Acting for Unionized Employees: To Sue or Not to Sue?

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1 Acting for Unionized Employees: To Sue or Not to Sue? by M. Steven Rastin Introduction Every day people walk into our offices and request our assistance in responding to what they feel are injustices and unfair practices that have been inflicted upon them. More often than not, some element of our new client s problem will involve his or her employment relationship. Some of these complaints will be straightforward; for example, the factory worker who feels he has been unjustly terminated for no good reason after twenty years of loyal service. In other cases, the employment connection will be more subtle. Consider, for instance, the case of the retail saleswoman who is attempting to get back to work after a serious motor vehicle accident, but her employer is refusing to accommodate her by providing her with modified hours or a graduated work-hardening program. At one level or another, it is likely that almost every situation will force you to consider the employment relationship. Understanding how to effectively represent our client s with their employment problems, is therefore essential. One of the first questions that we should ask ourselves in this area is whether our client is a member of a union or not. In Ontario, approximately thirty percent (30%) of the workforce is unionized. In many cases, a plaintiff s lawyer will have to approach a file in a completely different fashion if his or her client is subject to a collective agreement. It is a useful exercise, therefore, to consider the relevant legislation and jurisprudence that deals with the issue of when a unionized employee is entitled to sue. 1 Key Legislation and Jurisprudence Modern labour relations statutes were developed in the United States in the middle part of the twentieth century. This legislation has been copied in Canada by the federal government and all of the Provinces. The vast majority of unionized employees in Ontario are governed by Provincial legislation 2 and we will therefore focus there. The key legislation dealing with unionized employees in the Province of Ontario is the Labour Relations Act, This legislation is typical in that it sets out the rules concerning how employers and unions should interrelate in a unionized environment. A fundamental assumption of modern labour relations legislation is that private dispute resolution 4 is faster, cheaper and preferable to looking for resolution through the Courts. A key goal of the statute is to require employers and unions to use private arbitrators to decide disputes. This is usually referred to as the exclusive jurisdiction doctrine. It is embodied in the Labour Relations Act at section 48(1): Every collective agreement shall provide for the final and binding settlement by arbitration, without stoppage of work, of all differences between the parties arising from the interpretation, application, administration or alleged violation of the agreement, including any question as to whether a matter is arbitrable. Further, the Ontario Rights of Labour Act 5 states: 3(3). A collective bargaining agreement shall not be the subject of any action in any court unless it may be the subject of such action irrespective of this Act or of the Labour Relations Act. While this legislation seems relatively innocuous, an historical review of organized labour reveals that we would have no collective bargaining agreements without the Labour Relations Act. When unions organized in the United Kingdom during the Industrial Revolution, judges found Fall, 2002 THE LITIGATOR 51

2 union activity to be in restraint of trade and in violation of the common law. Legislation such as the Labour Relations Act therefore legitimizes what was once considered illegal activity. As a result of its enabling legislation, disputes relating to unionized employees have largely been resolved outside of the Courts. In fact, the Courts have generally shown a reluctance to decide cases involving collective bargaining agreements. 6 The Supreme Court of Canada affirmed the primacy of arbitrators over the courts in this area in the St. Anne decision when it noted: The collective agreement established the broad parameters of the relationship between the employer and his employees. The relationship is properly regulated through arbitration and it would, in general, subvert both the relationship and the statutory scheme under which it arises to hold that matters addressed and governed by the collective agreement may nevertheless be the subject of actions in the courts at common law. The more modern approach is to consider that labour relations legislation provides a code governing all aspects of labour relations, and that it would offend the legislative scheme to permit the parties to a collective agreement, or the employees on whose behalf it was negotiated, to have recourse to the ordinary courts which are in the circumstances a duplicative forum to which the legislature has not assigned these tasks. 7 Even after St. Anne, employers and unions tried from time to time to put labour relations issues before the Courts. There was considerable confusion as to whether labour arbitrators had the authority to do things like interpret the Canadian Charter of Rights and Freedoms, and deal with employers tortious conduct. 8 The Supreme Court of Canada revisited the issue in 1995 in Weber. 9 In that case, Ontario Hydro hired a private investigator to ascertain if Weber s ongoing claim for benefits was legitimate. The investigator gained entry to Weber s residence by false pretenses, and Hydro used information that they obtained as justification for suspending Weber for violating the company s sick leave plan. Weber commenced a civil action alleging breach of his Charter rights and tortious conduct including trespass, nuisance, deceit and invasion of privacy. The Court dismissed the civil action and reaffirmed support for the exclusive jurisdiction model. 10 The majority concluded that the intention of the Labour Relations Act was to confer exclusive jurisdiction on arbitrators. Disputes arising out of the collective agreement directly or by implication are beyond the jurisdiction of the courts. An appropriate starting point, therefore, when providing advice to a unionized employee is to look at whether the complaint is, at its core, a dispute that arises out of the collective agreement. If the answer if yes, it is unlikely that the client can sue. Application of The Principles to Specific Situations These principles provide a framework for deciding whether a plaintiff s lawyer can assist a potential client who is a unionized employee. Let s consider some specific situations. Wrongful dismissals Wrongful dismissal litigation is a significant part of many plaintiffs lawyers practices. However, the employment relationship and process for terminating an employee will be a central element in any collective agreement. It is therefore not possible to commence a civil action against an employer for wrongful dismissal in a case involving a unionized employee. The reality is that by joining a union, the employee has effectively given up his or her right to pursue common law remedies for wrongful dismissal. In some situations, this entails a considerable sacrifice. 11 The best piece of advice to give the unionized employee in this circumstance is that he or she should attempt to have the union file a reinstatement grievance on their behalf. Human Rights complainants Weber expressly confirmed that labour arbitrators have the power to make decisions concerning the Charter and Human Rights complaints. Most collective agreements contain a specific provision affirming that both the employer and the union will respect and abide by human rights legislation and that a violation of an employee s human rights may be arbitrated through the collective agreement. The Ontario Human Rights Commission has generally taken the position than a unionized employee with a human rights complaint should deal with the matter by filing a grievance under the collective agreement rather than filing a complaint with the Commission. In fact, section 34(1)(a) of the Ontario Human Rights Code gives the Commission the right to summarily dismiss complaints where The complaint is one that could or should be more appropriately dealt with under an Act other than this Act. 12 It has been the Commission s almost invariable practice to use section 34 to dismiss complaints filed by unionized employees. However, this practice has recently come under judicial scrutiny. In a unanimous decision of the Ontario Court of Appeal, 13 Chief Justice McMurtry criticized the Commission for using section 34 to side-step the complaint of a unionized employee who argued that her union had not properly represented her. The Chief Justice sent the matter back to the Commission for reconsideration. 52 THE LITIGATOR Fall, 2002

3 There is some hope, therefore, that unionized employees could hire lawyers to pursue human rights complaints on their behalf. However, the fact remains that most of these matters should also be dealt with through the collective agreement rather than the Courts or the Human Rights Commission. Occupational Health and Safety and/or W.S.I.B. matters The Occupational Health and Safety Act and Workers Safety Insurance Act provide a comprehensive régime for dealing with workplace safety issues and compensation for employees who are injured while in the course of their employment. All workers who are subject to the WSIA, whether unionized or not, are statute barred from suing their employers or another Schedule I employee. If the injury is caused by a third party, both unionized and nonunionized workers have the option of electing to receive WSIB benefits or of electing out of the regime and pursuing a civil action. 14 The only aspect of WSIB where unionized and non-unionized employees are treated differently is in the provision of information. The Office of the Workers Adviser has been set up by the government to provide assistance to non-union employees. The working assumption is that unionized employees who require assistance and guidance in this area will be able to go to their union for support. Tortious Conduct In Weber, the Court adopted the following test for determining whether a unionized employee could sue: does the dispute, viewed with an eye to its essential character, arise from the collective agreement? 15 Unionized employees may only sue in those rare instances where the conduct does not arise from the collective agreement. In Weber, the claim was dismissed because the Court found the tortious conduct arose in relation to matters covered by the collective agreement. This relatively restrictive view has generally been followed by judges. For instance, in Dwyer v. Canada Post 16 a unionized worker was not permitted to maintain an action for defamation and intentional infliction of nervous harm arising from a letter written by a supervisor. Actions for allegedly tortious communications, negligent misrepresentations, breach of fiduciary duty and defamation have also been regularly dismissed by Ontario Courts since Weber. 17 However, it would be a mistake to conclude that all tort-based actions against employers by unionized employees cannot succeed in the post- Weber era. Consider the decision of the P.E.I. Court of Appeal in Graham v. Straight Crossing 18, where a unionized employee s lawsuit for defamation was allowed to proceed. The employee had applied for W.C.B. benefits and the employer wrote a letter to the Board that was alleged to be defamatory. 19 The Ontario Court of Appeal has also allowed certain actions to proceed. In Piko v. Hudson Bay 20, the Bay had Piko charged with fraud. The charges were later withdrawn by the Crown. Piko grieved her dismissal and sued in tort for malicious prosecution. Justice Laskin ruled that the question of whether Piko had been unjustly discharged was a matter to be arbitrated; however, the tort action should be allowed to proceed. He found that Bay had taken the matter outside of the collective agreement by filing the complaint with the police: While any dispute arising under a collective agreement, regardless of how it is characterized, must be arbitrated and not litigated in the courts, the collective agreement does not govern every dispute between an employer and an employee A dispute centered on an employer s instigation of criminal proceedings against an employee, even for a workplace wrong, is not a dispute which in its essential character arises from the interpretation, application, administration or violation of the collective agreement. [head note]. The question of when a unionized employee may maintain a civil action for his or her employer s tortious conduct remains open. While most conduct will likely fall under the collective agreement, Piko is good authority for the proposition that extremely egregious actions may well be capable of being litigated in the Courts. Long-term Disability Claims Perhaps the most hotly contested jurisdictional issue related to unionized employees relates to whether disputes over employees entitlements to longterm disability benefits should be decided by private arbitrators or by the Courts. Long-term disability cases have been litigated by plaintiffs lawyers in the Courts for decades. Until recently, the jurisdiction of the Courts to deal with such matters was accepted by all sides without question. However, in the mid-1990s a line of cases developed in the wake of the Weber decision which held that, in some cases, L.T.D. entitlement issues should be decided by arbitrators operating under the authority of the collective agreement rather than by judges sitting in Courts. 21 The attempt to force L.T.D. cases out of the Courts is being driven primarily by the insurance industry rather than the labour community. In fact, employers, unions and arbitrators have expressed reservations about the suitability of the arbitration system to deal with this type of case. Employers find themselves having to hire lawyers Fall, 2002 THE LITIGATOR 53

4 to fight cases that would previously have been handled by the insurance company. Unions are forced to arbitrate cases that are far different in scope and substance from what they are accustomed to dealing with. Unions would also face serious cost issues if they were forced to arbitrate all of these disputes. Labour arbitrators do not generally have extensive experience with personal injury cases. They also struggle with the jurisdictional problems associated with having an arbitration between an employer and a union that might result in the arbitrator ordering the insurance company to resume paying benefits. 22 The problem is compounded when the conduct of the insurer is a serious issue. 23 The Courts have generally accepted that there are four categories relating to employee benefit plan obligations as found in collective agreements. The ability of an arbitrator to hear a grievance related to the payment of benefits is dependant upon what category is found in the collective agreement. These categories are described in a leading labour textbook 24 as follows: 1. The collective agreement does not refer to the insurance plan; 2. The collective agreement provides for certain benefits to employees; 3. The collective agreement provides that the employer is only to pay premiums; and 4. The insurance contract is incorporated into the collective agreement. Generally, arbitrators have the authority to decide cases that fall within categories 2 and 4, but not cases that fall within categories 1. and 3. While the vast majority of collective agreements would fall within category 3, insurance companies continue to use the Weber decision to attempt to get L.T.D. cases thrown out of the Courts. A recent case on point is Cicciarella v. Clarica and T.T.C. 25 Ms. Cicciarella brought a lawsuit for reinstatement of L.T.D. benefits and for bad faith. Clarica responded by bringing a Rule 21 motion to strike the Statement of Claim. Justice Loukidelis dismissed the motion with costs, noting; The plaintiff seeks redress arising from the cancellation of her long term disability benefits. The Defendants claim that the plaintiff s dispute shall be arbitrated in accordance with the Employer/Union Collective Agreement (C.A). Generally, this argument is correct. However, facts and or terms of some CA s may allow, or indeed require that a particular dispute be determined by the Courts. In this matter, Clarica by agreement with the T.T.C. was the administrator of the disability plan which was incorporated into the CA. The T.T.C. agreed to be bound by any good faith decision made by Clarica. T.T.C. fulfilled its obligation under the C.A. by paying all premiums and is now bound by Clarica s decision to terminate the plaintiff s benefits. This particular situation in my view comes within the 3 rd group of the Brown and Beatty categorizations which has been found to be non-arbitrable. In addition, the plaintiff has made a bad faith claim against Clarica which is a matter only for the Courts. Motion is dismissed. 26 I am informed by plaintiff s counsel that this matter is likely to be appealed. It is respectfully submitted that attempts to force LTD disputes from the Courts is likely not in the best interest of unionized employees who are asking for our assistance in obtaining benefits to which they are legitimately entitled, and plaintiff s lawyers should vigorously resist attempts by insurers to take the law in this direction. Conclusions Generally speaking, most dealings between employers and unionized employees will be governed by the collective agreement. In those cases, disputes should be arbitrated rather than litigated. Potential clients should be urged to seek the assistance of their union in dealing with these disputes. 27 In some limited circumstances, however, unionized employees may be able to bring lawsuits in tort against their employer for particularly egregious conduct. The law is still evolving in this area, but opportunities exist for creative counsel to assist the deserving plaintiff in the right situation. An area of concern for plaintiffs lawyers should be the ongoing attempts by insurers to force long-term disability cases out of the court system and into private arbitrations. It is submitted that unionized employees who are seeking redress for the wrongful termination of benefits, especially where they may be bad faith conduct on the part of the insurer, are better served by a court system in which they have some measure of control rather than a private arbitration system that is controlled by the employer and the union. M. Steven Rastin is a Member of OTLA and is a partner with the firm McCarthy Rastin Kerr, in Midland, ON. 54 THE LITIGATOR Fall, 2002

5 Notes 1 If an employee is not entitled to sue, his or her only recourse is to attempt to convince the union to file a grievance. The decision about whether to file a grievance belongs to the union and not the employee, and the union may decide (for a variety of reasons) that it is not interested in pursuing a certain matter. 2 Approximately 92% of unionized employees fall under provincial jurisdiction. 3 S.O.1995, c.1, Sched. A. (commonly referred to in labour circles as Bill 7). Bill 7 was enacted by the Conservative Harris Government shortly after coming to power in A primary objective of Bill 7 was to repeal the modifications made by the N.D.P. to the Ontario Labour Relations Act with Bill 40. Bill 40 and Bill 7 reflect very different views of how management and organized labour should conduct business in the Province of Ontario. Not surprisingly, Bill 7 made it more difficult for unions to organize, easier for workers to decertify (or get rid of) a union, more difficult for a first collective agreement to be imposed and several other important changes that are beyond the scope of this article. 4 Arbitration, mediation, conciliation. 5 R.S.O. 1990, c.r This rule is not absolute, however. See Matthew Certosimo, When Can the Unionized Employee Sue? (Toronto: Carswell, 1999) for an excellent discussion on the exceptions to this general rule. 7 Estey,J. in St. Anne Nackawic Pulp & Paper Co. v. C.P.U.., Local 219, [1986] 1 S.C.R. 704 at. P [as found in Certosimo, supra, p.5]. 8 For instance in Galea v. General Motor of Canada ltd. (1993), 94 C.L.L.C. 17,015 (Ont. Gen. Div) the plaintiff commenced an action against G.M. claiming intentional infliction of mental suffering. However, the action was struck by Mr. Justice Kerr. 9 Weber v. Ontario Hydro (1995), 2 S.C.R See Certosimo, supra at pp for a detailed discussion of the other two jurisdictional models that were presented to the Court: the Concurrent Model and the Overlapping Jurisdiction Model. 11 A long-service employee over the age of 50 who would clearly be entitled to a common law notice period of up to two years, my find that his or her entitlement under a collective agreement is only a few weeks. 12 R.S.O. 1990, c.h.19, as amended. 13 Thomas v. Ontario (Human Rights Commission), [2001] O.J. No (C.A). 14 Issues relating to when an injured employee may sue are actually more complicated, but that topic is beyond the scope of this paper. 15 Weber, supra, at para (April 21, 1997), Doc. CA C23119 (O.C.A) [found in Certosimo, supra] 17 See Giorno v. Pappas, (1999), 170 D.L.R. (4 th ) 160 (O.C.A.); Bhaduria v. Toronto Board of Education, (1999), 173 D.L.R. (4 th ) 382 (O.C.A.); and Ruscetta v. Graham (1998), 36 C.C.E.I. (2d) 177 (O.C.A.), lr (1998), 235 N.R. 200 (S.C.C.) 18 (1999), 170 D.L.R. (4 th ) Certosimo points out that this decision cannot be reconciled with the Ruscetta decision, supra, which has remarkably similar facts (supra, p. 25). 20 (1998), 41 O.R. (3d) 729 (O.C.A.) lr by S.C.C. 21 See the line of cases flowing from Pilon v. International Minerals and Chemical Corp. (1996), 31 O.R. (3d) 210 (O.C.A). 22 Some arbitrators have attempted to third party insurance companies. However, arbitrators are not s.96 judges, and they only have the authority that is conferred upon them by the collective agreement. Since the insurance company is not a party to that collective agreement, it is unlikely that an arbitrator has the authority to compel an insurer to participate in an arbitration and even more unlikely that an arbitrator has the authority to issue a ruling that would be binding on an insurer. See London Life v. Dubruil [1998] O.J. No (C.A), N.A.A.T.G.W.U.C. v. Sun Life (2000), C.A.; C.B.C. and Burkett (1997), 155 D.L.R. (4 th ) The best example of this would be a bad faith claim against an L.T.D. insurer. 24 Brown & Beatty, Canadian Labour Arbitration, 3 rd Ed. (Aurora, Canada Law Book, looseleaf). 25 Unreported. OTLA member Russ Howe acts for the plaintiff. 26 Unreported decision dated May 13, Provided courtesy of R. Howe of Boland Howe. 27 Employees will sometimes complain that their union is not representing their interests. Their recourse in that situation would be to file an Unfair Labour Practices complaint with the Ontario Labour Relations Board. Fall, 2002 THE LITIGATOR 55

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