1049-99-R The United Food and Commercial Workers’ International Union, Local 175, Applicant v. Sobeys; Brimley Price Chopper; 1349203 Ontario Inc. c.o.b. as Britannia IGA; Byng Price Chopper; 1356210 Ontario Limited c.o.b. as Creditview Price Chopper; Dundas IGA; Gerrard IGA; Leslie Price Chopper; 1356098 Ontario Limited c.o.b. as Rathburn Price Chopper; 1356094 Ontario Limited c.o.b. as Wentworth IGA, Responding Parties.
BEFORE: Christopher J. Albertyn, Vice-Chair.
APPEARANCES: Kelvin Kucey and Kate Chrysler for the applicant; Fred Hamilton and Terry Parnell for Sobeys; David L. Brisbin and Dave Armstrong for 1349203 – Britannia IGA; Magnatta Enzo for 1359307 Ontario Inc.; Donald D. White and Bob Miller for Byng Price Chopper; W. J. Hayter and John Cioffi for 1356097 Ontario Limited c.o.b. Leslie St. Price Chopper; Stephen A. McArthur, Jodi M. Tarter, Peter Marturano and Alex Hamilton for Gerrard Price Chopper and Creditview Price Chopper; John M. Wigle and Len Lupton for Dundas St. IGA; George Pollitt for 1356094 c.o.b. Wentworth IGA.
DECISION OF THE BOARD; March 10, 2000
This is an application under section 69 and subsection 1(4) of the Labour Relations Act, 1995, S.O. 1995, c.1, as amended (“the Act”). The relief sought by the applicant (“the union”) is a declaration that a sale of business has occurred as between Sobeys and the other responding parties, alternatively that the responding parties constitute one employer for purposes of the Act.
A hearing was held on February 29, 2000. The responding parties moved that the application be dismissed for failing to disclose a prima facie case. The union applied under subsection 1(5) of the Act for an order requiring the production of various documents.
This decision addresses these two motions.
Some background is useful. The union had bargaining rights in respect of 14 of Sobeys’ retail outlets. On May 20, 1999 Sobeys informed the union that it was selling 9 of the 14 stores. It did so. As part of the sale the 9 purchasers became franchisees of Sobeys. They are the responding parties besides Sobeys (”the franchisees”). Each of them has acknowledged that it is a successor employer, as contemplated in section 69 of the Act, and each has undertaken to be bound by the collective agreement between the union and Sobeys. They are willing to accept a declaration under section 69 of their successor status, if that is necessary.
Sobeys’ counsel explains that it operates approximately 200 franchises in Ontario, among them the nine affected by this application. He contends that the relationship between Sobeys and the franchisees is no different from that which obtains in respect of the other franchisees with whom Sobeys has concluded a franchise agreement. All are separate businesses from each other, and all operate at arms length from Sobeys, particularly as regards labour relations.
The union is not content with a declaration under section 69 in respect of each of the successor employers. It wants a declaration that they and Sobeys together constitute one employer as contemplated under subsection 1(4) of the Act.
The union’s factual allegations which advance its claim for a declaration under subsection 1(4) of the Act are the following: the work performed by the bargaining unit employees in the 9 stores is identical to what they did under Sobeys; the IGA and Price Chopper signs, which characterize the operations, are unchanged; Ms. Parnell, Sobeys’ Director of Human Resources of its Retail Operations, is a key individual in the operation of Sobeys and the franchisees; all aspects of each franchise operation (e.g. payroll, bookkeeping, purchasing, advertising, accounting and human resources) are monitored by Sobeys; labour relations and contractual negotiations are controlled and directed by a common management and group policy.
These allegations are denied or qualified in the various responses of the responding parties. For the purposes of the motion to dismiss the subsection 1(4) portion of the application for failing to disclose a prima facie case, the union’s allegations must be deemed to be true and provable. The essence of the averments by the franchisees is that they each conduct their businesses separately and for their own individual profit, under their own, independent control.
There is no allegation by the union of any intermingling between employees of the different franchisees. There is also no suggestion of any association or related activity or business as between the different franchisees. At best for the union it has made allegations which create the possibility of a finding of common control or direction as between Sobeys and each franchisee severally. It has not made allegations which link each franchisee to every other franchisee without Sobeys in a situation of common control or direction.
The union answers this problem by contending that if it has proper discovery of the relevant documents in this application it will likely be in a position to show common direction as between the franchisees.
The responding parties argue that no labour relations purpose would be served by allowing the union to pursue its subsection 1(4) allegation. They contend that none has been alleged by the union. It will be costly for the parties to do so, it will be time consuming for the Board, and the union has secured the successorship entitlement it seeks in relation to the franchisees by reason of the sales which occurred between Sobeys and each of them. Furthermore, the union’s collective bargaining rights are intact, each franchisee has recognized the union as the collective bargaining agent of its employees under the terms of the collective agreement which the union had with Sobeys and each is engaged in a separate collective bargaining relationship with the union.
The union answers these arguments by contending that the union is entitled to deal with the person who exercises real economic power. If, as it contends, Sobeys and the franchisees are one and the same person for purposes of labour relations, then the union should be entitled to establish that in evidence and to have the declaration it seeks. The labour relations purpose that would serve would be to have the union in a bargaining relationship with the real employer and not with some artificial entity which possesses no real autonomy or independence.
The delay in the resolution of this matter is affecting the on-going relationship between the individual franchisees and the union because the parties are not aware of the parameters of their obligations. Dismissal of the union’s subsection 1(4) application would, in the responding parties’ submission, bring immediate clarity to the situation.
I need to say something of the documents which have been produced thus far. Shortly before the hearing Sobeys produced a bundle of documents containing the generic form of the contracts concluded between Sobeys and each of the franchisees. These documents are: a sample Price Chopper Letter of Intent and Transmittal; Loan Agreement; Associate Security Agreement; Equipment Lease; Operating Agreement; Sublease; Employee Assumption Agreement - under which the franchisee concerned assumes all responsibility for Sobeys’ employment obligations to employees and for Sobeys’ collective bargaining obligations to the union and it indemnifies Sobeys accordingly; Price Chopper Franchise Agreement; Payroll Agreement and Price Chopper Retail Accounting Service Agreements. An equivalent set of documents is produced in respect of the IGA franchises. The union contends this is inadequate production because it does not contain the details of each contractual arrangement between Sobeys and each franchisee.
On their face the documents suggest an arm’s length arrangement between Sobeys and each franchisee. It is clear from the documents that franchisees conduct their own businesses and that, for the purposes of labour relations, they are not under common control or direction with Sobeys. The union contends, though, that it is not possible to come to this conclusion with any degree of certainty until the actual, signed agreements between Sobeys and each franchisee are produced so that the Board can determine whether there is, in fact, a relationship of dependence or independence such that an order under subsection 1(4) would be appropriate or inappropriate, as the case may be. The union submits that it is premature to reach any conclusion on the documents produced thus far because they do not contain the actual contractual terms between Sobeys and the franchisees.
The responding parties oppose any order for production of the actual contracts concluded between Sobeys and each franchisee. All that is missing from the generic documents produced thus far are the financial details of the contractual arrangements, and they contend the union does not need that information in order to advance its case. They say the documents are confidential. They contain sensitive financial information which should remain confidential as between Sobeys and each franchisee. They are against the information in each contract being disclosed to the union or to the other franchisees; the relationship between Sobeys and each franchisee is a matter which they would like to keep private. They argue that the interest of Sobeys and the franchisees to maintain the confidentiality of the documents far outweighs any evidentiary benefit which the union might derive from production. The union responds by contending that it needs to have a clear, transparent picture of the true state of the contractual relationship between Sobeys and each franchisee if it is to be able to prove the allegation it has made of relatedness, as contemplated under subsection 1(4). The union is willing to undertake not to disclose the content of the actual documents to any person, nor to use them in any proceedings besides this and to return them upon the conclusion of this matter.
The union has sought declarations under section 69 and subsection 1(4) in the alternative. The responding parties argue that, by being in a position to obtain the declaration it seeks under section 69, the union has no entitlement to pursue the alternative relief, which is framed as alternative relief. I am not persuaded by this argument. The declarations sought have different labour relations implications (that is obvious from the positions adopted by the parties) and it is legitimate for a union to want relief under subsection 1(4) even although it can obtain a declaration under section 69. A union may well seek to obtain a declaration under subsection 1(4), even although it can, by consent or otherwise, obtain an order under section 69.
Subsections 1(4) and 1(5) are to be read together. They read:
(4) Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions concerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.
(5) Where, in an application made pursuant to subsection (4), it is alleged that more than one corporation, individual, firm, syndicate or association or any combination thereof are or were under common control or direction, the respondents to the application shall adduce at the hearing all facts within their knowledge that are material to the allegation.
It is plain from subsection 1(5) that the union concerned is assumed not to know much about the actual contractual relationship or the extent of common control or direction as between the entities in respect of which it makes its application. It is sufficient for a union to make an allegation of the existence of common control or direction in order for it to enjoy the benefits of the evidentiary burden placed upon employers. There is no requirement of great particularity; no necessity of making detailed allegations which describe the facts the union wishes ultimately to prove. It is sufficient for a union to make the allegation, to then be shown the relevant documents, from which a proper determination can be made as to whether common control or direction exists, and further consideration can be given as to whether the Board should exercise its discretion to grant the declaration contemplated in subsection 1(4).
A motion to dismiss a subsection 1(4) application at a preliminary stage for failing to disclose a prima facie case, should be granted only in the clearest of cases, when there is absolutely nothing in the application upon which the Board could reasonably conclude that a declaration under subsection 1(4) could be granted.
Although there is considerable doubt as to whether the union can show that there is a relationship between each individual franchisee such that subsection 1(4) might apply as between them, the union has, though, in my view, established a prima facie case for relief under subsection 1(4) in respect of the relationship between each franchisee and Sobeys. The application may therefore proceed.
I recognize the confidential nature of the documents which the responding parties are reluctant to produce. However, the union should have a fair opportunity to try to prove the allegation of relatedness it has made. In the circumstances, I direct that the union’s counsel may peruse the actual terms of the contracts between Sobeys and the individual franchisees, at the offices of Sobeys’ counsel. The information shown to the applicant’s counsel may not be used in any other proceedings and, subject to his entitlement to take instructions, it shall remain confidential. Should the applicant’s counsel consider any portion of any of the contracts, not so far disclosed, to be relevant to the further proceedings in this matter, failing agreement as to its production with counsel for Sobeys and counsel for the franchisee concerned, I will consider the matter.
In the interests of saving time and costs in this matter, consideration should be given by the applicant and the responding parties as to whether the application should proceed in respect of Sobeys and a limited number of franchisees, perhaps only one. Such an arrangement should not affect the disclosure direction I have given above. The union should be able to make its decision on this suggestion on the basis of an assessment of the documents which are shown under this decision. If the parties do reach an arrangement for the further proceeding of this application which will have the effect of allowing for the non-participation of some of the franchisees, then the rights of those released from the proceedings would be reserved, pending the outcome of the hearing.
“Christopher J. Albertyn”
for the Board