In the Matter of the Grievance Arbitration Between STATE OF HAWAII ORGANIZATION OF POLICE OFFICERS (SHOPO), exclusive representative for Bargaining Unit 12, Police, on behalf of SHELLY L. RODRIGUES, JAMES A. RODRIGUEZ, and SHANE Y. SOKEI, Grievants-Appellants, and COUNTY OF KAUA'I, and KAUA'I POLICE DEPARTMENT, Employer-Appellees
APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT. (S.P. NO. 09-1-0031).
On the briefs: Vladimir Devens for Grievant-Appellant.
Alfred B. Castillo, Jr., Mauna Kea Trask, Office of the County Attorney, County of Kaua'i for Employer-Appellees.
FOLEY, PRESIDING JUDGE AND FUJISE, J. WITH GINOZA, J., CONCURRING AND DISSENTING SEPARATELY.
[134 Hawai'i 156]
Grievants-Appellants State of Hawaii Organization of Police Officers ( SHOPO ), exclusive representative for Bargaining Unit 12, Police, on behalf of Shelly L. Rodrigues ( Rodrigues ), James A. Rodriguez ( Rodriguez ), and Shane Y. Sokei ( Sokei ) appeal from the (1) September 20, 2010 " Order Granting in Part and Denying in Part Grievant SHOPO's Motion to Confirm Arbitrator's Award [Filed 7/20/10]" ( Order re Motion to Confirm ); (2) September 20, 2010 " Order Granting in Part and Denying in Part Employer's [134 Hawai'i 157] Counter-Motion to Vacate Filed August 5, 2010" (Order re Counter-Motion to Vacate); (3) August 6, 2009 " Order Denying Grievant SHOPO's Motion to Confirm Arbitrator's Award [Filed 6/23/09]" (Order re Motion to Confirm); and (4) August 6, 2009 " Order Granting in Part and Denying in Part Employer's Counter-Motion to Vacate [Filed 7/2/09]," (Order re Counter-Motion to Vacate) all entered in the Circuit Court of the Fifth Circuit (circuit court).
On appeal, SHOPO contends the circuit court erred by:
(1) vacating the arbitrator's remedial promotion of Grievants by ruling that:
(a) the arbitrator's remedy was in excess of his authority under the collective bargaining agreement, effective from July 1, 2007 to June 30, 2011 (CBA), and in violation of Hawaii Revised Statutes (HRS) § 658A-23(a)(4) (Supp. 2001);
(b) CBA provisions allowing the arbitrator to " otherwise change" any action by Employer-Appellees County of Kaua'i (County) and Kaua'i Police Department (KPD) (collectively, Employer) that the arbitrator found to be unfair, unjust, or improper were unclear, vague and ambiguous, and " potentially" conflicted with Article 11 of the CBA and HRS § 89-9(d) (Supp. 2007);
(c) the arbitrator's remedy violated public policy; and,
(2) substituting its own interpretation of the CBA for that of the arbitrator in violation of CBA provisions that the arbitrator's decision be " final and binding."
Around May 22, 2007, Employer notified SHOPO that they would promote five (5) officers from an existing eligible list, compiled as the result of a written exam, consisting of ten (10) officers, including Rodrigues, Rodriguez, and Sokei (collectively, Grievants). The acting chief of police utilized an oral interview process- to pick the officers for promotion.
On July 1, 2007, the new CBA under which SHOPO raises its points on appeal became effective.
On or about August 29, 2007, grievants received letters from KPD notifying them of their non-selection to the position of police sergeant.
On or around September 12, 2007, SHOPO filed grievances on behalf of Grievants, police officers with Employer. Grievants contested Employer's promotional process after they were not selected for promotion to the rank of police sergeant. SHOPO's grievances asserted inter alia that the promotion process was " subjective, arbitrary and capricious," heavily dependent on an inconsistent oral interview exam  and not based on merit, ability, or fair standards as required by Article 47 of the CBA  and various statutory and regulatory requirements for promotions within the civil service system. SHOPO requested promotion to sergeant for Grievants [134 Hawai'i 158] and retroactive payment of all salary and other benefits, rights, and privileges resulting from the improper non-promotion.
In the " Arbitration Decision and Award" (Award) dated June 2, 2009, the arbitrator found the oral interview portion of the promotional process did not address the requirements of the position and was subjective, arbitrary and capricious. The arbitrator found that the promotion process did not take into account the applicant's entire history, knowledge and abilities, and was not based on fair standards of merit and ability as required by the CBA. He wrote, " [t]he varied instructions on what experience could be used in answering the oral questions by each candidate and the inconsistent treatment of the candidates renders the oral examination unfair, inconsistent, and arbitrary." The arbitrator further noted that Employer failed to meet with each grievant and provide the reasons for the employee's non-selection for promotion, in violation of the CBA.
The arbitrator ordered that Grievants be promoted to the position of sergeant with a retroactive effective date of September 23, 2007, and also mandated back pay and entitlement to any additional rights, benefits and privileges that would have resulted from promotion. The arbitrator also recommended that KPD and SHOPO meet to review, discuss and implement measures to improve the promotion process.
On June 23, 2009, SHOPO filed a motion to confirm the arbitrator's Award in the circuit court. SHOPO argued that the Award was a proper exercise of the arbitrator's authority under Article 32(L)(9)(b)(2) of the CBA, which authorized him to set aside, reduce or otherwise change any action which the arbitrator finds " unfair, unjust, [or] improper." Employer opposed the motion to confirm and filed a counter-motion to vacate the arbitrator's award on July 2, 2009. Employer argued the arbitrator promoted the three officers based on his own criteria, exceeded his authority as arbitrator, and the remedial promotion violated public policy by encroaching on management's right to promote.
On August 6, 2009, the circuit court issued the Order re Motion to Confirm and Order re Motion to Vacate. The circuit court denied SHOPO's motion to confirm because " the Arbitrator's remedy exceeded the arbitrator's authority and powers granted under Article 32 of the [CBA] in violation of HRS § 658A-23(a)(4)."  The court granted in part and denied in part Employer's motion to vacate, confirmed that the grievances were properly before the arbitrator and within his jurisdiction and authority, and remanded for rehearing on the issue of remedy. On September 1, 2009, SHOPO filed a Notice of Appeal. In State of Hawaii Organization of Police Officers (SHOPO) v. County of Kauai, 123 Hawai'i 128, 230 P.3d 428 (App. 2010), this court dismissed the case for lack of appellate jurisdiction and held that the circuit court order denying a motion to confirm an award, vacating the award, and directing rehearing was not appealable pursuant to HRS § 658A-28(a)(3) (Supp. 2008). Id. at 132, 230 P.3d at 432.
Pursuant to the circuit court's August 6, 2009 orders, the parties met with the arbitrator and agreed to a rehearing through memoranda. On July 8, 2010, the arbitrator issued his ruling that the " Arbitrator's original remedy will remain unchanged based on the Arbitrator's [134 Hawai'i 159] reading and interpretation of the plain language and meaning of the 'Arbitrator's Authority,' as set forth in Article 32 of the applicable collective bargaining agreement." The arbitrator ruled that the CBA vested him with authority to resolve the grievances, the phrase " otherwise change" was clear and unambiguous, and the CBA placed no restrictions on his authority grant remedial promotions. He further found the remedy was consistent with past practices of the parties to the CBA and Employer had not contended during arbitration that Article 32 precluded remedial promotions.
On July 20, 2010, SHOPO filed a motion in the circuit court to confirm the arbitrator's award. On August 5, 2010, Employer filed a memorandum in opposition and a counter-motion to vacate. Employer argued that the arbitrator exceeded his authority because Article 11 of the CBA retained Employer's management rights over promotional procedures and that the arbitrator could not mandate promotion as a remedy.
On September 20, 2010, the circuit court filed its Order re Motion to Confirm, which confirmed the arbitrator's findings and decision in all respects except for the remedy. The circuit court found the remedial promotions were in excess of the arbitrator's authority under the CBA because the words " otherwise changed" in Article 32 of the CBA were " unclear, vague and ambiguous, [and] potentially conflict[ed] with Article 11 of the CBA and HRS § 89-9(d) [(Supp. 2012)]," and the remedy violates public policy. The circuit court also filed the Order re Counter-Motion to Vacate which contained a substantially identical ruling.
On October 15, 2010, SHOPO filed a notice of appeal.
II. STANDARD OF REVIEW
An appellate court reviews " the circuit court's ruling on an arbitration award de novo," but is " mindful that the circuit court's review of arbitral awards must be extremely narrow and exceedingly deferential." Tatibouet v. Ellsworth, 99 Hawai'i 226, 233, 54 P.3d 397, 404 (2002) (citations, internal quotation marks, and brackets omitted).
" The scope of an arbitrator's authority is determined by agreement of the parties. An arbitrator must act within the scope of the authority conferred upon him by the parties and cannot exceed his power by deciding matters not submitted."
Clawson v. Habilitat, Inc., 71 Haw. 76, 78, 783 P.2d 1230, 1231 (1989). " [W]here an arbitrator has exceeded his or her powers . . . pursuant to HRS § 658-9(4),  the resulting arbitration award must be vacated."
Tatibouet, 99 Hawai'i at 235, 54 P.3d at 406.
When the parties include an arbitration clause in their collective bargaining agreement, they choose to have disputes concerning constructions of the contract resolved by an arbitrator. Unless the arbitral decision does not draw its essence from the collective bargaining agreement, a court is bound to enforce the award and is not entitled to review the merits of the contract dispute. This remains so even when the basis for the arbitrator's decision may be ambiguous.
W.R. Grace & Co. V. Local Union 759, Int'l Union of United Rubber, Cork, Linoleum & Plastic Workers of Am.,
461 U.S. 757, 764, 103 S.Ct. 2177, 76 L.Ed.2d 298 (1983) (citations, internal quotation marks, and brackets omitted).
A. Employer was not estopped from challenging the award as exceeding the arbitrator's authority
SHOPO contends that Employer was estopped from contesting the arbitrator's authority [134 Hawai'i 160] to grant remedial promotions pursuant to Article 11 or 32 of the CBA because it failed to raise this argument during the arbitration process. The doctrine of quasi-estoppel provides " that one should not be permitted to take a position inconsistent with a previous position if the result is to harm another." Univ. of Hawaii Prof'l Assembly on Behalf of Daeufer v. Univ. of Hawaii, 66 Haw. 214, 221 659 P.2d 720, 726 (1983) (hereafter UHPA).
In UHPA, an employer agreed to submit tenure and promotion grievances to final and binding arbitration, but argued to the circuit court that the arbitrator was powerless to grant tenure or promotion upon a finding of arbitrary or capricious conduct. Id., 66 Haw. at 221-22; 659 P.2d at 725-26. The court held the employer was estopped from challenging the scope of the arbitrator's remedial authority. Id. The court reasoned that failure to raise this issue during arbitration proceedings, and then pursuing it in judicial proceedings, would make the UHPA grievants " substantially disadvantaged in terms of time and money spent in the arbitration process and in litigation." Id., 66 Haw. at 222, 659 P.2d at 726.
UHPA is distinguishable from the instant case. While both CBAs provided that an arbitrator's decision would be " final and binding[,]" the UHPA collective bargaining agreement expressly gave the arbitrator the right and power to " substitute his judgment for that of the official" if the arbitrator found the official's decision to be arbitrary or capricious, UHPA, 66 Haw. at 223, 659 P.2d at 727. By contrast, Article 11 of the 2003-2007 CBA, in this case expressly provides that Employer " reserves and retains, solely and exclusively, all management rights and authority, including the rights set forth in [HRS § 89-9(d)(1)-(8)], except as specifically abridged or modified by this Agreement."
SHOPO's other grounds for estoppel are unavailing. The arbitrator found: " Employer never contended during the arbitration hearings that the language in Article 32 was not sufficiently worded to permit the Arbitrator to grant a promotion to remedy the grievances[.]" Although Employer did not specifically appeal the arbitrator's finding and rather sought vacatur of the remedy, review of the arbitration award is properly before this court pursuant to HRS Chapter 658A and the County properly filed a motion to vacate. Furthermore, Employer did contest the arbitrator's authority to actually promote the grievants. The Arbitration Decision and Award summarized Employer's arguments to include:
7. The Arbitrator has no jurisdiction over the subjects raised by the Grievants.
8. The Grievants are not entitled to automatic promotions, or back-pay at the Sergeant's level.
We conclude that Employer is not estopped from asserting that the Arbitrator exceeded his authority in granting promotions to the three grievants.
B. The arbitration award did not violate public ...