Name of Case: Fullowka et al. v. Royal Oak Ventures Inc.

Date of Decision: February 18, 2010

Supreme Court Panel: Chief Justice Beverley McLachlin, Justices Ian Binnie, Louis LeBel, Marie Deschamps, Morris Fish, Rosalie Abella, Louise Charron, Marshall Rothstein and Thomas Cromwell

Judgment under Appeal: Judgment of the Northwest Territories Court of Appeal dated May 22, 2008

Facts: On September 18, 1992, nine miners hired by Royal Oak Mines Inc. as replacement workers during a bitter and violent strike at the Giant Mine near Yellowknife were killed when the mine car they were travelling in struck an explosive in one of the mine shafts.

The strike at the mine had begun several months earlier and had quickly degenerated into serious violence including a number of deliberately set explosions causing damage to company property. Determined to keep the mine operating with replacement workers, the employer hired Pinkerton's of Canada Ltd. to provide security services, and by the end of May 1992 Pinkerton's had 52 guards on the premises.

Throughout their strike, the workers were represented by CASAW Local 4, one of six locals affiliated with the Canadian Association of Smelter and Allied Workers (CASAW National). The National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW Canada) supported the strike and seconded a strike advisor, Harold David, to CASAW Local 4. More than two years later, in July 1994, CASAW National amalgamated with CAW National, with the result that the CAW assumed responsibility for any liabilities of CASAW.

As the strike continued into the summer of 1992, the atmosphere appeared calmer for a time, and Royal Oak instructed Pinkerton's to reduce its number of guards to 20. Soon, however, tensions began to increase again, and two more explosions, in late July and in early September, damaged company property. At the urging of its mine safety inspectors who believed that the replacement workers were at risk, the Northwest Territories government (NWT Government) considered ordering the mine to close, but decided against this after receiving (erroneous) legal advice that it lacked the legal authority to do so in the context of a labour dispute.

In the early hours of the morning of September 18, 1992, striking miner Roger Warren entered the mine through a remote and unguarded entrance, and planted explosives on a track carrying mine cars. Nine miners were killed when their mine car triggered the explosion. Warren was subsequently convicted on nine counts of second-degree murder.

The families of the victims and the miner who first arrived at the scene after the explosion commenced actions in tort against a number of individuals and organizations, including Warren, Royal Oak, the security service (Pinkerton's) hired by Royal Oak, the national and local unions and their local strike leaders, and the NWT Government.

Case History: In a 410-page December 2004 decision on the lawsuit by the victims' families (reported in Lancaster's Labour Law News, January/February, 2005), Northwest Territories Superior Court Judge Arthur Lutz awarded $10.7 million in damages, the liability for which he apportioned, "jointly and severally," as follows: Roger Warren (who was convicted of murder), 26 percent; CAW National, 22 percent; Royal Oak, 23 percent; Pinkerton's, 15 percent; the NWT Government, 9 percent; and local union strike leaders, 5 percent. The amount awarded was to be paid to the NWT Workers' Compensation Board, which had already paid compensation to the families.

In overturning this decision, the NWT Court of Appeal ruled that the trial judge erred in considering the local and national unions as a single legal entity, and in holding the national union directly and vicariously liable for the acts of the local and its members. The Court also held that, contrary to the trial judge's determinations, the other parties – Pinkerton's, the government, and the employer – had not been in a relationship of proximity with the victims that gave rise to a duty of care. The victims' families obtained leave to appeal this decision to the Supreme Court of Canada. Claims against the employer were settled, and were not part of the appeal.

Issue(s): The key issues before the Supreme Court were: (i) whether the national and local unions were separate legal entities; (ii) whether the national union was directly or vicariously liable for the acts of striking members of the local union; (iii) whether Pinkerton's and the NWT Government owed a duty of care to the miners who were killed; and (iv), if so, whether they breached that duty.

Supreme Court's Decision (9-0): The Supreme Court dismissed the appeals.

Reasons:

(i) National union and local union are separate entities

Writing for a unanimous Court, Justice Thomas Cromwell held that, as the appellate court had determined, the trial judge erred in finding that a national union and its local make a "two-tiered structure of one entity," and that therefore CASAW Local 4 was not a separate legal entity from CASAW National. In Justice Cromwell's view, "[n]early every aspect of [the trial judge's] analysis of the negligence claimed against the unions was affected by that conclusion."

Cromwell emphasized that "[i]f, contrary to the trial judge's view, they are separate legal entities, it follows that when CAW National stepped into the shoes of CASAW National on merger, CAW National did not thereby assume the obligations and liabilities of CASAW Local 4. Moreover, the trial judge's findings of liability considered the conduct of all union participants cumulatively. If he erred in doing so, his conclusions would be seriously undermined."

(ii) National union not directly liable for local's actions

The trial judge had indeed erred in this regard, Cromwell ruled, since "[t]here is no doubt that union locals may have an independent legal status and obligations separate from those of their parent national unions. Whether they do depends on the relevant statutory framework, the union's constitutional documents and the provisions of collective agreements." In the present case, CASAW Local 4 was certified pursuant to the Canada Labour Code, and was recognized in the collective agreement as the exclusive bargaining agent for all employees covered by the agreement. As Cromwell noted, "there is binding authority from this Court that local unions who are certified bargaining agents under the Code are legal entities [International Longshoremen's Association, Local 273 v. Maritime Employers' Association, [1979] 1 S.C.R. 120]." As well, he observed, "CASAW National's constitution makes it clear that the locals retain their assets in the event of secession and, more generally, endorses local autonomy and provides for retention by locals of local assets."

In Cromwell's view, "the Court of Appeal was correct to hold that CAW National did not assume the debts and obligations of CASAW Local 4 upon the merger of CAW National and CASAW National and that CAW National is not liable for the debts and obligations of CASAW Local 4. Therefore, the liability of CAW National may only be sustained on the basis of its own acts or on the principles of joint and vicarious liability."

Cromwell concluded that the national union was not directly liable for the acts of the local: "This conclusion means that the trial judge's finding that CAW National was directly liable for the acts of CASAW Local 4's executive members ... cannot stand. ... The trial judge's error about the separate legal status of CASAW Local 4 and CASAW National also skewed his findings about CAW National's direct liability for its own acts."

(iii) National union not vicariously liable for acts of local union or of members

With respect to vicarious liability for the acts of the local union, Cromwell first considered whether the national union could be held to be vicariously liable for the acts of the local on the basis that it had, as found by the trial judge, assumed control of the local. In this regard, Cromwell held that "[t]he trial judge concluded that Mr. David [the seconded strike advisor] in effect ran the strike on behalf of CAW National. The difficulty with that conclusion, however, is that it is not consistent with the trial judge's other conclusions about Mr. David's involvement. The trial judge found, for example, that one of the terms of Mr. David being made available to CASAW Local 4 was that he should be answerable only to the local union…. The trial judge also noted that CASAW National and CASAW Local 4, in joint correspondence, accepted CAW National's offer of David's assistance but on the basis that he would act under the direction of CASAW Local 4 in conjunction with CASAW National…. [T]he Court of Appeal was right to conclude that the trial judge's findings about the local's 'enslavement' cannot be sustained. The trial judge's own findings of fact make clear that Mr. David, at his own insistence and by agreement of the various union entities, was operating within the decision-making structure of CASAW Local 4."

As for the broader claim that the national union was vicariously liable for the acts committed by members of the local union during the strike, Cromwell pointed out that in making such a claim "[t]he plaintiff must show that the relationship between the tortfeasor [Roger Warren, the person committing the wrongful act] and the person against whom liability is sought is sufficiently close and that the wrongful act is sufficiently connected to the conduct authorized by the party against whom liability is sought."

Applying this to the present case, Cromwell found that "[u]nion members do not fall into any of the traditional categories of vicarious liability. They are not, by virtue of union membership, the employees, servants or agents of the union.… Nor is union membership closely analogous to any of these traditional categories. Unlike employers and principals, unions generally do not choose or control who their members are. The relationship between a union member and his or her union is contractual in nature, with both the union and the member agreeing to be bound by the terms of the union constitution. However, the analogy to contract has its limits given that the relationship is greatly determined by the relevant statutory regime and the general principles of labour law which have been fashioned over the years. Significantly, the members have the 'unqualified' right to speak out against the agenda of their bargaining agent.… This point is dramatically illustrated in this case: union members crossed the picket line against CASAW Local 4's wishes and we are told … [that] a member of the local started a rival organization and campaigned to have CASAW Local 4 replaced while the local had a statutory duty to represent them."

Cromwell concluded on this point that "[w]e must remember that the question is whether CASAW National is vicariously liable for the acts of the striking members of CASAW Local 4 and therefore it is the relationship between them that must be assessed…. [The] findings do not support the conclusion that the relationship between CASAW National and the striking union members … was sufficiently close to justify imposing vicarious liability on the national union for their unlawful acts."

(iv) National union not jointly liable with perpetrator

Turning finally to the issue of possible joint liability, Cromwell held that "concerted action liability may be imposed where the alleged wrongdoers acted in furtherance of a common design…. The trial judge's findings of fact in this case do not meet this test. There was no finding of any common design between Mr. Warren and CAW National to murder the miners and no finding that the murders were committed in direct furtherance of any other unlawful common design between Mr. Warren and the union. CAW National cannot be found liable as a joint tortfeasor with Mr. Warren on the basis that it acted with him in furtherance of a common design."

Dismissing on behalf of the Court the appeal with respect to the union, Cromwell concluded that "[t]he appellants have not shown that the Court of Appeal erred in setting aside the trial judge's findings against CAW National."

(v) Pinkerton's and NWT Government had duty of care, but met it

With regard to Pinkerton's and the NWT Government, Cromwell disagreed with the Court of Appeal that neither had a specific duty of care toward the victims. He found that they did, but that they had done everything reasonable to fulfill that duty. In Pinkerton's case, the security firm had done what it could with the limited human resources that Royal Oak permitted it to deploy, but this did not permit guarding all the numerous entrances to the mine against intruders with criminal intentions.

Justice Cromwell also rejected the appellants' contention that the NWT Government should have ordered closing of the mine for safety reasons despite (wrong) legal advice that it had no authority to make such an order in the circumstances, ruling that "[i]t will rarely be negligent for officials to refrain from taking discretionary actions that they have been advised by counsel, whose competence and good faith in giving the advice they have no reason to doubt, are beyond their statutory authority…. In the context of this case, the opposite view leads to alarming results, as the trial judge's holding here demonstrates. The effect of the trial judge's holding is that officials may be found to have acted negligently by refraining from taking action that they believed in good faith and on the basis of reputable, professional legal advice, to be unlawful. In other words, the law of negligence would require the inspectors to take action which they believed abused their powers. This cannot be the law."

Lancaster Reference: For analysis and comment with respect to the trial and appellate decisions in this case, see Lancaster's Labour Law News, January/February, 2005 and Headlines, June 17, 2008.