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State v. Nakanelua

Intermediate Court of Appeals of Hawai'i

January 31, 2014

STATE OF HAWAI'I; CITY AND COUNTY OF HONOLULU; COUNTY OF HAWAI'I; COUNTY OF MAUI; COUNTY OF KAUAI; HAWAI'I HEALTH SYSTEMS CORPORATION; AND THE JUDICIARY, Complainants/Appellees-Appellees, Case No. CU-10-278
v.
DAYTON NAKANELUA, State Director, UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO and UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO (2009-42), Respondents/Appellants-Appellants, and HAWAI'I LABOR RELATIONS BOARD; JAMES B. NICHOLSON; SESNITA A.D. MOEPONO; and ROCK B. LEY, UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO, Complainant/Appellant-Appellant, Case No. CE-10-726,
v.
NEIL DIETZ, and HAWAI'I LABOR RELATIONS BOARD; JAMES B. NICHOLSON; SESNITA A.D. MOEPONO; and ROCK B. LEY, Agency/Appellees-Appellees. UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO, Union-Appellee/Cross-Appellant,
v.
STATE OF HAWAI'I; THE JUDICIARY; HAWAI'I HEALTH SYSTEMS CORPORATION, Employers-Appellants/Cross-Appellees, and CITY AND COUNTY OF HONOLULU (2009-044), Employer-Appellee. Case No. CU-10-278, STATE OF HAWAI'I, CITY AND COUNTY OF HONOLULU; COUNTY OF HAWAI'I; COUNTY OF MAUI; COUNTY OF KAUAI; HAWAI'I HEALTH SYSTEMS CORPORATION; AND THE JUDICIARY, Complainants/Appellees-Appellees,
v.
DAYTON NAKANELUA, State Director, UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO AND UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO (2009-042), Respondents/Appellants-Appellants, and HAWAI'I LABOR RELATIONS BOARD; JAMES B. NICHOLSON; SESNITA A.D. MOEPONO; and ROCK B. LEY, Agency/Appellees-Appellees. Case No. CE-10-726, UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO, Complainant/Appellant-Appellant,
v.
NEIL DIETZ, Chief Negotiator, Office of Collective Bargaining, State of Hawai'i (2009-043), Respondent/Appellee-Appellee, and HAWAI'I LABOR RELATIONS BOARD; JAMES B. NICHOLSON; SESNITA A.D. MOEPONO; and ROCK B. LEY, Agency/Appellees-Appellees

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[Copyrighted Material Omitted]

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APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT. CIVIL NO. 09-1-2488, SPECIAL PROCEEDINGS NO. 09-1-0305, CIVIL NO. 10-1-0323.

On the briefs: Herbert R. Takahashi, Rebecca L. Covert, Davina W. Lam, (Takahashi and Covert, AAL), for United Public Workers, AFSCME, AFL-CIO and Dayton Nakanelua.

James E. Halvorson, Nelson Y. Nabeta, Jeffrey A. Keating, Deputy Attorneys General, Department of the Attorney General, State of Hawai'i, for State of Hawai'i; the Judiciary, Hawaii Health Systems Corporation; and Neil Dietz.

Valri Lei Kunimoto, Hawai'i Labor Relations Board, for the Hawai'i Labor Relations Board and its members.

NAKAMURA, CHIEF JUDGE, AND FOLEY AND LEONARD, JJ.

OPINION

Page 139

[132 Hawai'i 495] NAKAMURA, CHIEF JUDGE.

Page 140

These consolidated appeals stem from a dispute between government employers and a government-employee union regarding the process of selecting a neutral arbitrator after an impasse was reached in the parties' renegotiation of their collective bargaining agreement (CBA) for a new term. The type of arbitration involved in this case, known as [132 Hawai'i 496] " interest arbitration," [3] is designed to determine the terms of the parties' CBA when the parties cannot come to an agreement and an impasse is reached. The use of arbitration to resolve the impasse in this case is mandated by statute.

The government employers, the State of Hawai'i (State), the Judiciary, Hawaii Health Systems Corporation, and the City and County of Honolulu (City) (collectively, " Employer" ), and the government-employee union, United Public Workers, AFSCME, Local 646, AFL-CIO (UPW), reached an impasse in the renegotiation of the CBA for Bargaining Unit 10 (Unit 10), which is comprised of institutional, health, and correctional workers. Employer and UPW entered into a Memorandum of Agreement (MOA) setting forth an alternate impasse procedure for selecting a panel of arbitrators to conduct the arbitration required by Hawaii Revised Statutes (HRS) § 89-11 (2012) to resolve the impasse. However, after a dispute arose over the selection of the neutral arbitrator under the MOA, both Employer and UPW filed prohibited practice complaints with the Hawai'i Labor Relations Board (HLRB or Board). UPW also filed a motion to compel arbitration concerning this dispute with the Circuit Court of the First Circuit (Circuit Court).

The HLRB issued an order for interlocutory relief in Employer's and UPW's prohibited practice cases that directed the American Arbitration Association (AAA) to select the neutral arbitrator. After the neutral arbitrator was selected, arbitration hearings were held and the arbitration panel issued its award. UPW filed a motion to confirm the arbitration award with the Circuit Court, which the Circuit Court granted. In these consolidated appeals, neither UPW nor Employer challenges the terms of the arbitration award or seeks to invalidate the award, which pertains to the 2009-2011 CBA. After the Circuit Court issued its order confirming the arbitration award, UPW filed a motion in Circuit Court to have Employer found in civil contempt for allegedly violating the arbitration award and disobeying the confirmation order by failing to meet and confer to complete the final drafting of the CBA. The Circuit Court denied UPW's motion.

On appeal, UPW argues that the Circuit Court erred in: (1) determining that the HLRB, and not the Circuit Court, had jurisdiction to resolve the parties'[4] dispute over the selection of the neutral arbitrator; (2) determining that the HLRB had not exceeded its authority in issuing the order for interlocutory relief directing the AAA to select the neutral arbitrator; (3) determining that the HLRB had not erred or violated UPW's due process rights in ruling that UPW had committed a prohibited practice in connection with the selection of the neutral arbitrator; and (4) denying UPW's motion to find Employer in civil contempt.

Page 141

We conclude that because neither UPW nor Employer challenges or seeks to invalidate the terms of the arbitration award on appeal, and UPW, in particular, has moved to confirm and enforce the arbitration award, UPW's challenges to the selection of the neutral arbitrator in these appeals are moot. However, we further conclude that certain aspects of UPW's challenges to the selection of the neutral arbitrator, namely, whether the HLRB or the Circuit Court had original jurisdiction to resolve the parties' dispute over the selection and whether the HLRB exceeded its authority in the remedial interlocutory relief it granted, falls within the public interest exception to the mootness doctrine. See Hawaii Gov't Emps. Ass'n, AFSCME, Local 152, AFL-CIO v. Lingle (hereinafter, " HGEA" ), 124 Hawai'i 197, 202 n.8, 239 P.3d 1, 6 n.8 (2010). As explained in greater detail below, we hold that UPW's and Employer's dispute over the selection of the neutral arbitrator and UPW's motion for civil contempt involved controversies concerning [132 Hawai'i 497] prohibited practices over which the HLRB had exclusive original jurisdiction. We further hold that the HLRB did not exceed its authority in issuing its order for interlocutory relief. Accordingly, we hold that UPW is not entitled to the relief it requests in these consolidated appeals.

BACKGROUND

I.

HRS § 89-11 (2012)[5] establishes the process for resolving an impasse between a public employer and the exclusive bargaining representative of a bargaining unit in negotiating the terms of a renewed CBA. HRS § 89-11 (e), which applies to Unit 10, provides for mediation if an impasse exists, and then submission to arbitration if the impasse continues for more than twenty days.[6] In this type of arbitration, known as " interest arbitration," the arbitrator or arbitration panel is used to resolve the impasse by determining the actual contract terms that will bind the parties during the life of their new collective bargaining agreement.[7]

Page 142

HRS § 89-11 (e) (2) (A)-(D) sets forth procedures for selecting a three-member panel to conduct the interest arbitration and deadlines for the arbitration panel to hold a hearing and issue the arbitration decision. HRS § 89-11(f) establishes the factors the arbitration panel must give weight to in reaching its decision and requires the panel to " include in its written report or decision an explanation of how the factors were taken into account[.]" [8] HRS § 89-11(a) authorizes the [132 Hawai'i 498] parties to enter into a written agreement setting forth an alternate impasse procedure to the one set forth in HRS § 89-11(e) that culminates in an arbitration decision pursuant to HRS § 89-11(f).[9] The alternate impasse procedure is required to specify whether the parties desire an arbitrator or arbitration panel; how the neutral arbitrator will be determined or the name of the neutral arbitrator selected by the parties; and other details regarding the issuance of the arbitration decision. HRS § 89-11(a). Although HRS § 89-11(a) permits the parties to agree to an alternate impasse procedure for selecting arbitrators and conducting the arbitration, HRS § 89-11 requires that the impasse be resolved through arbitration.[10]

II.

On November 20, 2008, UPW entered into negotiations with Employer over the renewal of and modifications to the Unit 10 CBA for the period from July 1, 2009, through June 30, 2011. The parties could not reach mutual agreement on all the terms being negotiated, and thus, the HLRB issued an order pursuant to HRS § 89-11 (c) (2) declaring that the parties had reached an impasse. On March 3, 2009, UPW and Employer entered into an MOA setting forth an alternative impasse procedure pursuant to HRS § 89-11(a). The MOA named Dayton Nakanelua (Nakanelua), the UPW State Director, and Marie Laderta (Laderta), the Chief Negotiator for the State, as the representatives for UPW and Employer, respectively.

The MOA set forth the procedure and deadlines for selecting a panel of three arbitrators. Employer and UPW would each select a panel member, and a third neutral arbitrator would be selected by mutual agreement of the parties to serve as the chair of the panel. If mutual agreement as to the neutral arbitrator could not be reached by July 6, 2009, the MOA provided that the HLRB would request a list of five potential arbitrators from the AAA, and each party would alternatively strike a name from the list until a single name remained. The striking process was to be completed within five working days after receiving the list from the AAA.

By letter dated June 29, 2009, UPW designated Clifford Uwaine to serve as its panel member. By letter dated July 13, 2009, Laderta selected Georgina Kawamura as Employer's panel member, but later replaced Kawamura with Stanley Shiraki.

UPW and Employer could not mutually agree on the neutral arbitrator by the agreed upon deadline. Accordingly, on July 15, 2009, the AAA provided the parties with the following five names of potential arbitrators from which to select the neutral arbitrator: Sara Adler, Norman Brand, Fredric R. Dichter, Jonathan Dworkin, and William E. Riker. Under the MOA, the neutral arbitrator was to be selected by the parties on or before July 22, 2009. However, when that date passed without the parties beginning the striking process, the parties agreed to amend the MOA to extend the deadline for selecting the neutral arbitrator to July 28, 2009.

Page 143

[132 Hawai'i 499] According to Employer, after receiving the AAA list, Laderta attempted to contact Nakanelua regarding the selection of the neutral arbitrator prior to the amended deadline, but Nakanelua did not return her calls. On July 28, 2009, Herbert R. Takahashi, Esq. (Takahashi), UPW's attorney, sent a letter to each public employer (or its counsel) involved in the interest arbitration with Unit 10, stating that he would be selecting the arbitrator in behalf of UPW and requesting verification of " who will be doing the selection for the employer jurisdictions." Deputy Attorney General James E. Halvorson (Halvorson) informed Takahashi by letter dated July 31, 2009, that he had been assigned to represent Employer and would be " selecting the [a]rbitrator in this matter." Takahashi responded with a letter dated August 3, 2009, requesting clarification from Halvorson regarding " which 'employer' you represent." Halvorson responded by letter dated August 6, 2009, reiterating that he represented Employer " in the upcoming Unit 10 interest arbitration" and would be conducting the selection of the neutral arbitrator. Halvorson also requested that Takahashi contact him to make arrangements to begin the selection process.

On August 10, 2009, Halvorson requested the HLRB's assistance in facilitating selection of the neutral arbitrator. On August 13, 2009, the HLRB held a meeting with the parties where Halvorson proposed to initiate the striking procedure. Takahashi refused to begin the striking process at that meeting. Takahashi wrote to Halvorson by letter dated August 14, 2009, asking him to proceed with the first strike, but stating that such action would not constitute a waiver of UPW's right to contest Halvorson's authority to represent Employer.

Halvorson exercised Employer's first strike by striking William E. Riker in an undated letter received by Takahashi on August 18, 2009. Takahashi responded by letter dated August 20, 2009, which Halvorson asserted he received on August 24, 2009, striking Norman Brand.

In an August 21, 2009, email, AAA case manager Chris Camardella (Camardella) advised the parties that none of the five arbitrators would likely be available to accommodate the September 11, 2009, date set by the MOA for commencement of the arbitration hearing due to the delay in selecting the neutral arbitrator. In his email, Camardella set a deadline of August 25, 2009, for the parties to select the neutral arbitrator and stated that absent receipt of advice from the parties, AAA would administratively appoint an arbitrator at that time. Takahashi responded to Camardella by letter dated August 24, 2009, asserting that the AAA lacked the authority to set a deadline for the selection of the neutral arbitrator or to appoint the neutral arbitrator. In his letter to AAA, Takahashi also noted that there was a " dispute over who the 'employer' is, and whether the selection of arbitrators by the State . . . is improper."

Employer subsequently sent a letter to Takahashi dated August 26, 2009, asserting that Takahashi had " stonewalled any attempts to select [a neutral] arbitrator[,]" and that he had " delayed the selection by taking one week to make [his] strike." In addition, Employer claimed that Takahashi was " not acting in good faith" by continuing to challenge Halvorson's authority to act for Employer, and thus, UPW had waived certain of its rights related to the interest arbitration. Takahashi responded by letter dated August 27, 2009, requesting Employer to make its second strike, which Employer refused to do.

III.

Page 144

On August 24, 2009, Employer filed a prohibited practice complaint with the HLRB against UPW and Nakanelua, State Director of UPW, in Case No. CU-10-278. Employer's complaint asserted, among other things, that: (1) Employer's Chief Negotiator (Laderta) attempted to contact UPW's State Director (Nakanelua) from July 15, 2009, until July 28, 2009, but that Nakanelua never returned Laderta's calls; and (2) UPW has refused to participate in the selection of an arbitrator or honor the AAA's August 25, 2009, deadline for selection. Employer alleged that UPW committed a prohibited practice through its wilful violation of HRS § 89-13(b) (4) [11] [132 Hawai'i 500] by refusing to comply with HRS § 89-11.

On August 31, 2009, UPW filed a prohibited practice complaint with the HLRB against Laderta, Chief Negotiator, Office of Collective Bargaining, State of Hawai'i, in Case No. CE-10-726. UPW's complaint asserted, among other things, that: (1) on August 26, 2009, Laderta refused to exercise her second strike from the remaining members on the AAA list; and (2) on and after August 28, 2009, Laderta has willfully refused to proceed with the arbitrator selection process as required by the MOA. UPW alleged that Laderta committed a prohibited practice in wilful violation of HRS § 89-13(a)(8).[12]

On September 2, 2009, the State filed a motion for interlocutory relief in Case No. CU-10-278 (Motion for Interlocutory Relief), seeking a declaratory order that UPW: (1) is in violation of the MOA; (2) committed a prohibited practice; and (3) waived its right either (a) to participate in the interest arbitration or (b) to participate in the selection of the neutral arbitrator. On September 10, 2009, UPW filed a motion to dismiss Employer's complaint for lack of subject matter jurisdiction and failure to state a claim, or in the alternative, for summary judgment (Motion to Dismiss Case No. CU-10-278). On September 10, 2009, UPW filed a motion for summary judgment on its complaint in Case No. CE-10-726 (Motion for Summary Judgment).

The HLRB consolidated Case Nos. CU-10-278 and CE-10-726. On September 21, 2009, the HLRB held a hearing on (1) the State's Motion for Interlocutory Relief, (2) UPW's Motion to Dismiss Case No. CU-10-278, and (3) UPW's Motion for Summary Judgment in Case No. CE-10-726.

On September 25, 2009, the HLRB issued Order No. 2640, which granted, in part, the State's Motion for Interlocutory Relief, but did not rule on the other motions. The HLRB determined that " under [HRS] Chapter 89[,] the Board has exclusive jurisdiction over disputes involving interest arbitration as it does over disputes involving other collective bargaining and collective bargaining agreements." The HLRB recited the numerous filings by and correspondences between UPW and Employer pertaining to the selection of the neutral arbitrator, and it concluded:

19. It is clear to the Board that there has been undue delay in the selection of the neutral arbitrator. Because it is the employer that moved the Board for interlocutory relief, the Board's analysis is therefore based upon whether or not the employer is likely to prevail at trial. The Board concludes that, given the history of events regarding the interest arbitration procedure, the employer is likely to prevail on the merits that the UPW committed a prohibited practice by wilfully failing to comply with the impasse procedure set forth in HRS § 89-11 and by extension the alternate impasse procedure authorized by HRS § 89-11 and entered into by the parties.
20. With respect to balance of irreparable damage, the balance favors interlocutory relief. The expiration of the Unit 10 contract was June 30, 2009. The relatively short time frames for the interest arbitration process contained in HRS § 89-11 evince the legislature's intent that unresolved issues between the parties be dealt with expeditiously. To wilfully refuse to comply with the interest arbitration deadlines puts the interests of both parties and the public employees belonging to Unit 10, at risk. Additionally, the Unit 10 members do not have the legal right to strike, and the [132 Hawai'i 501]

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interest arbitration proceeding is their only means to obtain a new or renewed collective bargaining agreement once impasse occurs. Therefore, the interest ...

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