Haw. State Teachers Ass'n v. Univ. Lab. Sch.

• Decision Date: 27 February 2014
• Docket Number: No. SCWC–12–0000295.,SCWC–12–0000295.
• Citation: 132 Hawai'i 426,322 P.3d 966
• Court: Hawaii Supreme Court
• Parties: HAWAII STATE TEACHERS ASSOCIATION, Petitioner/Union–Appellant, v. UNIVERSITY LABORATORY SCHOOL; Education Laboratory Public Charter School Local School Board, Respondent/Employer–Appellee.

132 Hawai'i 426

322 P.3d 966

HAWAII STATE TEACHERS ASSOCIATION, Petitioner/Union–Appellant,

v.UNIVERSITY LABORATORY SCHOOL; Education Laboratory Public Charter School Local School Board, Respondent/Employer–Appellee.

No. SCWC–12–0000295.

Supreme Court of Hawai‘i.

Feb. 27, 2014.

Rebecca L. Covert, Honolulu (Herbert R. Takahashi, Honolulu, and Davina W. Lam with her on the briefs), for petitioner.

Richard H. Thomason (James E. Halvorson, Honolulu, with him on the briefs), for respondent.

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 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 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 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 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.

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 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 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 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 §§ 658A–6(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...