COURT OF APPEAL FOR ONTARIO

CITATION: Berry v. Pulley, 2015 ONCA 449

DATE: 20150619

DOCKET: C55933

Hoy A.C.J.O., Watt and Brown JJ.A.

BETWEEN

Patrick Berry, James Deluce, Jeffrey Karelsen, Robert James Simerson and Ernest Zurkan

Plaintiffs (Appellants)

and

Chris Pulley, Tom Fraser, James Griffith, Peter Wallace, George Cockburn, Denis Belhumeur, Greg Mutchler, Gary Dean, Yves Filion, Howard Malone, Kevin Vaillant and Gordon Grieg

Defendants (Respondents)

and

Kent Hardisty

Third Party (Respondent)

Benjamin Zarnett, Graham D. Smith and Peter R. Merchant, for the appellants

Steve Waller and Leanne Storms, for the respondents

Brian Shell and Steven Sagle, for the third party respondent

Heard: April 14, 2015

On appeal from the judgment of Justice Sarah E. Pepall of the Superior Court of Justice dated July 25, 2012, with reasons reported at 2012 ONSC 1790.

Hoy A.C.J.O.:

I overview

[1] This appeal arises out of turf wars waged nearly twenty years ago between Air Canada pilots and pilots of Air Ontario and other regional carriers in which Air Canada held an interest.

[2] In the late 1980s, Air Canada’s pilots became concerned that Air Canada would transfer domestic routes to the cheaper regional carriers, which had lower pilot costs. Some thought that merging the pilot seniority lists of Air Canada and the regional carriers would protect Air Canada pilots. They would get access to the routes that the regional pilots flew. Merger could also benefit the regional pilots. They would be able to bid on Air Canada planes, advance their careers, and make more money.

[3] On March 1, 1991, with the support of union executives from Air Canada, Air Ontario and four other regional airlines, the Canadian Airline Pilots Association (“CALPA”) – a trade union that, at its peak, represented 4,000 pilots in Canada – initiated a process to merge pilot seniority lists at Air Canada and five regional airlines. However, the Air Canada pilots and the regional pilots had different perspectives on how a merged seniority list should look. The Air Canada pilots pushed for an end-tail merger, in which the most senior regional pilot would follow the most junior Air Canada pilot. The regional pilots argued for a dove-tail merger, in which pilots would be assigned seniority numbers by start date, regardless of the airline for which they flew. Ultimately, an arbitrator – Michel Picher – crafted first a framework for a merged seniority list and then, a number of months later, drafted an actual merged seniority list.

[4] Neither the framework nor the list was binding on Air Canada and neither could be implemented without its agreement. CALPA contemplated that Air Canada’s agreement would be secured through collective bargaining.

[5] A couple of days after the arbitrator finalized the merged seniority list, the Air Canada pilots voted to leave CALPA and join a new union known as the Air Canada Pilots Association (“ACPA”). The merged seniority list was not implemented.

[6] In a class proceeding, the representative plaintiffs of a class comprised of 171 pilots employed by Air Ontario on March 28, 1995 claimed, among other things, that the defendant Air Canada pilots had committed the tort of unlawful act conspiracy. In particular, they alleged that from March 28, 1995 until November 14, 1995, Air Canada First Officer Chris Pulley – who was the Chairman of Air Canada’s Master Executive Council during that period – and defined sub-classes of Air Canada pilots conspired with each other by expressly or impliedly entering into an agreement or agreements to prevent implementation of the merged seniority list. The plaintiffs sued for expenses incurred in connection with creating the merged list and for the loss of the chance to implement the merged seniority list.

[7] Following a lengthy common issues trial, the trial judge dismissed the plaintiffs’ claims. She found that the plaintiffs’ claim for unlawful act conspiracy failed against the defendants in sub-classes two, four and six because those defendants had committed no unlawful acts, the second of the five elements in unlawful act conspiracy.

[8] After finding that the plaintiffs had established the first four elements of unlawful act conspiracy with respect to the defendants in sub-classes one, three and five, the trial judge dismissed the claims against those defendants because she found their unlawful conduct did not cause damage to the plaintiffs. Due to a number of barriers to implementation of a merged seniority list, the plaintiffs did not lose more than a de minimis chance to have a merged seniority list implemented.

[9] The plaintiffs advance four principal arguments on this appeal, all relating to their claim of unlawful act conspiracy:

1. The trial judge erred in concluding that a union member’s “right to dissent” permitted the defendants in sub-class six (Air Canada rank-and-file who somehow acted to prevent implementation of a merged seniority list) to resist implementation of the merged list. As a result, the trial judge wrongly concluded that the defendants in sub-class six acted lawfully in resisting implementation of the merged list.

2. The trial judge erred in concluding that sub-classes two and four (described below) did not commit unlawful acts related to the merged list.

3. The trial judge erred in her causation analysis. She should have concluded that the defendants’ unlawful conduct had caused the plaintiffs to lose more than a de minimis chance of having a merged seniority list implemented. She should then have gone on to value that lost chance.

4. The trial judge erred by failing to award damages equal to the $150,280 incurred by the plaintiffs in retaining lawyers and preparing for the arbitration with respect to the merged seniority list.

[10] As I explain below, I reject each of these arguments and would dismiss this appeal.

[11] Because I conclude that the trial judge did not err in her causation analysis, and that there is therefore no need to value the lost chance, I need not address the plaintiffs’ further argument that this court should value the lost chance in the aggregate on the evidence of the plaintiffs’ expert rather than refer the chance for individual assessment (as the trial judge would have ordered had she found causation).

[12] Before addressing the plaintiffs’ four principal arguments, I will first set out some portions of the background in more detail and then outline the elements of the tort of unlawful act conspiracy.

II THE BACKGROUND

The CALPA Constitution, the Merger Policy and the declaration of merger

[13] While the Air Canada pilots and the pilots of the various regional airlines formed separate bargaining units, they were all members of CALPA. CALPA had a Constitution and an Administrative Policy to which all members were bound. Under a section of CALPA’s Administrative Policy, the President of CALPA could declare a “merger” of pilot seniority lists, even if the pilots’ airlines had not actually merged operations. This section – referred to by the trial judge as the Merger Policy – set out a process for integrating the seniority lists of affected airlines once the President declared a merger.

[14] The CALPA Constitution provided for Local Councils. Each Local Council decided local matters and consisted of members who were employed by the same airline or division of an airline and who were based at the same location. In the relevant period, Air Canada had Local Councils in Montreal, Toronto, Winnipeg and Vancouver. Each Local Council elected a Local Executive Council (“LEC”).

[15] The CALPA Constitution also provided that each bargaining unit would have a Master Executive Council (“MEC”). The MEC was the highest governing body in all matters that only affected the active CALPA membership of a particular airline. The MEC was comprised of the Chairman and Vice-Chairman of each Local Executive Council. The members of the MEC elected a Chairman. First Officer Chris Pulley was the Chairman of Air Canada’s MEC from September 1994 until the Air Canada pilots decertified CALPA on November 14, 1995.

[16] At the request of the MEC Chairmen for Air Canada, Air Ontario and four other regional airlines, the President of CALPA declared a merger of pilot seniority lists in March 1991.

Unsuccessful negotiation of a merged seniority list

[17] As provided in the Merger Policy, the MEC of each merging bargaining unit appointed two Merger Representatives to negotiate a merged seniority list. One of Air Canada’s Merger Representatives is the defendant in sub-class two in this action.

[18] CALPA did not pay all expenses associated with the merger process. The MEC for each airline had to raise funds from its pilots. After an authorizing vote, the MECs deducted monies from pilots’ wages to pay merger-related expenses. Air Ontario’s merger-related expenses amounted to $238,000 up to November 15, 1995. Of that amount, $150,280 relates to their claim in this action and is the subject of the fourth issue that the plaintiffs raise on appeal.

[19] The various Merger Representatives were unable to agree on a merged seniority list. Mediations conducted in 1992 and 1993 failed. By late 1993, Air Canada’s MEC Chairman was receiving weekly if not daily communications on merger from Air Canada pilots, about 90% of whom were against merger. In response to pilot dissatisfaction, the Air Canada MEC in March 1994 passed a resolution to try and postpone, delay or cancel the merger of the seniority lists. The Air Canada MEC also tried to convince CALPA’s President to dissolve the merger.

[20] CALPA was not deterred. In accordance with the Merger Policy, Michel Picher had been appointed as arbitrator in January 1994 to put together the merged seniority list. Arbitration commenced in September 1994. Air Canada’s MEC participated fully in the arbitration.

The March Picher Award and events triggered by it

[21] On March 28, 1995, Mr. Picher released his first award (the “March Picher Award”). He contemplated two lists: one for seniority and a second for bidding on home base, flying equipment and status as captain or first officer (the latter two of which influenced a pilot’s income). He directed that an integrated seniority list be based on date of hire but left the dates of hire to be determined by the MECs. He selected an Air Canada pilot – P.J. O’Hara – to act as “top blocker” for bidding on base, equipment and status. Regional pilots senior to him would be treated as immediately junior to him for bidding purposes. In his reasons, Mr. Picher indicated that only the 15% most junior Air Canada pilots would compete with regional pilots in bidding on base, equipment and status. Mr. Picher invited the parties to fashion the two actual lists, but reserved jurisdiction in the event of a dispute.

[22] The Air Canada rank-and-file overwhelmingly opposed the March Picher Award. In April 1995, Air Canada’s MEC Chairman, First Officer Pulley, issued a newsletter questioning the legitimacy of the merger process. Air Canada Local Councils in Toronto, Winnipeg and Montreal passed motions directing the Air Canada MEC to reject the March Picher Award. In addition, the Montreal Local Council unanimously resolved that, among other things, the Air Canada MEC refuse to negotiate any agreement with Air Canada that would place any Air Canada pilot on the current seniority list junior to any regional pilot. The Montreal Local Council also resolved that Seniority Protection Committees be appointed at the Montreal level and at the MEC level to explore means to nullify the arbitration award.

[23] A Montreal-based Seniority Protection Committee was established and circulated a petition, entitled the “Declaration of Solidarity”. The Declaration of Solidarity was presented to Air Canada. It was also presented to CALPA’s Board of Directors with the hope that it would prompt them to stop the merger process.

[24] Air Canada pilots also sent letters to Hollis Harris, the Chief Executive Officer of Air Canada, complaining about the March Picher Award.

[25] The Air Canada MEC sought legal advice. Their lawyer told them the CALPA Constitution did not require the Air Canada MEC to put the March Picher Award into the collective agreement. The MEC unanimously passed a motion that recognized Air Canada pilots’ direction to cease any efforts to implement the March Picher Award. It also established the Special MEC Merger Advisory Committee (the “SMMAC”) to, among other things, provide options on the merged seniority list.

[26] The SMMAC recommended that the Air Canada MEC withdraw its grievance with Air Canada over Letter of Understanding 17 (“LOU 17”). LOU 17, concluded in 1988, provided that Air Canada could not transfer flying to regional airlines and then lay off Air Canada pilots due to loss of that flying. CALPA argued that Air Canada laid off pilots in 1993 because it transferred flying to the regional airlines. The SMMAC thought that pursuing the grievance risked demonstrating that Air Canada was playing its bargaining units off against one another. And that demonstration could provide fodder for an application under s. 35 of the Canada Labour Code, R.S.C. 1985, c. L-2. Under a s. 35 single employer application, the Canada Labour Relations Board (the “Board”) could declare Air Canada and its regional airlines a single employer and consolidate the pilot bargaining units into a single bargaining unit.

[27] Several meetings were held between late April and early August 1995 to construct seniority and bidding lists, as required by the March Picher Award. The Air Canada MEC did not agree to the proposed lists.

[28] The Air Canada collective bargaining agreement expired on April 1, 1995. First Officer Pulley and the Air Canada MEC directed the committee appointed to negotiate the new collective agreement not to raise the March Picher Award or the topic of a merged seniority list. Sub-class four of the defendants in this action consists of members of that negotiating committee.

[29] In April or May 1995, some Air Canada pilots began discussing formation of a new union. The Air Canada Pilots Association was subsequently formed and, in May 1995, it began soliciting support from Air Canada pilots. Because ACPA was seeking the right to represent Air Canada pilots, CALPA and the Air Canada MEC’s negotiating committee suspended collective bargaining with Air Canada on June 22, 1995. On July 7, ACPA applied for certification as bargaining agent for the Air Canada bargaining unit. In September, the Board ordered a representation vote to determine whether CALPA or ACPA would represent Air Canada pilots.

The Final Picher Award and de-certification of CALPA

[30] On October 9, Mr. Picher unsuccessfully attempted to mediate a resolution. He then proceeded to prepare finalized, merged seniority lists – the “Final Picher Award”. He released the Final Picher Award on November 7, 1995.

[31] On November 9, 1995, a substantial majority of Air Canada pilots voted to certify ACPA as the new bargaining agent for Air Canada pilots. On November 14, 1995, ACPA was certified and CALPA was subsequently decertified as the bargaining agent for Air Canada pilots. ACPA and Air Canada then negotiated a collective agreement.

[32] On March 20, 1996, CALPA filed an application before the Board, seeking a declaration that Air Canada and its five regional airlines constituted a single employer. On December 22, 1999, the Board declined to grant the relief requested. It had denied an Air Canada single employer application in 1989 and concluded that no change in the airline industry since warranted modifying its position.

[33] On February 1, 1997, CALPA merged with the Air Line Pilots Association (“ALPA”), a U.S.-based union. ALPA became the successor bargaining agent for the Air Ontario bargaining unit formerly represented by CALPA. ALPA, represented by Kent Hardisty, defended the main action as a Third Party and is the Third Party Respondent on this appeal. In a separate action, currently “on hold”, the Air Canada defendants seek indemnification from ALPA for any damages arising out of tort awarded to the plaintiffs. ALPA denies that the actions of the defendants were tortious.

III THE TORT OF UNLAWFUL ACT CONSPIRACY

[34] Before considering the issues raised on this appeal, it is useful to review the elements of unlawful act conspiracy.

[35] Canadian courts recognize two types of actionable conspiracy: Pro-Sys Consultants Ltd. v. Microsoft Corp., 2013 SCC 57, [2013] 3 S.C.R. 477, at para. 73. The first is predominant purpose conspiracy, also known as conspiracy to injure. This appeal involves the second type, which is known as unlawful means or unlawful act conspiracy.

[36] As outlined in Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460, 106 O.R. (3d) 427, at para. 26, a plaintiff must establish the following five elements to succeed on a claim of unlawful act conspiracy:

1. The defendants acted in combination, that is, in concert, by agreement or with a common design;

2. The defendants’ conduct was unlawful;

3. The defendants’ conduct was directed towards the plaintiff;

4. The defendants should have known that, in the circumstances, injury to the plaintiff was likely to result; and

5. The defendants’ conduct caused injury to the plaintiff.

[37] Only the trial judge’s conclusions on the second and fifth elements are at issue on appeal.

[38] With this framework, I turn to the first issue the plaintiffs raise on the second element: whether the members of sub-class six acted unlawfully in resisting implementation of a merged seniority list.

IV ISSUE One: DID THE “RIGHT TO DISSENT” permit THE DEFENDANTS IN SUB-CLASS SIX TO FRUSTRATE IMPLEMENTATION OF THE AWARD?

[39] To establish that the defendants in sub-class six (Air Canada rank-and-file who somehow acted to prevent implementation of a merged seniority list) were liable for unlawful act conspiracy, the plaintiffs had to establish that the defendants in sub-class six acted unlawfully in resisting implementation of the merged list. The trial judge acknowledged that the CALPA Constitution and Merger Policy constituted a contract between each union member and CALPA. The plaintiffs alleged that the members of sub-class six breached that contract and thereby acted unlawfully. At issue is how a union member’s right to dissent from the manner in which union affairs are conducted fits into this breach-of-contract analysis.

[40] Below, I first outline the trial judge’s reasons on this point, then summarize the plaintiffs’ arguments, and finally explain my conclusion that the defendants in sub-class six did not breach their contracts with CALPA. In interpreting the CALPA-member contract, I describe the relevance of sub-class six’s right to dissent.

The trial judge’s reasons

[41] Before considering whether the members of sub-class six breached their contract with CALPA, the trial judge considered the impact of a union member’s right of dissent on the contract analysis. She quoted the following passage from Tippett v. International Typographical Union, Local 226 (1975), 1975 CanLII 1024 (BC SC), 63 D.L.R. (3d) 522 (B.C. S.C.), at p. 546:

All members of trade unions have the unqualified right to speak out against the manner in which union affairs are conducted. There is a right of dissent. There is a right of decertification, subject to the condition that no member of a union shall conspire with his employer to injure the union… No person can be expelled or penalized by a trade union for insisting on his rights.

[42] She also cited Berry v. Pulley, 2002 SCC 40, [2002] 2 S.C.R. 493, the Supreme Court decision from an earlier point in this action. In 1998, the defendants brought a summary judgment motion that made its way to the Supreme Court. The court held that the plaintiffs’ breach of contract claims against the defendants could not prevail. The CALPA Constitution and Merger Policy constituted a contract between each union member and CALPA, not a contract between union members. At para. 60, Iacobucci J., for the court, endorsed the passage from Tippett and the unqualified right of union members to speak out against the agenda of their bargaining agent.

[43] The trial judge also cited the more recent decision of Fullowka v. Pinkerton’s of Canada Ltd., 2010 SCC 5, [2010] 1 S.C.R. 132, which, at para. 149, stated:

The relationship between a union member and his or her union is contractual in nature, with both the union and the member agreeing to be bound by the terms of the union constitution. However, the analogy to contract has its limits given that the relationship is greatly determined by the relevant statutory regime and the general principles of labour law which have been fashioned over the years. Significantly, the members have the “unqualified” right to speak out against the agenda of their bargaining agent.

[44] The trial judge then considered, at para. 417, whether a union member’s right to dissent permitted him or her to depart from the terms of the CALPA Constitution and Merger Policy. She concluded that the right to dissent did not permit members of sub-classes one through five, who were either officers of the union or members acting on behalf of officers, to so depart. However, members of sub-class six could seek to avoid implementation of a merged seniority list.

[45] At para. 419, she explained that the CALPA Constitution and Merger Policy did not require the members of sub-class six to act to implement the merged seniority list:

A review of the Merger Policy places the primary responsibility for implementation on CALPA, not the MECs, much less the individual members. Furthermore, while the Constitution bound union members, the Merger Policy provides that the President shall notify the MECs that it is their responsibility, as representatives of the affected pilots, to activate the described procedure for the integration of the pilot lists. The remainder of the Merger Policy describes the role of the MEC, the Merger Representatives and CALPA. With the exception of a passing reference to “pilot groups” in section 5(a) of the Merger Policy, there is no reference to the individual union members.

[46] She concluded, at paras. 420 and 421:

It seems to me that the unqualified right to dissent should operate to permit members of Class 6 to speak out against the agenda of CALPA and its union officers in these circumstances.

Many members of Class 6 communicated with Air Canada, urged the MEC and LECs to oppose the implementation of an integrated seniority list, supported the formation of SMMAC or the Local Seniority Protection Committee, signed the Declaration of Solidarity, and took other steps and positions to advocate against the imposition of the Picher Award. I decline to find that any of these actions or the conduct advanced by the Plaintiffs constituted unlawful conduct for the purposes of liability for conspiracy. Rather, they were permissible given the Class members’ right to dissent.

The plaintiffs’ argument

[47] The plaintiffs’ argument has two prongs. The second prong depends on the success of the first.

[48] First, the plaintiffs argue that the trial judge erred in concluding that the conduct of the rank-and-file members did not breach their contract with the union.

[49] The plaintiffs argue that the provisions of the Merger Policy bound all union members, including the rank-and-file members of sub-class six, to implement the merged seniority list. Section 1(c) of the Merger Policy provides that the Merger Representatives “will have authority to act for and on behalf of the pilots of their respective airlines for the purpose of compiling a single integrated seniority list”. The Merger Policy also mandates arbitration if the Merger Representatives cannot agree on an integrated pilot seniority list through negotiation or mediation. The Merger Representatives of each airline participate in the selection of the arbitrator. The arbitrator’s decision binds all parties to the arbitration.

[50] The plaintiffs submit that a party to a contract who renders it impossible to perform the contract breaches the contract: Culina v. Giuliani, 1971 CanLII 22 (SCC), [1972] S.C.R. 343, at pp. 357-58, citing Southern Foundries (1926), Ltd. v. Shirlaw, [1940] A.C. 701 (H.L. Eng.). Therefore, they say, because the Constitution and the Merger Policy bound the members of sub-class six, those members could not take any steps – including forming a new union and decertifying CALPA as their bargaining agent – to intentionally thwart implementation of the merged list.

[51] Second, if a union member harms another member by the breach of the union’s rules, the injured member may (if the requisite elements are present) have an action in tort against that member: Berry (SCC), at para. 64. The plaintiffs submit that a union member’s “right to dissent” does not insulate him or her from tort claims from other union members.

[52] The plaintiffs argue that Winkler J. (as he then was) “got it right” in his obiter comment in the summary judgment motion in this action: Berry v. Pulley (1999), 1999 CanLII 15079 (ON SC), 45 O.R. (3d) 449 (S.C.). There, Winkler J. wrote, at para. 78:

The assertion of a right of dissent in this case ignores the process that led to the Picher award. The defendants participated, through representatives, in the process with full opportunity to have their views heard by an independent arbiter. Consequently, I find that the defendants’ submission that their actions were justifiable based on a right to dissent to be untenable.

[53] This paragraph, the plaintiffs say, supports their position that the right to dissent does not insulate the members of sub-class six from the plaintiffs’ tort claims.

Analysis

[54] The plaintiffs argue on appeal that the members of sub-class six breached their contracts with CALPA. I agree with the trial judge that members of sub-class six did not breach their contracts with CALPA in their attempts to avoid the implementation of the March Picher Award and the Final Picher Award. The plaintiffs’ argument accordingly fails.

[55] In considering the plaintiffs’ argument that the members of sub-class six breached their contracts with CALPA, it is important to keep in mind the Supreme Court’s comments in Berry about the nature of the contract between the member and the trade union. The union-member contract is a unique adhesion contract: Berry (SCC), at para. 49. While, by the act of membership, both the union and the member agree to be bound by the terms of the union constitution, “the terms of the contractual relationship… will be greatly determined by the statutory regime affecting unions generally as well as the labour law principles that courts have fashioned over the years”: Berry (SCC), at para. 48. As the court pointed out, at para. 49, the statutory context plays a very important role:

For example, the statutory right of members to be represented by the union of their choice implies that the contract only exists as long as the members maintain that union as their bargaining agent, and no penalty could be imposed by the contract against members for exercising this statutory right.

[56] As the Supreme Court also noted at para. 49, “the unique character and context of [a member-union] contract, as well as the nature of the questions in issue, will necessarily inform its construction in any given situation.”

[57] Accordingly, the terms of the contractual relationship between the rank-and-file members of sub-class six and CALPA must be interpreted in light of both the statutory right of union members to choose their union[^1] and the labour law principle affording a right to dissent to union members.

[58] The trial judge concluded, and I agree, that that the Constitution and Merger Policy did not expressly require the members of sub-class six to act to implement a merged seniority list. Nor did the Merger Policy expressly require the members of sub-class six to refrain from impeding or thwarting implementation of a merged list. Having regard to the statutory right of union members to choose their union and the labour law principle affording a right to dissent to union members, I would not imply such a term. Interpreting the terms of the contractual relationship between the rank-and-file members of sub-class six in light of the applicable principles, the members of sub-class six did not breach their contracts with CALPA in voting to form ACPA and in taking other steps to avoid implementation of a merged seniority list.

[59] This case does not involve a situation where a union member’s right to dissent conflicts with an express provision of the union-member contract. While I am doubtful that a provision directly or indirectly prohibiting dissent would survive in what the Supreme Court has characterized as a unique adhesion contract, that issue is best left for another day.

[60] Culina does not help the plaintiffs.The contract between the members of sub-class six and CALPA did not require the members of sub-class six to act to implement, or to refrain from sabotaging, the merged seniority list.

[61] Nor does Winkler J.’s obiter comment assist the plaintiffs. First, as discussed above, the trial judge’s conclusion was driven by her interpretation of the union-member contract. Second, the defendants were not yet divided into sub-classes when Winkler J. gave his reasons. The trial judge determined that the right to dissent did not apply to sub-classes one through five (the sub-classes made up of union officers or members who worked on behalf of those officers). Winkler J. might well have taken a more nuanced position had the defendants been divided into sub-classes when he wrote his reasons. In light of the subsequent, clear direction from the Supreme Court, I would interpret his statement in obiter as restricted to the members of sub-classes one through five.

[62] I turn next to whether the members of sub-classes two and four acted unlawfully.

V ISSUE Two: DID THE TRIAL JUDGE ERR IN FINDING THAT THE MEMBERS OF SUB-CLASSES Two AND Four COMMITTED NO UNLAWFUL ACTS?

[63] The plaintiffs’ factum devoted a single paragraph to the argument that the trial judge erred in concluding that the defendants in sub-classes two and four committed no unlawful acts. The plaintiffs did not allude to the argument in their oral submissions. I will address the argument very briefly.

[64] The trial judge found that the members of the Air Canada MEC, who comprise sub-class one, engaged in unlawful conduct by breaching duties of loyalty to CALPA and breaching their contractual obligations under the Merger Policy. The trial judge found that the members of sub-classes two (one of the Air Canada pilots’ Merger Representatives) and four (members of the committee appointed by the Air Canada MEC to negotiate the new Air Canada collective bargaining agreement) did not owe duties of loyalty to CALPA. The trial judge also concluded, at para. 429, that members of sub-class two and sub-class four did not commit unlawful acts on the basis of breach of the Merger Policy. She found that the members of sub-classes two and four “had a limited contractual role. In addition, they acted under the control and direction of the Air Canada MEC. Furthermore, it is not clear to me that their conduct did amount to a breach of contract.”

[65] The plaintiffs argue that whether the members of sub-classes two and four acted under others’ direction is irrelevant and does not change the fact that they were bound, as union members, to abide by the Merger Policy.

[66] However, this argument does not address the trial judge’s key determination. The trial judge had to decide whether the members of the sub-classes, in their capacities as Merger Representatives or negotiating committee members, breached the Merger Policy. In addition to finding that the members of these two sub-classes acted under the control and direction of the Air Canada MEC, the trial judge found that their conduct did not breach the Merger Policy. The plaintiffs do not articulate how the trial judge erred in her interpretation of the Merger Policy, if they in fact argue that she did err. I am not persuaded that there is any basis to interfere with the trial judge’s conclusion that sub-classes two and four did not breach the Merger Policy.

[67] I turn next to the two issues arising out the fifth element of unlawful act conspiracy: causation.

VI ISSUE Three: DID THE TRIAL JUDGE ERR IN HER CAUSATION ANALYSIS?

[68] The fifth and final element of unlawful act conspiracy required the plaintiffs to prove that the defendants’ wrongful conduct caused them injury. The plaintiffs put forward as their main injury the loss of the chance to implement the merged seniority list. They say that the trial judge erred in concluding that, even without the defendants’ unlawful acts, the chance of implementing the merged seniority list was not more than de minimis. As a result of that error, the trial judge failed to value the probability of implementing the merged seniority list.

[69] In my view, the trial judge made no error. First, I outline the legal framework applied when a plaintiff claims injury consisting of the loss of a chance to achieve a benefit or avoid a loss. Then I review the relevant portion of the trial judge’s reasons, outline the plaintiffs’ arguments on this issue, and finally explain my conclusion.

The loss of chance doctrine

[70] A two-step framework applies when a plaintiff alleges injury consisting of the loss of the chance to achieve a benefit or avoid a loss. Folland v. Reardon (2005), 2005 CanLII 1403 (ON CA), 74 O.R. (3d) 688 (C.A.), at para. 73, outlines the four criteria the plaintiff must meet at the first step:

First, the plaintiff must establish on the balance of probabilities that but for the defendant’s wrongful conduct, the plaintiff had a chance to obtain a benefit or avoid a loss. Second, the plaintiff must show that the chance lost was sufficiently real and significant to rise above mere speculation. Third, the plaintiff must demonstrate that the outcome, that is, whether the plaintiff would have avoided the loss or made the gain, depended on someone or something other than the plaintiff himself or herself. Fourth, the plaintiff must show that the lost chance had some practical value. [Citations omitted.]

[71] As Doherty J.A. noted in Folland, at para. 74, the second criterion is “somewhat nebulous. There is no bright line between a real chance and a speculative chance. An empirical review of the case law suggests that chances assessed at less than 15 percent are seldom viewed as real chances.” This de minimis threshold has also been described as requiring the plaintiff to prove she had “some reasonable probability” of realizing “an advantage of some real substantial monetary value”: Kinkel v. Hyman, 1939 CanLII 7 (SCC), [1939] S.C.R. 364, at p. 383; see also Eastwalsh Homes Ltd. v. Anatal Developments Ltd. (1993), 1993 CanLII 3431 (ON CA), 12 O.R. (3d) 675 (C.A.), at pp. 689-90, leave to appeal refused, [1993] S.C.C.A. No. 225.

[72] If these four criteria are met, the court proceeds to the second step and will award damages equal to the probability of securing the lost benefit (or avoiding the loss) multiplied by the value of the lost benefit (or the loss sustained): see Wong v. 407527 Ontario Ltd. (1999), 1999 CanLII 3788 (ON CA), 179 D.L.R. (4th) 38 (Ont. C.A.), at para. 27.

The trial judge’s reasons

[73] After outlining the loss of chance doctrine, the trial judge concluded that the plaintiffs failed to establish that they had lost any chance above the de minimis range for any one of a number of reasons, which she detailed. I will enumerate only a few of them.

[74] First, the decertification of CALPA as the bargaining agent for the Air Canada pilots, which she found was lawful, terminated the prospect of implementing the merged seniority list through collective bargaining. Mr. Picher issued the Final Picher Award only one week before CALPA ceased to represent the Air Canada pilots. The chance of implementing the Final Picher Award in that very short period was negligible.

[75] Second and critically, Air Canada needed to agree for the parties to implement the merged seniority list. As she explained, in the absence of consent by Air Canada, a merged list was no more than “a bargaining position”. She accepted the evidence of Hollis Harris, the CEO of Air Canada at the relevant time. He testified that only he had the authority to accept the Picher Award and would not have done so. According to Mr. Harris, “[i]t would have been a financial disaster” to agree to a merged list. Based on his evidence, which was “credible”, “forceful” and “unequivocal”, she found, at para. 457, that:

[E]ven if the Defendants had fully complied with the Merger Policy and taken all necessary steps to implement the integrated seniority list, there was no possibility that Air Canada would have agreed to a merged list.

[76] Third, Air Canada pilots could not legally strike to force Air Canada to agree to a merged seniority list.

The plaintiffs’ arguments on appeal

[77] The plaintiffs do not take issue with the parameters of the loss of chance doctrine or the trial judge’s articulation of the doctrine. In essence, they make three arguments.

[78] First, they argue that the trial judge should have assessed the second criterion in the first step – whether the plaintiffs lost a chance above the de minimis range – beginning with the March Picher Award, and not the Final Picher Award. They say that the chance to implement a merged seniority list arose with the March Picher Award. They argue that chance was clearly real and significant, as evidenced by the defendants’ strenuous efforts to frustrate implementation of the Award. And, they continue, in March 1995, before the defendants engaged in wrongful conduct, there was clearly a reasonable probability of implementing a merged seniority list. The Air Canada MEC was about to begin collective bargaining with Air Canada and could have bargained to include the merged seniority list. In addition, CALPA was in a position to apply for a single employer declaration, relying on the LOU 17 grievance as evidence that Air Canada was undermining bargaining rights by playing bargaining units off against one another. They argue that either alternative could have resulted in implementation of a merged seniority list. Ignoring wrongdoing by the defendants, the contingencies that had to work out in the plaintiffs’ favour to implement the March Picher Award did not discount the value of the chance to a de minimis level. Accordingly, the trial judge should have valued the lost chance of implementing a merged seniority list.

[79] Second, the plaintiffs submit that figuring out what would have happened but for the defendants’ wrongful conduct is particularly challenging in this case because the defendants committed so many unlawful acts. In interpreting the impact of the defendants’ unlawful acts, the plaintiffs argue the trial judge simply got it wrong. They argue that Mr. Harris’ evidence did not foreclose the chance to implement a merged list. They submit that if events had transpired differently, Mr. Harris might have offered a more equivocal position.

[80] Third, they argue that although the trial judge properly directed herself to consider not what did happen but what would have happened but for the defendants’ wrongful conduct, she failed to follow that direction when she analyzed the potential success of a single employer application. They say the trial judge did not assess what would have happened had the Air Canada MEC not withdrawn its grievance with Air Canada over LOU 17 and had instead supported CALPA’s single employer application. This, they submit, amounted to an error in principle. The plaintiffs argue that had the trial judge conducted this portion of her analysis correctly, she would (or should) have concluded that there was a reasonable probability that, absent the defendants’ wrongful conduct, a single employer application would have been successful. They argue that if a single employer application had been successful, the chance of implementing the merged seniority list would have been more than de minimis.

Analysis

[81] In my view, all of the plaintiffs’ arguments fail in the face of the trial judge’s acceptance of Mr. Harris’ evidence, her detailed analysis of the circumstances leading to decertification, and her assessment of the lawfulness of the defendants’ actions. I explain my reasoning below in relation to each of the three arguments advanced.

[82] The plaintiffs’ first argument attempts to characterize what was inherently an exercise in meticulous fact-finding as an error in principle. Ultimately, nothing turns on whether the analysis focussed on the chance of implementing the March Picher Award or the Final Picher Award. Whether the Air Canada MEC had raised a merged seniority list in the collective bargaining process or CALPA had sought and won a single employer declaration before negotiating, Air Canada had to agree to a merged list. Air Canada’s opposition to a merged seniority list pre-dated the March Picher Award. The trial judge was entitled to accept the evidence of Mr. Harris that he would not have accepted a merged seniority list. She found that Air Canada would have inevitably rejected a merged list and that, for this reason alone, the chance of implementing a merged seniority list did not arise above the de minimis threshold.

[83] In substantial part, the plaintiffs’ second argument is rooted in sub-class six’s efforts to form ACPA and decertify CALPA, efforts the plaintiffs argued were unlawful. For example, they say that if ACPA had not been formed and CALPA decertified, the chance of implementing the merged seniority list would have exceeded the de minimis threshold. By way of illustration, they argue that but for the unlawful conduct of the Air Canada MEC, the March Picher Award, which set out a framework for a merged seniority list, would have been mentioned in collective bargaining negotiations with Air Canada and, if ACPA had not been formed, the negotiations would not have been suspended and the Air Canada pilots might have been able to fulfill the statutory preconditions to a legal strike. Moreover, if CALPA had not been decertified, the window within which to implement the merged seniority list would not have prematurely shut.

[84] Whether the plaintiffs’ chance was more than de minimis is essentially a determination of fact. I concluded, above, that the trial judge correctly found that the sub-class six defendants’ conduct in forming ACPA and decertifying CALPA was lawful. That conclusion reduces the plaintiffs’ second argument to one that the trial judge committed palpable and overriding errors in finding that the chance of implementing the merged seniority lists did not rise above a de minimis level even without the defendants’ unlawful conduct.

[85] I am not persuaded that the trial judge made any palpable and overriding errors. Indeed, I agree with her conclusion. She heard months of evidence. She reviewed the conduct of all the defendants in comprehensive and cogent reasons that reached 567 paragraphs in length. She clearly understood the implications and interplay of the conduct at issue, both lawful and unlawful. In the case of the Air Canada pilots’ ability to strike that the plaintiffs allude to, the trial judge explained both that the Merger Policy did not require the Air Canada pilots to strike to obtain a merged seniority list and that the suspension of collective bargaining was not the only reason why the Air Canada pilots could not legally strike to obtain a merged seniority list. The plaintiffs do not challenge those other reasons the Air Canada pilots could not legally strike to force Air Canada acceptance of a merged list.

[86] Each of the trial judge’s reasons for concluding that the plaintiffs’ chance of implementing the merged seniority list did not exceed the de minimis threshold was fully supported by the evidence and is logically sound.

[87] To put the plaintiffs’ third argument in context, it is necessary to consider what the trial judge said about the single employer application. She explained that it was CALPA and not the Air Canada MEC that had to bring a single employer application, that CALPA did not do so until March 1996, that six different unions representing various bargaining units opposed the application, and that the Board dismissed CALPA’s application in December 1999, stating that it failed utterly.

[88] At para. 471, she wrote the passage with which the plaintiffs take issue: “It is not possible or indeed appropriate to second guess [the Board’s] decision based on speculation that it would have been different if supported by the Air Canada pilots and if the LOU 17 grievance had been pursued.” She noted that the Board had dismissed an Air Canada single employer application in 1989. She concluded that “there was no possibility or probability that a single employer application would have had a different result but for the Defendants’ conduct.”

[89] The plaintiffs argue that while the trial judge declined to speculate whether the outcome might have been different, the loss of chance doctrine required exactly that hypothetical assessment. They say that had she engaged in that assessment, she would (or should) have concluded that, absent the defendants’ wrongful conduct, there was a reasonable probability CALPA would have won a single employer declaration. They argue that the withdrawal of the LOU 17 grievance played a crucial role in the failure of the application.

[90] They also argue that the trial judge erred in excluding the opinion of their expert, Professor McLaren, on the basis that it pertained to domestic law. He opined that had the Air Canada pilots supported a single employer application, it was highly likely that the Board would have exercised its discretion to grant the application. The plaintiffs argue that this was an opinion on a matter of fact (what the Board might have decided under different circumstances) and not law.

[91] The plaintiffs’ argument is flawed. It assumes that the defendants were required to support a single employer application. The trial judge found, at para. 426, that “[t]he Air Canada MEC was entitled to work to prevent a [single employer] application” and, at para. 467, that the Merger Policy did not call for a single employer application. Those findings are not challenged on appeal. While the trial judge was required to consider what would have happened but for the defendants’ wrongful conduct, she was not required to speculate about what would have happened but for lawful conduct. She was correct that it was not “appropriate to second guess [the Board’s] decision based on speculation that it would have been different if supported by the Air Canada pilots and if the LOU 17 grievance had been pursued.”

[92] Professor McLaren’s opinion, which assumed the defendants supported a single employer application, was therefore of no assistance to the plaintiffs.

[93] I turn now to the final issue.

VII ISSUE Four: DID THE TRIAL JUDGE ERR BY NOT AWARDING Merger Expenses DAMAGES OF $150,280?

[94] The fourth element of unlawful act conspiracy required the plaintiffs to establish that the defendants should have known that injury to the plaintiffs was likely to result from their unlawful conduct. At para. 442, the trial judge found the plaintiffs had established the fourth element:

Clearly the Air Canada pilots knew or ought to have known that the [regional] pilots might have been harmed. They certainly knew or ought to have known that the Air Ontario pilots were subject to assessments for merger expenses just as the Air Canada pilots were themselves.

[95] Elsewhere in her reasons, the trial judge determined that those merger expenses totalled $150,280.

[96] The plaintiffs argue that once the trial judge found that the merger expenses constituted an injury to the plaintiffs that the defendants knew or ought to have known would result from their unlawful conduct, she erred by not, at a minimum, awarding damages of $150,280.

[97] I disagree. I conclude that the plaintiffs are not entitled to the merger expenses.

[98] The trial judge’s conclusion on loss of chance disposes of the plaintiff’s argument. The plaintiffs had to establish that, but for the defendants’ wrongful conduct, the merger expenses they incurred would not have been for naught. The trial judge concluded that regardless of the defendants’ wrongful conduct, the merged seniority list would not have been implemented. Therefore, the defendants by their wrongful conduct did not cause the merger expenses to come to no end. The plaintiffs’ claim for merger expenses fails because they have not established that the defendants’ wrongful conduct caused the loss of those expenses.

VIII DISPOSITION

[99] For the foregoing reasons, I would dismiss this appeal. The parties agreed that the successful party on this appeal would be entitled to costs in the amount of $175,000, inclusive of disbursements and HST. I would accordingly order the plaintiffs to pay such amount to the defendants.

[100] The Third Party Respondent, ALPA, did not seek costs and shall not be entitled to them.

Released: “AH” “JUN 19 2015”

“Alexandra Hoy A.C.J.O.”

“I agree David Watt J.A.”

“I agree David Brown J.A.”

[^1]: See s. 38(1) of the Canada Labour Code, which provides a statutory right to decertify a bargaining agent:

Where a trade union has been certified as the bargaining agent for a bargaining unit, any employee who claims to represent a majority of the employees in the bargaining unit may, subject to subsection (5), apply to the Board for an order revoking the certification of that trade union.