United Public Workers v. Dawson Intern.
| Decision Date | 18 December 2006 |
| Docket Number | No. 27105.,27105. |
| Citation | 149 P.3d 495 |
| Parties | UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO, Applicant-Appellee, v. DAWSON INTERNATIONAL, INC., Respondent-Appellant. |
| Court | Hawaii Supreme Court |
John R. Dwyer, Jr. (of Dwyer Schraff Meyer Grant & Green), and Blake W. Bushnell (of Bushnell & Miller), on the briefs, Honolulu, for respondent-appellant.
James E.T. Koshiba, Charles A. Price, and Andrew D. Stewart (of Koshiba Agena & Kubota), on the briefs, Honolulu, for applicant-appellee.
Respondent-appellant Dawson International, Inc. (Dawson) appeals from the January 6, 2005 final judgment of the Circuit Court of the First Circuit, the Honorable Bert I. Ayabe presiding, confirming an amended arbitration award in favor of applicant-appellee United Public Workers, AFSCME, Local 646, AFL-CIO [hereinafter, UPW]. Briefly stated, the instant case involves a prepaid legal service plan implemented by UPW, pursuant to Hawai`i Revised Statutes (HRS) chapter 488,1 for the benefit of UPW's members. UPW, as plan sponsor, entered into a two-year contract with Dawson, as the plan administrator.2 Nine months into the contract, UPW terminated the contract, demanding that Dawson return the balance of prepaid premiums that Dawson held in reserve. In response, Dawson maintained, inter alia, that UPW had breached the contract by its unilateral termination, thereby entitling Dawson to damages. Pursuant to the dispute resolution provisions contained in their contract, the parties proceeded to arbitration, which initially resulted in an arbitration award in favor of Dawson in the amount of $25,074.00, plus the right to retain the balance of the monies held in reserve, amounting to $87,240.08. Thereafter, UPW filed a motion to modify or correct the arbitration award in the Circuit Court of the First Circuit, the Honorable Dexter D. Del Rosario presiding, on the ground of an evident mathematical miscalculation. Dawson, on the other hand, moved for confirmation of the award. Persuaded by the arguments advanced by UPW, the circuit court remanded the case to the arbitrator and stayed the circuit court proceeding until the arbitrator ruled on the alleged mathematical miscalculation. Ultimately, the arbitrator reversed himself, issuing an amended award in favor of UPW in the amount of $189,924.00. Thereafter, the circuit court confirmed the amended arbitration award, denied Dawson's motion to vacate the amended award and confirm the original award (Dawson's motion to vacate), and entered final judgment in favor of UPW on January 6, 2005.
On appeal, Dawson challenges the circuit court's confirmation of the amended arbitration award and denial of Dawson's motion to vacate. Specifically, Dawson maintains that, because HRS chapter 658 (1993) []—as opposed to HRS chapter 658A (Supp.2005) []—governs the instant case, the circuit court erred in remanding the case to the arbitrator to consider UPW's motion to modify or correct the original arbitration award.
Based on the discussion infra, we hold that: (1) HRS chapter 658 governs the instant case; and (2) under HRS chapter 658, the circuit court did not have the authority to remand the case to the arbitrator. Accordingly, we vacate the circuit court's January 6, 2005 final judgment and remand this case for further proceedings consistent with this opinion.
The following facts are substantially taken from the original arbitration award, dated March 18, 2004, in light of the deference required to be shown to the arbitrator's view of the facts. See United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 37-38, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987) ().
On February 24, 2000, UPW entered into a two-year contract with Dawson [hereinafter, the Plan Agreement]3 under which Dawson was to administer a prepaid legal service plan (the Plan) for the benefit of approximately 11,000 to 12,000 state and county employees in collective bargaining Units 1 and 10.4 The Plan was established to provide eligible unit employees [hereinafter, the covered employees] access to certain free or discounted legal services.
Specifically, Dawson agreed, inter alia, to "select a qualified referral panel of licensed attorneys," and UPW agreed to make monthly premium payments to Dawson. Premiums were to be paid by the state and county employers to UPW, and, in turn, UPW was to transfer the premiums to Dawson. Upon receipt, Dawson was required to place the prepaid premiums in a segregated account (the reserve) to be disbursed at its discretion to pay for the Plan's attorneys, operation of the Plan, legal education, research, and other uses, such as increasing benefits to the covered employees.
The Plan Agreement also contained the following dispute resolution procedures [hereinafter, the dispute resolution provisions]:
5.01 Notice of Violation.
Should either party allege a violation of this Agreement, the party alleging the violation shall notify in writing the other party of the alleged violation within thirty (30) days of the alleged violation or within thirty (30) days of realizing the alleged violation.
5.02 Violation Resolution.
Should the violation not be resolved within thirty (30) days after notification of the violation[,] the resolution procedure as provided in Section 5.03 shall apply.
5.03 Resolution Procedure.
The parties shall submit the violation to mediation before resorting to arbitration. The mediator(s) shall be selected by mutual agreement of the parties. In the event the violation is not resolved in mediation[,] the violation shall be submitted to arbitration. Within fifteen (15) days after the conclusion of mediation[,] the parties shall select an Arbitrator by mutual agreement. Negotiations, mediation or arbitration shall be conducted on O`ahu, Hawai`i.
(Underscored and bold emphases in original.) The Plan Agreement became effective on April 3, 2000 and was to expire on March 31, 2002.
On January 2, 2001, nine months into the twenty-four month contract, UPW notified Dawson that the Plan was "terminated" effective December 31, 2000 "because the employer[s'] contribution that funded the . . . Plan [was] terminated," i.e., the employers had ceased to contribute the premiums necessary for the viability of the Plan.5 Although UPW indicated it would pay Dawson for any operational expenses incurred through December 31, 2000, UPW demanded that the balance of the funds in the reserve be returned to UPW.
On January 5, 2001, Dawson informed UPW of its position that UPW was in breach of the Plan Agreement inasmuch as the agreement did not provide the right to unilaterally terminate the contract. Dawson further advised UPW that: (1) the unused balance of premiums would remain in the reserve to assure delivery of "legal services, education programs, operating costs and other financial obligations for the term of the contract" (internal quotation marks omitted); and (2) "[it] will continue to provide legal services to covered employees until such time as resolution is reached by approval of both parties" (internal quotation marks and original brackets omitted). Correspondence between the parties revealed that UPW continued to maintain its position that Dawson comply with the termination notice while Dawson maintained its position that, because the contract had a two-year minimum term, it would continue to comply with its contractual obligations.
Inasmuch as the parties made no progress toward resolution, Dawson demanded, on March 21, 2001, that Dispute Prevention & Resolution, Inc. (the DPR) begin the resolution procedure set forth in section 5.03 of the Plan Agreement, i.e., the mediation/arbitration process. For reasons that are unclear from the record, the alternative dispute resolution process was never completed.
Two years later, on April 17, 2003,6 UPW suggested that the parties submit the dispute to arbitration.7 On August 25, 2003, the parties selected attorney James T. Paul as the arbitrator. Three days later, on August 28, 2003, UPW executed an "Agreement to Participate in Binding Arbitration" [hereinafter, the DPR Arbitration Agreement], which provides in its entirety:
By agreement of the parties set forth below, [the DPR]/James Paul, Esq. have agreed to conduct a binding arbitration of the matters in controversy between the parties. James Paul, Esq. has agreed to serve in the capacity of a neutral and unbiased Arbitrator and will provide arbitration services to the parties on an impartial basis. It is understood [that,] as a neutral[,] the Arbitrator will not act as attorney or advocate for any party. The parties, DPR, and James Paul, Esq. agree to follow and abide by the DPR Arbitration Rules, Procedures & Protocols, as established by [the] DPR.
Unless the parties' agreement provides otherwise, the Arbitrator must determine all issues submitted to arbitrator by the parties and may grant any and all remedies that the Arbitrator determines to be just and appropriate under the law. In the Award of Arbitrator, the Arbitrator shall issue a determination on the issue of all arbitration-related fees and costs, including: Arbitrator's compensation and expenses; [the] DPR's fees and expenses; and, if provided for in the parties' agreement or the Submission to Arbitration, attorney's fees and costs.
The DPR/Arbitrator fee is $275.00/hour, plus GET, plus...
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