Date: 20041022
Dockets: A-261-03
A-36-04
Citation: 2004 FCA 348
CORAM: LINDEN J.A.
SEXTON J.A.
EVANS J.A.
BETWEEN:
CANADIAN AUTO WORKERS, LOCAL 2213
on its own behalf and on behalf of all members of
CANADIAN AUTO WORKERS, LOCAL 2213 EMPLOYED BY AIR CANADA
Applicant
and
NATIONAL AUTOMOBILE, AEROSPACE, TRANSPORTATION
AND GENERAL WORKERS' UNION OF CANADA (CAW-CANADA)
CANADIAN AUTO WORKERS, LOCAL 1990 and
AIR CANADA
Respondents
Heard at Toronto, Ontario on October 6, 2004.
Reasons for Judgment delivered on October 22, 2004.
REASONS FOR JUDGMENT BY: LINDEN J.A.
CONCURRED IN BY: SEXTON J.A.
EVANS J.A.
Date: 20041022
Dockets: A-261-03
A-36-04
Citation: 2004 FCA 348
CORAM: LINDEN J.A.
SEXTON J.A.
EVANS J.A.
BETWEEN:
CANADIAN AUTO WORKERS, LOCAL 2213
on its own behalf and on behalf of all members of
CANADIAN AUTO WORKERS, LOCAL 2213 EMPLOYED BY AIR CANADA
Applicant
and
NATIONAL AUTOMOBILE, AEROSPACE, TRANSPORTATION
AND GENERAL WORKERS' UNION OF CANADA (CAW-CANADA)
CANADIAN AUTO WORKERS, LOCAL 1990 and
AIR CANADA
Respondents
REASONS FOR JUDGMENT
LINDEN J.A.
[1] These applications are additional chapters in the legal saga arising out of the merger of
Air Canada ("AC") and Canadian Airlines International Ltd ("CAIL") on January 4, 2000. The main issue here concerns seniority issues arising out of the integration of the bargaining unit comprising the Sales and Service Employees.
[2] The applicants, Canadian Auto Workers Local 2213 ("Local 2213"), are seeking judicial
review of two decisions of the Canada Industrial Relations Board ("Board"), one dated May 14, 2003 ("Incorporation Decision") and the second dated December 24, 2003 ("Reconsideration Decision"). The Incorporation Decision incorporated an Award made by Arbitrator T. Joliffe on September 25, 2001. The Reconsideration Decision dismissed the applicant's request to quash the Incorporation Decision. The applicant now seeks judicial review of both these decisions. (The applicant also has an application for judicial review of the Arbitration Award itself pending in the Federal Court of Canada (T-1919-01)).
[3] On January 4, 2000 AC purchased CAIL and subsequently merged the two airline
companies. The sales and service employees at AC were represented by the Local 2213. The sales and service employees at CAIL, as well as certain cargo, load and baggage employees, were represented by Canadian Auto Workers Local 1990 ("Local 1990"). On September 22, 2000 the Board found that AC and CAIL comprised a single employer (pursuant to section 35 of the Canada Labour Code; (R.S.C. 1985, c. L-2 ). The Board then stated that the process contemplated by section 18. 1(2) to (4) of the Canada Labour Code (the "Code") would be initiated. This included the request that parties "come to an agreement within a reasonable period with respect to the determination of bargaining units and any questions arising from the review."
[4] On January 24, 2001 the Board determined the composition of the new sales and service
bargaining unit at AC. The sales and service employees from both Local 1990 and Local 2213 were placed in a new sales and service bargaining unit to be represented by Local 2213. The cargo, load and baggage employees who were represented by Local 1990 were also placed into this new sales and service bargaining unit. However, the cargo, load and baggage functions were transferred to another bargaining unit at AC.
[5] Local 1990 agreed to adopt most of Local 2213's collective agreement with AC, but the
paragraph dealing with seniority was controversial. The adoption of Local 2213's collective agreement, however, meant wage increases and pension improvements for Local 1990 employees.
[6] Seniority, as it is with all workers, is important to sale and service employees since it
affects many aspects of their work lives. Seniority is significant because, as elsewhere, it determines, on a competitive basis, access to vacancies, transfers and job locations, schedule bids and selection of hours of work, layoff and recall rights and choice of vacation time. Seniority does not, however, affect work, pay or job classifications.
[7] The integration of seniority was a major concern to both Locals. As they could not reach
an accord, they decided that the issue of seniority integration of the two groups should be resolved by an arbitrator. Local 1990, Local 2213, AC and the Board agreed that the question of seniority would be dealt with by Arbitrator T. Joliffe. All parties agreed to be bound by the Arbitrator's Award and they further agreed that the Award would be incorporated into an Order of the Board ( Incorporation Decision). This understanding was recorded in a Protocol Agreement signed on January 28, 2001.
[8] The position of Local 2213 before the Arbitrator was that the employees of Local 1990
should be endtailed, that is, that all of the employees from Local 1990 should be placed at the bottom of Local 2213's seniority list. In the alternative, failing endtailing, Local 2213 argued that the employees should be ratioed into the seniority list by a ratio of 5 to 1. This meant that the combined seniority list would start with the five most senior employees from AC followed by the single most senior CAIL employee and then the five next most senior from AC followed by the single next most senior employee from CAIL, etcetera. Local 2213 argued that, at the very least, those members of Local 1990 who had worked in cargo, load and baggage positions, but were now part of the sales and service group, should be endtailed.
[9] Local 1990's position was that seniority should be dovetailed. They argued that the
seniority of the two groups should be blended so that the most senior employee of both groups would be followed by the second most senior of both groups, etcetera. Local 1990 argued that endtailing and ratioing would be unfair to its workforce, since many of its members would lose a considerable amount of seniority. Furthermore, it had been CAIL's policy to dovetail all its employees in merger situations, based on their individual date of hire.
[10] Local 2213 did not wish to have its employees dovetailed with those of Local 1990 for
several reasons. First, it argued that this was not the past policy at AC. While other airlines, including CAIL, often dovetailed employees from other bargaining units when they merged, this had not been the policy at AC. At AC, employees from other bargaining units who joined a classification covered by Local 2213's collective agreement were always endtailed, even in cases where the employee came from another bargaining unit at AC. Only in situations where employees changed classifications within Local 2213's collective agreement could they transfer their seniority. It would, therefore, be unfair to dovetail the two lists in these circumstances.
[11] The second reason advanced by Local 2213, in essence an elaboration of the first
argument, was that seniority should not be dovetailed because Local 1990's collective agreement and work conditions were such that they could earn seniority in opportunities that were not available to Local 2213. For example, an employee from Local 1990 could earn seniority in situations where they came from another bargaining unit within CAIL but outside Local 1990. The CAIL employee would simply bring their seniority with them to Local 1990. On the other hand, employees from Local 2213 could not transfer their seniority in this situation - they would be endtailed. Local 2213 argued that it would be wrong to dovetail the two groups since this would unfairly advantage Local 1990 employees who had earned seniority in this way or unfairly disadvantage Local 2213 employees who had lost seniority in this way. Local 2213 estimated that one-third of its workforce had lost seniority by transferring into Local 2213's bargaining unit from another bargaining unit representing AC employees. The entry date into a Local 2213 classification became the date at which the employee's seniority was subsequently calculated at AC, rather than the original date of hire. Local 1990 employees also had the opportunity to earn seniority while "on leave". This opportunity was severely restricted for Local 2213 employees.
[12] The third reason why Local 2213 did not favour dovetailing is because relative ranking
for Local 2213 would be negatively impacted. They argued that an employee from Local 2213 who was at a particular percentile rank in terms of seniority (rank per 100 employees) would end up with a lower percentile rank after the integration. On the other hand, Local 1990 would see an increase in percentile rank. There was some dispute as to the exact magnitude of the disadvantages and advantages. The Arbitrator preferred the evidence of the expert witness, Mr. Walker, in this regard, who found that, by dovetailing, Local 2213 employees would be disadvantaged by 2.2% while Local 1990 members would be advantaged by 2.3%, the total spread being 4.5%.
[13] Finally, Local 2213 argued that economic factors should be considered in deciding how
to integrate the seniority of the employees. It was argued that CAIL was failing before it was bought by AC and, because of this, that employees from Local 1990 should be endtailed so that they would bear the full risk of any possible job losses, not the AC workers whose company was not failing.
[14] Arbitrator Joliffe conducted a fifteen day hearing and considered several volumes of
documentary evidence, viva voce testimony and expert reports. In his 83 page decision, dated September 25, 2001, he decided to dovetail the customer service employees of both groups (save possibly for the Winnipeg group): "I conclude that the seniority of the two agent groups which will form the new sales and service unit should be integrated, dovetailed, on the basis of the affected employees bringing their seniority dates with them" (at page 81).
[15] Arbitrator Joliffe's decision to dovetail was based on his finding that dovetailing was the
norm in the industry and that it was fair in all the circumstances. He found that the two groups were remarkably similar in composition, both in terms of numbers and seniority. This similarity helped ensure that dovetailing was fair. He decided that economic factors prior to the merger should not be taken into consideration.
[16] The Board, as had been agreed, incorporated the Arbitration Award into its Order dated
May 14, 2003.
[17] As indicated above, Local 2213 applied to the Federal Court of Canada for judicial
review of the Arbitrator's decision and also applied to the Board to have the Incorporation Decision reconsidered. The Board agreed to reconsider its Incorporation Decision, but ultimately dismissed it, issuing its Reconsideration Decision, dated December 24, 2003. However, it did not provide reasons for its decision until September 10, 2004.
[18] Local 2213 has now launched these applications for judicial review of both the May 14,
2003 Incorporation Decision and the December 24, 2003 Reconsideration Decision. The parties have agreed that the key Decision under review before this court is the Reconsideration Decision and that the results of the review of the Incorporation Decision and the review of the Arbitrator's Award, which is pending before the Federal Court of Canada, will depend on this one.
Standard of Review
[19] The pragmatic and functional approach in this case leads to a conclusion that the Board's
Reconsideration Decision should only be disturbed if it is "patently unreasonable" (Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, [1998] S.C.J. No. 46).
[20] First, the absence of a statutory right of appeal in the Labour Code and the presence of a
strong privative clause (section 22) suggest that decisions of the Board should be given a considerable amount of deference. The privative clause has been interpreted as "full" and "broad" (Canadian Broadcasting Corp. v. Canada (Labour Relations Board), [1995] 1 S.C.R. 157, [1995] S.C.J. No. 4; International Longshoremen's and Warehousemen's Union, Ship and Dock Foremen, Local 514 v. Prince Rupert Grain Ltd., [1996] 2 S.C.R. 432, [1996] S.C.J. No. 72 ).
[21] Second, substantial deference is also indicated because the Board is operating within its
particular area of expertise (Royal Oak Mines Inc. v. Canada (Labour Relations Board), [1996] 1 S.C.R. 369, [1996] S.C.J. No. 14 ) . The issue of seniority integration is "polycentric" in nature, which further reinforces the notion of deference. The Supreme Court of Canada found in Pushpanathan that (supra at paragraph 56):
some problems require the consideration of numerous interests simultaneously, and the promulgation of solutions which concurrently balance benefits and costs for many different parties. Where an administrative structure more closely resembles this mode, courts will exercise restraint.
[22] Third, the purpose of the provisions and the legislation indicates that this process is
remedial and is meant to be more interest-based than rights-based so that constructive resolution of labour disputes will be fostered.
[23] Fourth, the question of seniority integration is, on a continuum, more factual than legal.
Issues of mixed fact and law which are more factual than legal are given greater deference (Housen v. Nikolaisen, [2002] 2 S.C.R. 235; [2002] S.C.J. No. 31).
[24] In summary, the pragmatic and functional approach suggests that the Board's Decision
should be disturbed only if it is patently unreasonable or clearly irrational. This characterization is consistent with this Court's determination in Telus (Telus Advanced Communication v. Telecommunications Workers Union (2002 FCA 310, [2002] F.C.J. No. 1235) which found that decisions made by the Board under subsection 18(1) of the Code should be reviewed on the basis of patent unreasonableness. (See also Air Canada Pilots Association v. Airline Pilots Association, [2003] 4 F.C. 162 (F.C.A.).)
[25] This Court must now determine whether the Reconsideration Decision by the Board was
patently unreasonable or clearly irrational.
Analysis
Principles of Seniority Integration
[26] Local 2213 has argued that Arbitrator Joliffe should have referred to and applied the
principles set out in the Board's Decision in the Pilots case (Air Canada (re), [2002] CIRB No. 183). This Decision was rendered on July 10, 2002 after Arbitrator Joliffe had issued his Award.
[27] Specifically, Local 2213 referring to CIRB decision No. 183, has argued that paragraphs
138, 139,141, 142,143, 146, and 148 contain 11 principles relevant to the integration of seniority and that these principles should have been referred to and applied by the Arbitrator. Local 1990, on the other hand, has argued that some of the principles highlighted by Local 2213 are principles that were specifically intended to guide the pilot groups in negotiations, and are not meant to be general principles.
[28] However, both parties are in agreement that each situation must turn on its own unique
facts and circumstances and that the basic principle is that seniority integrations should be fair and equitable, consistent with productive and sound labour relations.
[29] There appears to be no "silver bullet" and no "magic formula" in seniority integration.
This is made clear by the nature of the arbitration in this case which was interest-based rather than rights-based. In CUPE Airline Division (CIRB Decision No. 266) the Board considered the mandate of interest arbitrators called upon to decide on the integration of seniority:
...the mandate of the interest arbitrator may be said to be more legislative than judicial. His task is different from the rights arbitrator in that he is called upon to find acceptable criteria as a basis for a decision to which there is likely no right or wrong answers.
...
The Code does not specify the principles that apply to interest arbitration as it applies to the merger of bargaining units, and therefore the parties exercise considerable latitude in how they deal with the issue. The only caveat is that the result must be consistent with sound and productive labour relations. Accordingly, there is no single or magic formula...there are no right or wrong answers and no silver bullet to resolve every possible disagreement.
[30] It appears as though the Board continues to support the notion that there is no "automatic
approach or preferred formula". The Board quotes in its Reconsideration Decision (paragraph 68) the following paragraph from its Pilots Decision with approval:
[175]An additional observation is appropriate. In the course of this reconsideration, it has become apparent that in a seniority integration under Code principles there can be no automatic approach or preferred methodology. The methodology chosen for seniority integration must be what which is appropriate in view of a careful consideration of the facts and a careful assessment of the rights of the parties as established in accordance with the Code.
[31] A flexible approach that is fair and equitable and takes into consideration the particular
facts of the situation appears to be the overarching "principle" in seniority integration. In fact, it might be an error to do as the Applicant suggests and to rigidly apply the list of "principles" articulated with respect to the seniority integration of another group, which, while similar in some regards to the group at issue here, differs in other regards. The Arbitrator distinguished the sales and service employees from the pilots with respect to the composition of the merging groups and with respect to the overall importance of seniority. While the merging sales and service employees were remarkably similar in composition, this was not the case for the pilots. The Board also distinguished the sales and service employees from the pilots on the basis of the importance of seniority (at paragraph 45 of its Reconsideration Decision):
Customer sales and service agents work under a regime in which their pay and working conditions, including their job classification is fixed. They do not bid every six months on equipment to be flown, job status and location as pilots do. Although it is true that competitive seniority is of importance to customer sales and service agents, it is not fully of the importance that it is in the pilots bargaining unit.
[32] In its Reconsideration Decision the Board found that the Arbitrator had carefully
considered all of the relevant facts and had chosen a method of integration which "in large measure" preserved the parties' bargaining rights, and that he did not err in principle.
[33] Local 2213's argument that specific principles should be considered in all seniority
integrations is to impose unnecessary rigidity on a process that requires flexibility. The Arbitrator and Board were not clearly irrational in their use of a flexible approach whose aim was to reach a fair and equitable solution.
Seniority Integration Date
[34] The Appellant has argued that the Arbitrator's failure to set a date for integrating the
seniority lists is an error. In its Reconsideration Decision the Board found that a date was not necessary. When seniority is dovetailed it is usually dovetailed according to an individual's seniority date. Consequently, it makes little difference on what date the actual integration takes place. In the case of Local 1990 employees, the date of seniority will usually be the date of hire. In the case of Local 2213, the date of seniority will normally be the date on which an employee entered into a Local 2213 classification. In either case, this date will not be affected by the date of integration.
[35] Expert evidence brought forward on behalf of both parties consistently used individual
seniority dates on January 3, 2000 in order to assess the impact of dovetailing. It is clear that Arbitrator Joliffe's Award expected individuals to bring their seniority dates with them as they existed on January 3, 2000, when he said at page 81: "...should be integrated, dovetailed, on the basis of the affected employees bringing their seniority dates with them". As discussed above, for Local 1990 this will usually be their date of hire, whereas Local 2213's seniority dates will be the date which reflects their entry into a Local 2213 classification.
[36] In my view, therefore, it was not patently unreasonable for the Board to find that a date of
integration was not necessary.
Assessing the Impact of Dovetailing
[37] The Appellants have also argued that, in assessing the impact of dovetailing, the
Arbitrator used the wrong date when he used the January 3, 2000 date. The Board agreed to hear more evidence on this point given its recent decision in the Pilots case. The Appellant argued that the appropriate dates for assessing impact was either the Sept 26, 2002 (the date the Board decided that the sales and service employees would be represented by a single consolidated bargaining unit) or January 24, 2001 (the date the Board decided that it would consolidate the bargaining units).
[38] The Board found that the Arbitrator's use of the Jan 3, 2000 date was appropriate. The
Board found that the use of a later date would exaggerate the negative impact on Local 2213 because of the addition of approximately 780 new Local 2213 employees in the summer of 2000 (largely because CAIL employees could not do AC work since collective agreement issues had not yet been sorted out). Given that this group of new hires were very junior, it was the Board's finding that it was appropriate to endtail this group of individuals to the merged seniority lists. The use of the earlier date impliedly chosen by the Arbitrator had this effect. The Board found that this was fair and equitable.
[39] Irrespective of the date chosen, Local 2213 has argued that dovetailing would be unfair to
their employees because their relative ranking would be negatively impacted. Experts testified before the Arbitrator on this matter for both Local 2213 and Local 1990. The Arbitrator preferred the evidence of Mr. Walker, the expert for Local 1990, who found that the combined impact would be about 4.5%. He found that Local 2213 employees would be disadvantaged by 2.2% and that Local 1990 employees would be advantaged by 2.3% following a seniority integration by dovetail.
[40] Local 2213 argues that Mr. Walker's analysis is flawed since it excludes from analysis
the group of individuals who took advantage of a Voluntary Severance Package (VSP) offered by Air Canada. Local 2213 argues that, when this group is included in an impact analysis, Local 2213 is disadvantaged to a greater extent than that which was found by Mr. Walker.
[41] The exclusion of this group was well-understood by the Arbitrator. By excluding the VSP
group, the seniority similarity between the groups was fortified. The Local 2213 employees and Local 1990 employees seniority looked remarkably alike, both in terms of seniority and numbers, once the older group was excluded from Local 2213. It was not unreasonable for the Arbitrator to exclude this group from his analysis, because their exclusion ensures that the analysis reflects the actual impact on the employees as a result of a dovetailed integration, not the more theoretical impact, contended for by Local 2213.
[42] The Board also considered Local 2213's suggestion that ratioing would be fairer. The
Board indicated that ratioing might, at least theoretically, lead to a more precise seniority integration with careful division of categories, agreement on the most appropriate date, and a consideration of a variety of other relevant factors. However, the Board did not find, in the circumstances, that the arguments advanced by Local 2213 warranted a disruption of the Award made by the Arbitrator.
[43] The Board found that, in the face of the conflicting evidence, the Arbitrator was not
wrong and that the impact of dovetailing was not "unacceptable". It further found at paragraph 67 of its Reconsideration reasons:
Considering the subsequent data and analysis supplied to the Board as new facts, it is not apparent to the Board in consideration of such factors as; the conflict of the experts respecting the meaning and interpretation of the additional data and analysis supplied with resulting uncertainty; the agreement of the parties to accept the Arbitrator's conclusions subject to judicial review; the scope of the loss of seniority on a relative basis; the uses of seniority in the sales and service agent context; and the other factors and circumstances set out in the submissions of the parties; that the matter is one in respect of which the new facts or circumstances justify reconsideration.
[44] It should be noted that Local 2213 has argued that Local 1990 cargo, load and baggage
employees, who now form part of the sales and service employees unit, should be endtailed. I am not persuaded that it was clearly irrational not to treat this group differently, simply because their job functions were transferred to another bargaining unit. This group formed part of the impact analysis by Mr. Walker, an impact which was found not to be unacceptable in all the circumstances.
[45] I am not persuaded that the Board erred in its assessment of the impact of dovetailing on
Local 2213. The Board was aware of conflicting evidence with respect to impact and found that the impact was not "unacceptable". When viewed reasonably, the evidence is capable of supporting the Board's finding, which is not clearly irrational.
[46] It was also contended by the Applicant that the Board misunderstood the nature of the
seniority lists, as far as the dates upon which seniority was based, but I am not persuaded that this was so. The Board was merely using an imprecise, short-hand description of the situation in their discussion of it. It should also be noted that the Applicant does not appear to have stressed the significance of the different methods of calculation of seniority in relation to the merging of the two lists, preferring instead to focus on the endtailing proposal rather than dovetailing.
[47] In summary, the Board's Reconsideration Decision was not patently unreasonable and as
such will not be disturbed.
[48] These applications will both be dismissed with one set of costs to the Respondents. Air
Canada has not requested any costs and, therefore, none will be awarded.
A.M. Linden
"I agree J. Edgar Sexton J.A." J.A.
"I agree John M. Evans J.A."
FEDERAL COURT OF APPEAL
Name of Counsel and Solicitors of Record
DOCKETS: A-261-03
A-36-04
STYLE OF CAUSE: CANADIAN AUTO WORKERS, LOCAL 2213
on its own behalf and on behalf of all members of CANADIAN AUTO WORKERS, LOCAL 2213 EMPLOYED BY AIR CANADA v. NATIONAL AUTOMOBILE, AEROSPACE, TRANSPORTATION AND GENERAL WORKERS' UNION OF CANADA (CAW-CANADA) CANADIAN AUTO WORKERS, LOCAL 1990 and AIR CANADA
DATE OF HEARING: October 6, 2004
PLACE OF HEARING: Toronto, Ontario.
REASONS FOR JUDGMENT: October 22, 2004
APPEARANCES BY:
Mr. Douglas J. Wray
Mr. Denis W. Ellickson For the Applicant
Mr. Lewis Gottheil For the Respondent,
CAW-CAN
Mr. Stuart Rush, Q.C.
Mr. Bruce Stadfeld For the Respondent,
CAW-CAN, Local 1990
SOLICITORS OF RECORD:
Caley Wray
Toronto, Ontario For the Applicant
CAW Canada Legal Department
Toronto, Ontario For the Respondent,
CAW - CAN
Rush Crane Guenther
Vancouver, B.C. For the Respondent,
Caw - CAN, Local 1990
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