Labourers' International Union of North America, Local 1059 v. Ingersoll Plastics Inc., 1997 CanLII 15541

[1997] OLRB REP. NOVEMBER/DECEMBER 996

1838-96-FC Labourers' International Union of North America, Local 1059, Applicant v. Ingersoll Plastics Inc., Responding Party v. David Pentland, Intervenor

BEFORE: Russell G. Goodfellow, Vice-Chair, and Board Members J. A. Rundle and H. Peacock.

APPEARANCES: Stephen Krashinsky and Jim MacKinnon for the applicant; Andrew Camman for the responding party; E. Dempsey for the intervenor.

DECISION OF RUSSELL G. GOODFELLOW, VICE-CHAIR, AND BOARD MEMBER H. PEACOCK; December 10, 1997

1. This is an application to the Board to direct the settlement of a first collective agreement by arbitration pursuant to section 43 of the Labour Relations Act, 1995. Section 43 states in relevant part:

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

(2) The Board shall consider and make its decision on an application under subsection (1) within 30 days of receiving the application and it shall direct the settlement of a first collective agreement by arbitration where, irrespective of whether section 17 has been contravened, if it appears to the Board that the process of collective bargaining has been unsuccessful because of,

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

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

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

(d) any other reason the Board considers relevant.

Also pending is an application for termination of bargaining rights. Pursuant to a decision of a differently constituted panel of the Board, the termination application was held in abeyance pending the disposition of the first contract application. It is common ground between the parties that if the first contract application is granted, the termination application must be dismissed: see subsection 43(23).

2. The application was filed on September 25, 1996 and came on for hearing before this panel on August 11, 1997. At that time a number of preliminary issues were addressed including a request by the applicant in the termination application for intervenor status in these proceedings. The Board granted that request and, on August 12, intended to rule on an outstanding evidentiary issue before hearing the merits of the case. At the commencement of that day of hearing, however, counsel for the responding party advised the panel that it was now willing to sign, "without exception", the "proposed collective agreement that the applicant [was] prepared to sign" when it filed its updated application on March 4, 1997. The requirement for a first contract applicant to file such a document comes from Rule 67, which states:

3. An application for first contract arbitration under section [43] of the Act must also include:

(a) the date of the certificate or voluntary recognition agreement;

(b) a detailed description of the bargaining unit affected by the application;

(c) the approximate number of employees in the bargaining unit;

(d) the name, address, facsimile number, if any, and telephone number of the primary negotiator for the applicant;

(e) the date of the no-board report;

(f) the dates on which negotiations were held or scheduled to be held;

(g) a list of all documents on which the applicant intends to rely;

(h) a copy of those documents, if the applicant has them;

(i) a list of all those bargaining issues agreed upon in writing and a list of those bargaining issues that remain in dispute; and

U) a copy of a proposed collective agreement that the applicant is prepared to sign.

[emphasis added]

3. In view of its position, the responding party asked the Board to dismiss the application. This request was supported by the intervenor and resisted by the applicant. The applicant took the position that the only context in which the document that it had filed in accordance with Rule 67 could be accepted, if at all, was as part of a first contract direction. When counsel for the applicant sought clarification from counsel for the responding party as to whether the responding party would be prepared to sign the proposed agreement on those terms, responding party counsel demurred, taking the position that the application must be dismissed because the parties had reached an agreement. Counsel for the applicant replied that the only reason that the responding party was taking this position was because of its desire to see the termination application revived and its confidence that the application would now succeed. Counsel for the applicant candidly admitted that the applicant, too, was concerned about its prospects for success in the termination application, some one and one half years after it had been certified, and wished the first contract application to proceed to a hearing on the merits. After hearing these brief representations, the Board advised the parties of a very recent decision dealing with a similar issue and afforded them 24 hours to review that decision and prepare more detailed submissions.

4. The Board then heard those submissions on August 13 and summarizes them now as follows. The responding party focused on the primacy of free collective bargaining and the exceptional nature of the first contract provisions. The responding party asserted that the first contract provisions are not intended to replace the "hard work" of collective bargaining and that it is only where "the process of collective bargaining has been unsuccessful" that the provision applies: see subsection 43(2). In this case, the responding party submitted, its willingness to accept the applicant's proposed collective agreement means, both, that "collective bargaining has not been unsuccessful" within the meaning of subsection 43(2) and that the parties have been able "to effect a first collective agreement" within the meaning of subsection 43(1). The responding party asserted that it would make no "labour relations sense" to require it to defend, at great cost, a first contract application when it was now willing to accede to all of the union's collective bargaining demands. The responding party submitted that the case is on all fours with the Board's recent decision in Native Child and Family Services of Toronto, Board File Nos. 3999-96-FC and 0052-97-R, released July 29, 1997 [reported infra at p. 1032], in which the Board found that the employer's signature on the document submitted by the union in accordance with Rule 67 meant that the parties had reached a "proposed collective agreement" and that the agreement had to be submitted to a ratification vote. Although the Board merely adjourned the application in Native Child, in this case the responding party asked that the application be dismissed.

5. Both the responding party and the intervenor argued, further, that the only reason that the applicant could now wish to proceed with the first contract application was to try to avoid a negative vote in the termination application. Both parties alleged that this constituted bad faith and an abuse of the Board's processes. The intervenor submitted that the approach that the Board should adopt in cases of this kind is one that would promote negotiated, rather than arbitrated, settlements.

6. Many of the arguments advanced by the applicant were first presented in Native Child and can be examined more fully in the context of that decision. Suffice it to say that the applicant took the position that Native Child was wrongly decided and, in any event, that it was distinguishable on its facts. Fundamentally, the applicant submitted that the responding party ought not to be allowed to profit from its own wrongdoing by delaying the signing of a proposed collective agreement until after a termination application has become timely and the trade union's support in the bargaining unit has predictably eroded. Characterizing the employers' conduct in Native Child and in this case as the "next thing", counsel for the applicant submitted that this was precisely the kind of employer behaviour that the first contract provision was designed to avoid. The applicant referred to the lengthy history of the application, which was filed on September 25, 1996, and attributed the reasons for the delay to the conduct of the employer. Counsel asked, rhetorically, if the applicant's proposed collective agreement was so attractive to the employer why was it not accepted five months ago and/or if the employer's only real concern is with the cost of litigation why would it not simply consent to a first contract direction and agree that the proposed collective agreement form the terms and conditions of employ­ment. Counsel submitted that the answer can only be because of the employer's desire to see the termination application proceed and a vote held among the bargaining unit before employees can ever taste the fruits of their original choice in favour of collective bargaining. Counsel submitted that this alone is a sufficient basis for denying the responding party's request.

7. However, counsel added that what the applicant was required to file in accordance with Rule 67 was not an "offer" to the responding party in collective bargaining but a desired outcome of a first contract application. The difference, according to the applicant, is between a litigated settlement and a negotiated collective agreement. In the alternative, if such a proposal were to be construed as an "offer" made in the course of collective bargaining, the applicant submitted that it had (a) been rejected by the filing of the response and/or the responding party's subsequent filing of its own proposed collective agreement; (b) evaporated over the period of five months from the date on which it was filed; and/or (c) been extinguished by the filing of the termination application. Seeking to locate itself within the language of the Native Child decision, the applicant characterized the last two factors as "meaningful collective bargaining or litigation events" which have produced a change in circumstances.

8. In response, the responding party asserted that its reasons for accepting the union's proposed collective agreement at this date have nothing to do with the filing of the termination application and everything to do with its financial capacity, as a small employer, to continue to defend this application. If this were not the case, and the real stimulus was the filing of the termination application on April 14, 1997, it would not have waited until August 12 to accept the applicant's proposal. Counsel for the responding party characterized as "bizarro world" the spectre of an employer being required to litigate the question of whether the Board should direct the settlement of a first collective agreement by arbitration when it is willing to agree to all of the union's collective bargaining demands. Further, and in any event, both the responding party and the intervenor stressed that the "process of collective bargaining" had worked - the parties have now reached an agreement - and there is no longer any basis upon which the application can proceed.

9. In considering the parties' submissions, the Board wishes to be clear about a number of points. First, apart from the circumstances set out in subsection 44(2) a positive ratification vote is required before a "proposed collective agreement that is entered into" or a "memorandum of settlement that is concluded" can take "effect" as a "collective agreement" under the Act. Section 44 states:

10. (1) A proposed collective agreement that is entered into or memorandum of settlement that is concluded on or after the day on which this section comes into force has no effect until it is ratified as described in subsection (3).

(2) Subsection (1) does not apply with respect to a collective agreement,

(a) imposed by order of the Board or settled by arbitration;

(b) that reflects an offer accepted by a vote held under section 41 or subsection 42(1); or

(c) that applies to employees in the construction industry.

(3) A proposed collective agreement or memorandum of settlement is ratified if a vote is taken in accordance with subsections 79(7) to (9) and more than 50 per cent of those voting vote in favour of ratifying the agreement or memorandum.

The idea of a "proposed collective agreement that is entered into" is a recent statutory creation given birth by the ratification requirement set out in section 44. It has no pre-Bill 7 analog and appears to exist solely as a conceptual device to facilitate the new ratification provision. Having said that, however, it is clear from the language of subsection 43(1) that it is the absence of a "collective agreement" (and the presence of the other conditions set out therein), and not the absence of a "proposed collective agreement", that grounds the Board's jurisdiction in a first contract application. As there was no suggestion in this case that any of the events outlined in subsection 44(2) had yet occurred, there is no basis for concluding that the parties have reached a "collective agreement" or that the Board's jurisdic­tion under subsection 43(1) has disappeared. The further question of whether "the process of collective bargaining has been unsuccessful" (as the applicant must show in order to succeed in a first contract application) is an issue that would ordinarily be addressed as part of the merits of the case.

10. Second, although both parties accused each other of delay, abuse of process, and bad faith bargaining, most of the facts upon which these allegations are based are not yet before the Board. What is clear from the record, however, is that the original hearing date was set within 30 days of the application filing date, that date was adjourned on agreement between the parties, further attempts at reaching a proposed collective agreement proved fruitless, those further attempts are alleged by the union to constitute additional grounds for a first contract direction, the union asked the Board to re-list the matter for hearing, some additional delay arose in having a hearing date set, the date subsequently set was adjourned by the Board over the union's objection, and this is the fifth Board decision in the application and the second appearance by the parties before a panel of the Board scheduled to deal with the merits of the application. While it may be possible to draw some limited inferences from these events as to the strengths and weaknesses of the parties competing assertions of impropriety, the Board is unwilling to do so at this time.

11. Third, what the responding party is asking the Board to do, at this stage, is to dismiss the application for a first contract direction rather than adjourn it as was done in Native Child. Where that would leave the parties is somewhat unclear and was not the subject of any express submissions. However, it appeared to be implicit in the responding party's submissions (that the Board should follow the Native Child decision) that the parties should be deemed to have reached a "proposed collective agreement" and that the Board should direct the holding of a ratification vote.

12. Fourth, and while not explicit in the submissions of counsel for the applicant, it may be the case that there is no longer a collective agreement that the applicant is prepared to sign except one which is accompanied by a first contract direction. At the same time, however, it appears equally clear that the responding party's willingness to sign the proposed collective agreement that the applicant submitted in accordance with Rule 67 is not entirely unconditional. In particular, the responding party is not prepared to sign that proposal unless the first contract application is dismissed. In the result, it appears to the Board that there may be considerable scope for the assertion that both the employer and the union are now more concerned about the disposition of the termination application than they are about concluding, or living with, a first collective agreement.

13. Fifth, despite the free-flowing accusations of mala fides, neither party has filed a section 17 application; the applicant has not alleged that the responding party initiated the termination application; and the responding party has not applied for a final offer vote. Any one of these courses of conduct may have helped to clarify the labour relations context and/or assisted the Board in fashioning the appropriate remedies.

14. In view of all of the foregoing, a majority of this panel finds itself unable to dismiss the first contract application at this time and can see no reason to adjourn the proceedings. As indicated above, the statutory preconditions to a first contract application have been met: the parties have not effected a "collective agreement" and a no-Board report has issued. As such, and assuming that the applicant has also met the procedural requirements imposed by the Board's Rules (and we note that the responding party and intervenor have not suggested otherwise), the applicant would seem to be entitled to a hearing on the merits. Indeed, and without wishing to appear unduly technical, there is a very real argument to be made (and the applicant made it) that this is not a matter of Board discretion but of statutory compulsion. In contrast, for example, to the discretionary language of subsection 96(4) (the Board may inquire into the complaint" of an unfair labour practice) subsection 43(2) provides that the Board "shall consider and make its decision on an application under subsection (1) within 30 days of receiving the application..."

15. Notwithstanding the apparently mandatory nature of the provision, however, it may be argued that it is up to the Board to determine how and in what sequence the relevant issues will be addressed. Among the issues to be decided in this case, it would appear, is whether the process of collective bargaining has been unsuccessful not because of the reasons listed in paragraphs 43(2)(a)-(d) but at all. In other words, whether the employer's offer to execute the union's proposed collective agreement means that "the process of collective bargaining has [not] been unsuccessful". That being the case, it might then be argued that this is an issue that can be usefully addressed, either with or without the calling of evidence, at this time.

16. Assuming that the Board has the jurisdiction to proceed in that fashion (i.e. to segregate the question of whether the process of collective bargaining has been unsuccessful from the balance of the provision), that is not an approach that we are inclined to adopt here. In our view, the question of whether "the process of collective bargaining has been unsuccessful" is an issue that cannot be decided, as the employer and intervenor would have it, solely by reference to the employer's offer to accept the union's proposed collective agreement. The process of collective bargaining has a statutorily mandated good faith element to it and we are unable to say categorically, and as a matter of law, that the circumstances leading up to or surrounding the employer's offer do not matter. In other words, it is possible that the Board may conclude that notwithstanding the employer's offer to accept the union's proposal "collective bargaining has been unsuccessful". Presumably, in the face of such an offer and barring an objective change in circumstances that would cause the Board to conclude that the union's proposal was no longer extant, the circumstances that would ground such a finding would be quite serious. They may need to involve, for example, a pattern of employer behaviour that demonstrated a complete unwillingness to ever conclude a collective agreement and a manifest desire to rid itself of the union. However, this is not an issue on which the majority feels able to pronounce at this time and

we would prefer to decide this matter with the benefit of evidence and additional argument. Inasmuch as that evidence is likely to overlap considerably with the evidence that the applicant would otherwise be entitled to call in the first contract application, the Board sees no practical value in addressing this issue separately. Accordingly, the responding party's motion is dismissed.

17. Because of the view we take of the matter, however, the Board believes that it would be appropriate to hear all of the relevant evidence up to and including that which relates to the employer's offer to accept the union's proposal on the last day of hearing. To the extent that any party disagrees with this approach, they must notify the Board forthwith and provide reasons for their position. Upon receipt of any such submissions, the Board may decide the issue immediately or determine what further steps will be taken.

18. Finally, we wish to advise the parties that we will not inquire into any of the allegations raised in paragraphs I through 8 of the material facts set out in the intervention or into any of the allegations set out in the document entitled "additional facts on which the applicant for intervenor status shall rely". In our view, these matters are not relevant to the issues raised in the first contract application.

DECISION OF BOARD MEMBER J. A. RUNDLE; December 10, 1997

1. It is unfortunate that within a very short period of time the Board will have issued two diametrically opposed decisions on essentially the same issue. The effect of which creates uncertainty in the labour relations community as to how the Board will deal with these matters. I refer of course to the Native Child and Family Services of Toronto, Board File Nos. 3999-96-FC and 0052-97-R which was a unanimous ruling of the Board (differently constituted) and the present majority decision.

2. In order to appreciate the issues in context the following facts are helpful and must be kept in mind when reading the majority decision and the dissent.

• there are approximately 8 employees in the bargaining unit.

• the applicant was certified in April 1996.

• the first contract application was filed in September 1996.

• the application was adjourned sine die on agreement in September 1996.

• the applicant requested the matter be relisted for hearing March 1997.

• a timely termination application was filed April 1997.

• the trade union has not filed s. 17 and s. 96 complaints.

• bargaining in bad faith charges.

• allegations of employer misconduct around the termination ap­plication s. 63(16).

• a majority of a panel of the Board - differently constituted - decided that the first contract application should proceed prior to the termination application.

3. It is a fundamental tenet of contract law that once an offer is made by one party, and the acceptance of that offer is communicated by the other party, a binding contract in law is formed between the parties. There is no difference to that fundamental principle in its application to matters of labour law, generally, and in the context of a first contract application specifically.

4. In my opinion, the decision of my colleagues in this case, errs in its application of basic contract law; and undermines what, to my mind is a primary purpose underlying section 43 of the Labour Relations Act; namely the desire to bring the parties closer together in what is sometimes the difficult process of forming a first collective agreement.

5. As a matter of substantive contract law, we have in this case an unequivocal offer, in writing, made by the union, and an unequivocal acceptance of that offer by the employer. As part of its application to the Board, the union was required by the Board's own rules of procedure to submit a copy of a proposed collective agreement that it was prepared to sign. An offer is an offer and should remain valid, outstanding and eminently signable in the context of the negotiations and application. Indeed its ongoing validity is requisite to protect the applicant from a charge of mala fides in the negotiations. The majority acknowledges in paragraph 13 of the decision that an allegation of mala fides is indeed possible, but has not been filed. The requirement to file a proposed collective agreement the union was prepared to sign constituted a clear offer by the union on all matters related to the settlement of the collective agreement which, as was the case here, the employer was able to accept at any time before the offer was either withdrawn by the union (if that were to be allowed) or before the Board had finally disposed of the application. As a matter of contract law, it is my view that once the offer of the union was accepted by the employer, that became the end of the matter and the Board must dismiss the section 43 application; since as a matter of law there would then be a proposed collective agreement in place between the parties leaving nothing for the Board to deal with under section 43 of the Act and the process of collective bargaining could not be said to be unsuccessful.

6. If it is the absence of a collective agreement that grounds the Board's jurisdiction, then that jurisdiction has been vacated by the employer's acceptance of the proposed agreement contained in the union's materials. Section 44 provides that the proposed agreement has no effect until it has been ratified (unless otherwise ordered by the Board; this "otherwise" is of no consequence in our situation). The employer's acceptance of the agreement negates the precondition at the beginning of section 43(1) ("When parties are unable to effect a first collective agreement.."). Similarly it does not require the Board to exercise its section 44(2) powers to impose an agreement. That leaves the operation of section 44(1) ("A proposed collective agreement that is entered into ... has no effect until it is ratified "), and the only issue left is for the union, if it so desires, to arrange a ratification vote.

7. Almost as important, however, is the very serious policy and practical issue of allowing one party, in this case the applicant union, to, in effect, withdrawing its "offer" as set out in the proposed collective agreement that it said it was prepared to sign prior to the commencement of the hearing on the merits, even after the employer has accepted that offer. In my opinion, to permit this to occur completely undermines the integrity of the Board's own process, and makes a mockery of the Board's rules of procedure which are supposed to engender certainty and predictability in the labour relations community. One wonders if the response would be the same were the parties positions reversed.

8. Also, it has always been my understanding that since the obligation of the parties to bargain in good faith continues notwithstanding an application by one party under section 43 of the Act, in my view it would be inconsistent with that obligation to permit any party, in this case the applicant union, to withdraw an unequivocal written offer after its acceptance by the employer. In the context of bargaining between these parties, such conduct would be construed as bargaining in bad faith to which the majority of this Board gives its tacit approval by ruling as it has in this case.

9. In my view, the circumstances in this case fall precisely within the principles enunciated by Native Child & Family Services of Toronto, Board File Nos. 3999-96-FC and 0052-97-R, and to the extent that the majority of this Board has refused to follow the decision in Native Child, that refusal can only further undermine the integrity of the Board's own procedures and add uncertainty and confusion in the labour relations community. Indeed, the message that the majority of this panel is sending to the community is that, when it comes to an application under section 43 of the Act, neither party can assume with any certainty that the collective agreement which a party might proffer as the collective agreement it is prepared to sign, as directed by the Board's rules, is in fact of any binding consequence. Thus parties, faced with such uncertainty would wisely consider "holding back" with their "best offer" in response; leading, of course, to the likely protraction of these types of proceedings to the benefit of no one. An unfortunate outcome given the length of time this section has been in the statute and the manner in which the parties have in the past governed their actions as per the requirements of the statute and the Board's own rules in first contract application.

10. The description of the applicant's document as a "desired outcome" elevates it beyond the parameters of a mere "offer". The latter anticipates some give-and-take and is presented as a first volley in what traditionally could be a protracted eventual meeting of minds. A "desired outcome" on the other hand, is more akin to a wish list, and entails the best possible results the offer or could ever hope for.

11. What the majority of the Board is in effect saying to applicants in such circumstances is: if you play your cards in the bargaining game and lose, you can expect the Board to come to your assistance. The Union having played the first contract arbitration card, and having filed the collective agreement that it said it was prepared to sign , should be required to play by the rules of the game to the end; which includes the obligation to accept the very contract that it, the union has proposed. To permit the Union to resile from its own proposal, which is, in effect to change the rules in the middle of the process, only brings the Board's own procedures into disrepute.

12. A very technical argument was made and seemingly adopted by the majority that section 43(1) has a mandatory element to it therefore the Board must hear this matter. That the union in this case is allowed to use the provisions of Sec. 43 as a sword in order to obtain a first contract direction then when the union is confronted with a proposed collective agreement that encompasses even on the union's description, their "desired outcome" it is allowed to use the same section as a shield to deflect the obvious, is inappropriate given the Board's jurisprudence and practice. For the majority—in light of the Board's jurisprudence and the Board's practices to give substance to this argument is to say the least interesting. Particularly when the Board dealt with the mandatory element of this section in Del Equipment Limited, [1989] OLRB Rep. Jan. 19.

13. In my view the only reason that the majority of this panel has chosen to disregard the employer's application to dismiss this case, in light of the lack of charges, is the pending decertification application by a group of employees. That is not a valid reason. The notion that the Board ought (or indeed has the authority) to "look behind" the decision of the employer to accept without modification the clear contract offer by the Union, is in my view a completely irrelevant exercise. Once there has been an offer and an acceptance of that offer a contract has been formed and, from the Board's perspective in an application under section 43 of the Act, that is the end of the matter.

14. Those familiar with the process of collective bargaining understand that during the course of bargaining, the parties engage in a series of strategic moves, some of which in the long term may be more successful than others. Absent allegations of violations of the Labour Relations Act - this Board has no business or jurisdiction looking behind those strategic moves.

15. The majority award appears to indicate the Board is revisiting its approach to s. 43 of the LRA. In light of this new direction, respondents should:

• decline to agree to any adjournment requests once a s. 43 application has been filed.

• decline to continue bargaining after the application has been filed. The Board cannot require a party to engage in a process the results of which may found by the Board to be prejudicial to them.

• decline to file a proposed collective agreement they are prepared to sign as the Board places no importance on that document.

16. The majority ruling in this case is part of the continuing quest to push the law in new directions as opposed to a showing of deference to the Board's existing caselaw and the perceived legislative intent. It sets new parameters, I would suggest, that were never contemplated by the Board under section 43 and which can only serve to polarize the way parties approach first contract applications.