In re the Arbitration between Hawaii State Teachers Ass'n and State, Department of Education

318 P.3d 591, 131 Haw. 301, 2013 WL 6210704, 197 L.R.R.M. (BNA) 2762, 2013 Haw. App. LEXIS 670
CourtHawaii Intermediate Court of Appeals
DecidedNovember 26, 2013
DocketNos. CAAP-11-0000065, CAAP-11-0000140
StatusPublished
Cited by1 cases

This text of 318 P.3d 591 (In re the Arbitration between Hawaii State Teachers Ass'n and State, Department of Education) is published on Counsel Stack Legal Research, covering Hawaii Intermediate Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Arbitration between Hawaii State Teachers Ass'n and State, Department of Education, 318 P.3d 591, 131 Haw. 301, 2013 WL 6210704, 197 L.R.R.M. (BNA) 2762, 2013 Haw. App. LEXIS 670 (hawapp 2013).

Opinion

Opinion of the Court by

LEONARD, J.

Union-Appellant Hawaii State Teachers Association (HSTA) appeals from the February 24, 2011 Final Judgment entered by the Circuit Court of the First Circuit (Circuit Court),1 and challenges the following Circuit Court orders: (1) Order Granting Employer’s Motion to Vacate in Part Award Dated May 7, 2010, which was filed January 4, 2011; (2) Order Denying HSTA’s Motion for Reconsideration of Employer’s Motion to Vacate in Part Award Dated May 7, 2010, which was filed January 4, 2011; and (3) Order Granting HSTA’s Motion to Alter and Amend Judgment Entered October 1, 2010 or in the Alternative to Confirm Supplemental Arbitration Award Clarifying Award Of May 7, 2010, Filed October 11, 2010, which was filed on January 31, 2011.

HSTA primarily contends that the Circuit Court erred when it vacated, in part, an arbitrator’s award that interpreted a Collective Bargaining Agreement provision to allow interest on back pay in order to make the grievant whole. We agree. Neither sovereign immunity nor the statutory prohibition against the award of pre-judgment interest against the State are implicated here. Public policy does not bar the arbitrator’s award. An arbitrator’s error in construing an agreement or misinterpreting applicable law is not sufficient ground for overturning an arbitration award, even assuming such errors were made. Before reaching these issues, however, this court must first address the complex procedural posture of this appeal.

I. RELEVANT BACKGROUND FACTS

A. The Arbitration Proceedings

HSTA participated in an arbitration with the State of Hawai'i, Department of Education (State or Employer) with respect to the State’s termination of a union member and public school teacher, Kathleen Morita (Morita). Morita was a public school teacher at Hauula Elementary School, and a member of HSTA. Based on a custodian’s report of the smell of “pot” in her classroom and the presence of what appeared to the custodian (based on its shape and cap cover) to be wine inside a paper bag, Morita was allegedly smoking marijuana, and in possession of alcohol in her classroom, on September 12, 2007. Over a period of several months, the incident was investigated, and the State terminated [303]*303Morita from her teaching position on July 18, 2008, effective July 31, 2008.

Pursuant to the applicable Collective Bargaining Agreement, and in accordance with Hawaii Revised Statutes (HRS) § 89-10.8 (2012), Morita’s grievance was submitted to binding arbitration before Arbitrator Walter Ikeda (Arbitrator), who rendered a Decision and Award on May 7, 2010 (Award). In the Award, the Arbitrator sustained Morita’s grievance, determining that the State lacked just cause to terminate Morita. The Arbitrator ordered that Morita be reinstated, and that she should be restored her service time for benefits, and awarded her back pay “with interest at the rate of ten (10) percent per annum on any unpaid amounts that are due and owing.” The Award did not specify an amount, as it was potentially subject to offsets for unemployment benefits, wages, and other payments received during the period of unemployment. The Award also stated that the Arbitrator would retain limited jurisdiction, for a period not to exceed six months from the date of the Award, to assure compliance with the Award.

On May 27, 2010, the State filed a motion to correct or modify the Award, requesting that the Arbitrator delete the interest on the back pay. The State’s motion was denied on June 16, 2010.

On July 28, 2010, HSTA filed a motion requesting that the Arbitrator enter a final decision and award. On or about September 25, 2010, the Arbitrator entered a Compliance Order; Post Decision and Award of May 7, 2010 (Compliance Order). In the Compliance Order, the Arbitrator identified various filings in the Circuit Court (which are discussed below). He explained that, while HSTA had requested a final award and order with a fixed amount because the parties had been unable to agree to what normally would have been a ministerial mathematical calculation, he elected to treat it as a compliance matter pursuant to his continuing jurisdiction pursuant to the Award, the Collective Bargaining Agreement and HRS Chapter 658A. The Compliance Order specifically addressed several issues potentially affecting the amount of payment due to Morita, including the effect of unemployment insurance payments, wages from another job, health care deductibles, and the treatment of retirement benefits.

The other issue addressed by the Arbitrator in the Compliance Order was the issue of the Arbitrator’s award of interest on any unpaid back pay, after the required offsets. The Arbitrator considered and rejected the State’s argument, i.e., that the Arbitrator lacked authority to impose interest because it had not been agreed to in the Collective Bargaining Agreement. He stated his reasoning as follows:

[T]he Arbitrator believes that he is acting in conformity [with] the Collective Bargaining Agreement and the authority granted by HRS, Chapter 658A in the determination that any backpay award includes interest at the rate of 10 percent per annum. The purpose of an award of backpay including interest is to ‘make whole’ financially the Grievant had she not been terminated. Elkouri & Elkouri, How Arbitration Works, 6th Ed. 2003, p. 1224. Payment to the Grievant of wrongfully withheld pay without interest would not restore her whole as loss of use of funds for that period entailed either deprivation or additional costs to the Grievant if she had to borrow funds to replace lost wages while awaiting the results of her grievance ....

Noting that the Employer indicated a possible appeal from at least the interest portion of the Award, the Compliance Order set forth the principal amount of the back pay (which was adjusted for setoffs) and detailed the methodology to be used for the calculation of the interest, from a date certain (August 1, 2008) until the back pay was paid.

B. The Circuit Court Proceedings

1. HSTA’s Motion to Confirm the Arbitration Award

On May 18, 2010, HSTA filed a Motion to Confirm Arbitration Award, Entry of Judgment and Allowing Costs and Other Appropriate Relief (Motion to Confirm). The State filed a memorandum in opposition, challenging the awarded interest and opposing HSTA’s request for attorneys’ fees and [304]*304costs. On October 1, 2010, the Circuit Court entered (1) an Order Granting in Part and Denying in Part Motion to Confirm Arbitration Award, Entry of Judgment and Allowing Costs and Other Appropriate Relief (Order Confirming Award) and (2) a Judgment in favor of HSTA and against the State (10/1/10 Judgment). In the Order Confirming Award, the Circuit Court confirmed the Award, and ordered that judgment be entered, but denied without prejudice HSTA’s request for attorneys’ fees and costs. The 10/1/10 Judgment included reference to HRS § 658A-25(a), and expressly stated that it resolved all claims by and against the parties, and that “[a]ny and all remaining claims, if any, are dismissed with prejudice.”

2. The State’s Challenges to the Award

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318 P.3d 591, 131 Haw. 301, 2013 WL 6210704, 197 L.R.R.M. (BNA) 2762, 2013 Haw. App. LEXIS 670, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-arbitration-between-hawaii-state-teachers-assn-and-state-hawapp-2013.