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Nov 30, 2012

Target not a successor employer to Zellers: B.C. Board

U.S. retailer acquiring leases and locations, not ‘definitive’ parts of Zellers’ business
    
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A new Target store that is replacing a Zellers store in a British Columbia mall is not a successor employer, the B.C. Labour Relations Board has ruled.

In January 2011, U.S. retail chain Target announced it would be purchasing numerous Zellers stores in Canada. Zellers would be closing its stores and Target would be taking over the leases of many of them and opening its stores. The deal also allowed Target the right to carry a brand of clothing that had been exclusive to Zellers in Canada, as well as the right to take over Zellers’ pharmacy files.

As part of the transaction, Target took over the lease of a Zellers store in a Burnaby, B.C., mall. Zellers announced the store would close on March 14, 2013.

The mall was about to undergo a major renovation and Target negotiated a lease with the mall landlord for a new location in the mall once the renovation was completed. The old Zellers location would be made available for another retailer to lease.

The union representing the Zellers workers applied to the board for a declaration that Target would be a successor employer under the B.C. Labour Code, which stated:

“If a business or a part of it is sold, leased, transferred or otherwise disposed of, the purchaser, lessee or transferee is bound by all proceedings under this Code before the date of the disposition and the proceedings must continue as if no change had occurred.

“If a collective agreement is in force, it continues to bind the purchaser, lessee or transferee to the same extent as if it had been signed by the purchaser, lessee or transferee, as the case may be.”

The union argued part of the Zellers business was being sold or transferred to Target — including the stores, clothing brand rights and pharmacy files.

The board found Target was not a successor employer to Zellers. Though both were mass merchandise department stores, Target was a different and established brand that wouldn’t necessarily appeal to the same customers as Zellers, said the board. Also, though leases, certain rights and pharmacy files were transferred, these weren’t “definitive parts of Zellers’ business.” Target didn’t acquire any of Zellers’ inventory, business processes, employment policies, contracts, accounts or branding. The main reasons for the transactions were the attractiveness of existing Zellers locations and Target’s wish to avoid direct competition in the areas it opened stores, said the board.

The board also found that at the Burnaby mall in particular, Target negotiated a new lease and would be operating in a different location in the mall than Zellers. In addition, because of the renovations, there would be a gap of between six months and three years from the closing of the Zellers store and the opening of the Target store. Though some of the Zellers employees might be hired to work at Target, this couldn’t be considered a continuous chain of employment, said the board in dismissing the union’s application

“I find that Target is bringing its own highly successful business to Canada,” said the board. “It did not need Zellers for anything but the lease or the opportunity to negotiate a new lease in a new area of (the mall).”

For more information see:

Zellers Inc. and Target Canada Co. and U.F.C.W., Local 1518 (Nov. 8, 2012), BCLRB No. 243/2012 (B.C. Lab. Rel. Bd.).
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