Labourers International Union of North America, Local 183 v. Ferretti Forming Inc., 1996 CanLII 11180

[1996] OLRB REP. FEBRUARY 66

0887-92-R Labourers International Union of North America, Local 183, Applicant v. Ferretti Forming Inc., Fer-Pal Construction Ltd., Responding Parties v. Inter­national Union of Operating Engineers, Local 793, Intervenor

BEFORE: Ken Petryshen, Vice-Chair, and Board Members F. B. Reaume and C. McDonald.

APPEARANCES: S. B. D. Wahl, A. Dionisio, Keith B. Cooper, Frank Palazzolo and Tony Candi­ano for the applicant; C. E. Humphrey and Paul Ferretti for the responding parties; David Watson and Gail Jacklin for the intervenor.

DECISION OF THE BOARD; February 23, 1996

1This is an application in which Labourers International Union of North America, Local 183 ("Local 183") seeks relief under section 1(4) and what is now section 69 of the Labour Rela­tions Act, 1995. During his opening statement, counsel for Fer-Pal Construction Ltd. ("Fer-Pal") and Ferretti Forming Inc. ("Ferretti Forming") denied that a sale of a business had occurred and conceded that the three pre-conditions to granting section 1(4) relief were present in the circum­stances in this case. The focus of the evidence and the representations of the parties therefore was on Local 183's claim that the Board should exercise its discretion by declaring Ferretti Forming and Fer-Pal to be a single employer within the meaning of section 1(4) of the Act.

2Paul Ferretti, the key figure in the operation of Fer-Pal, has considerable experience in the construction industry. While employed with the Cliffside Pipelines, he worked initially as a construction labourer and eventually became an assistant superintendent. After leaving Cliffside Pipelines, Paul Ferretti and his father operated R & N Excavating. Paul Ferretti and his wife Anna Ferretti incorporated Fer-Pal in 1986. Paul Ferretti initially planned to go into business with Tony Palazzolo but Mr. Palazzolo experienced family difficulties which prevented him from developing a business relationship with Paul Ferretti. The "Pal" in Fer-Pal is a reference to Tony Palazzolo. The funds for the incorporation of Fer-Pal and for its operation came from Paul and Anna Ferretti. During the relevant period, Fer-Pal was owned by two holding companies. Seventy-two percent of the shares are owned by Ferretti Investments Limited which is owned by Paul and Anna Ferretti. The remaining twenty-eight percent of the shares are owned by Gavia Limited which is owned by Shaun and Rosemary McKaigue. Paul Ferretti and Shaun McKaigue manage Fer-Pal on a day-to-day basis. Paul Ferretti handles the bidding process while Shaun McKaigue primarily looks after the on-site construction.

3Fer-Pal provides on-site services for industrial buildings. Fer-Pal engages in the excava­tion of and pouring of footings, and the installation of storm sewers, sanitary sewers and water­mains. Fer-Pal also performs grading for roads, and installation and compacting relating to sewers. In 1992, Fer-Pal began the relining of waterlines. Fer-Pal purchased the equipment to engage in the relining work from the liquidators of Clearline Cement Line Inc. ("Clearline"). An Order of the Ontario Court (General Division) ordered that Clearline be liquidated and dissolved. The Board is satisfied that Fer-Pal's purchase of this equipment did not result in the sale of Clearline's business or a part thereof to Fer-Pal. Fer-Pal merely bought some assets. Fer-Pal's level of business has ranged between $600,000 per year in its formative stage and $2,000,000 recently.

4Fer-Pal has a bargaining relationship with the International Union of Operating Engi­neers, Local 793 ("Local 793"). Subsequent to the commencement of this proceeding, Local 793 attempted to intervene in this case. In a decision dated February 28, 1994, the Board ruled that Local 793 did not have status to intervene in this proceeding.

5Ferretti Forming was incorporated in May, 1990 and is owned sixty percent by Fer-Pal and forty percent by Danny Ferretti, the brother of Paul Ferretti. Prior to the formation of Ferretti Forming, Danny had been employed as a carpenter by a number of firms to form and pour vaults for public utilities such as Bell Telephone and Ontario Hydro. Paul Ferretti testified that he assisted in the formation of Ferretti Forming in order to help his brother who was unemployed at the time. The work of Ferretti Forming has been primarily the forming and pouring of vaults for public utilities. Since its formation, its annual business has ranged between $130,000 to $180,000 per year.

6Although the President of Ferretti Forming, Paul Ferretti is not involved in the day-to­day management of that business insofar as it relates to utility work. Danny prepares the bids for the utility work and gives them to Paul or Anna Ferretti to write up and to fax the bids. Paul testi­fied that he and Anna, who is the receptionist and does the payroll for Fer-Pal, provides this kind of assistance to Danny since Danny has little formal education in Canada. Ferretti Forming uses the same office as Fer-Pal as well as Fer-Pal's secretary and equipment. Messages are taken for Danny and conveyed to him. Ferretti Forming stores some material in Fer-Pal's yard. Fer-Pal charges Ferretti Forming for the services it provides. Danny Ferretti has no interest in Fer-Pal nor is Danny in any way involved in the management of Fer-Pal.

7On May 26, 1991 Ferretti Forming became bound to Local 183's "Independent Utility

Agreement" ("the Agreement"). The Agreement was signed by Paul Ferretti on behalf of Ferretti

Forming and Frank Palazzolo, a business agent for Local 183 and the brother of Tony Palazzolo.

There is considerable conflict in the evidence concerning the events and the discussions which

occurred between the Ferretti's and Frank Palazzolo leading to the execution of the Agreement.

8The Ferretti's testified that there were three meetings with Frank Palazzolo. The first meeting was in late 1990 or early 1991 with Paul and Danny Ferretti. Another meeting occurred in March with Anna Ferretti and a third meeting occurred approximately a week later on February 26, 1991 with Paul and Anna Ferretti when the agreement was signed. The Ferretti's testified that they knew the Palazzolo family well and Paul indicated he knew Frank for approximately five years. The Ferretti's also testified that they did not see the draft agreement prior to the day Paul signed it. The Ferretti's also testified that all of the meetings occurred in Fer-Pal's office where there is no indication, even on its sign, of Ferretti Forming's presence. Frank Palazzolo testified that he attended two meetings in March in which all three of the Ferretti's were present and that he left a copy of the Agreement with the Ferretti's at the first meeting. Frank also testified that he did not know the Ferretti's until he met them in March 1991 and that the sign outside Fer-Pal's office did make a small reference to Ferretti Forming.

9In the first meeting and the meeting of March 26, 1991, the Ferretti's claimed that Fer­Pal was discussed. Ferretti Forming was created as a vehicle for Danny Ferretti and since Ferretti Forming was experiencing difficulty on union jobs, the Ferretti's were prepared to enter into a bar­gaining relationship with Local 183. But Paul and Anna Ferretti did not want an agreement between Local 183 and Ferretti Forming to impact on their main enterprise, namely Fer-Pal. Paul testified that he specifically asked at the first meeting with Frank Palazzolo whether the Agreement would affect Fer-Pal and he claims that Frank told him that the Agreement would only apply to Ferretti Forming and the utility work performed by Danny Ferretti. Anna testified that she raised the same issue on March 26, 1991 before the Agreement was signed. She testified that Frank again indicated that the Agreement would only cover Ferretti Forming. Frank Palazzolo testified that he asked about Fer-Pal and was told that it did not perform any work and that all the work was bid under Ferretti Forming and only it utilized construction labourers.

10The Board has carefully reviewed and weighed the testimony of Paul and Anna Ferretti and Frank Palazzolo. After having considered the general demeanour of those witnesses, their ability to relate 'the events clearly and to resist the influence of self-interest, and given what is most probable in the circumstances, the Board prefers the evidence of the Ferretti's where it conflicts in any material way with the evidence given by Frank Palazzolo.

11Counsel for Local 183 submitted that the way in which Fer-Pal and Ferretti Forming conducted business both before and after the Agreement was signed demonstrated the truth of Mr. Palazzolo's evidence, however inelegant it may have been. For us, Mr. Palazzolo's lack of elegance while testifying is irrelevant and we did not find that the actions of Fer-Pal and Ferretti Forming both before and after the execution of the 1991 Agreement provided a useful context in which to evaluate Mr. Palazzolo's version of what the Ferretti's told him. Quite simply, in light of all of the evidence, it is difficult to accept the evidence of Mr. Palazzolo as true. A number of inconsistencies between the Ferretti's evidence and Mr. Palazzolo's was not evident until Mr. Palazzolo gave his evidence-in-chief. The Ferretti's gave their evidence about the number of meetings, who was present, and when they first saw the Agreement without any suggestion in cross-examination that Mr. Palazzolo would give different evidence on these matters. The meetings between the Ferretti's and Mr. Palazzolo took place at Fer-Pal's office where there is no indication of any business activ­ity carried on by Ferretti Forming. Although the Ferretti's deny it, Mr. Palazzolo suggests that he asked about Fer-Pal and was merely told that Fer-Pal was not doing any work and all of the con­struction labourers' work would be performed by Ferretti Forming. On his own evidence, Mr. Palazzolo does not make any further inquiries about Fer-Pal. He apparently does not ask what work Fer-Pal performed in the past, whether it would start operating in the near future or what was the operating relationship between Fer-Pal and Ferretti Forming. One would reasonably expect that an experienced business agent such as Mr. Palazzolo would have made such inquiries and others if he had any concern at the time about Fer-Pal, particularly when he claims that he did not know the Ferretti's prior to March 1991. The fact that such inquiries were not made is an indi­cation that Mr. Palazzolo's version of the discussion is not credible. Although a small point, Mr. Palazzolo's insistence that the sign outside Fer-Pal's office referred to Ferretti Forming while all the other evidence suggests otherwise, is reflective of a number of concerns we had with his evi­dence.

12The Board accepts the Ferretti's version of what occurred. Ferretti Forming was formed in order to assist Danny Ferretti in obtaining the work of forming and pouring utility vaults. The Ferretti's initiated the effort to obtain an agreement with Local 183 in order to give Danny Ferretti access to union jobs. The Ferretti's made contact with Frank Palazzolo, someone they knew, who told them that Danny could continue performing his utility work and the Agreement was eventu­ally executed. Frank Palazzolo knew the work Ferretti Forming performed and indicated to the Ferretti's that the Agreement would not have an impact on Fer-Pal. The Ferretti's did not advise Mr. Palazzolo that Ferretti Forming would bid all of the Ferretti's work and only it would use con­struction labourers. The Board is satisfied that in March, 1991 Local 183 obtained bargaining rights for Ferretti Forming and not for the entire business enterprise of the Ferretti's.

13The Board heard considerable evidence about a number of jobs in which Fer-Pal and Ferretti Forming were involved subsequent to the execution of the Agreement. We do not propose to review the evidence concerning these jobs in detail. The Board agrees with the assessment of counsel for Fer-Pal and Ferretti Forming that this evidence does not disclose an erosion of Local 183's bargaining rights or a scheme by the Ferretti's to erode Local 183's bargaining rights. There is no evidence that any work normally performed by Ferretti Forming was transferred to Fer-Pal or that there was a movement of employees between the companies. During the summer of 1991 Fer­retti Forming became bound to both the Labourers and the Carpenters' Provincial Collective Agreements. It appears that work was generated by Fer-Pal for Ferretti Forming which was per­formed under the appropriate collective agreements.

14The material circumstances in this case are not unlike those in a number of cases decided by this Board where there are two related entities and one of the entities voluntarily enters into a bargaining relationship with a trade union in order to obtain work on unionized projects. In B & M Millwork Ltd., [1991] OLRB Rep. April 438, the Board describes circumstances where it is not generally inclined to exercise its discretion to grant a section 1(4) declaration. At page 445 the Board made the following comments:

34. The authorities cited for counsel by the respondents were more apposite to the circum­stances before us. The Board's decisions in Bramalea Carpentry Associates, [1981] OLRB Rep. July 844, Gerald Davidson Plumbing & Heating, [1984] OLRB Rep. Mar. 462 and Valiance & Levy Eng. Contractors Ltd., Board File No. 2403-83-M, August 16, 1984, unreported), demon­strate that the Board has not found it appropriate to make a section 1(4) declaration in circum­stances where a non-unionized company pre-exists a company which is incorporated by the same principal(s) and voluntarily enters into a collective bargaining relationship with a trade union in order to be in a position to perform work on unionized job sites, where there is no common pool of employees (as there was in Industrial Mine Installations Limited, [1972] OLRB Rep. Dec. 1029, for example) or interchange of employees between them and there is no indication that work destined for the unionized company has been diverted to the non-union company or that the non-union company has been surreptitiously used on unionized job sites to the detriment of the unionized company and the trade union..

15The facts here suggest that it would be inappropriate to exercise our discretion to grant section 1(4) relief. Fer-Pal was incorporated before Ferretti Forming and each entity performs its own type of work. Ferretti Forming voluntarily entered into a bargaining relationship with Local 183 in order to secure work on unionized projects. There is no common pool or interchange of employees. The two companies had been used by the Ferretti's in a way that has not compromised Local 183's bargaining rights. In addition, as we found earlier, the Board is satisfied that Frank Palazzolo represented to the Ferretti's at the time that the 1991 Agreement was executed that that Agreement would not have any impact on Fer-Pal.

16For the above reasons, this application is dismissed.