Alberta court quashes arbitrator's decision over Canadian Pacific Kansas City employment dispute

The Alberta Court of King’s Bench has quashed an arbitrator’s decision in an employment dispute between the Canadian Pacific Kansas City Railway and several of its employees.

In 2012, Canadian Pacific Railway Company, now Canadian Pacific Kansas City (CPKC) Railway, decided to switch from one type of car sorting system to a flat switching system for the sake of efficiency. The company implemented the transition in stages over several months. As a result of the transition, several positions or assignments in the hump system were made obsolete.

The employees’ union, Teamsters Canada Rail Conference, argued that the transition was a “material change” under the collective agreements. Consequently, the company had a duty to give a formal notice of the change. On the other hand, the company’s position was that there was no material change and no adverse effects to eligible employees.

An arbitrator, John Stout, resolved the issue of whether there was a material change. He agreed with the union, finding that the transition and the resulting elimination of jobs was a “material change” which triggered the notice requirements for the company under the collective agreements. In the Stout’s award, he identified the specific employees who were entitled to benefits arising from the transition.

In a subsequent arbitration proceeding, John Moreau was appointed as arbitrator to assess the impacts of the company’s transition and to identify measures to be taken to minimize the adverse impacts of the change on the affected employees. Moreau took a list of employees identified in Stout’s award as illustrative of the impacts of the transition and used that as a comprehensive list. He then went on to award various benefits to those, and only those, employees.

The union challenged Moreau’s decision before the Alberta Court of King’s Bench, arguing that it was wrong to limit Moreau’s award to the list of employees identified in Stout’s award without some coherent explanation of why he was doing so.

The court ultimately decided to quash Moreau’s decision and remit the matter back for another arbitration, finding that the arbitrator’s decision was not reasonable because there was “literally no path available to understand his disparate treatment of the allegedly affected employees. Reasonable justification for this might have been available, but without some indication of his rationale, the decision cannot stand.”

It appeared to the court that Moreau may have misunderstood the scope of the Stout award, or at least, misstated it. The court pointed out that the Stout clearly referred to the list as examples of impacted employees, but Moreau did not treat them as examples, but rather, as an exhaustive list. The court emphasized that Stout did not limit his findings to employees listed, as evidenced by repeated use of the word “examples.”

Furthermore, the court said that Stout’s description of the issue before him was only to determine if there had been a material change triggering the notice requirements. The court found that he did not go, or purported to go, further, to exhaustively identify or define who had been affected or how.

The court also pointed out that it would be difficult to explain to the union members why some of them received compensation, while others, in the same comparable circumstances did not. The court found that the reasons of Moreau failed to address the central arguments of the parties, which employees were eligible for benefits, and it contained no discernible pathway to his conclusion to include some employees and exclude others. Accordingly, the court decided to quash Moreau’s decision and rehear the matter.