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A Legal Letdown in CCWIPP Class Action Suit

Written by Wanda Pasz Sunday, 06 May 2007

Retirees pursuing a class action lawsuit against the CCWIPP pension plan's trustees and contributing employers have hit a bump on the road. We've got some words of encouragement.

An unexpected setback has confronted retired UFCW members who are seeking to bring a class action lawsuit against the trustees of the Canadian Commercial Workers Industry Pension Plan.

Lawyers representing the retired members are bailing off the case citing a recent decision of the Supreme Court of Canada which, they believe, obliges the retired workers to take any issues related to their pension plan through the grievance and arbitration procedure and/or possibly to the Ontario Labour Relations Board.

The retirees are understandably disappointed by this turn of events. They're down but not out. They're considering their options and haven't given up the fight.

The SCC decision that prompted lawyers to turn tail and bail is a case called Bisaillon v. Concordia University. Here's a brief synopsis of that case which, in my humble opinion, differs in some very significant aspects from that of the retired UFCW members and their deeply troubled CCWIPP.

Richard Bisaillon was an employee of Concordia University and a member of the Concordia University Faculty Association (one of nine unions that represent different employee groups at the Montreal university) at the time he tried to institute a class action lawsuit related to his pension plan - an employer-administered plan to which all Concordia employees belonged. He was shot down by the lower court on the basis that his complaint was about something that flows from a collective agreement and so should proceed through the grievance procedure and not the courts. Bisaillon appealed and was successful but his employer and his union weren't prepared to let the matter drop and so Bisaillon ended up in the Supreme Court which upheld the lower court's decision.

According to the CCWIPP retirees, it was on the basis of this decision (and some review of some other cases), that their lawyers decided that they were no longer interested in pursuing this case. The retirees who are the lead plaintiffs in the lawsuit were advised last week that their chances of winning were slim and that they should consider filing a policy grievance instead.

I'm going to use some colourful laypeople's language to express my dissent: What a load of crap!

There's a statement in the Bisaillon decision that holds a very simple key to distinguishing David Smith and Malcolm Fullwood's case from Bisaillon's:

For all the unionized members of the group covered by the class action, the disputes fall within the exclusive jurisdiction of grievance arbitrators appointed under the applicable collective agreements, as each arbitrator's in personam jurisdiction is limited to grievances of employees covered by the collective agreement in question.

The key words here are "for all the unionized members of the group covered by the class action". Unionized members are members of a union. Richard Bisaillon was a member of a union at the time he brought his class action against Concordia University. The plaintiffs in the CCWIPP case, David Smith and Malcolm Fullwood, are not union members. They are retired. As such they are no longer members of the UFCW.

There's no doubt about it. The UFCW's International Constitution makes no mention of retirees in any of its "membership classifications". Indeed, the constitution recognizes only the following members: active, affiliated, paid-up life, nonactive, general, and honorary. The definitions provided for these categories make no mention of retirees and specifically exclude anyone who does not fall into the categories mentioned. Hence, it can be said with a good deal of certainty that these retirees are not union members. They are members of CCWIPP (which is not a union) and not the UFCW.

So if the retirees are not union members how then are they going to file a grievance? They can't. The right to file a grievance comes from a collective agreement (which provides for a grievance procedure). In order to file grievances a person must be a member of a bargaining unit covered by a collective agreement. But the retired CCWIPP members are not part of any bargaining unit and so are not covered by any collective agreement. Therefore, they cannot file grievances nor are they in any position to compel the UFCW to file policy grievances (which are grievances that must be initiated by the union and not by individual union members).

Indeed it would, IMHO again, be dangerous for them to try going the grievance route. Suppose that the retirees actually asked the UFCW to file a policy grievance alleging that the trustees of their pension plan - which include a number of high-ranking UFCW leaders - are incompetent to sit as trustees and seeking their removal (which is one of the claims in their Statement of Claim) and suppose that the UFCW actually agreed to file such a grievance. Now this isn't going to happen once in a million years because there's no way that UFCW Canadian Director Wayne Hanley is going to file a grievance that claims the he is incompetent and should be removed from the CCWIPP board along with other UFCW "bigs" and their corporate cronies, but let's just say that Wayne decided to do it anyway - for a very devious reason.

Firstly, the UFCW could delay things for months, maybe even years, by ruminating on whether or not such a grievance could be filed. Hmm...let's see now. Are these guys members or aren't they? Should we file or shouldn't we file? Oh crap, I think we need yet another legal opinion on that one, just to be sure.

Years could (and likely would) pass without anything happening. The retirees would be stuck waiting for an answer that may never come and one that, even if it ever does, isn't going to be helpful to them. But that's not the only problem. Here's an even bigger one:

Once a grievance is filed, it becomes the property of the union. Whether it's a grievance initiated by an individual member or by the union itself, the union has "carriage" of the grievance and can decide what is to be done with the grievance. The union can decided to take it to arbitration or to withdraw it or settle it on whatever basis it wants. What the grievor or grievors want or would like to see happen to the grievance matters not one bit.

Imagine what the UFCW could do if it were to file such a grievance. It could file it and withdraw it. It could file it and settle it for a bag of magic beans or a free trip to a mothballed resort in the Bahamas or something equally as worthless. It could even team up with its employer-partners and ask an arbitrator to make a "consent ruling" (a ruling that reflects an agreement reached between the union and an employer about a grievance) - maybe something along the lines of, "The parties hereto agree that the CCWIPP trustees are fully competent, have made exceptionally prudent investment decisions and that the sun shines out of their assholes, individually and severally."

And if the retired CCWIPP members don't like this kind of settlement, well then, they can go to the Ontario Labour Relations Board and complain that the UFCW didn't represent them fairly. Those of us who are well-acquainted with the OLRB's handling of Duty of Fair Representation complaints know exactly where that would lead - nowhere. The Board is not concerned with fairness in these cases. OLRB case law in DFR cases is absolutely crystal clear: As long as the union can demonstrate that it gave some thought to the grievors' claims and maybe even got a legal opinion saying "not likely to win" before making whatever deal it made - case dismissed.

The retirees' recourse then would be to "judicial review" - a restrictive process where a panel of three lower court judges decide whether the Board's decision was "patently unreasonable". As we know, it never is. Case dismissed - again.

At this point, the retirees would be SOL, not to mention tens of thousands of dollars poorer. The pension trustees competence, their investment decisions and the issue of whether or not they breached their fiduciary duty to the members of the CCWIPP plan would never even come up in all the courtroom drama.

Is filing a grievance a good strategy in this situation? You be the judge.

What can the retirees do? In my view, they can and should continue to press for class proceedings. In the very least they should get a second opinion.

I don't believe that the Bisaillon case, while presenting an obstacle for CCWIPP members who are still members of the UFCW, precludes retirees from pressing forward. The Supreme Court did not say that pension plan members who are not members of a union are precluded from proceeding through the courts or that their only recourse is through the grievance procedure. The Supreme Court did not deal with their rights at all - it even said so:

Finally, the question whether a class action limited to non‑unionized employees lies was not before this Court. The Court accordingly refrains from ruling on this subject.

In addition to this, a ruling of the British Columbia Court of Appeal in a case called Bennett v. British Columbia, provides further support for the position that the grievance procedure is not a realistic venue for retirees' claims about pension and other benefits that may have derived from their employment.

The Bennett case is about health benefits provided to unionized and non-union employees by the BC provincial government. Although in this case, the benefits were not referenced in a collective agreement at all, the court considered and rejected an argument that the grievance procedure was available to Bennett (a retiree) and was a preferable venue for the claim that he was making.

Although it is true in theory that a retired person can seek to force his or her former union to represent him or her in advancing a claim, and that there may be recourse against a union that fails to carry out its duty vis-a-vis a retired member (as to which see Cominco Pensioners Union v. Cominco Ltd., June 13, 1979, B.C.L.R.B. No. 49/79 at 15), it stretches credulity to imagine that in this case the unions would not find themselves in a serious conflict of interest. This is especially true of the BCGEU, which the Province says has purported to "compromise" the Retirees' claims - although no explanation was proffered as to how the union could do so on Mr. Bennett's behalf when it no longer represents him or other Retirees. Like the Manitoba Court of Appeal in Bohemier v. Centra Gas Manitoba, (1999) 170 D.L.R. (4th) 310, then, I conclude that "retired employees, being non-parties to the [collective] agreement, have a right to an independent cause of action in court for an alleged violation of their...rights." (Para. 33.) The Court was discussing pension rights, but the same is true of the health benefits which are the subject of this case. (my emphasis added)

The Bennett case doesn't contradict the SCC's Biasaillon ruling, it actually addresses what the SCC didn't address - the issue of whether people who are not union members can institute litigation through the courts in matters that related to their previous employment in a unionized workplace. It deals with a situation where the plaintiffs are not union members.

Cited in the excerpt from Bennett is a Manitoba case called Bohmier v. Centra Gas Manitoba. It also contains some helpful findings:

19. There is little in the collective agreement itself to suggest that in signing the collective agreement the union was purporting to represent retired employees. The preamble and purpose clause at the outset of the agreement makes it clear that the bargaining agent represents certain employees of the company - not retired employees. The bargaining unit is defined in terms which exclude past employees. As one might anticipate, the subject-matter of the collective agreement deals with union security, the check-off of union dues, hours of work, vacations, leaves of absence, wage rates, overtime, sick pay, promotions and transfers, seniority, and health and safety matters. There are two articles which touch upon the subject of pensions in an oblique way, and otherwise, the collective agreement is irrelevant to retired employees.

20. The two articles are 14.00 and 29.00, and they read as follows:

14.00 PENSION PLAN

The Company agrees that the provisions provided under the existing pension plan, unless amended by the Memorandum of Agreement dated November 20, 1988 at 3:00 p.m., which shall form part of this Agreement, that these provisions shall not be reduced during the term of this Agreement.

Revisions may be made to the plan only by agreement of both parties. The terms and conditions of the plan will be reflected in a Pension Plan booklet issued to plan members. The Pension Plan Text will be filed with the Superintendant [sic] of Pensions for the Province of Manitoba.

29.00 PENSION COMMITTEE

A Pension Committee, comprised of an equal number of Union and Management personnel, will review plan provisions after each actuarial valuation.

21 Article 14.00 refers to an existing pension plan, plus an amendment to the plan. It is not entirely clear, but it would seem to me that the amending document, not the pension plan itself, is said to form part of the collective agreement. Indeed, the amending document specifically states that "[t]his memorandum of agreement will form part of the Collective Agreement." There is no similar wording in the pension plan itself. I do not think that it matters because unless the grievance is initiated and carried forward by the union, the grievance procedure under the collective agreement is not open to retired employees. Even if the entire pension scheme was incorporated into the collective agreement, retired employees are frozen out of the grievance process. Article 14.00 itself does not confer upon retired employees any rights to surplus funds in the pension plan or any authority to prevent Centra from taking a contribution holiday. If such rights exist, they must be found elsewhere. In terms of substantive rights, Article 14.00 simply provides a guarantee against pension reductions during the currency of the agreement.

22 Article 29.00 establishes a pension committee which does not include representatives of retired employees. The function of the committee is unclear.

23 The pension plan itself would appear to be the product of negotiations between Centra and a predecessor union. It was established in 1977. It was amended by an agreement dated November 20, 1988, which is referred to in Article 14.00 of the collective agreement. There was a further amending agreement between Centra and the union on April 12, 1991, followed by a letter of understanding between Centra and the union on May 17, 1991. The April 12th agreement and the letter of understanding authorized payment to current employees of amounts from $100 to $10,000 out of the pension fund surplus, but retired employees received no such benefits. There is nothing in the pension plan itself to indicate that the complaint of a pensioner should be resolved by the grievance procedure under the collective agreement rather than by an action in court.

24 There is no doubt, as argued by counsel for Centra, that the pension plan contemplates that future changes in the pension plan are to be negotiated between Centra and the union. However, those provisions, to which the plaintiffs are not a party, do not confer upon the union the authority to speak for retired employees in a manner which is detrimental to their interests. The plaintiffs claim that the pension plan constituted them beneficiaries of a trust and that the payment of monies to present employees wrongfully diminished their beneficial interests in the trust.

25 The terms of the Act suggest that retired employees are definitely not the focus of attention in the legislation. Throughout its many sections, the Act speaks in terms of employees, not retired employees. The scheme of the Act does not contemplate the protection of the rights of retired employees and does not provide them with a process to address their grievances.

It would seem to me that, while there's not sure slam dunk when it comes to courtroom drama, there is more than a little support for the proposition that retirees should not be forced into grievance proceedings that they, (a) can't access and (b) will force them to accept representation from an organization whose interests are in direct conflict with their own.

The notion that claims related to anything that is even obliquely referenced in a collective agreement having to go through the grievance procedure (and that all claimants, in these circumstances, are barred from the courts) is a popular myth that deserves to be busted. The Bennett case provides some clarification around this and the oft-cited case of Weber v. Ontario Hydro. No, Weber didn't say that everything had to go through the grievance procedure - just issues where the "essential character" of the dispute flows from a collective agreement.

In my view, this makes the question of whether or not active UFCW members are precluded from participating in a class action lawsuit an open question. The collective agreements between the UFCW and the 400+ employers that contribute to the CCWIPP pension plan, contain language that requires members of the UFCW bargaining units to which the agreements apply to become CCWIPP members and obliges the employers to make contributions to CCWIPP. So, if any of the employers ceased contributing to CCWIPP or refused to enroll employees in CCWIPP there would be a basis for a grievance. But I'm quite sure that there is no mention in any of these collective agreements about mismanagement of the pension plan's funds by the board of trustees or of the competence of the trustees or of a process for the appointment of trustees or anything else that is really the "essential character" of the claims in "Smith v. the CCWIPP-investment-gurus and their corporate pals".

But I digress. The retirees aren't UFCW members. They aren't covered by any of these collective agreements. If they are able to pursue their claims through the courts and are successful, UFCW members who are in the CCWIPP plan will also benefit. They should be allowed to proceed. If they aren't, then anyone in a unionized workplace who has ample reason to believe that their pension plan has been mismanaged will find themselves SOL in terms of recourse. That can't be allowed to happen.

In my view, Smith, Fullwoods et al, should in the least get a second opinion. I for one plan to do what I can to see that they get one. If any of you know of anyone who may be willing to help them out as well, please share whatever leads or information you may have with them.

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