Hospitality, Commercial and Service Employees Union, Local 73 v. Hillside Townhouses Limited, 1995 CanLII 9944

[1995] OLRB Rep. August 1075

3154-94-R; 3409-94-R; 3842-94-R; 4243-94-U Hospitality, Commercial and Service Employees Union, Local 73, Chartered by Hotel Employees and Restaurant Employees International Union, Applicant v. Hillside Townhouses Limited c.o.b. as The Victoria Inn, Thunder Bay, Responding Party v. Hospitality, Commercial and Service Employees Union, Local 73 chartered by Hotel Employees and Res­taurant Employees International Union and Hotel Employees and Restaurant Employees International Union, Intervenor; Hillside Townhouses Limited C.O.B. as The Victoria Inn, Thunder Bay, Applicant v. The Hospitality, Com­mercial and Service Employees Union of Canada, Responding Party v. Hospital­ity, Commercial and Service Employees Union, Local 73 chartered by Hotel Employees and Restaurant Employees International Union and Hotel Employees and Restaurant Em.ployees International Union, Intervenor; Hospitality, Com­mercial and Service Employees Union of Canada, Applicant v. Hillside Town­houses Limited c.o.b. as The Victoria Inn, Thunder Bay, Responding Party v. Hospitality, Commercial and Service Employees Union, Local 73, chartered by Hotel Employees and Restaurant Employees International Union, Hotel Employ­ees and Restaurant Employees International Union, Intervenor; Hospitality, Commercial and Service Employees Union, Local 73 chartered by Hotel Employ­ees and Restaurant Employees International Union and Hotel Employees and Restaurant Employees International Union, Applicant v. Hospitality, Commercial and Service Employees Union of Canada and Don Campbell, Responding Party

BEFORE: Lee Shouldice, Vice-Chair, and Board Members O. R. McGuire and B. L. Armstrong.

APPEARANCES: W. Dubinsky and Don Campbell for Hospitality, Commercial and Service Employees Union of Canada; J. James Nyman, Ed Goralski and Denis Ellickson for Hospitality, Commercial and Service Employees Union, Local 73, Chartered by Hotel Employees and Restau­rant Employees International Union, and Hotel Employees and Restaurant Employees Interna­tional Union; no one appearing for Hillside Townhouses Limited c.o.b. as The Victoria Inn, Thun­der Bay.

DECISION OF THE BOARD; August 15, 1995

I. Introduction

1. These matters are, respectively, an application for certification, an application to com­bine bargaining units, an application for a declaration of successor status, and an unfair labour practice complaint. Each of these Board files has its genesis in an attempt by a local trade union to withdraw from its affiliation with an international trade union.

2. These matters all came on for hearing before this panel of the Board on May 17. 1995. At that time, the parties agreed to stipulate certain facts in order to argue a preliminary motion brought by Mr. Nyman on behalf of his clients. In essence, counsel asserted that there was not, at any time, a proper withdrawal by Hospitality, Commercial and Service Employees Union, Local 73, chartered by Hotel Employees and Restaurant Employees International Union (referred to in these reasons for decision as "Local 73") from Hotel Employees and Restaurant Employees Inter­national Union (referred to in these reasons for decision as "the International"). If, in fact, no proper withdrawal of Local 73 from the International had occurred, the certification application, combination application and unfair labour practice proceeding would proceed in the name of Local 73, and the successorship application would, by necessity, be dismissed. An agreed Statement of Facts was placed before the Board for the purpose of the motion, and the motion was thereupon argued by counsel on basis of the facts stipulated therein. At the conclusion of argument the Board reserved its decision.

3. By way of decision dated June 26, 1995, the Board determined that there had not been, at any time, a proper withdrawal by Local 73 from the International. As a result of that determina­tion, the application pursuant to section 63 of the Act was dismissed, and the application for certi­fication and the application to combine bargaining units are to proceed, in the name of Local 73 (now subject to a trusteeship imposed by the International). The Board determined that the unfair labour practice complaint could proceed, if desired by Local 73 and the International.

4. These are the reasons for the decision reached by the Board.

II. The Facts

5. The agreed Statement of Facts placed before the Board, for the purposes of the prelimi­nary motion, read as follows:

Statement of Facts

1. Hotel Employees & Restaurant Employees International Union (the "International") is an international trade union with approximately 300,000 members across Canada and the United States. It is affiliated with the AFL-CIO and the CLC.

2. Hospitality, Commercial & Service Employees Union, Local 73 chartered by the Hotel Employees & Restaurant Employees International Union ("Local 73") is a trade union affili­ated with & chartered by the International Union. Local 73 was granted a charter by the Inter­national on September 1, 1990. Local 73 has approximately 114 members in six bargaining units in Thunder Bay, Ontario.

3. Local 73 is governed by the Constitution of the International as well as its own bylaws. At all material times the contents of the International's Constitution & Local 73's bylaws were as rep­resented in Schedules "1" and '2" of the Intervention in Board file No. 3842-94-R (Section 63 Application) filed on behalf of Local 73 and the International.

4. A petition, signed by 90 members of Local 73 requesting Local 73's executive to hold a meet­ing to consider a resolution that Local 73 disaffiliate from the International, was presented to the executive of Local 73 on November 30, 1994 at a Special Executive Board Meeting. At this meeting, the executive decided to hold a meeting of Shop Stewards on December 7, 1994 to determine the level of support for disaffiliation and to hold a special general meeting of the membership on December 12, 1994. The petitions are at Schedule I of the Application in Board File No. 3842-94-R and the minutes of the November 30, 1994 executive meeting are at Sched­ule 2.

5. On December 5, 1994 a notice of the special general meeting was posted at each workplace and mailed by regular mail to each member of Local 73 and received by them within a day or two. No notice was mailed to the International. A copy of the notice is at Schedule 4 of the Application in Board file No. 3842-94-R.

6. Including members of Local 73's executive, 31 of Local 73's 114 members attended the special general meeting on December 12, 1994 in Thunder Bay.

7. At this meeting a motion was made to withdraw Local 73 from the International and dissolve the Local's affiliation with the International. This motion was seconded and the members were called on to vote by a show of hands but no one requested a ballot vote. The motion carried unanimously. The minutes of the December 12, 1994 special general meeting and the various motions are at Schedules 5 to 9 of the Application in Board File No. 3842-94-R. Included in these motions is a motion passed to change the name of the local from Hospitality, Commercial & Service Employees Union, Local 73 to Hospitality, Commercial & Service Employees Union, of Canada ("Hospitality Canada").

8. At a meeting held on December 15, 1995 a new constitution was adopted. Notice of the meet­ing was posted on December 13. 1995 at all workplaces and mailed to each member by ordinary mail on the evening of December 12. Twenty-three members attended and voted unanimously to accept the new constitution. Refer to Schedules 10 & 11 of the Application.

9. By letter dated December 21,1994 the International Union was advised that Local 73 had withdrawn from the International Union (attached as Schedule 14 of the Application in Board File No. 3842-94-R).

10. On November 30, 1994, an Application for Certification was filed by Hospitality, Commer­cial and Service Employees Union, Local 73, chartered by Hotel Employees and Restaurant Employees International Union for certain front-office employees of the Victoria Inn (Board File No. 3154-94-R).

11. On December 12, 1994 the Victoria Inn filed an application pursuant to the combination provisions of the Act in which it is seeking to combine the employees in Board File No. 3154-94-R with an existing group of employees for whom Local 73 has for years held bargaining rights.

12. On January 20, 1995 the Applicant in Board File No. 3154-94-R requested the Board amend the name of the Applicant Union from Hospitality, Commercial and Service Employees Union, Local 73, chartered by Hotel Employees & Restaurant Employees International Union to Hos­pitality, Commercial and Service Employees Union of Canada. The Board has not ruled on that request.

13. On February 17, 1995 the General President of the International appointed Mr. Edward Goralski as International Trustee of Local 73. To date, Mr. Goralski has been managing the affairs of Local 73 on behalf of the International.

14. The collective agreement with the Victoria Inn refers to the union party as 'Hospitality, Commercial and Service Employees Union, Local 73, chartered by the Hotel Employees and Restaurant Employees International Union".

15. On February 24, 1995 Hospitality Canada filed with the Board a petition signed by six indi­viduals indicating they wished to be members of Hospitality Canada. These signatories are employees of the Victoria Inn.

16. Hospitality Canada is not affiliated with any trade union, council of trade unions or central Labour body including the Ontario Federation of Labour, the CLC, and the Thunder Bay & District Labour Council.

17. The parties agree that the foregoing statement of facts, as set out herein, is stipulated with­out proof and only for the purpose of considering the preliminary arguments raised by Local 73 and the International Union. In the event that the Board should find, on the basis of the stipu­lated facts, if proven that Hospitality Canada would have acquired the bargaining rights of Local 73 or would be entitled to proceed with Board File No. 3154-94-R as Applicant in its own name. then the Board shall proceed with the hearing and neither of the parties are entitled to rely on any of the facts stipulated herein nor are they bound by the facts as stipulated herein except to the extent that they are proven in the course of the hearing on the merits.

For the purposes of this decision, we will refer to the Hospitality, Commercial and Service

Employees Union of Canada as "Hospitality Canada".

6. The relevant constitutional provisions of the International which governed the parties at the relevant times read as follows:

Article XI

Section 1. Issuance of Charters.

Twenty-five or more persons may apply to the International Union for a charter of affiliation as a Local Union. The application shall be accompanied by a remittance of Fifty ($50.00) Dollars. Upon approval of the General Executive Board, the charter may be granted.

Section 2. Bylaws.

(a) Local Unions shall be required to enact their own bylaws; provided, however, that such bylaws may not conflict with the International Constitution, Federal, State or Provincial laws, and are approved by the General President as provided in (b) of this Section.

(b) All Local Unions shall submit bylaws and amendments thereto to the General President for approval and these shall become effective on the date final approval is given thereof by the Gen­eral President. Such approval shall not foreclose the General President from ordering changes or elimination of provisions if at any time thereafter it is found that such provisions are in con­flict with the International Constitution or applicable laws.

Section 15. Withdrawal.

Withdrawal of a Local Union from the International Union may not take place as long as three members of the Local object.

Section 16. Defunct Locals.

(a) When the charter of a Local Union is revoked, or should a Local Union dissolve, be sus­pended, withdraw, disaffiliate or forfeit its charter, the Local Union and its officers shall be required to turn over all books, documents, property, and funds, to the International Union. Such records and property shall be held in trust until such time as the Local Union may be reins­tated or reorganized, or shall be used to organize a new Local Union.

The relevant by-laws of Local 73 which governed Local 73 at the relevant times read as follows:

ARTICLE XIII

AMENDMENTS

Section 1. All proposed amendments to these bylaws must be in writing, proposed by the Execu­tive Board or signed by fifty (50) members in good standing with the Local and read at two (2) consecutive meetings and voted upon at the second (2nd) meeting. After the first reading, the proposed amendment must be posted on the bulletin board until final action. A two-thirds majority vote of members present at the second (2nd) meeting shall be required to adopt an amendment. No amendment shall become effective until approved by the General President.

Section 2. The procedure outlined in Section 1 above shall be fully applicable to amendments providing for an increase in dues or initiation fees, except it shall require a majority vote by secret ballot on such second (2nd) meeting day after reasonable written notice of intent to vote on the increase is given to the membership. The amendment, as set forth in the notice, is not subject to change after the notice is sent.

ARTICLE XIV

INTERNATIONAL CONSTITUTION

Section 1. The terms and provisions of the International Constitution and any amendments thereto shall be binding upon this Local Union, its officers and members, as if fully set forth herein.

Section 2. Any provisions of these bylaws which are in conflict with the International Constitu­tion or Provincial or Federal law shall be of no force or effect.

III. Decision

7. In our view, the determination of the issue placed before us on the preliminary motion is governed by the decision of Stamos et al. v. Jean-Guy Belanger et al., (October 3, 1994) an unre­ported decision of Adams J. sitting in Motions Court of the Ontario Court, General Division. In Stamos, the Court was asked by the plaintiffs in two separate proceedings to grant both an interim and an interlocutory injunction against a number of individual defendants who had sought to with­draw Hotel Employees and Restaurant Employees International Union, Local 75 (hereinafter "Local 75") from the International. In the main action, the plaintiff Stamos (the trustee appointed by the International to govern the affairs of Local 75) sought an order that the defendants turn over to the International the assets of Local 75 and that the bargaining rights of Local 75 be turned over to the trustee. The defendants resisted the application, in part, by asserting that they had acted in accordance with the constitution and by-laws of the International and of Local 75, respec­tively, when withdrawing Local 75 from the International. The defence to the injunction applica­tions was that, in light of the defendants' compliance with the aforementioned constitution and by­laws, no prima facie case existed to support the ordering of an interim or interlocutory injunction.

8. In the course of rendering his decision in Stamos, Adams J. made reference to the con­stitution of the International and the by-laws of Local 75. They are, in all relevant respects, identi­cal to the constitutional provisions and by-laws which governed the rights and duties of the parties before us.

9. As noted above, Local 75 resisted the application for an interim injunction by asserting compliance with the constitution and by-laws of the International and of Local 75, respectively. Mr. Justice Adams disagreed with that assertion. At pages 39 and 40 of his reasons for decision, Adams J. notes as follows:

This brings me to the claim of the plaintiffs that proper notice of the proposed withdrawal was not given to the members. For the purposes of this case, I will accept the defendants' submission that the plaintiffs must demonstrate a prima facie or even a strong prima fade case of alleged breach given that the issuance of an interlocutory injunction could well dispose of the differ­ences between the parties. However, I disagree with the defendants that they acted in compli­ance with the constitution and by-laws of the International and the local. Indeed, I find the plaintiffs have established a strong prima facie case of the breach of fundamental constitutional provisions lying at the heart of this contractual relationship.

Article XI, Section 15, of the International's constitution embodies a fundamental guarantee. In my view, all members have an individual right to clear and specific notice of any contemplated withdrawal action. If a proposed increase in union dues attracts the special procedures of pro­posed amendments to the by-laws but with the additional requirement of a secret ballot vote, so does a proposed withdrawal. I am of the opinion it would be entirely unreasonable not to imply the most rigorous notice and voting procedures set out in the constitution. It is not surprising that those drafting the constitution of the International did not set out expressly all the rules involved in its breakup. This silence cannot be purposefully construed as an intention that the issue of a local's withdrawal might be treated as just another item of union business at a regular membership meeting. See Faulds v. Hesford 1957 CanLII 252 (BC SC), [1957] 10 D.L.R. (2d) 292 (S.C.B.C.) at pp. 306-7.

Accordingly, it was the view of Adams J. that Local 75 could not withdraw from the International without complying with the most rigorous notice and voting procedures set out in the constitution. We are of the view that these proceedings ought to be determined by reference to the decision of Adams J. in Stamos.

10. On the facts of our case, those individuals who desired to effect a withdrawal of Local

73 from the International observed a number of the notice and voting requirements contained in the International's constitution and the by-laws of Local 73. However, counsel for the Interna­tional and for Local 73 noted during argument a number of deficiencies in the notice and voting procedures adopted by those effecting the withdrawal of Local 73 which he asserted could establish non-compliance with "the most rigorous notice and voting procedures" contained in the constitu­tion and by-laws. It is evident that at no meeting where the issue of the withdrawal of Local 73 from the International was considered by the membership present was there a secret ballot vote, as compliance with the most rigorous notice and voting procedures set out in the constitution and by­laws would require. For that reason alone (and we make no comment on the other alleged defi­ciencies asserted during argument) we conclude that the purported withdrawal by Local 73 from the International was ineffective at law.

11. Counsel for Hospitality Canada submitted during argument that the decision of Adams J. was distinguishable, on the basis that the Local 75 "withdrawal" from the International was, in reality, a "palace coup", whereas the situation involving Local 73 was more properly characterized as a "membership revolt". Furthermore, counsel pointed to Article XI, Section 16 of the Interna­tional constitution, which distinguishes between the "withdrawal" of a local union from the Inter­national, and the "disaffiliation" of same, and submitted that what those who wished to leave the International really did here was to "disaffiliate" from the International. As there are no "notice and voting procedures" contained in the constitution and/or by-laws respecting "disaffiliation" from the International, the steps taken by those desiring to leave the International were sufficient to effect that desire, as they were taken "reasonably, fairly, and democratically". Finally, counsel submitted that the comments made by Adams J. in Stamos were obiter dicta, inasmuch as the issue before him was "who gets the property" rather than "who gets the bargaining rights", which is the issue here.

12. These arguments do not persuade us that the standard determined by Adams J. in Stamos, supra, ought not to apply to the circumstances of these proceedings. It does not appear to us that the notice and procedural standards determined to be appropriate by Adams J. in Stamos were necessarily founded upon the allegations made respecting a "palace coup" that permeated that proceeding. It is highly likely that the standards dictated by the Stamos case would preclude a "palace coup" from occurring in the future. However, it is not evident to us that the standard adopted by Adams J. was, in any way, limited only to those cases which can be considered to be "palace coups"; common sense would suggest quite the opposite conclusion.

13. We do not find the distinction drawn by counsel between the concepts of "withdrawal" and "disaffiliation" to be a meaningful one. It is true that the article of the International's constitu­tion referred to by counsel during argument appears to distinguish between the concepts of "disaf­filiation" and "withdrawal" from the International. That being said, it is not clear to us what dis­tinction can meaningfully be drawn between those two concepts. Counsel, in response to a question from the Board during argument, suggested that the distinction between the two concepts lies in the fact that by "disaffiliating" the local union exists as it did before, as a separate trade union, but is merely no longer affiliated with the International. What was not explained, though, is how that status differs from the same local union "withdrawing" from the International. In those circumstances, the local union which withdraws still "exists as it did before", as an independent trade union. The "before" and "after" pictures appear to us to be identical in both scenarios.

14. Even if we are wrong, however, it would appear to us that on the facts of this case those desiring to leave the influence of the International attempted to effect same by way of a "with­drawal" rather than by a "disaffiliation" as was asserted during argument. The Minutes of the meeting of Local 73, held on December 12, 1994, reflects that the following motion was made and voted upon by those members present:

15. It was moved by Tony Lillington, and seconded by Eva Tremblay that the Hospital­ity, Commercial and Services Union, Local 73, withdraw from the International and dissolve the affiliation with the Hotel Employees and Restaurant Employees Interna­tional Union and become an independent all Canadian Union which was unanimously passed.

(emphasis added)

It is apparent, therefore, that the intention of those desiring to leave the aegis of the International was to depart by way of "withdrawal". If anything, the wording of the motion (and its reference to dissolution of the local union's "affiliation" with the International) merely serves to confirm the apparent identity of concept between "withdrawal" and "disaffiliation".

15. Finally we disagree that the comments of Adams J. were made in obiter. It is evident from a plain reading of the decision that control of both Local 75's property rights and of its bar­gaining rights were in issue before Adams J. It was necessary for Adams J. to deal with the issue of proper notice to employees to reach the decision he did on the injunction applications. When deal­ing with that issue~ Adams J. determined that the constitutional provisions of the International and the by-laws of Local 75 implicitly require a certain standard of notice and voting procedures to be observed in order to effect a proper withdrawal from the International. The standards determined by Adams J. were clearly part of the ratio decidendi of that decision and there is no reason to not apply those standards to the proceedings before us.

16. For all of the above reasons, we ruled as we did on June 26, 1995.

17. The Board has received correspondence from two different law firms purporting to act for Hospitality Canada. Each has indicated a desire to request reconsideration of this decision. The Board will entertain one such request on behalf of Hospitality Canada, if filed with the Board within thirty days of the date of these reasons for our earlier decision. Should there be no request for reconsideration filed with the Board within the thirty day time period, the remaining matters in dispute will be scheduled for hearing.

18. This panel is not seized.