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Arbitrator Awards Employer $500,000 Damages For Union Defamation

June 30, 2022

Labour Relations & Union Advice

Arbitrator Awards Employer $500,000 Damages For Union Defamation

A labour arbitrator appointed to hear an employer grievance for damages in defamation against its union, Unite Here Local 40, has awarded the employer $500,000 but would not award costs.  Yes you read that right—a labour arbitrator operating under a collective agreement and not a court has made that award.  Not only is the amount of the award stunning and potentially crippling to Local 40 it shows just how far the courts, applying the Weber decision have refused to take jurisdiction on any matter that is even remotely connected to the collective agreement. In an earlier award the Arbitrator decided he had jurisdiction because “if the statements were defamatory they would constitute bad faith in the administration, application and performance of the collective agreement which violated the principles laid down in Bhasin v Hrynew, 2014 SCC 71, [2014] 3 SCR 494, and the dispute was therefore arbitrable.” [Page 2]

The full decision is available here: 2022CanLII 51879 (BC LA) | Civeo Corporation v Unite Here, Local 40 | CanLII

Civeo Corporation is an international company that provides housing to construction projects including the Kitimat Sitka Lodge in Kitimat.  It had a collective agreement applicable to employees at the Kitimat LNG project.  The collective agreement in question ran from 2018 and was in effect in 2021 when the defamatory statements were made.  Local 40 had a dispute with Civeo as it wanted it to open up the collective agreement and increase wages and provide better hiring practices.  To support its agenda it tried to appeal to the public including the Indigenous public by posting the following on its web site:

Civeo’s broken promises to First Nations people:

·      Low wages

·      Decrease in hiring of Indigenous workers over the past 2 years

This means that Civeo has not showed commitment to improving the living standards of Indigenous workers and their families.

Civeo had prided itself in how it dealt with Indigenous peoples across the world and especially in Canada and Australia.  “All the lodges in Canada are in First Nations territory and good relations with First Nations are paramount” [page 12].  The Canadian Council for Aboriginal Business bestowed the company with a Gold Level certification in the Progressive Aboriginal Relations program [page 13]. Its commitment to a respectful and inclusive relationship with First Nations was a cornerstone of its success in obtaining contracts such as the one in Kitimat.

Defamatory Statement Against Employer

In a 114-page decision the Arbitrator summarized his view of the alleged defamatory statement as follows:

An ordinary well informed Canadian reader would take from the website image a message that Civeo had broken its promises to First Nations people. Closer examination of the small print would reveal the message that Civeo had promised higher wages and delivered lower wages. It had promised a certain level of hiring and delivered something less. Further, I find that the message delivered by the impugned words was not just that Civeo had failed to make good on its promises but had cynically and deliberately provided something less.
I find there was an additional “sting” in the allegation, recognizable by the averagely well informed Canadian reader, which associates the employer’s conduct with the history of broken promises at a government level, which aggravates the defamatory meaning of the words used, and amplifies the degree of harm, and therefore damages if no defence is successful, caused to the employer’s reputation by association with this unfortunate history…
To this should be added that the impugned banner headline specifically identifies the “Broken Promises” of Civeo as promises made to “First Nations People” not just anyone. This connection, as well as the deliberate and pronounced prominence of the headline make it very clear as to what the union’s message was intended to convey. The message deliberately associates and links Civeo’s conduct to the historical undercurrent of broken promises to First Nations. Added to that is the fact that among the intended recipients of this message were indigenous people in the region and beyond, who of course were especially sensitive to this history.
In summary, taking the objective common-sense approach referred to above, I find that the impugned statement is defamatory in its natural and ordinary meaning. [pages 6/7]

Employer Files Grievance

Civeo, through counsel, filed the grievance with the union in the following terms in August 2021:

On behalf of Civeo, we hereby file a grievance at stage 2 of the grievance procedure seeking damages and a cease-and-desist order regarding the following defamatory statements publicly communicated by your union:
Civeo's broken promises to First Nations people: Low wages; Decrease in hiring of Indigenous workers over the past 2 years.
This means that Civeo has not showed commitment to improving the living standards of Indigenous workers and their families. (See attached internet posting by Local 40)
These statements are patently untrue:
(i) The wages being paid are what were negotiated with your union in a letter of understanding covering the duration of the Sitka Lodge; (ii) Indigenous workers make up 47% of the total workforce; and (iii) As evidenced by the recent nomination of Civeo by the Haisla Indigenous community for the Indigenous Joint Venture/Partnership Award given by the Kitimat Chamber of Commerce, Civeo has shown a strong commitment to improving the living standards of Indigenous workers and their families.
Given the ongoing harmful effect of your false statements on the reputation and business interests of Civeo, we request a step 2 grievance meeting by telephone early next week. Please confirm the availability of your union for this meeting as soon as possible. In the meantime, to limit the liability of your union for the damages caused by your defamatory statements, we recommend that you take immediate steps to publicly retract these statements and apologize for making them. [pages 9/10]

Employer Reputation

The case is important not just for its detailed and scholarly analysis of the law of defamation including the various defences such as fair comment but also for its unique analysis of the importance of reputation when dealing with an employer’s ability to secure and maintain work when dealing with an Indigenous workforce:

Reputations are by their nature fragile, and the law of defamation is there to recognize this and protect reputations where appropriate. The comments earlier quoted from Zhong v Wu (supra) bear repeating:
The impression left by a libel on the reader may never be known but may last a lifetime, Philip Lewis, Gatley on Libel and Slander 8th ed., (London: Sweet & Maxwell, 1981) at 9.2. Thus, the presumption of damage recognizes the importance but fragility of a good reputation and the reality that the harmful consequences of defamation are difficult to prove, much less quantify. Zhong v. Wu, 2019 ONSC 7088, para 35. [Page 110]

Punitive Damages Awarded Against Union

In awarding punitive damages the Arbitrator relied on the following facts:

As in Barrick Gold, punitive damages are appropriate in this case, both because of the need to deter the union’s conduct, and because of the following factors:
1) The union’s contention that Civeo broke its promises to First Nations peoples is a complete fabrication;
2) The statement was published on the union’s website in order to maximize the statements’ distribution, well beyond anyone in the immediate region – including to anyone in the world doing a Google search of “Civeo”, whether they be potential employees, investors, business partners, contractors, governments, or otherwise;
3) The union did not remove this false or misleading, and defamatory, claim from its website for two months after Civeo wrote to the union to request that it take immediate steps to retract the defamatory statements and issue an apology;  
4) The union has refused to issue an apology or retraction, even after removing the statement from its website and continues to assert the truth of its defamatory message. It has indicated every intention, unless restrained, of repeating and continuing its message.
5) The union made these statements to pressure Civeo improperly to renegotiate terms of the Collective Agreement during the term of the agreement;
6) The union’s statements were made in an attempt to circumvent the provisions of the collective agreement dealing with disputes and disagreements between the parties; and
7) The threat to investors in furtherance of these vindictive statements compounds the culpability of the union’s conduct. [pages 106/107]

The Arbitrator therefore awarded $400,000 General Damages and $100,000 punitive damages [page 111].

Civeo also argued that it was entitled to costs but couched its claim as seeking:

compensatory damages caused by the union’s unlawful and tortious conduct, which includes – amongst other things – the consultation and legal work performed in order to address and repair the harm stemming from the union’s unlawful conduct. [page 60]

The claim was made in this fashion because section 90 of the Code precludes arbitrators from awarding the costs of the arbitration.  The Arbitrator decided to deny Civeo’s claim stating he decided to “err if at all on the side of adhering to the specific statutory direction provided by the Code” [page 64].  The Union argued that the Grievance should not proceed because the Arbitrator did not have jurisdiction only the court did.  If the matter had proceeded to court then the employer would have likely been entitled to at least taxable costs.

EMPLOYER TAKEAWAYS

Arbitration under a collective agreement has always been touted as being an inexpensive and expeditious way to deal with workplace disputes during the term of a collective agreement since employees cannot go on strike to pursue their grievances.  But as this case demonstrates that is a long-ago debunked fallacy.  Arbitrations are expensive and often complicated in terms of legal, evidentiary, and factual issues as this case truly demonstrates and is a prime example of that reality.

At the same time those businesses that want to do business in Frist Nations territories and with First Nations might find the decision of interest as to the steps taken by Civeo to successfully nurture that relationship and its business model in Canada and Australia.

Mike Weiler - Contact Info Here

June 30th, 2022

Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our group members. We communicate all these updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.

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MICHAEL J. WEILER

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Mike Weiler has more than 35 years experience in the ever evolving world of employment, labour and human rights law. And experience in this area is critical to protect our clients—this is where law is not just a science but most often an art. Judgment is critical for our clients and that is what we bring to the table based on our years of experience. This means first and foremost knowing the law—keeping updated and current. Experience also means knowing the players in the game and their processes—the LRB, the Employment Standards branch, WorkSafeBC, the courts etc. It means not only seeing the...

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