United Food v. Commercial Workers, Local 401, 2014 ABQB 704

Court of Queen ’ s Bench of Alberta Citation: United Food and Commercial Workers, Local 401 v XL Foods Inc (Calgary Beef Plant), 2014 ABQB 704 Date: 20141117 Docket: 1303 10244 Registry: Edmonton Between: United Food and Commercial Workers, Local 401 Applicant - and - XL Foods Inc. (Calgary Beef Plant) Respondent _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Peter Michalyshyn _______________________________________________________ Introduction [ 1 ] This is an application for judicial review of the decision in XL Foods Inc. (Calgary Beef Plant) v.

United Food and Commercial Workers, Local 401 (Grievance 2011Cal215) . [ 2 ] At issue is the reasonableness of an Arbitrator’s decision around the timing of employees’ termination and of the characterization of their layoffs under a collective agreement and the Employment Standards Code RSA 2000 c. E-9. [ 3 ] For reasons which follow the application for judicial review succeeds, the decision is quashed and returned to be revisited by

the original tribunal. Background [ 4 ] On April 8, 2011 XL Foods gave notice that almost 200 employees would be laid off indeterminately owing to what it said was a lack of work. XL Foods was “hopeful” the plant would reopen if and when market conditions improved. Nevertheless an exemplar record of employment showed the reason for the employees’ departure as “plant closure”. The ROE also recorded the expected date of recall as “unknown” as distinct from the other possibility on the form, “not returning”.

Nevertheless in the exemplar notice before the Arbitrator the employer stated: … we are treating the closure as a termination of employment in accordance with the provisions of the Employment Standards Code and a layoff under the collective agreement. [ 5 ] Though notice was given on April 8, 2011 the layoff took effect May 7, 2011. Certain benefits including recall rights expired only 90 days after the layoff, on August 5, 2011.

In September, 2011, and owing to factors not known to the company in April/May, 2011, XL Foods subsequently decided it would not reopen the plant. [ 6 ] The effect of the May 7, 2011termination – as compared to a termination only by August 5, 2011 – was to reduce the amount of termination pay owed to employees. [ 7 ] The Arbitrator found that on the plant closure date of May 7, 2011 the employees were permanently laid off.

As such ss. 62/63 of the Code did not apply: … In all, the evidence cannot be avoided as indicating the best likelihood of the permanent closure occurring, or at least very long-term, which does not suggest any temporary layoff lasting less than 90 days. It also does not suggest anything other than a termination occurring under the contract language of

article 11.04(

d) as intended from the outset. That being the case, I see no application of

section 62 and 63 of the Code to the facts at hand. (at para 28) Positions of the parties UFCW, Local 401 [ 8 ] The union says the Arbitrator unreasonably concluded that termination occurred on May 7, 2011 rather than 90 days later, on August 5, 2011. [ 9 ] The union relies on the collective agreement between the parties which allows employment to be terminated in only two ways: for just cause, or with the expiration of recall rights following a 90-day layoff. The union says the collective agreement is a complete code as defined in s. 3(1) of the Code .

As such, the employer was unable to rely on termination provisions in the Code that were less generous to the employees’ position. [ 10 ] The union points to the Arbitrator’s finding of fact (or of mixed fact and law) that …unquestionably there can be no termination of the 192 affected bargaining unit employees until 90 days subsequent to commencement of the layoff …(at para 24) [ 11 ] The union questions how that finding can stand alongside the Arbitrator’s subsequent findings, for example that the evidence “…does not suggest anything other than a termination occurring under the contract language of

article 11.04(

d) as intended from the outset” (at para 28) and that the employees were in fact given “proper and sufficient written termination notice” on May 7, 2011. (at para 29) [ 12 ] The union says that if these findings stand up, then by virtue of s. 60 of the Code the April 8, 2011 notices are invalid owing to the fact that thereafter an ongoing employment relationship lasted for months, until August 5, 2011. [ 13 ] In the alternative, the union also takes issue with the Arbitrator’s finding of fact that the employer wished to effect not a temporary but rather a permanent layoff when its notices were delivered in early April, 2011.

The union points to what it says is equivocal language in the notices and the ROEs, not to mention the Arbitrator’s reliance on hindsight (ie, that for reasons unknown to the employer at the time of the notices, the plant did actually close in the fall, 2011) and argues the impugned finding of fact of a permanent layoff was not supported by the evidence. [ 14 ] The union says that had the Arbitrator correctly found the layoffs to be temporary, then ss. 62/63 of the Code would apply.

Under the heading “Layoff and Recall”, ss. 62/63 read as follows: Temporary layoff 62 If an employer wishes to maintain an employment relationship without terminating the employment of an employee, the employer may temporarily lay off the employee. Termination pay after temporary layoff 63(1) On the 60th consecutive day of temporary layoff, an employee’s employment terminates and the employer must pay the employee termination pay on that day.

63(2) Subsection (1) does not apply if … (

b) the employer makes payments for the benefit of the laid-off employee in accordance with a pension or employee insurance plan orthe like, in which case employment terminates and termination pay is payable when the payments cease; (

c) there is a collective agreement binding the employer and employee containing recall rights for employees following layoff, in whichcase employment terminates and termination pay is payable when the recall rights expire. [15] The union says that having mischaracterized the nature of the layoffs as permanent rather than temporary, the Arbitrator alsofailed to apply the prevailing law that stipulates: …that a reduction in the workforce due to a lack of work is a layoff [but] when an employee retains rights following a layoff, such asrecall rights and/or benefits, the layoff is considered temporary rather than permanent. [16] On judicial review the union relies on the following authorities, few of which appear to have been argued before theArbitrator: Hamilton (City) v.

CUPE, Local 5167 (Simon), Re (2012), 113 CLAS 34 at para 31; Manitoba Nurses Union, Local 5 (St.Boniface Nurses) v. Boniface General Hospital (MB KB), [1997] M.J. No. 598 at paras 22-23; Max FactorCanada and U.S.W., Loc. 9050 (1988), (ON LA), 33 LAC (3d) 274 (Simmons) at paras 12, 15; United Brotherhoodof Carpenters, Local 579 v. Silverbirch No 30 Operations Ltd. Partnership [2011] NLLAA No. 13 at paras 16, 20) (Oakley), andCommunications, Energy and Paperworkers Union of Canada v.

Bowater Maritimes Inc. (Pensions Benefits Grievance) [2008]NBLAA No. 28 (Bruce), upheld at 2011 NBCA 22 , [2011] NBJ No. 69 (CA). [17] The union also argues that these authorities are consistent with the operation if not the intent of s. 63(2) of the Code which theunion says deems a temporary layoff to come to an end only after the expiration of recall rights or other employment benefits. XL Foods [18] The employer argues that the Arbitrator was reasonable throughout. It argues that in fact the Arbitrator did not conclude theemployees were terminated on May 6, 2011.

It says that in fact the Arbitrator found that termination took effect 90 days after the plantclosure, on August 5, 2011. The employer says the Arbitrator also found that XL Foods communicated no different termination date inits April 8, 2011 notices. [19] The employer says the Arbitrator was entitled to find that nothing in the collective agreement prevented the employer from“instituting a permanent layoff from the outset to reflect a plant closure about to occur”. The employer thus rejects the union’s positionbased on s. 3(1) of the Code that the collective agreement, and

article 11.04 in particular, provides a greater benefit. [20] Having reached his conclusion regarding the timing of termination and nature of the layoffs, the union argues that theArbitrator’s decision regarding ss. 62/63 of the Code simply follows and is reasonable. In particular, it says the Arbitrator reasonablyfound that on the whole the employer had no wish to maintain the employment relationship, which the Arbitrator found was aprerequisite to the application of ss. 62/63. The employer says this is consistent with the law as stated in Vrana v. Procor Limited 2004ABCA 126.

It says the authorities relied on by the union are distinguishable or in any event not binding on this review. Analysis Standard of review [21] No one disagrees the standard of review is reasonableness. The real issue is whether, within that standard, the Arbitrator’sdecision meets the test of reasonableness. [22] In its recent decision of Telus Communications Inc. v.

Telecommunications Workers Union 2014 ABCA 199 the court, afterreviewing the leading authorities, summed up as follows (at paras 21-23): 21 The chambers judge was required to consider whether the arbitrator’s decision falls within a range of possible acceptable outcomeswhich are defensible in respect of the facts and the law.

In doing so, he was required to also consider the decision-making process anddetermine whether his decision is intelligible, transparent, and justiciable. 22 The correct approach to this task was articulated by the Supreme Court in Law Society of New Brunswick v Ryan, 2003 SCC 20 atpara 56, [2003] 1 SCR 247: This does not mean that every element of the reasoning given must independently pass a test for reasonableness. The question is ratherwhether the reasons, taken as a whole, are tenable as support for the decision.

At all times, a court applying a standard of reasonablenessmust assess the basic adequacy of a reasoned decision remembering that the issue under review does not compel one specific result.Moreover, a reviewing court should not seize on one or more mistakes or elements of the decision which do not affect the decision as awhole. 23 In Newfoundland and Labrador Nurses' Union v Newfoundland and Labrador (Treasury Board), 2011 SCC 62 at para 14, [2011] 3SCR 708, the Supreme Court affirmed that the task of the reviewing court is to undertake an "organic exercise" and read the reasonstogether with the outcome to determine whether the result falls within a range of possible outcomes.

[ 23 ] I recognize that the Arbitrator does not have to “explicitly address all possible shades of meaning” of contested provisions (as per Construction Labour Relations v. Driver Iron Inc. 2012 SCC 65 at para 3 ): This court has strongly emphasized that administrative tribunals do not have to consider and comment upon every issue raised by the parties in their reasons. For reviewing courts, the issue remains whether the decision, viewed as a whole in the context of the record, is reasonable. [ 24 ] Likewise, Communications, Energy and Paperworkers’ Union of Canada, Local 30 v.

Irving Pulp & Paper Ltd. , 2013 SCC 34 at paras 16 and 34 , and United Nurses of Alberta, Local 301 v. Capital Health Authority (University of Alberta) , 2009 ABCA 202 at para 8 . [ 25 ] But of importance to the case before me, and as stated in Dunsmuir v. New Brunswick 2008 SCC 9 at para 47 , is there the necessary justification, transparency and intelligibility that characterizes a reasonable decision? [ 26 ] Put another way, as stated in United Food and Commercial Workers’ Union, Local 401 v.

Real Canadian Superstore 2008 ABCA 210 at para 19 , a reviewing court is obliged to consider the reasoning process of the impugned decision: The relevant inquiry is whether the reasoning is rational and, accordingly, reasonable. It would be insufficient for an adjudicator to simply say “there are two reasonable conclusions here – a. and b.

I choose b.” The path of reasoning is not thereby disclosed and, accordingly, one cannot say that the process of reasoning is, indeed, reasonable. [ 27 ] Further, what’s acceptable and defensible as a reasonable decision is a contextual matter, “widening or narrowing depending on the nature of the question and other circumstances”: First Nations Child and Family Caring Society of Canada v. Canada (Attorney General) , 2013 FCA 75 at para 13 , citing Catalyst Paper Corp. v. North Cowichan (District) , 2012 SCC 2 , [2012] 1 S.C.R. 5 at paragraphs 17-18 and 23 ; Canada (Citizenship and Immigration) v.

Khosa , 2009 SCC 12 , [2009] 1 S.C.R. 339 at paragraph 59 . The Arbitrator’s decision [ 28 ] It is hard to argue against the Arbitrator’s findings of fact that the employer wished to effect a permanent layoff – which is indistinguishable from termination – and to that extent, hard to argue also against the reasonableness of his findings on the applicability of ss. 62/63 of the Code . The Arbitrator clearly heard and dealt with the evidence and the union’s submissions that the layoffs were other than permanent.

The Arbitrator reasonably held otherwise. [ 29 ] As to the Arbitrator’s impugned findings regarding the date of termination, these can be reconciled by concluding that the Arbitrator found as a fact that in accordance with the employer’s wishes the employees were permanently laid off/terminated as of the May 7, 2011 plant closure, for purposes of the Code , but that for purposes of the collective agreement an employment relationship continued in the way of certain benefits and recall rights, until August 5, 2011. [ 30 ] What’s more in issue, however, is the reasonableness of the Arbitrator’s very conclusion that the employer could give effect to its wishes to permanently layoff/terminate the employees notwithstanding the provisions of the collective agreement and the operation of s. 3(1) of the Code . [ 31 ] I emphasize the word ‘conclusion’ because that’s all it is.

I am not persuaded that on this critical threshold issue the path of the Arbitrator’s reasoning is at all disclosed. It is not disclosed directly, nor even by the most generous of inferences. I am accordingly not persuaded that the Arbitrator’s conclusion, again on not a minor but rather a central issue, meets the test of being justified, transparent and intelligible.

To paraphrase from Dunsmuir, on this record I cannot begin to assess whether the Arbitrator’s decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and the law. [ 32 ] To reprise, the issue is whether

article 11.04 of the collective agreement constitutes a complete code which on the facts of this case allows termination only 90 days after layoff. If it does, then the Arbitrator’s finding of fact regarding the employer’s wishes or intentions and his consideration of ss. 62/63 of the Code , seem largely irrelevant as the employer simply could not terminate sooner than August 5, 2011. [ 33 ] The Arbitrator fails to deal with this issue head-on.

He does conclude, summarily, as follows: I do not see that the collectively bargained provisions requiring that recall rights be maintained for 90 days prevents the Employer from instituting a permanent layoff from outset [sic] to reflect a plant closure about to occur. (at para 27) [ 34 ] And later: In all, the evidence does not disclose the Employer having any temporary layoff in mind, and the existence of recall rights extending out 90 days under the collective agreement does not change that … (at para 29) [ 35 ] Other than to so conclude, the Arbitrator fails to explain, or to reason, how

article 11.04 is not a complete code when it lays out, plainly, the circumstances in which employees “shall” be terminated. This defect, taken alongside the whole of the Arbitrator’s reasons, in my view results in an unreasonable conclusion that the employees could be terminated on May 8,

Section 60 of the Code [ 36 ] In the alternative, the union raises s. 60 of the Code , which reads as follows: Continuation of employment after termination

60 A termination notice is of no effect if an employee continues to be employed by the same employer after the date specified for termination of employment. [ 37 ] The employer relies on Alberta (Information and Privacy Commissioner) v.

Alberta Teachers’ Association 2011 SCC 61 at paras 22-28 and says that the s. 60 issue, if not raised before the Arbitrator, should not be considered now for the first time on judicial review. [ 38 ] Alberta Teachers’ Association cautions that the reviewing court should be especially careful to avoid considering matters not raised before the tribunal when the issue raised for the first time on judicial review relates to the tribunal’s specialized functions or expertise, or where the party opposite will be unfairly prejudiced owing to an inadequate evidentiary record. [ 39 ] But the same court, at paras 27-28, upheld the reviewing court’s discretion to consider an issue not raised before the tribunal in question, in part because no additional evidence was required to consider the issue, and no prejudice was alleged. [ 40 ] Likewise in the case before me no prejudice is alleged.

And the employer acknowledges in its brief that the s. 60 argument is not based on any new facts or evidence. Nor does the employer argue that the s. 60 issue is one that particularly relates to the tribunal’s specialized functions or expertise. [ 41 ] In the alternative the employer argues that even if the issue can now be raised, s. 60 does not apply because the April 8, 2011 notices did not specify a “termination” date but rather a date for the plant closure, being May 7, 2011.

At paragraph 82 of its brief the employer specifically recognizes that employees could be “terminated” formally only via s. 11.04 of the collective agreement “…which makes it clear that employment had to continue until 90 days after the layoff commenced”, that is to say, until August 5, 2011. [ 42 ] I confess I am unable to reconcile the employer’s statement on the s. 60 issue with its earlier position – and with the Arbitrator’s finding – that XL Foods intended at the time of the April, 2011 notices to terminate employment as of the May 7, 2011 plant closure. [ 43 ] What’s more, as noted above the exemplar notice as repeated in the parties’ agreed statement of facts states that the employer was: … treating the closure as a termination of employment in accordance with the provisions of the Employment Standards Code and a layoff under the collective agreement. [emphasis added] [ 44 ] The Arbitrator, at para 29 of his decision, accepted on the evidence that with this notice “…the Employer gave proper and sufficient written termination notice…” [ 45 ] The Arbitrator also found that the notice was of a “permanent layoff” rather than as argued by the union, a temporary layoff.

The “permanent layoff” finding was critical to the Arbitrator’s decision that ss. 62/63 of the Code were not applicable in the circumstances of this case. [ 46 ] As mentioned earlier, at least in the context of the case before me I am unable to conclude that a “permanent layoff” is something different than a “termination”.

Even the employer states, at para 51 of its brief, that: By definition, a layoff that results in termination rather than a recall is not a temporary layoff. [ 47 ] Yet earlier in its brief before me the employer appears to want to distance itself from the plain wording of the April 8, 2011 notice. At paragraph 32 of its brief for example the employer states: The Notices provided by XL Foods do not state that the terminations took effect on May 6, 2011.

Instead, the Notices communicate that …the employees’ last day of work due to the plant closure would be May 6, 2011. [emphasis in original] [ 48 ] With respect, and at the risk of repetition, the notices can be read only to say very clearly that XL Foods intended to give notice that the plant closure was termination under the Code , and a layoff under the collective agreement. [ 49 ] At the end of the day and in the alternative to the Code s. 3(1) issue decided earlier in these reasons, the union succeeds on the s. 60 issue: the employer clearly intended to terminate the employers effective May 7, 2011; the Arbitrator found that as of that date the employees were permanently laid off/terminated for Code purposes, including ss. 62/63, but not for purposes of the collective agreement.

Assuming the employer was entitled to permanently lay off/terminate in that fashion, then it runs afoul of s. 60 by virtue of the admitted employment relationship that carried on for three months following the permanent layoffs/termination, ending only on August 5, 2011. Remedy [ 50 ] The application for judicial review is granted and the decision of the Arbitrator quashed. I agree with the employer’s submissions, based on Elk Valley Coal Corporation v.

United Mine Workers of America Local 1656 , 2009 ABCA 407 , that in the absence of any reasonable apprehension of bias, the economies favour returning the matter to the Arbitrator, and that it is reasonable to assume the original tribunal can fairly revisit the matter and do justice between the parties. Heard on the 6 th day of June, 2014. Dated at the City of Edmonton, Alberta this 14 th day of November, 2014.

Peter Michalyshyn J.C.Q.B.A. Appearances: Ritu Khullar, Q.C. Chivers Carpenter for the Applicant Terri Susan Zurbrigg Neuman Thompson for the Respondent