IN THE MATTER OF AN ARBITRATION TIMBERWEST FOREST COMPANY (COWICHAN WOODLANDS OPERATION) (the Employer ) UNITED STEELWORKERS, LOCAL 1-80.

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1 #990 - Document Identity Number IN THE MATTER OF AN ARBITRATION BETWEEN: TIMBERWEST FOREST COMPANY (COWICHAN WOODLANDS OPERATION) (the Employer ) AND: UNITED STEELWORKERS, LOCAL 1-80 (the Union ) (Preliminary Award Section 86 Case No /06R) ARBITRATOR: COUNSEL: Vincent L. Ready Peter Parsons for the Employer John Rogers for the Union HEARING: July 20, 2006 Vancouver, BC PUBLISHED: September 14,

2 2 I have been appointed by the Director of the Collective Agreement Arbitration Bureau, under Section 86 of the British Columbia Labour Relations Code as an arbitrator in this dispute. The issue before me is a preliminary matter related to my jurisdiction to resolve a longstanding dispute relating to dependent contractors/truck drivers at the Employer s Cowichan Woodlands operation. BACKGROUND I have taken much of the background and facts to this dispute from a previous arbitration Re TimberWest Forest Company (Cowichan Woodlands Operation) and United Steelworkers of America, Local 1-80, unreported, March 10, 2005 (Lanyon), (the Lanyon Award ) and a series of decisions of the BC Labour Relations Board ( LRB or Board ) TimberWest Forest Company, BCLRB No. B24/2006 (Upheld on Reconsideration in BCLRB No. B65/2006). In BCLRB No. B177/95 as referenced in the Lanyon Award above, the Labour Relations Board varied the certification of IWA Local 1-80 (the predecessor to the Union) and Pacific Forest Products Limited (the predecessor to TimberWest Forest Company) to include dependent contractor truck owners whose trucks are employed to haul timber on behalf of Pacific Forest Products Limited, Cowichan Woodlands Division. Pacific Forest Products concluded a Collective Agreement with the Union in relation to the dependent contractors that was in force from April 1, 1995 to June 14, This was done because of the contractors unique circumstances and the decision by the Union not to dovetail their seniority. The Letter of Understanding did not adopt the Coast Master Agreement ( CMA ) in its entirety, but instead dealt with a few specific items which included rates, method of payment, and severance provisions in the case of a permanent

3 3 closure (Lanyon Award, pp. 2-3). The reason for the separate agreement was that the dependent contractor truckers wished to maintain their current tax status with Revenue Canada (BCLRB No. B24/2006, p. 2). The parties negotiated two further Letters of Understanding that mirrored the expiry and renegotiation of subsequent CMAs, with negotiation usually following the conclusion of the Master Agreement negotiations (Lanyon Award, p. 3). In 1996, the parties reached an agreement referred to as the Rush/Routley Agreement, which set-out a number of provisions, including the following with respect to the dependent contract truck drivers: (b) Trucking It is agreed that the Company s Dependent Contractor Truckers have the right to maintain their employment, during a reduction or curtailment, ahead of any additional contract truckers. It is further agreed that the Company will only use contract truckers certified to IWA-Canada, Local The above agreement comes with Administrative Notes that attempt to explain the meaning of the above clause as follows: Point 1(b) Trucking The intent of this provision is to ensure the 14 existing dependent contractors are afforded some protection over incremental contractors (i.e., so they aren t laid off while independent contractors are hauling). If there is a reduction of harvest in the Cowichan operation (from the current cut of approximately 200,000 m3) which results in a reduction of available wood to be hauled, the parties agree to discuss ways and means of identifying additional hauling work within the operation of the Cowichan truckers based on the

4 4 principles and process outlined in the New and Evolving Work letters contained in the Master Agreement. It is not the Union s intent to grow Company truckers beyond the 1986 numbers, based on the Company s commitment to use I.W.A. contract truckers. The Company intends to use I.W.A. contract truckers for steady hauling work. The Union recognizes that in some instances, due to availability and practicality, non-union contract truckers may be used for short-term work (i.e., won t go to Ready over two days hauling). Arbitrator Lanyon commented on the combined effect of these documents at page 10 of his decision: In July 1996, the Union, through the Rush/Routley agreement, attempted to add additional rights for these dependent contractors. The wording of this agreement, combined with the Administrative Notes, leads me to the conclusion that the dependent contractors, if laid off, had the right to haul logs prior to the employment of any other contractors. The Collective Agreement between the Company and the dependent contractor truckers expired June 14, 2003, and on November 20, 2003 the Employer served the Union notice it wished to commence bargaining (Lanyon Award, p. 5). Bargaining for the CMA had previously commenced in the fall of 2003 and resulted in a labour dispute in late November, which was settled on December 16, 2003 when the Government passed The Coastal Forest Industry Dispute Settlement Act, S.B.C. 2003, c. 103 (the Act ). The Act ended the dispute and appointed a Commissioner, Mr. Donald Munroe, to mediate/arbitrate the terms of a new CMA for the parties (see BCLRB No. B152/2006). Concurrently, the parties to this dispute met to bargain for the dependent contractors on December 15, 2003 and, at that meeting, the

5 5 Employer announced that it intended to bring the contractor truck drivers inhouse with the use of leased trucks and employee drivers. On January 5, 2004, the Employer posted 16 truck driver positions and the Union filed a grievance on behalf of the dependent contractor truck drivers. The substance of that grievance is stated in a letter dated February 3, 2004, which reads in part: Our position is that item 1(b) Trucking (of the July, 1996 local agreement) specifically applies to these Dependent Truckers and gives these workers rights ahead of additional contract truckers. (For example) ahead of any work going to Lance Hawthornthwaite or Bennett Trucking or any additional contract trucks working the Cowichan/Sooke logging operation. The Employer advised the truckers that that they would be laid off effective April 19, 2004 and, on a without prejudice basis, all 16 drivers applied for and received the posted employee truck driver positions. On April 16, 2004, the Employer signed two contracts with T.G. Hawthornthwaite Logging Ltd. ( TGH ) to supply and service logging trucks and provide personnel and managerial services. The dependent contractor truckers continued to drive their own trucks until April, 2004, after which TGH brought in trucks for a period of time, then finally purchased trucks in September, 2004 (Lanyon Award, p. 7; BCLRB No. B24/2006, p. 3). Arbitrator Lanyon describes the structure of the Hawthornthwaite contracts as follows: Lance Hawthornthwaite is the principle officer of three related companies: T.G. Hawthornthwaite Logging Ltd., Davis and Hawthornthwaite Logging Ltd. and Eagle Point Trucking Ltd. It is the first company that has contracted with TimberWest. The first two companies are unionized and the third (Eagle Point) is nonunion. None of these companies were involved in the

6 6 Cowichan/Sooke area prior to TGH has set up a new maintenance shop to service and maintain the trucks hauling logs for TimberWest. It has five mechanics in this new shop who are paid by Eagle Point. The operation of hauling logs changed considerably when the truck drivers were changed from dependent contractors to employees. Their past shift was a 5 and 2 shift, 10 hours a day. The current shift is a 4 by 4, 10 hours a day. They now work 10 hours less a week. Also since September 2004, the Employer has run two shifts, and as a result, needs a fewer number of trucks; a reduction of trucks from 16 to 9. The current number of employees is approximately Sixteen of these positions are filled by former dependent contractors and the remainder are filled by TGH employees who are paid by Eagle Point. These Eagle Point employees are paid the same rates under the collective agreement but are not paid benefits. If there is an illness or a leave of absence of any kind, it is routinely filled by TGH employees. (at pp. 7-8) The parties agree the grievors [16 drivers] had probably suffered some degree of financial harm and that some grievors had probably suffered significant financial hardship as a result of the Company s actions (Lanyon Award, p. 8). As a result, at least one of the former dependent contractor truckers has resigned as a company employee. Arbitrator Lanyon concluded that this issue in dispute before him was whether the reorganization of the truck drivers from dependent contractors to the status of employee constitutes contracting out (Lanyon Award, p. 9). In his analysis, he concludes that the current status of truck drivers is as employees and the transfer of these dependent contractors to employee status was bona fide. He further states: The fact that there exists differences over aspects of the collective agreement, for example, marshalling points or job postings, does not raise an issue of a fabricated scheme in which dependent contractors are only notionally made employees, and the actual

7 7 work is contracted out. No other conclusion is possible in light of the position adopted by both parties that these truck drivers enjoy all the benefits and rights under the collective agreement, and further, that they have lost no work hauling logs. If there are differences over the interpretation or administration of the collective agreement then that is a matter for separate grievances. Turning to the issue of contracting out, Arbitrator Lanyon comes to the following conclusions: I conclude that the Union is correct, that the service and maintenance work performed on these trucks has been contracted out to TGH. We therefore should return to the wording of Article XXV: ARTICLE XXV CONTRACTORS AND SUB- CONTRACTORS (a) As of the date of the signing of the Memorandum of Agreement the Industry agrees that as of the 5 th day of December, 1986, the introduction of a Contractor or Sub-Contractor into an operation will not result in the loss of full-time positions held by regular employees in the operation, except where justified by special circumstances. Article XXV addresses the introduction of a contractor or subcontractor that results in the loss of full-time positions. It is uncontested that these 16 employee truck drivers have not suffered any loss of work while other contractors were hauling logs. All 16 occupy full time positions hauling logs. I therefore conclude, that there has not been the loss of full time positions, and thus, no breach of Article XXV. The employer is not in breach of Article XXV when it decides, in good faith, to bring work that has been formerly contracted out back into the bargaining unit. Indeed, contracting out provisions are negotiated in order to prevent work from leaving the bargaining unit, to preserve the work of the bargaining unit and thus protect jobs. The anomaly in these circumstances was that the same employees were earning more money as dependent contractors. However, that has never been the test in determining a bona fide

8 8 contracting out or in denying the Employer the right to bring any such work back into the bargaining unit. (at pp ) The Union appealed under Section 99 of the Labour Relations Code and, in dismissing the appeal, the panel held in BCLRB No. B24/2006, page 3, that there are no facts referred to by the Arbitrator from which I can conclude that contract drivers are being used by the Employer for hauling logs. This is reiterated at page 6 of the decision, as follows: While the Union argues that it was concerned about other contract truckers receiving work in preference to the dependent contractors, there is nothing on the face of the Award nor is there support in the Statutory Declaration that would lead to a finding that other contractors were used for log hauling. The Union argues that the Arbitrator did not determine the truckers rights under the Dependent Contractor s Agreement. However, all of the evidence and the Award point to the fact he was not asked to do so. Given that the Arbitrator was apparently not asked to decide that issue by the Union, it cannot now complain that he did not do so. The application for reconsideration of this decision was denied in BCLRB No. B65/2006. The present grievance was filed on March 24, 2005, shortly after the Lanyon Award was issued, and alleges the following: The Company has wrongfully laid-off dependent contractor drivers while using other contractors to haul logs. The Company has refused to bargain in good faith for a renewal of Agreement Re: Dependent Contractors. This grievance is filed without prejudice to the Union s s.99 application concerning the arbitration award of March 10, 2005.

9 9 The Employer provided a written, fourth stage response to the issues raised in the grievance on May 23, 2005, which reads in part: 1. The Company has wrongfully laid off dependent contractor drivers while using other contractors to haul logs. It is our view that this issue was decided and determined within the scope of the recent arbitration convened before Umpire Stan Lanyon. Mr. Lanyon has retained jurisdiction in this matter and we have no objection to a reconvening before his panel to address this issue. 2. The Company has refused to bargain in good faith for a renewal of agreement re: dependent contractors. It is our view that all bargaining issues have been resolved by the imposition of a Coast Master Agreement and its accompanying mechanisms under the auspices of Don Munroe. We further deny emphatically that there has been any failure to bargain in good faith, the Union is well aware of the extensive and protracted discussions which ensued with respect to this matter. There was what can only be described as considerable delay in advancing this matter to arbitration following a further exchange of correspondence between legal counsel in June, Eventually, I was appointed as an arbitrator by the Director of the Collective Agreement Arbitration Bureau of the Labour Relations Board on February 7, However, there was a further delay in setting down dates, primarily if not solely as a result of the Employer s Counsel resisting setting dates for reasons which were articulated in a letter to me on April 4, In the interim period, the Union took a strike vote in December, 2005, which was declared by the Board of no force and effect in a bottom line decision dated March 9, 2006 (the full reasons were provided in BCLRB No. B152/2006 on June 29, 2006). In her full reasons, Vice Chair Southern makes the following concluding comments:

10 10 In my letter to the parties dated March 9, 2006 I communicated my decision to grant TimberWest and Munn s application. I also made the following comments: In keeping with my duties under Section 2 of the Code, I feel compelled to reiterate my suggestion that the parties seek a resolution to their dispute through mediation. To that end, and despite the acknowledgement by the parties that the matters in issue were not part of the Protocol Agreement, it would seem sensible that these matters be addressed through the terms of the Letter of Understanding Local Agreements and Local Issues. Alternatively, given the parties agreement that the particular issues between them were never raised before the Commissioner, another sensible solution would be referral back to him for resolution. A third option would be for the parties to mutually agree to vary the terms of the collective agreement, consistent with Section 11(2) of the Coastal Forest Industry Dispute Settlement Act. The Board is available to assist the parties in mediation, should the parties wish such assistance. After the conclusion of the hearing in the matter, and the publishing of the decision on March 9, 2006, the Board received a letter from the Union which alleges that TimberWest has refused to pursue any of the options set out above and is also refusing to set dates for arbitration of a related grievance. TimberWest did not respond to that letter. Without deciding whether TimberWest has refused to appoint or constitute an arbitration panel, I note that the parties have already engaged in protracted litigation. This protracted litigation is inconsistent with the goal of the Act, the Commissioner s conclusions about the need for stability and good labour-management relations in the forest industry, and the duties of the Board set out in Section 2 of the Code. The Board has the power under Section 88 of the Code to take action in certain circumstances. The parties are asked to provide brief submissions, of no more than 4 pages in length, as to whether it is appropriate for the Board to utilize its powers under Section 88 in this case. The Union is to file its submission by July 5, The Employer is to file its submission by July 12, 2006.

11 11 The parties filed submissions and, because this hearing had already been scheduled, Vice Chair Southern declined to exercise her discretion under Section 88 of the Code in a letter dated July 17, POSITIONS OF THE PARTIES On behalf of the Employer, Mr. Parsons makes two preliminary arguments in this matter. First, it is the position of the Employer that this matter cannot proceed until the matter of which Collective Agreement applies is operative in this matter, an issue that is currently and properly before the Labour Relations Board. Second, the Employer argues that the matter is res judicata, in that it has been settled by the decision in the Lanyon Award. Counsel contends that the present grievance is another attempt by the Union to adjudicate a matter that has already been settled. Mr. Parsons submits that the issue in dispute before the arbitrator in that case, was thoroughly reviewed and ultimately resolved. Finally, on the argument of the Union that the Employer has not bargained in good faith, Employer Counsel submits that that is a matter which would also properly be before the Labour Relations Board. For its part, the Union takes the position that the matter before me is the grievance filed on March 24, Mr. Rogers argues on the behalf of the Union that, on the date the Employer ceased using the dependent contractor truckers and offered them work as employees, the Company continued to use other contractors to haul logs in violation of the Rush/Routley Agreement.

12 12 The second issue put forward by Mr. Rogers is that the contracting out of the Cowichan Operation stump-to-dump to Munns Lumber and the contracts with TGH, have had a devastating effect on the truckers who are no longer able to use their trucks, shops and other equipment. Counsel submits that the only matter that was before the Labour Relations Board was the issue of whether the Union had the right to strike. That issue is now settled and there is nothing further pending before the Board, in the submission of Counsel. Furthermore, the Union filed an appeal of the Lanyon Award and the Board held that the arbitrator had not been asked to decide certain issues. The Union submits that it is now proceeding with a grievance on those matters that were not before Mr. Lanyon. Third, the issue of which Collective Agreement applies has been decided, in the submission of the Union. In the alternative, if it has not been decided, an arbitrator has the authority under the Code to make such a determination. In reply, the Employer argues that the grievance filed alleges a wrongful layoff and that issue has been decided by Arbitrator Lanyon. DECISION This award relates to the preliminary matters raised by the Employer. Specifically, the assertion that the matter in dispute is res judicata, having been resolved in the Lanyon Award and, second, whether or not the matter can proceed prior to a conclusive determination by the Labour Relations Board of what Collective Agreement is in force between the parties. Without deciding this matter at this time, it is my finding that the issue of which Collective Agreement or other agreement are in effect and cover the dispute at hand is a matter that is within the authority of an arbitrator to

13 13 determine. Sections 89 and 92 of the Code establish the authority and powers of an arbitration board, as follows: Authority of arbitration board 89 For the purposes set out in section 82, an arbitration board has the authority necessary to provide a final and conclusive settlement of a dispute arising under a collective agreement, and without limitation, may (a) (b) (c) (d) (e) (f) (g) make an order setting the monetary value of an injury or loss suffered by an employer, trade union or other person as a result of a contravention of a collective agreement, and directing a person to pay a person all or part of the amount of that monetary value, order an employer to reinstate an employee dismissed in contravention of a collective agreement, order an employer or trade union to rescind and rectify a disciplinary action that was taken in respect of an employee and that was imposed in contravention of a collective agreement, determine that a dismissal or discipline is excessive in all circumstances of the case and substitute other measures that appear just and equitable, relieve, on just and reasonable terms, against breaches of time limits or other procedural requirements set out in the collective agreement, dismiss or reject an application or grievance or refuse to settle a difference, if in the arbitration board's opinion, there has been unreasonable delay by the person bringing the application or grievance or requesting the settlement, and the delay has operated to the prejudice or detriment of the other party to the difference, interpret and apply any Act intended to regulate the employment relationship of the persons bound by a collective agreement, even though the Act's provisions conflict with the terms of the collective agreement, and

14 14 (h) encourage settlement of the dispute and, with the agreement of the parties, the arbitration board may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement. Powers of arbitration board 92 (1) An arbitration board may (a) (b) (c) (d) determine its own procedure, receive and accept evidence and information on oath, affidavit or otherwise as in its discretion it considers proper, whether or not the evidence is admissible in a court of law, determine prehearing matters and issue prehearing orders, enter during regular working hours any land, ship, vessel, vehicle, aircraft or other means of conveyance or transport, factory, workshop or place of any kind where (i) (ii) (iii) work is or has been done or commenced by employees, an employer carries on business, or anything is taking place or has taken place concerning a matter referred to the arbitration board under this Code, and may inspect any work, material, appliance, machinery, equipment or thing in it, and interrogate any person in relation to it, and (e) authorize a person to do anything the arbitration board may do under paragraph (d) and report to the arbitration board in the presence of the parties or their representatives as a witness subject to cross examination by each party. (2) The jurisdiction of an arbitration board to hear and determine a difference does not cease until the matters in dispute have been finally resolved. An arbitrator has broad-reaching powers and authority to provide a final and conclusive settlement of a dispute arising under a collective agreement. In

15 15 my view, this extends to what Collective Agreement, if any, covers the matters in dispute. Dealing with the Union s grievance, I am not satisfied that the Lanyon Award provides the parties with the clarity they need. In fact, as submitted by the Union, the Board determined that Mr. Lanyon s arbitration award, in fact, did not deal with certain issues. The following passage from BCLRB No. B24/2006 (p. 6) is again set out for ease of reference: While the Union argues that it was concerned about other contract truckers receiving work in preference to the dependent contractors, there is nothing on the face of the Award nor is there support in the Statutory Declaration that would lead to a finding that other contractors were used for log hauling. The Union argues that the Arbitrator did not determine the truckers rights under the Dependent Contractor s Agreement. However, all of the evidence and the Award point to the fact he was not asked to do so. Given that the Arbitrator was apparently not asked to decide that issue by the Union, it cannot now complain that he did not do so. Clearly the Labour Relations Board award raises the issue to the extent that it requires further investigation and a determination of the March 24, 2005 grievance, namely, whether the Company has wrongfully laid-off dependent contractor drivers while using other contractors to haul logs under the dependent contractors agreement. That matter has now been put before me as an arbitrator appointed by the Collective Agreement Arbitration Bureau of the Labour Relations Board. In order to proceed as arbitrator with jurisdiction I require the parties to provide me with written submissions with all related and supporting documents, including the nature of the evidence upon which they rely. Accordingly, the parties should forward their initial written submissions to my office by the close of business Thursday, October 5, 2006, copied to the other side. Reply submissions should then be forwarded by the close of business

16 16 Thursday, October 12, 2006, copied to the other side. These submissions should be ed only to Should there be any attachments, they may be forwarded by courier or regular mail. On completion of my review of this material I will contact the parties to discuss and determine if it is necessary to convene a formal hearing. It is so awarded. Dated at the City of Vancouver in the Province of British Columbia this 14 th day of September, Vincent L. Ready Vincent L. Ready