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HomeMy WebLinkAbout1980-0439.Gigliozzi.81-08-22 DecisionONTARIO CROWN EMPLOYEES GRIEVANCE SETTLEMENT BOARD 180 DUNDAS STREET WEST, TORONTO, ONTARIO, M5G 1Z8 - SUITE 2100 TELEPHONE , 416/598-0688 , 439/80 155/81 IN THE MATTER OF AN ARBITRATION Under The CROWN EMPLOYEES COLLECTIVE BARGAINING ACT Before THE GRIEVANCE SETTLEMENT BOARD Between: Mr. P. Gigliozzi Griever - And - The Crown in Right of Ontario (Liquor Control Board of Ontario) Employer Before: Prof. J. W. Samuels Vice Chairman Mr. S. R. Hennessy Member Ms. H. J. Laing Member Mr. J. M. Rosen, Counsel Rosen & Fleming For the Griever: For the Employer: Mr. M. P. Moran, Counsel Nicks, Morley, Hamilton, Stewart & Stone Hearings: June 25 & August 21, 1981 2 Contents Page Introduction and Pacts 3 Legal Results 6 Conclusion 9 List of Exhibits 11 Introduction and Facts This is the second award in this matter. On September 1, 1981, this Board gave its decision concerning the preliminary objection raised by the Employer related to timeliness. We denied the objection and, on that day, carried on with the hearing into the question of just cause for the indefinite suspension and then discharge of the Grievor. The LCBO's case, in short, is that the Grievor acquired four cases of a particular brandy at $9.00 per bottle in late April 1980, knowing that on April 28 its price would rise to $13.90. In May and June, over two occasions, he returned the four cases at the new price and thereby made a profit of $235.20. It is argued that this is tantamount to theft from the LCBO, and justifies the dis- charge. In fuller detail, the relevant facts concerning the disciplinary action are: 1.The Grievor is 25 years old, and has been working full-time for the LCBO since May 3, 1976. He commenced at Store 4727, moved to Store 4366 in 1977, and to Store 4360 on April 9, 1979. 2.No evidence was introduced by either party concerning the Grievor's work record. 3.Throughout the period of his employment with the LCBO, the Grievor has been engaged in the catering business on a part-time basis. This was widely known to his fellow employees at the LCBO and to his supervisors. As part of - 4 - this business, he will supply liquor at functions from time to time. To facilitate this, he holds a liquor inventory at his home. 4.If a particular brand is not going well at his catered functions, he will return some stock, using the LLBO permit he received for his most recent function. The liquor re- turned may or may not have been purchased with respect to that function and permit. The permit will have on it the name of the person holding the function. This appears to have presented the Grievor no problem. Indeed, when he returns liquor, he always uses yet another name -- his brother-in- law's, other friends'. His explanation for this is that he didn't want the LCB0 to see his own name cropping up regularly on re- turns. Furthermore, except for one occasion, he never made returns at his own store, because "it would create the wrong impres- sion". All of this subterfuge is very curi- ous because it seems that everything being done by the Griever was perfectly legitimate in the context of the LLBO permit system and the LCB0 returns policy. 5.The "returns policy" of the LCBO involves four types of return of unopened bottles - a.Any person mAy exchange up to 3 bottles at one time for another product of equi- valent value at the time of the exchanae, and no documents need be shown to do this exchange (eg. sales slips from the time of purchase). b.Any person may receive a full refund for bottles returned together with the receipt showing the purchase price. c.A person with an LLBO "Sale Permit" (issued for a function at which liquor will be sold) may return bottles within seven days after the function for which the permit was issued. The original copy of the permit must be returned for the refund. d.A person with an LLBO "No-Sale Permit" (issued for a function where liquor will be served but not sold to the consumers) may return bottles in the same manner as in the case of a "Sale Permit", but with less red-tape. 6.The evidence at the hearing indicated that, in the case of "permit" returns, at least at the time relevant to this hearing, it was not readily apparent whether the liquor being returned was purchased under the permit being used for the .return-, and often it was not possible to tell what price was paid on purchase because this was not indicated on the permit and it was not necessary to show a cash register tape to prove the cost of purchase. Hence, anyone with the original copy of a permit could easily return liquor for cash at the prevailing price of the product at the time of the return. 7.On April 16, 1980, a major price increase was announced to LCB0 employees by a Price Bulletin (Exhibit 5). The effective date of the increase was April 28, 1980. The brandy involved here had the greatest increase of all the products affected. 8.On April 23, the Grievor purchased two cases of the brandy at $9.00 per bottle at his own store. This would have been known to his supervisors. On April 26, he purchased another two cases at $9.00 per bottle at a different store. It is the Grievor's evi- dence that he made these purchases as part of his catering business, and that he returned the cases because the brandy was not popular. I do not accept this. The Grievor was unclear as to how many functions he catered or had planned between April 23 and the date he made the first return (May 20), but the impression he left was that he had no satisfactory explanation for his purchase of the brandy. It is also odd indeed that the four cases were entirely untouched. If they were to serve in the catering business, wouldn't at least one bottle have been opened? I have concluded that the four cases were purchased for the purpose of return after the price increase. 9.On May 20, the Grievor returned two cases for cash at $13.90 per bottle at Store 279. The way in which he did this is not really rele- vant. He produced the wrong copy of the permit he was using, and it was the investi- gation into this circumstance which led to the uncovering of the profit of $235.20. Originally the police were called in because it was thought that the Grievor had stolen the liquor. Ultimately the criminal charges were dropped. The return of the other two - 6 - cases took place on or around June 21 at a different store, and the evidence is not clear on whether the Grievor took cash or exchanged for some other product. However, it is clear that he was treated as having returned two cases worth $13.90 per bottle. The evidence indicated that $13.90 price stickers were on some of the returned bot- tles, and the others had no price stickers. It was suggested that the Grievor put the $13.90 stickers on. I am not satisfied with the evidence on this point and, therefore, make no finding as to how the $13.90 stickers got on the bottles. 10. In our earlier award, we recited the facts relating to the suspension and discharge. Suffice it to say here that, at the outset, the LCB0 appears to have thought that the Grievor had stolen the bottles and, there- fore, suspended him "pending disposition of the criminal charges". However, the internal and .police investigations showed that a profit had been made on the return of the four cases. The Grievor was then discharged for this reason. The letter of discharge (Exhibit 7 in the award on the preliminary objection) merely said: "Full consideration has now been given to the circumstances which caused your suspension on July 4, 1980. As a result it has been decided that your services are terminated effec- tive August 11, 1980." Legal Results On behalf of the LCBO, Mr. Moran argued that the Grievor's acts were "tantamount to theft". This raises scme very difficult questions. Theft involves the taking of someone else's property. What did the Grievor "take"? If we resort to accounting principles, we can analyze this situation in two ways: 7 a.It could be argued that, when the Grievor returned the cases, he was returning some- thing to the LCBQ "worth" $13.90 per bottle and, therefore, was entitled to that amount. While he purchased the bottles at,$9.00 per bottle (their "worth" in April 1980), he returned a more valuable product in May, and June, and sh-Cial-d-haViu-S-tITy- received the -Treater amount-. It is nci-i-televant that the reason for the greater -worth"-was the LCB01-s eNn-ip-r-i-ce-tm-C-fdase. b.On the other hand, if we look at the situa- tion from the point of view of the LCBO, we can see a different picture. It is best illustrated by an example. Suppose the selling price of this brandy was originally constituted as follows: Supplier's price $6.00 LCBO profit $3.00 Price per bottle $9.00 And after the price increase, for bottles on hand before the trice increase, it was as follows: Supplier's price $6.00 LCBO profit $7.90 Price per bottle $13.90 Now, with respect to the particular bottles involved here, the picture for the LCBO is as follows: Original cost of product Receipt from Grievor Refund to Grievor Ultimate sale to a third-party Net LCBO profit ($6.00) $9.00 ($13.90) 13.90 $3.00 The LCBO profit after the price increase was supposed to be $7.90 per bottle, but it has been reduced to $3.00 per bottle by the Grievor's actions. This could be called a "taking" from the LCBO by the Grievor. The matter, is complicated by the fact that pro- spective specific price increases are sometimes made known in the media in advance. If a member of the public took 8 advantage of this publicity by buying liquor at the pre- increase price, then returning it for exchange or cash (perhaps with a legally-obtained permit) at the post-in- crease price, it is unlikely we would characterize this activity as "theft" from the LCBO. The consumer has used the LCBO's returns system to preclude the LCBO's "windfall" profits when the LCBO changes the new higher price on stock it had on hand before the price increase. Many private businesses do not increase prices on stock held before sup-_ pliers raise their prices to the retailer. Rather, old - stock is sold at the old price and new stock at the new higher price. If it's not "theft" when done by a member of ----- the public, is a practice "theft" when done by an employee? _ _ ----- In my view, our situation is best characterized as one where an employee took advantage of his position as an employee to make a profit at the expense of his employer. This is a breach of the duty of fidelity owed by an em- ployee. The Grievor had access to information concerning an impending price increase not readily available to members of the public, and he used that information to take for him- self the LCBO's additional profits on 4 cases of brandy. He did not falsify records. He returned liquor according to a system which offered anyone the possibility of receiving more for the bottles than was paid for them at the outset. 9 In these circumstances, is discharge a justifiable penalty? His conduct deserves disciplinary sanction to make it clear to the Grievor and others that this conduct is unacceptable, but does not offer justification for dis- charge. Parenthetically, it seems obvious that, if the LCB0 does not want customers (employees and members of the pu- blic) to be able to return liquor for more than the purchase price, it should establish a returns policy which does not permit this. Conclusion After much consideration, I have concluded that a three-month suspension is an appropriate penalty in all the circumstances. The Grievor shall be reinstated immediately and compensated for monies lost as a result of the excessive penalty, less the $235.20 profit he made. At our hearing, the Grievor indicated he was willing to return this money. I would have ordered it even without the offer. - 10 - This Board will retain its jurisdiction to the amount of compensation if the partis are unable to on this matter. Done at London, Ontario, this day of 1981. J.W. Samuels, Vice-Chairman H.J. Laing, Member, concurs S.R. Hennessy, Member, concurs, but would have found a shorter suspension more appropriate. EXHIBITS 1. Evidence of Staff Sargeant J.G. Wilson 2. Cash tape 3. Return to Stock Form 4. Special Occasion Permit 5. Price Bulletin 2428 6. Price Bulletin 2428A 7. Extract from Mr. Gigliozzi's cash tape, April 23, 1980