivanhoe (real estate company)). The negotiations throughout, until the ultimate asset purchase agreement was concluded, were essentially conducted by officials from the American parent of A & P.

41. An amended proposal was submitted to Steinberg. In addition to the purchase of the retail stores, A & P offered to lease Steinberg's warehouse premises at 75 Rexdale for up to one year. Byars characterized that provision as "dead rent". That is, the offer was intended to improve the attractiveness of A & P's offer but Steinberg would be responsible for the operation and main­tenance of the facility and all concomitant expenses. It was expressly provided that A & P would assume no responsibility for severance or termination pay for any Steinberg employees at the ware­house nor would A & P have any obligation to employ such persons. This proposal, as well, was not acceptable to Steinberg.

42. During this period, A & P representatives met with senior officers of Investment Canada and the Competition Bureau to discuss the impact of a possible deal and formed the view that the necessary approvals would be forthcoming.

43. A & P continued its efforts to reach a deal. A & P and another Canadian firm (which the parties agreed should remain unnamed) then submitted a joint proposal in late May 1988 for Steinberg's retail supermarket operations in both Ontario and Quebec, including the warehouse operations. That offer, dated May 24, 1988, was characterized as an expression of intent which did not create any binding obligations or agreements. The employees at the store locations and the

warehouses were to be offered employment by the "purchaser". Office and administrative staff would be reviewed and those necessary and suitable would be retained by the "purchaser".

44. Under that offer, as between A & P and the Canadian firm, their respective positions were as follows. The Ontario retail stores would be divided between the Canadian firm and A & P (60:40). The Canadian firm would acquire the warehouse and office facilities in Ontario. The meat processing facilities and operations would be subject to a 50:50 partnership as a separate operation. In Quebec, the store locations would be divided between A & P and the Canadian firm (60:40). A & P would acquire the Quebec warehouse and office facilities. Byars testified that, if retail stores in Quebec were acquired, A & P would need distribution facilities there to service the stores. The Canadian firm was to assume responsibility for offering employment to the current employees of Steinberg at the distribution centres subject to a 180 day turn back provision. Employees working in the stores would be engaged by the relevant purchaser and, after 180 days, the purchaser would be liable for termination costs. The proposal also stipulated that unionized employees in Ontario and Quebec were to be separated into separate bargaining units in accordance with the division of store locations and facilities.

45. This offer, too, was not accepted by Steinberg. At that point, negotiations between A & P and Steinberg ended. Between June 1988 and July 1989, there were no further discussions between the parties. As noted above, the Steinberg board had taken the company "out of play" following the conclusion of collective agreements with the UFCW in Ontario and Quebec agreeing to FOS and labour peace.

46. While the Steinberg board ended the solicitation process prior to the commencement of formal bargaining with the Teamsters, there was an unsolicited bid from the Oxdon consortium in March 1989. This offer, to purchase the shares in the entire Steinberg company, was rejected by the Steinberg board of directors in April 1989. A further unsolicited bid from Oxdon received in June 1989 was likewise rejected.

47. In July 1989, Michel Gaucher, president of Socanav Inc. ("Socanav"), acquired an option (a "lock-up" agreement) to purchase a 52% controlling interest in Steinberg from the Stein­berg family. Gaucher's approach to the family was unsolicited. Gaucher's bid for control was sup­ported by the Caisse de Depot et Placement du Quebec ("Caisse"). The take-over bid documents sought purchase of common shares, Class A shares and convertible fourth preferred shares, Series 1 of Steinberg. The offering circular indicated that Socanav, if successful, intended to conduct a detailed review of the company and subsidiaries. Socanav's stated intention was to continue, as a going concern, the retail and wholesale food business but, after review, might dispose of other assets. Pursuant to the take-over bid, the Caisse would purchase most of the real estate assets.

48. At the time of the take-over bid, Oxdon was also involved in the battle to acquire Stein­berg. Indeed, it appeared that Loblaws was supporting the Oxdon bid. Newspaper articles reported that the UFCW and the Quebec Federation of Labour backed the Oxdon bid as well. The Steinberg board, at one point, appeared poised to accept the Oxdon bid if Socanav did not submit a higher bid by July 31, 1989. In the event, Socanav did submit a bid worth $1.3 billion, conditional upon specified share levels being tendered. That level was reached and, in August 1989, the Soca­nay take-over was successful.

49. In July, prior to the formal take-over, A & P, through Byars, contacted Gaucher to express an interest in the Ontario operations. An internal A & P memo indicated that A & P had expressed flexibility in terms of discussing a mutually beneficial transaction, although their prefer­ence would be to acquire the Ontario retail store operations, either in total or, better yet, on a hand-picked basis. A & P was advised by Gaucher that he planned on pursuing a public offering

and intended to keep the food operation intact. That rebuff ended the involvement of A & P at that time.

50. Gaucher's acquisition of the controlling interest of Steinberg was at a high price. The take-over was highly financed through the Caisse and various other financial institutions. As Pierre Guilbault testified, the deal was the highest leveraged buy-out in Canadian history. Following the take-over, while the financial results for the fiscal year end and the first quarter for Steinberg and its subsidiaries showed improved profitability and cash flow, Socanav commenced selling off assets to meet its debt load. In August 1989, Socanav authorized the sale of assets related to the remain­ing real estate operations (Ivanhoe, principally), 50% interest in Lantic Sugar and Price Club and assets related to Smitty's food operations in the United States. During 1990, assets related to the real estate operations, Lantic Sugar and part of the restaurant operation were sold. Smitty's did not attract interest at anywhere near the expected level. Byars testified that, in his view at that point, it was only a matter of time before the debt obligations incurred in the leveraged buy-out would force the disposition of the Ontario operations. His statement proved prophetic.

51. By the turn of the year, it was realized that the sale of other Steinberg assets would not generate sufficient monies to sufficiently reduce Socanav's debt. Gaucher was under significant and increasing pressure to dispose of further assets to satisfy creditors and decided to sell the MFM operations in Ontario and the 50% interest of Steinberg in Price Club. Newspaper articles at the time noted the financial pressures on Socanav by creditors flowing from the leveraged buy-out.

52. Senior executives from A & P and Socanav met in Montreal in February 1990; A & P's position that it did not wish to acquire the warehouse or transportation operations was reiterated. Because of Gaucher's confidentiality concerns, the negotiations were handled on behalf of A & P through its U.S. parent by James Wood, CEO (U.S.) and Robert Ulrich, senior vice-president and corporate counsel (U.S.); the Canadian officers of A & P were excluded from the meeting. Wood and Gaucher met privately for a brief period. On their return, it appeared a deal was reached whereby A & P agreed to a formula for the sale price of three times book value, as sought by Soca­nay, and A & P would not purchase the distribution, transportation and maintenance operations. A & P did agree to offer employment to (and/or bear the termination costs .of) the head office employees; A & P did not assume the head office facility of Steinberg. Approximately one-half the office staff was ultimately retained by A & P.

53. On the basis of the agreement in principle, the parties made the necessary filings with Investment Canada and the Competition Bureau. At a meeting with Investment Canada in early April, A & P indicated that the transaction would generate synergies in the warehouses and distri­bution operations and it was anticipated that the banner would continue to be operated separately, given their prior experience with the Dominion stores acquisition. A & P also indicated that, with respect to the Steinberg warehouses, the company would be willing to receive applications for 75 to 100 employees to accommodate the additional volume. In response to other questions, A & P stated that the supplier relationships would not be jeopardized by the transaction and responded to questions regarding market share. In its filing with Investment Canada in this time period, A & P indicated that the transaction would involve 79 retail supermarkets in Ontario but not the ware­house facility. The purchase price was anticipated at approximately $360 million; employment was to be offered to the stores' employees and head office management and clerical staff and, in respect of the unionized employees in the stores, A & P would be a successor employer. A & P indicated that the existing supply arrangements would continue and some systems economies would result in administration and distribution of products. A & P also undertook due diligence investigations in this period.

54. A further meeting between the principals of A & P and Steinberg was convened in March 1990; A & P's position with respect to the warehouse and transportation operations did not change. In early April, yet another meeting was held. In April, Wood responded to Gaucher out­lining A & P's approach to the cost of the deal which was based on a multiple of book values and a multiple of earnings. It is useful to quote an excerpt from that April 2, 1990 document:

"Essentially A & P's price for Ontario, we based upon the multiple of book values and a mul­tiple of earnings.

With the existence of possible synergy benefits and the value of adding to an existing A &P mar­ketplace, a multiple of post tax earnings of twenty was the fundamental price ingredient.

On the same basis a revised price for the assets of Ontario in the light of the more actual figures would be more appropriate in the range of $250 million, plus working capital with A &P assum­ing the liability for the office and the administrative organization as before.

If negotiations are attractive to you at this level, let's both talk tomorrow morning, Tuesday, and with the firm information now available, we would proceed to a very quick completion of the purchase."

55. Concurrently with the direct negotiations, A & P were studying the impact of the trans­action on their operations. For example, an internal document dated April 17, 1990 noted a num­ber of matters. The most urgent requirement for the grocery operation at the West Mall was for additional racking to increase significantly the cube utilization of the facility. The hiring and train­ing of new employees was to commence four to six weeks prior to the acquisition to ensure the availability of a trained work force to handle all stores on closing and to complete the transfer of inventory within ninety days of commencing shipment to the new stores from the West Mall. The frozen food was already at 100% capacity but could be reconfigured and additional racking would increase capacity provided the inventory level was kept low. The long term resolution required expansion of existing facilities into areas currently devoted to other goods or relocation to another warehouse. The perishable produce operation anticipated a third shift to handle increased volume; again the training Period was anticipated at four to six weeks. An integration team was suggested to manage the restructuring, with specified persons assigned certain responsibilities.

56. Another memorandum dated March 29, 1990 should be noted. The witnesses could not identify the author of the memo, which addresses "alternative labour strategies". Advantages and disadvantages of offering employment to Steinberg warehouse employees are discussed. Under advantages, are summarized: if offers are based on selection and not seniority (and subject to a probationary period), the result would be a trained, competent full-time complement; the hirings would assist the acquisition process for negotiators and transfer of produce to A & P's warehouses; avoidance of potential labour board/human rights complaints and negative impact on corporate image if employment is not offered. Disadvantages noted were: introduction of a third culture into the warehouse; maintenance of pay rates and benefits which could negatively impact on current and new employees; severance implications if the probationary period was unsuccessful; a more expensive collective agreement could affect expectations in bargaining and sway the balance of power in the work force. The recommendation was to support offering employment on whatever terms are set and concluded the advantages outweighed the disadvantages. The company would continue to have the most favourable labour contract in the area for food distributors and have eliminated the least favourable collective agreement.

57. A & P and Steinberg could not reach agreement on the overall price. Throughout these discussions, Socanav sought to include the warehouse equipment in the asset sale to A & P; that inclusion would have added significantly to the purchase price. A & P continued to resist the pur­

chase of those assets or the assumption of any obligations to employ Steinberg warehouse person­nel. The various drafts of the transaction in March and April, as well as internal documents, reflect the negotiations in progress between the parties and their differing views of the scope of the desired transaction. Documents also reflect consideration of the form of the transaction, from tax­ation and financing viewpoints, that is, whether it would be preferable to structure an asset pur­chase agreement, stock purchase format or otherwise. The agreement in principle fell apart.

58. Once more, there was a lull in the negotiations with A & P. In the interim, Steinberg retained Merrill Lynch to solicit other offers for the Ontario operations. The Merrill Lynch docu­ment described the Steinberg retail operation in Ontario in some detail. Of interest are the com­ments regarding the "state-of-the-art" inventory and billing computer system introduced in the warehouses and the capital improvements in those facilities, on the order of $3 million in renova­tions to the produce/perishable warehouse in June 1989. The brochure noted that the company had begun to explore opportunities to enhance profitability through franchising and wholesaling. The leased transportation fleet was described, including the recent replacement of equipment and the fact that the company aggressively sought "backhaul" opportunities to offset transportation costs. Other matters of note were the Inventory Control and Billing Systems which could be used in both retailing and warehousing operations.

59. In April, Steinberg documents indicated that, by the end of July 1990, the company had to raise $350 million from the disposition of various assets (including Lantic Sugar for $110 million; the restaurant group for $21 or $22 million, etc.) The 1991 Socanav annual report indicated that the company was required to fulfil its commitment to the bank syndicate to repay over a very short term $435 million of the $558 million credit facility which was granted at the time of the acquisition in August 1989. In short, Socanav was facing demands from its creditors which could only be satis­fied with the disposition of the retail supermarket operations in Ontario.

60. In that context, the negotiations between A & P and Steinberg resumed in July 1990. Those discussions did culminate in an asset sale and purchase agreement. Although the resumption of discussions commenced with Socanav continuing to push the inclusion of the warehouse assets in the book value for the purpose of calculating the purchase price, ultimately, A & P's position was accepted. The deal was constructed as an asset purchase agreement with a closing date of October 20, 1990.

61. Subsequent to the deal but prior to closing, Steinberg and A & P created a transition team to facilitate the finalization of the transaction. As well, A & P established an integration team which met regularly to ensure a smooth integration of the acquisition into existing A & P opera­tions; that team dealt with the myriad aspects of the integration, from physical logistics to person­nel and organization.

The Asset Purchase Agreement

62. It is necessary to only briefly summarize the complex asset sale and purchase agree­ment. The formal agreement, dated July 20, 1990 and sixty-two pages in length (plus attached schedules), refers in the original document and the amending agreement (of October 22, 1990) to the following parties: A & P, Steinberg, Steinberg Equipment Leasing Inc., New Miracle Food Mart Inc. and A & P Drug Mart Limited. For convenience, the references are to "A & P" as pur­chaser and "Steinberg" as vendor. The complex form of the document and the additional corpo­rate structures reflected concerns regarding the tax impact of the transaction and such like.

63. The asset purchase agreement covered such matters as definitions, the purchase of assets and price, representations and warranties of vendor and purchaser, the interim period before closing, the closing itself, business matters, indemnification and non-merger and general matters. The purchase price was over $235,500,000, including monies in respect of inventory, cash on hand in the stores, adjustments on the settlement date and subsequent adjustments. Briefly described, A & P acquired the leasehold interests (and fixtures and improvements), store equip­ment, registered and unregistered trade marks, and goodwill in respect of specified stores, approxi­mately seventy in total. That comprised virtually all of the Steinberg retail locations in Ontario with the exception of some stores in the Ottawa area. The transaction was subject to the approval of Investment Canada and other government bodies.

64. "Business" was defined as follows:

"Business" means the retail supermarket and pharmacy business currently carried on by Stein­berg and Oak through the Stores and the Office to the extent that the business carried on at the Office relates directly to the business carried on through the Stores or to the expansion and development of the retail supermarket and pharmacy business in the Territory, but excluding the maintenance, warehouse and transportation functions carried out at the Warehouses.

65. The term "assets" was defined in the document to expressly exclude assets which were situated at the warehouse locations and the truck and trailer fleet. No assets were purchased from the distribution centres. The agreement provided A & P with an opportunity to review the truck and tractor leases and to assume those leases. Following that review, by letter dated August 17, 1990, A & P determined that it wished to assume the automobile leases identified in the relevant schedule to the purchase agreement but not to assume the leases with respect to the trucks, trac­tors and trailers or the computer leases, in the relevant schedules to the purchase agreement. At one point, A & P indicated an interest in the assumption of the computer leases for a defined period, although that was not provided for in the transaction; the eventual result of that issue was not here relevant. A & P assumed the lease with respect to the head office of Steinberg at 65 Rex-dale for a period of one year.

66. Consistent with these definitions, the term "employees" expressly excluded "unionized employees performing maintenance, warehouse and transportation functions". That is, A & P did employ those persons working in the stores which were acquired as a result of the asset purchase and, as noted infra, those employees at head office. With respect to those employees in the stores who were unionized, A & P accepted its role as successor employer and the terms and conditions of the collective agreements in force were continued. The non-union employees were retained on substantially the terms and conditions of employment in force at the time of the transaction. In total, approximately 8,000 unionized and non-unionized employees were hired from Steinberg's workforce. A & P did not assume any obligation to hire the warehouse, transportation and mainte­nance employees.

67. Between July 10, 1990 and closing, Steinberg was obligated to carry on the business in the normal course, consistent with past practice, and to use its "best efforts" to preserve the good will of suppliers, customers and other related businesses. Byars testified that A & P had to pur­chase the existing inventory to protect the value of the stores and retain the goodwill of the cus­tomers. That is, unless the stores remained fully stocked, customers would be lost as the high velocity items were depleted and were not replaced by Steinberg. Further, to facilitate the delivery of the inventory on closing, orders were placed with Steinberg to be delivered to the A & P distri­bution centre; all inventory was to be transferred within a specified period following the closing date. A & P assumed responsibility for the product at the point of loading onto Wilson Transport trailers.

68. A & P did agree to transfer the individuals working at Steinberg head office at 65 Rex-

dale, including buyers, replenishment clerks, account and control clerks to A & P's head office. The reporting structures for those employees differed from those in the Steinberg distribution cen­tre and, functionally, those persons were not part of the distribution function. The functions per­formed by the employees in those classifications would have been carried out even if Steinberg did not operate a distribution centre but had all product shipped directly from suppliers to the stores. Apparently, roughly half of those transferred employees were subsequently terminated; the obliga­tion for severance was assumed by A & P.

69. The amending agreement, dated October 22, 1990, in a colloquial sense, "fine-tuned" the asset purchase agreement with up-dated information and details. Additionally, both A & P and Steinberg signed reciprocal non-competition agreements dated October 22, 1990. Follow up items subsequent to closing included settlement date adjustments reflecting finalized figures on matters such as vacation pay, cola and xmas bonus for some employees, department head premiums, etc.

70. A supply agreement was entered into on October 22, 1990 between A & P and Trillium Meats, a division of Steinberg, for the supply of meat for a defined period until June 30, 1991, sub­ject to renewal. The transaction was described as an "arm's length" agreement; no employees of A & P were involved in the operation or management of Trillium Meats. The document itself states that Trillium shall process, pack and sell the products to A & P as an independent contractor with no authority or power to bind A & P, to assume or create any obligation or responsibility, express or implied, on behalf of A & P or to represent to anyone that Trillium has such power or authority. That arrangement ended in January 1992.

Hiring of Warehouse Employees by A & P

71. Pursuant to the asset purchase agreement, the employees in the Teamsters bargaining unit were given notice of termination effective October 20, 1990. The termination date coincided with the closing date of the transaction as Steinberg was responsible for supplying the stores until then. Prior to closing, Steinberg placed advertisements in newspapers indicating to potential employers the availability of its complement of skilled employees (skilled trades, general ware­house and drivers) in its distribution centres. The ads noted that, as the closure of the distribution facilities approached, experienced warehousing personnel would be available for employment. The asset purchase agreement made no provision for the assumption of employment offers to distribu­tion centre bargaining unit personnel nor was that discussed during the final negotiations culminat­ing in the sale. Steinberg did not attempt to place its warehouse employees with A & P.

72. Following the asset purchase, A & P temporarily used some outside storage facilities pending the installation of additional racking at the existing A & P warehouses. Additional equip­ment (several forklift and pallet trucks) was purchased but, essentially~ from the regular budget line. Burden and Byars testified that the transaction did not significantly affect prior supply arrangements except with respect to volume. The relationship between the A & P distribution cen­tre and the buying department and data processing function was not changed. The new product items were added to the existing computerized system and handled as was other product with respect to orders, selection and distribution.

73. The distribution function at A & P need only be briefly described. Product is received at the warehouse, unloaded and the billing information entered into the computerized system. Pallet labels, describing the product, commodity number, slot number, date received and quantity, are generated. The count is verified, the pallet tagged and the product is transported to the appropri­ate location by the forklift operator. Stores order product through the data centre at head office. That office produces invoices and labels for the order which are printed there or directly at the dis­tribution centre. The invoice is sent to the store; the label is used by the order selector. A co-ordi­nator at the distribution centre determines the loading schedule and attempts to maximize the loads delivered by the trucks to various stores (regardless of the store's banner as A & P, Miracle Food Mart or Dominion) in a geographic area. The orders are divided into selection packages and the labels given to selectors by shipping. The selectors fill the pallets with the requisite product, labelling the items as selected. A shipping pallet tag, identifying the store number and selector, is attached to the skid. The selector completes the paperwork involved and identifies to the co-ordi­nator any problems in filling the order. The product is loaded on the trailer and, once all loads are completed, the trailer is billed out and the product transported.

74. A & P did expect to hire additional warehouse personnel to handle the increased vol­ume expected as a consequence of the purchase of the stores. Initially, the projections were for 140 full-time and 70 part-time employees; about 195 were to be hired with the objective of retaining 140. The eventual figures were closer to 90 and 75 respectively. Additional personnel were needed in the classifications of receiver, shipper, forklift operator, general warehousemen, checkers and selectors. In anticipation of the acquisition, a study was prepared regarding the feasibility of inte­grating the servicing of the stores through the existing distribution facilities.

75. A detailed plan, dated August 21, 1990, was produced showing critical paths for han­dling the increased volume. Ads were to be placed indicating interviews would be scheduled in late August and early September. Initial screening was to be followed by interviews and an ergonomic medical evaluation. Successful applicants were to be offered part-time employment with the under­standing that, if their performance was acceptable, full-time employment would be offered in October. Training was to include: orientation (expectations regarding absenteeism, productivity, attitude; plant tour; review of rules and regulations, selecting procedures and principles, manual, health and safety video); four day intensive on the floor training with experienced trainers; review with trainers at end to evaluate new employees' performance and attitude. A probationary period follow up was outlined. It was anticipated that other training needs had to be satisfied during this period as well, given that existing employees would bid into new positions. With respect to clerical and supervisory hiring, interviews and hiring would commence after August 20 but some positions would remain vacant until closing date; experienced Steinberg employees would be considered for those positions. The document addressed the several distribution facilities in terms of current com­plement, expected increase, shifts, racking, layout, supervision, equipment, procedures, renum­bering and re-labelling, etc.

76. Both Byars and Burden testified that A & P had to commence the hiring process in Sep­tember 1990 in order to have a trained workforce in place to service the new stores as of the closing date of the transaction. The new employees had to be familiar with A & P's specific order selection process, including the paperwork. Burden testified with respect to the training of employees in the warehouse. There was one day of orientation and four days on the floor training. A & P has a pro­ductivity program which specifies the time expected to carry out various duties. The company expects that an employee's productivity reaches 80% after 120 hours and 100% after 200 hours. In addition to the training of the new selectors, those persons who transferred into other vacancies from the full-time and part-time units required training with respect to their new duties.

77. It is appropriate at this point to comment on the collective agreements between A & P and the RWDSU covering the distribution operation. There are separate full-time and part-time bargaining units. The collective agreements require that new full-time positions be first posted in the full-time bargaining unit to provide the opportunity for existing full-time employees to apply for and, if successful, transfer to the new positions. After that process, if the original positions remain vacant and/or if other positions have opened up because of transfers by full-time employ­ees, the positions are filled from the part-time bargaining unit. Thus, persons are hired into the full-time unit through the part-time unit; all new employees at the A & P warehouses are first hired as part-time employees. The wages for new hires into the part-time unit are below those for the full-time employees. There is a thirty day probationary period for new full-time employees.

78. As noted, the original projections were for approximately 140 full-time and 80 part-time employees. Additional positions were first posted in the full-time unit. The full time positions were anticipated as: 87 at West Mall, 13 at frozen food and 40 at Vickers Road. An internally posted memo indicated, as well, that at least six separate sets of postings might be required to determine the location, classification and shift that the new hires would eventually be filtered into. To quote an excerpt from the memo:

"It is in the best interests of all employees that this placement procedure be done as quickly and fairly as possible.

The shifts and number of employees as well as the classifications have been closely scrutinized by management and discussed with the [union management] committee, and it is management's view that these will be effective to cover our requirements for the foreseeable future.

We would ask for your cooperation during a trying and busy period over the next few months.

Note: It is very important and in your best interest to follow the instructions outlined in the form letter when availing yourselves for all positions. It has also been set up that the union will be monitoring the process as it evolves."

79. As a result of the internal posting procedure, the only vacancies which remained were in the classification of "order selector". The other (and preferable) positions (such as, shipper, receiver, checker, forklift operator) were filled internally. Postings in the part-time unit for selec­tors commenced in September 1990 and ended prior to October 9, 1990.

80. In anticipation of the hiring a number of new employees, ads were placed, in August, in newspapers for order selectors and several "open houses" were held to receive applications. All applicants were given the standard A & P application form. That form requests the date on which an individual is available to start work. Hiring for part-time employees commenced in September with a break in mid-October to reassess the number of additional persons who would be needed. Hiring commenced again in the first week in November and continued until mid-February 1991.

81. Applicants were interviewed by various management personnel. If applicants were not immediately available, they were informed that their applications would be held and not consid­ered further until the applicant contacted the company to indicate such availability. Burden testi­fied that part-time employees hired between August and October were advised that there was a strong possibility that they would be offered full-time employment in October 1990. From Novem­ber onwards, however, additional full-time employees were not needed; new hires were not given an expectation of full-time work.

82. A few Steinberg warehouse employees applied for positions at A & P. John Ricchio tes­tified that he applied in September 1990 and was interviewed. He stated he was told that all Mira­cle Food Mart applications were being put to one side and they would be in touch later. On his return to the company in early October, Ricchio testified he was informed by a security guard that the company was not taking applications. There was no record of Ricchio's application. Brian Payne testified that he went to the A & P distribution centre but decided not to apply for a posi­tion. Michael Ursini testified that he was informed by a security guard at A & P that the company was not accepting applications in November 1990. Thomas Michailidis applied for and was hired in February 1991 as a part-time employee at the A & P distribution centre. He was terminated in April 1991 during his probationary period for not meeting the productivity standards. Michael Lemarsh testified that he approached Wilson Transport for a position as a driver but received a "cold shoulder".

83. In October, A & P met with Investment Canada; in a subsequent letter from Dunne, A & P confirmed their intention to operate the Steinberg Ontario business as a separate organization, that the existing supply arrangements would not be significantly affected and that the employees in the stores and the head office management and clerical staff would be offered employment. As well, Dunne indicated, in a letter dated October 12, 1990, to Investment Canada the following, in part:

“……While A & P is very sympathetic with the position in which terminated warehouse employ­ees find themselves, A & P has made its requirements for additional warehouse employees for its warehouse facility, who must be available immediately, well known. Up until yesterday, only twenty-four individuals who identified themselves as Steinberg warehouse employees (who had been notified by Steinberg of termination and severance arrangements) had made applications for employment to A & P, and none of them were prepared to accept immediate employment with A & P and prejudice their Steinberg severance arrangements. In the past 7 weeks, we have received 959 applications for these positions from others who are available to work now."

84. The data regarding the applications and their disposition indicated that, of the 275 applicants as of September 4, 1990, 254 received interviews and 56 were hired. By the end of Sep­tember, another 90 of 450 applicants were hired (the figures are approximate). Open houses were scheduled for October 5 and 9 and another 105 interviews were scheduled for that week. Hiring dropped off dramatically during October and November 1990 and continued at a low level in December and the new year as well. By February 28, 1991, the totals were 1598 applicants and 422 hires (some hires were to replace attrition and dismissals during the probationary period).

85. The documentation also indicates that, of approximately fifty applicants from persons at the Steinberg distribution facilities, some thirteen were employed by A & P as of January 1, 1991; two of those quit by January 17, 1991. Of those thirteen, two were full-time probationary and nine were part-time probationary at that point. Of those applying, eleven indicated that they were only interested in full-time work and seventeen were not followed through on for a variety of reasons (including the wrong phone number or no phone number on the application, not available for med­ical reasons, failed to show up for an interview, worked as a driver or in accounting, were to con­tact A & P in January, etc.).

86. Following the announcement of the acquisition, there was a meeting with A & P man­agement and representatives of the RWDSU, Local 414 in August 1990. The agenda included a review of the take-over, proposed shifts for all distribution facilities, proposed posting procedures, implementation of re-studied measured work day program data. Some union members expressed a concern with respect to the hiring of employees from Steinberg's distribution centres. The concern arose from difficulties in integrating the former Dominion warehouse employees with the existing A & P employees as a result of the sale of Dominion to A & P. The RWDSU represented both the Dominion and A & P warehouse employees at the time of that sale, albeit in different locals. The resulting integration of the employees resulted in litigation before the Ontario Labour Relations Board (see: Great Atlantic & Pacific, infra). Burden testified that A & P's response to the question was that everyone would be treated the same and that the expression of concern did not affect the company's hiring policy. Further, Burden testified that the union representatives did not suggest that the Steinberg's warehouse employees not be hired.

SUBMISSIONS

87. The representations of counsel are next set out in highly abbreviated form. Given the length of the proceedings, counsel submitted factual distillations, summarizing their respective positions on the evidence, as a factual matter, in advance of their oral arguments. This process facilitated and expedited the submissions process. The Board thanks counsel for their able and thorough submissions in this complex matter.

88. Counsel for A & P dealt with what he characterized as the three issues from A & P's perspective, namely, was there a sale, was there an unfair labour practice in the structure of the transaction and was there an unfair labour practice in the hiring by A & P. The negotiations over the years culminating in the transaction were reviewed; counsel submitted that clearly established that A & P did not wish to purchase and did not need the Steinberg distribution centres. It was argued that the distribution centres were a severable part of the business, operationally and func­tionally. A & P purchased only that "part" of the Steinberg business consisting of some of the stores. Counsel argued that was consistent with the sale of a business jurisprudence. As to the structure of the transactions, counsel submitted that there was no anti-union animus present as employees in A & P's distribution centre were represented by the RWDSU and, further, A & P accepted its position as successor employer with respect to the stores' bargaining unit employees. It was argued there was no evidence of a specific anti-Teamster animus. The retention by Steinberg of the warehouse employees until closing was a legitimate business interest given Steinberg's obli­gation to A & P to continue normal operations until that date and to preserve customer goodwill. Counsel argued, with respect to the hiring of new employees by A & P, that the company followed its usual hiring processes, in accordance with its collective agreement obligations. It was a legiti­mate business concern for A & P to schedule the hiring process so as to ensure the availability of a trained work force as of the closing date. Counsel also noted that some Steinberg warehouse employees did apply and were hired and, further, those who did not so apply for positions could not assert an unfair labour practice. In summary, counsel requested that the Board dismiss the unfair labour practice allegations and the sale application.

89. Counsel for Steinberg dealt with the issues of whether there was a sale of a business and the bad faith bargaining allegation. With respect to the first issue, counsel adopted the submissions of counsel for A & P and asserted the jurisprudence, including Great Atlantic and Pacific, infra, was dispositive. That is, Steinberg sold a part of its business (the stores) and not the distribution centres. It was argued that the stores, even individual stores, have been regarded as "parts" of a business within the meaning of the Act. Steinberg retained the distribution centre part of the busi­ness but chose not to continue that operation. With regard to the duty to bargain in good faith, counsel asserted that the onus of proof did not lie with Steinberg and, further, that the individual complainants lacked status to bring that complaint. As well, counsel contended that the duty com­prised two separate disclosure obligations with respect to a company's future intentions. A decision already made which could impact on the bargaining unit must be disclosed during bargaining and a company must respond honestly when asked in bargaining if an employer was contemplating initia­tives which were likely to impact on the bargaining unit. In any event, no jurisprudence imposed a duty on the shareholders directly or to deal with unpredicted future events which might impact on the bargaining unit. In that context, counsel reviewed the facts in support of his assertions that there was no firm decision during negotiations to sell Steinberg; indeed, the company had been taken "out of play". Further, Steinberg was not asked in bargaining if there were any plans to sell at some point in the future. It was argued that the Steinberg negotiators responded in good faith and their belief with respect to the future was based on reasonable grounds. Counsel reviewed the time period prior to the commencement of negotiations, at the negotiating table and Steinberg's actions following bargaining with regard to pressing ahead with wholesaling as consistent, in each period, with the duty to bargain in good faith. Counsel also contended that the evidence demon­strated that the union sought but did not obtain increased job security and that the company did not provide job security guarantees in conjunction with FOS and labour peace. Counsel submitted the sale application should be dismissed, together with the unfair labour practice allegations.

90. Counsel for the RWDSU solely dealt with the sale of business issue. It was argued that the jurisprudence did not establish a bright line test and one important consideration was the mis­chief against which the statute was directed. On an instrumental basis, the Board has determined whether the transfer was a coherent and severable part of the business. Counsel adopted the sub­missions of counsel for A & P and for Steinberg that, in this industry, distribution may be regarded as a coherent and severable part of the business. On an instrumental view, there was no transfer of the distribution business to A & P. Finally, there must be regard to the jurisprudence distinguish­ing a "sale" from a transaction carried out in connection with a parallel business operation. Coun­sel argued the instant facts with respect to the existing distribution operation of A & P was consis­tent with that approach. In summary, counsel submitted there was no sale of the Steinberg distribution business to A & P.

91. Counsel for the individual complainants did not dispute the applicable legal principles but submitted that the application of those principles in the instant context sustained the allega­tions. Counsel extensively reviewed the evidence in support of his position that the economic sub­stance and reality of the transaction was that the distribution business was continued by A & P, notwithstanding that the "bricks and mortar" were not purchased, and that one of the factors underpinning the structure of the transaction was the desire to be rid of the Teamsters collective agreement. While the distribution operation could be a "stand alone" segment, that was not the instant case given the description by Steinberg of its retail food business as an integrated operation. Counsel argued the purpose of the statute was to preserve bargaining rights. It was conceded that A & P had legitimate business reasons for not acquiring the distribution centres but counsel con­tended that one of the factors was an anti-Teamster animus and that was sufficient, given the taint theory of the jurisprudence, to ground a finding of unfair labour practices in the structure of the deal and the hiring of additional warehouse employees by A & P. Counsel stressed that Gaucher and Wood were not called to testify with respect to their private conversation. With respect to the bad faith bargaining allegation, counsel submitted that Steinberg had induced the employees to believe their future was secure and that specific job security clauses were not needed in the collec­tive agreement. Given the duration of FOS and labour peace, it was submitted that the duty to bar­gain in good faith transcended the specific collective agreement negotiated in the Fall of 1988. What contravened the duty to bargain was the sale of Steinberg to Gaucher as that exposed Stein­berg and its employees to all the risks and uncertainties that the employees were told they were putting behind them in agreeing to FOS and labour peace. While the Teamsters unit constituted a small part of the Steinberg operation, counsel contended that the distribution centres were of vital importance and the Teamsters could have negotiated more forcefully for iron-clad job guarantees. With respect to remedy, counsel sought a declaration that A & P was bound to the Teamsters col­lective agreement as a successor employer or, in the alternative, a representation vote. If the struc­ture of the transaction were found to constitute an unfair labour practice, the Board should find a sale on that basis, even if, otherwise, the transaction would not fall with in the statutory provision. If only the hiring was found contrary to the Act, counsel sought a declaration and monies payable to the Teamsters employed at the distribution warehouses for their "loss of opportunity". With respect to the duty to bargain in good faith allegation, counsel also sought a declaration and mon­ies for "loss of opportunity" to negotiate different and improved provisions in the collective agree­ment.

92. Counsel for the Teamsters concurred with the submissions of counsel for the individual complainants. With respect to the sale issue, counsel argued that the jurisprudence must be read in the factual context of each case and, here, the distribution centres operated as an integral part of the entire business. That is, there was a disposition of the warehouse business through the sale of the stores. With respect to remedy, counsel sought a declaration that the Teamsters collective agreement was binding on A & P in the "like" bargaining unit. Further, it was asserted that the Teamsters collective agreement obligated A & P to utilize its own drivers to distribute product to the transferred stores. Counsel sought a representation vote of the employees in the distribution centres, even if the drivers were not included in that vote. With regard to the structure of the trans­action, it was argued that there was evidence that one of the factors analyzed by A & P in its deter­mination was the existence of the Teamsters as bargaining agent for the employees in the distribu­tion centres. The fact that A & P agreed to take the office employees (who were not unionized) was stressed. That is, A & P discriminated on the basis of union representation, contrary to the statute. Given that Steinberg would be liable for the termination costs of shutting down the ware­house operation, it made no business sense for Steinberg not to make enquiries of A & P to accept some of those employees. The only reasonable inference, it was asserted, was that Gaucher and Wood had agreed not to involve the Teamsters bargaining unit members to avoid a "third culture" in the A & P distribution centres. If the Board concluded that the deal was structured so as to avoid the Teamsters, counsel argued that the relief ordered should mirror that which would flow if a sale was found. If the Board found the deal was not so structured, counsel contended that the conduct of A & P in hiring the additional employees was designed to frustrate the hiring of Team­sters. The fact that only a few Teamsters actually applied was characterized as an issue of mitiga­tion. Counsel did not make submissions regarding the duty to bargain in good faith allegations.

93. In reply, counsel for the individual complainants indicated his agreement with the sub­missions of Teamsters' counsel. Counsel for the RWDSU, while not agreeing that there was a sale, commented on the remedy. That is, a sale finding was not dispositive; the Board would have to consider the issues of intermingling, which collective agreement should apply and who was the bar­gaining agent. In the circumstances and in view of Board practice, there was a presumption in favour of the existing A & P bargaining unit and a declaration should issue declaring that A & P was not bound by the Steinberg collective agreement. Given the numbers of new employees hired (even assuming all should have been Teamsters) in the context of the existing size of the bargaining units, no representation vote should be ordered. Counsel for Steinberg acknowledged that stores need to acquire product to sell but asserted that A & P chose to use an existing part of its business to satisfy that need. Counsel also noted that, with respect to the warehouse part of the business, all those employees, whether in management, the Teamsters bargaining unit or the UFCW bargaining unit (for maintenance employees) were affected by the transaction and the fact that the warehouse was not acquired by A & P. Counsel for A & P, because of time constraints submitted his reply, on agreement, in writing. Counsel argued that there must be some manner of disposition to ground a finding of a sale and there was none in the instant circumstances. Nor, even in an integrated opera­tion, need there be a sale of the entire operation provided the parts of the business are severable. Counsel also opposed the submissions of the applicants/complainants regarding remedy and, fur­ther, argued that no remedy would be appropriate with respect to the allegations regarding hiring given that only a few Teamsters applied and, with respect to those, there was no evidence of dis­crimination.

94. The cases cited by counsel in respect of their several positions, listed together, included: Great Atlantic and Pacific Tea Company Limited, [1986] OLRB Rep. Apr. 485; Metropolitan Park­ing Inc., [1979] OLRB Rep. Dec. 1193; Beef Terminal (1979) Limited, [1980] OLRB Rep. Aug. 1167; Grand Valley Ready Mixed Concrete Supply Limited, [1981] OLRB Rep. June 663; Vaunclair Meats Limited, [1981] OLRB Rep. May 581; B rant Erecting and Hoisting, [1980] OLRB Rep. July 945; Corporation of the City of Stratford, [1985] OLRB Rep. June 923; Gilham Foods, [1984] OLRB Rep. Oct. 1423; Kitchener-Waterloo Hospital, [1991] OLRB Rep. Oct. 1130; Kitchener-Waterloo Hospital, [1993] OLRB Rep. Mar. 187; New Holiday Tavern, [1987] OLRB Rep. May 753; The Globe and Mail, [19881 OLRB Rep. Apr. 384; Emrick Plastics Inc., [1982] OLRB Rep. June 861; Sunnylea Foods Limited, [1981] OLRB Rep Nov. 1640; Daynes Health CareLimited, [1984] OLRB Rep. Aug. 1091; Penny Lane Food Markets Ltd., [1993] OLRB Rep. March 230; Paperboard Industries Corporation, [1992] OLRB Rep. Aug. 946; Union Carbide Canada Limited, [1992] OLRB Rep. May 645; Metropolitan Life Insurance Company, [1989] OLRB Rep. Feb. 175; BCL Canada Inc., [1984] OLRB Rep June 791; Amoco Fabrics Ltd., [1982] OLRB Rep. Mar. 314; Consolidated Bathurst Packaging Ltd., [1983] OLRB Rep. Sept. 1411; Zehrs Markets Limited, [1974] OLRB Rep. May 331; Culverhouse Foods Limited, [1976] OLRB Rep. Nov. 691; More Groceteria, [1980] OLRB Rep. Apr. 486; Valencia Foods, [1984] OLRB Rep. May 773; New Dominion Stores Inc., [1986] OLRB Rep. Apr. 519; New Dominion Stores Inc., [1986] OLRB Rep. Oct. 1378; Canada Safeway Limited, [1986] OLRB Rep. Nov. 1498; Krush, [1987] OLRB Rep. June 859; Miracle Food Mart, Steinberg Inc., [1988] OLRB Rep. July 679; Briston Fashions Inc., [1990] OLRB Rep. Mar. 223; Steinberg Inc., [1990] OLRB Rep. July 794; Canadian Pacific Forest Products Limited, [1990] OLRB Rep May 492; Accomodex Franchise Management Inc., [1993] OLRB Rep. Apr. 281; Caressant Care Nursing Home of Canada Limited, [1984] OLRB Rep. Aug. 1060.

DECISION

95. The Board has carefully considered the submissions of counsel and the jurisprudence cited. The allegations are addressed in sequence, although it is not possible to entirely compart­mentalize the analysis. There was no dispute that the relevant statutory language is that prior to the amendments to the Act which came into force in 1993. Some of the jurisprudence cited fol­lowed the coming into force of the amendments but is referred to where the reasoning is apposite and is not predicated on the changes to the Act. Nothing in the instant analysis is to be read as indicative of the rights and obligations under the current form of the Act and/or the jurisprudence developed thereunder where the amendments would have impacted on those rights and obligations and that jurisprudence.

The Duty to Bargain in Good Faith

96. Counsel for the individual complainants asserted that Steinberg contravened the duty to bargain in good faith in negotiating FOS and labour peace but in subsequently selling the company to Gaucher. That sale, it was argued, exposed the employees to those risks and uncertainties which they thought were being put behind them in settling the collective agreement; had the employees realized the risk of sale continued, they would have negotiated ironclad job guarantees. While counsel has focused on the sale to Socanav, the Board considers it appropriate to measure the stat­utory duty against the conduct of Steinberg throughout, in part, because it is necessary to examine the collective bargaining negotiations between the Teamsters and Steinberg to understand the con­text of the subsequent Socanav take-over.

97. The statutory duty to bargain in good faith has been fleshed out by the Board over the years. The aspect of that duty which is of particular concern here is the obligation on the employer to disclose plans or intentions to the union which are reasonably likely to impact on the bargaining unit. The union's opportunity to negotiate with respect to the impact on the bargaining unit of future management decisions is confined to the open period of a collective agreement when the parties bargain over the terms and conditions which are to govern their relationship for the dura­tion of that collective agreement: Union Carbide, supra, and the cases cited therein. Because the union's right to bargain about such matters is so restricted, the Board articulated a duty to disclose consistent with the fundamental notion that rational and informed discussion during bargaining was essential to the well-being of the collective bargaining relationship.

98. The first element of the duty to disclose deals with decisions already made which may have a major impact on the bargaining unit: Westinghouse Canada, [1980] OLRB Rep. Apr. 577:

"39.... can there be any doubt that an employer is under a section [then] 14 obligation to reveal to the union on his own initiative those decisions already made which may have a major impact on the bargaining unit. Without this information a trade union is effectively put in the dark. The union cannot realistically assess its priorities or formulate a meaningful bargaining response to matters of fundamental importance to the employees it represents. Failure to inform in these circumstances may properly be characterized as an attempt to secure the agreement of the trade union for a fixed term on the basis of a misrepresentation in respect of matters which could fun­damentally alter the content of the bargain.”

99. The concept of "decision" was regarded as elastic so as to include "de facto" decisions. Nor was the Board insensitive to the possibility of manipulation by an employer seeking to delay decisions which would attract the duty to disclose until the collective bargaining window had closed. In addition to the obligation of unsolicited disclosure with respect to de facto decisions, the Board articulated a duty to respond honestly when asked in bargaining regarding company plans. Finally, the Board recognized that the representatives of the employer at the bargaining table must be informed so as to respond meaningfully to questions asked by the union. These aspects to the duty to disclose, and their rationale, are usefully summarized in the following passage from Union Carbide, supra,:

"23 In using the term 'decisions', however, the Board at the same time was mindful of the obvious extent to which such a 'bright-line' test could invite manipulation by the employer. The timing of such decisions, therefore, or the employer's announcement of same, continue to be a matter of concern to the Board when following in close proximity to the consummation of what the employer professes to be a good-faith collective bargaining agreement with the Union. And that is why the Board in Westinghouse made it clear that in appearing to adopt actual 'decisions' made by the corporation as the test for unsolicited disclosure, it had in mind when saying that what it described as 'de facto' decisions as well (see paragraph 41). As the Board put it in Consolidated Bathurst Packaging Limited, [1983] OLRB Rep. Sept. 1411, at paragraph 50:

…..plans and decisions to close a plant can effectively extinguish a bargaining unit and the relevance of the usual terms of a collective agreement. In this context, where a decision to close is announced 'on the heels' of the signing of a collective agreement, the timing of such a significant event may raise a rebuttable presumption that the decision-making was sufficiently ripe during bargaining to have required disclosure or that it was intentionally delayed until the completion of bargaining. It can be persua­sively argued that the more fundamental the decision on the workplace, the less likely this Board should be willing to accept fine distinctions in timing between 'proposals' and 'decisions' at face value and particularly when strong confirmatory evidence that the decision-making was not manipulated is lacking. This approach is sensitive to the positive incentive not to disclose now built into our system, and the potential for manipulation.

24. All of the Board's comments cited above deal with the issue of 'voluntary' or unsolicited' disclosure. The Board has been quite deliberate, however, in distinguishing the situation where the company has to decide whether it is appropriate to raise something on its own, from that where the Union has shown sufficient interest in the topic to specifically make the inquiry at the bargaining table. In the latter case the Board in Westinghouse, also at page 39, wrote:

"Having regard to the importance of the exercise, the requirement for full and open discussion, the scope of matters open to bargaining and the statutory framework which binds the parties to the terms of their agreement for its full term, can there be any doubt that the section [then] 14 duty requires an employer to respond honestly when asked in bargaining if he is contemplating initiatives of the type which have a real likelihood of significantly impacting on the bargaining unit."

Indeed, in the very course of concluding that the line should be drawn at 'decisions' (however loosely defined) in the situation where there has been no inquiry put forward on the part of the Union, the Board went on as follows to comment upon the kind of 'balancing' that it found nec­essary in arriving at that conclusion:

40. The more difficult question is whether there is an obligation on an employer to reveal on his own initiative plans which are not finalized at the time of bargaining but which, if implemented during the term of the collective agreement, would have a sig­nificant impact on the economic lives of bargaining unit employees. On one side the Board must be concerned with potential distortion of the bargaining process by the imposition of an obligation which requires the employer to advise the union on his own initiative of plans which may never become decisions. On the other side, how­ever, the Board must be sensitive to the purpose of the collective bargaining process and to the role of the trade union as exclusive bargaining representative of the employees who might be affected if these plans resulted in decisions being made by the company.

41. The competitive nature of our economy and the ongoing requirement of compe­tent management to be responsive to the forces at play in the marketplace result in ongoing management consideration of a spectrum of initiatives which may impact on the bargaining unit. More often than not, however, these considerations do not mani­fest themselves in hard decisions. For one reason or another, plans are often dis­carded in the conceptual stage or are later abandoned because of changing environ­mental factors. The company's initiation of an open-ended discussion of such imprecise matters at the bargaining table could have serious industrial relations conse­quences. The employer would be required to decide in every bargaining situation at what point in his planning process he must make an announcement to the trade union in order to comply with section [then] 14. Because the announcement would be employer initiated and because plans are often not transformed into decisions, the possibility of the union viewing the employer's announcement as a threat (with atten­dant litigation) would be created. If not seen as a threat the possibility of employee overreaction to a company initiated announcement would exist. A company initiated announcement, as distinct from a company response to a union inquiry, may carry with it an unjustified perception of certainty. The collective bargaining process thrusts the parties into a delicate and often difficult interface. Given the requirement upon the company to respond honestly at the bargaining table to union inquiries with respect to company plans which may have a significant impact on the bargaining unit, the effect of requiring the employer to initiate discussion on matters which are not yet decided within his organization would be of marginal benefit to the trade union and could serve to distort the bargaining process and create the potential for additional lit­igation between the parties. The section 15 duty, therefore, does not require an employer to reveal on his own initiative plans which have not become at least de facto decisions.

It has always been the view of the Board, as Mr. Ublanksy put it in other words, that the spe­cific asking of the question by the Union 'sharpens' the obligation to disclose (see, once again, Consolidated Bathurst, supra at paragraph 43). And as a necessary addendum to that, the Board has also noted that it is part and parcel of the duty to bargain in good faith for the employer to ensure that it is sending 'informed' representatives to the table as its negotiators. As the Consolidated Bathurst case itself stated, at paragraph 53:

"...Further, it is no answer that the company's negotiators knew nothing about the impending closing. The company has a statutory responsibility to send informed rep­resentatives to the bargaining table."

More recently, see for example Plaza Fiberglas Manufacturing Limited, [1990] OLRB Rep. Feb. 192 at paragraphs 27 and 28.

100. One other comment from the jurisprudence is noteworthy at this juncture. In Amoco Fabrics, supra, the Board adopted the reasoning expressed in the cases regarding the obligation to

disclose. The Board went on to note the vagaries and uncertainties inherent in any enterprise in the following excerpt:

"43. The general principle also applies to a decision that is finalized to the extent that there is no foreseeable impact on the employees or their union. Most private enterprise is a risk taking ven­ture. There is always some element of uncertainty in a business decision. Where a corporate planning decision is made and the employer believes that its decision will not affect its employ­ees there is inevitably some possibility of an error in the employer's prediction. Events beyond the employer's control, such as changes in the economy or the introduction into the market of competitors or competing products may affect production and sales and, ultimately, the welfare of the company and its employees. Should it follow that any time during bargaining a company makes a decision that risks its capital and know-how, and by extension its production, sales and employment levels, it is required to disclose and discuss its business strategy and predictions with the trade union that represents its employees?

44. An affirmative answer to that question would be tantamount to moving the union into the corporate boardroom. While some might see that as a positive step, it is not one which in our view can be conjured out of the statutory duty to bargain in good faith and make every reason­able effort to conclude a collective agreement mandated by section 15 of the Labour Relations Act. Collective bargaining under the Act is premised on the exercise of traditional management rights by employers to the extent that those rights are not abrogated by statute or by the terms of a collective agreement. Absent some contractual restriction, it is generally the prerogative of the employer to finance, organize, plan and direct its enterprise in the way that it sees fit. As some recent plant closures have demonstrated, errors of judgment in these areas can be fatal to an enterprise. As part of the scheme of collective bargaining employees and the trade unions that represent them understand and accept that they are generally vulnerable to the success or failure of decisions taken by management, just as they are to market forces beyond their employer's control.

45. In some instances a more enlightened attitude of disclosure and discussion with the union might profit the employer in the long run. Secrecy and mistrust can undermine good labour rela­tions. Communications with the union may produce some positive suggestions to improve the employer's strategy and enhance its chances of success. It may be wise to insure that a union is aware and onside when a major initiative is undertaken. The advisabliity of communication must, however, depend on the sophistication of the parties and the overall quality of their bar­gaining relationship.. There is a difference between what is advisable or desirable from a labour relations standpoint, and what is the minimum required by the Act. In our view, it would be unrealistic and unresponsive to the sensitive nature of collective bargaining relationships to require employers to bargain with their unions about corporate decisions made in the belief, held in good faith and on reasonable grounds by the employer, that employees will not be adversely affected. In those circumstances the degree of disclosure remains in the discretion of the employer."

46. In the above jurisprudential context, the Board turns to the instant facts. In the Board's view, the conduct of Steinberg throughout the negotiations from 1988 up to and including the take­over by Gaucher in 1989 does not contravene the statutory duty to bargain in good faith.

47. Ludmer and Bilodeau, in initiating the FOS and labour peace concept, were entirely open with the various trade unions representing the employees in the Steinberg retail supermarket operation. All parties were aware that that company was "in play" as a result of feuding amongst the Steinberg family members. Ludmer was candid in his expressed hope that, if FOS and labour peace were accepted by the unions, he could convince the Steinberg board to continue the com­pany as a "going concern". All parties were aware, from express statements by Ludmer and Bib­deau and newspaper coverage, that the alternative was the likely sale of the company "piecemeal". This approach by Steinberg management could only be described as full disclosure of the options facing the company and the context in which the unions had to make their collective bargaining decisions.

48. It is important to note that the Teamsters were minor players in the overall picture. If the UFCW locals in Ontario and Quebec did not accept the FOS and labour peace concept, the position of the Teamsters was largely irrelevant. It is also important to note that the Teamsters did not enter formal negotiations until after the conclusion of collective bargaining with the UFCW locals. The details with respect to their acceptance of the company's proposals are set out above and need not be reiterated here. What does bear reiterating is that the Steinberg board took the company "out of play" prior to the commencement of the Teamsters negotiations.

49. Given the discussions between Grimaldi and Bilodeau in the Spring of 1988 and Grimal­di's assurances that he was amenable to FOS and labour peace, it was reasonable for Steinberg to expect that, at the bargaining table, those company proposals would not prove an impediment. However, in giving his assurances, Grimaldi had not been successful in extracting a promise or rep­resentation form Bilodeau that FOS and labour peace would only apply to Steinberg and not to a subsequent buyer or any additional commitment with respect to job security. Grimaldi had attempted to obtain those guarantees but such were not forthcoming. Again, up to the point of the formal negotiations for the renewal of the collective agreement, the conduct of Steinberg did not contravene the duty to bargain in good faith.

50. During the actual negotiations, the company and the union each pursued their respec­tive agendas. The union sought additional severance in their initial proposal at three times the E. S.A. rate; the company resisted. That position of the union was not withdrawn until the last day of bargaining. The possibility of a bona shida payment was raised verbally but was dismissed by the company. In the Board's opinion, there was nothing in the collective bargaining discussions which constituted a misrepresentation by Steinberg with respect to its plans for the company. At that point, the company was no longer for sale; indeed, Steinberg anticipated an expansion into the wholesaling business. This direction would increase the number of jobs in the distribution centre, not place them at risk. The Steinberg negotiators responded honestly when asked about job secu­rity. It is not reasonable to characterize Peardon's response about "being around another thirty years" as an absolute guarantee or as warranting life-time job security. The Teamsters are a sophisticated trade union organization. It is not plausible that the Teamsters negotiating team would regard Peardon's comment as a binding obligation when the collective agreement was silent on the subject. As noted, there is always an element of risk in private enterprise. The duty to bar­gain does not impose an obligation of correctness or total accuracy with respect to future events. The duty to disclose does require a company to honestly respond to questions and, in the instant case, the Steinberg negotiators did so.

51. Indeed, the conduct of the company following negotiations is entirely consistent with a finding that its negotiators responded honestly to inquiries. As outlined in paragraph 35 and only highlighted in part herein, the company proceeded with a number of steps intended to facilitate a wholesaling operation, including the completion of an inventory billing system, installation of a vacuum system and refrigeration, and improvements to the produce warehouse facilities. As well, Steinberg purchased several wholesale operations in Quebec.

52. It must also be emphasized that Grimaldi had his own agenda for the negotiations. From the initial conversations with Bilodeau, Grimaldi sought a specific wage package ("a buck and a buck") and the alteration of the duration of the Teamsters collective agreement to schedule its expiry after the Oshawa Group negotiations. Grimaldi was successful in that regard. Bilodeau assured Grimaldi that his (Grimaldi's) agenda could be accommodated in the same conversations which dealt with the FOS and labour peace concept. Grimaldi sought and obtained reassurances from Bilodeau in the period prior to the commencement of formal negotiations just as Bilodeau sought and obtained reassurances from Grimaldi regarding FOS and labour peace. Thus, each party had assessed its respective priorities and, by and large, achieved their objectives.

53. It is not reasonable to characterize the negotiation process as a matter of Steinberg lull­ing the Teamsters into a false sense of security over the future. The company responded honestly to queries about Steinberg's future plans for the distribution centres. The Teamsters did not ask whether there were no conceivable conditions under which the company could be sold. However, even in that regard, it is useful to note Ludmer's comment reported in the newspapers to the effect that the Steinberg family decided not to tender the controlling block of shares but that the family would again have to decide whether to accept another offer if such was forthcoming at some point (see par. 28). Whether or not the Teamsters' negotiators were specifically aware of that comment, Ludmer was quoted in the public press prior to the commencement of the Teamsters negotiations to the effect there were no guarantees with respect to the family's decision with regard to selling their controlling interest in the future.

54. There was no dispute that Steinberg continued its retail supermarket operation and rejected unsolicited offers from the Oxdon consortium in March and June 1989. As outlined above, Gaucher was successful in July 1989 in acquiring a lock-up agreement from the Steinberg family to acquire a controlling interest in the company. That lock-up agreement was not dispositive of control; Gaucher tendered a take-over bid for the purchase of more than the controlling inter­est. Gaucher, through Socanav, was successful in his take-over bid, in the face of a battle for con­trol of Steinberg between Socanav and the Oxdon consortium, supported by Loblaws and the Que­bec Federation of Labour.

55. Counsel for the individual complainants contends that it is the sale which contravened the duty to bargain in good faith. The Board reviewed the earlier events up to and including the Teamsters negotiations and concluded that there was no violation of the duty in that period. Those negotiations concluded in October 1988. The Socanav take-over bid was successful in July 1989. The case law notes the suspicion that is raised when the decision to sell falls in close proximity to the negotiations during which the company made no disclosure of its plans nor responded to inqui­ries to the effect that such matters might be considered. In the instant case, the lack of proximity is not supportive of counsel's argument. That is particularly so given the rejection by the Steinberg board of unsolicited bids between July 1988 and July 1989. The Socanav approach was itself unsoli­cited. Moreover, the Board's finding that there was no promise by the Steinberg negotiators that the company would never be sold or of life-time job security supports the conclusion that there was no violation of the duty to bargain in good faith.

56. Counsel's argument would also impose directly on the shareholders of the company the statutory obligation. This approach is fraught with difficulty. The Board is not here commenting on circumstances of privately held companies where there is no real distinction between the principals of a company and management. In the instant case, while there is no doubt that the Steinberg fam­ily held a controlling interest and had a presence on the Steinberg board, the Socanav take-over bid was predicated upon the tendering of specific levels of shares which were widely held. Had those levels not been reached, the bid would have failed. In such circumstances, it is far more tenu­ous to impose a duty to bargain in good faith on shareholders who are distinct from management.

57. The Board need not ultimately determine herein whether the scope of the statutory duty extends that far. The Board is satisfied that, even if such an obligation is imposed on the Steinberg family in the instant case, their decision to sell their controlling interest cannot be char­acterized as a violation of that obligation. As noted, there was no express or implied representa­tion during negotiations that the company would never be sold or of life-time job security. Prior to the Socanav take-over, Steinberg conducted itself in accordance with its stated intention to branch into the wholesaling business (which would increase the job security of the Teamsters bargaining unit members). At the time of the Socanav take-over, the offering circular indicated that, if suc­cessful, a detailed review of the company and its subsidiaries would be undertaken. Subsequent to that review, assets of the company might be disposed of but Socanav's stated intention was to con­tinue, as a going concern, the retail and wholesale food business. There is no reason to doubt the veracity of this statement; it is consistent with the rebuff by Gaucher of an approach by A & P in this period. Further, it is consistent with subsequent events. Gaucher sought, through the disposi­tion of various assets to satisfy those creditors who financed the take-over. As well, Gaucher rejected various offers from A & P which sought the acquisition of the stores but not the distribu­tion centres in the Ontario operation. It was only in July 1990 when the anticipated monies from the disposition of the other assets failed to materialize and the financial institutions were demand­ing payment, that Gaucher finally had no choice but to accede to the A & P offer.

58. Thus, at the time the Steinberg family made its decision to sell its controlling interest, the circumstances more closely resembled those in Amoco, supra, where the decision was made in good faith and on reasonable grounds that the employees would not be adversely affected. Indeed, ultimately, that decision remained sound for the vast majority of the Steinberg employees in Ontario, that is, those in the stores acquired by A & P. There is no doubt that the leveraged buy-out by Socanav eventually resulted in the closure of the distribution centres and the termination of the distribution centre employees. The Board regards that outcome, while truly unfortunate for the individuals affected, as part of the expected vagaries of private enterprise and the inherent uncertainties in business decisions. Had the disposition of the other assets yielded the expected returns, there is no evidence to suggest the retail supermarket operation would have been placed on the block.

59. The Board, in its analysis just given, is responding to the argument of counsel for the individual complainants at its highest and, even in those circumstances, a breach of the duty to bar­gain in good faith is not sustained. On a more traditional approach, wherein the obligation is imposed on management, there can be no doubt that there is no such contravention.

60. Thus, for the reasons given, the allegations of a failure to bargain in good faith are dis­missed. Given the Board's conclusion, the Board need not deal with the argument that a bad faith bargaining complaint may not be brought by individual complainants.

Sale of a Business and the 1(4) Allegation

116. The section 1(4) allegation was not pressed in submissions. The Board finds that, in the circumstances, there is no basis for a finding under that section of the Act. Both Steinberg and A & P were in the retail supermarket business but as competitors. As noted in paragraph 13, as between the two companies there was no common ownership, directors, management or financial control. As a result of the sale, while a few management personnel associated with MFM were offered positions with A & P, none were such as to fall within the "key persons" line of cases. Although there was a transition team proximate to the scheduled closing, following the sale, the companies continued their separate ownership, directors, management, financial control and oper­ations. The agreement with Trillium Meats was an arms-length arrangement which was terminated in January 1992; during its term, A & P was not involved in that operation. A & P was never involved in the management or operation of the Steinberg distribution warehouses.

117. With respect to the alleged section 63, it is helpful to begin with a sketch of the jurispru­dence. The statute defines "business" only as including "a part or parts thereof". The term "sells" has a more expansive definition as including "leases, transfers and any other manner of disposition". In that statutory framework, the Board has analyzed a myriad of factual circumstances. In each case, the Board has had to determine whether what was transferred between the purported vendor and purchaser constituted the sale of a "business". The Board has looked to various indicia of a sale, including location, equipment and other assets, goodwill, licenses, customer lists, logo or trademark, inventory, non-competition covenants, etc. in reaching that determination. Where a "key person" has continued in the new operation, that may be sufficient to ground a "sale" find­ing: Brant Erecting, supra. A "business" has been regarded as not necessarily co-extensive with specific "work" nor do employees have proprietary rights to "work" performed by a vendor: see Metropolitan Parking, supra, for a detailed exposition of the concept of a "business". The presence of the previous employees in the new operation may well be regarded as sustaining a finding of a "sale"; their absence, however, does not establish the contrary conclusion.

118. The Board has approached its decision on the basis that the statute was intended to pro­vide stability in collective bargaining relationships and the rights of employees under a collective agreement notwithstanding a change in ownership of the business. The Board has recognized that commercial transactions may take many forms but that the form of that transaction should not be permitted to negate collective bargaining rights where the commercial arrangement may properly be characterized as a "sale"; More Groceteria, supra, articulated the legislative rationale. Finally, the Board has also distinguished between a "sale" and an "idle collection of assets" and between a "sale" and the "expansion of a pre-existing business": Grand Valley Ready Mixed, supra.

119. The Board has, as well, been sensitive to the fact that what is critical to the concept of a "business" may be idiosyncratic to an industry. For example, a licence to operate a nursing home was regarded as a critical indicator of a "sale" in Caresssant Care, supra. In the retail food indus­try, location has traditionally been regarded as an important element: Penny Lane, supra; Canada Safeway, supra. Location has not been considered conclusive of the issue in the face of other fac­tors, such as, a lengthy closing or competition: Valencia Foods, supra; Miracle Food Mart, supra; Gilham Foods, supra. A finding of a sale where a party opened a retail food operation where a similar operation existed previously has not been automatic if the Board determined the new oper­ation was the expansion of a pre-existing business: Steinberg Inc., supra. However, the Board has not readily characterized the nature of the businesses as different in the retail food industry despite a changed emphasis in that new operation: Culverhouse Foods, supra.

120. The following passage from Accomodex, supra, ably articulates the Board's concerns:

121. A "business" is a commercial vehicle which has been rationally constructed to produce cer­tain goods or services for a defined market; and, over the years, the Board has come to what might be described as an "operational" or "instrumental" interpretation of that term. In St. Leonard's Society of Metropolitan Toronto, [1993] OLRB Rep. Ian. 56, the Board put it this way:

The Board's conception of the "business" under the Labour Relations Act is an oper­ational or instrumental one. The business is not its legal envelope, nor the employees, nor some incidental or unrelated grouping of assets, nor the body of work in which employees may be engaged from time to time. It is a delivery system, an economic vehicle, an organizational means of getting something done. It is to this vehicle that bargaining rights attach and in which they continue if the undertaking or a coherent part of it is transferred to a new owner.

This also seems to be the approach taken by the Supreme Court of Canada in Syndicat national des employes de la Commission scolaire regionale de l'outaouais (CSN) v. Union des employes de service local 298 (FT Q), Bibeault et al. [1988] 2 5CR 1048 - a decision involving the successor rights provisions of the Quebec Labour Code. Beetz J. describes a business undertaking as something that "consists of a series of different components which together constitute an opera­tional entity", and "all the means available to an employer to obtain his objectives".

55. The instrumental approach to successorship suggests that bargaining rights are attached to an economic vehicle - the mechanism, resources or facilities by which the undertaking serves its purpose - rather than the purpose itself, the employees, or their work. Bargaining rights attach to the business undertaking. The Board then tries to determine, from a labour relations perspec­tive, whether the transfer and continuation of some facet or facets of that undertaking, warrants a continuation of bargaining rights - for, of course, when interpreting section [now] 64. the Board has to keep in mind its purpose and effect. The Board tries to reach a result which is fair to both the statute and the context under review - that is, a result that appears to be called for to remedy the mischief for which section [now] 64 was passed. That mischief is not the loss of work or work opportunities, but rather the disruption of bargaining rights which would flow from a change in the ownership but continuation of all or part of the elements that make up the busi­ness.

56. As a result of section [now] 64, bargaining rights are not coextensive with commercial own­ership or the continuing identity of the owner, nor does it matter how the new owner comes to have possession of the instruments necessary to carry on all or part of the functions of the prede­cessor. Bargaining rights continue with a continuation of the business undertaking or a part of it. The cases explore just what those instruments or elements of the business are, and what can be said to be the essence of the undertaking - land, equipment, location, employee skills, licences, patents, etc. They consider, from a labour relations perspective, whether a sufficiently-coherent grouping of those things has been transferred so as to warrant a continuation of bargaining rights.

57. Accordingly, in deciding whether there has been a sale of the predecessor's "business" for successor rights purposes, the Board has found it useful to consider the extent to which the vari­ous elements of the predecessor's business can be traced to the alleged successor - that is, whether there has been an apparent continuation of the predecessor's undertaking or organiza­tion, albeit with the change of owner. This "tracing" approach was considered by the Board in Culverhouse Foods Limited, [1976] OLRB Rep. Nov. 691 (application for judicial review dis­missed January 18, 1979) where the Board listed some of the factors which might be significant in deciding if there had been a transfer of the predecessor's business:

In each case the decisive question is whether or not there is a continuation of the busi­ness ... the cases offer a countless variety of factors which might assist the Board in its analysis; among other possibilities the presence or absence of the sale or actual trans­fer of goodwill, a logo or trademark, customer lists, accounts receivable, existing con­tracts, inventory, covenants not to compete, covenants to maintain a good name until closing or any other obligations to assist the successor in being able to effectively carry on the business may fruitfully be considered by the Board in deciding whether there is a continuation of the business. Additionally, the Board has found it helpful to look at whether or not a number of the same employees have continued to work for the successor and whether or not they are performing the same skills. The existence or non-existence of a hiatus in production as well as the service or lack of service of the customers of the predecessor have also been given weight. No list of significant considerations, however, could ever be complete; the number of variables with poten­tial relevance is endless. It is of utmost importance to emphasize, however, that none of these possible considerations enjoys an independent life of its own; none will nec­essarily decide the matter. Each carries significance only to the extent that it aids the Board in deciding whether the nature of the business after the transfer is the same as it was before

58. If many of the elements that made up the predecessor's business organization can be found in the hands of the successor, and are used for the same business purposes, there is an inference that there has been a transfer of a business to which section [now] 64 applies. The more the transferee's ability to carry on his business is derived from or dependent upon things acquired from the proprietor of the predecessor business, the stronger the inference will be - particularly if the predecessor has ceased to carry on its business or has withdrawn from the relevant market. Continuity of the economic mechanism or vehicle points towards a "successorship" within the meaning of the Act - which is to say the application of a provision that results in a continuation of the institutionalized collective bargaining relationship. The issue before the Board, of course, remains whether there has been a transfer of a "business" or "part" of a business within the meaning of section [now] 64; but it is much easier to make that finding, with the result that the collective bargaining relationship will be continued, if there is a substantial continuity of the other elements of the predecessor's business organization.

59. As might be expected in a labour relations statute, the Board pays particular attention to the "character" of the business (a matter referred to in section [now] 64(5)) and the characteristics of the employer/employee relationship, because, from a labour relations point of view, the importance of the business is that it generates work opportunities for employees. The activities of the business require it to enter the labour market as an employer, and this, in turn, can give rise to the employment or collective bargaining relationships with which the Act is concerned, and which section [now] 64 is designed to preserve. Accordingly, in determining whether there has been a "sale" within the meaning of the Act, the Board attaches particular significance to the nature of the work performed in, and by, the business, before and after the alleged transfer. If the nature of the work performed subsequent to the transfer is substantially similar to the work performed prior to that transaction (and if the employees, or types of employees, are the same) this would normally support an inference that there has been a transfer of a business or part of a business within the meaning of section [now] 64. This approach with its focus on jobs is one that seems to have been taken by the B.C. Court in R v. B. C. Labour Relations Board ex pane Lodum Holdings Ltd. (1969) 1968 CanLII 586 (BC SC), 3 D.L.R. (3d) 41. At page 52, Dryer, 1. commented:

The importance of the 'business' in its labour relations aspect is the jobs it provides for the employees. One factor to be considered therefore, is whether the same or sub­stantially the same jobs are being performed. That depends on a number of factors, such as whether the jobs are being performed at the same or substantially the same times and places, in respect of the same or substantially the same goods or services, and for the same or substantially the same customers or patrons, etc. These matters are, in my opinion, more important than the form of transfer.

60. Unless there is a continuation of work and jobs, it would make little sense to preserve the collective bargaining relationship or collective agreement. Conversely, if the work, jobs, or employees are the same or substantially similar, it is easier to conclude that the transaction is one to which section [now] 64 was intended to imply - and that is especially so if the work is being performed in the same context, at the same location, with the same equipment, or in respect of the same clientele.

61. The Board has also addressed the reference in the statute to "part" of a business as included within the ambit of a "sale". The Board has determined that a commercial transaction may constitute a "sale" where a coherent and severable "part" of a business has been transferred:

Paperboard Industries, supra; Beef Terminal, supra; Vaunclair Meats, supra. In that regard, it is useful to again refer to Accomodex, supra, in the following excerpts:

64. Most of the cases under section [now] 64 involve an alleged sale of a business in its totality. Only a few consider the meaning to be ascribed to the words "part of a business". Yet those words pose much more difficulty than the term "business" itself. Almost anything actually trace­able to the predecessor could be considered "part" of its business, but it cannot have been intended that every minor disposition of surplus assets should give rise to a successorship. To accept that view, would make section [now] 64 the vehicle for extending rather than preserving bargaining rights. That is why the Board has not accepted a literal or dictionary definition of the words "part of a business" and has been much less inclined to find a successorship where the transferee already has its own existing undertaking or capacity.

65. The content of the term "part" of a "business" must be considered in the particular factual context; however, a few cases may illustrate the way in which the Board has interpreted those terms. The Board has found a transfer of "part of a business" where one of a chain of retail stores has been sold to a competitor (Loblaws Groceterias, [1973] OLRB Rep. Jan. 72, More Groceterias Limited, supra); where there was a transfer of certain milk delivery routes in a par­ticular geographic area (Borden Company Limited, [1970] OLRB Rep. Jan. 1244); where there was a transfer of the oil burner and installation service of a firm which was primarily engaged in the sale and delivery of fuel oil (Automatic Fuels Limited, [1972] OLRB Rep. May 515); where a slaughterhouse which was formerly part of a much larger integrated meat-packing company was transferred to a new owner (Beef Terminal, [1980] OLRB Rep. Aug. 1167); where the shock-absorber portion of a much larger business was transferred to a firm which leased the machinery equipment, tools and a portion of the premises used by the predecessor (Canack Shock Absorbers, [1973] OLRB Rep. Oct. 508); where a firm acquired the premises and some of the equipment used by the predecessor to produce two products which had accounted for only a small portion of the predecessor's total production (Alcan Building Products Limited, [1968] OLRB Rep. May 213); and where a firm took over some of the functions of a larger enterprise using some of the equipment, employees or a portion of the premises formerly used by the larger business to serve at least some of the same customers ( Vaunclair Meats Limited, [1981] OLRB Rep. May 581, Antonacci Clothes Inc., [1984] OLRB Rep. July 887, involving respectively a meat purveyor and a clothing manufacturer). (c.f.: Central Native Fisherman's Co-operative et al, [1977] 1 Can. LRBR 329, the British Columbia Relations Board found that there had been a transfer of a "part of a business" when a cannery which was formerly part of a much larger business organization was sold to a fisherman's co-operative.)

66. In each of these cases, the Labour Relations Board found that the predecessor had transfer­red a coherent and severable "part" of its economic organization - managerial, or employee skills, plant, equipment, know-how, or goodwill - thereby allowing the successor to perform a definable part of the economic functions formerly performed by the predecessor. This new economic organization undertook activities which gave rise to employment, and the terms and conditions of employment, together with the union's right to bargain about them were pre­served. The "part" of the predecessor's business which it no longer wished to continue, pro­vided the business opportunity which the successor was able to pursue to its own advantage.

67. In all of these cases, there was a transfer of a distinct part of the predecessor's configuration of assets or capacity to carry on business, and no material change in the character of the work performed by the employees within that asset framework. There was a continuation of the work performed, the essential attributes of the employment relationship, and the skills of the employ­ees; and, but for section [now] 64, the established bargaining and collective bargaining rights would have been lost. This was the mischief to which section [now] 64 is directed, and the Board was satisfied on the evidence in each of these cases that it should be applied.

68. The instant case raises a rather novel twist on the existing jurisprudence. A & P expressly agreed in the transaction documents that it was a successor employer pursuant to the Act with respect to the stores it acquired as a result of the asset purchase agreement. The stores employees continued in their employment and continued to be represented by their bargaining agent; the terms and conditions of their employment continued pursuant to their collective agree­ment. There is no doubt that the transaction would be characterized as a "sale" of those retail stores within the meaning of the Act. What is asserted is that A & P also acquired the distribution operation.

69. Counsel for the individual complainants contended that, while the "bricks and mortar" were not purchased and while the distribution operation could be a "stand alone" segment, that was not so in the instant case given Steinberg's description of its retail food business as an inte­grated operation. Further, counsel pointed to the purpose of the statute of preserving bargaining rights and the fact that A & P supplied the former Steinberg stores through its distribution centres. Counsel for the Teamsters concurred with those submissions and emphasized that, here, the distri­bution centres operated as an integral part of the entire business.

70. The Board does not agree. The essence of the argument is that the Steinberg retail food operation must be taken as an indivisible whole. That is not consistent with the jurisprudence, sound labour relations or the facts in the instant case. The Board considers each element in turn.

71. The jurisprudence has long recognized in the retail food industry that the concept of successorship under the Act may apply to individual stores. That is, even if part of a retail "chain" operation, a company which divests itself of a single store may well be found to have "sold" a business. Indeed, the Board has not regarded such sales as "parts" of a business but as "stand alone" operations: see More Groceteria, supra, Penny Lane, supra, Canada Safeway, supra, Culverhouse Foods, supra and the cases cited therein. Where the Board has not characterized the impugned transaction as a "sale", the rationale has not been grounded on the fact that a store was not an appropriate unit for the application of the statute but on other factors: see Valencia Foods, supra, Miracle Food Mart, supra, Gil/tam Foods, supra and Steinberg Inc., supra. It is inherent in the con­cept of a "store" that a store sells items which it acquires from other sources. The fact that the stores in the cases noted must have acquired product from elsewhere was not regarded as a rele­vant, let alone determinative factor in deciding whether the transaction constituted a "sale".

72. Counsel's assertions herein would require a purchaser to acquire the entire operation of a vendor for there to be a "sale" finding. In the Board's view, the argument of counsel cannot but help call into question the existing jurisprudence which developed to give life to the statutory intention of preserving bargaining rights in the face of various commercial transactions which were tantamount to a "sale" of a business. There is no jurisprudence which would support a principle that, under the Act, a commercial transaction is an "all or nothing" disposition. Further, if counsel is correct, a company selling its operations "piecemeal" would result in a finding that the purchas­ers of each part were all found to have acquired the original business. That is, there would be mul­tiple and conflicting sale declarations. There is nothing to commend such an approach. Nor is there anything in the instant circumstances which differentiates this case conceptually from the tradi­tional approach in the jurisprudence.

73. Nor is the approach urged upon the Board consistent with sound labour relations. A "macro" approach to the definition of "sale" which would require the acquisition of an entire operation by a single purchaser would not assist in the preservation of bargaining rights and the continuation of employment opportunities. If such a buyer is not found, the entire operation may well close whereas its constituent "pieces" may be assured of a healthy future. It is in the "micro" level, through the recognition that a single store may be the subject of a "sale", that the intent of the statute is best fulfilled. Further, the inclusion of "part of a business" in the statutory definition suggests to the Board that the "micro" approach is preferable.

74. The instant facts, as well, do not support counsels' position. It is not sufficient for coun­sel to assert that Steinberg regarded its operation as "integrated" and that that fact was dispositive. Even if a company operated an integrated business, there is nothing to preclude the company deciding to sell its business, or parts of that business, to one or more purchasers. In the instant case, during negotiations culminating in the inclusion of FOS and labour peace, Ludmer empha­sized that he was attempting to persuade the Steinberg board to continue the company as a "going concern" but that, if he failed, it was likely the company would be sold off "piecemeal". It is accu­rate to note that Steinberg urged A & P to buy the entire operation including the distribution cen­tres. However, it must be remembered that such a result would have benefited Steinberg finan­cially given the structure of the pricing for the purchase; their position was not altruistic.

75. It is also accurate to note that A & P could have decided to purchase the entire retail supermarket operation, including the distribution centres. The asset purchase agreement makes clear that the distribution centres were not included in the transaction. The Board accepts that it is the substance and not the form of the transaction which is determinative. Parties cannot, merely through language in an agreement which they control, preclude a finding that the transaction con­stitutes a sale. In the instant case, A & P acquired no assets relating to the distribution centres. This is not merely a question that the "bricks and mortar" (i.e., locations) were not purchased; the equipment, truck or trailer leases, and fixtures were not transferred. A & P did purchase the inventory but this was to ensure the viability of the stores whose inventories would otherwise have been depleted of high velocity items to the detriment of customer goodwill. The inventory pur­chase does not point to the acquisition of the distribution centres.

76. A & P certainly would have to supply its newly acquired stores with produce but, in that, there is no meaningful distinction from the existing jurisprudence which, in focusing on the characterization of individual stores as "businesses" within the Act, separated those commercial units from their supply arrangements. A & P carried out that supply function from its existing dis­tribution centres. In that sense, the circumstances bear close resemblance to the jurisprudence recognizing expansions to existing businesses as outside the ambit of the sale language. In that regard, it is important to note that A & P's distribution operation differed significantly from Stein­berg's both in the organization and procedure in the warehouses and in the fact that A & P did not operate its own distribution fleet.

77. Moreover, it cannot be reasonably argued that the Steinberg distribution centres are not "stand alone" operations. Following the conclusion of collective bargaining negotiations in 1988, Steinberg took steps to expand into the wholesale business. Those have been outlined in paragraph 35 above and need not be repeated here. It is evident, from the entry of Steinberg into wholesal­ing, that the distribution centres were conceived of as fulfilling a function greater than the supply of existing Steinberg retail supermarkets. The direction in which the company was moving was to act as supplier for retail stores outside the Steinberg chain. Conversely, it is appropriate to note that it is not necessary to operate a distribution centre to supply one's retail supermarkets. The evi­dence indicates that stores may be supplied, to a greater or lesser extent, directly from suppliers and/or from wholesalers (as Steinberg itself hoped to become). In this regard, the Board finds fur­ther support in its conclusion from the decision in Great Atlantic and Pacific, supra, which dealt with the sale by Dominion to A & P of its warehousing operation. In that case, there was no ques­tion that the distribution operation constituted a "business" or "part of a business" to which the Act applied and separate from the retail supermarkets, some of which were also acquired by A & P in the same transaction.

78. One final comment is apposite. The jurisprudence has, in each case, evaluated those elements of a business which were transferred in order to determine whether or not a "sale" occurred. In the instant case, no elements of the distribution operation were acquired by A & P. What was acquired were the majority - but not all - of the Steinberg Ontario retail supermarkets. The stores did have to be supplied with product to sell. But that function, of itself, does not consti­tute the "sale of a business" where A & P chose to fulfil that function through its existing distribu­tion centres. The stores, taken together or singly, constituted the sale of a business or part of a business within the meaning of the Act. The Board is satisfied there was no sale of the distribution centres.

79. In summary, for the foregoing reasons, the Board dismisses the section 63 and 1(4) applications. Given the Board's conclusion, the Board need not deal with the arguments related to the like bargaining unit, intermingling and the appropriateness of a representation vote or the scope of those entitled to vote.

The Structure of the Asset Purchase Agreement

134. The Board next considers the allegation that the transaction was deliberately structured so as to oust the Teamsters bargaining rights. It was asserted that A & P was motivated by an anti­Teamsters animus in refusing to purchase the distribution centres and, in so doing, committed an unfair labour practice. This allegation is related to the application for a declaration of sale in that it is contended that, if the Board concludes that A & P did commit such an unfair labour practice, the appropriate remedy would include, in part, a finding of a sale even in circumstances which would otherwise not sustain such a finding.

135. Counsel for the individual complainants and for the Teamsters pointed to evidence which they submitted supported their position that the structure of the sale was motivated, at least in part, by an anti-Teamsters animus. For example, A & P did offer employment to the head office staff which were not unionized and did hire additional staff for its existing warehouses. Gaucher and Wood had a private conversation which resulted in an apparent deal to exclude the distribu­tion centres; neither Gaucher nor Wood testified. An internal A & P memo spoke of the potential negatives of introducing a third culture into the A & P distribution centres; that subject was also raised by the RWDSU in a labour-management meeting. Counsel did concede that A & P had legitimate business reasons for not acquiring the distribution centres but argued that the "taint" theory applied to colour the entire transaction.

136. The Board agrees that the applicable test is what is commonly referred to as the "taint" theory. If any part of the motive for impugned conduct is for a reason prohibited under the Act, that is sufficient to sustain a finding of an unfair labour practice. The analysis in that regard is no different from the usual unfair labour practice cases wherein the Board determines whether the reasons for conduct are impermissible. The Act proscribes conduct by an employer which, inter alia, interferes with the formation, selection or administration of a trade union or which discrimi­nates against an employee because of union membership.

137. There is a paucity of recent jurisprudence which analyses the taint theory in the context of an alleged sale of business. In Metropolitan Parking, supra, the Board noted that a sale of busi­ness finding does not depend on an improper motive as the statute is intended to preserve bargain­ing rights even in bona fide business transactions. In Metropolitan Parking, supra, the Board did comment that "collusive arrangements, or transactions explicitly designed to subvert bargaining rights have become much less common; and can, in any event, be dealt with under [the unfair labour practice provisions]. Sun Parlour Greenhouse, [1972] OLRB Rep. Jan. 94, Intermountain Industries Ltd., [1975] 1 Can. LRBR 257 (B.C.L.R.B.); Academy of Medicine, [1977] OLRB Rep. Dec. 783 and Humber College, [1979] OLRB Rep. June 520 were referred to in that context. In Academy of Medicine, supra, the Board indicated that an employer may not terminate the entire business operation if the motive for so doing contravenes the Act:

“……It is difficult to conceive of conduct more destructive of these rights [under the Act] than a permanent closure of a business, based not upon legitimate business considerations but upon an employer's simple refusal to operate with a trade union....

138. The Board commented in Kitchener- Waterloo Hospital, supra, as follows:

"42.... The form of a transaction may not be particularly illustrative of the real transaction. It is the substance of what occurred that is important. If it were otherwise, and the Board looked only to the surface details, employers would be able to structure events in legal form in a man­ner that would ensure that a 'sale' never occurred, even if in substance such a transaction had in fact resulted. Section 63 is designed to look beyond the outward structuring to the substance of the transaction, seen from the collective bargaining and labour relations perspective. It may well be, therefore, that the reasons for having made particular decisions as to the structuring of the transaction are relevant in a section 63 application in assessing the true heart and shape of the transaction. Evidence of why particular transaction events were so executed could well be rele­vant

139. One other case merits comment at this juncture. In Sunnylea Foods, supra, the Board affirmed the taint theory in examining the basis for the closing and selling of Sunnylea's business. In that case, Sunnylea had been found to have committed unfair labour practices in the context of

the certification application and the owner openly reiterated his opposition to unions. However, the Board concluded on the evidence that the sale would have occurred with or without the pres­ence of the trade union and was, therefore, only motivated by the economics of the situation.

140. The Board has noted earlier the voluminous documentation submitted in this matter. That documentation clearly supports the testimony of witnesses from A & P as to the reason for the structure of the deal. That reason is straightforward: A & P did not need the Steinberg distri­bution centres in order to service the additional stores which they hoped to acquire. A & P had 300,000 sq. ft. of unused warehouse space at its head office. The existing facilities at the West Mall and Vickers Road could be reconfigured and reorganized to handle the additional volumes. Indeed, it was this prospect of "synergies" in the acquisition of the stores and not the Steinberg distribution centres which made the deal attractive to A & P. In short, A & P's business objectives in acquiring some or all of Steinberg's retail supermarkets in Ontario were to increase A & P's presence in that geographic area, provide a third banner for its operations and enhance the utiliza­tion of its existing distribution capacity. This theme of the opportunities for "synergies" in the acquisition of retail supermarkets and not the distribution centres resonates throughout the pro­tracted negotiations between A & P and Steinberg from 1988 to the conclusion of the transaction in July 1990 and is consistent with the filings with government review bodies.

141. Further, that conclusion is supported by the conduct of A & P following the asset pur­chase transaction. Outside storage facilities were used on a temporary basis pending the installa­tion of additional racking at the existing A & P warehouses. Existing space was reconfigured and reorganized to substantially increase capacity. Additional equipment, such as, forklift and pallet trucks, were purchased from the regular budget line. The transactions did not significantly affect prior supply arrangements except with respect to volume. The relationship between the A & P dis­tribution centres and the buying department and data processing function was not changed. The new product items were added to the existing computerized system and handled as was other prod­uct with respect to orders, selection and distribution. A & P's assessment that it did not need addi­tional warehousing capacity to service the newly acquired stores was borne out in fact.

142. The allegations ascribe anti-Teamsters motivation to the structure of the transaction. The Board intends to deal with these assertions in more detail, particularly given the applicability of the taint theory wherein legitimate business motives may yet co-exist with improper reasons for impugned conduct.

143. It is critical to note at the outset, however, that what is here alleged is not anti-union animus. A & P is a highly unionized operation; it has bargaining relationships with several unions, including the RWDSU, the UFCW and the USWA. A & P agreed throughout the negotiations that its acquisition of the stores would result in successor status with respect to those stores; A & P did not resist the continued representation of those employees by their bargaining agent or the continued application of the collective agreements. With respect to the anticipated new hires in the A & P warehouses, A & P recognized that those employees would be members of the full-time or part-time bargaining units and represented by the RWDSU. In the Board's view, this is a signifi­cant difference between the instant case and the context in which the jurisprudence has developed.

144. The Board intends to briefly review the negotiations sequence to determine whether that evinces an anti-Teamsters animus. In the Spring of 1988, A & P made several proposals to Steinberg for its Ontario retail supermarkets. One proposal included "dead rent" for the distribu­tion centre facilities for a one year period to increase the attractiveness of A & P's offer; A & P would not operate the distribution centres. A joint venture proposal with another company would have taken all the Steinberg retail supermarket operation, including the distribution centres, in Ontario and Quebec. In that offer, A & P would have taken some of the stores in both Ontario and Quebec plus the Quebec distribution facility. The explanation given, that, if A & P was to enter the Quebec market, a Quebec distribution centre was needed, is rational and consistent with the other evidence. All of those proposals were rejected by Steinberg; the company was taken "out of play" in July 1988. There is nothing in the negotiations in this period which sustains the allega­tions.

145. In July 1989, in the midst of the take-over bid by Socanav, Gaucher was approached by A & P expressing interest in the Ontario retail supermarket operations. A letter indicating that A & P was prepared to be flexible in its position cannot reasonably be read to sustain a conclusion that A & P was prepared to take the distribution centres in the face of its continued assessment that such were not needed. In any event, this approach was rebuffed by Gaucher. There is no anti-Teamsters animus in this time frame.

146. In early 1990, in response to increasing pressure from the financial institutions, Gaucher was forced to consider the disposition of the Ontario retail supermarket operation. Negotiations between A & P and Gaucher/Steinberg resumed. The form of the negotiations was dictated by Gaucher's concerns for confidentiality; it is for this reason that the conversations excluded A & P Canada and involved a private meeting between Wood and Gaucher. As a result of that meeting, it appeared that a deal had been struck whereby A & P would take the head office employees (in addition to the majority of the store locations) but not acquire the distribution centres.

147. Counsel for the individual complainants and for the Teamsters emphasized this result as indicative of anti-Teamsters animus. The Board disagrees. A & P had legitimate business reasons for not wishing to acquire the distribution facilities; their position had been consistent from the ini­tial negotiations with Steinberg in 1988. A & P testified as to its reasons for modifying its position with respect to the head office employees. The agreement permitted A & P to draw upon a consid­erable pool of managerial talent; A & P could selectively choose from amongst that pool, plus the clerical staff, to fill its needs. That aspect of the asset purchase provided advantages to both A & P and Steinberg. A & P could pick and choose amongst those employees so as to best satisfy its needs at a cost of assuming the severance obligations of those it rejected. In fact, approximately, one-half of those employees were subsequently terminated. For Steinberg, there was the release of its obligation to pay the requisite severance. The head office facility itself was not acquired by A & P. There is nothing sinister in A & P continuing to resist acquiring unneeded warehouse facilities or in resisting the assumption of the severance obligations with respect to the employees in the dis­tribution operation. Resisting an increased purchase price (through the assumption of unneeded assets or severance for persons employed in that unneeded operation) cannot reasonably be equated with or indicative of anti-Teamsters animus.

148. The Board is satisfied that, given that the impetus for confidentiality originated with Gaucher and given the legitimate business reasons which underlay A & P's consistent position with respect to the warehouses, there is no negative inference to be drawn from the fact that Wood did not personally testify with respect to the private conversation with Gaucher. The apparent deal which resulted from the conversation was adequately explained by senior personnel from A & P and is consistent with the weight of the documentary evidence.

149. Moreover, that apparent "deal" in the Spring of 1990 fell apart as the parties were unable to agree with respect to price. The formula for calculating price had been agreed to but Steinberg persisted in attempting to include the warehouse facilities in the package for purposes of price; A & P continued to resist the inflated price for the retail stores which would have resulted. The letter from Wood to Gaucher dated April 2, 1990 and set out in paragraph 54 illustrates the level at which negotiations were conducted. The critical factors were "multiple of book values", and "multiple of earnings" (including "post tax earnings") with A & P assuming the liability for the office and the administrative organization. The focus was on that level of "multiples" of vari­ous indicia and "liability for the office and administrative organization" (with respect to severance for employees not retained). This is far removed from anti-Teamster animus as a motivation for the structure of the deal. And, as noted, the "deal" fell apart. When the negotiations resumed in July 1990, Socanav initially continued its position regarding the inclusion of the warehouse assets in the book value but ultimately acceded to A & P's position on pricing.

150. The Board intends to deal next with the three documents adverted to by counsel in sup­port of the unfair labour practice allegations. It is accurate to note that, at a labour management meeting, the RWDSU communicated concerns expressed by some of its members with respect to the hiring of Steinberg employees. Management's response was that those persons would be treated in the same way as other applicants. There is nothing in this which assists the allegations. The overview of alternative labour strategies in March 1990 consists of an objective assessment of the advantages and disadvantages of offering employment and concludes with a recommendation that the advantages outweigh the disadvantages. It is difficult to derive an anti-Teamsters animus from this; in a document which focused on labour strategies, there is a conspicuous absence of anti-Teamster motivation. That the recommendation was not accepted does not prove the allegations given the over-riding objective to secure the retail stores and the absence of need for additional warehouse facilities; the consistency of the weight of the documentary evidence and the oral testi­mony supports a conclusion that the deal was not structured to negate the bargaining rights of the Teamsters. Finally, in that regard, it appears that the document in question was not forwarded to the senior executives of A & P (U.S.) who conducted the negotiations until months after the apparent "deal" was struck in early 1990.

151. The internal document which characterized the Teamsters collective agreement as a negative must be placed in context. On its face, the document only obliquely refers to the Team­sters contract under "other". Its placement follows an extensive listing under "rents" and a section on "equipment". The category "other" includes notations that the meat operation is non-economic and has union bumping rights to the stores, the office facility is redundant and the grocery ware­house is redundant, all prior to the Teamsters reference. The "union bargaining rights" noted are not those of the Teamsters. The document then has an abbreviated reference to "Combines Act", "support" and "transportation". Byars testified with respect to the document. The notes are his and were prepared shortly after the receipt of the McLeod Young Weir offering circular in 1988. Byars followed the circular format and jotted down his thoughts. He stated that his concern arose from the fact that the RWDSU recognition clause covered that same geographic area. Byars evi­dence was not shaken on that point and is consistent with the format of the document itself. The Board accepts the explanation for the reference and is satisfied that there is demonstrated no anti-Teamsters animus in that reference.

152. Several other matters must be noted with regard to the alleged anti-Teamsters animus. A & P did not acquire the warehouse, transportation and maintenance operations; the UFCW and not the Teamsters represented the maintenance employees. Thus, even on its face, the deal did not result in the termination of only members of the Teamsters bargaining unit. While the "non-union­ized" employees at head office were offered employment by A & P, that was done only to permit A & P to select from that pool of employees those who best fit the A & P operation; approxi­mately one-half were subsequently terminated. Thus, again, others beyond the Teamsters bargain­ing unit members had their continued employment affected as a result of the transaction.

153. While an anti-Teamster animus was asserted, there was an absence of evidence as to why there should be such an animus. There were references by counsel to the Teamsters "reputa­tion" but, significantly, there was no evidence of any animosity between A & P and the Teamsters even though A & P (U.S.) has collective bargaining relationships with that union. The Teamsters would be reasonably expected to be in a position to call such evidence if it existed. The Teamsters were characterized by one A & P witness as effectively representing their members. That descrip­tion is a long way from evincing an anti-Teamsters animus. As noted, the instant allegations are not like the general "anti-union animus" cases; A &P is a highly unionized environment. The other unions with which A & P has mature collective bargaining relationships include the UFCW, the RWDSU and the USWA. None of those organizations may be described as "company unions". The Board is not prepared to assume that the Teamsters are any more effective at representing their members than are those other trade unions. In the context of an asserted animus against a specific trade union, there must be cogent evidence of that specific proposition. In the instant case, there was no such evidence.

154. In the Board's view, the evidence amply justifies a conclusion that there was no anti-Teamsters animus in the structure of the transaction. The Board has examined the substance of the transaction and the proffered explanations for the structure of the asset purchase agreement in the context of the documentary material, the credibility of the witnesses and the taint theory. The Board is satisfied that the only reasons for the exclusion of the Steinberg warehousing and trans­portation operations from the transaction were the business reasons asserted by A & P that those operations were not needed. In reaching its conclusion, the Board has considered the matters noted in this section and both separately and in conjunction with the allegations dealt with under the hiring of additional warehouse employees.

The Hiring of Additional A & P Warehouse Employees

155. The Board approaches the issue of the hiring by A & P in the context of the taint theory and, as in the just-noted section, considers the evidence with respect to the hiring separately and in conjunction with the issues regarding the structure of the transaction. The Board is cognizant of the fact that it may well be that it is only taken together that the evidence would sustain the allega­tions.

156. The relevant jurisprudence need only be adverted to briefly. In Metropolitan Parking, supra, the respondent received applications and conducted interviews but then ignored evidence of past experience, qualifications and references and selected at random from amongst the applica­tions. The Board had no difficulty in concluding that the conduct of the respondent constituted an unfair labour practice. The Board determined that the respondent resorted to an irrational selec­tion process since consideration of relevant experience and qualifications would have resulted in the hiring of a substantial number of the employees of the prior contractor. While the Board acknowledged that the respondent was entitled to hired a qualified work force and to unilaterally set terms and conditions of employment, the Board emphasized that the respondent, in so doing, was not entitled to exclude persons for reasons of an anti-union animus. To similar effect, is the decision in Sunnylea Foods, supra, wherein the Board determined that the respondent's hirings were influenced by the trade union affiliation of the former employees; see also, Daynes Health Care, supra. Likewise, in Kit chener-Waterloo Hospital, supra, the Board concluded that the hospi­tal had altered its position with respect to giving preference to the nurses only because it was felt that the fact of their unionization would create administrative problems. The employment decision turned on the union membership of the nurses, contrary to the rights conferred by the Act.

157. It is also useful to note the decision in Metropolitan Life, supra, where the Board, in dealing with the allegation of discrimination against union members in hiring, found that the respondent followed its usual policy in advertising for new hires and utilized its own hiring criteria. The Board concluded that there was a "conspicuous absence of evidence" of the employees of the former contractor agreeing to the respondent's terms of employment but having their applications refused. The Board did not consider that the continuation of the respondent's existing hiring prac­tices was improper and did not infer an unlawful motive in the failure to make a "special job offer" to those employees of the former contractor.

158. One final decision is helpful before turning to the instant facts. In New Holiday Tavern, supra, the successor employer was not bound by the conditions of employment in the expired col­lective agreement because of the timing of the sale. Further, the Board determined that, for there to be a contravention of the Act through hiring practices which discriminated on the basis of union membership, there must be applications for employment from the individuals. To paraphrase the statute, for there to be a "refusal to employ" for reasons proscribed by the Act, there must be an "application for employment". The Board returns to this issue infra.

159. The Board first deals with the A & P hiring process. It is not intended herein to do more than touch upon the relevant factual findings. A & P anticipated hiring additional employees to handle the increased volumes resulting from the acquisition of the majority of the Steinberg store locations in Ontario. The documentary and viva voce evidence indicated the numbers of new employees, by classification, which were anticipated in the various distribution facilities. The evi­dence indicated a training period would be required. The actual process followed, including the time lines, closely followed the planning exercise.

160. At first blush, it might seem puzzling as to why the Steinberg warehouse personnel were not simply "moved over" to A & P. There is no suggestion that the Steinberg warehouse employ­ees were other than a trained and competent work force. However, several factors complicated a "first impression" solution to A & P's increased hiring needs. The Board regards those factors as the real reasons for the eventual placement of only a handful of Steinberg employees in the A & P warehouses. The Board is satisfied that the fact of the trade union affiliation of the Steinberg ware­house employees played no part in the process.

161. The Steinberg employees were required to remain at the Steinberg distribution centres until the closing of the asset purchase agreement. Then, at the moment of closing, A & P had to assume the responsibility of supplying the newly acquired stores. This reality flowed solely from the nature of the commercial transaction and the respective obligations of the vendor and pur­chaser. Under the agreement, Steinberg was obligated to maintain the stores until closing accord­ing to "normal business practice". A & P, to ensure there was no depletion of high velocity items in the interim period before closing, purchased the inventory. As of the closing date, A & P had to have in place a trained work force ready to carry out substantial additional responsibilities. In those circumstances, it was reasonable and necessary for A & P to commence the hiring process well in advance of closing. One significant complicating factor, then, was the conflict between the A & P imperative of hiring before the Steinberg warehouse employees would be available. Even if it was possible to schedule training around the Steinberg warehouse employees' shift schedules, the operation would have been complex. More critically, there is no basis in the statute for imposing such a requirement on A & P where A & P was not a successor employer in respect of the Stein­berg warehouse employees. In the Board's view, A & P acted solely from business imperatives and not to penalize the Steinberg warehouse employees because of their union affiliation.

162. While it was open for Steinberg distribution centre employees to leave Steinberg before the closing date, their reasons for not doing so are eminently understandable. At Steinberg, the warehouse employees held full-time positions at relatively high wage rates. At A & P, the openings were for part-time positions for substantially less remuneration. In the early rounds of hiring, new part-time employees were informed that, if their probationary period was successful, there was a good likelihood of their achieving full-time status following the closing date. However, the pros­pect of part-time status with the possibility of full-time later on was far less attractive than remain­ing at the Steinberg warehouses until closing. Unfortunately, by that point, the bulk of the full-time positions were filled and, essentially, only part-time personnel were needed.

163. The requirement of immediate availability was standard A & P practice. Further, the existence of a training period was usual and, in the circumstances, not unreasonable. While the Steinberg distribution centre employees were familiar with their operation, the evidence indicated that the A & P operation differed significantly. Although the function of both warehouse opera­tions was the same, the process by which the functions were carried out differed. Thus, there is no doubt that the Steinberg warehouse personnel would have required training. Whether or not they would have been "more quick on the uptake" is uncertain but, even if so, there is no reasonable basis on which to conclude that the Steinberg warehouse employees should have been treated pre­ferentially, with respect to availability and training requirements, in contrast to other applicants.

164. A further complicating factor was the existence of the RWDSU collective agreements to which A & P was bound. The full-time agreement required that new vacancies first be posted in that unit. That is not an unusual type of provision in a collective agreement and is designed to ensure existing employees have an opportunity for promotion to preferable job classifications. In the instant case, that posting process was followed and resulted in the filling of all positions except those for order selectors. The collective agreements required that preference for full-time positions then be given to those in the part-time bargaining unit. That, again, may not be described as uncommon. The internal posting process occupied several weeks and was detailed earlier.

165. That procedure - required by the RWDSU collective agreements - negatively impacted on new applicants and especially the Steinberg warehouse employees. One result of the internal postings process was that the preferable (and higher paying) job classifications were not available to the new hires. Only order selectors were needed. For the Steinberg distribution centre person­nel in particular, this added to the unattractiveness of the advertised positions. As well, the signifi­cant numbers of internal transfers increased the complexity of the training period. That is, A & P not only had to train the new hires but also the internally transferred employees. The Board is per­suaded that the training period outlined in the documentary evidence was not inappropriate in the circumstances and was not designed to thwart the hiring of the Steinberg employees of the distribu­tion facilities.

166. The Board accepts the testimony of the A & P witnesses that the union affiliation of the Steinberg distribution centre employees was not taken into account. That evidence was credible, in part, because of its consistency with the documentary material. At a labour management meeting, when the RWDSU representatives expressed concerns of some of their members regarding the hir­ing of Steinberg employees, A & P management responded that applications from Steinberg ware­house personnel would not be treated differently. In fact, there is no evidence that they were treated differently; there is no doubt that those applications were not treated preferentially (see below). However, that lack of preferential treatment is not contrary to the Act.

167. The Board concludes that the application and training process was in conformance with the usual approach of A & P to hiring. In the Board's view, there is no basis in the Act for requir­ing A & P to depart from its usual practice in that regard. The process followed cannot reasonably be described as a sham or charade intended to keep out the Steinberg warehouse employees.

168. The Board next returns to the issue of the dearth of applications from Steinberg ware-

house employees. In the Board's opinion, this is not merely a matter of mitigation, as asserted by Teamsters counsel. For there to be an unfair labour practice, there must be applications or other compelling evidence that the Steinberg warehouse employees wanted the available jobs at A & P and the failure to hire those persons in circumstances which reasonably supports an inference the decisions were motivated by their trade union affiliation: see New Holiday Tavern, supra. In the face of an open advertising process, there was a marked lack of interest expressed by the Steinberg warehouse employees. Although their reasons may well have beei'i understandable (see paragraphs 162 and 165), the result is the absence of evidence supporting the allegations. The Board does not consider the evidence of several of the individual complainants to the effect that a "security guard" told them the Steinberg was not receiving applications at that point as demonstrating an anti-Teamsters animus. Those hearsay comments are consistent with the evidence of A & P witnesses that there was a lull in the applications process until the company had a better "take" on the num­bers hired, their likely retention figures and the numbers of additional employees needed. The Board is not prepared to infer a sinister motive in the temporary hiatus in accepting applications given the complexity of the internal and external posting and hiring process outlined above.

169. Likewise, the testimony of Ricchio that he was told that all Steinberg applications were being put to one side is consistent with the evidence of A & P's witnesses that all applicants who indicated on their applications that they were not immediately available for work were told that their applications would not be processed further until they informed A & P that they were so available. The "set aside" comment, in the Board's view, was not predicated on the applicant's sta­tus as a Steinberg warehouse employee but on the fact that those employees, for understandable reasons, chose to continue at Steinberg until the closing date and, hence, were not immediately available for employment. Applicants with no Teamsters affiliation but who were not immediately available for employment were treated in similar fashion by A & P.

170. The letter of October 12, 1990 from Dunne to Investment Canada is to similar effect. Dunne comments on the unfortunate situation of the Steinberg warehouse personnel but notes that, to date, one twenty-four of those persons had applied for employment at A & P and "none of them were prepared to accept immediate employment with A & P and prejudice their Steinberg severance arrangements".

171. The data regarding the applications and their disposition indicated that, of the 275 applicants as of September 4, 1990, 254 received interviews and 56 were hired. By the end of Sep­tember, another 90 of 450 applicants were hired (the figures are approximate). Open houses were scheduled for October 5 and 9 and another 105 interviews were scheduled for that week. Hiring dropped off dramatically during October and November 1990 and continued at a low level in December and the new year as well. By February 28, 1991, the totals were 1598 applicants and 422 hires (some hires were to replace attrition and dismissals during the probationary period).

172. The documentation also indicates that, of approximately fifty applicants from persons at the Steinberg distribution facilities, some thirteen were employed by A & P as of January 1, 1991; two of those quit by January 17, 1991. Of those thirteen, two were full-time probationary and nine were part-time probationary at that point. Of those applying, eleven indicated that they were only interested in full-time work and seventeen were not followed through on for a variety of reasons (including the wrong phone number or no phone number on the application, not available for med­ical reasons, failed to show up for an interview, worked as a driver or in accounting, were to con­tact A & P in January, etc.).

173. The Board regards the circumstances herein as resembling those in Metropolitan Life, supra, in that the gravamen of the complaint is that A & P did not make special arrangements to hire the Steinberg warehouse personnel or give preference in hiring to those employees. A & P is not a successor employer with respect to the Steinberg warehouse facilities; if such had been the case, A & P would have been bound by the extant collective agreement unless and until the Board declared otherwise. In the absence of a successor employer situation, A & P was not obligated to offer employment to the Steinberg distribution centre employees provided that A & P conducted its hiring without discriminating against those Steinberg employees because of their union affilia­tion. The Board is satisfied that A & P followed its usual hiring process in accordance with its obli­gations under the full- and part-time collective agreements with the RWDSU. In following that process, A & P did not discriminate against the Steinberg warehouse employees. The statute does not impose any greater obligation.

174. The Board does not consider the evidence that a Steinberg warehouse employee was given the "cold shoulder" when he approached Wilson Transport for employment as relevant; Wil­son Transport is an independent company not a party to these proceedings and against whom no allegations of impropriety have been made.

175. Having regard to the foregoing, the Board dismisses the unfair labour practice allega­tions with respect to the hiring of additional warehouse employees by A & P. As noted, although the Board has not here reiterated its analysis with respect to the structure of the transaction, the Board also has considered together the evidence relevant to both unfair labour practice allega­tions. The Board has concluded that the allegations are not sustained on that evidence. In the cir­cumstances, the Board need not deal further with the complex issues involved in the appropriate remedial relief if the unfair labour practice allegations had been sustained.

Conclusion

176. The Board, in its foregoing analysis, has carefully considered the evidence, both docu­mentary and viva voce, in the context of the able and thorough submissions of counsel. The Board is satisfied that the allegations impugning the negotiations between Steinberg and the Teamsters, the structure of the asset purchase agreement and the hiring by A & P of additional employees in its distribution facilities should be dismissed. The Board is further satisfied that the applications pursuant to sections 63 and 1(4) should be dismissed as well.

CONCURRING OPINION BOARD MEMBER R. R. MONTAGUE; October 2, 1995

1. I concur with the legal conclusion reached in the majority's decision, but in my humble opinion feel that it is morally wrong.

2. The parties could have and should have been made to find an amicable way of integrat­ing these fully experienced warehouse workers, at the very least into "job offers" in the opera­tional scheme of the deal, thus going a long way to help, and I quote:

"promote harmonious labour relations, industrial stability and ongoing settlement of differences between employers and trade unions".