Air Canada v. Canadian Union of Public Employees, Air Canada Component, (2010) 258 O.A.C. 139 (DC)

• Judge: Whalen, Dambrot and Swinton, JJ.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: November 03, 2009
• Jurisdiction: Ontario
• Citations: (2010), 258 O.A.C. 139 (DC);2010 ONSC 456

Air Can. v. CUPE (2010), 258 O.A.C. 139 (DC)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. FE.019

Air Canada (applicant) v. Canadian Union of Public Employees, Air Canada Component (respondent)

(160/09; 2010 ONSC 456)

Indexed As: Air Canada v. Canadian Union of Public Employees, Air Canada Component

Court of Ontario

Superior Court of Justice

Divisional Court

Whalen, Dambrot and Swinton, JJ.

January 22, 2010.

Summary:

In 2004, in response to a financial crisis that threatened Air Canada's existence, Air Canada and the Canadian Union of Public Employees, Air Canada Component (the union) entered into a memorandum of understanding that introduced a voluntary separation program (VSP) under which union members were offered monetary incentives for early retirement or resignation. Paragraph 2 provided that Air Canada would offer "at least" 250 VSPs per calendar year. A governing principle of the program was that the "maximum number" of VSPs would be granted. In 2008, Air Canada received 340 eligible VSP applications, granted 250 and denied 90. The union filed a grievance regarding the denials. The arbitrator concluded that there was no sustainable reason for the denials and ordered Air Canada to immediately offer VSPs to the 90 applicants and to compensate them for any loss. Air Canada applied for judicial review.

The Ontario Divisional Court dismissed the application.

Arbitration - Topic 7803

Judicial review (incl. appeals) - Nature of review proceeding (incl. standard of review) - [See Labour Law - Topic 9353 ].

Arbitration - Topic 7959

Judicial review (incl. appeals) - Jurisdiction of arbitrator - General - Excess of jurisdiction - [See Labour Law - Topic 9128 ].

Arbitration - Topic 8005

Judicial review (incl. appeals) - Jurisdiction of arbitrator - Error of law on the face of the record - Modification or addition to contract - [See Labour Law - Topic 9128 ].

Labour Law - Topic 9128

Public service labour relations - Adjudication of grievances - Jurisdiction of adjudicators or boards - In 2004, in response to a financial crisis that threatened Air Canada's existence, Air Canada and the Canadian Union of Public Employees, Air Canada Component (the union) entered into a memorandum of understanding (MOU) that introduced a voluntary separation program (VSP) under which union members were offered monetary incentives for early retirement or resignation - Paragraph 2 provided that Air Canada would offer "at least" 250 VSPs per calendar year - A governing principle of the program was that the "maximum number" of VSPs would be granted - In 2008, Air Canada received 340 eligible VSP applications, granted 250 and denied 90 - The union filed a grievance regarding the denials - Air Canada asserted that the additional 90 applications had been denied because granting them would add costs, rather than resulting in savings - The arbitrator acknowledged Air Canada's discretion but concluded that the wording of the MOU required Air Canada to assess its obligation to grant VSPs above 250 with a degree of rationality and transparency - Here, the 90 applications had been denied without justification on the sole, but unexplained, basis that they would result in added costs - The arbitrator concluded that there was no sustainable reason for the denials and ordered Air Canada to immediately offer VSPs to the 90 applicants and to compensate them for any loss - Air Canada applied for judicial review, asserting that the arbitrator had exceeded his jurisdiction - The Ontario Divisional Court dismissed the application - The critical issue was whether the arbitrator had modified the collective agreement and added terms that could not be justified - The arbitrator's analysis focussed on and interpreted the words "at least", "governing principle" and "maximum number will be granted" - The court rejected Air Canada's assertion that the management rights provisions in the collective agreement prevented this analysis - The MOU had amended the collective agreement - Paragraph 2 abridged or modified management's rights - The arbitrator had no choice but to enquire into what it meant - The arbitrator was entitled to require Air Canada to exercise its management rights reasonably in order "not to negate or unduly limit" the governing principle that the maximum number of VSPs would be granted - There had to be underlying reasons for the acceptance or denial of eligible VSP applications that could be explained and assessed as to whether the governing principle had been followed - Air Canada had to generate those reasons because it controlled the relevant information - Air Canada had been asking the union to trust its conclusion without explaining or justifying how it was reached - Parties to agreements and those mandated to arbitrate and adjudicate their terms were entitled to information that permitted an assessment of whether the governing principle has been complied with - See paragraphs 36 to 55.

Labour Law - Topic 9353

Public service labour relations - Judicial review - Decisions of adjudicators, arbitrators, grievance appeal boards or officers - Scope of review (incl. standard) - In 2004, in response to a financial crisis that threatened Air Canada's existence, Air Canada and the Canadian Union of Public Employees, Air Canada Component (the union) entered into a memorandum of understanding that introduced a voluntary separation program (VSP) under which union members were offered monetary incentives for early retirement or resignation - Paragraph 2 provided that Air Canada would offer "at least" 250 VSPs per calendar year - A governing principle of the program was that the "maximum number" of VSPs would be granted - In 2008, Air Canada received 340 eligible VSP applications, granted 250 and denied 90 - The union filed a grievance regarding the denials - The arbitrator concluded that there was no sustainable reason for the denials and ordered Air Canada to immediately offer VSPs to the 90 applicants and to compensate them for any loss - Air Canada applied for judicial review - The Ontario Divisional Court held that the standard of review was reasonableness - The arbitrator's statutory authority was derived from the Canada Labour Code, which contained a strong privative clause - This signaled Parliament's desire that deference be accorded to the decisions of arbitrators - The arbitrator was required to interpret and apply the parties' collective agreement, a matter within the specialized expertise of labour arbitrators - There was no suggestion that the question of law at issue was of central importance to the legal system or outside the arbitrator's specialized area of expertise - Therefore, the decision merited considerable deference - This did not mean, however, that the decision should not be scrutinized within the parameters of the "reasonableness" standard - This was so whether jurisdiction or some other question was in issue - If the arbitrator modified the collective agreement without basis and thereby added terms that were not there, he had acted unreasonably - See paragraphs 30 to 35.

Labour Law - Topic 9513

Public service labour relations - Collective agreement - General and definitions - Interpretation - General - [See Labour Law - Topic 9128 ].

Labour Law - Topic 9622.1

Public service labour relations - Collective agreement - Management rights - Duty of reasonableness - [See Labour Law - Topic 9128 ].

Labour Law - Topic 9632

Public service labour relations - Collective agreement - Management rights - Discretionary decisions - Requirement of reasons - [See Labour Law - Topic 9128 ].

Labour Law - Topic 9702

Public service labour relations - Collective agreement - Arbitration - Jurisdiction - [See Labour Law - Topic 9128 ].

Labour Law - Topic 9710

Public service labour relations - Collective agreement - Arbitration - Judicial review - [See Labour Law - Topic 9353 ].

Cases Noticed:

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1, refd to. [para. 24].

Brown (George) College of Applied Arts and Technology v. Ontario Public Service Employees Union (2003), 179 O.A.C. 272; 68 O.R.(3d) 161 (C.A.), refd to. [para. 24].

Sisters of St. Joseph v. Service Employees Union, Local 210 (1997), 102 O.A.C. 192; 35 O.R.(3d) 91 (C.A.), refd to. [para. 24].

Hamilton (City) v. Canadian Union of Public Employees, Local 167 et al. (1997), 99 O.A.C. 155; 33 O.R.(3d) 5 (C.A.), refd to. [para. 27].

Stelco Inc. v. United Steelworkers of America, Local 1005 et al. (1994), 69 O.A.C. 172; 17 O.R.(3d) 218 (Div. Ct.), refd to. [para. 27].

Toronto Transit Commission v. Amalgamated Transit Union, Local 113 (2005), 194 O.A.C. 322 (Div. Ct.), refd to. [para. 27].

Taub v. Investment Dealers Association of Canada et al. (2009), 255 O.A.C. 126 (C.A.), refd to. [para. 28].

Marianhill Inc. v. Canadian Union of Public Employees, Local 2764, [2009] O.J. No. 2703 (C.A.), refd to. [para. 28].

Lakeport Beverages v. Teamsters Local Union 938 (2005), 201 O.A.C. 267; 258 D.L.R.(4th) 10 (C.A.), refd to. [para. 28].

Social Services Administration Board (Parry Sound District) v. Ontario Public Service Employees Union, Local 324 et al., [2003] 2 S.C.R. 157; 308 N.R. 271; 177 O.A.C. 235, refd to. [para. 28].

Counsel:

Brad Elberg, for the applicant;

Craig Flood and Ron Lebi, for the respondent.

This application was heard at Toronto, Ontario, on November 3, 2009, by Whalen, Dambrot and Swinton, JJ., of the Ontario Divisional Court. On January 22, 2010, Whalen, J., delivered the following reasons for judgment for the court.