3129-98-G The United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, Local 599, Applicant v. Heritage Mechanical Limited, Responding Party.

BEFORE: John Morgan Lewis, Vice-Chair, and Board Members J. G. Knight and G. McMenemy.

APPEARANCES: James Fyshe and Dennis Carter for the applicant; Hugh Scher and Ben Dalimonte for the responding party.

DECISION OF THE BOARD; May 31, 2000

1. This is a referral of a grievance to arbitration pursuant to section 133 of the Labour Relations Act, 1995 (the “Act”).

2. In its decision dated August 31, 1999 (the “decision”) with respect to this matter, the Board found that Heritage Mechanical Limited (“Heritage”) violated articles 101 and 111 of Appendix 10 to the Ontario Provincial Collective Agreement between the Mechanical Contractors Association Ontario and the Ontario Pipe Trades Council effective May 1^st, 1998 to April 30, 2001 (the “collective agreement”). At the request of the parties, the issue of damages was not addressed in the decision. Rather, the Board remained seized if the parties were unable to reach an agreement as to the appropriate relief in the circumstances. This turned out to be the case and accordingly, the Board reconvened on April 6, 2000 to deal with the issue of damages.

3. The Board set out in detail the facts of this case in the decision, so there is no need to do so again. For the purposes of this decision, it is sufficient to note that Heritage employed two individuals from United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, Local 46 (“Local 46”) to perform work at the Barrie Cinema Project located in Barrie (the “Project”) from early November 1998 to February, 1999. The Project was located within the geographic jurisdiction of the applicant (“Local 599”) and the relevant articles of the collective agreement permitted Heritage to employ only one individual who was not a member of Local 599. Heritage attempted to characterize one of its employees, Mark Natalizio, as a subcontractor but the Board found him to be an employee.

4. At the commencement of the hearing dealing with the issue of damages, the parties agreed to the following facts and the introduction of documentary evidence in support of those facts:

1. During the relevant period of time, the total wage package pursuant to the collective agreement for a journeyman plumber working at the Project was $33.97 per hour;

2. Mark Natalizio worked a total of 552 hours on the Project;

3. At all relevant times, Local 599 had unemployed journeymen members who were ready, willing and able to perform work for Heritage at the Project.

5. The relevant provisions of the collective agreement are set out as follows:

ARTICLE 1 – DEFINITIONS

1.4 “Union” means a local union having geographical jurisdiction over a particular area and any successor or assign.

ARTICLE 12 – UNION SECURITY

As condition of employment, an employee must be in good standing with the Union.

APPENDIX 10

ZONE 10 BARRIE – LOCAL UNION 599

Article 101 HIRING

101.1 The Contractor agrees to give preference in employment to members of Local Union 599. Such member shall have his Certificate of Qualification for the trade required.

101.3 The Employer shall request the Union to supply Qualified men, and if the Union is unable to do so within 48 hours after request, the Employer may recruit men directly but shall not hire such men until they shall deliver to the Employer a referral slip from the Union, provided that if no Union Representative is available during business hours to give such referral slip such men may be hired and shall be required to make application for membership in the Union and make arrangements to have initiation fee fully paid up within thirty days of commencement of employment.

Article 111 FOREMEN

111.1 Where the principle business office of an employer shall be outside the area covered by this Collective Agreement as described in Article 3, thereof they will be allowed to supply one (1) man only and he will be classified as a superintendent.

5. As noted, the Board determined that Heritage violated articles 101 and 111 of Appendix 10 to the Collective Agreement by employing two individuals who were not members of Local 599 to perform work on the Project. At paragraph 35 of the decision, the Board questioned whether a breach of article 101 necessarily gave rise to a claim for damages. The relevant portion of paragraph 35 is reproduced below:

…If the issue of damages is brought back before the Board, the first item to be determined will be whether damages arise at all in the context of a breach of Article 101 of the collective agreement. The Board is unclear as to the effect of the term “preference in employment” found in Article 101 and whether it creates an obligation to hire exclusively in all circumstances members from Local 599.

6. Having considered the submissions of the parties, the Board finds that the breach of Article 101 in the context of this case, does give rise to a claim for damages. In so ruling, the Board finds that Article 101 of the collective agreement mandates the exclusive use of members from Local 599 to perform work falling within its geographic jurisdiction. That exclusivity is derived from the master portion of the collective agreement, which defines union security in terms of mandatory membership in a local union; in this case, Local 599. This exclusivity is not absolute, however, as the collective agreement provides for at least two instances in which individuals who are not members of a local union are permitted to work within the local union’s jurisdiction. The first instance is referred to in Article 111 of Appendix 10, which allows an out-of-area contractor to supply one man from outside the local area. The second instance is addressed in Article 101.3 of Appendix 10, which permits a contractor to employ individuals not from the local union if the local union is unable to supply sufficient manpower. In Sutherland and Shultz Limited (Unreported, OLRB File No. 2724-86-M, September 11, 1987) the Board adopted this interpretation of Article 101. At paragraph 7, the Board writes:

Article 101 clearly requires the exclusive use of members of Local 463 on jobs in the geographic area over which that local has jurisdiction, unless Local 463 proves unable to supply the necessary workers. As between an employer and the local union, this is a requirement which the local union can waive on a case by case basis as it sees fit. The issuance of a referral slip to a worker who is not a member of its local is apparently the way this local customarily signifies its consent to employment of that worker notwithstanding the requirements of Article 101. While it is true, as counsel for the responding party argued, that Article 101 does not require that any worker other than a member of Local 463 present a referral slip, the union’s grievance that a member of another local was employed without having a referral slip is simply another way of saying that the respondent’s employment of a member of another local in a bargaining unit position on this job was a breach of Article 101 which Local 463 had not waived.

7. In the context of this case, Heritage cannot take comfort in the exceptions to the exclusivity of employment for Local 599 members found in either Article 101.3 or Article 111. Article 111 does not apply as Local 599 concedes that Heritage is permitted to employ one member from Local 46 on the Project. Local 599 is only seeking redress for the employment of a second employee from Local 46. Accordingly, Article 111 is not helpful to Heritage. Article 101.3 is also not of assistance to Heritage as there is no evidence before the Board that Heritage was unable to obtain workers from Local 599.

8. Counsel for Heritage argued that the Board should not award damages to Local 599 and in doing so sought to distinguish the instant case from the decision of the Ontario Court of Appeal in Re Blouin Drywall Contractors Ltd. and C.J.A., Loc. 2486 (1977), 1975 CanLII 707 (ON CA), 57 D.L.R (3d) 199. Counsel relied on a number of cases in which arbitrators refused to order any monetary relief despite finding there had been a breach of the union security provision of the respective collective agreement. For example, in Re Miracle Food Mart Canada and U.F.C.W., Loc. 175 & 633 (1994or5), 1994 CanLII 18689 (ON LA), 45 L.A.C. (4^th) 209, Arbitrator Dumoulin found that the employer had improperly assigned work to individuals not part of the bargaining unit. In declining to award damages to the union, Arbitrator Dumoulin found that the union had not led any evidence that there were members who had been prejudiced by the violation of the collective agreement. At page 219, he writes as follows:

The two individual grievances before me were not lodged by employees who potentially could have been called upon by the employer to do the bargaining unit work performed by the assistant manager on April 8 and 10, 1993. No evidence was called on the availability, willingness or capability of any such employees liable to be asked to do the work in question. Hence, there can be no monetary award to other members of the bargaining unit.

9. In this case, however, it cannot be said that Local 599 failed to present evidence that it had members who were prejudiced by the violation of the collective agreement. As noted earlier, the parties agreed that there were unemployed members of Local 599 who were ready, willing and able to perform work for Heritage at the Project during the relevant time period. That is sufficient for the Board to find that Local 599 has established a claim for monetary relief resulting from the violation of the collective agreement by Heritage.

10. Finally, the Board rejects the argument that it should decline to award monetary relief on the basis that Heritage acted in good faith when it violated the collective agreement as it intended to enter into a bona fide subcontract with Mr. Natalizio. It is our view that whether Heritage acted in good faith or not in its dealings with Mr. Natalizio is irrelevant to the both the finding of a breach of the collective agreement and to the awarding of compensation. The Board cites with approval the following passage from Ellis-Don Limited, [1994] OLRB Rep. April 386 commencing at paragraph 15:

11. Counsel for the employer focused on the union's acknowledgement, during the course of the hearing which led to the Board's finding on liability, that the subcontract in question is a bona fide subcontract. This issue arose in the prior hearing when counsel for the employer sought to question a witness on new developments in the cleaning industry since the witness began business. The question was objected to on the basis of relevance. Counsel for the employer stated that the question related to the issue of whether there are appropriate union subcontractors available to perform the work. In argument in support of the objection, union counsel stated that it is the Labourers' position that Ellis-Don has the obligation to find a union subcontractor or use its own forces to perform the work. The Labourers do not dispute that this subcontract is bona fide.

12. Relying on the bona fides of the subcontract, counsel for the employer agrees that it is a management function to decide whether to perform work covered by the collective agreement with its own employees, or to engage a subcontractor. Counsel states that having conceded that the subcontract was a "bona fide" subcontract, taken for proper business reasons and no other reason, the union cannot now submit that there has been wrongdoing. It is an employer's right to make decisions based on business principles.

13. Counsel for Ellis-Don submits that the Board cannot determine the soundness of the decision to subcontract. It would be impossible for an employer to prove that it could not have performed the work itself. If money and efficiency are irrelevant, any business could decide to take on any work. This cannot be the issue. Therefore, once it is accepted that it is a proper exercise of management rights to decide to perform work directly or engage a subcontractor to perform work covered by the agreement, the scope of the Board's scrutiny of the decision taken must be limited to its bona fides. In counsel's submission, therefore, there is nothing for the Board to decide in the case before it.

14. In any event, the evidence of the union regarding the availability of subcontractors is problematic. The evidence amounts to a general assertion that any general contractor is capable of performing the work in question, since most of the contractors referred to are general contractors. The suggestion is either that Ellis-Don could have done the work with its own forces, or else that Ellis-Don should have subcontracted the cleaning work to another general contractor. This cannot be proof of the availability of suitable union subcontractors. The Board cannot accept the notion that a general contractor should be obliged to subcontract cleaning work to another general subcontractor. There is no evidence tendered by the union of union subcontractors in the cleaning business.

15. Counsel agreed that Ellis-Don made no attempt to find out whether there were any union subcontractors available and suitable to perform the work. At the time, Ellis-Don did not view the work as being in the construction industry. It has been proved wrong. At the time, however, its decision was made honestly.

16. In their submissions, counsel referred the Board to: Re Blouin Drywall Contractors Ltd. and United Brotherhood of Carpenters and Joiners of America, Local 2486 (1975) 1975 CanLII 707 (ON CA), 57 D.L.R. (3d) 199 (Ont. C.A.); Re McKenna Brothers Ltd. and Plumbers Union, Local 527 (1975) 1975 CanLII 2128 (ON LA), 10 L.A.C. (2d) 273 (Shime); Napev Construction Limited [1980] OLRB Rep. Feb. 260; Eton Construction Limited, [1981] OLRB Rep. July 872; George Ryder Construction Ltd., [1981] OLRB Rep. Dec. 1785; Piggott Construction Limited, [1985] OLRB Rep. Aug. 1290; Steve's Sheet Metal Company, [1986] OLRB Rep. Sept. 1309; Bechtel Canada Inc., [1993] OLRB Rep. May 400; Bechtel Canada Inc., [1993] OLRB Rep. July 581, and Ontario Hydro, [1978] OLRB Rep. April 331.

17. At the hearing, the union submitted a detailed chart showing its summary of damages owing. The chart is based on the hours of work performed by employees of Final Touch, with appropriate calculation for shift premiums, overtime and the like. Counsel for Ellis-Don had not been provided with this chart prior to the hearing, and requested an opportunity to review the chart to confirm its accuracy in terms of number of hours and when they were worked. Counsel stated that the employer did not dispute the principles applied to the calculations, but simple wanted to "double-check" the hours. The Board agreed to permit the employer this opportunity, and to receive written representations on this point.

18. The Board does not agree with counsel for the employer that the focus of the Board's inquiry is whether or not there was a bona fide decision taken to subcontract the work. Further, the Board does not accept that the bona fides of the decision taken in the case before us is determinative of the remaining issues.

Disposition

11. Having reviewed the material before us and the submissions of the parties, the Board hereby finds in favour of the applicant and orders Heritage to pay to Local 599 the sum of $18,751.44 forthwith.

“John Morgan Lewis”

for the Board