Two sets of cases before the Supreme Court of Court, that were recently pleaded and which derive from Wal-Mart’s closing of its Jonquière store some years ago - Pedneault and Desbiens – have the potential of becoming a legal tsunami in terms of their impact on employers! 

These cases have morphed into an allegedly Charter based challenge to what seemed to be an already clearly established employer right to go out of business at any time and for any reason – all of this with the possibility of very serious and unexpected consequences for employers. 

These sets of cases may also determine whether administrative tribunals, like the Quebec Labour Relations Commission (hereinafter «QLRC»), whose remedial powers are strictly defined and limited by their enabling statutes, can make use of the far more extensive remedial powers of Section 49 of the Quebec Charter when and if they find Charter violations and indeed, whether or not they are obliged to search for alleged violations when the legislature has specifically and limitatively crafted the questions they are to address, and the remedial powers that pertain. 

To review the facts quickly – Wal-Mart was unionised at its Jonquière Quebec store, then bargained, to impasse with the U.F.C.W., known in Quebec as T.U.A.C.  On the strength of the Supreme Court’s judgment in Place des Arts,[1] and the employer’s presumptive right to go out of business for any reason, that that case clearly endorses, when the dispute between Wal-Mart and the Union was referred to compulsory first contract arbitration[2], Wal-Mart announced the store’s closing.  All applicable legal provisions that apply to mass terminations were apparently followed to the letter. 

From the record of the case, it appears Wal-Mart was neither alleged to, nor found to have negotiated in bad faith, nor to have violated any other specific provision of the Labour Code in its collective bargaining. 

Its ex-employees or a substantial number of them, challenged the terminations of employment that resulted from the closure, claiming that they had been terminated because of union activities.  Given their proof of union activities, i.e. their union membership and the aforesaid collective bargaining, they were found to be entitled to the rebuttable presumption that their termination was in fact due to such union activities, absent proof of another «cause».  Wal-Mart, citing Place des Arts, argued that the causa causans – the proximate and operating cause of the loss of employment - was the store closure - a cause that is both «other» than the alleged union activities and recognized as valid by the Supreme Court.

Place des Arts, endorsed what former Labour Court Chief Judge Lesage said, in City Pontiac Buick, to the effect that an employer has the presumptive right to cease being an employer at any time, and for any reason – even for reasons which might be thought socially reprehensible – so long as the cessation of activities was final, definite and genuine Wal-Mart therefore sought dismissal of the complaints. 

In one set of complaints, Pedneault, the QLRC dismissed the complaints.  Its decision was sustained in judicial review proceedings and leave appeal to the Quebec Court of Appeal was refused.

In the other set of cases, Desbiens, the QLRC found that because the Store Manager, in his testimony, could not establish Wal-Mart’s ultimate intentions with respect to the multi year store lease by which it was still bound, that therefore Wal-Mart had left itself a way to reinter the marketplace, notwithstanding that all that was left of the store was an empty shell.  In the QLRC’s view therefore, closure merely pretextual –that the closure was neither final, definite and/or genuine.  The Quebec Superior Court refused judicial review, but the Quebec Court of Appeal reversed. 

With leave to appeal to the Supreme Court having been given in both sets of cases ostensibly on Charter grounds, to use language near and dear to lovers of hockey, Canada’s national sport - we are now into sudden death over-time! 

As I understand Appellants position, they argue:

1. In Health Services B.C.,[3] the Supreme Court held that the Section 2 (d) right of association found in the Canada Charter, includes the right to collective bargaining.  That Section provides:

«2. [Fundamental freedoms.] Everyone has the following fundamental freedoms:

 

[…]

 

(d) freedom of association.»

 

2. While that Section 2 (d) only applies to state action, clearly not relevant here, Section 3 of the Quebec Charter also speaks of a right of association, allegedly incorporating a Charter right to collective bargaining but contains no such limitation in its text, Section 3 of the Quebec Charter provides:

«3. [Fundamental freedoms] Every person is the possessor of the fundamental freedoms, including freedom of conscience, freedom of religion, freedom of opinion, freedom of expression, freedom of peaceful assembly and freedom of association.»

 

3. The terminations resulting from the Jonquière store’s closing affect Appellants’, Section 3 Quebec Charter Rights, in that they purportedly interfere with their associational rights to collective bargaining.  Hence the closure of the store must be deemed abusive, in contravention of Articles 6 and 7 of the Civil Code.  Place des Arts notwithstanding, since no one has an absolute right to anything.  Indeed, pursuant to these actions of the Civil Code, all rights must be exercised in good faith;
4. While the termination may result from a cause other than union activities, to wit the closure, since the closure allegedly violates the employees’ Section 3 associational rights to collective bargaining, such cause cannot be either just or sufficient;
5. The QLRC, the Quebec Superior Court and/or the Quebec Court of Appeal, missed the mark in not scrutinizing the underlying reason for Wal-Mart’s store closure, in effect, refusing to exercise jurisdiction.  In particular, there was refusal to exercise jurisdiction, because no account was taken of the alleged violation of the associational rights to collective bargaining which Appellants contend derive from Section 3 of the Quebec Charter. 

While the Supreme Court in Health Services B.C. found that the associational right of collective bargaining forms part of the freedom of association[4], covered by Section 2 d) of the Canada Charter, that Court has not yet interpreted the right of association set forth at Section 3 of the Quebec Charter, to be of the same effect.  Yet there may well be differences to be taken account of!  As Health Services B.C. noted, Section 2 d) of the Canada Charter, addresses state action and state action alone.  Does this different legislative context in which the same term is used in the two Charters, in the one addressing only state action and in the other containing no such limitation, constitute a relevant consideration for distinguishing Health Services B.C.’s application in Quebec? 

Article 3 of the Quebec Charter predates its federal counterpart by 7 years.  One cannot, therefore, argue that since Section 3 was borrowed from Section 2 (d) they must be interpreted in parallel. 

There is a further contextual difference in that there seems to be no equivalent in the Canada Charter of Section 6 of Quebec’s own Charter. No doubt this is so because Property and Civil Rights lie exclusively in the Provincial legislative domain as per the Canadian Constitution.  That Section provides:

«6. Every person has a right to the peaceful enjoyment and free disposition of his property, except to the extent provided by law.»

At first blush, Wal-Mart apparently disposed of or divested itself of its property pursuant to and by following, to the letter, the legal regime that applies i.e. all the rules regarding mass-terminations, etc.  How is one therefore to balance the seeming collision of rights that a decision that collective bargaining is part of the ex-employees rights of association under Section 3 of the Quebec Charter and hence somehow violated by the loss of employment that closure would bring about, and any possible recognition that such closure was in the exercise of Wal-Mart’s Section 6 Quebec Charter rights?

Is there an argument to the effect that an employer’s Section 6 rights are even stronger than any claimed Section 3 rights in that the right to dispose of property to the extent and in the manner provided by law is legislatively specific, whereas any alleged associational rights of collective bargaining following from Section 3 are derivative – the result only of interpretation?

Interestingly, no reference to Section 6 of the Quebec Charter appears anywhere in the Place des Arts judgment.  If the Supreme Court arrived at an employer’s presumptive right to go out of business given, simply, the very nature of the liberal and democratic economy which Canada ostensibly is, does Section 6 of the Quebec Charter gives quasi-constitutional status to that right. 

Since both sets of Wal-Mart cases are now awaiting decision by the Supreme Court, practitioners in the field are waiting anxiously and with baited breath to see what the outcome of all of this will be. [5]

Should the Appellants win, profound impact may be felt by all employers!  What types of divestiture or cessation of operations would be affected?  Would, for instance, a simple exit from business by way of non renewal of a subcontract or the designation by a franchisor of a new franchisee or sub-contractors, as happened in U.E.S. vs. Bibeault,[6] attract an alleged Section 3 challenge? Would the timing of the divestiture – before or after a collective agreement - affect the matter?   Alienation of part of an enterprise, permitted by the Labour Code, may bring not only a change in employer but results in legislatively sanctioned changes in the collective agreement’s expiry date (See Section 45.2 (1) L.C.).  Would a win for Appellants open that Section, that was so politically divisive when it was introduced, to a new Charter challenge?  Does the associational right to collective bargaining, if such exists, pursuant to Section 3 of the Quebec Charter, end with the signature of a collective agreement?  If not, does it continue without end until certification is revoked?  Remember that Wal-Mart closed the store after it bargained to impasse but before imposition of a first collective agreement.  Health Services B.C. established that there is no right to either any particular form of collective bargaining or indeed to any particular result of collective bargaining. 

Other Charter issues arise in the event of victory by Appelants.  Section 49 of the Quebec Charter provides that any unlawful interference with any right or freedom recognized by the Charter entitles the party aggrieved to obtain the cessation of such interference and compensation for the moral or material prejudice that results.  Where the interferences are intentional the tribunal may as well impose punitive damages.  In the case of a claim of illegal termination because of union activities, (Articles 15 et seq. L.C.), the remedial powers of the QLRC are set out clearly, definitively and limitatively at Section 15 of the Quebec Labour Code.  The Labour Code was significantly amended in 2002 when the QLRC was created, with no incorporation, direct or indirect, of Section 49 of the Charter at Section 15. 

Can the QLRC appropriate powers under Section 49 beyond its enabling statute à la McLoed vs. Egan, or Parry Sound, [7]or is the legislature deemed have to have addressed this issue in the negative by legislating in the way it did at Section 15 of the Code.  In any case, P.G. du Québec vs. Laplante reviewed in my written materials seems to have opened a serious breach in Parry Sound’s application in Quebec.

If the QLRC cannot extend its remedial powers beyond what is provided for at Section 15, does the fact that more than three years have passed since the employee terminations mean that any recourse to the civil courts allegedly pursuant to Section 49 of the Charter is now prescribed or time barred via the Civil Code? Can recourse to the QLRC via the Section 15 complaints be viewed as an interruption of prescription or the tolling of any time bar?  If not, is the matter is some ways moot?

In an early set of cases, Boutin vs. Wal-Mart, an attempt was made to get the CRT to order Wal-Mart to reopen the store based allegedly on QLRC’s remedial powers set out at Sections 118 and 119 of the Labour Code and failed.  Such requested orders were refused on the basis of Place des Arts.  Since Petitioners eventually desisted therefrom are the issues resjudicata?  Are these cases presently before the Supreme Court an attempt to revive and resuscitate the Boutin case? 

In closing, can one imagine the juridical oddity that might be created if Appellants win.  Employers in other Provinces in Canada could cease operations at will based on Place des Arts, a Quebec case, without having to fear any alleged violation of any associational right of collective bargaining, because, as the Supreme Court pointed out in Health Services B.C., Section 2 d) of the Canada Charter only affects the state.  On the other hand, employers in Québec, could not avail themselves of the rights recognized by that same Québec case, notwithstanding their divestiture rights instantiated in the Quebec Charter pursuant to Section 6 that I referred to above.  To quote Alice in Wonderland, things could be said to be getting «curiouser and curiouser». 

N.B: The opinions expressed herein are solely those of the author.  He alone is responsible for any errors or omissions.

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