11111

Freight Forwarders are “Local Undertakings” – Supreme Court of Canada

On 26 November the Supreme Court handed down its judgment in the case of Consolidated Fastfrate v Teamsters. Fastfrate offered local distribution services in a number of Canadian cities, but where freight moved between these cities the interprovincial haulage was contracted out to third party carriers. Although the matter arose out of attempts by the Teamsters to certify Fastfrate’s employees, the key question was whether the fact that Fastfrate contracted for interprovincial transport, without performing it, was sufficient to make it an interprovincial undertaking subject to Federal legislation, as opposed to a local undertaking subject to Provincial laws.

On application by Teamsters to the Canadian Labour Relations Board, it was determined that the various branches of Fastfrate’s operations in various cities were part of an integrated, interprovincial network, and therefore subject to Federal jurisdiction. This decision was quashed on judicial review, with the Court holding that the contracting of interprovincial carriage to third parties was not sufficient to bring Fastfrate’s operations within the Federal sphere. That finding was in turn reversed by the Alberta Court of Appeal, which agreed with the original Board decision, and it was the Alberta Court of Appeal’s decision that Fastfrate was an interprovincial undertaking that was appealed to the Supreme Court.

The Supreme Court upheld the Appeal in a 6-3 decision. The majority stated that an undertaking that performs consolidation and deconsolidation and local pickup and delivery services does not become an interprovincial undertaking simply because it has an integrated national corporate structure and contracts with third party interprovincial carriers. Neither Fastfrate’s employees nor their equipment are involved in any actual interprovincial transport. The majority did not accept that contracting for interprovincial services alone would be sufficient to bring an otherwise local undertaking under the Federal jurisdiction:

“Its presence at both the originating and terminating ends may mean that it can provide a comprehensive service to its customers, but this does not change the fact that it is still only a shipper using an interprovincial railway or trucking company.”

While the Constitution provides specific exceptions for interprovincial transport by rail and steamship, a requirement for federal jurisdiction over transportation undertakings is that the undertaking itself physically operates or facilitates carriage across interprovincial boundaries.

The minority preferred to focus on the service Fastfrate offered to customers, which was one for interprovincial carriage; this service is in substance federal and the fact that elements of the service are contracted out was not relevant to the analysis. This position echoes a line of regulatory cases from Ontario that subjected forwarders to regulations governing interprovincial carriage based on their contractual connection to that carriage. In my view, this line of cases inappropriately extended the scope of Federal authority; with this decision the theory that contracting for interprovincial carriage is in and of itself an interprovincial undertaking can now definitively be described as wrong

This entry was posted in Case Commentaries, Maritime + Transport Law and tagged , , , , , , . Bookmark the permalink.