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In re BCI Coca-Cola Bottling Company of Los Angeles, Inc.

Supreme Court of Hawaii

June 10, 2019

IN THE MATTER OF BCI COCA-COLA BOTTLING COMPANY OF LOS ANGELES, INC., Respondent/Respondent/Appellant/Appellee/Cross-Appellee,
SCOTT MURAKAMI, in his official capacity as the Director, Department of Labor and Industrial Relations, STATE OF HAWAI'I; DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS, STATE OF HAWAI'I, Respondents/Appellees/Appellees/Cross-Appellants, and TAMMY L. JOSUE, Petitioner/Complainant/Appellee/Appellant/Cross-Appellee.


          Ronald Fujiwara for petitioner

          Adam S. Rosenberg for respondents Scott Murakami, Director of Department of Laborand Industrial Relations, and Department of Labor and Industrial Relations

          Anna Elento-Sneed for respondent BCI Coca-Cola Bottling Company

          Robert H. Thomas Loren A. Seehase for amicus curiae National Federation of Independent Business Small Business legal Center



          POLLACK, J.

         Hawai'i law protects workers who suffer injuries arising out of and in the course of their employment from being discharged, suspended, or discriminated against on the sole basis of their work injuries. In this case, an employer hired a permanent replacement for an employee who was taking a leave of absence due to such an injury. The employer thus declined to reinstate the employee to her pre-injury position upon her return, instead offering her only positions that were downgrades from her previous work or that she was unqualified to perform. The employer contends that this was not discrimination based solely on the employee's work injury because it was motivated by the company's business needs.

         We now hold that, in order for business necessity to constitute a valid defense to a claim of work injury discrimination, an employer must demonstrate that the employee's absence caused a business impairment that could not be reasonably alleviated by means that would not result in discrimination. Because no such showing was made in this case, we affirm the decision of the Director of the Hawai'i Department of Labor and Industrial Relations that the work injury discrimination in this case contravened our law. We accordingly vacate the Circuit Court of the First Circuit's judgment and the Intermediate Court of Appeals' Judgment on Appeal and remand the case to the Hawai'i Department of Labor and Industrial Relations for any further proceedings as may be appropriate.


         A. Agency Proceedings

         1. Hearing Officer

         On September 15, 2010, Tammy L. Josue filed a complaint with the Wage Standards Division of the Hawai'i Department of Labor and Industrial Relations (Department) alleging that BCI Coca-Cola Bottling Company (Coca-Cola) discriminated against her on the basis of her work injury in violation of Hawai'i Revised Statutes (HRS) § 378-32(2) (1993).[1]Coca-Cola responded on October 7, 2010, denying the allegations and arguing that Josue's claim was untimely.

         An administrative hearing on the complaint commenced on February 7, 2011. Josue testified that she began working at Coca-Cola in 2000 as a full-service driver and later received a promotion to full-service supervisor. On May 29, 2009, Josue stated, she suffered an injury during the course of her employment. Josue explained that she was unable to work as a result of this injury and was placed on a leave of absence in accordance with Coca-Cola's disability leave policy. Josue testified that she attempted to resume her employment on September 1, 2010, the day after her doctor authorized her to return to work with no restrictions, but she was informed that Coca-Cola had hired an employee to permanently fill her position. Coca-Cola thereafter offered Josue several other positions with the company, but Josue testified that these offers were rejected because she either could not meet the physical requirements of the positions due to a prior shoulder injury, the positions required experience or certifications that she did not possess, or the positions were downgrades from her pre-injury employment.

         Coca-Cola called two witnesses: a human resources manager and Josue's supervisor. The human resources manager testified that, during Josue's absence, she received a request from Josue's supervisor that the position be filled.[2] The manager stated that, after Josue's position had been vacant for ten months, Coca-Cola hired a permanent replacement in April 2010.[3] The vacancy had been creating a hardship, the manager explained, because two other supervisors were covering Josue's job duties in addition to performing their own. Josue's supervisor added that the two individuals providing coverage were required to adjust their schedules by arriving to work two hours prior to the time that they typically arrived.

         When asked by the hearing officer about the internal process behind hiring a permanent replacement to fill Josue's position, the manager refused to answer because she said that the process was "confidential" and "privileged." The manager stated, however, that the company did not have any information regarding whether Josue was capable or incapable of returning to work when it hired Josue's replacement. The manager testified that Coca-Cola's disability leave policy, which allowed an employee to take a twelve-month leave of absence after a work injury, does not state that the injured employee's job will remain open for those 12 months, but rather merely provides that the employee's benefits end after twelve months.

         In her post-hearing brief, Josue argued that Coca-Cola violated HRS § 378-32(2) by failing to return her to the position she had previously held when she was capable of returning to work after suffering a workplace injury. This amounted to unlawful discrimination based solely on an injury that arose from her employment, she contended, and any argument that the company filled the position for business reasons was pretextual. In response, Coca-Cola asserted that its failure to reinstate Josue to her former position had nothing to do with her work injury, but rather was the result of the company filling the position more than four months prior to when Josue was medically released to return to work. Additionally, Coca-Cola argued, nothing in the language or legislative history of HRS § 378-32(2) required it to keep Josue's position vacant indefinitely or return her to her same position after she was medically cleared to work.

         On August 1, 2011, the hearing officer issued a Recommended Decision stating that Coca-Cola's failure to return Josue to her position was contrary to the purpose of HRS § 378-32(2). The hearing officer determined that the statute did not require Coca-Cola to keep Josue's position open indefinitely, but it did make it unlawful "for an employer to discriminate against an employee in conditions or terms of employment when the employee has been released to return to work full duty, no restrictions to the position occupied at the time of the work injury." Because Coca-Cola knew or should have known that Josue would one day be able to return to work without restrictions, the hearing officer concluded, the company should have filled her position with a temporary replacement that was subject to her right to return. Thus, the hearing officer determined that Coca-Cola discriminated against Josue solely because of a compensable work injury in violation of HRS § 378-32(2) and recommended that Josue be returned to the position that she held before suffering her injury.

         2. Director

         Coca-Cola appealed the Recommended Decision to the Director of the Hawai'i Department of Labor and Industrial Relations (the Director). Coca-Cola again argued that the plain language of HRS § 378-32(2) did not prevent it from hiring a replacement nor did it require the company to return Josue to her pre-work related injury position. Specifically, Coca-Cola argued that the "[s]olely because" language in the statute meant that the work injury must be the only reason for the employment action, and here the reason for not reinstating Josue was that a replacement was hired due to the business hardship inherent in requiring other employees to perform the duties of the position while Josue was absent. (Citing Fergerstrom v. Datapoint Corp., 680 F.Supp. 1456, 1459 (D. Haw. 1988).) Thus, Coca-Cola concluded, the Recommended Decision was clearly erroneous because the company's failure to return Josue to her prior position was motivated by legitimate, business concerns.

         The Director, in his Decision and Order, noted that when the legislature added the term "discriminate" to HRS § 378-32(2) in 1981, it made unlawful the practice of reassigning an employee to a position with other duties at a lower rate of pay after the injured employee returned to work. (Citing S. Stand. Comm. Rep. No. 782, in 1981 Senate Journal, at 1249.) Here, the Director stated, Josue was not returned to her pre-injury position, but instead was offered other positions that were either downgrades or positions for which Josue did not meet the requirements. The Director agreed with the hearing officer that although Coca-Cola should not be required to hold Josue's position open indefinitely, it could have satisfied its business concerns by filling the position with a temporary employee. By instead hiring a permanent employee to fill Josue's position, the Director determined, Coca-Cola became unable to return Josue to her pre-injury position "solely because she suffered a work injury in violation of section 378-32." The Director's Decision and Order thus adopted the hearing officer's Recommended Decision that Coca-Cola discriminated against Josue solely because of her work injury when it failed to return her to the position that she held at the time of her injury.

         B. Circuit Court Proceedings

         Coca-Cola appealed the Director's Decision and Order to the Circuit Court of the First Circuit (circuit court) and argued that it was improper for the Director to rely on legislative history because the language of the statute was unambiguous.[4] But even if reliance on the legislative history was proper, Coca-Cola asserted, it did not support the conclusion that refusing to terminate a replacement employee to open the injured employee's position is discrimination. In response, Josue contended that the purpose of the statute is to protect employees from retaliatory discharge, and therefore the Director's decision comported with the text and purpose of the statute. (Citing Purchert v. Agsalud, 67 Haw. 25, 35, 677 P.2d 449, 457 (1984).) The Department also responded to Coca-Cola, arguing that the Director did not err in concluding ...

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