Reasons for decision
Canadian Merchant Service Guild Western Branch,
applicant,
and
International Longshore and Warehouse Union, Local 400,
applicant,
and
Hodder Tugboat Co. Ltd.,
applicant,
and
Riverside Towing Ltd.,
employer.
Board File: 27118-C
CIRB/CCRI Decision no. 443
March 11, 2009
This matter was heard by a panel of the Canada Industrial Relations Board (the Board) composed of Mr. Graham J. Clarke, Vice-Chairperson, sitting alone pursuant to section 14(3) of the Canada Labour Code (Part I - Industrial Relations) (the Code).
Section 16.1 of the Code provides that the Board may decide any matter before it without holding an oral hearing. Having reviewed the submissions, the Board is satisfied that the documentation before it is sufficient for it to decide the matter without an oral hearing.
Appearances
Mr. Peter Massy, for the Canadian Merchant Service Guild Western Branch;
Mr. Terry Engler, for the International Longshore and Warehouse Union, Local 400; and
Mr. John McCutcheon, for Hodder Tugboat Co. Ltd.
These Reasons for Decision were written by Mr. Graham J. Clarke, Vice-Chairperson.
I - Nature of the Application
[1] On October 16, 2008, the Canadian Merchant Service Guild (Guild), the International Longshore and Warehouse Union Local 400 (ILWU) and Hodder Tugboat Co. Ltd. (Hodder) submitted a joint application to the Board requesting a declaration of a sale of a business.
[2] The application related to a business transaction between Hodder and another company, Riverside Towing Ltd. (Riverside).
[3] The Co-Applicants submitted that a sale of business had taken place. They further agreed in a Memorandum of Agreement (MOA) on all other resulting issues, including the dovetailing of seniority, but could not agree on the effective date for the blending of the seniority lists.
[4] The parties asked the Board to determine whether the seniority blending date should be as of the date when the Board issued a sale of business declaration or as of April 30, 2009.
[5] The current panel received the completed file, including a thorough Investigating Officer’s Report, in early January 2009 and set up a case management conference for January 22, 2009.
[6] At that case management conference, the parties agreed to provide the Board with written submissions in support of their differing views regarding the appropriate blending date for the seniority lists. The Co-Applicants agreed to complete the written submission process by no later than February 20, 2009.
[7] The Board undertook to issue a decision quickly following receipt of the parties’ submissions.
II - Facts
[8] On June 30, 2008, Hodder and Riverside completed a business transaction. In the joint application at paragraph 3, the parties wrote:
On June 30th, 2008 Hodder Tugboat Co. Ltd purchased the business and all related assets of Riverside Towing Ltd.
[9] The Investigating Officer’s Report, which was sent to the parties on December 16, 2008 for comment, indicated that the Registrar of Companies, Province of British Columbia, had issued a certificate of amalgamation certifying that Hodder and Riverside were amalgamated as one company under the name of Hodder Tugboat Co. Ltd. on June 30, 2008.
[10] The Guild had bargaining units at both Hodder and Riverside.
[11] At Riverside, the Guild represented a single voluntarily-recognized bargaining unit covering all Riverside employees, including 10 Masters and 13 Rivermates. Its collective agreement was due to expire September 30, 2010.
[12] At Hodder, the Guild represented a certified bargaining unit which included 16 Masters and 2 Mates:
all employees employed as masters, mates, chief engineers, and marine engineers aboard vessels owned and / or operated by or bare boat chartered to the member employers of the Council of Marine Carriers. (Order No: 9112-U)
[13] The ILWU represented a certified bargaining unit at Hodder covering 21 Deckhands:
all unlicensed employees of Hodder Tugboat Ltd. working aboard its vessels as deckhands. (Order No.: 6691-U)
[14] The Guild’s and the ILWU’s respective collective agreements at Hodder were also set to expire on September 30, 2010.
[15] As part of their MOA, the Guild and the ILWU agreed to recognize the existing certified bargaining units at Hodder and to move the Guild’s Rivermates into the ILWU’s Deckhand bargaining unit.
[16] The Joint Application at paragraph 10 explained the parties’ agreement to dovetail the seniority of all unionized employees:
10.) These are currently two seniority lists at Hodder Tugboat o. [sic] Ltd., one for the Guild Members and one for the ILWU Members. The parties have agreed to recognize the seniority of the Riverside employees and blend them into the existing Hodder seniority lists according to their classification.
[17] The only issue on which the parties could not agree was the date for the blending of the seniority lists. Paragraph 11 of the Joint Application states:
The Parties to this application have signed a Memorandum of Agreement (attached) that resolves all outstanding issues except for the date on which to implement the blending of seniority lists. Two dates have been discussed, immediately upon approval of the application or April 30th, 2009.
[18] Certain employees filed letters with the Board after the posting of the notice of the Application. The Board, after receiving the employees’ consent, sent these letters to the Co-Applicants for comment, if any.
[19] The employees in the units had divergent positions, including contesting the parties’ agreement to dovetail seniority. Other employees took the position that seniority should be blended as of the date that the Board issued its sale of business declaration.
[20] No employee applied to intervene in the proceeding.
[21] In its February 4, 2009 submission on the blending date, the Guild argued that the effective date for the merging of the seniority lists should be as of the date the Board approved the sale of business application.
[22] The Guild suggested that the effective date of the blended seniority list is usually as of the date of the sale, unless the parties agree otherwise. In the Guild’s view, the parties agreed to delay the effective date until either the date the Board approved the sale of business application or April 30, 2009.
[23] The Guild argued that the parties all recognized that the dovetailing of the seniority lists would be contentious, especially if there was a downturn in the economy. The language put into the MOA was negotiated in order to take into account these potential repercussions. In the Guild’s view, given the parties had time to address these potential risks, there is therefore no further reason to delay the blending of the seniority lists beyond the date the Board issues a sale of business declaration.
[24] The Guild referred the Board to grandfathering provisions in the MOA which protected certain individuals on specific vessels. This would restrict bumping following the blending of the seniority lists.
[25] Hodder chose to make no formal submissions on the seniority issue but stated that it would “agree with the decision of the Board.”
[26] The ILWU’s submission described how it had agreed to a dovetailing of seniority lists and that Hodder had been candid with its bargaining agents that there were probably going to be temporary layoffs in the fall or winter of 2008-2009. The effect of the layoffs could prejudice Hodder deckhands who had significantly less seniority than the Riverside deckhands being added to the seniority list. In order to deal with this issue, Hodder had proposed that the seniority lists not be dovetailed until the end of April 2009 when business generally picked up.
[27] The ILWU therefore agreed with Hodder’s position that the dovetailing should take place in April 2009.
[28] In its submission, the ILWU suggested that, due to worsening economic circumstances, the merging of the seniority lists should now not take place until April 30, 2010.
[29] The ILWU ended its submission with this paragraph:
In conclusion it is ILWU Local 400's position that the seniority lists should be dovetailed, however we believe that combining the seniority lists at the present time would disadvantage the Hodder deckhands and we would therefore request that the dovetailing not be done until April 30, 2010. We would also ask the CIRB order that if any of the Riverside employees who were on benefits at the time of merger/purchase become able to return to work that they be allowed to use their seniority to bump only employees who were Riverside employees otherwise an employee with employment at the time of the merger/purchase could end up losing their employment to someone who did not have gainful employment through Riverside at the time of merger/purchase.
[30] On February 12, 2009, the Guild filed the only response the Board received.
[31] The Guild maintained its position that the appropriate date for the blending of seniority was the date the Board approved the sale of business application. The Guild pointed out that, in any event, the parties had clearly anticipated that the blending would occur by no later than April 30, 2009.
[32] In the Guild’s view, were the Board to accept a later date, the Board would be undoing the parties’ agreement.
III - Issues
[33] This case raises two discrete issues:
- has a sale of business taken place?; and
- what is the appropriate date to blend the seniority lists?
i) Has a sale of business taken place?
[34] The Guild was voluntarily recognized at Riverside and had concluded a collective agreement. It also represented a certified bargaining unit at Hodder, as did the ILWU.
[35] Sections 44(1) and (2) and 45 of the Code are relevant to this issue:
44. (1) In this section and sections 45 to 47.1,
“business”
« entreprise »
“business” means any federal work, undertaking or business and any part thereof;
“provincial business”
« entreprise provinciale »
“provincial business” means a work, undertaking or business, or any part of a work, undertaking or business, the labour relations of which are subject to the laws of a province;
“sell”
« vente »
“sell”, in relation to a business, includes the transfer or other disposition of the business and, for the purposes of this definition, leasing a business is deemed to be selling it.
Sale of business
(2) Where an employer sells a business,
(a) a trade union that is the bargaining agent for the employees employed in the business continues to be their bargaining agent;
(b) a trade union that made application for certification in respect of any employees employed in the business before the date on which the business is sold may, subject to this Part, be certified by the Board as their bargaining agent;
(c) the person to whom the business is sold is bound by any collective agreement that is, on the date on which the business is sold, applicable to the employees employed in the business; and
(d) the person to whom the business is sold becomes a party to any proceeding taken under this Part that is pending on the date on which the business was sold and that affects the employees employed in the business or their bargaining agent.
45. In the case of a sale or change of activity referred to in section 44, the Board may, on application by the employer or any trade union affected, determine whether the employees affected constitute one or more units appropriate for collective bargaining.
[36] The Board has often commented that a sale of business takes place as of right and is not dependent on the Board actually issuing a declaration. In this case, the experienced parties realized that the pending transaction probably constituted a sale of business and started working together early in the process to deal with any resulting issues.
[37] The Board has been satisfied that the transaction between Riverside and Hodder constituted a sale of business under the Code. As of June 30, 2008, Riverside ceased to exist and Hodder started operating Riverside’s former business.
[38] In these circumstances, the Guild’s bargaining agent status at Riverside transferred over and bound Hodder: Code section 44(2)(a). The Guild’s collective agreement at Riverside also transferred over to Hodder: Code section 44(2)(c).
[39] Section 45 of the Code gives the Board the power to review bargaining units following a sale of business. Section 18.1 of the Code establishes the procedure to follow:
Review of structure of bargaining units
18.1 (1) On application by the employer or a bargaining agent, the Board may review the structure of the bargaining units if it is satisfied that the bargaining units are no longer appropriate for collective bargaining.
Agreement of parties
(2) If the Board reviews, pursuant to subsection (1) or section 35 or 45, the structure of the bargaining units, the Board
(a) must allow the parties to come to an agreement, within a period that the Board considers reasonable, with respect to the determination of bargaining units and any questions arising from the review; and
(b) may make any orders it considers appropriate to implement any agreement.
Orders
(3) If the Board is of the opinion that the agreement reached by the parties would not lead to the creation of units appropriate for collective bargaining or if the parties do not agree on certain issues within the period that the Board considers reasonable, the Board determines any question that arises and makes any orders it considers appropriate in the circumstances.
Content of orders
(4) For the purposes of subsection (3), the Board may
(a) determine which trade union shall be the bargaining agent for the employees in each bargaining unit that results from the review;
(b) amend any certification order or description of a bargaining unit contained in any collective agreement;
(c) if more than one collective agreement applies to employees in a bargaining unit, decide which collective agreement is in force;
(d) amend, to the extent that the Board considers necessary, the provisions of collective agreements respecting expiry dates or seniority rights, or amend other such provisions;
(e) if the conditions of paragraphs 89(1)(a) to (d) have been met with respect to some of the employees in a bargaining unit, decide which terms and conditions of employment apply to those employees until the time that a collective agreement becomes applicable to the unit or the conditions of those paragraphs are met with respect to the unit; and
(f) authorize a party to a collective agreement to give notice to bargain collectively.
[40] The Co-Applicants agreed that the pre-existing bargaining units at Hodder remain in place. The Riverside employees would be placed either in the Guild’s Masters bargaining unit or in the ILWU’s Deckhands bargaining unit. Seniority would be dovetailed.
[41] The parties’ agreement on the bargaining units satisfies the requirements of s.18.1(2) of the Code. Section 18.1(3) allows the Board to decide any other questions arising from a sale of business, including those related to seniority.
[42] While the parties agreed on most bargaining unit matters, they differed on the effective date for the blending of the seniority lists. That leads to the second issue in this case.
ii) What is the appropriate date to blend the seniority lists?
[43] The Co-Applicants all knew of the potential post-transaction economic landscape early in the process. Hodder, to its credit, advised its two bargaining agents that there could be layoffs. Evidently, no party knew with absolute certainty what the future economic situation might bring.
[44] It was within this context of possible layoffs that the parties negotiated the MOA. That MOA agreed to use dovetailing when adding the Riverside employees to the Hodder seniority list. However, the MOA also contained some grandfathering language in order to lessen the impact that pure dovetailing might cause.
[45] No one argued before the Board that the date of the sale in June 2008 should be used for the blending of seniority lists. The appropriate date for blending is not a fixed one and depends always on the situation before the Board: see Air Canada, [2002] CIRB no. 183; and 91 CLRBR (2d) 161.
[46] The Guild requested that the blending take place as of the date the Board issued a sale of business declaration. Hodder and the ILWU originally asked for the date of April 30, 2009. In subsequent correspondence, the ILWU suggested that the Board adopt April 30, 2010, due to the current economic uncertainty.
[47] The integration of seniority lists places an employer, its bargaining agents and the employees in a difficult situation. Bargaining agents can be faced with employees in the same bargaining unit having diametrically opposed interests. Similarly, an employer has legitimate concerns that problems with the seniority integration process may impact the efficiency of its business.
[48] The ILWU has not convinced the Board that the date of April 30, 2010 is appropriate. On the facts, the parties agreed implicitly that a blended seniority list would come into effect no later than April 30, 2009. They therefore had ample opportunity to negotiate provisions that they believed were in the overall interest of their respective members.
[49] The Board has considered thoroughly the parties’ submissions and has chosen the date of the Board’s declaration of a sale of business. This date coincides with the date of this decision.
[50] The parties negotiated the MOA based on a factual underpinning that events might occur in the fall/winter of 2008-2009 which would have an impact on members of the bargaining unit. They therefore sought to limit this impact in the hope that the economic situation would improve in the spring of 2009.
[51] Given that all parties had this common understanding about the challenges they faced, they all had the same opportunity to negotiate extra protections, such as grandfathering. All parties knew how an eventual blending date could impact them, regardless of what date it might take place.
[52] The Board prefers using the date of its declaration since, besides being one of the parties’ contemplated dates, it also brings finality. A decision which chose a future date could invite uncertainty, among other things.
IV - Conclusion
[53] The Board hereby declares that the transaction between Hodder and Riverside constituted a sale of business under the Code. Given the current description of the Guild’s and the ILWU’s bargaining units there is no need to amend those units. The parties have agreed which former Riverside employees belong to each unit.
[54] The Board has also determined, after considering the parties’ submissions, that the seniority blending date will be as of the date of the declaration of a sale of business, which coincides with the date of this decision.