Name of Case: Plourde v. Wal-Mart Canada Corp.; Desbiens v. Wal-Mart Canada Corp.

Date of Decision: November 27, 2009

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

Judgment under Appeal: Judgment of the Quebec Court of Appeal dated September 14, 2007 (Plourde); Judgment of the Quebec Court of Appeal dated February 6, 2008 (Desbiens)

Facts: The facts giving rise to both the Plourde and Desbiens appeals are essentially the same. In September 2004, the United Food and Commercial Workers Union, Local 503, was certified to represent employees of Wal-Mart's store in Jonquière, Quebec. Following certification, the union's attempts to negotiate a first collective agreement stalled, and it applied to Quebec's Minister of Labour for appointment of an arbitrator. On February 9, 2005, the Minister of Labour referred the dispute to arbitration and notified the parties of the referral. The same day, Wal-Mart announced that it was closing the store effective May 6, 2005, purportedly due to insufficient business. The store was subsequently closed ahead of schedule on April 29, 2005, allegedly to head off anticipated protests, as a result of which the applicants Plourde and Desbiens and approximately 190 other employees lost their jobs.

Numerous employees filed complaints with the Quebec Labour Relations Board requesting an order that Wal-Mart reopen the store, and pay the employees compensation, on the ground that the store was closed for improper anti-union motives, in breach of the Quebec Labour Code. It was agreed between the union and the company that selected cases would proceed first, without prejudice to the other complainants' rights. The Desbiens case involved four of the complaints that the parties initially agreed to select for hearing. Plourde was another complaint and was heard separately.

Case History:

Desbiens Complaint

In a September 2005 ruling, Vice-Chair Flageole of the Quebec Labour Relations Board found that the closing and resultant dismissal of all the employees was a breach of the prohibition in the Quebec Labour Code against reprisals or sanctions against employees for union activity. He relied on s.17 of the Code, which states that "[i]f it is shown to the satisfaction of the Board that the employee exercised a right arising from this Code, there is a presumption in his favour that the sanction was imposed on him or the action was taken against him because he exercised such right, and the burden of proof is upon the employer that he resorted to the sanction or action against the employee for good and sufficient reason."

Flageole determined that the closing of the store was not "real, genuine and definitive" because the building had neither been sold nor demolished and the company had made no real effort to find another tenant for the property. He concluded that the closing was not permanent, as "every indication is that the company has left the door open to resume the same business in the same place." He deferred a decision as to penalties for the company's action.

In a July 13, 2006 decision, the Quebec Superior Court dismissed Wal-Mart's application for judicial review. The company in turn appealed this ruling to the Quebec Court of Appeal.

Writing the unanimous decision of a three-member panel of the Quebec Court of Appeal (February 6, 2008), Justice Paul-Arthur Gendreau ruled that the Board's decision was patently unreasonable. In particular, the Court objected to Flageole's finding that Wal-Mart had not defeated the presumption under s.17 of the Code solely because the company was unable to say how it intended to dispose of the building that housed the store and thereby free itself from the economic consequences of the lease.

Justice Gendreau determined that, in making such a finding, Flageole "imposed on [Wal-Mart] a burden of proof that the law does not require." He held that, while the employer must demonstrate that it intends to close definitively its establishment in order to show good and sufficient reason in the sense of s.17 of the Code, it does not follow that it has the obligation to prove that this decision is not a subterfuge. On the contrary, it is up to the employees to establish that the facts to which the employer has testified are false and hide a loophole.

That being the case, Gendreau found, "it is unreasonable to oblige [Wal-Mart] to demonstrate the absence of a scenario that would conceal an intention to eventually re-open the enterprise. That proof was up to [the employees] to make."

Ruling that the lower court had erred in "accepting the theory whereby it was up to [Wal-Mart] to demonstrate that the closing was not a ruse," Justice Gendreau overturned the decision and set aside the Labour Relations Board's ruling.

Plourde Complaint

The Plourde complaint was heard approximately five months after the Desbiens complaint. In a decision released April 25, 2006 Vice-Chair Pierre Flageole dismissed the complaint, relying on additional uncontradicted evidence from Wal-Mart showing that the closure of the store was "real, genuine and definitive," including evidence that Wal-Mart had terminated the lease of the building. Flageole found no reason to doubt the genuineness of the closing of the Jonquière store, and hence no basis for the Board to interfere. He furthermore rejected Plourde's argument that a loss of employment in violation of freedom of association could not constitute a loss of employment for another reason that is good and sufficient.
 
Flageole's ruling in Plourde was upheld by the Quebec Superior Court (June 28, 2007) and by the Quebec Court of Appeal (September 14, 2007).

Issue(s): The key issues before the Supreme Court included: (i) whether the employees of a closed business alleging dismissal due to union activity can bring an unfair labour practice complaint under ss. 15 to 17 of Quebec's Labour Code; (ii) in particular, whether such employees can benefit from the s.17 statutory presumption that they were dismissed as a result of exercising their collective bargaining rights and avail themselves of the s.15 remedy of reinstatement; and (iii) whether the permanent closure of a business in Quebec amounts to "good and sufficient reason" within the meaning of s.17 to justify dismissal.

Supreme Court's Decision (6-3): The Supreme Court of Canada dismissed both appeals. By a 6-3 majority, the Court in Plourde held that the protections in ss. 15 to 17 of the Labour Code – in particular, the s.17 presumption and s.15 remedy of reinstatement – do not apply to employees dismissed from their jobs as a result of a definitive business closure because a genuine and definitive business closure in itself constitutes "good and sufficient reason" within the meaning of s.17 to justify employee dismissals.

In Desbiens, the majority held that the Quebec Court of Appeal had erred in quashing the Board's decision as the finding that Wal-Mart had failed to rebut the s.17 presumption on the evidence available at the time was within the range of reasonable outcomes open to the Board. However, in light of the uncontested evidence that Wal-Mart had permanently closed the business, the majority held that it would be a waste of the parties' time and money to remit the Desbiens matter to the Board to be dealt with on the basis of the Court's decision in Plourde.

Reasons (Plourde Appeal):

Majority Ruling

The majority ruling, authored by Justice Binnie, rests on the following key elements:

(1) the majority's interpretation of s.15 of the Quebec Labour Code, which refers to reinstatement in employment – language which, according to the majority, implies that there must be an ongoing business to which the employees can be reinstated;

(2) the majority's analysis of s.17 of the Quebec Labour Code, characterizing the closing of a business as good and sufficient reason for employee dismissals, even though the closing was to avoid a union;

(3) a line of jurisprudence to that effect in Quebec, culminating in a ruling by the Quebec Labour Court in the City Buick case ([1981] T.T. 22), which was not reversed by the Quebec legislature in 2001 when it made a number of amendments to the province's Labour Code;

(4) the Supreme Court of Canada's decision in 2004 in the Place des Arts case, endorsing the ruling in City Buick.

The majority was not dissuaded from its conclusion by the fact that the Canadian Charter of Rights and Freedoms guarantees freedom of association, which protects the right of workers to collectively bargain; in its view, the Quebec Labour Code creates a balance between the rights of labour and the rights of management that respects freedom of association, which the Court should avoid upsetting by handing labour a "lopsided advantage." Nor was the majority dissuaded by the fact that the law in the rest of Canada is different; in the majority's view, in matters of labour relations, provinces are free to strike their own balance according to their varying circumstances and attitudes.

The majority declined to reverse an earlier Supreme Court ruling in the Place des Arts case (2004 SCC 2) – which held that permanent closing of a business because the employer does not want to deal with a union is not prohibited, even if the secondary effect of the closing is employee dismissal. In effect, however, the majority decision significantly narrows the Place des Arts ruling by making it clear that:

(1) as a result of specific statutory language in the Quebec Labour Code, the law in Quebec differs from that in the rest of Canada, where a reverse onus typically applies to all cases of reprisal for union activity, including situations where a business is closed; and

(2) even in Quebec, the closing of a business for anti-union reasons is not immunized from a finding that it constitutes an unfair labour practice, under sections 12 to 14 of the Quebec Labour Code, giving rise to remedies such as damages against the employer under section 119 of the Code, although in such cases it will be for the union to prove that the employer's motive in closing the business is tainted by anti-union animus.

The majority decision suggests the result might well have been different if the union had sought damages for breach of sections 12 to 14 of the Quebec Labour Code, rather than reinstatement of employees under section 15.

The Dissent

In a vigorous dissent, Justices Abella, LeBel and Cromwell argued that the reverse onus under section 17 is "one of the most vaunted equity tools in modern labour law." In their opinion, the majority's suggestion that the full substantive and procedural benefits of ss. 15 to 19 are unavailable to provide a remedy in the case of a business closed for anti-union reasons "represents a marked and arbitrary departure from the philosophical underpinnings, objectives and general scope of the [Quebec] Labour Code."

The minority ruling, authored by Justice Abella, is based on its view that:

(1) section 15 of the Quebec Labour Code contains nothing that would indicate that it does not apply to a business that has closed, and the majority's determination of the legislative scheme by reference solely to the words "reinstate ... in his employment" introduces a highly restrictive approach to remedial legislation which has traditionally attracted a highly expansive one;

(2) the evidentiary difficulty experienced by employees in attempting to prove that an employer's conduct was motivated by anti-union animus supports the application of the reverse onus provision in section 17 of the Quebec Labour Code to all unfair labour practices including the closing of a business for anti-union reasons; disagreeing with the majority's comment that the reverse onus in section 17 offers a "lopsided advantage" to employees, Justice Abella responded that, given the excessive difficulties in trying to establish employer motive, it is in fact the procedural core of the Quebec legislature's scheme to protect employees from unfair labour practices;

(3) the City Buick case, decided by the Quebec Labour Court in 1981, amounted to a singular deviation from prior Quebec jurisprudence, as well as from jurisprudence elsewhere in Canada, including the 1980 decision of the Supreme Court in the Lafrance case ([1980] 1 S.C.R. 536). Moreover, the Quebec legislature in 2001, far from intending to endorse the City Buick decision, did not question the application of the general remedies in section 119 of the Quebec Labour Code to section 15 proceedings, and there is no language in sections 118 or 119 restricting their application in this way, and in particular no language referring to a distinction between a closed and an ongoing workplace;

(4) the Supreme Court of Canada's decision in Place des Arts was not controlling because City Buick was peripheral to the Court's analysis: Place des Arts affirmed City Buick only to the extent of confirming the proposition that employers have the right to close a business; nothing in Place des Arts suggested that section 15 cannot provide remedies to dismissed employees, or that the section 17 presumption is unavailable in the case of a business closing.

The minority pointed out that a comparative review of the jurisprudence demonstrates that labour boards across Canada have consistently refused to immunize employers who are inspired to close a business – and dismiss employees – by anti-union motives, and have consistently held that a decision that is tainted by anti-union animus, whether a closing or any other action, is a violation of labour rights. In the minority's view, while provinces are entitled to strike their own legislative balance, the approach to business closings in Quebec did not emerge from a legislative choice, but from jurisprudence developed in the City Buick case, and perpetuated despite its inconsistency with Quebec's own labour jurisprudence and the text of the Labour Code itself. Even here, Justice Abella noted that the majority was prepared to acknowledge that City Buick ought no longer to stand as a precedent to foreclose access to scrutiny for anti-union animus, but only if the scrutiny takes place under sections 12 to 14 of the Labour Code, provisions traditionally used by unions, not employees, thereby preventing the scrutiny from being accompanied by the benefit of the reverse onus in section 17 of the Quebec Labour Code.

Repeatedly, the minority pointed to the inconsistency in the majority's reasons of extending the remedy of reinstatement, and the procedural advantage of the reverse onus provision, to employees dismissed for anti-union reasons by an ongoing business, while denying such a remedy to employees who experience the most drastic possible employer conduct, i.e. closing of the business, resulting in dismissal of the entire workforce. As Justice Abella stated: "It strikes me as oddly tautological to conclude that a business closing is a good enough reason for closing a business. The effect is to suggest that under the Labour Code, an employer's conduct can be scrutinized for anti-union motives if a single employee is dismissed, but not if all employees are dismissed. Closing a business can in fact be the most severe form of reprisal for union activity. To close a business in order to avoid a union is to dismiss employees because they have engaged in union activity."

Lancaster Reference: For further analysis and comment with respect to the issues in this case, see Lancaster's Headlines, published December 2, 2009.

Full text of the decision: http://onlinedb.lancasterhouse.com/images/up-SCC_Plourde.pdf and http://onlinedb.lancasterhouse.com/images/up-SCC_Desbiens.pdf