Name of Case: Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters

Judgment under Appeal: Judgment of the Alberta Court of Appeal dated July 27, 2007

Facts: In 2003, the Western Canada Council of Teamsters applied to the Canada Industrial Relations Board to be certified as the bargaining agent for a unit of employees of Consolidated Fastfrate Inc, a national freight forwarding business, in western Canada, including those at the Calgary facility. When the CIRB granted the application in 2004, the Employees' Association at Consolidated Fastfrate applied to the Alberta Labour Relations Board for an order affirming its provincial certificate, which it had obtained in 1992. However, in July 2005 the Alberta Board determined that the Calgary operation was "part of a single, indivisible interprovincial undertaking," notwithstanding that it contracted the physical transport of goods to third party carriers. Consequently, labour relations at the Calgary branch were held to be subject to federal jurisdiction under s.92(10)(a) of the Constitution Act which gives Parliament jurisdiction over a "work or undertaking connecting the Province with any other or others of the Provinces, or extending beyond the limits of the Province."

The Association, which had been joined by Fastfrate in the proceedings, applied for judicial review of the Board's decision.

Case History: In a judgment released on December 20, 2005 [see (2005), 390 A.R. 354], Judge Hart of the Alberta Court of Queen's Bench allowed the application, holding that Fastfrate was insufficiently involved in interprovincial transport to displace the presumption of provincial jurisdiction over labour relations. In reaching this conclusion, the review judge emphasized that no Fastfrate employees or equipment crossed provincial boundaries.

The Western Canada Council of Teamsters appealed to the Alberta Court of Appeal.

The Teamsters submitted that the review judge erred in declaring that the Calgary operation fell within provincial jurisdiction. The union supported the Alberta Labour Relations Board's decision as being correct in not unduly emphasizing the physical transport of goods. In its dominant purpose, the Teamsters maintained, Fastfrate's business was, and was marketed to its customers as, the interprovincial transport of freight through a network of its own locations throughout Canada. The Board, it was submitted, properly applied the reasoning of the Canada Labour Relations Board (as it then was) in Teamsters, Local 362 v. DHL International Express Ltd. (1994), 27 C.L.R.B.R. (2d) 95 in support of its decision.

The Association and Fastfrate asserted that the review judge was correct in overturning the Alberta Board's decision and in holding that the corporate structure was not determinative of the issue. Pointing to the review judge's application of Re Cannet Freight Cartage Ltd. (1976), 60 D.L.R. (3d) 473 and Re the Queen and Cotrell Forwarding Co. Ltd. (1981), 124 D.L.R. (3d) 674, they supported his view that physical involvement in the actual transport of goods was required in order for a freight forwarder to be characterized as a federal undertaking.

A majority of the Alberta Court of Appeal allowed the appeal.

Noting that the only dispute between the parties was the conclusion that properly flowed from the undisputed facts and well-established jurisprudence, Justice Jack Watson, writing for himself and Justice Frans Slatter, pointed out that "Parliament has no presumptive or generalized authority over labour relations; provincial competence is the presumption. By way of exception, however, Parliament may ‘assert exclusive jurisdiction over these matters if it is shown that such jurisdiction is an integral part of its primary competence over some other single federal subject': Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115." In determining whether a business or undertaking falls under federal jurisdiction, the Court continued, "[i]t is the essential nature or character of the undertaking that is determinative, not the physical structures, their geographical location, nor the corporate structure."

After reviewing a number of transportation and telecommunications cases, Justice Watson declared that the reviewing judge, in determining the essential nature of Fastfrate's business, erred by limiting his inquiry "to whether the Calgary operation physically participated in the interprovincial carriage of goods," stating that "[i]n our view, the jurisprudence does not give trumping status to, let alone mandate, the factor of physical transition as a pre-condition to finding an interprovincial work or undertaking. ... More important than a physical connection is whether the functional nature of the operation is to connect the provinces." In United Transportation Union v. Central Western Railway, [1990] 3 S.C.R. 1112, for example, the Supreme Court of Canada stated that "the case law ... makes it clear that physical connection cannot be the determinative factor for jurisdictional questions," a concept which Justice Watson felt was illustrated in cases such as Capital Cities Communications Inc. v. C.R.T.C., [1978] 2 S.C.R. 141, in which the Supreme Court held that a telecommunications provider, even though physically located within one province and serving only intraprovincial customers, was a federal undertaking because it provided a service that involved the receipt and transmission of signals from outside the province. Applying the same reasoning, the Court held, "[f]unctionally, Fastfrate 'connects' the provinces."

In reaching the conclusion that "Fastfrate operates an interprovincial freight collection and delivery service," Justice Watson cited the following features of the business: "This involves picking up the freight at one end using its own employees (or contractors on occasion), consolidating it through its facilities, arranging for its transportation by rail, picking it up at the other end, de-consolidating it through its facilities, and arranging for its ultimate delivery (usually through its own employees but occasionally through contractors). It provides this service through a single, centralized corporate entity with facilities throughout Canada, and the Calgary operation is functionally integrated into the whole." The Court then noted that in very similar circumstances DHL was determined to be an interprovincial concern, notwithstanding that it also relied on third party carriers to forward the freight; in that case, the Board declared that the focus was on whether "the undertaking has as its dominant purpose an interprovincial or international operational connection extending its activities – services to clients – 'beyond the limits of the province' on a regular and continuous basis...." It was also considered significant in DHL that the company had facilities at the receiving end and took responsibility for the freight from beginning to end, a factor that was also present here, Justice Watson noted.

In the result, the Court concluded: "Fastfrate is a single company, with integrated operations and centralized control that operates a regular and continuous freight forwarding business designed to receive and deliver freight throughout Canada.... The fact that it arranged to regularly hire CP Rail to physically transport the freight did not change its service provided to its customers, nor change it from the national enterprise those customers could logically assume that it is. Fastfrate was rightly found by the A.L.R.B. to be a federal undertaking."

Justice Carole Conrad wrote a dissenting opinion in which she agreed with the review court's emphasis on the fact that Fastfrate did not do any of its own interprovincial transport. In this respect, Justice Conrad expressed the view that DHL was wrongly decided, and moreover, that the Alberta Board and the majority of the Court of Appeal wrongly distinguished Cannet, supra and Cottrell, supra. She was also critical of the majority's reliance on the telecommunications analogy, pointing out that "[i]t is not necessary to carry or convey anything to communicate with another person." On a policy level, the dissenting judge observed that to classify businesses such as Fastfrate which do not actually transport anything interprovincially as federal undertakings "would lead to a serious erosion of provincial legislative authority," which is the presumptive rule.

Issue(s): Whether the Alberta Court of Appeal erred in determining that Fastfrate’s Calgary operation falls within federal jurisdiction under the Constitution Act, 1867, and is thus subject to the Canada Labour Code.

Status: The Supreme Court of Canada granted leave to appeal on March 6, 2008.

Lancaster Reference: For analysis of the Alberta Court of Appeal’s decision, see Lancaster’s Federal Labour & Employment Law E-Bulletin, October 5, 2007, Issue No. 14.