Court File and Parties

Court File No.: CV-13-484365 Motion Heard: June 16, 2015 Superior Court of Justice – Ontario

Re: Michael O'Brien, Plaintiff v. Universal Workers Union, Labourers' International Union of North America Local 183, Defendants v. Durval Terceira and Cesar Daniel Avero, Third Parties v. Labourers International Union of North America, Joseph Mancinelli and Cosmo Manella, Fourth Parties v. Daniel Randazzo, Fifth Party

Court File No.: CV-13-484368 Re: Gaetano Strazzanti, Plaintiff v. Universal Workers Union, Labourers International Union of North America Local 183, Defendants v. Durval Terceira and Cesar Daniel Avero, Third Parties v. Labourers International Union of North America, Joseph Mancinelli and Cosmo Manella, Fourth Parties v. Daniel Randazzo, Fifth Party

Court File No.: CV-13-478164 Re: Durval Terceira, Cesar Daniel Avero and Jaime Melo, Plaintiffs v. Universal Workers Union, Labourers' International Union of North America Local 183 and Labourers' International Union of North America, Defendants

Before: Master Lou Ann M. Pope

Appearances: Ian J. Roland, Paliare Roland Rosenberg Rothstein LLP, for moving defendant, Labourers International Union of North America Local 183 Brannan Meiklejohn, for responding plaintiffs, Michael O'Brien and Gaetano Strazzanti Chris Donovan, Dewart Gleason, for responding plaintiffs, Durval Terceira, Cesar Daniel Avero and Jamie Melo Elichai Shaffir, Cavalluzzo Shilton McIntyre Cornish LLP, for responding defendant/fourth party, Labourers' International Union of North America

Reasons for Endorsement

[1] The defendant, Universal Workers Union Labourers International Union of North America Local 183 ("Local 183"), brings this motion. All parties consent to an order that the above three actions, including the third, fourth and fifth party actions, be tried at the same time or one immediately after the other at the discretion of the trial judge, and that the actions be case managed under Rule 77 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[2] This court must determine whether the issues of the plaintiffs' employment contracts and wrongful dismissal claims ought to be bifurcated from the other relief sought by the plaintiffs in action number CV-13-478164 (action brought by Durval Terceira, Cesar Daniel Avero and Jaime Melo ("Terceira action")). All parties, except Terceira, Avero and Melo, consent to this relief.

[3] If the issues are bifurcated, Local 183 seeks an order that the issues of the plaintiffs' employment contracts and wrongful dismissal claims follow a common discovery plan and timetable. All parties, except Terceira, Avero and Melo, consent to this relief.

[4] Lastly, the court must determine whether case management is appropriate.

Background

[5] Local 183 is a trade union located in Toronto, Ontario. It is affiliated with and chartered by Labourers' International Union of North America ("LIUNA"), which has its head office in Washington, D.C. Membership with Local 183 and its operational framework is governed by, among other things, the International Constitution and the Local Constitution ("the Constitutions").

[6] The plaintiffs in all three actions are former officers or executive board members of Local 183. In June 2011 the plaintiffs were defeated in a hotly-contested Local 183 general membership election. After the new executive for Local 183 took office, it came to light that the plaintiffs had allegedly engaged in misconduct while in office. Among other allegations, it is alleged that the plaintiffs improperly used Local 183 funds to secure political support during the election. On July 11, 2011, Local 183 terminated the plaintiffs' employment with Local 183 for cause.

[7] In this action, the plaintiffs have asserted causes of action for breach of contract and/or wrongful dismissal. In their respective claims, each of the plaintiffs seek to enforce a written employment contract that provides the plaintiffs on termination with 24 months of notice regardless of whether the termination was with or without cause. Local 183 takes the position that the written contracts, alleged to have been signed by the plaintiffs on March 23, 2007, are unenforceable as they were signed while Local 183 was under trusteeship. In particular, Local 183 alleges that the contracts were signed by the plaintiffs without authority and in violation of the Union Constitutions.

[8] In the Terceira action only, the plaintiffs seek various declarations; namely, that the election of officers to the executive board of Local 183 held in June 2011 and the resultant decision by LIUNA to expel the plaintiffs was not conducted in accordance with the provisions of the local union's constitution and hence the election and expulsion are null and void, that a new election be conducted, and that Local 183 reinstate the plaintiffs' memberships. ("election and membership issue") Therefore, Local 183 brought this motion to bifurcate the election and membership issue from the breach of contract and/or wrongful dismissal issues. It is proposed that if bifurcation is permitted, the trial of all actions be heard together on the breach of contract and/or wrongful dismissal issues followed by the trial of the issue of election and membership in Terceira action.

[9] By consenting to the actions being tried together, all parties concur that there will be no risk of conflicting findings on the breach of contract and wrongful dismissal issue. Further, they agree that the issue of the enforceability of the impugned contracts raise questions of law and fact in common and the relief claimed in each of the actions arise out of the same transactions or occurrences.

Status of Actions

[10] In March 2015, the O'Brien and Strazzanti plaintiffs obtained an order imposing a discovery plan. The discovery plan provided that sworn affidavits of documents were to be delivered by May 31, 2015. Further, the plaintiffs' discovery of the defendants were to be conducted at the same time and completed by July 31, 2015. Any motions arising from discoveries were to be scheduled by September 30, 2015. The order was made without prejudice to any motion brought by Local 183 for consolidation or trial together, common timetable and case management.

[11] No party has filed a jury notice in any of the actions.

[12] For unexplained reasons, none of the material filed on this motion addresses the issue of bifurcation; therefore, there is a gap in the evidence regarding the status of the actions and the applicable law in Local 183's factum.

Law - Bifurcation

[13] Rule 6.1.01, enacted in 2008, provides that:

With the consent of the parties, the court may order a separate hearing on one or more issues in a proceeding, including separate hearings on the issues of liability and damages.

[14] In addition, section 138 of the Courts of Justice Act, R.S.O. 1990, c.C.43, discourages multiplicity of proceedings. That section provides that "[A]s far as possible, multiplicity of legal proceedings shall be avoided."

[15] In decided cases prior to the 2008 amendment which enacted rule 6.1, in 1986 the Court of Appeal held that although there is limited jurisdiction to split a trial and render judgment on one issue, it is a narrowly circumscribed power, to be exercised only in the clearest cases. (Elcano Acceptance Ltd., v. Richmond, Richmond, Stambler & Mills (1986), 1986 CanLII 2591 (ON CA), 55 O.R. (2d) 56, 9 C.P.C. (2d) 260, at para. 11) When this case was decided in 1986, there was no specific rule of civil procedure in Ontario that expressly conferred the power to split a trial. The Court of Appeal accepted that the court had inherent jurisdiction to do so; however, only to be exercised in the interest of justice. The court also recognized that since it is a basic right of a litigant to have all issues in dispute resolved in one trial, it must be regarded as a narrowly circumscribed power. That approach was found by the court to be supported by the "statutory admonition" found in s. 148 of the Courts of Justice Act, 1984 (Ont.), c.11, now s. 138 regarding avoidance of multiplicity of proceedings.

[16] The court in Elcano referred to the 1905 case of Waller v. Independent Order of Foresters (1905), 5 O.W.R. 421 at p.422, where the court admonished splitting a trial: "Experience has shown that seldom, if ever, is any advantage gained by trying some of the issues before the trial of the others is entered upon..." The court concluded that the power should be exercised, in the interest of justice, only in the clearest cases. It went on to state that a court will give substantial weight to the fact that both parties consent to splitting of a trial; however, it should be slow to exercise the power if one of the parties objects to its exercise. (para.11)

[17] In 1995, Epstein J. refused to severe the issues of insurance coverage and damages in an action involving a motor vehicle accident where a jury notice had been delivered by the insurer. (Mitchell v. Reed Estate, [1995] O.J. No. 281 (O.C.J. (Gen.Div.) In that case, one party opposed the motion seeking to enforce the client's basic right to have all issues in dispute resolved in one trial. The court recognized and accepted that in a jurisdiction such as Toronto, all reasonable efforts should be made to cut down the length of trial, to reduce the inconvenience to witnesses, to curtail the expense wherever practicable and to protect and preserve the very limited public resources available to conduct such trials. (Royal Bank of Canada v. Kilmer van Nostrand Co. (7 July 1994), Doc. No. 63579/91Q (Ont. Gen. Div.) [unreported], at para. 5) Although, the court went on to hold that these considerations ought not to overwhelm the considerations of justness and fairness. (para. 6) In citing problems with severing the issues, the court found that the insurer had not demonstrated any prejudice, apart from financial considerations, if severance was not ordered.

[18] In another pre-2008 decision, in General Refractories Co. of Canada v. Venturedyne Ltd., [2001] O.J. No. 746 (S.C.J.) Himel J., dismissed the defendant's motion to sever the issue of which law applied to the contract in an action that involved interpretation of a contract. The plaintiff opposed the motion which the defendant brought after fifteen years of litigation and on the eve of trial. The court held that the plaintiff had not demonstrated that it would suffer prejudice if the trial was severed; however, the defendants had not demonstrated that any substantial benefits would be enjoyed or potential pitfalls avoided. Referring to Elcano, and recognizing that there was no statute or rule of civil procedure that provided for severance, Himel J. held that the court has inherent jurisdiction to sever the issues to be tried in the interests of justice; however, it is a high threshold that must be met by the moving party. (paras.10 and 46) The court went on to hold that the moving party defendants had the onus of demonstrating that there is a clear benefit to be gained, in terms of time and expense, from severing an issue from the trial, particularly given the strenuous objection. Once the defendant has met that burden, the onus shifts to the responding party to demonstrate real prejudice which outweighs any such expediency. (para.13) In extrapolating the principles from the case law, the court held that the following non-exhaustive list of factors should be considered by a court in deciding whether severance of a trial is just and expeditious, with fairness and justice being the dominant considerations:

1. Whether the issues for the first trial are relatively straightforward;
2. The extent to which the issues proposed for the first trial are interwoven with those remaining for the second;
3. Whether a decision at the first trial is likely to put an end to the action altogether, significantly narrow the issues for the second trial or significantly increase the likelihood of a settlement;
4. The extent to which the parties have already devoted resources to all of the issues;
5. The timing of the motion and the possibility of delay;
6. Any advantage or prejudice the parties are likely to experience; and
7. Whether the motion is brought on consent or over the objection of one of more of the parties. (para. 16-17)

[19] The final case relied on by Local 183 is another pre-2008 decision in Unwin v. Crothers, 2005 CanLII 23337 (ON SC), [2005] O.J. No. 2797, 76 O.R. (3d) 453 (S.C.J.), at paras 78-81, where N.J. Spies, J. upheld the decision of Master Hawkins to bifurcate several issues for trial. The court provided a succinct summary of the principles that govern the court's discretion to order the bifurcation of proceedings. Starting with the Court of Appeal's decision in 1986 in Elcano, Spies J. stated that it was the seminal case on a judge's inherent jurisdiction to bifurcate which held that:

the power to bifurcate a proceeding is a narrowly circumscribed power, is a departure from the basic right of litigants to have all issues in dispute in a proceeding resolved in one trial, and ought therefore to be exercised only in exceptional cases. The moving party has the onus to demonstrate that there is a clear benefit to be gained, in terms of time and expense, from severing an issue from the trial. This burden is particularly high when the opposing party object to the bifurcation.

[20] The court cited the following passage from Elcano:

However, since it is a basic right of a litigant to have all issues in dispute resolved in one trial [the power to grant an order for bifurcation or split a trial] must be regarded as a narrowly circumscribed power ... The power should be exercised, in the interest of justice, only in the clearest cases. We would think that a court would give substantial weight to the fact that both parties consent to the splitting of a trial, if this be the case. On the other hand, a court should be slow to exercise the power if one of the parties . . . objects to its exercise.

[21] The court went on to hold that the evidence filed by a moving party in support of its motion for a bifurcation order must be "extraordinary" and the circumstances of the case must show that the preponderance of factors justify the court in departing from the general rule that all issues relating to litigation should be determined at the trial. The court should not order bifurcation unless it is satisfied on the balance of probabilities that severance will more likely than not result in the just, expeditious and least expensive determination of the proceedings on the merits.

[22] N. J. Spies, J. also referenced the Supreme Court of Canada's decision in Garland v. Consumers Gas, 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 90, which held that "litigation by installment" is to be avoided wherever possible, so as to minimize the risk of multiplicity of proceedings and multiplicity of appeals. (para.80)

[23] The court enunciated a list of primary factors to be considered when determining whether to bifurcate an action. I note that some of the factors are essentially the same as those enunciated by the court in the General Refractories decision. The primary factors are as follows:

1. Are the issues to be tried simple?
2. Are the issues of liability clearly separate from the issues of damages?
3. Can a better appreciation of the nature and extent of the injuries and consequential damage to the plaintiff be more easily reached by trying the issues together?
4. If the issues of liability and damages are severed, are facilities in place which will permit the two separate actions to be tried expeditiously before one Court or before two separate Courts as the case may be?
5. Is there a clear advantage to all parties to have liability tried first?
6. Will there be a substantial savings of costs?
7. Will splitting the case save time, or lead to unnecessary delay?
8. Is it likely that the trial on liability will put an end to the action?
9. Is the action so extraordinary and exceptional that there is good reason to depart from normal practice requiring that liability and damages be tried together?

Analysis

Bifurcation

[24] Local 183 submits that the election and membership issues pled only by the Terceria plaintiffs should be bifurcated from the employment issues (ie. breach of contract and wrongful dismissal) pled in all the actions. They state that the employment issues are distinct from the election and membership issues. Local 183 is not involved in the election and membership issues. Further, they argue that it is unfair to the plaintiffs, O'Brien and Strazzanti, to be required to be involved in the trial of that issue when they do not assert the election and membership claims in their actions.

[25] It is also submitted that bifurcation will not delay the Terceria action because the parties in that action are able to conduct separate discoveries on the election and membership issues at the same time as the discoveries on the employment issues. They state this is so because the parties in the O'Brien and Strazzanti actions will have no interest in questioning on the election and membership issues. Local 183 points out that Master Dash's order of March 26, 2015 requires that the O'Brien and Strazzanti plaintiffs conduct their discovery of the defendants at the same time. The defendants in those two actions are the same.

[26] Plaintiffs, O'Brien and Strazzanti, submit that what they are asking of the court is not to break up the cause of action, but to separate the issues, which is on consent of all parties except the Terceira plaintiffs. They submit that there are two distinct causes of action in the Terceira action; whereas, there is only one in their actions. Thus, they are seeking to separate the two issues. They argue that the circumstances herein are distinguished from the case law cited where it was sought to essentially separate one cause of action (ie. liability and damages in a personal injury action). They also contend that the Terceira plaintiffs will not be prejudiced if the issues are severed because they are required to be present for trial on the employment issues in any event. In addition, there would be one trier of fact for both trials.

[27] The Terceira plaintiffs object to bifurcation of the issues for several reasons; namely, the issues are complex and the facts are intertwined. For one example, they point to paragraph 9 of the statements of defence in the O'Brien and Strazzanti actions in which the defendants rely on the Pink Report to justify termination of the plaintiffs' employment. In comparison, at paragraphs 31 to 33 of the Terceira statement of claim, the plaintiffs allege the LIUNA interfered with the election campaign when they commissioned the Pink Report.

[28] The authority under Rule 6.1.01 to order a separate hearing on one or more issues in a proceeding is discretionary. It provides that if the parties consent, the court may order a separate hearing. The fact that the rule specifically states "[w]ith the consent of the parties" does not mean that without consent of the parties, the court does not have discretion to order a separate hearing. In a post-2008 decision after Rule 6.1 was enacted, the court in Soulliere (Litigation guardian of) v. Robitaille Estate (2013), 2013 ONSC 5073, 117 O.R. (3d) 95 (S.C.J.), additional reasons 2013 ONSC 5934, held that this rule does not remove the courts inherent jurisdiction to order separate hearings on liability and damages in the clearest of cases. However, as the case law has reiterated, a court will give substantial weight to the fact that all parties consent to separating the issues and, conversely, the moving party has a high burden when the opposing party objects.

[29] I will now address the relevant factors.

[30] Are the issues clearly separate? I find that the issues are clearly separate.

[31] Are the issues to be tried simple? In my view none of the issues are simple. They become complex due to the intricate facts that involve relationships between union officials and their locals and the international union. It involves the constitutions of both local and international unions, detailed facts that involve the election and the campaign, as well as facts and issues involving the term of trusteeship of the Local.

[32] Whether the issues for the first trial are relatively straightforward. In my view, they are not. It is proposed that the issues for the first trial are whether the defendant breached the employment contracts and whether the plaintiffs were wrongful dismissed. Those issues are not as straightforward as they may appear. The issue of breach of employment contract becomes intertwined in the facts and issues involving the Local's period of trusteeship. The plaintiffs allege that the contracts are dated March 23, 2007, which was during the period of the Local's trusteeship. The defendant alleged that the purported employment contracts are invalid and unenforceable as the plaintiffs had no ostensible authority to enter into the contracts on behalf of the Local during the period of trusteeship. They also pled that the plaintiffs fabricated the contracts when they were defeated in the election in June 2011. Although not expressly pled, that allegation would involve the plaintiffs allegedly back-dating the contracts. Therefore, the issue is not simply whether the defendant breached the employment contracts because the defendant has put into issue not only the legitimacy of the contracts, but the authority to enter into them. Given those allegations, at trial the court will have to hear testimony regarding the chain of events that involved the trusteeship period, the rights and obligations of the parties during and after that time, the facts surrounding the election campaign and the facts that led to the purported employment contracts. These facts are unescapably intertwined.

[33] Whether the decision in the first trial is likely to put an end to the action altogether, significantly narrow the issues for the second trial or significantly increase the likelihood of a settlement. The parties consented to the actions being tried together. If the issues are separated, it is unlikely the trial judge will have made a determination on the contract and wrongful dismissal issues when the second trial commences as the request is that the second trial commence immediately after the first. Further, any determination on the first trial will not, in my view, narrow the issues for the second trial, nor will it increase the likelihood of a settlement.

[34] Is there a clear advantage to all parties to have the breach of contract and wrongful dismissal issues tried first? In my view, there is no clear advantage to any party. The only possible advantage will be to the plaintiffs, O'Brien and Strazzanti, and their counsel, because they would not have to be present at the end of the trial when oral submissions are made by counsel on the issues of the election and membership. Thus, there is no advantage to the Terceira plaintiffs. Moreover, any such time savings will be minimal.

[35] Will there be a substantial savings of costs? There is no evidence on this point. Given my finding in the above paragraph, the cost savings will be minimal relative to the substantial amount of time that will be required for trial.

[36] Is there any prejudice the parties are likely to experience? Again, there is no evidence filed regarding prejudice to any party if the issues are not bifurcated, nor is there any evidence of prejudice if they are bifurcated.

[37] The moving defendant has the onus to demonstrate that there is a clear benefit to be gained, in terms of time and expense, from severing an issue from the trial. This burden is a high one given that the Terceira plaintiffs object to bifurcation.

[38] The only evidence filed on this motion regarding bifurcation is the affidavit of an associate lawyer at the office of counsel for Local 183. The affidavit provides a summary of the facts and statements regarding the pleadings in all the actions only as they relate to the claims for breach of employment contract and wrongful dismissal. The only evidence about the election and membership issues are vague references to the plaintiffs' application to the Ontario Labour Relations Board wherein the plaintiffs alleged "various breaches" of the Ontario Labour Relations Act by the defendants and "alleged improprieties with respect to the conduct of Local 183 election." A copy of the Board's decision is attached as an exhibit. Remarkably, in paragraph 23 of the affidavit, Debra McKenna states that in a letter from defence counsel to plaintiffs' counsel he outlined Local 183's position that "the Terceira Action, O'Brien Action and Strazzanti Action ought to be consolidated and/or tried together given the overlap of the issues." (my emphasis) Further, in paragraph 21, she states that " . . . the relief claimed in each of the actions arise out of the same transactions or occurrences." Understandably, these statements are made in support of the motion for an order that the actions be tried together; however, it seems that the defendants are, to use a common term, talking out of both sides of their mouth, when requesting trial together and, on the other hand, separate the issues. The statement above by defence counsel that the issues overlap is, I find, fatal to the relief sought to bifurcate the issues.

[39] The circumstances herein are not any different than in a personal injury action where, for example, three plaintiffs were injured in a motor vehicle accident where liability and damages were in issue. The trial of that action would involve fact and expert witnesses who would give evidence regarding each plaintiff's injuries and damages. The issues of each plaintiff's injuries would be different and unrelated to the co-plaintiffs' injuries; however, the issue of damages of each plaintiff is not bifurcated for obvious reasons.

[40] There is no dispute that the relief claimed in each of the actions arise out of the same transactions or occurrences. All of the plaintiffs held similar positions with the defendant and they were all dismissed for cause for similar reasons under similar circumstances.

[41] For those reasons, I conclude that the defendant has not met its onus to demonstrate that that there is a clear benefit to be gained, in terms of time and expense, from severing an issue from the trial and to depart from the normal rule that all issues relating to the litigation be determined at the trial. In my view, trial together of all the actions will achieve the most just, expeditious and least expensive determination of the proceedings on the merits.

Case Management

[42] All parties consent to this relief. The rule is discretionary and consent by itself is insufficient and parties must explain why case management is necessary having regard to the circumstances and the criteria set out in rule 77.05(4).

[43] Rule 77.05(1) provides that a regional senior judge or, subject to the direction of the regional senior judge, any judge or case management master may, with the consent of all parties, assign a proceeding to which this Rule may apply for case management.

[44] Rule 77.05(4) sets out criteria that a court is required to consider when case management is requested as well as having regard to all the relevant circumstances of the action.

[45] The criteria in subparagraph 1 refers to the purpose of rule 77. Subrule 77.01(1) states that the purpose of rule 77 is to establish a case management system that provides case management only of those proceedings for which a need for the court's intervention is demonstrated and only to the degree that is appropriate as determined in reliance on the criteria set out in this Rule.

[46] Under rule 77.02(2)1, parties are required to assume the greater share of responsibility for managing their own actions. However, "light touch" case management under Rule 77 is available on an "as needed/as requested" basis in accordance with the provisions of the rule.

[47] It is submitted that case management is required given the number of parties and counsel. There are five plaintiffs and eight defendants, third, fourth and fifth parties. There appears to be four counsel at this time, possibly a fifth if Daniel Randazzo enters a defence. It is also submitted that the issues are complex particularly given the third, fourth and fifth party claims.

[48] These actions were commenced in 2013. Aside from a Rule 21.01 motion brought by LIUNA in September 2013, the only other court intervention was the plaintiff, O'Brien's, motion to impose a discovery plan in the O'Brien and Strazzanti actions which was ordered on March 26, 2015. There is no evidence that any further motions are intended in the foreseeable future.

[49] It is unknown whether discoveries have been completed but, if not, it is possible there will be undertakings and/or refusals motions.

[50] There is no evidence that expert witnesses will be retained to give evidence at the trial, nor is there any evidence regarding the number of witnesses for trial, or the estimated length of trial. Lastly, there has been some delay in the proceedings which can be attributed to the protracted pleadings given the third, fourth and fifty party claims.

[51] In my view, the parties have not demonstrated a need for the court's intervention at this time. There has been little court intervention to date and there is no evidence of any impending need. Therefore, I decline to order that these actions be assigned to case management; however, the request may be made in the future should the need change.

[52] The defendant did not seek costs of the motion in the notice of motion. None of the other parties filed any responding material. In their oral submissions, no counsel sought costs of the motion. No party filed a costs outline. For those reasons, there shall be no order as to costs.

[53] In conclusion, the following orders shall be issued:

1. On consent, action numbers, CV-13-478164, CV-13-484365, CV-13-484365-A1, CV-13-484365-B1, CV-13-484365-C1, CV-13-484368, CV-13-484368-A1, CV-13-484368-B1, CV-13-484368-C1, shall be heard at the same time or one immediately after the other, at the discretion of the trial judge;
2. The defendant's motion to separate the hearing under rule 6.1.01 is dismissed;
3. The defendant's motion for a common discovery plan and timetable at paragraph 3 of the notice of motion is dismissed given the order in paragraph 2 above;
4. The defendant's motion for case management is dismissed.

(Original Signed)

Master Lou Ann M. Pope

Released: November 16, 2015