1905-00-R Union Energy Inc., Applicant v. United Steelworkers of America, Local 7356, Responding Party.
BEFORE: Timothy W. Sargeant, Vice-Chair.
APPEARANCES: Peter J. Thorup, Robert Jutras, Roger Cnarbonneau and Linda Morgan for the applicant; Andrea Bowker and Gerry Loranger for the responding party.
DECISION OF THE BOARD; November 6, 2000
This is an application under section 69 and subsection 1(4) of the Labour Relations Act, 1995 (the “Act”).
The facts are not in dispute.
Union Gas Limited (“Union Gas”) existed as a regulated utility for many years. It was party to numerous collective agreements across the province, some with the United Steelworkers of America (the “Union”). Union Gas owned pipelines and distributed and sold gas. A large part of its business also related to the renting and servicing of hot water tanks. Installation of the hot water tanks was done by contractors.
After deregulation Union Gas was split into two. Union Gas was restructured to carry out the regulated activities – basically the distribution of gas up to the meter. Everything after the meter became deregulated.
Union Energy Inc. (“Union Energy”) was created to do business in the retail competitive sector (i.e. the deregulated part of the business). This for example included the sale of gas, the sale of services, the sale of equipment, and the sale of home heating protection plans. Also included in its activities were the sale and service of hot water tanks.
After deregulation both Union Gas and Union Energy had two bargaining units – one clerical and the other operational.
Union Energy acquired about 29 companies throughout Canada (mostly in Ontario), some by asset purchase, some by share purchase. These companies were in the heating, ventilation and air conditioning business, mostly in the residential area (“HVAC Companies”).
Charbonneau Home Heating Co. Ltd. (“Charbonneau”) existed for many years in Sudbury prior to its acquisition by Union Energy. It was a seller and distributor of HVAC equipment and fireplaces. Though Union Gas had some minor forays into this area, it had basically not been in the HVAC business.
At Charbonneau there were limited clerical functions. On the operations side it had employed technicians, gas fitters, sheet metal workers etc. At the relevant time Union Energy had 11 employees on the clerical side in the Sudbury, Sault Ste Marie and North Bay area, while Charbonneau had 2 employees on the clerical area. In the operations area for the same geographical location there were 12 employees at Union Energy, while there were 17 employees at Charbonneau.
For the most part the Union Energy operations for the relevant geographical area operated out of 868 Falconbridge Road, Sudbury, while the Charbonneau operation continued to operate out of 727 Lorne Street, Sudbury.
United Holdings Inc. acquired the shares of Charbonneau in April of 1999. Between April and August of 1999 nothing really changed for either location. In September of 1999 the sales function centralized at the Lorne Street location. Both Union Energy and Charbonneau participated in joint advertising. A corporate individual had the operating responsibility for Union Energy at the Falconbridge Road location. A different individual had the operating responsibility for the Charbonneau operation at Lorne Street. Both reported to the same Vice-President. Vehicles and uniforms were each distinctive to their respective operations. On the operating side there is virtually no integration between the two locations. Charbonneau invoices separately and has its own payables.
The employees at the Union Energy in the relevant geographical area were represented by the Union. Employees at Charbonneau were not unionized. Terms and conditions of employment are vastly different at the two locations. At Charbonneau it is basically a task rate process, the premiums are less that at Union Energy, as are the holidays and vacations. It is the applicant’s opinion that this is the only way the HVAC business can survive. In contrast the employees at Union Energy have better vacations, holidays, pension and pay rates. These better benefits and rates in the applicant’s submissions were maintainable only in a regulated industry.
These two operations have basically continued to be run separately. Though the applicant and the union had discussions about separate agreements for the two operations, such discussions were not successful.
From the outset of the acquisition of Charbonneau the union took the position that it represented employees employed by Charbonneau as an accretion to its existing collective agreement with Union Energy. The recognition clause with the union and Union Energy provides:
(a) The Company recognizes the Union as the Sole Bargaining Representative for operations employees of the Company in Sudbury, North Bay, and Sault See. Marie, save and except – Supervisors, persons above the rank of Supervisor, office and sales staff.
(b) The Company recognizes the Union as the sole bargaining representative for office employees of the Company in Sudbury and North Bay, save and except: Supervisors, persons above the rank of Supervisor, Sales Representative and persons covered by a subsisting Collective Agreement.
In addition the union contends that the Letter of Understanding #12 of the Collective Agreement makes it clear that it represents such employees. Union Energy disputes that such Letter of Understanding has any application to these circumstances. The Letter of Understanding #12 provides as follows:
In the event that Union Energy subsequently establishes operations and employ’s hourly employees in classifications listed in the Union Energy Collective Agreement in the existing Union Gas geographic franchise where Union Gas had performed service work prior to the date of legal separation, it is agreed that the Union Energy Collective Agreement will apply, assuming of course that such employees are not already covered by another collective agreement (such as may occur with the purchase of the asserts of a unionized business that employs such employees).
Throughout the relevant period Union Energy has taken the position that the union does not represent the employees of Charbonneau.
As of January 1, 2000 the assets of Charbonneau were rolled into Union Energy. Prior to that time such assets were separate. The union filed two grievances dated January 11, 2000 taking the position that “the former employees of Charbonneau Home Heating Inc. fall within the scope of the Collective Agreement between the Union and the Company”.
Furthermore on March 13, 2000 the union filed a section 69 and subsection 1(4) application with the Board. Several months later the union asked that this application be deferred to await the outcome of the resolution of the grievances filed. The Board refused to defer the matter and a hearing was set for September 15, 2000. A couple of days prior to the hearing the union again requested an adjournment or a withdrawal. The Board refused to adjourn the hearing but did grant the withdrawal. In this decision dated September 13, 2000 the Board indicated that if Union Energy wished to file a 69 and subsection 1(4) application it could do so. Union Energy then filed such application which is the matter before this panel.
In regards to the negotiations for a collective agreement, the union did apply for conciliation. A conciliation meeting took place on August 30, 2000 in Sudbury. Basically no progress was made. It was left that either party could ask for a “no board report” by telephone.
In regards to the grievances, an arbitrator has been appointed and a date set for hearing (December 21, 2000), provided that this application is dealt with by the Board by the scheduled time of hearing for the arbitration hearing.
Finally it should be noted that the union position remains that the former employees of Charbonneau are in the bargaining unit. The union submits that if the employer recognized this position, then such employees would have the right to vote on a proposed collective agreement and/or a strike. In the union’s submission the employer, however, continues to refuse to recognize that such employees are in the bargaining unit and that is why an arbitration hearing is required to settle this issue.
Counsel for the applicant based his primary argument on an interpretation of section 69(6) of the Act. This section states:
(6) Despite subsections (2) and (3), where a business was sold to person who carries on one or more other businesses and a trade union or council of trade unions is the bargaining agent of the employees in any of the businesses and the person intermingles the employees of one of the businesses with those of another of the businesses, the Board may, upon the application of any person, trade union or council of trade unions concerned,
(a) declare that the person to whom the business was sold is no longer bound by the collective agreement referred to in subsection (2);
(b) determine whether the employees concerned constitute one or more appropriate bargaining units;
(c) declare which trade union, trade unions or council of trade unions, if any, shall be the bargaining agent or agents for the employees in the unit or units; and
(d) amend, to such extent as the Board considers necessary, any certificate issued to any trade union or council of trade unions or any bargaining unit defined in any collective agreement.
Counsel for the applicant candidly states that if the Board followed the rationale set out in the previous decisions of other panels of the Board (see for example General Bakeries Limited [1979] OLRB May 400 and Kerr-Progress Painting Limited [1975] OLRB July 590), then the applicant would be unsuccessful. Counsel, however, submitted that such decisions as it would affect the applicant are just wrong. In his submission the applicant on these facts falls clearly within the wording of section 69(6) of the Act. He notes that section 69(6) states at the beginning that this section is to be read “despite subsections (2) and (3)” (emphasis added). On the agreed facts a business was sold to a person who carries on one or more businesses where a trade union was the bargaining agent in one of the businesses and in a situation where it agreed by the parties that an intermingling took place within the meaning of the Act. Thus counsel argues the prerequisites to bring an application under section 69(6) have been met. If the Board concurs then it has the discretion to apply a range of remedies. Given the unique aspect of this fact situation, counsel submits that the Board should exercise its discretion and that the best labour relations solution would either be to keep the status quo (i.e. that the former Charbonneau employees remain unionized), or in the alternative order a vote of all the employees (i. e. both Union Energy employees and former Charbonneau employees). Counsel points out the terms and conditions of employment between these two groups are so different that to put them together will cause serious labour relations problems. Further, the former employees of Charbonneau will have had no opportunity to determine whether they wish to belong to a union if it is ultimately determined that such employees are covered by the existing collective agreement between Union Energy and the union. On the operations side counsel pointed out that a majority of the employees would be former Charbonneau employees. Thus a vote would determine the democratic wishes of the employees as to whether they wish to be represented by the union. This is an opportunity for the Board to assist the parties in a difficult situation and to foster sensible bargaining relationships.
Counsel for the applicant also submitted that the Board has the jurisdiction to exercise its discretion to order similar remedies under subsection 1(4) of the Act. Counsel argued that the Board could apply subsection 1(4) as prior to January 2000, there were two separate entities involved. In fairness counsel in asking for similar remedies under subsection 1(4) conceded that his best argument was made pursuant to his submissions concerning section 69(6) of the Act.
Counsel for the union submits that the Board should in the first place defer to arbitration. In counsel’s view, the Board should not, even if it thought it had jurisdiction (which counsel submits on these facts it does not), interfere based on these facts. In her submission, counsel argues that if the Board ordered either of the remedies requested by the applicant the union would be seriously prejudiced. She points out that in the union’s view the parties in the Letter of Understanding #12 have agreed that in such a situation as the Charbonneau acquisition, its employees would be covered under the existing collective agreement. Further, the union takes the position that in any event such former employees of Charbonneau are covered by the recognition clause. These are important negotiated rights. While the company may disagree with the union’s interpretation, the union should have the right to argue such issues before an arbitrator appointed under the collective agreement. If the Board awarded either of the remedies requested, this very important right of the union to present its view would be lost. In such circumstances the Board should not interfere but allow the matter to be determined by arbitration.
In any event, counsel for the union, argues the Board has no jurisdiction to consider this application. In her view the Board has dealt with similar arguments raised by the applicant and determined that for section 69(6) to be applicable there first has to be a sale within the meaning of section 69(2) or (3). This was the conclusion in the Kerr-Progress Printing Limited decision (see above), which to date has never been reversed. In this situation there has not been a sale within the meaning of sections 69(2) and 69(3). The aim of section 69 is to preserve bargaining rights and existing collective agreements. As no trade union represented the former employees of Charbonneau there are no bargaining rights or collective agreements to preserve in regards to that operation and thus section 69 has no application. Similarly subsection 1(4) is designed to preserve bargaining rights, and has no application in this case. In essence, according to counsel for the union, the applicant is attempting to turn the interpretation of these sections on their head and thus these applications should be dismissed.
Decision
Having carefully considered the submissions of counsel, I am in agreement with counsel for the union that this is not a proper application either under section 69 or subsection 1(4) of the Act. In that, I concur with the reasoning as set out in General Bakeries Limited and Kerr-Progress Painting Limited (see above). As was held at paragraph 12 in the Kerr-Progress Painting Limited decision the “specific wording used in sections 55(2), 55(3) and 55(4) makes it clear that these sections only apply when a predecessor employer or business had a collective bargaining relationship with a trade union and such is not the case in the facts at hand. Section 55(6) then goes on to relieve against the effects of sections 55(2), 55(3) and 55(4) when employees of the two are intermingled following a sale and the wording of section 55(6)(a) makes this relationship clear. A fortiori if sections 55(2), 55(3) and 55(4) have no application in the facts at hand section 55(6) is not applicable either” (note: section 55 as it then was is now section 69).
Furthermore, in regards to subsection 1(4) as there was only one corporate identity at the time of this application, I do not see how such section is in any way applicable.
As counsel for the applicant conceded, if I followed the rationale in General Bakeries Limited and Kerr-Progress Painting Limited that would end the matter. As I have indicated that I would follow such rationale, these applications are dismissed.
However, I would like to comment further. Even assuming that I was wrong in following such rationale and did have jurisdiction to consider this application, this is not a case where I would have exercised my discretion and granted the remedies requested by the applicant. The issue of whether the union holds bargaining rights for the former employees of Charbonneau is, in my view, a matter that should properly be determined at an arbitration hearing. I agree with counsel for the union that an interpretation of what may be important negotiated rights should be determined by an arbitrator and not potentially undermined by the Board’s interference. These are sophisticated parties, and the applicant must have been aware of the potential labour relations problems when it acquired Charbonneau. Thus in these circumstances the Board agrees with union counsel that it is appropriate given the language negotiated in the Collective Agreement, that the union be given an opportunity to present its position at an Arbitration hearing. If it is determined by an arbitrator that indeed the union does hold bargaining rights for the former employees of Charbonneau, the Board is strongly of the opinion that the difficulties brought on by deregulation and by the acquiring of a company with different terms and conditions of employment are precisely the type of issues that should be resolved between the parties pursuant to the collective bargaining process established under the Act.
For all these above reasons, this application is dismissed.
“Timothy W. Sargeant”
for the Board