Hawai‘i State Teachers Association v. University Laboratory School. Â

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Electronically Filed
Supreme Court
SCWC-12-0000295
27-FEB-2014
11:11 AM
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
---o0o---
HAWAII STATE TEACHERS ASSOCIATION,
Petitioner/Union-Appellant,
vs.
UNIVERSITY LABORATORY SCHOOL;
EDUCATION LABORATORY PUBLIC CHARTER SCHOOL LOCAL SCHOOL BOARD,
Respondent/Employer-Appellee.
SCWC-12-0000295
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-12-0000295; S.P. NO. 11-1-0411)
FEBRUARY 27, 2014
NAKAYAMA, MCKENNA, AND POLLACK, JJ.,
WITH RECKTENWALD, C.J., CONCURRING SEPARATELY,
AND ACOBA, J., CONCURRING SEPARATELY
OPINION OF THE COURT BY NAKAYAMA, J.
This case concerns a dispute over whether agreements
between the Petitioner/Union-Appellant Hawai#i State Teachers
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Association (HSTA)1 and the Respondent/Employer-Appellee
University Laboratory School (ULS)2 mandate arbitration of a
grievance filed by the HSTA against the ULS. The HSTA’s
grievance alleged that the ULS refused to implement a step
placement chart for a salary schedule agreed to in a supplemental
agreement negotiated by the HSTA and the School Board. The ULS
responded that the step placement chart the HSTA sought to
enforce had never been agreed upon or incorporated into the
agreement.
The HSTA filed, as a special proceeding in the Circuit
Court of the First Circuit (circuit court), a motion to compel
arbitration of its grievance. The circuit court denied the
HSTA’s motion to compel arbitration and the HSTA appealed to the
Intermediate Court of Appeals (ICA). The ICA concluded that the
Hawai#i Labor Relations Board (HLRB) had primary jurisdiction
over the issues raised in the HSTA’s grievance and that the
HSTA’s motion to compel arbitration was premature. We hold that
because the parties agreed to leave questions of arbitrability to
the arbitrator, our case law mandated that the circuit court
grant the HSTA’s motion to compel arbitration after concluding
1
The HSTA is the bargaining representative of teachers and other
personnel of the State of Hawai#i Department of Education.
2
The ULS is also known as the Local School Board of the Education
Laboratory Public Charter School or as the Education Laboratory Public Charter
School Local School Board.
2
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that an arbitration agreement existed.
I. BACKGROUND
On June 30, 2009, the ULS was transferred from the
University of Hawai#i College of Education at the University of
Hawai#i at Manoa to the local school board as a public charter
school. At that time, the ULS and the HSTA entered into a
Memorandum of Agreement (MOA) that memorialized the collective
bargaining agreement (Master Agreement) already in effect between
the HSTA and the State of Hawai#i Board of Education. The
parties agreed that the HSTA was thereafter the employees’
bargaining representative and the ULS was the employer. The MOA
also stipulated that the parties were subject to future
supplemental agreements.
On June 21, 2010, the HSTA and the ULS signed a
supplemental agreement (Supplemental Agreement) governing the
salaries of the ULS’s unit 5 employees. Appendix XIV of the
Supplemental Agreement provided:
[A]n employee’s appropriate salary placement
designation (class and step) is made onto the unit 5
master agreement salary schedule. For step placement,
parties shall use the attached chart (Exhibit 1)
indicating negotiated step increments for unit 5
members.
(Emphasis added). To calculate a unit 5 teacher’s salary, the
salary schedule and the step placement chart from Exhibit 1 were
required. However, no document entitled Exhibit 1 was attached
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to the Supplemental Agreement.
On October 29, 2010, during an ongoing inquiry into the
proper step placement of certain ULS employees, the HSTA informed
the ULS via email that “it was brought to [the HSTA’s] attention
that [it] had inadvertently omitted ‘Exhibit 1’ for Appendix
XIV.” The HSTA attached a document to its email that was
purportedly the “inadvertently omitted” Exhibit 1 and it
instructed the ULS that this document “should be included as part
[of] the [S]upplemental [A]greement.”
On November 9, 2010, the ULS denied having agreed to
the terms of the purported “Exhibit 1,” stating that, although it
recalled the chart in the document, “[a]t no time during the
negotiations did [ULS] assume that [it] would be following that
[chart] in setting [teachers’] salaries.” The ULS had assumed
that a different chart used during subsequent negotiations was
the “missing Exhibit 1” and it had used that other chart when
calculating teachers’ salaries.
On April 13, 2011, pursuant to Article V of the
Supplemental Agreement3, the HSTA filed a grievance alleging that
Appendix XIV and Exhibit 1 were bargained for in good faith and
3
Article V of both the Supplemental Agreement and the Master
Agreement contain identical provisions regarding grievances whereby the
parties assented to submit unresolved claims to arbitration and to leave
questions of arbitrability to the arbitrator.
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that the ULS “refused to implement the proper salary placement
for teachers, thereby, repudiating Appendix XIV of the
supplemental agreement.” Then, on April 21, 2011, the HSTA
notified the ULS that it wished to proceed to arbitration.
The ULS contested HSTA’s request for arbitration and
responded by filing a prohibited practice complaint with the HLRB
on April 28, 2011. In its complaint, the ULS alleged that the
HSTA refused to bargain in good faith and to comply with the
terms of the Supplemental Agreement, in violation of Hawai#i
Revised Statutes (HRS) §§ 89-13(b)(1), (2), (4), and (5) (Supp.
2010).4 Furthermore, the ULS alleged that the HSTA violated HRS
§ 89-10.8(a)(1) (Supp. 2010)5 by attempting to use the grievance
process to alter the Supplemental Agreement.
4
HRS § 89-13(b) provided then, as it does now, in pertinent part:
It shall be a prohibited practice for a public employee or
for an employee organization or its designated agent
wilfully to:
(1) Interfere, restrain, or coerce any employee in the
exercise of any right guaranteed under this chapter;
(2) Refuse to bargain collectively in good faith with the
public employer, if it is an exclusive representative, as
required in section 89-9;
. . . .
(4) Refuse or fail to comply with any provision of this
chapter; or
(5) Violate the terms of a collective bargaining agreement.
5
HRS § 89-10.8(a)(1) provided then, as it does now: “A dispute
over the terms of an initial or renewed agreement shall not constitute a
grievance.”
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Before the HLRB, the HSTA filed a motion on May 12,
2011 to dismiss the ULS’s complaint and the ULS filed a motion on
July 13, 2011 to stay all arbitration proceedings. At a hearing
on August 12, 2011, the HLRB denied the motion to dismiss the
complaint and took the motion to stay arbitration under
advisement.6
Due to the ULS’s continued refusal to enter
arbitration, on August 3, 2011, the HSTA filed a motion in a
special proceeding in the circuit court to compel arbitration of
its grievance pursuant to HRS § 658A-7 (Supp. 2010).7 The
6
After almost two years of no action from the HLRB, on July 23,
2013, the ULS filed a motion for partial summary judgment on its complaint.
On August 14, 2013, the HSTA filed a motion to stay proceedings before the
HLRB until this court’s review was completed. By order of November 5, 2013,
the HLRB granted in part the ULS’s motion for partial summary judgment and
denied the HSTA’s motion to stay the proceedings before the HLRB pending this
court’s review of this case. The HLRB also granted the ULS’s July 13, 2011
motion to stay the arbitration proceedings.
The HLRB’s order is not ripe for review by this court and has no
bearing upon our resolution of this case. However, we note that the HLRB
cites to no statutory or legal authority granting it the authority to stay a
pending arbitration proceeding or a court’s review of a motion to compel
arbitration. The HLRB’s powers derive from and are limited by HRS chapter 89.
No provisions in HRS chapter 89 grant the HLRB the power to stay proceedings
before any other body. Therefore, the HLRB’s purported stay of the
arbitration proceedings is of no legal effect.
7
HRS § 658A-7 provided then, as it does now, in pertinent part:
(a) On motion of a person showing an agreement to arbitrate
and alleging another person’s refusal to arbitrate pursuant
to the agreement:
(1) If the refusing party does not appear or does not
oppose the motion, the court shall order the parties to
arbitrate; and
(2) If the refusing party opposes the motion, the
(continued...)
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circuit court denied HSTA’s motion to compel arbitration by order
of March 2, 2012.8 The circuit court did not provide an
explanation of its reasoning in denying the motion, although it
noted during argument on the motion that this case raised novel
issues regarding the jurisdiction of the HLRB.
The HSTA appealed the circuit court’s March 2, 2012
order, and March 28, 2012 final judgment, to the ICA. In its
opening brief, the HSTA argued that the circuit court had
jurisdiction over the agreement and that the HSTA fulfilled the
conditions to compel arbitration. In response, the ULS argued
that the matter was unripe for adjudication and that the HLRB had
original jurisdiction over the dispute.
On April 15, 2013, the ICA issued its opinion
concluding that the circuit court did not err in denying HSTA’s
motion to compel arbitration. Haw. State Teachers Ass’n v. Univ.
Lab. School, Educ. Lab. Pub. Charter School Local School Bd.
(HSTA v. ULS), No. CAAP-12-0000295, 2013 WL 1578338 at *1, *4
(App. Apr. 15, 2013). Referencing the probability of conflicting
or redundant results, the ICA reasoned that denying the motion
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court shall proceed summarily to decide the issue and order
the parties to arbitrate unless it finds that there is no
enforceable agreement to arbitrate.
8
The Honorable Patrick W. Border presided.
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was proper because HSTA’s motion implicated technical and policy
issues over which the HLRB had primary jurisdiction.9 Id. at *4.
On July 16, 2013, the HSTA timely filed an application
for writ of certiorari to this court in which it contended that
the ICA erred in applying the doctrine of primary jurisdiction
and in affirming the circuit court’s denial of HSTA’s motion to
compel arbitration. We accepted certiorari on August 28, 2013,
and held oral argument on October 17, 2013.
II. STANDARD OF REVIEW
A. Petition to Compel Arbitration
We review a petition to compel arbitration de novo.
Douglass v. Pflueger Hawai#i, Inc., 110 Hawai#i 520, 524, 135 P.3d
129, 133 (2006). “The standard is the same as that which would
be applicable to a motion for summary judgment, and the trial
court’s decision is reviewed ‘using the same standard employed by
the trial court and based upon the same evidentiary materials as
were before [it] in determination of the motion.’” Id. at 524-
25, 135 P.3d at 133-34 (alterations in original) (quoting Koolau
Radiology, Inc. v. Queen’s Med. Ctr., 73 Haw. 433, 439-40, 834
9
Rather than affirming the circuit court’s order, the ICA vacated
the order and remanded the case with instructions to consider whether a stay
or dismissal without prejudice would be appropriate. HSTA v. ULS, 2013 WL
1578338 at *4. The ICA reasoned that under the primary jurisdiction doctrine,
without a finding that the parties would not be “unfairly disadvantaged” by a
dismissal, the circuit court was required to stay the proceedings. Id.(emphasis omitted) (quoting Pavsek v. Sandvold, 127 Hawai#i 390, 402, 279 P.3d
55, 67 (App. 2012).
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P.2d 1294, 1298 (1992)).
III. DISCUSSION
A. Parties may reserve questions of arbitrability for the
arbitrator
This court has repeatedly acknowledged the general
enforceability of arbitration agreements. See, e.g., Douglass,
110 Hawai#i at 530, 135 P.3d at 139; Luke v. Gentry Realty, Ltd.,
105 Hawai#i 241, 247, 96 P.3d 261, 267 (2004); Brown v. KFC Nat’l
Mgmt. Co., 82 Hawai#i 226, 232, 921 P.2d 146, 152 (1996). The
Uniform Arbitration Act, adopted in Hawai#i in 2001 and codified
at HRS chapter 658A, provides that when a court has “jurisdiction
over the controversy and the parties[, it] may enforce an
agreement to arbitrate.” HRS § 658A-26 (Supp. 2010). An
arbitration agreement is “valid, enforceable, and irrevocable
except upon a ground that exists at law or in equity for the
revocation of a contract.” HRS § 658A-6(a) (Supp. 2010).
Our statutes have delineated the roles of courts and
arbitrators in enforcing arbitration agreements; “[t]he court
shall decide whether an agreement to arbitrate exists or a
controversy is subject to an agreement to arbitrate” and “[a]n
arbitrator shall decide whether a condition precedent to
arbitrability has been fulfilled and whether a contract
containing a valid agreement to arbitrate is enforceable.” HRS
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§§ 658(b)-(c). “When presented with a motion to compel
arbitration, the court is limited to answering two questions: 1)
whether an arbitration agreement exists between the parties; and
2) if so whether the subject matter of the dispute is arbitrable
under such agreement.” Koolau, 73 Haw. at 445, 834 P.2d at 1300.
The second prong of this rule -- “whether the subject matter of
the dispute lies within the arbitrator’s jurisdiction” -- is
termed the “arbitrability” of the dispute. Hokama v. Univ. of
Haw., 92 Hawai#i 268, 274 n.6, 990 P.2d 1150, 1156 n.6 (1999).
We have modified this general rule for cases in which
the parties have agreed to leave questions of arbitrability to
the arbitrator. See Bateman Constr., Inc. v. Haitsuka Bros.,
Ltd., 77 Hawai#i 481, 485, 889 P.2d 58, 62 (1995) (“[T]he
question of arbitrability is usually an issue to be decided by
the courts, ‘unless the parties clearly and unmistakably provide
otherwise.’” (alterations omitted) (quoting FSC Sec. Corp. v.
Freel, 14 F.3d 1310, 1312 (8th Cir. 1994)). Where the parties
have “clearly and unmistakably” reserved the issue of
arbitrability for the arbitrator, courts lack the authority to
rule upon this issue because “[a]fter all, ‘it was the
arbitrator’s judgment [the parties] had bargained for, not a
court’s.’” Id. (alterations omitted) (quoting Morrison Knudsen
Co. v. Makahuena Corp., 66 Haw. 663, 670, 675 P.2d 760, 766
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(1983)); see also Bronster v. United Public Workers, Local 646,
90 Hawai#i 9, 14-16, 975 P.2d 766, 771-73 (1999) (“[P]arties are
free to agree among themselves to vest sole authority in an
arbitrator to determine the issue of the arbitrability of a
particular subject matter so long as they do so ‘clearly and
unmistakably.’” (quoting Bateman Constr., Inc., 77 Hawai#i at
485, 889 P.2d at 62)). “Parties may contractually excise the
court from the determination” of whether the dispute is
arbitrable and, in these cases, the court may only consider
whether there is a valid agreement to arbitrate. Bronster, 90
Hawai#i at 15, 975 P.2d at 772; see also In re United Public
Workers, Local 646, 124 Hawai#i 372, 378, 244 P.3d 609, 615
(2010) (“When agreements reserve questions of arbitrability for
the arbitrator, as they do here, the court may only consider the
first prong[ -- whether there is a valid agreement to
arbitrate].”)
1. The HSTA and the ULS contracted to leave questions of
arbitrability to the arbitrator
The Master Agreement and the Supplemental Agreement
contained identical provisions regarding the grievance process:
ARTICLE V - GRIEVANCE PROCEDURE
A. DEFINITION. Any claim by the [HSTA] or a teacher that
there has been a violation, misinterpretation or
misapplication of a specific term or terms of this Agreement
shall be a grievance.
. . . .
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H. ARBITRATION. If a claim made by the [HSTA] or teacher
has not been satisfactorily resolved, the Association may
present a request for arbitration of the grievance within
ten (10) days after the receipt of the decision.
. . . .
e) If the Employer disputes the arbitrability of any
grievance submitted to arbitration, the arbitrator shall
first determine the question of arbitrability. If the
arbitrator finds that it is not arbitrable, the grievance
shall be referred back to the parties without decision or
recommendation on its merits.
(Emphasis added). These provisions establish that the HSTA and
the ULS agreed to arbitrate grievances and reserved questions of
arbitrability for the arbitrator.
In Bronster, we interpreted similar arbitration
provisions. In that case, Attorney General Bronster sought a
declaration that the Office of the Attorney General was not
subject to arbitration pursuant to an agreement between the State
of Hawai#i and the United Public Workers Union (UPW). Bronster,
90 Hawai#i at 9-10, 975 P.2d at 766-67. The circuit court denied
the UPW’s motions to stay proceedings pending arbitration, to
compel arbitration, and for summary judgment and granted
Bronster’s motion for summary judgment. Id. On appeal to this
court, we first concluded that, “as a ‘representative’ or agent
of the State, the Attorney General was a ‘party’ to the
agreement.” Id. at 10, 975 P.2d at 767. We then interpreted the
arbitration provision in the agreement between the UPW and the
State which provided: “[i]f the Employer disputes the
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arbitrability of any grievance under the terms of this Agreement,
the Arbitrator shall first determine whether he has jurisdiction
to act; and if he finds that he has no such power, the grievance
shall be referred back to the parties without decision on its
merits.” Id. (alteration and emphasis in original). We reasoned
that “[w]ithout question, here . . . the agreement calls ‘clearly
and unmistakably’ for the arbitrator to decide the arbitrability
of a grievance.” Id. at 15, 975 P.2d at 772. While Attorney
General Bronster contended that UPW failed to comply with certain
provisions of the agreement in bringing its grievance, we
characterized this as a question of arbitrability. We concluded
that the issue of arbitrability had been “expressly reserved by
the parties for determination by the arbitrator” and thus the
circuit court erred in addressing this question. Id. at 16, 975
P.2d at 773. We held that, because there was an arbitration
agreement between the parties that reserved the question of
arbitrability for the arbitrator, the circuit court erred in
granting Bronster’s motion for summary judgment and in denying
UPW’s motions for summary judgment and to compel arbitration.
Id.
Here, it is uncontested that there was an arbitration
agreement between the parties. Using similar language to that in
Bronster, the agreement in the instant case “clearly and
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unmistakably” left the issue of arbitrability to the arbitrator.
Therefore, because the question of whether there was a valid
arbitration agreement between the parties was uncontested, the
circuit court should have granted the HSTA’s motion to compel
arbitration.
2. The determination of whether a grievance exists is
a question of arbitrability reserved for the arbitrator
The ULS contends that pursuant to the laws for
“Collective Bargaining in Public Employment” codified in HRS
chapter 89, this is a bargaining dispute and therefore it is not
a grievance subject to the parties’ arbitration agreement. HRS §
89-10.8 governs the “Resolution of disputes; grievances” and
states: “A public employer shall enter into written agreement
with the exclusive representative setting forth a grievance
procedure culminating in a final and binding decision, to be
invoked in the event of any dispute concerning the interpretation
or application of a written agreement.” This statute clarifies
that “[a] dispute over the terms of an initial or renewed
agreement” is not a grievance. HRS § 89-10.8(a)(1) (emphasis
added). HRS § 89-11 (Supp. 2010) governs the “Resolution of
disputes; impasses” and states that parties may enter into an
agreement establishing an “alternate impasse procedure” that may
“be invoked in the event of an impasse over the terms of an
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initial or renewed agreement.” (Emphasis added).
The ICA erred in stating that pursuant to the parties’
agreements, and HRS § 89-10.8, the circuit court may only order
arbitration after finding that a grievance exists. HSTA v. ULS,
2013 WL 1578338 at *3. It is immaterial whether this case
involves a “grievance” or a “dispute over the terms of an initial
or renewed agreement.” “[A]s with any contract, the parties’
intentions control, but those intentions are generously construed
as to issues of arbitrability.” Lee v. Heftel, 81 Hawai#i 1, 4,
911 P.2d 721, 724 (1996) (quoting Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)). We
have previously classified the issue of whether claims fall
within the scope of an arbitration clause to be a question of
arbitrability. See Haw. Med. Ass’n v. Haw. Med. Servs. Ass’n,
113 Hawai#i 77, 92, 148 P.3d 1179, 1194 (2006) (discussing
whether the disputes fall within the scope of the arbitration
agreement as an issue of arbitrability); see also Univ. of Haw.
Prof’l Assembly v. Univ. of Haw., 66 Haw. 207, 210, 659 P.2d 717,
719 (1983) (“The arbitration process may only be used when the
grievance involves the violation of a provision of the agreement.
Thus the questions of arbitrability and whether the agreement is
involved are one and the same.”).
Here, the question of whether the HSTA’s claim
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constitutes a grievance subject to the arbitration provisions of
the Supplemental Agreement is a question of arbitrability. As
discussed above, the HSTA and the ULS explicitly agreed to leave
all questions of arbitrability to the arbitrator. Therefore, it
was not necessary for the circuit court to determine whether
HSTA’s claim constituted a grievance before granting the motion
to compel arbitration.
B. The doctrine of primary jurisdiction does not apply
“The primary jurisdiction doctrine is designed to
promote uniformity and consistency in the regulatory process.”
Aged Hawaiians v. Hawaiian Homes Comm’n, 78 Hawai#i 192, 202, 891
P.2d 279, 289 (1995) (quoting United States v. Western Pac. R.R.,
352 U.S. 59, 64 (1956)). This doctrine recognizes that “‘in
cases raising issues of fact not within the conventional
experience of judges or cases requiring the exercise of
administrative discretion, agencies created by [the legislature]
for regulating the subject matter should not be passed over.’”
Kona Old Hawaiian Trails Group v. Lyman, 69 Haw. 81, 93, 734 P.2d
161, 169 (1987) (emphasis in original) (quoting Far East
Conference v. United States, 342 U.S. 570, 574-75 (1952)). “The
primary jurisdiction doctrine applies to a claim that is
originally cognizable in the courts but which requires the
resolution of issues that are within the special competence of an
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administrative agency.” Fratinardo v. Emps. Ret. Sys. of Haw.,
121 Hawai#i 462, 468, 220 P.3d 1043, 1049 (App. 2009) (quoting
Jou v. Nat’l Interstate Ins. Co. of Haw., 114 Hawai#i 122, 128-
29, 157 P.3d 561, 567–68 (App. 2007)).
Here, the ICA concluded that the primary jurisdiction
doctrine was applicable because the “HSTA’s motion to compel
arbitration implicat[ed] technical and policy issues” within the
jurisdiction of the HLRB. HSTA v. ULS, 2013 WL 1578338 at *4.
The ICA reasoned that “the issue which HSTA wishes to compel to
arbitration is closely related to the issues raised in ULS’s
prohibited practice complaint” and the HLRB had “exclusive
original jurisdiction” over the issues raised in the ULS’s
complaint. HSTA v. ULS, 2013 WL 1578338 at *3.
The ICA need not have reached the issue of the HLRB’s
possible primary jurisdiction over this dispute. Before a court,
or an arbitrator, can apply the doctrine of primary jurisdiction,
it must first determine that it has jurisdiction over the
dispute. Fratinardo, 121 Hawai#i at 468, 220 P.3d at 1049. As
discussed above, the only issue before the circuit court was
whether an arbitration agreement between the HSTA and the ULS
existed. This issue was uncontested and, regardless, it did not
implicate the expertise of the HLRB. Thus, the ICA erred in
applying the doctrine of primary jurisdiction to conclude that
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the HSTA’s motion to compel arbitration was premature.
IV. CONCLUSION
Because, it is undisputed that the Master Agreement and
the Supplemental Agreement contained arbitration clauses that
‘clearly and unmistakably’ reserved questions of arbitrability
for determination by the arbitrator, the circuit court erred in
failing to grant the HSTA’s motion to compel arbitration. We
therefore vacate the ICA’s May 17, 2013 Judgment on Appeal filed
pursuant to its April 15, 2013 opinion and remand this case to
the circuit court for further proceedings.
Rebecca L. Covert /s/ Paula A. Nakayama
(Herbert R. Takahashi and
Davina W. Lam with her on /s/ Sabrina S. McKenna
the briefs) for petitioner
/s/ Richard W. Pollack
Richard H. Thomason
(James E. Halvorson
with him on the briefs)
for respondent
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