The Supreme Court Of Canada Rules On The Jurisdiction Of A Grievance Arbitrator To Decide Issues Related To Pension Plans.

The Supreme Court of Canada recently released its decision in a matter1 which had, for several years, pitted Concordia University (Concordia) against some of its unionized employees with respect to the jurisdiction of the Superior Court of Quebec to decide issues involving the Concordia pension plan. The Supreme Court, in a majority decision, ruled that the grievance arbitrator had exclusive jurisdiction to decide the issues at bar.

The Facts

Concordia sponsors the Concordia University Employees' Pension Plan (the Plan). At the time of the action, the Plan had more than 4,000 active and inactive participants. More than 80% of the participants are unionized employees governed by one of the nine collective agreements in effect. Each collective agreement refers, in some fashion or another, to the Plan.

In 1997, Richard Bisaillon (Bisaillon), a unionized employee, filed an Application with the Superior Court of Quebec for authorization to commence a class action against Concordia on behalf of all participants in the Plan. He alleged that it illegally amended the Plan in order to provide for the right of the employer to grant itself contribution holidays, to charge Plan administration expenses to the Fund and to receive part of the surplus upon termination of the Plan. According to Bisaillon, in addition to the $56 million which allegedly were used by Concordia for the purposes of contribution holidays and the payment of Plan administration expenses, an amount of $15 million of surplus was allegedly also wrongfully used by the employer in order to fund an early retirement program. Bisaillon sought an order from the Superior Court declaring the amendments made by Concordia to the Plan invalid and asking for repayment to the Plan Fund the sums which Concordia purportedly used wrongfully.

Concordia and the Concordia University Faculty Association (CUFA), one of the certified unions representing more than 30% of the active participants in the Plan, asked that Bisaillon's Application be dismissed. CUFA, with the support of Concordia, alleged, in particular, that the issues raised were within the jurisdiction of the grievance arbitrator pursuant to the collective agreements and could not be decided by the Superior Court.

Decisions of the lower courts

In April 2003, Crepeau J. of the Superior Court sided with CUFA and held that the questions raised, in respect of the unionized employees, were indeed within the exclusive jurisdiction of the grievance arbitrator since the Plan was a benefit provided for in the collective agreement and the claim resulted from its application.

In March 2004, the Court of Appeal of Quebec reversed Crepeau J.'s decision and held that the issues raised by the Application were within the jurisdiction of the Court and not that of the grievance arbitrator. According to the Court of Appeal, "[TRANSLATION] the subject-matter of this action has nothing to do with the collective agreement to which the intervenor is a party. Rather, it originates from the interpretation to be given to the pension plan in force at the respondent, Concordia University, a plan based on an innominate contract, which exists independently of any collective agreement."

The Court of Appeal also added that the arbitrator who would be called upon to hear a grievance concerning the issues raised would have no jurisdiction concerning unionized employees not governed by the agreement pursuant to which the grievance would be filed nor with respect to non-unionized employees. Therefore, the arbitrator's award would not be binding on them. In the Court's view, the risk of chaos created by the possibility of contradictory decisions with concerning the validity of the various actions allegedly improperly taken by Concordia justified having the issues decided by the Superior Court.

Decision of the Supreme Court

a) The majority justices

Applying the test developed by the Supreme Court in Weber2, the four majority justices held that the facts alleged by Bisaillon with respect to the amendments to the Plan and their validity were related at least implicitly to the collective agreements and their application and therefore fell within the jurisdiction of the grievance arbitrator. Even if the collective agreements did not specifically deal with the issues at bar, each of them referred to the Plan, by providing, for instance, that the employees were eligible to participate therein in accordance with the specified conditions or that the employer undertook to maintain the coverage and the benefits offered to the employees by the Plan. Provisions of this nature had the effect of including the conditions for the application of the Plan in the collective agreement. In the Court's view, Concordia had undertaken, "at least implicitly, to respect the several rights and obligations provided for in the Plan or arising out of the legislation applicable to it. In doing so, [Concordia] also recognized the in personam and subject-matter jurisdiction of the grievance arbitrator".

The majority justices also recognized that, even if all the participants in the Plan could benefit from a favourable decision of the arbitrator, only those who were governed by the agreement pursuant to which the grievance was filed would be bound by the decision. Although multiple actions and potential conflicts between separate arbitration awards in each bargaining unit were possible, this was not an impediment to recognizing the exclusive jurisdiction of the arbitrator.

b) The dissenting justices

The difference of opinion between the majority justices and the three dissenting justices hinged on the question of whether the motion filed by Bisaillon arose out of the application of the collective agreement. According to the dissenting justices, the analysis set out in Weber led to the conclusion, according to the facts at bar, that the arbitrator did not have jurisdiction to decide the matter.

According to the dissenting justices, the Plan transcended the collective agreements and, therefore, had not been "absorbed" by the latter. The dissenting justices were of the view that the Plan Fund was a patrimony (estate) created for the benefit of the beneficiaries and which formed an indivisible whole. In the case at bar, the Application by Bisaillon related to the funding of the Plan and, thus, all the beneficiaries of the Plan were affected. A decision handed down by an arbitrator with respect to the issues raised by Bisaillon would affect all the other beneficiaries of the Plan and not only those belonging to the bargaining unit filing a grievance. This conclusion, as well as the risk of contradictory decisions, confirmed in the minds of the dissenting justices that the action transcended the collective agreement and did not arise from its application.

Comments

By concluding that the conditions of application of the Plan were included in the collective agreement when the latter refers to the plan in a manner similar to that examined in Concordia, the Supreme Court recognized that the grievance arbitrator had a wide jurisdiction with respect to matters relating to the pension plan. Indeed, on this basis, several pension plan issues could be characterized as arising out of the collective agreement and, therefore, would fall under the jurisdiction of the arbitrator, even though they may not be specifically addressed in the collective agreement.

The majority justices alluded to recent decisions of the Court of Appeal of Quebec which purported to be even more liberal with respect to the jurisdiction of the arbitrator. These decisions would confer jurisdiction on the arbitrator without the need for any reference whatsoever to the plan in the collective agreement. In this respect, we note that, of the two decisions of the Court of Appeal referred to by the Supreme Court in support of this approach, one did not raise the issue of jurisdiction of the grievance arbitrator and the other dealt with a collective agreement which included a reference to the pension plan. In any event, the Supreme Court expressly avoided making a determination as to the merits of such an approach since the agreements which it was asked to examine in Concordia contained a reference to the Plan.

It will be interesting to see the scope the courts will give to this recent decision of the Supreme Court. In Concordia, the Supreme Court was asked to make a determination as to whether or not issues with respect to the validity of amendments made to the Plan fell within the jurisdiction of the grievance arbitrator. Although the reasons for judgment of the majority justices do not make any distinctions with respect to "conditions of application of the plan" which were incorporated in the collective agreement by way of a reference thereto, a number of pension plan issues are more closely related to the employer and its assets than to the administrator of the Plan and Plan Fund.

For instance, in Lacroix3, the Court of Appeal of Quebec held that an action against the employer, sued in its capacity as administrator of the plan for having failed to review certain decisions with respect to the investment of the assets of the fund, did not arise from the collective agreement and, therefore, did not fall within the jurisdiction of the grievance arbitrator although the collective agreement specifically provided that the pension plan formed a part thereof. The application for leave to appeal the decision of the Court of Appeal in Lacroix was dismissed by the Supreme Court on June 22, 2006 (i.e., after the decision was released in Concordia). The decision of the Court of Appeal on this issue is therefore final. It is interesting, as well, to note that the dissenting justices of the Supreme Court in Concordia referred to Lacroix as an illustration of an action which transcended the collective agreement.

In addition, an appeal is currently pending before the Court of Appeal of Quebec by various pension committees from a decision of the Superior Court4 which ruled that their application fell within the jurisdiction of a grievance arbitrator. The committees are asking the Court of Appeal to reverse this decision on the grounds that they are not parties to the collective agreements and that a grievance arbitrator has no jurisdiction over them.

Finally, several actions dealing with pension plans involve not only active employees, but also retirees who no longer belong to the bargaining unit. In Concordia, even if the majority justices ruled that the questions at issue fell within the jurisdiction of a grievance arbitrator, they also recognized that the participants not covered by the agreement and non-unionized employees would not be bound by the decision of the arbitrator. With respect to the rights and remedies available to retirees under such circumstances, the decision of the Court unfortunately does not shed any additional light. Indeed, even though the group which Bisaillon sought to represent included retirees, the majority justices did not specifically address retiree issues as part of their decision.

Footnotes

1. Bisaillon v. Concordia University, 2006 SCC19;

2. Weber v. Ontario Hydro, [1995] 2 S.R.C. 929;

3. Lacroix c. Societe Asbestos Ltee, J.E. 2004-1808 (C.A.);

4. Comite de retraite du regime de retraite des employes d'Industries Davie inc. membres du syndicat des travailleurs du chantier naval de Lauzon inc. c. Groupe Thibault Van Houtte & Associes ltee, J.E. 2006-807

(C.S.).

Josee Dumoulin is a partner in the firm's Pension & Benefits Department practising out of the Montreal office The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Ms Josee Dumoulin

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