77 Hawai'i 187, Inlandboatmen's Union of the Pacific, Hawai'i Region, Marine Div. of Intern. Longshoremen's and Warehousemen's Union v. Sause Bros., Inc.

• Decision Date: 26 September 1994
• Docket Number: No. 15838,15838
• Citation: 881 P.2d 1255,77 Hawaii 187
• Parties: 77 Hawai'i 187 INLANDBOATMEN'S UNION OF THE PACIFIC, HAWAI'I REGION, MARINE DIVISION OF the INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION, Movant-Appellant, v. SAUSE BROTHERS, INC., Respondent-Appellee.
• Court: Hawaii Court of Appeals

Page 1255

881 P.2d 1255

77 Hawai'i 187

INLANDBOATMEN'S UNION OF THE PACIFIC, HAWAI'I REGION, MARINE DIVISION OF the INTERNATIONAL LONGSHOREMEN'S AND WAREHOUSEMEN'S UNION, Movant-Appellant, v. SAUSE BROTHERS, INC., Respondent-Appellee.

No. 15838.

Intermediate Court of Appeals of Hawai'i.

Sept. 26, 1994.

Syllabus by the Court

1. The court shall take notice of a plain error when it is necessary to prevent a miscarriage of justice.

2. "To modify" is to limit or restrict the meaning of the matter affected.

3. The Hawai'i Supreme Court has confined judicial review of arbitration awards to the strictest possible limits.

4. Review of arbitration awards by the circuit and appellate courts is limited by the provisions of the arbitration statute.

5. The circuit courts shall grant an order confirming an arbitration award unless

the award is vacated, modified, or corrected, as prescribed in Hawai'i Revised Statutes (HRS) §§ 658-9 and 658-10.

6. HRS § 658-9 provides only four specific grounds upon which an award can be vacated, while HRS § 658-10 provides only three grounds for modifying or correcting an award.

7. If the ground urged is not one of the specified grounds, the circuit court is powerless to vacate, modify, or correct an award and has no alternative but to confirm the award and to enter a judgment accordingly.

8. HRS § 658-9 and HRS § 658-10 also restrict the authority of appellate courts to review judgments entered by circuit courts under the arbitration statute.

9. Appellate courts reviewing a HRS § 658-8 confirmation award under HRS § 658-15 are restricted to a consideration of the seven specific grounds included in HRS §§ 658-9 and 658-10 and thus are not free to review a confirmation award to the same extent as any other judgment.

10. However, the Hawai'i Supreme Court adopted a judicially recognized exception to HRS Chapter 658, when it allowed a party to move in circuit court for clarification by the arbitrator of an ambiguous arbitration award because clarification does not fit within the literal definition of vacating, modifying, or correcting an award.

11. A party's claim that an arbitrator's award under a contract would compel it to violate a statute necessarily invokes consideration of a public policy exception to the general deference given arbitration awards which does not fit within the literal definition of vacating, modifying, or correcting an award under the express provisions of HRS chapter 658.

12. A court will not enforce any contract that is contrary to public policy.

13. If the contract as interpreted by an arbitrator violates some explicit public policy, the courts are obligated to refrain from enforcing it.

14. The test established for application of the public policy exception requires a court to determine that (1) the award would violate some explicit public policy that is well defined and dominant, and that is ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interests, and (2) the violation of the public policy is clearly shown.

15. There is a limited public policy exception to the general deference given arbitration awards.

16. The public policy exception does not otherwise sanction a broad judicial power to set aside arbitration awards as against public policy and an appellate court does not sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing decisions of lower courts.

Charles K.Y. Khim, on the briefs, Honolulu, for movant-appellant.

Leonard F. Alcantara (Robert G. Frame and Marybeth King Fentriss, with him on the brief), Alcantara & Frame, Honolulu, for respondent-appellee.

Before BURNS, C.J., and HEEN and ACOBA, JJ.

ACOBA, Judge.

On May 22, 1990, the Movant-Appellant, Inlandboatmen's Union of the Pacific, Hawai'i Region, Marine Division of the International Longshoremen's and Warehousemen's Union (hereafter Union), filed a motion in circuit court pursuant to the Arbitration and Awards statute, Chapter 658 of the Hawai'i Revised Statutes (HRS), specifically HRS § 658-8 (1985), to confirm an arbitration award rendered on January 12, 1990. The award was issued following hearings on three grievances filed under a collective bargaining agreement with Respondent-Appellee-employer Sause Brothers, Inc. (hereafter Sause). The award made three "findings" ¹ as follows:

1. Under Rule 11.02(C), when an employee performs harbor work on a Saturday, Sunday or holiday, he should be paid at the overtime rate for each hour actually worked or the guaranteed minimum, whichever is more.

2. Under Rule 17.02, including past practice pertinent thereto, plugging and unplugging reefers is part of "cargo work" and is compensable at overtime rates.

3. Under Rule 10.01(A)(10), employees have the right to complete their scheduled watches in outports and be assigned work to perform during their scheduled watch while the vessel is secured to a dock or moorage unless otherwise agreed between the master and a crew member that the crew member may perform such work at another mutually agreeable time. The Employer may not terminate such scheduled sea watch to avoid paying overtime compensation.

Sause did not move to vacate, modify, or correct the arbitration award under HRS §§ 658-9 or -10 (1985).

By May 22, 1990 the time to file such a motion had passed. HRS § 658-11 (1985) provides that such a motion must be made within ten days after the award was made and served.

Sause did not move for clarification of the award by the arbitrator.

Written opposition to confirmation was not filed by Sause, although it filed written opposition to Union's request for attorney's fees, costs and interest. At the hearing on confirmation, Sause's attorney stated generally that Sause had "made the motion to vacate [the arbitration award] in [f]ederal [c]ourt under [f]ederal [s]tatute."

Hence, prior to the confirmation hearing, Sause had filed an action to vacate the award in the United States (U.S.) District Court for the District of Hawai'i. But apparently this action had been dismissed. An appeal to the U.S. Court of Appeals for the Ninth Circuit from the federal district court's dismissal was pending at the time of the confirmation hearing. ² The court noted that Sause had spent "a lot of time investigating whether or not this award can be confirmed or not and is in fact proceeding in [f]ederal [c]ourt[.]"

Sause did not request a stay of the state court proceedings.

On September 7, 1990, the court granted Union's motion to confirm arbitration award and denied its motion for attorney's fees and interest. The order stated that:

the ... motion to confirm arbitration awards [is] GRANTED, and pursuant to Hawaii [Hawai'i] Revised Statutes, Section 658-14, the arbitration awards issued on January 12, 1990, ... made a part hereof, shall be given the full force and effect, in all respects as, and is [sic] subject to all the provisions of law relating to, a judgment in an action, ... and said arbitration awards shall be enforced as if it [sic] had been rendered in an action in the above entitled Court.

Sause did not file a notice of appeal from the order making the arbitration award a judgment.

On January 30, 1991, Union filed a motion for issuance of "an order to show cause why the Respondent Sause Bros., Inc. should not be held in civil contempt of court for failing to comply with a judgment issued ... on September 7, 1990" (hereafter contempt motion). The supporting Union affidavit stated that:

Sause had not yet complied with [the] Court's order, and was not keeping some of the records ... necessary ... in order to comply with ... [the] order ... supposedly on the ground that the matter was on appeal to the United States District Court for the District of Hawai'i[,] [h]owever, said appeal was dismissed by ... the Ninth Circuit on November 8, 1990.

Attached to the affidavit was a Ninth Circuit Court order of dismissal granting Sause's "motion for voluntary dismissal under [Federal Rules of Appellate Procedure] 42(b)[.]"

In its opposition memorandum, Sause indicated it had paid overtime compensation for "work on Saturdays, Sundays or holidays" and for "cargo work[,]" all in compliance with findings numbers one (hereafter finding one) and two (hereafter finding two) of the arbitration award. Sause further advised that it had suspended the provision relating to overtime pay on watches, i.e., finding number three (hereafter finding three), because "implementation ... would cause SAUSE to violate federal law on manning vessels." Citing 46 U.S.C. § 8104 (1988), which limits employees' hours on "watch," Sause maintained that the arbitration award "requires a crewmember to stand scheduled watches during each outport call regardless of how many work and/or watch hours the crewmember stands during the same twenty-four (24) hour period."

On May 22, 1991, the court issued an order granting Union's contempt motion, giving Sause fourteen days to comply with "[the] Court's judgment ... filed ... on September 7, 1990."

On May 31, 1991, Sause filed a motion for reconsideration. In the affidavit attached to this motion, Sause indicated that the issues regarding overtime pay on "Saturday[s], Sunday[s], and holiday[s]" and on cargo work (findings one and two in the arbitration award) were "no longer an issue" or "resolved to each of the parties [sic] satisfaction." Sause, therefore, proposed that the court enter one of three alternative orders. One of the proposals was that the "order to show cause [be] granted as to [the] Arbitrator's findings 1[ ] and 2[ ] and partially granted as to finding 3[ ] only to the extent that the Arbitrator's interpretation therein be read consistnet [sic] with 46 USC [sic] 8104 so as not to violate its provisions."

In opposition to the reconsideration motion, Union stated that Sause's "argument concerning the application of 46 U.S.C., Section 8104 was resolved against [...