GP Roadway Solutions, Inc. v. Laborers Int'l Union of N. Am. Local 368

• Decision Date: 29 July 2014
• Docket Number: CIVIL NO. 13-00282 JMS-KSC
• Parties: GP ROADWAY SOLUTIONS, INC., Plaintiff/Counterclaim Defendant, v. LABORERS INTERNATIONAL UNION OF NORTH AMERICA LOCAL 368, Defendant/Counterclaimant.
• Court: U.S. District Court — District of Hawaii

GP ROADWAY SOLUTIONS, INC., Plaintiff/Counterclaim Defendant, v. LABORERS INTERNATIONAL UNION OF NORTH AMERICALOCAL 368, Defendant/Counterclaimant.

CIVIL NO. 13-00282 JMS-KSC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII

July 29, 2014

ORDER (1) DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, AND (2) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

ORDER (1) DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, AND (2) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

I. INTRODUCTION

Before the court are Cross-Motions for Summary Judgment in this action brought pursuant to Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, seeking to vacate or confirm an arbitration award. Plaintiff/Counterclaim Defendant GP Roadway Solutions, Inc. ("Plaintiff" or "GP Roadway") moves for summary judgment, contending that an arbitrator exceeded his authority under the relevant collective bargaining agreement ("CBA") when awarding certain remedies to Plaintiff's employee. Doc. No. 24. On the otherhand, Defendant/Counter-claimant Laborers International Union of North America Local 368 ("Defendant" or "Union") cross-moves for summary judgment, seeking (1) confirmation of the arbitration award, and (2) an award of attorney's fees and costs for Plaintiff's bad faith conduct in refusing to pay all of the award in a timely manner. Doc. No. 26.

Based on the following, Plaintiff's Motion is DENIED, and Defendant's Cross-Motion is GRANTED in part and DENIED in part. The arbitration award is CONFIRMED. The court finds no bad faith conduct on the part of Plaintiff and thus declines to award Defendant attorney's fees or costs on that basis. The court awards Defendant prejudgment interest in this action under 28 U.S.C. § 1961.

II. BACKGROUND

A. Factual Background

1. The Arbitration

GP Roadway is an employer engaged in commerce under the LMRA. Doc. No. 25, Pl.'s Concise Statement of Facts ("CSF") ¶ 1.¹ The Union is a labor organization under the LMRA, and represents certain employees of GP Roadway.Id. ¶ 2. GP Roadway and the Union are parties to a CBA, covering the period of September 1, 2010 to August 31, 2013, that includes binding grievance and arbitration provisions. Doc. No. 27, Def.'s CSF ¶¶ 2, 4.

Kuiola Kelly ("Kelly," or "grievant"), employed by GP Roadway, is a member of the Union who is covered under the CBA. Id. ¶ 3. On May 11, 2012, GP Roadway discharged Kelly for insubordination. Doc. No. 27-1, Oliver Decl. ¶ 9. The Union filed a grievance on behalf of Kelly under the CBA on May 17, 2012, seeking Kelly's immediate reinstatement, and payment of all lost wages and benefits. Doc. No. 27, Def.'s CSF ¶ 6. When the parties could not resolve the grievance, they mutually selected Mario R. Ramil ("Ramil" or the "Arbitrator") as the Arbitrator from the panel of names in the CBA. Id. ¶ 8; Doc. No. 25, Pl.'s CSF ¶ 5. Ramil held arbitration hearings over five days in December 2012. Doc. No. 27, Def.'s CSF ¶ 11. His decision sets forth the issues presented in the arbitration as: "(1) whether the discharge of the grievant was in compliance with the terms of the [CBA], and (2) if not, what are the appropriate remedies for the grievant and the union." Doc. No. 32-1, Def.'s Ex. 13 at 2.

Prior to the arbitration hearings, the Union served certain discovery requests on GP Roadway, invoking Hawaii Revised Statutes ("HRS") § 657A-17(c), which is a provision of the Hawaii Uniform Arbitration Act. Doc. No. 1,Compl. ¶ 20; Doc. No. 8, Answer ¶ 8. In opposition to the Union's motion to compel and for sanctions, GP Roadway argued to the Arbitrator that Hawaii law does not apply to arbitrations under a CBA governed by Section 301 of the LMRA, contending that "such arbitrations are completely governed by federal law and state law is only applicable when needed to fill in gaps in federal law." Doc. No. 45-3, Def.'s Ex. 24 at 2. The Arbitrator denied the Union's motion, but did not specifically rule on the preemption issue (although his written decision explained the preemption arguments). Doc. No. 45-5, Def.'s Ex. 26 at 3-4. Instead, he found the authority to decide the matter within the CBA itself, and applied principles described in a federal National Labor Relations Board decision. See id. at 4 (citing Anheuser-Busch, Inc., 237 N.L.R.B 982 (1978)).²

On April 15, 2013, the parties submitted simultaneous post-hearing briefs to the Arbitrator. Doc. No. 27, Def.'s CSF ¶ 19. Among other arguments, the Union contended that "[t]he appropriate remedy is for the Arbitrator to rescind the termination of [Kelly], order the Employer to purge the employee's record of any discipline related to insubordination, and order back pay with interest." Doc. No. 43-2, Def.'s Ex. 11 at 102. For these powers, the Union cited (among othersources) the Supreme Court's "Steelworkers Trilogy" as establishing guidelines for an arbitrator to fashion remedies.³ Id. The Union argued that an arbitrator may "look for guidance from many sources" in formulating a remedy, and may look to "the industrial common law -- the practices of the industry and the shop" in interpreting a CBA. Id. at 101-02 (quoting from, among other federal caselaw, Warrior & Gulf Navigation Co., 363 U.S. at 581, and Enterprise Wheel & Car Corp., 363 U.S. at 597). But the Union also cited to Hawaii law for the proposition that labor arbitrators have "broad discretion to fashion appropriate remedies" that are "just and appropriate." Id. at 100 (quoting Hokama v. Univ. of Haw., 92 Haw. 268, 273, 990 P.2d 1150, 1155 (1999), and HRS § 658A-21, among other authorities).

The Union sought "a make-whole remedy including reinstatement, back pay and reinstatement of rights and benefits." Id. at 104. It argued that "[t]o achieve a make-whole remedy[,] the Arbitrator may also order the Employer [to] purge the employee's record of the discharge, and restore all fringe benefits, and issue a cease and desist order." Id. at 107. It called for the Arbitrator "to sustain the grievance, set aside the discharge, remove any reference to the discharge from[Kelly's] employment records, and award him back pay with ten percent (10%) interest up until he is reinstated." Id. at 107. And as for interest, the Union cited to federal and state authorities indicating that "interest on the back pay award would be an essential component of a make whole remedy." Id. at 106. The Union cited to several Hawaii authorities that applied an interest rate of ten percent per year. See id. at 106 n.23 (citing Hawaii law indicating ten percent based on HRS § 478-3).

On the other hand, GP Roadway argued that the Arbitrator should uphold the decision to terminate Kelly, and deny the grievance. Doc. No. 27, Def.'s CSF ¶ 22. GP Roadway did not focus its arguments on limitations on a remedy, should the Arbitrator rule in Kelly's favor (and did not argue that a ten percent interest rate is preempted), see Doc. No. 31-3, Def.'s Ex. 12, although GP Roadway now points out that the parties were not provided an opportunity to file responsive briefs before the Arbitrator.

2. The Arbitrator's Decision

Section 19 of the CBA describes the terms and procedures of grievances and arbitrations under the CBA. In particular, paragraph 19(e) provides in part:

All decisions of the arbitrator shall be limited expressly to the terms and provisions of this Agreement, and in no event may the terms and provisions of this Agreement be altered, amended or modified by the arbitrator. . . . The arbitrator shall make a decision in the light of the whole record and shall decide the case upon the weight of all substantial evidence presented. . . . All decisions of the arbitrator under this section including decisions following informal hearings shall be final and binding upon the parties.

Doc. No. 25-2, Pl.'s Ex. A at 9. As for remedies, paragraph 19.4(g) provides:

In any case of discipline where the arbitrator finds that such discipline was without cause or improper, the arbitrator may set aside, reduce or modify the action taken by the Employer. If the discipline is set aside, reduced or otherwise changed, the arbitrator may award back pay to compensate the employee wholly or partially for any wages lost because of the discipline. In determining the amount of the award for back pay, the arbitrator may deduct from the award sums received from unemployment compensation and other compensation received while the discipline was in effect. All decisions of the arbitrator shall be in writing and a copy thereof shall be submitted to each of the parties.

Doc. No. 25-2, Pl.'s Ex. A at 9-10 (emphasis added).⁴

The Arbitrator issued his decision on May 15, 2013. Doc. No. 44-1, Def.'s Ex. 13. In a thirty-page "Decision and Award," he made a factual finding that GP Roadway "failed to meet its burden of proof to support a discharge for insubordination." Id. at 29.⁵ He then made the following remedial award:

Keeping the directives of Section 19.4 of the Agreement in mind, under Hawaii case law, arbitrators have "broad discretion to fashion appropriate remedies." Hokama v. University of Hawaii, 92 Hawaii 268, 273, 990 P.2d 1150 (1999). As noted in Mathewson v. Aloha Airlines, 82 Hawaii 57, 919 P.2d 969 (1996), arbitrators "may grant whatever remedy to right the wrongs he deems appropriate.["] Id. at 79 n.22, 919 P.2d at 991 n.22. Here, for the reasons discussed above, it is appropriate to award Grievant with back pay that would make him whole.

Accordingly, GP (Grace Pacific) Roadway Solutions, Inc., shall (1) rescind the termination of Kuiola Kelly; (2) purge Kuiola Kelly's record of any discipline related to the May 11, 2012 incident; (3) reinstate Kuliola Kelly to his former position at GPforthwith; (4) make full back pay, minus any unemployment compensation and other compensation received while the discipline was in effect; (5) restore contractual benefits including sick leave, vacation, retirement credit, and health fund

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