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Jul 30, 2019
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A unions' internal affairs are governed by its constitution. In Brown v. Hanley, the Ontario Court of Appeal addressed a novel claim by four members seeking to invalidate sections of their union's constitution that made it difficult to affiliate with another union on the basis that those sections were unconscionable as a matter of contract law. 

As to the main appeal, the Court issued a stay of proceedings while the members' complaints proceeded through the regular channels of union democracy.  The Court also rejected the respondent union's argument that the doctrine of unconscionability was inapplicable to union constitutions.

Several unions sought leave to intervene in this proceeding due to the importance of the issues raised in the claim. However, the Court declined to allow the interventions. 

Nevertheless, this case raises important issues for many Canadian unions because the impugned provisions are commonly included in union constitutions. 

Facts

The Amalgamated Transit Union (ATU) represents transit workers across 240 local unions in the United States and Canada. Local 113 was formed in 1899 and currently represents 10,000 Toronto Transit Commission employees subject to both the Local's bylaws and the International Constitution. The Constitution is only amendable by a two-third's majority vote at the ATU's international convention.

In 2017, four Local 113 members sought a declaration from the Superior Court that certain provisions in the Constitution were unenforceable on the basis of unconscionability. As a matter of contract law, a contract is unconscionable when one party exploits its bargaining power to extract an unfair advantage from the other.

The provisions in question dealt with inter-union raiding. Specifically, they:

            (1) permitted 10 Local members to block a disaffiliation vote

(2) required the Local to forfeit its assets to the ATU in the event of disaffiliation, and

(3) allowed the ATU to impose sanctions on members engaged in prohibited dual unionism or otherwise supporting raiding activity.

The union initially responded by asking the Court to strike the claim. It argued that the claim disclosed no reasonable cause of action because unconscionability was inapplicable to union constitutions. The ATU also argued that the members lacked standing to bring an action on behalf of the Local and that the matter was within the exclusive jurisdiction of the Ontario Labour Relations Board.

In 2018, the Superior Court dismissed the union's application to strike the claim.  However, the Court ordered a stay of proceedings while the members pursued amendments to the Constitution through internal decision-making channels. In the meantime, the union was enjoined from invoking any disciplinary measures until a final resolution was reached. The members appealed the stay and the union cross-appealed the Court's refusal to strike.

The Court of Appeal Decision

In a May 15, 2019 decision, the Ontario Court of Appeal affirmed the lower court's ruling and dismissed both appeals. Applying the Supreme Court of Canada's leading decision Berry v. Pulley, the Court of Appeal added to the jurisprudence examining the legal nature of union membership and the relationship between the statutory jurisdiction of the Ontario Labour Relations Board and the common law of internal union affairs. While the decision offers clarity on the Court's thinking in these areas, it also suggests that the law of union governance and inter-union conflict remains in a state of flux.

1. Union constitutions are contractual in nature

The modern legal view of unions and their constitutions was outlined by the Supreme Court of Canada in Berry v. Pulley. Historically, unions lacked status as discrete legal entities and were treated as a  web of contracts between individual union members. In light of the labour movement's important role in Canadian society and the strong legal foundation provided by labour relations statutes, the Supreme Court cast aside this outdated legal fiction and recognized unions as legal entities in their own right.

Berry v. Pulley allowed unions and their members to establish union constitutions in the nature of private contracts and then enforce the terms of these constitutions in court. The Supreme Court described this contract-like quality and the unique legal relationship embodied by union constitutions:

[…] this relationship is in the nature of a contract because it is unlike a typical commercial contract. Although the relationship includes at least some of the indicia of a common law contract (for example offer and acceptance), the terms of the contractual relationship between the union and the member will be greatly determined by the statutory regime affecting unions generally as well as the labour law principles that courts have fashioned over the years. [emphasis in original].

After Berry v. Pulley, the Ontario Court of Appeal considered to what extent this contract-like characterization invites the application of contract law principles in Birch v. Union of Taxation Employees, Local 70030.  Like the plaintiffs in Brown v. Hanley, the members in Birch argued that sections of their union constitution were unconscionable. They wanted to avoid fines for crossing a picket line on the basis that the union's constitutional authority to impose these sanctions was rooted in an unfair, take-it-or-leave-it "contract of adhesion" concluded in the absence of a meaningful bargaining process. A majority of the Court in Birch agreed and set aside the contested provisions.

Brown v. Hanley offered the Court an opportunity to reconsider the approach it took in Birch. Both cases confront the fundamental conflict between a statutory labour relations regime that relies upon the principle of majoritarian exclusivity to deliver collective bargaining, and private law tools such as unconscionability which privilege individual freedom of contract above all else.

The ATU argued that viewing the take-it-or-leave-it nature of union membership as evidence of unfairness misread Berry v. Pulley. In its view, this assessment would undermine unions' ability to pursue meaningful collective bargaining by limiting the capacity to mobilize solidarity and wield economic power.

Additionally, the terms of union constitutions develop democratically over time in a way that ordinary commercial contracts do not. Because the Labour Relations Act requires that these constitutional contracts apply to all union members equally, the fact that union constitutions have a take-it-or-leave-it character is not a cause for concern, but a feature required by the statutory framework.

While the Court declined to strike the members' claim and found "no reason to eliminate the doctrine of unconscionability in the context of this case," it did highlight two important differences between commercial contracts and union constitutions:

[…] union contracts result from a process of deliberation among members who share certain interests in common as workers. The union as a legal entity plays no oppositional role in this process, even though it becomes a party to the resulting contract with its members. This is unlike the manner in which commercial contracts are formed or amended, where adverse parties are active participants in negotiations.

A second distinguishing feature of union contracts flows from the democratic character of union membership. Unlike parties to a typical commercial contract, individual parties to a union contract become members of that union. As members they acquire the power to conduct the union’s affairs collectively, often through a system of elected representatives. Union membership confers a range of other rights, obligations, and protections, including the right to propose changes to the contract through a periodic constitutional amendment process. What lone individuals may lack in bargaining power when joining a union thus contrasts sharply with the collective power they exercise as equal members.

While these differences were not enough to avoid the doctrine unconscionability as it had been applied in Birch, they did drive the Court to maintain the stay of proceedings and to redirect the dissenting members to the union's internal democratic procedures for amending the constitution. If the members are unsuccessful in obtaining sufficient support among the membership to amend the constitution and nevertheless seek to return to the Court, the Court may then be forced to address the tension between the union's democratic character and the precedent established by Birch in a much more direct manner. Such a decision could have a profound impact on the Canadian labour relations environment.

In addition to the application of unconscionability, the union also disputed the members' standing to bring a claim on behalf of the Local without a representative order. The lower court had relied on Berry v. Pulley to circumvent this procedural step and permit the members to sue the ATU directly. The Court of Appeal held that the issue of capacity was not sufficiently addressed and would have to be determined in future proceedings. This could create an additional barrier to similar claims in the future and suggests that complaints about provisions impacting locals as a whole could require such an order to proceed.

2. The courts' labour law jurisdiction includes "unfair" union conduct

The Court of Appeal's other major holding relates to the scope of its jurisdiction over internal union affairs. The union argued that private law tools addressing unfairness like unconscionability were not applicable to union constitutions because they had been displaced by the unfair labour practice provisions in the Labour Relations Act.

According to the ATU, the alleged unfairness in this case – specifically the claim that the provisions violated the members' freedom of association by preventing them from switching unions – fell within the exclusive jurisdiction of the OLRB via s. 76 of the Act:

76 No […] trade union […] shall seek by intimidation or coercion to compel any person to become or refrain from becoming or to continue to be or to cease to be a member of a trade union

The Court of Appeal disagreed, finding that the matter fell within its proper jurisdictional authority. It relied on the OLRB decision in Ballantyne v. Ontario English Catholic Teachers' Association, which held that s. 74 of the Act imposing a duty of fair representation on unions does not cover internal governance matters, as well as older common law cases including Lee v. Showman's Guild of Great Britain.

Notably, the Court of Appeal was silent on the lower court judge's statement that the "subject-matter and factual circumstances of a dispute may be within both the court’s jurisdiction and also within the jurisdiction of the Labour Relations Board." This statement appears to conflict with the conferral of exclusive jurisdiction to the OLRB in s. 114 (1) of the Act. Considering the broad and contested relocation of authority from the courts to labour relations boards, questions of jurisdiction are likely to continue to arise until this sort of ambiguity is resolved. In the meantime, unions must be prepared for proceedings in both the common law courts and at the OLRB.

Takeaways

In Brown v. Hanley, the Court affirmed its holding in Birch that the doctrine of unconscionability could apply to union constitutions. The provisions at issue are common to many union constitutions and the Court made no rulings as to their lawfulness in this proceeding.

The Court did not consider whether interfering with long-standing union constitution frameworks created through a democratic process by members exercising their right to freedom of association could violate s. 2(d) of the Canadian Charter of Rights and Freedoms

The Court did, however recognize the democratic character of Canadian unions and their constitutions, and once again affirmed the principle that internal remedies must be exhausted before a court may intervene in a union's internal affairs.

*Thanks to Cole Eisen, law student at the University of Toronto Faculty of Law, for his work on this post.

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