Saturday, 23 March 2013

New Low Prices or just New Lows?

Reports that Target is opening nearly two dozen stores in Ontario have come from multiple sources in several mediums. Perhaps the more compelling story, however, is why these media sources choose to provide Target (and Walmart years earlier) with what is essentially free advertising. [1] This is a deceptively important issue. In so widely reporting on the fact that Target is opening new stores the media stands in opposition to the interests of Canadian workers.

Media exposure is directly related to corporate reputation. It has been persuasively argued that “newsworthiness of company activities” is a variable which determines the image and reputation of a corporation. Research on corporate reputation has shown that "... favorable reputations may enable firms to charge premium prices, attract better applicants, enhance their access to capital markets, and attract investors".[2] 

Since media exposure of a corporation’s activities is one factor likely related to the effect and breadth of corporate reputation, in widely reporting on the opening of Target stores, the media is doing Target an invaluable service – enabling it to increase profits and finance operations. These boons are in addition to the obvious and inexplicable advantages of the free advertising Target receives. The danger of this intimate relationship between media exposure and corporate interests is that while the media is busy over-exposing the rather pedestrian event of chain-store openings, the damage these events are having on Canadian workers is being largely under-reported. The price of the media’s service to Target is its disservice to Canadian workers.

Target has been using its acquisition of Zellers’ leasehold interests, pharmacy records and a brand waiver to enter Canada and it does not plan to respect the rights of the workers who’d been employed by Zellers. In fact, Target’s plan has been to fire all of the Zellers workers. The former Zellers workers are guaranteed an interview with Target if they wish to reapply with Target, but there is no guarantee they will be hired. Even if the workers reapply and are hired, the experience and seniority they’d accumulated at Zellers will not be recognized by Target.  

In 2012, UFCW, Local 1518 stepped up to protect its members. The union argued that Target was bound by successor interests under the BC Labour Relations Code and so lacked the capacity to fire Zellers employees. Target successfully challenged the unions’ claims. Since Target did not purchase Zellers proper but only the leasehold interests in Zellers locations, the BCLRB found that Target was not a successor employer. Of vital importance to the Board was the fact that Target’s brand had significant recognition separate from Zellers and did not intend to continue the Zellers model of business:

A significant feature of this case is the enormous amount of evidence led regarding Target's unique position in the retail sector, its marketing strategies and the high amount of consumer recognition of its brand. I find that Target is bringing its own highly successful business to Canada. It did not need Zellers for anything but the lease or the opportunity to negotiate a new lease…Though the employees may perform similar jobs in both stores and the Transaction Agreement confirmed the transfer of leases, pharmacy records and the Brand Waiver, I find those are not sufficient for me to conclude there is a discernible continuity of Zellers' business[3].

Note that one of the factors the Board took into consideration in determining that Target was not a successor employer was the fact that Target has high “consumer recognition of its brand.” As we have seen, media exposure is positively linked to consumer recognition. In giving such intense media exposure to the opening of a US-based chain store in Canada the media is arguably undermining the rights of Canadian workers to the job protections afforded by successor rights.

The media would provide a better service to Canadians if it reported on the more important aspects of Target’s foray into Canadian waters. Such aspects include the fact that thousands of Zellers’ workers across Canada will lose their jobs, their seniority, and the working lives they’d known, some for decades[4]. Target has done an end-run around the successor rights of workers, buying leasehold rights which avoid continuity of business claims by workers. The story behind the story is not that department stores are opening, but rather that thousands of Canadians are being detrimentally impacted by the entrance of these stores into the Canadian market. This is the story the media should be reporting on. As famed Canadian professor of communication theory Marshall McLuhan once stated: the real news is bad news.

Wednesday, 20 March 2013

Ford Conflict may go to Supreme Court

In 2012, Ford courted controversy when he was caught soliciting funds from registered lobbyists for the “Rob Ford Football Foundation”. In soliciting the donations, city council determined that Ford violated the city’s code of conduct and displayed an “improper use of influence”. That November, Justice Hackland ordered Ford’s mayoral seat vacated after finding Ford breached the conflict-of-interest provisions of the Municipal Conflict of Interest Act (MCIA) when he participated in a debate and vote regarding a council order that he personally reimburse the funds he had solicited. Ford appealed to the Divisional Court.

On January 25, 2013, the Divisional Court overturned Justice Hackland’s decision and ruled that the actions of city council were ultra vires, meaning that in ordering reimbursement of the funds council was acting outside the scope of its authority. Since council did not have the authority to order this reimbursement, the Court held that Ford could not have had a conflicting interest in the vote. After the ruling, the CBC reports that a jubilant Ford vowed that he and his colleagues would “continue doing the work we were elected to do.”[1]

Only about a month following Ford’s returned to office, concerns were raised that he was not merely continuing the work he was elected to do, but was also continuing the behaviour that brought him before the courts in the first place. The Toronto Star reported that Ford was still sending out letters to registered lobbyists to solicit donations for the football foundation, with one registered lobbyist stating that he received a fundraising letter from Ford a mere three days after Ford won his appeal[2].

One city councillor is reported to have said: “It’s a very dangerous sign that the mayor still thinks he can send letters to lobbyists and ask them for money.”[3] Indeed. Not only does Ford show an apparent hubris in failing to correct his behaviour, but there is also an implicit coercion in using the power of his position to solicit funds from registered lobbyists. Ford may not think he is acting coercively, but the fact that he is mayor could make lobbyists feel they must donate if they are to be treated fairly by the city. If Ford does not see this, there are problems much larger than his hubris at play here. The nature of these problems aside, Ford has indicated that he intends to run for Mayor again in 2014[4].

It seems, however, that he may be planning too far ahead. Leave to appeal the Divisional Court decision has been requested from the Supreme Court. Clayton Ruby, a lawyer for Paul Madger, the Toronto resident responsible for bringing the conflict-of-interest case against Ford, has argued that this case raises important issues related to governance that are of vital public importance. The crux of the request for leave to appeal is that this case raises questions about the nature and parameters of the authority of municipalities to take public officials to task for violating ethical boundaries. To this extent, it is argued that the Divisional Court’s ruling, if allowed to stand, “will undermine municipalities’ efforts to confront modern challenges.”[5] 

Cognizant of the approaching 2014 elections, Madger has requested an expedited appeal and is attempting to use a per saltum provision of the Supreme Court Act[6]. “Per saltum” is a Latin phrase meaning by a leap or bound. The provision allows a party to a proceeding to effectively jump over lower courts and bring an appeal directly to the Supreme Court where either: (i) both sides agree; or (ii) only one side wishes to appeal, but the issue is one the Supreme Court deems to be of public importance[7].

Madger is asserting that this case meets the latter criterion, and so does not require Ford’s agreement in order to bring the appeal. It cannot be said whether the leave to appeal will be granted, but it’s not outside the realm of possibility. As Madger’s factum points out, “a more deferential, generous and flexible approach”[8] to questions concerning the powers of municipalities has been taken by the courts in recent times.

All Canadians, by necessity, live in a municipality or some variant thereof. The issue of public officials violating ethical rules is one that will impact on all Canadians. If the Supreme Court agrees to hear the case this matter will finally be put to rest and we will all have a better sense of the ethical parameters that must guide and constrain our public officials. Should the Supreme Court choose to hear the case, “Ford Nation” may very well be at an end.

[7] Supreme Court Act, RSC 1985, c. S-26, ss. 38-40(1).