ONTARIO LABOUR RELATIONS BOARD

3033-09-U United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (United Steelworkers) on its own behalf and on behalf of its Local 6500 and its Local 6200, Applicant v. Vale Inco Limited, Responding Party.

BEFORE: Ian Anderson, Vice-Chair, and Board Members P. LeMay and C. Phillips.

APPEARANCES: Brian Shell, Chris Donovan, Rick Bertrand, Myles Sullivan and Wess Dowsett appearing for the applicant; Barry Brown, Tim Liznick and Kevin Inwood appearing for the responding party.

DECISION OF THE BOARD: February 24, 2012

1. This application arises from a long and bitter strike by United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (United Steelworkers) (USW) at Vale Inco Limiteds (Vale) Sudbury operations. During the course of the strike, Vale discharged nine employees for alleged misconduct. In collective bargaining, Vale refused to agree to any procedure which might give rise to the possibility of reinstatement of the nine employees. It is that refusal which gives rise to this application. 2. The USW alleges that Vales position constitutes a breach of section 17 of the Labour Relations Act, 1995 which provides:
The parties shall meet within 15 days from the giving of the notice or within such further period as the parties agree upon and they shall bargain in good faith and make every reasonable effort to make a collective agreement.

The USW alleges that Vale has failed to make every reasonable effort to make a collective agreement. The USW expressly states that it does not allege that Vales position amounts to a failure to bargain in good faith. The Proceedings 3. By decision dated August 12, 2010, reported at [2010] OLRB Rep. Aug. 548 (hereafter, the August decision), we rejected the argument of the USW to the effect that Vales position was illegal per se. We also rejected Vales argument that the pleadings which the USW had filed in support of its allegation failed to make out a prima facie case. We directed a hearing at which the USW would be entitled to call evidence to prove the facts in its pleadings with which Vale did not agree and Vale would be entitled to call evidence in response and to lead evidence as to reasons why it took the position that it did. A number of procedural rulings were subsequently made with a view to expediting the proceedings. Those rulings, for the most part, are set out in prior written decisions. We do not intend to summarize them here. For completeness of the procedural record we note only that in accordance with the September 27, 2011 decision (2011

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CanLII 59689 (ON LRB)) issued in this matter, Vale filed will-says from Line Villeneuve, Harvey Beresford and John Pollesel. Vale called each of these witnesses and had each of them adopt their will-say as their evidence in chief. With the exception of Beresford, Vale did not avail itself of the opportunity to supplement or expand upon that evidence through asking additional questions of the witness. Facts 4. The USW had a long standing collective bargaining relationship with Inco, Vales predecessor. For Incos operations in and around Sudbury, those bargaining rights are held by USW, Local 6500. For Incos employees at its Port Colborne Plant, those bargaining rights are held by USW, Local 6200. Both bargaining units were subject to collective agreements which ran from June 2006 to May 2009. Inco was acquired by Vale in 2006. The negotiations for the new collective agreements were the first since the acquisition. The principal negotiator for USW was Wayne Fraser, USW District 6 Director. The principal negotiator for Vale was Harvey Beresford, a senior partner at the labour law firm of Hicks Morley Hamilton Stewart Storie LLP. Fraser and Beresford are both very experienced negotiators and both had been involved during several previous rounds of negotiations between the USW and the former Inco. 5. In December 2008, prior to the commencement of formal negotiations, representatives of Vale met with Fraser and other representatives of the USW. Vale outlined three principal objectives which it sought to achieve in the negotiations through amendments to the collective agreement: movement from the existing defined benefit pension plan to a defined contribution pension plan; restructuring the nickel bonus, by increasing the price at which the bonus was triggered and introducing a cap on the maximum payable bonus in a given year; and obtaining efficiencies through limitations on transfers, limitations on trainee jobs, grievance procedure changes and other matters. In support of its positions Vale made several extensive presentations to the USW about the changed economic circumstances which Vale asserted it faced. This included a presentation by its pension consultants, Mercer, which described the existing noncontributory pension plan and revealed that the plan had an estimated solvency deficiency of $728 million as of December 31, 2008. 6. From the outset, the USW strongly resisted demands related to Vales three principal objectives. 7. From April to July 2009, the parties met many times to attempt to negotiate a collective agreement. Agreements were reached on many substantive issues, but they remained far apart on others, including those relating to Vales three principal objectives. 8. On July 3, 2009, Vale presented the USW with a settlement proposal.

9. The USW negotiating committee put Vales July 3, 2009 proposal to its membership with a unanimous recommendation that it be rejected. The membership voted overwhelmingly to reject the proposal and go out on strike. The strike commenced on July 13, 2009. 10. The strike lasted a year. (Indeed, as discussed further below, for the purposes of this decision it is ongoing.) Both sides engaged in inflammatory rhetoric. In a departure from the past practice of Inco, Vale decided to continue operations during the strike and hired replacement workers for this purpose. Some bargaining unit members crossed the line and resumed work. Vale hired a private security firm, AFI, to supplement its own security staff. There were a number of incidents of alleged threats, intimidation, harassment and violence, both on and off the

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picket line. Vale sought and obtained a number of court injunctions in relation to picket line activities. Vale security staff compiled reports with respect to these incidents which were forwarded to the manager of Human Resources for review. If based on his or her review the manager thought discipline was warranted he or she would present a recommendation to a committee of senior managers of Vale for further review and decision as to discipline. As a result of this review process, over the course of the strike Vale terminated the employment of nine of the striking workers: Ron Breault, Mike Courchesne, Adam Cowie, Dan Labelle, Mike French, Jason Patterson, Patrick Vienot, Brian Miller and John Landry. 11. Vale did not involve the USW in its investigation of the incidents. There was no discussion of the merits of the various discharges at the collective bargaining table. 12. The discharges were the subject of much discussion within the membership of the locals. The sentiment at the monthly membership meetings held during the strike was that no one gets left behind: that is, the nine would have to be reinstated as part of any settlement of the collective agreement. 13. Fraser testified that from the institutional perspective of the USW, if an employer has the unilateral right to discharge striking employees without the right of the union to challenge that decision, then the union might as well not go on strike. Employees, he testified, would not want to go on picket lines and be part of lawful activity because of concerns about getting themselves fired. He also testified that the issue of discharged strikers is normally addressed in the return to work protocol negotiated between the parties as part of the settlement of a collective agreement. 14. Following the commencement of the strike, negotiations between the parties broke off. While the parties and in particular the principal negotiators remained in contact and discussed some issues, there was no official resumption of negotiations until February 2010. During the period July, 2009 to January, 2010 four strikers were fired: Breault, Courchesne and Cowie were all terminated on September 29, 2009; Labelle was terminated on October 9, 2009. 15. In January 2010, on Vales initiative, Kevin Burkett, a well known and highly respected neutral in labour relations, was approached and asked if he would agree to act as a mediator. Burkett agreed. Mediated bargaining sessions were scheduled for late February 2010. 16. On January 13, 2010, the Union filed this application. (As noted in the August decision, events overtook that application. New particulars were subsequently directed and filed and form the basis for the issues which are currently before the Board.) 17. On or about January 22, 2010, three more strikers were fired: French, Patterson and Vienot. Vale alleged that they were involved in assaulting a worker who had crossed the picket line to resume work while that individual was out jogging. Criminal charges were laid against French, Patterson and Vienot. Ultimately, French was convicted; Vienot and Patterson were acquitted following a trial. Vienot had been the vice president of Local 6500 until the spring of 2009. In the Local elections which were held in spring of 2009, Vienot ran for the office of president, along with a slate of candidates for the other positions on the Locals executive. Vienot narrowly lost the election to John Fera, but members of his slate were elected as the majority of the Locals executive board. Patterson was an officer of Local 6500 and a member of its negotiating committee for the current round of collective bargaining.

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18. On January 26, 2010, following the discharge of French, Patterson and Vienot, Vale caused the following Open Letter to the Community of Sudbury to be run as a full page in the Sudbury Star:
For more than six months now, Vale has found itself embroiled in a labour dispute in Sudbury. As we know too well, no one wins during a strike not the company, not the community and certainly not our striking employees. Unfortunately, events in recent months have demonstrated an uglier side to these disputes. Acts of intimidation, violence and vandalism have become commonplace. These are acts that none of us can ignore or condone. Death threats, terrorizing and threatening spouses and children, damage to private homes and vehicles, vandalism of public and private property, spikes on public roadways, and now, an apparently premeditated three-on-one assault on an individual who was doing nothing more than jogging in broad daylight on our communitys streets. Does anyone really believe observance of the law should be suspended during a strike? Websites and public statements that elicit violent and intimidating behaviour have no place in this dispute or in this community. At Vale, we believe in preserving the ability of all concerned to exercise their legal rights in a safe and secure manner. The USW has a legal right to strike. Employees have a legal right to report to work. And all of us have every right to expect and demand observance of the law.

19. On or about February 23, 2010, Vale fired Miller; on or about March 4, 2010 Vale fired Landry. 20. In late February 2010, the parties resumed collective bargaining, with the assistance of Burkett. Many substantive issues remained in dispute. 21. By March of 2010, the person who was giving instructions to Beresford as to Vales positions at the collective bargaining table was John Pollesel. At the commencement of the strike, Pollesel was the Vice President of Production, Services and Support and General Manager for Ontario Operations. In October 2010 he became Chief Operating Officer of Vale Canada Limited and Director of Base Metal Operations, North Atlantic. 22. Pollesel had limited experience with collective bargaining. Prior to joining Vale, Pollesel had been a manager at Falconbridge with responsibility for accounting and finance. His role in collective bargaining had been limited to costing of proposals. His only experience in serving as part of a collective bargaining committee had been in Peru, in approximately 2006. He had never previously been part of a collective bargaining committee in Canada. 23. Pollesels evidence in chief was that he did not attend all of the bargaining dates between Vale and USW, but that he did attend many of the mediation sessions held with the

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assistance of Burkett, including all of the final days leading to the settlement which were held on June 21 and 22, 2010 and are discussed further below. 24. Pollesel made the decision not to allow for any potential for the dismissed employees to be returned to work. (While there may be other procedures which could give rise to this result, as a matter of shorthand we will often describe Vales position as being that it refused to agree to arbitration with respect to the discharged employees.) Pollesels evidence was that he told Tito Martins, the Chief Executive Officer of Vale Inco Ltd., that under no circumstances could Vale allow for any of the discharged employees to be returned to work and Martins supported Pollesel in that decision. While the exact timing was not established in the evidence, this decision had been made by March of 2010. 25. Through the adoption of his will-say, Pollesel testified that his reasons for adopting this position were as follows:
12. I decided that we would not allow for the dismissed employees to be returned to work or have the opportunity to be potentially reinstated because: (a) Many employees had expressed the view that they did not wish to have any of the discharged employees returned to work: (i) Walking through the plants and talking to employees as well as out in the community, I was repeatedly told by employees not to take the 9 people who had been dismissed back to work. Employees expressed to me, their frustration at having had to tolerate threats, abuse and intimidation against them or [their] families - often by men wearing masks on the picket lines coming to work and their concern about having to deal with people who misconducted themselves during the strike back in the workplace. I understood these concerns to be that many employees did not want, under any circumstance, to have any of the discharged employees returned to work. On April 30, 2010, [I] received a copy of an e-mail from one of our managers about conversations that he had with picketers as he crossed the picket line on his way to work. At that point, the Union had rejected our March, 2010, efforts at achieving a collective agreement. I was led to understand that employees who spoke to our manager did not support the nine discharged employees and the employees were unhappy at having the strike continued by the Union to achieve some remedy for these discharged people.

[There is no (ii).] (b) I was aware of the threats, abuse and intimidation that many of our employees endured during the strike as they came to work and as they went about their lives in the community. I did not believe that it would be right to create a circumstance where the persons who engaged in the most severe misconduct

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during the strike could return to work along side the employees that they had victimized during the strike; (c) We have no legal obligation to extend just cause arbitration to any of the discharged employees and we did not consider it to be appropriate to extend the right to just cause arbitration to these dismissed employees when we would not extend such rights to any other dismissed employee who was not covered by an operating collective agreement. I considered that it was fair that striking employees dismissed while there was no operating collective agreement should have access to potential civil remedies in the courts just like any other dismissed employee not covered by an operating collective agreement extending just cause protection and an arbitral review process; The Union had previously published to striking employees that they would not have access to just cause protection and arbitration if they return to work during the strike. I believed that it would be inconsistent to extend greater protection to persons who did not return to work than the Union itself said would extend to employees who returned to work. I am aware that about half of the CBAs reached between Local 6500 and the former INCO involved labour disputes. Our new reality is that in future labour disputes, we will, very likely operate. I was concerned that any process which permitted persons to return to work after having been dismissed for misconduct during the strike would have a negative effect on our ability to deter bad behaviour during any future labour dispute.

(d)

(e)

26. Pollesels evidence in chief was that he was aware in a general sense of most reported incidents of misconduct on the picket line (some of which the USW asserts were more egregious than the incidents for which employees were fired). He was also aware in a general sense of each of the incidents for which employees were discharged. In cross examination he testified, however, that he had not done an evaluation of the facts to ascertain whether on arbitral review any of the discharges would be upheld, nor had he spoken to Line Villeneuve, manager of Human Resources for the Sudbury operations at the commencement of the strike, or Mitch Medina, who succeeded her in the position during the latter part of the strike, to obtain their assessment of the results of arbitral review. 27. With respect to paragraph 12(a)(i) of his will-say, in cross examination Pollesel in essence testified that the information upon which he relied was anecdotal. He also testified that even if he heard from strikers on the picket line, cross-overs and independent contractors that Vale should agree to arbitration, he would not have agreed. 28. With respect to 12(e) of his will-say, in cross examination Pollesel confirmed that one factor giving rise to Vales position was its concerns about the contingency of future strikes. 29. In cross examination, Pollesel agreed that the position which he, on behalf of Vale, had adopted was a firm, inflexible position. He also testified the position that Vale would not allow for any potential for reinstatement of discharged strikers had been in his mind from the beginning of the strike. He knew that this was going to become an issue in bargaining. He

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expected that the parties would arrive at a negotiated solution with respect to this issue, but potential reinstatement was not a solution to which he would agree. In his view, if Vale fired someone during the strike, they were not coming back to work. The position would have been the same if instead of firing nine employees Vale had fired eleven, sixteen, twenty-five or one hundred and fifty. When asked if it would have remained the same if Vale had fired five hundred employees, he said he did not know what the result would be; that he would need a lot of time to think about it. 30. On March 3, 2010 the issue of the discharged strikers was raised in the negotiations for the first time. At that time the USW tabled a proposal, delivered to Vale by Burkett, which included a requirement that all discipline and discharges of striking employees be wiped off the books as part of a return to work protocol. Through March, Beresford told Fraser that Vales position was that the discharged employees were not going to be permitted to return to work under any circumstances. 31. On March 7, 2010, after approximately ten days of meetings, the parties ended the negotiation session being mediated by Burkett. Prior to doing so, Vale made a further offer to settle. While there were many issues which separated the parties at that time, notably Vales proposal did not include reinstatement of the nine discharged striking employees or any provision whereby striking employees discharged during the strike would have access to any process by which their discharges and possible reinstatement could be determined by an independent arbitrator. 32. On March 11, 2010, the USW put the March 7, 2010 offer to its membership for a ratification vote, with a unanimous recommendation from the negotiating committee that it be rejected. The membership voted overwhelmingly to reject Vales offer. 33. On March 16, 2010, Vale published an open message to striking employees on a website which it maintained during the strike. That message expressed the view that the USW was more committed to misrepresenting and manipulating the facts than they are to ending the current labour dispute. Vale stated: There is no responsible option but to move forward with the business until such time as the USW changes its current position. Vale then stated we are providing answers to many of the questions we received from employees following the USW campaign of misinformation. Among the questions and answers was the following:
Is the company prepared to bring back employees who had their employment terminated during the strike? No. The union bargaining team is demanding the company reinstate individuals terminated over the course of the strike as part of any settlement. Our position remains clear this will not happen. Decisions to terminate employment are not made lightly. The facts of each case were reviewed in detail before any decisions were made. In the end, the actions of the individuals in question fail any test of acceptable behaviour either in society or in the workplace. The USW leadership knows this as well. [Bolding in original.]

34. On March 31, 2010, Fraser and his assistant, Charlie Scibetta, met with Beresford and David Barnes, Vales Director of Labour Relations for North America and Europe. Fraser identified the discharged striking employees as the key issue which was a roadblock to any settlement. Fraser signalled a modification of the USWs previous position that the discharged

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employees must be returned to work as part of any settlement and suggested instead that the cases of the discharged striking employees be referred to arbitration. 35. Beresford testified that during the meeting Fraser made a statement that we had to meet with just him and John Fera (John) because Rick Bertrand (Rick) would just leak everything back to Patrick Vienot (Pat), one of the discharged strikers, and Rick is completely against not returning the fired strikers. I understood this to mean that this was an issue that would not be a barrier as we went forward. Fraser denied making the statement upon which Beresfords assessment appears to have been based. In any event, there is no evidence that Beresford communicated this assessment to anyone else. 36. Through adoption of his will-say, Beresford testified:
19. At the request of [Burkett], the parties again met in April with a group that included a number of operating people to try to put together what an RTW [Return To Work] protocol would look like. During those discussions, at the suggestion of [Burkett], the issue of the discipline letters and discharges during the strike was not included in the separate RTW protocol discussions. [Fraser] and I continued to explore solutions on all issues with [Burkett] in private meetings in his hotel suite. On the issue of the discipline letters and the discharged strikers, I said that Vale was not prepared to abandon the discipline letters nor was it prepared to either take the discharged strikers back or allow them access to arbitration for a variety of reasons, including: (a) The importance of responding to the wishes of many employees, including supervisors, that these people not be given any chance to return. The earlier Union statements and publications that strikers who returned to work would not have access to arbitration and the just cause protection of the CBA. The need to be clear that serious misconduct during a strike would not be tolerated, forgiven or discharges subject to arbitral review. The Company had made that known publicly both in response to questions from its employees and contractors and for the purpose of discouraging further serious misconduct aimed at intimidating people who wanted to come to work. It was a very important principle of its move to an accountability culture of meaning what you say and doing what you say. Vale is determined to operate in any future strike and the ability to do all it can to ensure the safety and security of its people will be paramount. This will be seen as a significant commitment to achieving that safety and security. Vale, and its predecessor Inco, has had about 50% of its negotiations with the USW production and maintenance bargaining unit result in a strike and past behaviour is generally seen, regrettably, as the best predictor of future behaviour so attempts to modify that behaviour are important.

(b)

(c)

(d)

(e)

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(f)

The uncertainty of any arbitrated outcome.

37. With respect to paragraph 19(a) of his will-say, in cross examination Beresford testified that he had not spoken to supervisors but had heard from senior managers at Vale, including Barnes, that this was the view which was being expressed to them. 38. With respect to paragraph 19(c) of his will-say, in cross examination Beresford testified that he had received a summary of the misconduct upon which Vale relied in making its decisions to terminate each of the nine. He did not suggest that he had read it, and we note in this respect that earlier in his cross examination he stated that he was unfamiliar with the details of the alleged misconduct and had not been asked to provide an opinion in relation to it. He testified that there were various versions of such summaries, one of which was entered into evidence. He was not sure what Vale had said publicly about arbitral review; but Vale had said that it was not going to bring these people back. Once Vale took the position of no arbitral review, which was communicated at some time to others, Vale was not going to change its position, and its credibility with respect to future strikes was one of the reasons for this stance. While he was aware that Vale was using a review process prior to making decisions to discharge strikers, he did not know the details or who was involved. Beresford testified that he was never asked to give his opinion to Vale on the merits of the discharges, nor did he have the facts which would have enabled him to do so. 39. Notwithstanding paragraph 19(d) of his will-say, in cross examination Beresford testified he did not in fact tell Fraser that Vale was determined to operate in any future strike. He could not remember whether he told Fraser that Vales position with respect to arbitral review of the discharged strikers was at least in part designed to communicate to the workers that in the event of future strikes Vale would not subject discharges that occurred during a strike to arbitral review, but stated that it was possible. Whether or not he told Fraser, he testified that this was, in fact, a consideration in Vales position with respect to the issue in the period March to June 2010. 40. Through adoption of his will-say, Beresford also testified:
20. While company and union teams worked on the RTW protocol, [Burkett], [Fraser] and I continued to meet separately in an effort to narrow the many issues and find resolution. The discharged strikers was just one of these issues and there were a number of options proposed by me during our discussions. These included the payment of severance to the discharged strikers, the payment of a large lump sum to the union which it would allocate as it saw fit among the discharged strikers or allowing the discharged strikers to seek whatever remedies that might be available at common law and not requiring that the matter be abandoned as part of the settlement. In the interests of "negotiator confidentiality and the preservation of the ability to dialogue about solutions, I am reluctant to disclose all of the suggestions made by [Fraser] but they did involve significant compromise away from sending all cases to arbitration and let the arbitrator decide. 21. During these discussions, (which were held during the three mediation sessions we had between late April and early June) I also suggested that perhaps everyone could find cover in allowing the USW to amend and use the existing OLRB BBF [bargaining in bad faith] complaint on the issue of whether refusal to return the strikers or offer them arbitration was in itself bargaining in bad faith. The BBF complaint, as originally filed, did not deal with that issue in any respect. If that was a

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possibility, I would recommend to Vale that the RTW did not require the USW to abandon the BBF complaint insofar as it related to that issue.

41. In cross examination, Beresford agreed that during these discussions at one point Burkett had proposed to him that Burkett would review the nine cases and deal with them directly, including the power to order reinstatement. Beresford testified that the proposal was rejected by Vale, but stated that the proposal had more to it than that, which he was reluctant to discuss. Beresford was not asked to clarify this statement either in cross or in re-examination. 42. 43. Bargaining broke off again on May 6, 2010. By letter dated May 7, 2010 counsel for USW requested the Board:
schedule peremptory urgent expedited hearing dates in the immediate future to deal with an aspect of the instant matter, namely the Respondents refusal to consider the reinstatement, or a process that might permit reinstatement, of striking employees whose employment was terminated during the labour dispute, all forming part of the instant application.

44. A hearing was held on May 14, 2010 by a panel of the Board consisting of Kevin Whitaker (now Mr. Justice Whitaker of the Ontario Superior Court of Justice), Mr. LeMay and Ms. Phillips to hear the USWs motion to sever this issue from the main application. In a decision dated May 16, 2010 (2010 CanLII 26706 (ON LRB)) the panel stated in part:
6. One of the issues raised in the complaint is whether the employer has breached its obligations under section 17 of the Act by refusing to agree in bargaining, that nine workers who have been discharged during the strike, should have access to arbitration of their discharges, on a just cause standard, with reinstatement as a possible option, as part of a return to work protocol. The employer has taken the position that these employees are only entitled to their civil remedies before the courts (which would not include the potential remedy of reinstatement). 7. The union has asked that this matter of the return to work protocol be severed from the main application and litigated separately on an urgent basis. . 10. Having heard the parties' submissions and accepting for purposes of argument the facts relied upon by the union, we find at this point that there is insufficient evidence to permit us to conclude that the employer has on this issue, breached its obligations under section 17 of the Act. While it may very well be that the employers position on this issue might amount to a breach of the Act if for example, all other matters were agreed upon in bargaining and the employer at that point refused to attempt to negotiate a return to work protocol - that question is premature. 11. The union may at some later point, renew its request to deal with the present complaint concerning the employer's position on the return to work protocol. 12. It is appropriate at this point in the proceedings for the Board to provide the parties with interim directions in the context of the main application.

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13. Accordingly, the Board directs the parties to return to the bargaining table to recommence negotiations, preferably with the assistance of Mr. Burkett. Further, the parties are directed to turn their attention to and bargain all of the issues which remain outstanding with the exception of the return to work protocol. Finally, the parties are only to deal with and address the return to work protocol when they have reached agreement with all other terms of a Memorandum of Settlement.

45. Notwithstanding the May 16, 2010 direction of the Board, the parties continued to have discussion with respect to the return to work protocol and specifically the issue of the nine prior to resolving all other issues. 46. Through adoption of his will-say, Beresford testified:
23. On May 26, 2010, [Burkett], [Fraser] and I met again to see if we could get back to productive negotiations with the full committees on all issues. During that discussion, [Fraser] put forward a settlement position which included the discharged strikers issue being settled by having the matter dealt with at the OLRB as I had suggested earlier. This and other matters contained in his suggested "deal are as set out in my notes produced to counsel for the USW. 24. It was clear to me from that point on that the resolution of the discharged strikers could be settled and now it was a matter of putting together the remaining parts of the settlement, including bonus, grievance procedure, benefits, wages, the payment of bargaining costs, contractors using mobile equipment underground, return to production payments to returning employees, the many details of the return to work, etc.

47. Fraser denied that on May 26 he proposed that the discharges go to the Board. He maintained that until June 22 the USWs position continued to be that the discharges had to be resolved by arbitration. In any event, there was no suggestion in Beresfords evidence that he ever communicated his assessment that the resolution of the discharged strikers could be settled to anyone else. 48. The parties resumed formal negotiations, with the assistance of Burkett, on June 4, 2010. Many issues remained in dispute, including issues related to Vales three major objectives and the issue of the nine. 49. The final push took place on June 21 and 22, 2010.

50. Beresford testified that at 3 a.m. on June 22, Burkett presented Vale with an offer from the USW which included the proposal that the discharged strikers issue would be resolved by sending it to the OLRB. Vale responded by accepting this proposal but rejecting some of the other proposals contained in the USWs offer. At 4:15 a.m. Burkett presented Vale with a counter proposal by the USW which sought one variation in Vales last position (with respect to withdrawal of discipline letters issued during the strike). Vale declined to change its position and Burkett then advised Vale that there was a deal based on its last proposal. 51. Fraser and Myles Sullivan, who at the relevant times was a staff servicing representative with Local 6500 and who attended all of the negotiating sessions, both disputed that the USW ever proposed that the issue of the nine be referred to the Board. Rather, they

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insisted that while through the course of the night Vale repeatedly proposed that the issue of the nine be referred to the Board, the USWs position continued to be that the nine should be referred to arbitration. According to Fraser and Sullivan it was only at 7:30 a.m. on June 22 that the USW agreed to refer the issue to the Board because Vale continued to refuse to consider arbitration. 52. Beresfords will-say continues:
30. Following concluding our deal, and as we were preparing to leave the hotel, [Fraser] and [Burkett] came to see me and said there was a problem. [Fraser] had spoken to Brian Shell about the OLRB matter and [Shell] had told him that the case would be meaningless because we had concluded a deal - how could it possibly be bargaining in bad faith when we had resolved the very issue which they alleged our failure to resolve was per se illegal and the basis for the bargaining in bad faith complaint. 31. We met in [Burketts] room at approximately 8 a.m. and arrived at the following four point understanding: (a) Vale would not raise the fact of the settlement as a bar at the OLRB hearing re the 9 discharged strikers. The settlement will first go to ratification and not await the outcome of the OLRB hearing. The parties would draft up the arrangements regarding the OLRB in the next couple of days. Meanwhile Myles Sullivan and Jennifer Witty would meet and review all language in Sudbury as soon as possible.

(b)

(c)

(d)

32. It should be pointed out that [Fraser] and I had an understanding that one of the discharged strikers would retire and receive the special retirement bonus that we had negotiated, so the 9 were in reality 8.

53. Fraser agreed that Beresfords notes as to the 4 points of agreement were correct. We also note that there was no dispute that the parties did in fact reach an agreement with respect to Landry which permitted him to retire and receive a special retirement bonus available under the terms of the tentative settlement. 54. In Beresfords view, on June 22 the parties had reached an agreement in principle on how to address the issue of the nine, and further they reached this agreement before they reached agreements with respect to some of the other outstanding issues. In cross examination, Beresford agreed, however, that the parties had not unpacked the details of how the issue of the nine was to be dealt with at the Board. There had been, at that point in time, no discussions about the timing of a ratification vote. Beresford stated, however, it was inconceivable to him that that the parties would not be able to reach an agreement on this or the other details of the referral. 55. Fraser denied that agreement in principle to refer the nine to the Board was reached before agreement on some of the other issues 56. Both parties agree that the manner in which the referral of the issue of the nine to the Board was to be accomplished was itself referred to counsel to draft an appropriate agreement. These efforts were initially unsuccessful. The negotiations broke down on June 27, 2010.

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57. On June 29, 2010, Burkett terminated his involvement in the mediation discussions and issued the following public press release:
I regret to announce that after extensive mediation between Vale and United Steelworkers the parties are deadlocked. The Deadlock concerns the adjudicative avenues available to 8 of the 9 employees discharged from their employment during the strike. I have concluded that additional mediation efforts will not resolve this issue. Accordingly, I am terminating the mediation as of today.

58. stating:

That same day, on June 29, 2010, the Ministry of Labour issued a press release

After months of intense negotiations, talks between Vale and the United Steel Workers locals 6200 and 6500 have reached an impasse, mediator Kevin Burkett made public today. The parties have been engaged in collective bargaining for more than 11 months. Through these efforts, the parties were able to resolve all outstanding issues except one regarding a process to review the dismissal of eight employees during the strike. On this issue, it is clear that the parties have reached a deadlock. The Minister of Labour will be contacting the parties immediately, and they will be asked to give an account on their inability to find a solution to this one remaining issue.

59. Also on June 29, 2010, a letter authored by Pollesel was posted on Vales strike related website:
I am writing to provide you with the latest news regarding our efforts to negotiate new collective agreements with USW Locals 6500 and 6200 and end the strikes. We recognize that employees are anxious for information and are anxious to return to normal operations. Until now, both the union and the company have operated under a "communications blackout" imposed by independent mediator Kevin Burkett. As of moments ago, with Mr. Burkett terminating mediation, the blackout has now been lifted. Unfortunately, the latest round of contract talks has failed to produce a tentative agreement - despite us having a deal at hand. We had a deal on all issues early Tuesday morning (June 22), including submitting the matter of the discharged employees to the Ontario Labour Relations Board. Regrettably, in the days that followed, the parties could not agree on how this submission to the OLRB would take place. As far as we're concerned, all other matters remain agreed. At this time, there are no further talks scheduled.

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60. On June 30, 2010, the USWs bargaining committee issued a letter to the union's membership posted on USW Local 6500's website stating the following:
We can now tell you that as of Tuesday, June 22nd, we had successfully negotiated an agreement with Vale. All items were agreed to, including a legal document that both parties were going to draft to send to the Labour Board. Unfortunately, by Friday afternoon, June 25th, Vale had still not submitted their document, and when they finally did respond to us, their document was worded in a way that had very little to do with what we, Local 6500 and Vale, had agreed to on Tuesday, June 22nd.

61. On July 2, 2010, Union representatives and Employer representatives met separately with Ontario's then Minister of Labour, The Honourable Peter Fonseca. 62. On July 3, 2010 the Union and the Employer resumed discussions with the assistance of Ministry of Labour Director of Mediation and Conciliation Services, Reg Pearson. 63. On July 4, 2010 the parties concluded a Letter of Agreement (LOA) which provides as follows:
The parties to this Letter of Agreement (LOA) are Vale Inco Limited; the USW (in full) and its Locals 6500 and 6200. 1. The parties have reached tentative settlements, dated June 22, 2010, settling the terms of their new collective agreements and ending the strikes if they are ratified. The tentative settlements will be the subject of ratification votes at both Local Unions and by the Company on July 7 and 8, 2010. If the tentative settlements are ratified by both Locals and by the Company, (the Settlements) then the parties agree to the following. If the tentative settlements are not ratified by both Locals and by the Company, then this Letter of Agreement (LOA) is of no force or effect. The Unions Application and all filings in connection with that Application (OLRB File No. 3033-09-U) as modified and amended by this LOA shall be heard and determined by the Board commencing as now scheduled on July 9, 12 and 13, 2010. However, only the Unions allegation that the Companys refusal to agree to an arbitration process that could result in the reinstatement of any of the nine strikers discharged during the strike violates section 17 of the Labour Relations Act as alleged by the Union, shall be heard by the Board. The Union shall not proceed with all other allegations. The parties may rely on the terms of the ratified Settlements and on the content of the entire negotiation process in the course of the hearing of the Unions Application as amended by this LOA. Nothing precludes the Union from asserting to the Board that such evidence is not relevant. Neither party will take the position that (1) the fact of the Settlements, or (2) the fact of the ratification of the Settlements, or (3) the fact of the end of the strikes shall be taken into consideration in any way by the Board or precludes the Board in any way from hearing and determining the Application, including making such orders as the Board may consider appropriate in the circumstances. The parties also

2.

3.

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agree that the Board shall not take into consideration (1), (2) or (3) above. 4. The decision of the Board with respect to the Unions amended Application shall not amend the parties Settlements referred to above. This LOA is conditional upon the Boards approval which is to be sought in a hearing teleconference on July 4, 2010 with the panel of the Board seized with this matter. At that time the parties shall file an executed copy of this LOA with the panel. In the event this LOA is not approved by the Board, then this LOA is of no force or effect. In deciding this matter, the parties agree that the Board shall determine whether there has or has not been a violation of the Act, and if the former, that the Board shall issue such remedial order(s) as it considers appropriate. The parties agree that this LOA and any decision of the Board does not restrict any rights that any party would otherwise have with respect to an appeal or judicial review of the decision of the Board, but the parties agree that by this LOA neither has agreed to a stay of implementation of any Order of the Board set forth in any decision of the Board.

5.

6.

7.

64.

On July 5, 2010, the Board approved the LOA.

65. As a result of the negotiations, Vale made substantial gains with respect to all three of its major objectives. 66. While we are precluded by the LOA from taking into consideration these facts, for the purposes of completeness of the narrative, and because the LOA itself was conditional upon ratification of the settlements of the collective agreements, we note that ratification votes were held on July 7 and 8, 2010. The collective agreement was ratified and effective as of July 8, 2010. 67. Before leaving this review of the evidence we would note the following. There is clearly a difference in the evidence of Vale and the USW with respect to whether certain proposals were advanced or positions taken. In some, but not all, instances, it is important to note that the positions or proposals were being conveyed through Burkett as mediator. To the extent that this is the case, it is not possible to resolve these disputes. A statement made through a mediator may be relied upon as evidence of a bona fide belief as to the position of the other party. It cannot, however, be relied upon as evidence that the statement actually was the position or proposal of the other party. There are, however, several instances in which the evidence of Vale and the evidence of USW are directly at odds. For reasons stated below, we do not find it necessary to resolve these disputes. Given this, we do not think it will assist the future relations of the parties to describe that evidence in greater detail than we have, as such descriptions might reflect poorly upon the credibility of one or more witnesses. Positions of the parties The USW 68. The USW argues that the duty to make every reasonable effort to make a collective agreement requires an objective analysis, relying upon the decision of the Supreme Court of

- 16 -

Canada in Royal Oak Mines Inc., [1996] 1 S.C.R. 369. Vales beliefs and desires are, it argues, irrelevant. 69. The USW argues that Vale has established no sound business basis for its position of refusing to agree to arbitration. It notes in this respect that the evidence of Villeneuve was that Vale believed that it would be successful if the cases had proceeded to arbitration. On the other hand it argues that just cause arbitration is standard in the industry. 70. The USW argues that Pollesels evidence establishes that he subscribed to the theory that during a strike, the company and its employees, including striking employees, are in a master-servant relationship, in which employees may be fired at will. It argues this is wrong in law. It cannot be the case, it argues, that an employer which has legally locked out its employees can thereafter discharge those employees and prolong the lock-out by refusing to agree to arbitration. The same result, it argues, must apply if the workers are out on strike. 71. The USW argues that its initial position was that the discharged employees must simply be reinstated as part of any settlement of the collective agreement while the employers position was that it would not agree to the reinstatement of the discharged employees. The USW characterizes this as the parties being at opposite ends of a football field. It argues that when it changed its position to that of referring the discharges to arbitration, it moved to the centre of the field. Vales position, however, remained intractable: it would never agree to arbitration. 72. The USW argues that on June 22, 2010, the only remaining issue in dispute was that of the discharged nine. It argues that this issue remained in dispute until July 4, 2010 when the parties concluded the LOA. Having regard to the LOA concluded on July 4, 2010, the USW argues that for the purposes of this hearing the strike remains ongoing and the issue of the discharged nine remains the only outstanding issue. 73. The USW argues a strike that goes on for almost a year is not a tea party. As this was the first time that replacement workers had been used during a strike at what was formerly Inco, it was foreseeable that emotions would run high and in fact they did. The evidence, it argues, established that there were strikers who engaged in more egregious behaviour than those who were fired. 74. The USW notes that the issue for the Board is not whether Vale had just cause for discharge of each of the nine; it is whether Vale made every reasonable effort to conclude a collective agreement. It argues, therefore, that the evidence led by Vale as to its understanding of the conduct engaged in by the nine is irrelevant. Further, it argues that if Vale had evidence to sustain the discharges, then it was unreasonable for Vale to refuse to proceed to arbitration. Conversely, if Vale did not have such evidence then it would simply underscore the unreasonableness of Vales position. 75. The USW argues that the real objective of Vale in taking the position that it did was to achieve an unstated goal: to embarrass and undermine the union and demonstrate the unions incapacity to protect strikers from overwhelming power. 76. The USW reviews the evidence of Pollesel as to the basis of his decision that Vale would not agree to arbitration. It argues Vales intractability on an issue which it knew was sensitive and would impact on the ratifiability of the collective agreement and which was not related to a business purpose, enables the Board to infer that the reason for the position was to undermine and embarrass the union: to geld it.

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77. The USW argues that the Board has found that it is an unfair labour practice to prefer cross-overs to those who stay on strike, citing Shaw-Almex Industries Limited, [1986] OLRB Rep. Dec. 1800. The USW argues by extension that to demonstrate loyalty to cross-overs by refusing to agree to arbitration of picketers who disapproved of cross-overs cannot be a factor which weighs in an employers mind at all. Therefore, it argues, reliance on such a factor does not constitute making every reasonable effort to make a collective agreement. 78. The USW argues that whether or not there has been a breach of the duty to bargain will almost invariably be a product of inferential reasoning: Municipal Property Assessment Corporation, [2010] OLRB Rep. May/June 425, 2010 CanLII 26713 (ON L.R.B.) at para. 10. 79. The USW relies upon Royal Oak for three propositions. First, maintenance to impasse of an objectively unreasonable position is capable of supporting an inference of a breach of section 17 absent compelling evidence of justification. Second, a breach of section 17 does not necessarily require anti-union animus or intent because the second leg is measured on an objective standard. Third, in determining whether or not a position is objectively unreasonable, regard may be had to industry practice as demonstrated by cases with similar facts and by common knowledge. The USW argues that arbitration of discharged strikers is industry practice having regard to both common knowledge and cases with similar facts, the primary exemplar of which is Royal Oak itself. 80. By way of remedy, the USW requests that the Board direct arbitration of the discharges on a just cause standard. The USW argues that it is important that the arbitrations be conducted and concluded on an expeditious basis. Accordingly, failing an agreement by the parties, it argues that the Board should make extraordinary orders designed to ensure this result. Vale 81. Vale argues that the August decision suggests that there are some proposals which give rise to a rebuttable presumption of a breach of the obligation to make every reasonable effort to make a collective agreement. It argues that this gives rise to three issues: first, what is the legal test for such a proposal; second, does Vales proposal fail to meet that test; third, if it does, has Vale nonetheless rebutted any presumption of a breach of section 17 of the Act. 82. With respect to the first issue, Vale argues that if a proposal is not illegal on its own then it can only become illegal if there are additional facts or circumstances which taint it. In this case, it argues, the USW relies only upon Vales proposal as a basis for its assertion that Vale has breached its duty to make every reasonable effort: the USW in its application did not assert that Vale engaged in any other conduct which could be said to taint Vales actions. Thus any suggestion of taint or impropriety must arise from the nature of the proposal itself. The question then becomes what types of proposals attract such a suggestion or inference. 83. Vale argues that this is not a new issue for the Board. The Board has consistently held that a proposal must be so patently unreasonable that it suggests that the real reason it is being advanced is to prevent the parties from reaching a collective agreement. The Boards jurisprudence has described such proposals in various ways. In Governing Council of the University of Toronto (Royal Conservatory of Music), [1985] OLRB Rep. Nov. 1652 at para. 32 the Board referred to a proposal that was tailor-made for rejection. In Radio Shack, [1979] OLRB Rep. Dec. 1220, 1979 (Radio Shack (1979)) at para. 69 the Board referred to patently unreasonable proposals lacking any semblance of business justification. In Shaw-Almex, the Board stated at para. 53: The Board is principally concerned with the process of collective

- 18 -

bargaining, not the content, except where the content of bargaining patently demonstrates a desire to avoid a collective agreement. In Radio Shack, [1985] OLRB Rep. Dec. 1789 (Radio Shack (1985)) at para 30, the Board referred to terms so unreasonable that, in reality, it wanted no agreement and no union. 84. Vale notes that the reason that the Board has adopted such a high standard is that no other standard would recognize the primacy of collective bargaining to our system of labour relations. The Board has noted that the parties can bargain hard, even ruthlessly; that the process of collective bargaining is one which does not require that an agreement be reached at all; and that the resulting agreement need not conform to any test of fairness. Referring to the USWs argument that the parties started at opposite ends of the field and the USW had moved to the centre of the field while Vales position remained unchanged, Vale argues (and we agree) that the Boards case law has made it quite clear that the duty to bargain does not give rise to an obligation to meet the other party half way. 85. Vale notes that the August decision of the Board set out some of the problems with adopting instead a standard of objective unreasonableness. At para 33: It could have the unintended consequence of diverting the attention of the parties from concluding a collective agreement at the bargaining table to developing a case for prosecution at the Board. At para 34: Further, it can be argued that a determination by the Board as to whether or not a position is objectively reasonable would of necessity require the Board to impose its own normative standards upon the parties, a role which appears to be at odds with free collective bargaining. 86. Vale argues that Royal Oak does not require the Board to abandon its earlier approach.

87. With respect to its second issue, Vale argues, therefore, that the test against which its bargaining position is to be assessed is not whether it is objectively unreasonable, but rather whether it is patently unreasonable. It notes that the Board has consistently held that an employers refusal to agree to arbitration is not inconsistent with its duty to bargain obligations. It cites the cases reviewed at para. 23 of the August decision. It also refers to the legislative history referenced at para. 28 of the August decision. It argues that the result is the same even if the applicable test is objective unreasonableness. It argues that it cannot be unreasonable to take a position which the Board has said is lawful unless tainted by illegal motives. 88. In the further alternative, turning to its third issue, Vale argues that even if the position which it has taken is such as to give rise to an inference that it has breached its duty to make every reasonable effort to conclude a collective agreement, on the evidence it has rebutted that presumption. Vale argues that the evidence establishes four major points: a. b. Vale had valid reasons for taking the position which it did; Vale had good reason to believe that a collective agreement was possible without agreeing to arbitration for the discharged employees; Vale made several attempts to find a solution to the dispute with respect to the discharged employees; and A solution with respect to the discharged employees was found while other issues were outstanding: that is, the issue of the discharged employees was not the last issue in dispute.

c.

d.

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89.

In the result Vale argues the application should be dismissed.

90. In the event that the Board finds a breach of the Act, Vale states that it does not disagree that the logical remedy in these circumstances is to direct arbitration of the discharged employees, as requested by the USW. It argues, however, that there is no need to go beyond that and make any of the extraordinary orders sought by the USW. It notes that the parties have a collective agreement in place with a list of arbitrators and that the parties have a long history of managing their own arbitration process without the imposition of arbitrary time lines or continued supervision by the Board. Analysis and Determination 91. Some of the arguments of the USW suggest that it is illegal per se for an employer to refuse to agree to arbitration with respect to discharged striking employees. For the reasons already stated at length in the August decision, we disagree. Nonetheless, and notwithstanding the careful and measured arguments of counsel for Vale, on the evidence we conclude that Vale has breached the Act. 92. It is convenient to reproduce again section 17 of the Act:
The parties shall meet within 15 days from the giving of the notice or within such further period as the parties agree upon and they shall bargain in good faith and make every reasonable effort to make a collective agreement.

93. The section as a whole has sometimes been referred to in the jurisprudence as the duty to bargain in good faith. This is potentially confusing in a case, such as this, when only the second leg of section 17 is relied upon. When referring to section 17 as a whole, we will refer to the duty to bargain. When referring to the first leg, we will refer to the duty to bargain in good faith. When referring to the second leg, we will refer to the duty to make every reasonable effort to conclude a collective agreement. 94. As noted, Vale argues that only a patently unreasonable position gives rise to a rebuttable presumption of a breach of the duty to make every reasonable effort to make a collective agreement. We disagree. In most cases the statement that a position is patently unreasonable is a conclusion reached after consideration not only of the position but the circumstances in which it is taken and held to impasse. A position maintained to impasse on a matter which, viewed objectively, a party knows or ought to know is of fundamental significance to the other party is one which attracts the scrutiny of the Board, not its automatic censure. 95. The significance of an issue to the other party is a factor which a party, acting reasonably, will include in assessing its own position on that issue. A contrary position with respect to an issue of fundamental significance may be maintained only if the party maintaining that position has compelling grounds for doing so. The obligation to make every reasonable effort to make a collective agreement means, at least for issues of this sort, that those grounds must be more than mere beliefs: they must be capable of rational discussion; they must be based on an honest assessment of the negotiations and what would be reasonably required to make a collective agreement having regard to the significance of the issue. If not, depending on the overall circumstances of the case, the Board may conclude that the party has adopted and is maintaining a patently unreasonable position and is not making every reasonable effort to make a collective agreement.

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96.

This is consistent with the case law.

97. In Radio Shack (1979), at paragraph 69 the Board enunciated the general principles relied upon by Vale in its argument before us. In that statement of principles, the Board referred to the need to assess the totality of a collective bargaining relationship. The Board then made the statement on which Vale relies in this case:
[P]atently unreasonable contract proposals lacking any semblance of business justification may suggest an employer's desire to embarrass the union and encourage its abandonment by the employees.

98. Radio Shack (1979) was an unfair labour practice complaint arising from the negotiations of a first collective agreement. The employers fierce and intransigent opposition to the trade union had given rise to a number of prior findings that it had breached the Act. This history effectively gave rise to a presumption that the employer in adopting some of the positions which it took was in breach of its duty to bargain. We in no way suggest that such a presumption arises with respect to the conduct of Vale in this case. Nonetheless, Radio Shack (1979) is instructive as to the application of the general principle upon which Vale relies. 99. The major issue upon which the parties were at an impasse in Radio Shack (1979) was a union security clause. The union sought mandatory union dues. The employer insisted upon a voluntary revocable check-off. At the time there was no equivalent to section 47 of the current Act, which provides that a mandatory dues provision shall be included in a collective agreement upon the request of the union. Rather, the then section 36a of the Act provided that a union was entitled to a voluntary revocable check-off clause and that was precisely what the employer was prepared to offer. 100. The Board ultimately found that Radio Shack had breached the duty to bargain. In doing so, it made a number of comments that provide some guidance to the case at hand. First, in view of section 36a of the Act, the Board agreed that the employers insistence upon a voluntary revocable check-off clause could not in and of itself constitute a violation of the duty to bargain. However, the Board stated (at para. 86):
It is simply wrong to conclude that offering what the statute requires as a bare minimum in the area of union security cannot be held to constitute bargaining in bad faith. Standing alone this may be the case. But when considered in the light of other employer actions, it can be one of the most coercive elements of a scheme to discourage and undermine trade union support.

Second, the Board commented on how the issue of union security was one of particular sensitivity and importance to trade unions, citing section 36a as legislative recognition of that fact (see para. 87). Third, the Board noted that while the chief negotiator for Radio Shack had testified that it was prepared to be flexible on this issue, he did not have the final say in developing Radio Shacks negotiating position, another individual did. Given the failure of Radio Shack to call that individual as a witness, the Board drew the inference that Radio Shack had not in fact departed from its previous adamantly anti-union position. (See para. 84.) 101. As applied to this case, Radio Shack (1979) provides support for the following propositions. First, the fact that the Act does not require an employer to agree to arbitration with respect to discharged strikers does not mean that refusing to agree to arbitration cannot constitute

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a breach of the duty to bargain: one must consider the circumstances of the case. Second, the fact that arbitration with respect to discharged strikers is an issue of particular sensitivity and importance to trade unions is one of which the Board is entitled both to take notice and to factor into its decision making. Third, the evidence of Vales chief negotiator, Beresford, that his assessment was that an agreement could be reached without agreeing to arbitration and that he had in fact tabled a number of suggestions in this respect is of far less significance than the evidence of Pollesel, who made the decision on behalf of Vale, that Vales position was firm and inflexible, that there was nothing which the USW could have proposed which would have resulted in a change in Vales position and which contained no suggestion that Vales position was in any way informed by what was going on at the bargaining table. 102. Vale notes that in Shaw-Almex the Board stated at para. 53:
The Board is principally concerned with the process of collective bargaining, not the content, except where the content of bargaining patently demonstrates a desire to avoid a collective agreement.

In making this statement, the Board cited Radio Shack (1985). 103. Radio Shack (1985), as is apparent from the portion excerpted in Shaw-Almex, is a case about hard bargaining. The evidence before the Board established that the employers refusal to agree to arbitrate disciplinary action imposed during the strike arose from its assessment, which on the evidence was shared by the union, that it had won the strike. As stated by the Board at paragraph 30:
30. As we have already indicated, much of the law has already been canvassed in previous proceedings involving these same parties and it is unnecessary to duplicate that analysis here. However, certain statements drawn from earlier cases bear repeating: (1) ... [section 15 [now section 17]] of the Labour Relations Act is not intended to redress any imbalance of bargaining power that may exist between the parties. A party whose bargaining strength allows it to force the acceptance of hard terms at the bargaining table does not thereby bargain in bad faith. The very word bargain presupposes that the parties will seek to maximize their own best interests. Hard bargaining, albeit ruthless, is not bad faith bargaining. (from Pine Ridge District Health Unit, [1977] OLRB Rep. Feb. 65.) There is no requirement that a company must make concessions or agree to a particular agenda of discussions. The parties met often and bargained hard. Because the union might have to accept an agreement tailored to the company's measurements, to use a modified version of Mr. Peacock's own chosen words, is no reason to conclude that the company was bargaining in bad faith.... There is no evidence to suggest that the company was unprepared to sign an agreement; but of course it wanted an agreement on its own terms. Collective bargaining is redolent of self-interest and without evidence to suggest that the company's terms were so unreasonable as to suggest that, in reality, it wanted no agreement and no trade

(2)

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union, the Board is unprepared to grant the application (from C. C.H. Canadian Limited, [1974] OLRB Rep. 375). (3) Accordingly, both parties are entitled to bargain hard for the agreement that they believe to be acceptable. This is so even if one of the parties has an overwhelming strength at the bargaining table and is able to achieve most or all of its needs. The exercise of such raw bargaining power in good faith does not offend the bargaining duty imposed by this Act (from Radio Shack, [1979] OLRB Rep. Dec. 1220). The content of the agreement is for the parties to determine in accordance with their own perceived needs and relative bargaining strength. The legislation enables employees to combine together to bargain collectively and compels the employer to recognize their bargaining agent. It further provides a framework within which there can be an exploration of the parties' differences and a sincere effort to reach some accommodation but the statute does not require any particular concessions, nor does it stipulate the content of a collective agreement or even that a collective agreement always must be the necessary outcome of the parties' bargaining.... Rational discussion is an important aspect of the bargaining process. So is power. Persuasion is an effective tactic to gain one's bargaining objectives. So is economic pressure.... A party whose bargaining strength allows it to virtually dictate the terms of the agreement does not thereby bargain in bad faith, and that proposition is applicable whether it is the union or the employer which 'has the upperhand" (from Canada Trustco Mortgage Company Limited, [1984] OLRB Rep. Oct. 1356).

(4)

These passages merely underline a basic characteristic of our collective bargaining system: bargaining power is the ultimate arbiter of the clash between management's drive for productive efficiency, and the workers' demand for job security and a bigger share of the "economic pie". Parties strike their own bargain, based upon a realistic appraisal of the value of their objectives in relation to their ability to obtain them. Unless the parties' bargaining power is relatively equal (a situation not compelled by statute), the agreement will inevitably reflect the wishes of the stronger party.

104. While Vale placed emphasis on the second of these points, we think that the summary comment at the end is most informative as to the basis for the Boards decision in Radio Shack (1985), and the distinction with the case at hand. In Radio Shack (1985), the employers position was based upon a realistic appraisal of the value of its objectives in relation to its ability to obtain them. There is no evidence that Pollesel engaged in a similar assessment in this case. 105. Vale cites Formula Plastics Inc. for the excerpt of paragraphs 30 to 32 of Governing Council of the University of Toronto (Royal Conservatory of Music), contained therein. It relies on the reference to a proposal that is tailor made for rejection. However, a careful reading of Governing Council of the University of Toronto (Royal Conservatory of Music) shows that the Board there was discussing proposals the mere tabling of which would give rise to the inference that an employer is seeking to undermine the union as bargaining agent.

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106. Royal Oak is an application of these principles. In Royal Oak, the employer refused to agree to binding arbitration for discharged strikers. While the Supreme Court of Canada did refer to this position as objectively unreasonable, it was not this assessment alone which caused the Court to conclude that the decision of the Canada Labour Relations Board (CLRB) finding a breach of the duty to bargain should not be quashed on judicial review. Rather, the Court considered the subject matter of the proposal itself. Cory J., writing for the majority, noted (at para. 45): The grounds on which an employer may dismiss an employee is of fundamental importance for any association of employees. At paragraph 44 he described a just cause for dismissal clause as a basic or standard term. At paragraph 43 he indicated that it would be common knowledge that the absence of such a clause would be unacceptable to any union. At paragraph 42, he referred to comparable standards and practices within the particular industry and proposals which, viewed objectively, are so far from the accepted norms of the industry that they must be unreasonable. 107. Further, in upholding the decision of the CLRB that there was a breach of the duty to bargain, Cory J.s reasons refer not simply to the fact that the employer had adopted such a position, but to the CLRBs finding that there had been an outright refusal to discuss the issue [which] completely blocked the bargaining process (see para. 40). In describing the applicable test more generally, Cory J. referred to taking a rigid stance (para. 44); a refusal to discuss and a refusal to negotiate (see para. 45); and a bargaining position that was inflexible and intransigent to the point of endangering the very existence of collective bargaining and surface bargaining (see para. 46). 108. Nor is this conclusion inconsistent with the decisions referred to in paragraph 23 of the August decision. At paragraph 23 of the August decision, we wrote:
A finding of per se illegality must be grounded in the provisions of the Act or some other law. The Board has repeatedly found that nothing in the Act requires an employer to agree to arbitration with respect to discharged striking employees: John T. Hepburn Limited, [1985] OLRB Rep. Jan. 75 at paragraph 16; Radio Shack, [1985] OLRB Rep. Jun. 901 at paragraph 32; International Wallcoverings, [1983] OLRB Rep. Aug. 1316 at paragraph 37. (See also: Shaw-Almex (employers position that striking employees would only be recalled to fill vacancies in the workforce of replacement workers was not per se illegal); Formula Plastics (employers insistence on a clause permitting it to discharge without just cause, provided that severance pay was paid, was not per se illegal, notwithstanding the fact that the Board recognized that a just cause for discharge clause is the foundation of most negotiated collective agreements); and Mini-Skool (employers position that striking employees would not have the right to displace non-striking employees not per se illegal).)

However, in each of those cases the Boards determination was that refusing to agree to the provision in question was not illegal per se. The Board did not find that refusing to agree to the provision could not form the basis of a breach of the duty to bargain. 109. In International Wallcoverings the Board wrote extensively on the interplay of what are now sections 70 and 72 of the Act. Prior to doing so, the Board briefly addressed the issue of whether a refusal by an employer to agree to arbitration of discharged strikers was a breach of the duty to bargain (at para. 22, not para. 37 as stated in the August decision). The Boards reasons, in their entirety, consisted of the following:

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We do not accept that the respondents refusal to arbitrate the terminations constituted a failure to recognize the complainant or that section 15 [now section 17] was breached in this regard.

The decision, therefore, provides little guidance on the proper interpretation of the duty to bargain. 110. In John T. Hepburn Limited, there was no basis on which it could be said that the parties had bargained the issue of arbitration with respect to discharged strikers to an impasse. Indeed they had concluded a collective agreement: see para. 2. Rather, the unions argument that there was a violation of the duty to bargain was dependent on a finding that the firing of the individual in question was in response to his union activities. The Board did not make that finding: see para 17. 111. In Radio Shack, [1985] OLRB Rep. Jun. 901, the Board stated at para 32:
One of the issues on which "hard bargaining" may occur is the arbitrability of discharges and suspensions imposed during a strike for picket-line misconduct. The Act does not impose any legal obligation to arbitrate disciplinary action imposed during a strike. However, it is open to a union to attempt to use its bargaining power to obtain a recision [sic] of such disciplinary action or an agreement to refer it to arbitration. Similarly, it is open to an employer to attempt to use its bargaining power to resist reinstatement or arbitration, provided such resistance is not motivated by anti-union animus or a desire to avoid entering into a collective agreement.

We note, first, that the Board cited International Wallcoverings and John T. Hepburn as authority for this statement. Those decisions have been discussed above. Second, this statement recognizes that there are circumstances in which refusing to agree to arbitrate disciplinary action during a strike may constitute a breach of the duty to bargain. However, third, and most importantly, the statement is obiter dicta. The case arose from the purported acceptance by the union of an offer made by the employer prior to the commencement of the strike. At the time that offer was made there were, of course, no incidents of strike related misconduct or discipline arising therefrom. At the time that the union purported to accept the offer, in the sixth month of the strike, it was unaware of the employers decision to discharge five employees and suspend two others for strike related misconduct. Although the employer indicated in its evidence before the Board that it intended to take a hard position with respect to the discharges, it also indicated that it could have been influenced by discussion: see para 22. In fact, no discussions took place. Rather negotiations broke off almost immediately and the union brought the application in which it asserted that the employers refusal to agree to the terms contained in its pre-strike offer constituted a breach of the Act. The case, therefore, provides no guidance on the circumstances in which refusing to agree to arbitrate disciplinary action during a strike may constitute a breach of the duty to bargain. 112. In Shaw-Almex, the Board held the employers position that striking employees would not be recalled to fill vacancies in the workforce of replacement workers was not per se illegal: see para. 56. However, on the basis of an improper motive approach, the Board found that there was in fact a breach of the duty to bargain: see para. 69. Of particular note was that the Boards finding was based in part on the fact that the employer rigidly adhered to its position on the basis of a moral obligation which it felt to the replacement workers: see para. 64. So, in this case, Pollesels decision is based in part on what he believed to be right and fair to those who had crossed the line to continue to work.

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113. In Formula Plastics, [1986] OLRB Rep. Jul. 954, the Board held that the employers insistence on a clause permitting it to discharge without just cause, provided that severance pay was paid, was not per se illegal, notwithstanding the fact that the Board recognized that a just cause for discharge clause is the foundation of most negotiated collective agreements. The Board made it clear, however, that the result could have been different had there been evidence that the process of collective bargaining [was] being hampered: see para. 12. 114. In Mini-Skool Ltd., [1983] OLRB Rep. Sept. 1514, the entire decision appears to be addressed to whether or not the employers position that striking employees would not have the right to displace non-striking employees was per se contrary to inter alia what is now section 17 of the Act. There is no other analysis of section 17 and its application. 115. We return now to the facts of this case.

116. As discussed in the August decision, the fact that Vale tabled the position that it would refuse to agree to arbitrate disciplinary action imposed during the strike is not per se illegal. Nonetheless, it is an issue of particular importance and sensitivity to trade unions, indeed one described by the Supreme Court of Canada as being of fundamental importance. Absent consensual settlements with respect to employees discharged during a strike (as the parties in this case reached with respect to Landry), referral to arbitration is a common, if not standard means of resolving such disputes. Viewed objectively, Vale knew or ought to have known this. Whether Vales maintenance of this position to impasse was patently unreasonable requires consideration of the circumstances in which it took its position and its grounds for doing so. 117. As noted, Vale argues that the evidence establishes four major points, which it states rebut any inference that it was failing to make every reasonable effort to make a collective agreement: a. b. Vale had valid reasons for taking the position which it did; Vale had good reason to believe that a collective agreement was possible without agreeing to arbitration for the discharged employees; Vale made several attempts to find a solution to the dispute with respect to the discharged employees; and A solution with respect to the discharged employees was found while other issues were outstanding: that is, the issue of the discharged employees was not the last issue in dispute.

c.

d.

118. In our view, the LOA precludes Vale from advancing the second and fourth of these arguments for the following reasons. 119. By virtue of the LOA, the issue before the Board is whether the Unions allegation that the Companys refusal to agree to an arbitration process that could result in the reinstatement of any of the nine strikers discharged during the strike violates section 17 of the Labour Relations Act as alleged by the Union. 120. In determining this issue, the LOA provides that Vale may rely on the terms of the ratified Settlements and on the content of the entire negotiation process. However, the LOA also

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provides that neither party will take the position that the Board shall consider, and in fact the Board is not to consider, (1) the fact of the Settlements, or (2) the fact of the ratification of the Settlements, or (3) the fact of the end of the strikes. 121. Vale argues the evidence establishes that the parties had reached a solution with respect to the nine in that they had agreed to refer the USWs allegation to the Board before they had reached an agreement on some of the other issues. The USW disagrees, arguing that the evidence establishes that the agreement to refer the issue of the nine to the Board was reached after all other issues were agreed upon. 122. We do not find it necessary to resolve this dispute. The agreement to refer to the Board the USWs allegation that Vales position constitutes a breach of section 17 did not constitute a resolution of the issue of the nine through collective bargaining any more than the USW walking away from the bargaining table and unilaterally pursuing its allegation would have been. Both parties continued to adhere to their respective positions: the USW sought arbitration with respect to the discharges; Vale resolutely adhered to its position that it would not under any circumstances agree. The issue which is before the Board, pursuant to the parties agreement, is USWs allegation that through maintenance of its position Vale has breached its duty to make every reasonable effort to make a collective agreement. The status of the nine themselves, or the justness of Vales decision to terminate them, is not before the Board. That remains in dispute. 123. Vale argues that it was the one which suggested this solution to the issue. It concedes the solution left the issue unresolved, but notes (we think correctly) that this is what made it attractive to the parties. It argues, however, that it in fact came up with a solution which allowed the parties to reach a collective agreement and that this rebuts any inference that it was failing to make every reasonable effort to conclude a collective agreement. 124. The difficulty with this argument is that it is also precluded by the LOA. Given the terms of the LOA, for the purposes of this application there is no subsisting collective agreement between Vale and Local 6500. Rather, there is an ongoing strike. Further, whatever else the negotiation process shows, it is clear that as of July 5, 2010, when the LOA was approved by the Board, the only outstanding issue between the parties related to the nine discharged strikers. That issue remains in dispute. Thus, we do not agree with Vales fourth argument, that the issue of the nine discharged strikers is not the last issue in dispute. 125. Vale argues the evidence of the negotiation process establishes it had good reason to believe that a collective agreement was possible without agreeing to arbitration for the discharged employees. The USW denies this to be the case. 126. Whether or not Vale had good reason to believe at some point in the negotiations that a collective agreement was possible without agreeing to arbitration for the discharged employees, as of July 5, 2010, if not June 22, 2010, it was clear that this was not the case. All other issues had been resolved by that time and yet, according to the LOA, no collective agreement had been achieved. The parties were at an impasse. This continues to be the case to date. The sole issue which prevents the parties from concluding a collective agreement is their ongoing dispute about whether the discharges of the nine striking employees should be referred to arbitration. 127. Vales third argument is that the evidence establishes that it made several attempts to find a solution to the dispute by proposing alternatives to arbitration. However, a precondition of all solutions offered by Vale was that the discharged employees would not return to work. Thus,

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this argument is really a sub-category of its first argument: that the evidence establishes that it had, in its words, valid reasons for taking the position which it took. 128. Vale argues that it had ample reason to believe that the events of harassment, intimidation and violence were affecting others. It established a system whereby evidence of misconduct was reviewed. It acted systematically and carefully. While no system is perfect, it believed that it had discharged the worst offenders. The conclusions reached by Pollesel, it argues, were reasonable based on the information which he had. The position of refusing to agree to the possibility of reinstatement was rationally connected to its business interests. It was not a fanciful conclusion designed to mask some other agenda. 129. The evidence before us supports these propositions. On the basis of the material before us, we would have no hesitation in concluding that Vale fulfilled its duty to bargain in good faith. In this respect we note that while the USW expressly stated at the outset of the case that it was not alleging that Vale had failed to fulfill its duty to bargain in good faith, a great deal of hearing time was consumed by cross examination with no apparent purpose other than challenging the bona fides of Vales position. If the allegation were properly before us, we would find that it is not made out. In this sense Vales reasons were valid. 130. The issue, however, is whether Vales reasons were valid in the sense that they establish that Vale made every reasonable effort to make a collective agreement. 131. We note first that the basis for Vales position was completely divorced from events at the bargaining table. As chief negotiator, Beresfords assessment of the negotiations caused him to believe the issue of the nine would not be a barrier and could be settled. Leaving aside the question of what those statements mean, Beresford did not make the decision that Vale would not agree to arbitration: Pollesel did and instructed Beresford accordingly. Pollesels reasons for taking or continuing to adhere to the position of refusing to agree to arbitration did not include any assessment that a collective agreement could be achieved without agreeing to a process which might result in the reinstatement of the nine (nor, for that matter, was there any suggestion in the evidence that Pollesel was even aware of any such assessment). Thus, unlike Radio Shack, (1985), Vales position was not based on an appraisal of what was occurring during negotiations. 132. What then of the reasons offered by Pollesel for taking the position (many of which we note were also presented to the USW by Beresford during negotiations)? 133. The first reason offered was that many employees had expressed a view that they did not wish to have discharged employees returned to work. Undoubtedly there were such employees. Yet Pollesel testified that even if he had heard the opposite view from others he would not have agreed. This position is not conducive to rational discussion. 134. The second was that Pollesel did not believe that it was right to have a circumstance where the persons who engaged in the most severe misconduct during the strike return to work alongside employees that they had victimized during the strike. However, as became apparent from Pollesels cross-examination discussed further below, in fact what he believed was that it was not right to have strikers who had been discharged returned to the workplace. There was no margin to discuss whether the discharged strikers had in fact engaged in the conduct alleged, whether the conduct constituted misconduct or whether if so that misconduct was so severe that it would be inappropriate for a particular striker to return to the workplace. Vales decisions on these issues were conclusive for Pollesels purposes. These critical underlying assumptions were

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not open for rational discussion. Indeed, neither Beresford nor Pollesel had actual knowledge of the specifics of the particular cases. 135. The third reason offered by Pollesel was that Vale had no legal obligation to extend just cause arbitration to discharged employees and he did not consider it appropriate to extend the right to just cause arbitration to these dismissed employees when we would not extend such rights to any other dismissed employee who was not covered by an operating collective agreement. As noted above in the discussion of Radio Shack (1979), the fact that an employer is not legally required to agree to just cause arbitration for discharged strikers is not in itself sufficient basis to refuse to agree to such a provision, given the significance of this issue to trade unions. The fact that Vale would not agree to extend such rights to any other dismissed employee not covered by a collective agreement adds little. The obligation is to make every reasonable effort to conclude a collective agreement with a trade union, for which the issue is one of fundamental significance; not to agree to arbitration for employees not covered by a collective agreement, for whom it is not. 136. The fourth reason offered by Pollesel was that the USW had published to striking employees that they would not have access to just cause arbitration if they returned to work during the strike. He believed that it would be inconsistent to extend greater protection to persons who did not return to work than the union itself said it would extend to employees who returned to work. This argument amounts to equality with a vengeance. It is not so much a point for rational discussion as it is a taunt. 137. The fifth reason offered by Pollesel was:
I am aware that about half of the CBAs reached between Local 6500 and the former INCO involved labour disputes. Our new reality is that in future labour disputes, we will, very likely operate. I was concerned that any process which permitted persons to return to work after having been dismissed for misconduct during the strike would have a negative effect on our ability to deter bad behaviour during any future labour dispute.

138. This reason is particularly troubling. The Act permits an employer to operate during a labour dispute. Further, when determining whether to discipline an employee for misconduct, including misconduct by an employee on a strike, the deterrent effect of such discipline on other employees is an appropriate consideration. The difficulty is Vale was signaling an intransigent position with respect to future conduct in relation to which, given its refusal to agree to arbitration, it would be both accuser and judge. An employee who did not engage in the conduct alleged, or engaged in the conduct but would not reasonably have thought it would warrant dismissal, was being told they faced the prospect of non-negotiable job loss simply for participating in a lawful picket line. The fifth reason, then, comes perilously close to an attempt not to deter future picket line misconduct but future picket lines themselves. 139. Even more troubling than the reasons advanced by Pollesel in his evidence in chief for taking the position was evidence elicited in his cross examination. Pollesel agreed that the position which he, on behalf of Vale, had adopted was a firm, inflexible position. Pollesel also testified the position that Vale would not allow for any potential for reinstatement of discharged strikers had been in his mind from the beginning of the strike. He knew that this was going to become an issue in bargaining. He expected that the parties would arrive at a negotiated solution with respect to this issue, but potential reinstatement was not a solution to which he would agree. The position would have been the same if instead of firing nine employees Vale had fired eleven,

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sixteen, twenty-five or one hundred and fifty. When asked if it would have remained the same if Vale had fired five hundred employees, he said he did not know what the result would be; that he would need a lot of time to think about it. In his view, if Vale fired someone during the strike, they were not coming back to work. 140. Further, as already noted, Pollesels position was not based on an assessment of the particular facts of any of the discharges nor was it based on an assessment of whether or not it would be possible to arrive at an agreement if Vale refused to agree to arbitration. 141. Vales approach to negotiating the issue of the discharged strikers may be usefully contrasted to its approach to negotiations with respect to its three principal objectives. There is no dispute that from the outset of negotiations, and indeed before formal negotiations began, Vale was making presentations to the USW with respect to the changing economic circumstances which it asserted it was facing and their relationship to the three principal objectives it sought to achieve during negotiations. Whether Vales assessments were correct or not, they provided a basis upon which the parties could discuss these issues. As a result of these discussions and its bargaining strength Vale made substantial gains with respect to all of these issues. 142. By contrast, Vales position with respect to the discharged nine was a result of Pollesels decision. Overall, whether due to his inexperience with collective bargaining or otherwise, we conclude that Pollesel adopted an intransigent position on an issue of fundamental significance to trade unions. That decision was ultimately based on little more than belief and maintained without regard to the negotiations and what would reasonably have been required to make a collective agreement (which we emphasize is not the same as an obligation to make a collective agreement on the terms preferred by the other party). His decision was not one which was open for rational discussion. In particular, as Beresford conceded, once Vale made public its position that it was not going to agree to arbitration, it was not going to change its position. In so finding, we are not in any way impugning the conduct of Beresford as its chief negotiator at the bargaining table. He had no authority to change Vales position. 143. In the result, having regard to the circumstances and Vales position, we conclude that Vales position was patently unreasonable. In maintaining that position to impasse Vale was not making every reasonable effort to make a collective agreement. Accordingly, it breached section 17 of the Act. Remedy 144. As noted, the USW requests that the Board direct arbitration of the discharges on a just cause standard, and Vale agrees that in the event that we find a breach this is the logical remedy. Given the agreement of the parties, we direct arbitration with respect to whether or not Vale had just cause to discharge Breault, Courchesne, Cowie, Labelle, French, Patterson, Vienot and Miller. (We note again that the parties had reached an agreement pursuant to which Landry has retired.) We see no basis for the extraordinary orders sought by the USW with respect to the conduct of those arbitrations.

Ian Anderson for the Board