High Court Overturns Labour Board Decision

EDMONTON-In an important and strongly-worded decision released yesterday, the Alberta Court of Appeal overturned a controversial Labour Relations Board (LRB) decision which allowed Finning International in 2005 to rid itself of a union collective agreement by establishing a new company for part of its operations. At the time the decision was considered by many to fly in the face of available evidence. (Please backgrounder below on issue, including a timeline.)

"This is an important decision by the three Justices of the Court of Appeal," says AFL President Gil McGowan. "It reverses a terrible decision by the Alberta Labour Relations Board (LRB). Finning had created a new blueprint for union busting, and the LRB was letting them get away with it. Thankfully the Court of Appeal saw through it and has stopped it."

The unanimous decision pertains to a dispute in 2005, in which Finning International created a new entity, OEM Remanufacturing, to take over Finning's component rebuilding operations. In the transfer OEM evaded the existing contract with the International Association of Machinists (IAM) and instead signed a contract with the Christian Labour Association of Canada (CLAC).

An original LRB decision ruled OEM was a successor to Finning and that the two companies were, in fact, a common employer. Normally this would have meant that IAM would have maintained its status as official bargaining agent and the workers would have been protected by the existing IAM collective agreement with Finning.

Two months later, adopting a highly unusual procedure, the Labour Relations Board reconsidered the decision at the request of the employer. In that reconsideration, a five-person "superpanel" consisting of the LRB Chair Mark Asbell, two Vice-Chairs and two Board members overturned the original ruling. IAM then appealed to the courts.

"It was a thinly-veiled attempt to bust our union, and we were determined to fight it," says IAM Lodge 99 President Bob MacKinnon. "This is an important day for us, the Machinists, and for all unionized workers. It is also a great day for the democratic process: the Court has recognized that where workers have voted to be represented by a union, that decision must be respected by employers in Alberta."

In its decision, the Appeal Court criticized the LRB superpanel for substituting its opinion for the factual findings of the original panel. The Appeal Court also found that the panel had deviated from well-established successorship principles clearly evident in the Boards own previous rulings and in court decisions. It ruled the decision was "patently unreasonable" and ordered the original decision re-instated. "Patently unreasonable" is a legal term indicating that the decision was "clearly irrational" or "bordering on the absurd."

"Quite frankly, the LRB messed up on this," says McGowan. "It speaks to ongoing problems at the LRB and will deepen the growing mistrust unions have with the Board's lack of visible objectivity. It is gratifying that the Court of Appeals recognized the superpanel's rush-to-judgment for what it was."

The decision leaves the IAM free to pursue its attempt to ensure that the successorship decision leads to full remedies for its wronged members.

"It is a shame that workers need to rely on judges to uphold our democratic rights," notes McGowan. "That is supposed to be the job of the Labour Relations Board."


For more information call:

Gil McGowan, AFL President   @  780.218-9888 (cell)
Bob McKinnon, AIM Lodge 99 President  @  780.218-9888 (cell)


High Court Overturns Labour Board Decision

Blueprint for Union Busting Now Off the Table: The Significance of the Decision

  • It is rare for LRB decisions to be overturned by the courts. The bar for doing so is very high.
  • The case was a controversial one. It related to a new technique for union busting, and included the involvement of CLAC, a bargaining agent mistrusted by mainstream unions.
  • The decision by the Appeal Court raises serious questions about the process used by the Reconsideration Panel.
  • Unions have been growing increasingly frustrated at the LRB for its lack of transparent objectivity.
  • The Alberta Court of Appeal does not have a reputation for progressive decisions.

Timeline of Finning/OEM Case


  • Finning operates its own Component Rebuild Centre (CRC), employing 160 workers represented by IAM Local 99. An internal study by Finning concludes it needs a new CRC.

January 2004

  • Company sets up OEM Remanufacturing using a complicated legal structure which, according the Court of Appeal "ensured that Finning would not be publicly disclosed as the registered shareholder". Finning Canada, wholly owned by Finning International, in turn wholly owns OEM. Finning finances the building of the new plant at the cost of $87 million. Finning signs an agreement to send all CRC work to OEM.

June 2004

  • Finning informs workers it is closing existing plant as of March 2005. At the same time, Finning announces publicly that it will be contracting out its work to OEM.

March 2005

  • OEM takes over CRC operations. IAM files for successor rights under Section 46 of the Labour Relations Code.

April 7, 2005

  • Original LRB decision rules OEM and Finning are "common employers," but withholds traditional remedy of automatic certification, ordering a "run-off" vote instead. Union intends to appeal need for run-off vote.

June 7, 2005

  • Reconsideration Panel overturns the original ALRB decision, arguing Finning and OEM are not common employers.

April 25, 2006

  • Court of Queen's Bench upholds Reconsideration Panel

Oct. 17, 2007

  • Alberta Court of Appeal overturns Reconsideration Panel, calling it "patently unreasonable" and re-instating the original decision.

Why are Finning & OEM "Common Employers"

  • OEM did not demonstrate sufficient legal and operational independence from Finning International.
  • Finning Canada, a wholly-owned division of Finning International, paid the total costs (approximately $87 million) for the construction of the new OEM plant
  • Finning Canada financed all of the money for the creation of OEM through the purchase of two existing independent firms
  • Finning International controls 100% of the Class A (controlling) shares in OEM's parent company
  • All CRC work was subsequently transferred to OEM

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