Sunnybrook Health Sciences Centre v. Aramark Canada Ltd., 2019 ONSC 4183

CITATION: Sunnybrook Health Sciences Centre v. Aramark Canada Ltd., 2019 ONSC 4183

DIVISIONAL COURT FILE NO.: 494/18

DATE: 20190719

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Swinton, Tzimas and Myers JJ.

BETWEEN: )

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SUNNYBROOK HEALTH SCIENCES CENTRE

Applicant

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ARAMARK CANADA LTD., CANADIAN UNION OF PUBLIC EMPLOYEES, LOCAL 790, and RUSSELL GOODFELLOW

Respondents

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Brian Smeenk and Megan Beal, for the Applicant

 

 

Adam Guy, for the Respondent Aramark Canada Ltd.

Mark Wright and Mary-Elizabeth Dill, for the Respondent Canadian Union of Public Employees, Local 790

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  )  
  ) HEARD at Toronto: June 20, 2019

Swinton J.

 

Overview

[1]               The applicant, Sunnybrook Health Sciences Centre (“Sunnybrook”), has brought an application for judicial review seeking to quash an arbitration award dated March 19, 2018.  Sunnybrook was not given notice of the arbitration hearing, which dealt with a policy grievance brought by the respondent Canadian Union of Public Employees, Local 790 (the “Union”) claiming that the respondent Aramark Canada Ltd. had breached the collective agreement to which they were parties.  That collective agreement applies to a bargaining unit of employees at St. John’s Rehabilitation Hospital in Toronto (“St. John’s”).

[2]               The Union had claimed that Aramark violated the collective agreement by contracting out patient food services work to employees at Sunnybrook, resulting in the lay-off of a large number of bargaining unit employees. The arbitrator held that Aramark had violated the collective agreement.  In the present proceeding, Sunnybrook seeks an order quashing the arbitration award on the basis that it was denied natural justice because it was not given notice of the arbitration hearing nor an opportunity to participate in the hearing.

[3]               For the reasons that follow, I would dismiss this application, as there was no denial of natural justice.

Factual Background

[4]               Sunnybrook is an acute care, rehabilitation, long-term care and research health sciences complex in Toronto.  It operates from three sites: Bayview Avenue, Holland Orthopaedic and Arthritic Centre on Wellesley Street, and St. John’s on Cummer Street.

[5]               Aramark has been the food services provider at St. John’s since 1966.  The Union and Aramark are parties to a collective agreement that applies to “all employees engaged in the food services at St. John’s Rehabilitation Hospital” except certain management employees.

[6]               Prior to 2012, St. John’s was a stand-alone facility not affiliated with another hospital.  However, in 2012, St. John’s merged with Sunnybrook.  Initially, the merger did not affect the operation of food services at St. John’s.  Aramark continued to provide the food services there.  However, retail and food services for Bayview and Holland were generally centralized at Bayview, and food for patients was distributed from that site.  At the Bayview and Holland sites, Sunnybrook contracted out the management of food services to Compass Group Canada.  With respect to patient food services, Compass managed Sunnybrook employees who were members of the SEIU.

[7]               Sunnybrook wished to integrate the food services at St. John’s with the other two sites and issued a Request for Proposal (“RFP”) in February 2016.  Sunnybrook wished to select a single food services operator to deliver patient and retail food services from Bayview. Aramark was the successful bidder and entered into a Retail and Patient Food Services Agreement with Sunnybrook on July 1, 2017.  The agreement is for a ten year term.

[8]               In May 2017, Aramark advised most of its employees at St. John’s that they would be laid off in the fall, because food preparation and plating for patients would be carried out at Sunnybrook by Sunnybrook employees, and the food then brought to St. John’s for distribution.  Ultimately, Aramark issued 20 layoff notices in a bargaining unit that had approximately 22 employees, and 16 employees were laid off and two were reduced from full-time to part-time status.

The Arbitration Award

[9]               The Union filed a grievance respecting the transfer of retail and patient food services to the Bayview site. The arbitrator rejected the grievance with respect to retail food services, but upheld the grievance with respect to patient food services, finding it was an unlawful contracting out under article 25.03 of the collective agreement.  That article states,

No job category covered by the scope of this agreement shall be contracted out if it shall cause the demotion or lay-off of bargaining unit employees or suffer in a reduction in his regular hourly rate.

[10]           The arbitrator described contracting out as “simply the giving outside of bargaining unit work to be performed by the employees of another employer on the first employer’s behalf” (Award, p. 12).   He concluded that all of the patient food services preparation and plating work “for the Employer at St. John’s has been transferred to employees of Sunnybrook at Bayview” (Award, p. 12).

[11]           The arbitrator observed that Aramark did not attempt to argue that there would be no contracting out to Sunnybrook, because Sunnybrook was keeping the work to be performed by its own employees.  He assumed that Aramark had not made this argument because it had “acquired from Sunnybrook the contractual right and responsibility to perform all of the patient food services work for all three sites” (Award, pp. 12-13).

[12]           He rejected Aramark’s argument that article 25.03 did not apply because the entire “job category” had not been contracted out.  He concluded that the parties were referring to a kind or type of work transferred to a third party, and the clause was violated if the contracting out results in demotion or lay-off or reduction in hourly rate of pay of bargaining unit employees (Award, p. 14).  He then gave a declaration that “the patient food services side of the transaction, to the extent that it involves any of the consequences to employees identified in Article 25.03, is prohibited by Article 25.03.”

[13]           Sunnybrook then sought to reopen the hearing on the basis that it should have been given notice and an opportunity to participate.  The arbitrator concluded that his decision was final, and he was functus officio, except in relation to disputes over the implementation of the award and remedy, as he had remained seized with respect to these issues.

The Issues

[14]           Sunnybrook raised two issues in this application for judicial review: first, that it was denied natural justice; and second, the arbitration award was unreasonable.  While Aramark supported Sunnybrook’s position with respect to the denial of natural justice, it took no position on the reasonableness of the award.

[15]           During oral argument, the Court indicated that it would not hear the second argument with respect to the reasonableness of the award, since Sunnybrook sought to raise an argument concerning the application of the collective agreement that had not been raised before the arbitrator.  Specifically, Sunnybrook sought to argue that the arbitrationaward was unreasonable because the arbitrator found that Aramark transferred work to Sunnybrook, when the work was not Aramark’s to contract out.   Sunnybrook takes the position that in its contract with Aramark, it reserved to itself the St. John’s patient food preparation, so that the work could be performed by its employees at Bayview.

[16]           It is not appropriate for a court on judicial review to determine an issue squarely within the expertise of the arbitrator that was not raised before him or her (Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Federation, 2011 SCC 61 (CanLII), [2011] 3 S.C.R. 654 at paras. 23-26).  Accordingly, the only issue before the Court in this application for judicial review is whether the arbitrator denied natural justice by failing to give notice of the hearing to Sunnybrook and an opportunity to participate in the arbitration hearing.

The Law

[17]           Arbitrators and the courts have been cautious in granting standing to third parties in grievance arbitrations, given that arbitration is a private dispute resolution process.  Normally the parties to a grievance arbitration are the parties to the collective agreement – the union with bargaining rights and the employer.

[18]           There are limited circumstances where a third party has been found to have a direct legal interest that will be affected by the arbitrator’s decision, and this has warranted granting notice and rights of participation to a third party.  Some of these cases were the result of judicial review proceedings in the courts, where an arbitration award was quashed because a person or entity was not granted notice and given a chance to participate.  Other cases which have discussed the legal principles respecting third party standing arose because an arbitrator was asked to grant intervenor standing to the third party.  The outcome in some of those cases was guided by principles of natural justice; however, other cases are justified on the basis of the arbitrator’s exercise of discretion to grant standing.

[19]           First, standing has been recognized where individual employees have a direct personal interest in the outcome of the arbitration proceeding, and that interest is not represented by the union or the employer.  In Hoogendoorn v. Greening Metal Products and Screening Equipment Company, 1967 CanLII 20 (SCC), [1968] S.C.R. 30, an employee had refused to join the union or authorize deduction of monthly union dues.  The employer and union had proceeded to an arbitration, and the arbitrator ordered the employee dismissed.  The Supreme Court of Canada held that the employee was denied natural justice because his bargaining agent had taken an adverse position to his interest that affected his ongoing right to employment.  In the circumstances, he should have been given notice and a chance to participate.

[20]           Similarly, in Bradley v. Ottawa Professional Fire Fighters Association (1967), 1967 CanLII 160 (ON CA), 63 D.L.R. (2d) 376 (Ont. C.A.), the arbitrator interpreted a collective agreement provision dealing with promotions and ordered that a number of the incumbents, who had been promoted in a job competition, should lose their positions and be demoted.  Again, given that the union was taking an adverse position to these employees’ interests under the collective agreement, and their rights to employment in their positions were at stake, the Court of Appeal held that they should have been given notice of the arbitration hearing as a matter of natural justice.

[21]           Second, notice has been required in jurisdictional disputes, where two different trade unions claim the same work or bargaining rights in a workplace.  For example, in Canadian Union of Public Employees v. Canadian Broadcasting Corp. (1990), 1990 CanLII 8078 (ON CA), 70 D.L.R. (4th) 175,  the Court of Appeal held that rival unions, claiming the same work with the employer that was the subject of an arbitration hearing, were entitled to notice of that hearing and an opportunity to participate.  The concern, if the unions were not present, was that there would be further grievances and potentially conflicting arbitration awards.  On appeal, the Supreme Court of Canada, in brief reasons, dismissed the appeal, stating (Canadian Union of Public Employees v. Canadian Broadcasting Corp., 1992 CanLII 108 (SCC), [1992] 2 S.C.R. 7 at para. 4):

The important issue resolved by this appeal is that those to be significantly affected by the arbitration should receive notice of the proceedings. Fairness and natural justice require no less.

[22]           A third set of cases in which arbitrators have granted third party standing are ones where  the remedy sought would fundamentally alter an employment relationship.  This includes cases where the union seeks a finding that an employee notionally employed by another entity is in fact an employee of the employer bound by the collective agreement (Vancouver Hospital and Health Sciences Centre v. British Columbia Nurses Union (1998), 72 L.A.C. (4th) 297 (Kinzie) at paras. 7 and 36).  As well, this explains the result in Finning International Inc. v. IAM & AW, Local 99 (2008), 173 L.A.C. (4th) 170 (Ponak), where the Northern Alberta Institute of Technology (“NAIT”) was granted standing in an arbitration in which the union claimed that students on a work study program were bargaining unit employees.  The arbitrator concluded that NAIT had an important interest to protect as the educational supervisor of the students (at paras. 22-24).

[23]           Finally, arbitrators have also granted standing to third parties to avoid duplicate litigation of the same issue – for example, granting standing to an insurance company where the union and the employer are contesting benefit entitlement under the terms of the insurance company’s policy (Greater Essex County District School Board v. Canadian Union of Public Employees, Local 27 (1998), 74 L.A.C. (4th) 58 (Samuels) at paras. 27-29.)

Analysis

[24]           In the present case, Sunnybrook argues that it has a direct and significant interest in the outcome of the arbitration, and therefore, the arbitrator denied it natural justice by failing to require that it be given notice and a chance to participate.  Sunnybrook wants to participate in a new arbitration hearing, because it wishes to argue that it “owns” the patient food services work and is entitled to decide how that work will be performed.  It takes the view that the work was contracted out to Aramark by it.  Sunnybrook also wishes to lead evidence and argue that it will be unable to fulfil some of its key objectives in triggering the RFP process – enhancing patients’ experience, improving the quality and efficiency of food services, protecting the work and job security of its employees, and controlling its costs.  Sunnybrook also wishes to lead evidence of the decision’s effect on the quality of the food services that can be provided to patients.

[25]           I accept that Sunnybrook has an interest in the outcome of the arbitration, but it does not have a direct and significant legal interest that gives it a right to participate in the arbitration hearing.  The arbitration jurisprudence on third party standing has distinguished a “direct personal legal interest” from a “commercial or incidental, or legally remote interest.” Even if there is an economic impact on another entity as a result of an arbitration – for example, in a contracting out dispute – that has not been characterized as the kind of direct legal interest that justifies an award of standing or requires notice and participation rights as a matter of natural justice (see, for example, Residential Framing Contractors’ Association of Metropolitan Toronto & Vicinity Inc. v. Labourers’ International Union of North America, Local 1832016 CarswellOnt 1049 (Surdykowski) at paras. 10-11Finning, above, at para. 20; and Re Avenor Inc. v. I.W.A.-Canada, Local 26931995 CarswellOnt 5660 (Bendel) at paras. 22-23).  As stated by Arbitrator Burkett in Air Canada v. Air Canada Pilots Association2010 CarswellOnt 9380 (at para. 14):

I have a broad discretion to decide if intervenor status should be granted.  While intervenor status should not be granted where the interest of the entity seeking status is purely commercial in nature, where the outcome may result in findings or remedies that affect the legal interests or legal status of that entity, natural justice requires that intervenor status be granted.

[26]           Sunnybrook’s interest in the arbitration proceeding is commercial and indirect in nature.  While it argues that the arbitrator has ruled on its rights under the contract with Aramark, that it is not the case.  The arbitrator’s task was to interpret the collective agreement between the Union and Aramark.  He did so and gave a declaration that Aramark had violated the collective agreement.  He made no ruling with respect to the legal rights of Sunnybrook.  Thus, this was not a situation like Hoogdendoorn or Bradley, above, where the rights of individuals under the collective agreement were being determined in a situation where the union took a position adverse to their interests, and where the remedy adversely affected their employment position.

[27]           Sunnybrook’s interests are aligned with Aramark’s in respect to the desired outcome of the arbitration. Aramark could have made the argument about the ownership of the work and called evidence on the impact of the interpretation of the contracting out clause on Sunnybrook.  The fact that it chose not to do so does not result in a denial of natural justice to Sunnybrook, as there was no ruling on its legal rights in the arbitration.

[28]           Sunnybrook relies on Bloorview School Authority v. Canadian Union of Public Employees, Local 4400 (2015), 2015 CanLII 362 (ON LA), 252 L.A.C. (4th) 87 (Knopf)in support of its argument that it was denied natural justice.  It submits that it has an interest analogous to that of the Bloorview hospital, because the arbitrator’s decision affects the quality of food services provided to patients, as well as patient experience.  It also states that it will suffer adverse effects, because it will not be able to realize some of the key objectives underlying the RFP project.  It also wishes to protect the workload and job security of its food service employees at Bayview.

[29]           This is not a case like Bloorview.  There, a school was located in a hospital, and the union representing educational workers at the school challenged the employer’s application of a hospital policy to them.  The policy required mandatory influenza vaccinations or the wearing of masks, and the grievance claimed that the policy should not apply to those working in the school area.  The arbitrator exercised her discretion to grant standing to the third party hospital. She observed that this was an unusual case where standing should be granted, because a ruling in the union’s favour had the potential to adversely affect the hospital’s ability to maintain reasonable health and safety standards both for its own employees working in the school area and the patients of the hospital.  Moreover, the hospital had no other forum in which to protect the health and safety interest in enforcing its policy.  As the arbitrator stated (at para. 37):

If a ruling in the Union’s favour has the potential of adversely affecting the Hospital’s ability to maintain reasonable health and safety standards for its own staff and patients, this is a legitimate legal interest that cannot be ignored.

[30]           The circumstances of the present case are very different.  There is no concern here with patient health and safety.  Sunnybrook has commercial concerns, but it has other ways to address its issues with Aramark’s ability to perform its contractual obligations with Sunnybrook, either through the exercise of rights under their contract and/or in the civil courts.

[31]           I note as well that Sunnybrook’s interest is not grounded in labour or employment law principles, a factor at issue in cases like CBC above.  The collective agreement that the arbitrator interpreted has no application to Sunnybrook or its employees.  The Sunnybrook employees have never performed the food services work for St. John’s, and they will continue to perform that work for Bayview and Holland at Bayview.  Any negative impact on them because of the arbitration is at most speculative.

[32]           Sunnybrook also relies on National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada) v. Pharma Plus Drugmarts Ltd., 2011 ONSC 4188 (CanLII).  This is a decision of the Divisional Court that overturned a decision of the Ontario Labour Relations Board respecting approval of a settlement agreement between Pharma Plus and the United Food and Commercial Workers Union (“UFCW”).  The effect of this settlement was to allow UFCW to represent Pharma Plus employees in Rexall stores throughout Ontario when in the past, the CAW had represented employees of Pharma Plus in the Ottawa region.  Given the impact of the settlement on future bargaining rights of CAW, the Court held that CAW should have been given notice of the Board proceedings.

[33]           Again, that case is distinguishable, as it was, in effect, a jurisdictional dispute case between unions.  Here, as I have said before, the arbitrator made no ruling on the legal rights of Sunnybrook under its contract with Aramark.

[34]           The arbitrator did not purport to bind Sunnybrook to use the employees of Aramark at St. John’s to cook and plate food for Sunnybrook’s patients there. Here, as counsel for the Union quite properly conceded during the hearing, Sunnybrook remains free to carry out its food services restructuring and to utilize its own employees to cook and plate food as it wishes. The effect of the arbitration decision is that by contracting to participate in Sunnybrook’s restructuring plan, Aramark has agreed to act in violation of its collective agreement with the Union.

[35]           Whether Aramark can perform its agreement with Sunnybrook is an issue between Aramark and Sunnybrook that was not before the arbitrator. Nothing decided by the arbitrator determines Sunnybrook’s rights under its agreements or otherwise.  Sunnybrook’s interest in the arbitration is commercial in nature in the sense that it is now faced with a contractual counterparty who may have a problem performing an agreement in the manner that it has agreed. This may cause inconvenience and, depending on what Aramark chooses to do, may give a cause of action or other legal rights to Sunnybrook. But the arbitrator’s decision does not determine or affect Sunnybrook’s entitlement to contract for food services as it wishes. As Sunnybrook does not have a direct legal interest at issue in the arbitration proceeding, it was not entitled to notice of the arbitration.  There was no denial of natural justice.

Conclusion

[36]           For these reasons, the application for judicial review is dismissed.  Aramark does not seek costs.  Costs to the Union are fixed at $7,500.00, an amount agreed upon by the parties, and payable by Sunnybrook.

_______________________________

Swinton J.

I agree               _______________________________

Tzimas J.

I agree               _______________________________

Myers J.

Released: July 19, 2019