High Court Overturns Labour Board Decision - Blueprint for Union Busting Now Off the Table

    EDMONTON, Oct. 18 /CNW/ - In an important and strongly-worded decision
released yesterday, the Alberta Court of Appeal overturned a controversial
Labour Relations Board (LRB) decision which allowed Finning International in
2005 to rid itself of a union collective agreement by establishing a new
company for part of its operations. At the time the decision was considered by
many to fly in the face of available evidence.
    "This is an important decision by the three Justices of the Court of
Appeal," says AFL President Gil McGowan. "It reverses a terrible decision by
the Alberta Labour Relations Board (LRB). Finning had created a new blueprint
for union busting, and the LRB was letting them get away with it. Thankfully
the Court of Appeal saw through it and has stopped it."
    The unanimous decision pertains to a dispute in 2005, in which Finning
International created a new entity, OEM Remanufacturing, to take over
Finning's component rebuilding operations. In the transfer OEM evaded the
existing contract with the International Association of Machinists (IAM) and
instead signed a contract with the Christian Labour Association of Canada
    An original LRB decision ruled OEM was a successor to Finning and that
the two companies were, in fact, a common employer. Normally this would have
meant that IAM would have maintained its status as official bargaining agent
and the workers would have been protected by the existing IAM collective
agreement with Finning.
    Two months later, adopting a highly unusual procedure, the Labour
Relations Board reconsidered the decision at the request of the employer. In
that reconsideration, a five-person "superpanel" consisting of the LRB Chair
Mark Asbell, two Vice-Chairs and two Board members overturned the original
ruling. IAM then appealed to the courts.
    "It was a thinly-veiled attempt to bust our union, and we were determined
to fight it," says IAM Lodge 99 President Bob MacKinnon. "This is an important
day for us, the Machinists, and for all unionized workers. It is also a great
day for the democratic process: the Court has recognized that where workers
have voted to be represented by a union, that decision must be respected by
employers in Alberta."
    In its decision, the Appeal Court criticized the LRB superpanel for
substituting its opinion for the factual findings of the original panel. The
Appeal Court also found that the panel had deviated from well-established
successorship principles clearly evident in the Boards own previous rulings
and in court decisions. It ruled the decision was "patently unreasonable" and
ordered the original decision re-instated. "Patently unreasonable" is a legal
term indicating that the decision was "clearly irrational" or "bordering on
the absurd".
    "Quite frankly, the LRB messed up on this," says McGowan. "It speaks to
ongoing problems at the LRB and will deepen the growing mistrust unions have
with the Board's lack of visible objectivity. It is gratifying that the Court
of Appeals recognized the superpanel's rush-to-judgment for what it was."
    The decision leaves the IAM free to pursue its attempt to ensure that the
successorship decision leads to full remedies for its wronged members.
    "It is a shame that workers need to rely on judges to uphold our
democratic rights," notes McGowan. "That is supposed to be the job of the
Labour Relations Board."


                 High Court Overturns Labour Board Decision

                Blueprint for Union Busting Now Off the Table

    The Significance of the Decision

    -   It is rare for LRB decisions to be overturned by the courts. The bar
        for doing so is very high.
    -   The case was a controversial one. It related to a new technique for
        union busting, and included the involvement of CLAC, a bargaining
        agent mistrusted by mainstream unions.
    -   The decision by the Appeal Court raises serious questions about the
        process used by the Reconsideration Panel.
    -   Unions have been growing increasingly frustrated at the LRB for its
        lack of transparent objectivity.
    -   The Alberta Court of Appeal does not have a reputation for
        progressive decisions.

    Timeline of Finning/OEM Case

    2001            Finning operates its own Component Rebuild Centre (CRC),
                    employing 160 workers represented by IAM Local 99. An
                    internal study by Finning concludes it needs a new CRC.

    January 2004    Company sets up OEM Remanufacturing using a complicated
                    legal structure which, according the Court of Appeal
                    "ensured that Finning would not be publicly disclosed as
                    the registered shareholder". Finning Canada, wholly owned
                    by Finning International, in turn wholly owns OEM.
                    Finning finances the building of the new plant at the
                    cost of $87 million. Finning signs an agreement to send
                    all CRC work to OEM.

    June 2004       Finning informs workers it is closing existing plant as
                    of March 2005. At the same time, Finning announces
                    publicly that it will be contracting out its work to OEM.

    March 2005      OEM takes over CRC operations. IAM files for successor
                    rights under Section 46 of the Labour Relations Code.

    April 7, 2005   Original LRB decision rules OEM and Finning are "common
                    employers," but withholds traditional remedy of automatic
                    certification, ordering a "run-off" vote instead. Union
                    intends to appeal need for run-off vote.

    June 7, 2005    Reconsideration Panel overturns the original ALRB
                    decision, arguing Finning and OEM are not common

    April 25, 2006  Court of Queen's Bench upholds Reconsideration Panel

    October 17,     Alberta Court of Appeals overturns Reconsideration Panel,
    2007            calling it "patently unreasonable" and re-instates the
                    original decision.

    Why are Finning & OEM "Common Employers"

    -   OEM did not demonstrate sufficient legal and operational independence
        from Finning International.
    -   Finning Canada, a wholly-owned division of Finning International,
        paid the total costs (approximately $87 million) for the construction
        of the new OEM plant
    -   Finning Canada financed all of the money for the creation of OEM
        through the purchase of two existing independent firms
    -   Finning International controls 100% of the Class A (controlling)
        shares in OEM's parent company
    -   All CRC work was subsequently transferred to OEM

For further information:

For further information: Gil McGowan, AFL President at: (780) 218-9888
(cell); Bob McKinnon, AIM Lodge 99 President at: (780) 218-9888 (cell)

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Alberta Federation of Labour

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