[1999] OLRB REP. MARCH/APRIL 324
3051-97-R United Brotherhood of Retail, Food, Industrial and Service Trades International Union, Applicant v. 935772 Ontario Limited c.o.b. as "Royal Taxi" and 240969 Taxi Ltd. et al, Responding Parties
BEFORE: Mary Ellen Cummings, Vice-Chair.
APPEARANCES: Timothy J. Bartkiw, Sheri Price, David Kelava for the applicant; David Cowling for Bill George Frolick et al; Robert A. Stewart for a number of responding parties; Carl Peterson for 935772 Ontario Limited c.o.b. as "Royal Taxi".
DECISION OF THE BOARD; March 11, 1999
This is an application pursuant to section 1(4) of the Labour Relations Act, 1995 (the "Act"). In a decision dated November 17, 1998, the Board dismissed the application. The Board determined that even if a factual basis existed to support the conclusion that Royal Taxi and the Associates were related employers, the Board would not exercise its discretion and make a declaration that the entities are a single employer for the purposes of the Act.
These are the reasons for that decision.
This matter arose by way of a preliminary motion, made by Mr. Cowling, on behalf of a number of the Associates. He argued, and was supported by counsel for Royal Taxi, that it was not necessary for me to hear evidence to make that determination because it was incontrovertible facts that were relied on. Essentially, the facts relied on are as follows. On October 30, 1997, the applicant was certified as the bargaining agent for the following bargaining unit:
all dependent contractors and/or employees of 935772 Ontario Ltd. c.o.b. as Royal Taxi operating under a Royal Taxi roof sign in Metropolitan Toronto, excluding supervisors and those above the rank of supervisor, dispatchers, call takers, maintenance staff, office and clerical staff, multi-plate/multi-car owners or lessees and inspectors.
As can be seen, the certification related only to Royal Taxi, the brokerage and pertained to persons who were employees or dependent contractors of Royal Taxi. The certification had nothing to do with the Associates. Then, on November 14, 1997, a mere two weeks after the certificate, the applicant brought this section 1(4) application. In its pleadings, it cited as reasons for the request, the difficulty in establishing a meaningful collective bargaining relationship with Royal Taxi, in the absence of the Associates; the need to prevent the erosion of bargaining rights and to ensure that the trade union is negotiating the with parties who have real economic control over the employees' lives.
Meanwhile, the applicant served notice to bargain a collective agreement on Royal Taxi. Royal Taxi sought to delay the negotiations until the present application was resolved. The applicant was initially agreeable, but as time passed, and this case meandered, the applicant indicated that it wanted to bargain. Royal Taxi complied with the request, and negotiations began.
Ultimately, after referring two issues to an arbitrator, the applicant and Royal Taxi reached a collective agreement, effective October 1, 1998. None of the Associates are party to the collective agreement.
Initially, Royal Taxi took a neutral position with respect to this proceeding. However, once the collective agreement was negotiated, Royal Taxi's position changed. Counsel argued that it was unwilling to reopen the collective agreement, as both some Associates and the applicant suggested was the inevitable result in the event that the Board made the single employer declaration. Counsel for Royal Taxi argued that the Board should decline to make a single employer declaration when the result would be to unsettle an established bargaining relationship, in this case the one between the applicant and Royal Taxi. On the other side, counsel for the applicant submitted that the meager terms of the collective agreement, particularly around dues collection, demonstrate that a true negotiation of the terms and conditions of employment for the drivers is not possible, unless the Associates are brought into the picture.
It is useful to start with some background about the taxi industry in Toronto. The Board's decision in Diamond Taxicab Association (Toronto) Limited, [1995] OLRB Rep. June 753, provides a useful primer. That case is a section 1(4) application brought by a different trade union, where the brokerage had been certified, and the trade union sought to bring the associates into the bargaining framework. Some brief excerpts will assist:
Turning then to the substance of those facts, they reveal a complex matrix of economic relationships among the various players in an industry that is heavily regulated by the Metropolitan Licensing Commission. There are about 3,500 taxis licensed to operate in Metro Toronto. Ownership of licenses or plates is not concentrated in that about half are held by persons or corporations having one plate each. The remaining 1700 are probably held by an additional 600 persons or corporations. In total there are approximately 2,300 individual entities holding the 3,500 plates. Additionally, there are approximately 9,000-10,500 persons who hold taxi drivers' licenses, or coupled with owners, more than 12,500-15,000 individuals legally entitled to drive the 3,500 taxicabs in Metropolitan Toronto. Most of these plates are associated with one broker or another; approximately 600 are independent of any broker.
Of course, the brokers now have a life of their own as commercial entities which offer taxi services to the public. This is done through advertisements, order-taking, dispatch services and a charge account/collection service. Nevertheless the brokers themselves, as corporate bodies, still do not own taxi plates. These are owned, controlled or managed by associates, who through contractual arrangement affiliate with the brokers with the effect of permitting taxi service to be provided to customers under the commercial umbrella of the brokers. The brokers' income is derived mainly from monthly dispatch fees levied on each taxi operating within the brokerage, as well as administration charges on fares paid by charge account. Revenues are derived from these fees and service charges, customer service charges and miscellaneous revenues including the sale of promotional items. In addition to providing dispatch and other services, the brokers give some overall structure to the industry. The three brokers in these proceedings are among the largest in Metropolitan Toronto.
There can be little doubt that the commercial activities of the brokers and the associates involve a very high degree of functional integration. The brokers supply the advertising, promotion, dispatch services, charge account services, computers, roof signs, credit card imprinters and the commercial umbrella and structure which enable them to deliver customers to the business. The associates supply the plates, cars, meters, radios and drivers necessary to provide the taxi service to those customers. Both sets of functions and assets are critical to the activities or businesses carried on. Through the advertising, promotion, roof signs, regulation car colours, receipt cards with the broker's logo and so forth, the business is represented as an integrated whole to the public, that is, Diamond Taxi, for example, rather than the various names of the associates.
The drivers, for whom the applicant holds bargaining rights, have economic ties to two different entities; the Associates and the broker. Each "master" can make decisions which impact on the livelihood and working conditions of the drivers. While the taxi industry may be a unique challenge to traditional collective bargaining, this situation is not news. The taxi industry and all it complexities from a labour relations point of view were canvassed in the Diamond Taxicab case cited above. While this is an oversimplification, that case was the culmination of a certification of 3 brokerages, followed by difficult negotiations, and an ugly and lengthy strike. Ultimately the trade union and the brokerages sought to negotiate terms that would affect (and bind) the Associates, but as the Board noted in the decision, the parties were without legal recourse to bind the associates. Hence, the genesis of the section 1(4) application. While the decision makes clear that some of the associates did not want to be included in the collective bargaining, it is equally clear that many participated not to oppose the section 1(4) application, hut to ensure there was a mechanism for the associates to participate in collective bargaining. While it would be an overstatement to say that Diamond Taxicab was a consensual declaration pursuant to section 1(4), it is fair to say that the trade union, the brokerages and many of the associates sought the related employer declaration in order to develop a bargaining structure that would include all the parties who had an interest and role in the economics of the taxi industry in Toronto. At paragraph 104, the Board wrote:
The objectives of section 1(4) include the creation or preservation of viable bargaining structures and ensuring direct dealings between a bargaining agent and an entity with real economic power over employees. In this case, the absence of a formal legal role for associates is undermining the viability of the collective bargaining relationship and the parties, with the exception of a small minority of associates, have created an alternative bargaining structure which requires the application of section 1(4) to be successful. Such application would also have the effect of bringing associates within the ambit of the labour relationship who exert considerable economic control over the drivers both with respect to costs (and therefore driver income) and in regard to the engagement and termination of drivers. Declining to exercise the Board's discretion in this regard would mean that both the brokers and the union would be dealing with ghosts at the bargaining table, and the associates would have a unionized workforce but no legal status in negotiations.
It is within that backdrop that the application before the Board should be assessed. First, the complexities of the taxi industry in Toronto are notorious, and were certainly fully set out in the Board's Diamond Taxicab decision. In particular, the Board's decision identified the challenges to collective bargaining and labour relations that were presented if a trade union sought certification in a manner that touched only on the relationship between the drivers and the brokerage. Given that history, it seems incredible that the applicant in this case would choose to certify only the brokerage side of the triangle, then come back to the Board, only two weeks after the certificate was granted, and seek to include the Associates, the other side of the triangle, by virtue of a section 1(4) declaration. Counsel for the applicant argued that it was only when it had been through an organizing campaign that it came to understand that the Associates were crucial to a viable bargaining relationship. Counsel noted that the Board has regularly held that trade unions should be permitted a reasonable time to investigate facts before being required to decided whether to make a section 1(4) application. I agree. But in this case, the salient facts are few and notorious; drivers have relationships with both associates and brokers within the taxi industry in Toronto. And if one were truly a neophyte to the industry, one would likely choose to certify the Associates, because their relationship with the drivers is more like a traditional employment relationship, than is the relationship between drivers and the brokerage. In the alternative, on a number of occasions, trade unions unable to identify the "true employer" in an organizing campaign have made a section 1(4) application at the time of the application for certification. See for example, Penmarkey Foods Limited [1984] OLRB Rep. Sept. 1214 in which the Board said that one of the purposes of section 1(4) is to remove roadblocks to viable structures to collective bargaining, which can be achieved when the section 1(4) application is made at the time of certification. That was an option open to the applicant. If it had chosen that route, the arguments being made before me would not be available to the responding parties.
One is left to conclude that the applicant made a strategic decision to certify the brokerage relationship, then come to the Board to seek a 1(4) declaration, and include the Associates. It is also difficult to take seriously the applicant's allegations around difficulties in establishing meaningful collective bargaining when they are made only two weeks after the right to bargain has been granted.
The applicant argued that it should not be criticized for such a strategy in any event, because the Board decided in KNK Limited, [1991] OLRB Rep. February 209 that there was nothing unseemly in "sweeping in" new employers by way of section 1(4) rather than by way of certification. At paragraph 45, the Board wrote:
It is only in this sense that section 1(4) is a "substitute for certification": it makes certification unnecessary because it recognizes that bargaining rights already exist. It is equally accurate to say that section 1(4) prevents the extinction of bargaining rights from unilateral employer action and! or commercial law considerations unrelated to labour relations. It prevents a termination of bargaining rights by means other than those provided by statute.
That point is well taken, but is not applicable in this case. The bargaining rights the applicant holds with the brokerage are limited by the commercial realities of the taxi industry; the brokerage controls only some aspects of the drivers' economic reality. The other aspects are controlled by the Associates (leaving aside the hoary question of the role of the Toronto Licencing Commission). What the applicant would be able to bargain about with the brokerage is different from what it would be able to bargain about with the Associates. In these circumstances it is not accurate to say that bargaining rights already exist for the relationship between the drivers and the Associates.
But even if the Board were prepared to overlook what appears to be a strategy to bring the Associates into the regime, without the need to certify, subsequent events have convinced the Board that it would not exercise its discretion to issue a section 1(4) declaration.
As set out above, the applicant served notice to bargain on Royal Taxi, and the brokerage demurred, on the basis that it wanted to await the outcome of these proceedings. At some later point, the applicant reiterated its request, and Royal Taxi, mindful of its obligation to bargain in good faith, agreed. And on October 1, 1998, the parties reached a collective agreement. The applicant relies on what it calls the meager terms of the agreement to highlight the need to bring in the Associates to the process. Both the applicant and some of the Associates indicated that the agreement would have to be renegotiated if the Associates were included, a position that led Royal Taxi to oppose the section 1(4) declaration. Applicant's counsel was highly critical of this change in position, suggesting that Royal Taxi had been prepared to reopen the collective agreement in the event that the Associates were added to the bargaining structure. Counsel for Royal Taxi disagreed. It agreed that the collective agreement provided that dues collection would become the responsibility of the Associates if the Associates became party to the agreement, but that is quite different from suggesting that there was an agreement that the collective agreement could be reopened on any other basis. My review of the collective agreement supports the view of counsel for Royal Taxi.
Counsel for the applicant argued that the collective agreement, rather than discouraging the exercise of the Board's discretion pursuant to section 1(4), should encourage it. He submitted that the parties could not even negotiate a satisfactory dues deduction provision. The present regime requires drivers to deliver their union dues to Royal Taxi, because Royal Taxi has no mechanism to deduct dues, since it pays no wages to the drivers. Counsel for the applicant submitted that a viable dues deduction system, which is critical to the financial security of the applicant, is possible only if the Associates are made parties, because then a true deduction model can be negotiated.
Counsel for the applicant argued that in the past, the Board has not found prejudice to an employer seeking to resist a section 1(4) declaration simply on the basis that it would be required to apply a collective agreement that it had not negotiated. True. But the situation presented on these facts is quite different. At the risk of repetition, because control over the drivers' terms and conditions of employment are divided between the brokerage and the Associates, the issues that would be negotiated with the brokerage are different from what would be negotiated with the Associates. As counsel for Royal Taxi submitted, this collective agreement, unlike the situation in Diamond Taxicab does not touch on "associate" issues. The consequences are two-fold. If the Associates were required to apply the collective agreement, they would be prejudiced because they would be required to live with a collective agreement that does not address the issues they have with drivers on "their side" of the triangle. The more likely result, as counsel for the applicant and some of the Associates indicated, is an attempt to re-open the collective agreement. That result is unfair to Royal Taxi, which believed it had concluded a collective agreement touching the issues relevant to its side of the economic triangle.
The imperative identified in Diamond Taxicab does not exist here. Bargaining did not break down over "associate" issues; associate issues were not on the table, and a collective agreement was concluded.
The Board is concerned about the applicant's claim that the present bargaining arrangement is not viable. But if it is not viable, it is in large part due to the choices of the applicant. The applicant chose to certify only the brokerage side of the economic relationship and then the applicant chose to negotiate a collective agreement with only the brokerage side. And given the Board's skepticism about the timing of the section 1(4) application, only two weeks after the certification, and before any real bargaining could have been done, coupled with the Board's concerns about disrupting the collective agreement so recently negotiated, even if a factual foundation could be made out to support a finding of a single employer, the Board would not exercise its discretion to make the declaration.
Of course, dismissal of this application at this time does not mean that the Board would not entertain an application in the future.