In re Arbitration Between United Pub. Workers

• Decision Date: 21 May 2021
• Docket Number: SCWC-16-0000666
• Citation: 149 Hawai‘i 215,487 P.3d 302
• Parties: In the MATTER OF the ARBITRATION BETWEEN UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO, Respondent/Union-Appellant, and State of Hawai‘i, DEPARTMENT OF TRANSPORTATION; LA-15-02 (Glen Tanaka) (2016-003), Petitioner/Employer-Appellee.
• Court: Hawaii Supreme Court

149 Hawai‘i 215

487 P.3d 302

In the MATTER OF the ARBITRATION BETWEEN UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO, Respondent/Union-Appellant, and State of Hawai‘i, DEPARTMENT OF TRANSPORTATION; LA-15-02 (Glen Tanaka) (2016-003), Petitioner/Employer-Appellee.

SCWC-16-0000666

Supreme Court of Hawai‘i.

MAY 21, 2021

As Corrected JULY 7, 2021

Jonathan E. Spiker, Honolulu, for UPW

Robert T. Nakatsuji, Honolulu, for the State

Robert Brian Black and Casey K. Shoji for amicus curiae Civil Beat Law Center for the Public Interest.

RECKTENWALD, C.J., NAKAYAMA, McKENNA, WILSON, AND EDDINS, JJ.

OPINION OF THE COURT BY McKENNA, J.

I. Introduction

We address whether the State of Hawai‘i ("State") "incurred" attorney's fees under Hawai‘i Revised Statutes ("HRS") § 658A-25 (2011)¹ in a grievance arbitration when it was represented by an attorney employed by the State's Department of Attorney General. The State sought $20,044.49 in appellate attorney's fees and $35.20 in costs under HRS § 658A-25 as the "prevailing party" in an appeal of a grievance arbitration with the United Public Workers, AFSCME, Local 646, AFL-CIO ("UPW"). The Intermediate Court of Appeals ("ICA") awarded costs but no attorney's fees, on the grounds the State "failed to demonstrate that it incurred, as an expense, liability, or legal obligation to pay, appellate attorney's fees[.]"²

We hold that the State "incurred" attorney's fees for the purposes of HRS § 658A-25. We grant the State's request for attorney's fees in the amount of $16,197.50.

II. Background

A. Underlying proceedings

On April 13, 2015, UPW filed a grievance on behalf of an employee who had been discharged from his employment with the State. UPW and the State entered arbitration. The State moved to dismiss the grievance based on procedural grounds. The arbitrator denied the motion to dismiss in a February 3, 2016 "Decision on Arbitrability."

On March 7, 2016, UPW filed a motion to confirm the Decision on Arbitrability in the Circuit Court of the First Circuit ("circuit court").³ The circuit court denied the motion, ruling that the Decision on Arbitrability was not an "award" subject to confirmation under HRS § 658A-22 (2011).⁴

On June 20, 2016, the arbitrator issued a "Decision and Award," reducing the employee's discipline to 20 days suspension with no back pay. On July 8, 2016, UPW filed a "Motion to Confirm Arbitration Decisions and Awards, to Enter Final Judgment, and For Appropriate Relief." UPW requested that the circuit court confirm both the Decision on Arbitrability and the Decision and Award pursuant to HRS § 658A-22,⁵ enter judgment on the arbitration award, and to grant UPW attorney's fees and costs. On September 16, 2016, the circuit court partially granted and partially denied this motion. It granted UPW's request to confirm the Decision and Award, which incorporated the Decision on Arbitrability, but it denied a separate confirmation of the Decision on Arbitrability. The circuit court also denied UPW's request for costs and attorney's fees.

B. State's request for attorney's fees and costs

UPW appealed the circuit court's denial of its request to confirm the Decision on Arbitrability to the ICA. The ICA affirmed the circuit court. United Public Workers, AFSCME, Local 646, AFL-CIO v. Dep't of Transp., CAAP-16-0000666 (App. Mar. 13, 2020) (mem.).

Then, on April 3, 2020, the State filed a request for appellate attorney's fees and costs with the ICA, citing HRS § 658A-25⁶ and Hawai‘i Rules of Appellate Procedure ("HRAP") Rule 39(a) (2016).⁷ The State asserted entitlement to attorney's fees as the prevailing party for fees "incurred" by the State's attorney, who is employed by the State Department of Attorney General. The State pointed out the ICA had affirmed the circuit court's orders in their entirety. The State argued attorney's fees may be awarded even if State attorneys are not paid on an hourly basis, and that Hawai‘i courts had awarded attorney's fees in favor of and against government entities in the past. Similarly, Hawai‘i courts had awarded attorney's fees to public interest attorneys, who, like State attorneys, did not bill their clients.

The State requested attorney's fees using the "lodestar method" by multiplying an hourly rate of $325.00 by the hours spent on the appeal. The State's attorney maintained he had 24 years of experience, was an appellate specialist, and $325.00 per hour was a reasonable rate based on attorney's fees awarded in other cases. The State thus requested a total of $20,044.49 in fees as well as $35.20 in costs.

UPW opposed the State's request for attorney's fees and costs, arguing the requested fees were unreasonable and that the hourly rate should be based on the State attorney's salary, which it alleged was the actual expense the State "incurred."

The State's reply contended that an award of "reasonable attorney's fees" required the consideration of prevailing market rates. The State also pointed out this court had previously awarded fees to public interest attorneys based on reasonable hourly rates and had not limited fees to a share of the public interest attorney's actual salary, citing Kaleikini v. Yoshioka, 129 Hawai‘i 454, 304 P.3d 252 (2013).

On July 6, 2020, the ICA issued an order granting the State's request for costs but denying its request for attorney's fees. The ICA ruled that while the State was entitled to attorney's fees pursuant to HRS § 658A-25(c), it "failed to demonstrate that it actually ‘incurred’ appellate attorney's fees." The ICA cited Vinson v. Association of Apartment Owners of Sands of Kahana, 130 Hawai‘i 540, 548-49, 312 P.3d 1247, 1255-56 (App. 2013), which had held that the prevailing party "must have paid or be legally obligated to pay such fees and costs" to its attorneys in order to have "incurred" fees.

On July 16, 2020, the State filed a first amended request for attorney's fees and costs further arguing it had "incurred" attorney's fees. As HRS Chapter 658A did not define "incur," the State cited Black's Law Dictionary, which defined "incur" as, "[t]o suffer or bring on oneself (a liability or expense)." Incur, Black's Law Dictionary (11th ed. 2019). The State contended it had "suffered the liability" of spending 58.9 hours defending against UPW's nonmeritorious appeal, which was time its attorney could have spent on other cases.

The State distinguished Vinson, asserting that case involved private parties and attorneys, not government attorneys. The State maintained the ICA's interpretation of Vinson would "categorically deny[ ] attorney's fees to the State," which would contravene the purpose of HRS § 658A-25 to discourage nonmeritorious challenges. The State contended Vinson actually stood for the proposition that there must be a "sufficient legal connection" between the party and attorney "such that an attorney's fees award ... would not result in unjust enrichment." The State asserted there was a sufficient legal connection here because government lawyers and their client agencies are both part of the State.

On September 4, 2020, the ICA issued an order also denying the State's first amended request for attorney's fees and costs. The ICA again determined that the State "failed to demonstrate that it incurred, as an expense, liability, or legal obligation to pay, appellate attorney's fees of $20,044.49."

III. Standard of Review

A. Statutory interpretation

"Statutory interpretation is a question of law reviewable de novo." State v. Wheeler, 121 Hawai‘i 383, 390, 219 P.3d 1170, 1177 (2009) (internal quotation marks omitted).

This court's construction of statutes is shaped by the following rules:

First, the fundamental starting point for statutory interpretation is the language of the statute itself. Second, where the statutory language is plain and unambiguous, our sole duty is to give effect to its plain and obvious meaning. Third, implicit in the task of statutory construction is our foremost obligation to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself. Fourth, when there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of an expression used in a statute, an ambiguity exists.

Id. (quoting Citizens Against Reckless Dev. v. Zoning Bd. of Appeals of the City & Cty. of Honolulu, 114 Hawai‘i 184, 193–94, 159 P.3d 143, 152–53 (2007) ). "When there is ambiguity in a statute, ‘the meaning of the ambiguous words may be sought by examining the context, with which the ambiguous words, phrases, and sentences may be compared, in order to ascertain their true meaning.’ " Citizens Against Reckless Dev., 114 Hawai‘i at 194, 159 P.3d at 153 (citations omitted). "Moreover, the courts may resort to extrinsic aids in determining legislative intent, such as legislative history, or the reason and spirit of the law." Id.

IV. Discussion

The State's Application presents two questions:

[1]. Did the ICA commit grave errors or act inconsistently with prior case law by denying the State's requests for appellate attorney's fees based on an extreme and irrational interpretation of the word "incur" that categorically denies attorney's fees awards to government attorneys?

[2]. Did the ICA commit grave errors or act inconsistently with prior case law by failing to award attorney's fees to the State according to the prevailing hourly rate?

A. The State incurred attorney's fees under HRS § 658A-25(c)

The State argues it "incurred" attorney's fees for purposes of HRS § 658A-25(c) because it spent 58.9 hours defending against UPW's nonmeritorious appeal. The State maintains the ICA's interpretation of Vinson would categorically deny attorney's fees to the State, which is inconsistent with HRS § 658A-25 ’s purpose of discouraging nonmeritorious challenges.

HRS § 658A-25(c) provides:

(c) On application of a prevailing party to a contested judicial proceeding under section 658A-22, 658A-23, or 658A-24, the court may add reasonable

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