Canada: The Wal-Mart Case: Supreme Court Ruling Upholds Employers’ Right To Close Their Businesses

On November 27, 2009, the Supreme Court of Canada handed down judgment in Plourde v. Wal-Mart Canada Corp.,¹ upholding a principle derived from a long line of Quebec cases which recognized an employer's right to close its business, even for reasons relating to unionization of its workforce.

The Factual Background

Following the unionization of its Jonquière store, Wal-Mart and the newly certified union tried unsuccessfully to agree on the content of a collective agreement. The union then asked the Minister of Labour to initiate the dispute arbitration procedure that allows the terms of a first collective agreement to be determined by an arbitrator. On February 9, 2005, an arbitrator was appointed for this purpose. On the same day, Wal-Mart notified the Minister that it would close its Jonquière store permanently on May 6, 2005. In fact, the closure took place on April 19, 2005, ahead of the designated date.

The appellant Plourde, along with a number of other employees whose employment was terminated following the closure of the Jonquière store, filed a complaint against Wal-Mart under sections 15 to 17 of the Quebec Labour Code,² alleging that he had lost his job because the store had been unionized. These sections set out a remedy for employees who have been dismissed, discriminated against or subjected to reprisals or other sanctions because they exercised a right arising from the Code. One of the undeniable advantages of bringing a claim under sections 15 to 17 of the Code is that the employee benefits from a reversal of the burden of proof. Once the employee shows that he was taking part in union activities, there is a presumption that his termination (or other sanction) resulted from the exercise of such right and thus that a violation of the Code occurred. In such a case, it will be up to the employer to demonstrate that it had a good and sufficient reason to proceed with termination.

The Quebec courts have always recognized that an employer that proceeds with a real and definitive closure of its business necessarily has a good and sufficient reason to terminate the employment of its workforce. The Commission des relations du travail (Labour Relations Board), asked to rule on Mr. Plourde's complaint, applied these authorities and found that since Wal-Mart had shown that its store had been genuinely and permanently closed, there was no violation of section 15 of the Code. The complaint was accordingly dismissed. The Board's finding was confirmed by the Quebec Superior Court and the Court of Appeal.

The Decision Of The Supreme Court

Before the Supreme Court, the appellant Plourde argued that the Court should reverse the Quebec case law on the question, in particular taking into consideration a recent decision by the Court which recognized that the collective bargaining process had a constitutional dimension.³

The Supreme Court, in a 6-3 majority decision, confirmed the current state of Quebec law and acknowledged that an employer is entitled to close its business, even if the closure is based on "socially reprehensible considerations."

The Scope Of The Supreme Court Ruling

Accordingly, the Court has affirmed that an employer that proceeds with a real and definitive closure of its business is not required to justify its decision. The Court has thus acknowledged that employees alleging closure of a workplace for anti-union motives cannot benefit from the considerable advantage afforded by section 17, namely, a reversal of the burden of proof.

The Supreme Court nevertheless points out that an employer that closes its business for anti-union motives may be the subject of an unfair labour practice complaint under sections 12 to 14 of the Code, which provisions prohibit an employer from interfering with an association of employees or using intimidation, threats or reprisals to prevent employees from exercising their rights under the Code. However, the Court emphasizes that in bringing such a complaint, employees will have to overcome the difficulties resulting from their burden to establish real anti-union conduct on the part of the employer, a demonstration that will not always be easy to make. Moreover, even in cases involving violation of sections 12 to 14 of the Code, the Commission des relations du travail will not be able to compel a business to reopen and reinstate the employees. As noted by the Court, the possible adverse consequences for the employer in such cases will be financial only, and may include compensating the employees for the losses suffered as a result of the closure of the business for anti-union motives.

Ogilvy Renault represented the Conseil du patronat du Québec (Quebec Business Council) in this matter, which intervened in the case before the Supreme Court in order to protect the interests of its members.

Footnotes

1. 2009 SCC 54. On the same day, the Court also handed down judgment in a related case: Desbiens v. Wal-Mart Canada Corp., 2009 SCC 55.

2. R.S.Q., c. C-27 (the "Code").

3. Health Services and Support – Facilities Subsector Bargaining Assn. v. British Columbia, [2007] S.C.R. 391.

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