Date: 20050126
Docket: T-1411-04
Citation: 2005 FC 123
Ottawa, Ontario, January 26, 2005
Present: The Honourable Madam Justice Danièle Tremblay-Lamer
BETWEEN:
SPORTS INTERACTION
Applicant
and
TREVOR JACOBS
Respondent
REASONS FOR ORDER AND ORDER
[1] This is an application for judicial review from the decision of an adjudicator, appointed under the Canada Labour Code, R.S.C. 1985, c. L-2 (the "Code"), dated June 30, 2004, finding that the respondent (or "Jacobs") had been unjustly dismissed and ordering his reinstatement by the applicant (or "Sports InterAction") with benefits as of the seventh month following his dismissal from the employ of the applicant.
FACTS
[2] Sports InterAction is an online gaming operation duly licensed by the Kahnawake Gaming Commission, and has a place of business in the Mohawk Territory of Kahnawaka in Québec. The owner of Sports InterAction is Jim Magner, who controls the company's operations in part from Dublin, Ireland.
[3] Trevor Jacobs, the respondent, was employed by Sports InterAction from September 26, 1999 to March 28, 2003. At the time of his dismissal, Jacobs held the position of a line manager.
[4] On March 27, 2003, MSN Messenger transcripts of conversations between Jacobs and a co-worker, Donald Phillips, were discovered.
[5] On the next day, March 28, 2003, Jacobs was dismissed from Sports InterAction for the following reasons, set out in a letter by Tina Stacey, the respondent's immediate superior at the business' reserve location:
- that Mr. Jacobs had improperly and wrongfully used the company's internet connection during working hours;
- that while using the employer's internet connection and during working hours, made disrespectful, threatening, obscene and disloyal remarks against his immediate superior and the company;
- that his work performance had deteriorated considerably since the termination of his girlfriend's employment at Sports InterAction and had become unsatisfactory.
[6] By March 28, 2003, Donald Phillips, the other employee involved in the MSN Messenger conversations, had already tendered his resignation and was told not to return for his two remaining scheduled shifts.
[7] On April 15, 2003, the respondent filed a complaint with Labour Canada pursuant to section 240 of the Code. He also filed a complaint with La Commission des normes du travail du Québec. On October 20, 2003, La Commission des normes du travail du Québec ruled the matter ultra vires claiming it to be of federal jurisdiction.
[8] Prior to January 14, 2004, an adjudicator was appointed under the Code, and, after receiving a letter from the adjudicator requesting the respondent to choose which jurisdiction to pursue his complaint under, Jacobs discontinued his complaint before the Québec Labour Standards Commission.
[9] The hearing before the adjudicator was convened on May 18, 2004.
DECISION OF THE ADJUDICATOR
[10] The adjudicator concluded that the applicant had "cause for concern but failed to investigate the incident in a proper and adequate manner"; therefore, Jacobs' dismissal was annulled. Due to the seriousness of the infraction, the penalty of dismissal was replaced by a four-month suspension and his salary and benefits were denied for an additional two months. However, his reinstatement was ordered as of the seventh month following his dismissal of March 28, 2003, and the applicant was ordered to compensate him for all lost salary and benefits.
[11] The adjudicator's conclusion was premised on several findings. First, the adjudicator judged the credibility of the respondent preferable to that of the company's witnesses.
[12] The adjudicator found that the evidence showed the following: that although the MSN Messenger conversations contained "offensive, insulting and sometimes threatening language", this type of communication was the norm amongst Sports InterAction employees; that despite the time spent on internet chatting, there was no negative impact on the company's operations and its clients; that there was no proof in support of the allegation that Jacobs' work performance had declined since his girlfriend had been terminated; and that the company failed to warn Jacobs that "his job was on the line if he did not correct his behaviour and improve his performance".
[13] The key ground for dismissal, in the adjudicator's view, concerned the respondent's "disrespectful, threatening, obscene and disloyal remarks against his immediate superior and the company through the employer's internet connection". There was no policy or rules prohibiting internet chatting while at work and Sports InterAction did not demonstrate that the employee's work performance was adversely impacted. Further, the evidence "clearly indicates that Mr. Jacobs had no intention of carrying through with any threats"; the obscene remarks were part of a joke that were not intended to be seen by any person other than Donald Phillips.
[14] The adjudicator then determined that the applicant should have proceeded by way of progressive discipline rather than an immediate dismissal, explaining that "[t]he company had a duty to investigate all the circumstances of the events which gave rise to the dismissal. The company should have provided equivalent disciplinary measures for at least three other employees who committed similar infractions and who escaped punishment despite the similar use of the Internet connection for unrelated work activities". Donald Phillips, in particular, was offered a job back with the company after his resignation even though he was the co-author of the impugned MSN Messenger conversations.
[15] Still, in light of the evidence of mischief and an admission of same by Jacobs himself, the adjudicator substituted the penalty above while also awarding reinstatement.
ANALYSIS
[16] The parties agree that the issues here are twofold: this Court must first decide whether the adjudicator had jurisdiction over the instant dispute and second, in the event that he did, whether the adjudicator failed to consider crucial evidence giving rise to an excess of jurisdiction.
[17] The first issue, in other words, concerns whether the labour complaint by the dismissed employee was ultra vires the federal adjudicator.[1] As recently explained by the Supreme Court of Canada, "[t]here is no need to engage in the pragmatic and functional approach in a review for vires" because "[s]uch a question will always be reviewed on a standard of correctness": United Taxi Drivers' Fellowship of Southern Alberta v. Calgary (City), [2004] 1 S.C.R. 485 at para. 5.[2] If the adjudicator was incorrect in assuming jurisdiction, then his decision was ultra vires and it must be quashed.
[18] The applicant submits that the adjudicator did not have jurisdiction to hear the respondent's complaint. It is only by way of exception that federal jurisdiction applies to labour disputes. And in the present case, there is nothing to favour the application of this exception: the applicant's activities are not the result of federally delegated powers, nor are they contemplated by the Indian Act, R.S.C. 1985, c. I-5. As such, and by default, labour relations at the applicant's operation fall within the purview of the province.
[19] The respondent, on the other hand, notes at the outset that this issue was not raised prior to this stage. And, taking this into consideration in the context of an application for judicial review, the applicant has not met its burden of demonstrating that this is a matter of provincial jurisdiction. Absent the necessary facts to assess under whose jurisdiction the complaint falls, this argument against federal jurisdiction should fail.
[20] The issue of jurisdiction (provincial versus federal) over labour relations has arisen on numerous occasions. Since the Privy Council's decision in Toronto Electric Commissioners v. Snider, [1925] A.C. 396, labour relations have generally fallen within the provincial sphere by virtue of subsection 92(13) of the Constitution Act, 1867, (U.K.), 30 & 31 Vict., c. 3, reprinted in R.S.C. 1985, App. II, No. 5. The "Stevedores case"(In re the Validity of the Industrial Relations and Disputes Investigation Act, [1955] S.C.R. 529), essentially marked the emergence of an exception whereby labour relations could fall under federal jurisdiction provided the labour relations at issue engage an integral element of federal competence delineated in the Constitution Act, 1867.
[21] Subsequently, the Supreme Court of Canada has set clear guidelines in this area in Construction Montcalm Inc. v. Minimum Wage Commission, [1979] 1 S.C.R. 754, which were reiterated more succinctly in Four B Manufacturing v. United Garment Workers et al., [1980] 1 S.C.R. 1031:
With respect to labour relations, exclusive provincial legislative competence is the rule, exclusive federal competence is the exception. The exception comprises, in the main, labour relations in undertakings, services and businesses which, having regard to the functional test of the nature of their operations and their normal activities, can be characterized as federal undertakings, services or businesses. [references omitted]
[22] In Northen Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115 ("Northern Telecom No. 1"), Dickson J. as he then was, neatly distilled six principles from Beetz J.'s ruling; namely:
(1) Parliament has no authority over labour relations as such nor over the terms of a contract of employment; exclusive provincial competence is the rule.
(2) By way of exception, however, Parliament may assert exclusive jurisdiction over these matters if it is shown that such jurisdiction is an integral part of its primary competence over some other single federal subject.
(3) Primary federal competence over a given subject can prevent the application of provincial law relating to labour relations and the conditions of employment but only if it is demonstrated that federal authority over these matters is an integral element of such federal competence.
(4) Thus, the regulation of wages to be paid by an undertaking, service or business, and the regulation of its labour relations, being related to an integral part of the operation of the undertaking, service or business, are removed from provincial jurisdiction and immune from the effect of provincial law if the undertaking, service or business is a federal one.
(5) The question whether an undertaking, service or business is a federal one depends on the nature of its operation.
(6) In order to determine the nature of the operation, one must look at the normal or habitual activities of the business as those of "a going concern", without regard for exceptional or casual factors; otherwise, the Constitution could not be applied with any degree of continuity and regularity.
[23] The analysis and application of these principles is of course informed by the particular context in which the labour dispute stems. In Four B Manufacturing, supra, the labour dispute arose in native territories. Nevertheless, as Beetz J. emphasized, this does not in and of itself alter the nature of the going concern in question, thereby bringing it under federal authority. On the contrary:
There is nothing about the business or operation of Four B which might allow it to be considered as a federal business: the sewing of uppers on sport shoes is an ordinary industrial activity which clearly comes under provincial legislative authority for the purposes of labour relations. Neither the ownership of the business by Indian shareholders, nor the employment by that business of a majority of Indian employees, nor the carrying on of that business on an Indian reserve under a federal permit, nor the federal loan and subsidies, taken separately or together, can have any effect on the operational nature of that business. By the traditional and functional test, therefore, The Labour Relations Act applies to the facts of this case, and the Board has jurisdiction.
[24] Beetz J. went on to note that his conclusion was further buttressed by the very provisions of the Indian Act, R.S.C. 1985, c. I-5. Though the legislation does pertain to "certain Indian civil rights," and thereby usurp for Parliament a measure of provincial jurisdiction otherwise conferred by subsection 92(13), "it does not provide for the regulation of the labour relations of Indians with one another or with non-Indians": Four B Manufacturing, supra. He reasoned that provincial jurisdiction remains the rule in the context of First Nations' peoples in part based on section 88 of the Indian Act, which reads:
Subject to the terms of any treaty and any other Act of Parliament, all laws of general application from time to time in force in any province are applicable to and in respect of Indians in the province, except to the extent that those laws are inconsistent with this Act or any order, rule, regulation or by-law made thereunder, and except to the extent that those laws make provision for any matter for which provision is made by or under this Act.
[25] More recently in Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010, the Supreme Court explained that although subsection 91(24) confers jurisdiction over "Indians" to Parliament, the provinces may retain competence by virtue of section 88 of the Indian Act, and provided that Indian status or "Indianness" is not impacted.
[26] It follows, in my opinion, that absent a demonstration that the going concern under scrutiny is a federal work, undertaking or business because it impacts upon Indian status or "Indianness", (thereby invoking subsection 91(24) and triggering federal jurisdiction), the general rule will apply. Indeed, in my view, the judgment in SIGA, supra provides direct support for this proposition. In that case the Court determined that the operation of casinos by SIGA on native territories did not render it a federal work, undertaking or business. The Court reached this conclusion notwithstanding that SIGA was a "First Nations corporation", mandated to "operate for the benefit of Saskatchewan First Nations generally, both in developing employment opportunities for First Nations people and in generating revenue to be used for the legislatively defined purposes of the First Nations Trust Fund": SIGA, supra at para. 54.
[27] Smith J. emphasized that the casino in question is "operated as a commercial enterprise to provide entertainment to a wide class of persons, by no means limited to First Nations persons nor, indeed, especially intended for them, and that casinos, generally are subject to provincial regulation": SIGA, supra at para. 65. Furthermore, following the Supreme Court's holding in Four B Manufacturing, supra, the concept of "Indianness" is narrow in scope and therefore provincial labour laws should apply unless "where this would affect matters clearly governed by federal legislation or infringe upon Indian rights or status": SIGA, supra at para. 67.
[28] In the present case Sports Interaction is an online gaming operation duly licensed by the Kahnawake Gaming Commission. On these facts alone, nothing showed that the labour relations in issue touch upon an integral element of primary federal jurisdiction, therefore provincial laws should govern. The same conclusion was reached in Four B Manufacturing, supra as well as Southeast Resource Development Council Corp. (c.o.b. Southeast Medical Referral Services) v. United Food and Commercial Workers Union, Local No. 832, [2004] 8 W.W.R. 633 (Man. Q.B.).
[29] The respondent here nevertheless points out that this determination, or functional test concerning the nature of Sports InterAction's activities, is predicated on a set of "constitutional facts", as Dickson J. underscored in the Northern Telecom No. 1 case.[3] The absence of constitutional facts at the present stage, the respondent submits, must bar granting judicial review for reason of lack of jurisdiction. Notwithstanding the general rule of provincial jurisdiction over labour relations, in the context of judicial review, the onus rests with the applicant to raise and demonstrate, with the necessary constitutional facts, that the adjudicator did not have jurisdiction over the instant complaint.
[30] With respect, I disagree with this submission for the following reasons.
[31] First, and more fundamentally, this follows from the overarching principle of Canadian law enshrined in section 52 of the Constitution Act, 1867: the Constitution is the supreme law of Canada. In general terms, any exercise of legal power, whether legislative or administrative, must be measured against this; to the extent that the exercise of legal power is inconsistent with the Constitution, it is of no force and effect.
[32] Judicial review in no way alters this principle of Constitutional supremacy. Thus, whether labour relations is a matter of provincial or federal jurisdiction cannot (in effect) be determined solely on the basis of which party is the applicant (and therefore ordinarily carries the prima facie burden) in the context of judicial review. Nor can this issue necessarily be determined, or cast aside, by the doctrine of waiver if it is not raised before the administrative tribunal at first instance. As Brown and Evans indicate, "an applicant who fails to raise a jurisdictional challenge before the tribunal [will not] necessarily be held to have waived the right subsequently to seek judicial review on the ground that the tribunal lacked jurisdiction over the matter": Donald J.M. Brown & John M. Evans, Judicial Review of Administrative Action in Canada, looseleaf (Toronto, On: Canvasback Publishing, 2004) at 3-80.
[33] Further, the respondent's submission misconstrues the jurisprudence and firmly entrenched principles governing the constitutional division of authority over labour relations. The Northern Telecom No. 1 case in no way detracts from the principles summarized in Construction Montcalm, supra and Four B Manufacturing, supra. As shown above, Dickson J. in fact restated them with approval. In short, provincial jurisdiction is the rule while federal jurisdiction is the exception. The determination of the jurisdictional issue in Northern Telecom No. 1 was, moreover, not complicated by the Indian Act and the operation of section 88, which added further credence to the finding of provincial jurisdiction in Four B Manufacturing, supra and SIGA, supra.
[34] And, finally, the Supreme Court reaffirmed these principles and the general rule in the "Northern Telecom No. 2 case" (Northern Telecom Canada Ltd. v. Communication Workers of Canada, [1983] 1 S.C.R. 733). In this second version of essentially the same labour dispute, the majority of the Court were satisfied that the exception to the rule should be applied and the labour relations in question fall under federal authority. The difference in opinion between the majority's conclusion and the dissent (written, incidentally, by Beetz J.), concerned whether the evidence of the operation's activities supported this conclusion. However, there was no dispute as to the law insofar as constitutional division of authority over labour relations was concerned. As Beetz J. stated so eloquently:
Because provincial competence is the rule and federal competence is the exception, the onus is on the party who invokes the exception to establish the constitutional facts necessary for the exception to come into play. Failing such a demonstrative, exclusive provincial competence must govern.
[35] I find this reasoning compelling. Contrary to the respondent's submission, because it is the respondent who invoked the exception the onus rests with him to establish the constitutional facts necessary for the exception to come into play. In the present case, that onus has not been met. In the absence of constitutional facts demonstrating that the applicant's business and activities touch upon an element integral to federal jurisdiction such as "Indianness" under subsection 91(24) of the Constitution Act, 1867, this Court must apply the general rule: labour relations are ultra vires federal jurisdiction.
[36] I am well aware and regret that this decision will bring further delays in the final determination of this dispute and that equity seems to favour the respondent considering the provincial labour tribunal decided not to hear the instant complaint. However, I am unable to disregard the fundamental principle of constitutional law which provides the framework for judicial review of administrative action.
[37] For these reasons, I find the adjudicator's assumption of jurisdiction to be incorrect and therefore invalid and I must allow the present application for judicial review for this reason alone.
ORDER
[1] The application for judicial review is allowed.
[2] The decision of the adjudicator dated June 30, 2004 is declared invalid.
"Danièle Tremblay-Lamer"
J.F.C.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1411-04
STYLE OF CAUSE: Sports InterAction
and
Trevor Jacobs
PLACE OF HEARING: Montreal, Quebec
DATE OF HEARING: January 17, 2005
REASONS FOR ORDER
AND ORDER OF THE HONOURABLE MADAM JUSTICE DANIÈLE TREMBLAY-LAMER
APPEARANCES:
Mr. Dan Goldstein FOR APPLICANT
Ms. Chantal Poirier FOR RESPONDENT
SOLICITORS OF RECORD:
Schneider & Gaggino G.P.
Barristers & Solicitors
375 Lakeshore Drive
Dorval, Quebec
H9S 2A5 FOR APPLICANT
Brodeur Matteau Poirier
Barristers & Solicitors
194 Saint Paul Street
Suite 302
Montreal, Quebec
H2Y 1Z8 FOR RESPONDENT
[1] This inquiry, sometimes referred to as a "true jurisdictional question" logically precedes and is conceptually distinct from any assessment of an "excess of jurisdiction", which constitutes the second primary issue raised in this judicial review, and makes reference to the bases listed in the Federal Courts Act, R.S.C. 1985, c. F-7, that allow judicial review to be granted: see in particular s. 18.1(4)(a).
[2] Indeed, this standard was applied without engaging the pragmatic and functional approach in Saskatchewan Indian Gaming Authority (SIGA) v. National Automobile, Aerospace, Transportation and General Workers Union of Canada, [2000] S.J. No. 266 at para. 23 (Sask. Q.B.)(QL), aff'd [2000] S.J. No. 766 (Sask. C.A.)(QL), leave to S.C.C. ref'd [2001] S.C.C.A. No. 46 (QL).
[3] In both SIGA, supra and Southeast Resource Development, supra, which follows the holding in SIGA, supra, the Court's assessment of jurisdiction is replete with factual content, concerning, for example, the character of the corporation, its ownership, mandate and trust purposes regarding the First Nations community, as well as how its trustees are appointed by the provincial government. The same is true with respect to Justice McKelvey's ruling in Southeast Resource Development Corp., supra.