by Brian Smeenk
TFI Transport (doing business as Canadian Freightways) had a bit of a theft problem in its Calgary terminal in 2005 and 2006. The company was losing television sets and generators. It conducted an investigation and was able to prove that one of its employees, Wayne Spence, had either stolen or was knowingly in possession of a number of the TVs and at least one generator.
The company tried to get an explanation from Spence, without success. But rather than just fire the culprit (and why they didn’t was never explained), they filed a claim for damages against him. The company filed a grievance against the employee and presented it to his union. TFI Transport 7 LP, Transforce Administration Inc. vs. Wayne Bruce Spence (Arbitrator D. Tettensor), April 25, 2008.
The company told the union that it was not claiming that the union was liable, but rather insisted that Spence was. The total claim against Spence was for about $80,000 for 90 stolen televisions and one generator.
Presumably to “send a message” that theft does not pay, the company didn’t stop at seeking repayment for the value of the lost goods. It also wanted to be repaid the $28,000 cost of its investigation into the theft and $25,000 in punitive damages.
Before the arbitration, the employer’s case was assisted by two developments. First, Spence pleaded guilty to the criminal offense of possession of stolen property. Second, the employee’s union, the Teamsters, decided not to represent him at the arbitration. He was thus left to defend himself.
Somewhat surprisingly, the employer’s claim succeeded in part. The company was awarded damages for its out-of-pocket costs regarding the eight televisions and one generator that it could prove Spence stole or possessed, less the amount it recovered once the police had seized the property. It was, however, unable to provide sufficiently cogent proof that Spence was responsible for the other 72 stolen televisions. Spence was ordered to pay the company $10,000 for the stolen property. He was also ordered to compensate the company $20,000 for that part of the investigation into the eight televisions. Perhaps the real “message” was sent with a punitive damages award against the culprit in the amount of $5,000 — plus interest!
The employer’s rationale for the claim was based on a line of cases in which Canadian courts have said that claims can be filed under the collective agreement arbitration process even if they do not directly involve a breach of the agreement. This goes back to the Supreme Court of Canada decisions in Weber v. Ontario Hydro and New Brunswick v. O’Leary in 1995. In those cases Canada’s top court ruled essentially that a dispute can and must be dealt with by an arbitrator appointed under a collective agreement if the essential character of the dispute arises out of the collective agreement, either expressly or inferentially.
In Weber, the court allowed the employee’s claims for damages for nuisance, deceit, and invasion of privacy to proceed to arbitration. In O’Leary, it allowed the employer’s claim against the employee for damages caused to a vehicle damaged by the employee’s negligence to go to arbitration. Previously, it had been thought that all such claims had to be litigated in the courts because collective agreements don’t normally contain explicit clauses dealing with those kinds of issues.
A 1999 decision, Re Board of School Trustees, School District 42 (Maple Ridge-Pitt Meadow) (1999) 81 LAC (4th) 92, from British Columbia, had used these cases to affirm that an award of damages against an employee arising from the employee’s misconduct could be made by an arbitrator in favor of the employer.
Applying the logic of the Weber and O’Leary cases, the arbitrator in the TFI case found that he had the power to order the employee to pay damages to the employer. He based this on the fact that the Canada Labour Code requires that all disputes under the collective agreement be settled by arbitration. He found that the essential character of this dispute did indeed arise under the collective agreement because Spence had access to the stolen goods through his employment.
Lesson Learned
This case teaches a lesson not only to Wayne Spence and his coworkers about what theft can cost you, but also to all Canadian unionized employers and their unions. Because of this line of cases, employers now have a very cost-effective method to recover losses incurred by employees through misconduct. Indeed, O’Leary seems to be clear authority for the ability of employers to seek at arbitration a wide variety of remedies for a wide variety of claims that previously would have been the preserve of the courts.
Such claims might be brought not only against employees but also against unions or union officials if the facts warrant it. Just as defamation claims are sometimes now brought by employees against employers in arbitration cases, such claims might also be brought by employers. Damages due to willful destruction of property or other harm suffered by an employer as a result of unauthorized employee or union actions could now, potentially, be pursued at arbitration. Arbitration under collective agreements would appear to no longer be a forum where employers always are on the defensive.
