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Wal-Mart Store Closing is Off to the Supremes

The Supreme Court of Canada granted leave yesterdayto hear two appeals from the Quebec Court of Appeal involving the decision of Wal-Mart to close a store in Saguenay, Que. several years ago after the union was certified to represent the workers.  Nearly 200 employees lost their jobs.  A good summary of the events is set out in this piecefrom Business Week. 

The main facts for the purpose of the law cases are: (1) the union was certified by a statutory card-check in Sept. 2004; (2) the parties began bargaining, but bargaining stalled; (3) the union applied for first contract arbitration under the Quebec labour legislation, and on Feb. 9, 2005, the Ministry of Labour appointed the arbitrator; (4) that same day, Wal-mart announced it was permanently closing the store and terminating all of the employees; (5) in late April, 2005, all of the employees were dismissed and the store was closed.

There are two cases moving onto the Supreme Court: Gaétan Plourde v. Wal-Mart Canada  and Johanne Desbiens, Ingrid Ratté and Claudine Beaumont v. Wal-Mart Canada .  The facts of the cases are summarized briefly in the SCC’s leave application notes.  The litigation began at Quebec’s labour board.   In both cases, the dismissed employees argued that the store closure and the dismissals were in response to unionization, and that this violated the employees’ rights under s. 15 of the Code, which prohibits a dismissal in response to the lawful exercise of union activities.  They relied on a reverse onus provision in the Code, which provides as follows:

17. If it is shown to the satisfaction of the Commission that the employee exercised a right arising from this Code, there is a simple presumption in his favour that the sanction was imposed on him or the action was taken against him because he exercised such right, and the burden of proof is upon the employer that he resorted to the sanction or action against the employee for good and sufficient reason.

Therefore, a key issue in the cases is whether a permanent closure is “a good and sufficient reason” for the dismissals.  If it is, then Wal-mart will have successfuly rebutted the presumption.  

The Supreme Court has agreed in an earlier case called I.A.T.S.E., Stage Local 56 v.Société de la Place des Arts de Montréal, [2004] 1 S.C.R. 43 with a ruling that found that Quebec labour law does not prohibit the closure of a business, even if the reason for the closure is based on “socially reprehensible considerations”:

In our free enterprise system, there is no legislation to oblige an employer to remain in business and to regulate his subjective reasons in this respect . . . .  If an employer, for whatever reason, decides as a result to actually close up shop, the dismissals which follow are the result of ceasing operations, which is a valid economic reason not to hire personnel, even if the cessation is based on socially reprehensible considerations.  What is prohibited is to dismiss employees engaged in union activities, not to definitively close a business because one does not want to deal with a union or because a union cannot be broken, even if the secondary effect of this is employee dismissal. 

So, it came as a bit of surprise that the Quebec labour board found in favour of the employees in one of the two cases (Johanne Desbiens).  The employees argued that the earlier decisions had not considered the effect of the Quebec Charter, which in Section 3 protects ‘freedom of association’, and the labour board ruled that in fact Wal-Mart had fact not satisfied it that the store was permanently closed because Wal-Mart had a 20 year lease that remained  in effect, notwithstanding that the store had been emptied of its contents.

That decision was overruled by the Quebec Court of Appeal (the decision has not been translated, so I only have the French version.  American readers might want to our friend Paul Secunda to translate!).

So the Supreme Court has agreed to hear appeals from the employees in both cases, presumably on a consolidated basis.  The case has some intrigue in light of recent SCC decisions.  Firstly, the Court ruled recently that the Canadian Charter of Rights protects a right to unionize and a (limited) right to collective bargaining.  One question raised in these cases was whether an interpretation of s. 17 that permits employers to undermine the exercise of these fundamental rights by simply closing the workplace and firing everyone is consistent with the new, broader interpretation of freedom of association crafted by the SCC.  

A second issue of interest is how the Court will apply its new standard of review as crafted in a case called Dunsmuir v. New Brunswick.   In that case, the Court dropped the old standard of “patently unreasonable” in favour of a new “reasonableness” standard, but also affirmed that expert labour tribunals would usually be granted considerable deference when interpreting their own home statutes:

Deference will usually result where a tribunal is interpreting its own statute or statutes closely connected to its function, with which it will have particular familiarity…. Deference may also be warranted where an administrative tribunal has developed particular expertise in the application of a general common law or civil law rule in relation to a specific statutory context: … Adjudication in labour law remains a good example of the relevance of this approach

So, we will have to see how the SCC deals with the finding of the Quebec labour board that Wal-mart violated the employees’ rights under the code when it closed the store and dismissed the employees.  If I were the employees, I’d keep my expectations low.  

Of course, at the bottom of all this is the policy question:   Should an employer be able to prevent collective bargaining by simply closing every workplace that becomes unionized?   What interests are advanced by allowing this, and what interests are sacrificed, and where should a democratic state stand on this issue? 

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