Del Monte Fresh Produce (Hawaii), Inc. v. International Longshore & Warehouse Union, Local 142 , 128 Haw. 289 ( 2012 )

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Electronically Filed
Supreme Court
SCWC-29037
22-OCT-2012
10:55 AM
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
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DEL MONTE FRESH PRODUCE (HAWAII), INC.;
EDWARD C. LITTLETON; STACIE SASAGAWA; TIM HO;
DIXON SUZUKI; and DEL MONTE FRESH PRODUCE COMPANY,
Petitioners/Appellants-Appellants,
vs.
INTERNATIONAL LONGSHORE AND WAREHOUSE UNION,
LOCAL 142, AFL-CIO,
Respondent/Union/Appellee-Appellee,
and
HAWAII LABOR RELATIONS BOARD,
Respondent/Appellee-Appellee.
NO. SCWC-29037
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(ICA NO. 29037; CIVIL NO. 07-1-0708)
OCTOBER 22, 2012
RECKTENWALD, C.J., NAKAYAMA, ACOBA, JJ.,
CIRCUIT JUDGE AHN, IN PLACE OF DUFFY, J., RECUSED,
and CIRCUIT JUDGE ALM, IN PLACE OF MCKENNA, J., RECUSED
OPINION OF THE COURT BY RECKTENWALD, C.J.
This case arises from Del Monte Fresh Produce Company’s
2006 decision to cease growing pineapples at its plantation on
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O#ahu. The company’s subsidiary, Del Monte Fresh Produce
(Hawaii), Inc., subsequently bargained with the International
Longshore and Warehouse Union, Local 142, with regard to the
effects of that decision on Del Monte employees in Hawai#i. The
Union believed the company was not negotiating in good faith, and
on August 21, 2006, it filed a complaint with the Hawai#i Labor
Relations Board alleging that Del Monte had engaged in unfair
labor practices.1 Following an evidentiary hearing, the HLRB
entered an order on March 21, 2007, which concluded that Del
Monte failed to bargain in good faith.2
Del Monte appealed, arguing that the Board Chairman
displayed an appearance of impropriety during the hearing, and
thus, should have been recused and/or disqualified; and that the
HLRB created a new test for effects bargaining in contravention
of federal labor policy, which led the HLRB to reach an erroneous
result. The Circuit Court of the First Circuit3 and the
Intermediate Court of Appeals affirmed. Del Monte Fresh Produce
(Hawaii), Inc. v. Int’l Longshore and Warehouse Union, Local 142,
AFL-CIO (Del Monte II), No. 29037, 2011 WL 5834630, at *5 (App.
Nov. 21, 2011) (SDO).
1
As discussed in Part I.B.1 infra, this opinion refers to the
petitioners/appellants-appellants in this case collectively as “Del Monte.”
2
Then HLRB Board Chairman Brian Nakamura, Board Member Sara
Hirakami, and Board Member Emory Springer presided.
3
The Honorable Sabrina S. McKenna presided.
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In its application, Del Monte raises the following
questions:
A. Did the [HLRB] err by failing to apply the “appearance
of impropriety” standard when ruling on [Del Monte’s] motion
for the HLRB Chairman’s recusal or disqualification?
B. Did the HLRB clearly err in denying [Del Monte’s] motion
for the HLRB Chairman’s recusal or disqualification?
C. Did the HLRB err in constructing a new test for “effects
bargaining” by requiring bargaining on numerous subjects
that federal labor policy has rejected as mandatory
bargaining subjects?
D. Did the HLRB clearly err in finding that [Del Monte]
failed to engage in good faith effects bargaining?
For the reasons set forth below, we hold that the HLRB
did not clearly err in denying Del Monte’s motion to disqualify
the HLRB Chairman. We further hold that the HLRB did not clearly
err in finding that Del Monte engaged in bad faith bargaining,
because there was substantial evidence that the “totality” of Del
Monte’s conduct did not evince “a present intention to find a
basis for agreement and a sincere effort to reach a common
ground.” See Del Monte Fresh Produce (Hawaii), Inc. v. Int’l
Longshore and Warehouse Union, Local 142, AFL-CIO (Del Monte I),
112 Hawai#i 489, 500, 146 P.3d 1066, 1077 (2006) (citations
omitted). However, to the extent that the HLRB’s order could be
construed to impose per se requirements for effects bargaining,
we also hold that bargaining on all of the subjects identified in
the HLRB’s order is not required in every effects bargaining
accompanying a plant closure. Accordingly, we affirm the
judgment of the ICA.
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I. Background
The following factual background is taken from the
record on appeal.
A. Announcement of Del Monte Fresh Produce (Hawaii), Inc.
Closure
The International Longshore and Warehouse Union, Local
142, AFL-CIO (ILWU or Union) is the bargaining representative for
the three bargaining units4 of Del Monte Fresh Produce (Hawaii),
Inc. (DMH). DMH is part of a larger corporation, Del Monte Fresh
Produce Company (DM Corporate), which is located in Coral Gables,
Florida. DMH and the Union were signatories to three collective
bargaining agreements for the three respective units
(collectively, “Collective Bargaining Agreement”). The
Collective Bargaining Agreement was effective from February 8,
2004 through May 30, 2009.
As of January 2006, DMH was a pineapple plantation
located at Kunia on O#ahu, which employed more than 700
employees. DMH and its local management, Edward Littleton and
Stacie Sasagawa, reported to Richard Contreras, the Vice
President of Finance and Administration of Del Monte Fresh
Produce North America.
On February 1, 2006, Littleton, then General Manager of
4
The three respective bargaining units include O#ahu Plantation,
Kunia Processing and Packing Operations (Fresh Fruit or KFF), and Kunia
Chilled/Frozen Operation (KCFO).
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DMH, sent a letter to Fred Galdones, President of the Union,
which stated that “effective February 19, 2006, [DMH] will cease
its planting of pineapple in Hawaii.” The letter further stated
that “operations would still continue (at a diminished scale over
time) over approximately the next 2 ½ years.” On the same day,
DMH publicly issued its “Local Company Statement”:
It should be noted that Del Monte is not leaving
Hawaii immediately. Pineapple has a crop cycle of
three years and the Company’s current crop cycle will
continue to produce quality fruit through mid-2008.
Del Monte expects to continue harvesting and packing
pineapple in Hawaii through that time. In fact, the
Company expects significant volumes during 2006.
. . . Prior to the close of the Kunia plantation at
the end of 2008, Del Monte will work with its
employees and union representatives to reduce the
impact of this decision. The Company has been
discussing measures to help its employees, including
notifying other potential employers and potentially
transferring the Kunia housing to the current
employees/tenants. Del Monte is mindful of the
Company’s obligations to its employees and the local
community, and is committed to making every reasonable
effort to lessen the impact on all individuals
involved.
In response to these announcements, Galdones sent a
letter to Littleton dated February 9, 2006 to request effects
bargaining5 over DMH’s closure. Over six months in 2006, the
parties met for eight bargaining sessions from February 16
through July 18. During these bargaining sessions the Union was
principally represented by Union President Galdones, while DMH
was represented by a bargaining committee composed of
5
In labor relations, “effects bargaining” refers to the requirement
that an employer bargain over the effects of an operational change, including
the effects of a decision to close a plant. 48A Am. Jur. 2d. Labor and Labor
Relations § 2345 (2005).
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spokesperson Tim Ho, who was from the Hawai#i Employers Council,
Littleton and Sasagawa.
On February 22, 2006, the Union submitted in writing
its proposals regarding the “effects of ceasing planting
operations and closure of business.” The proposals included
three “cost items”: “enhanced severance, six months of medical
and dental coverage after closure, and protecting the residents
of Kunia Camp by providing seed money to retain a housing
association.” The “non-cost proposals” included administrative
items. The parties agreed to form a housing subcommittee to
negotiate with respect to Company-provided housing, and on or
around February 23, 2006, the Union submitted its housing
proposals.
In April 2006, the parties reached certain tentative
agreements on the effects of the closure. These tentative
agreements related to non-cost items and housing; DMH made no
concessions over the other items. On April 12, 2006, DMH
proposed a new cost item, a cash “retention bonus” to be paid to
fourth year covered seasonal employees, i.e., non-regular
employees who had worked for four years, and who remained
employed at DMH into 2007. Prior to the filing of the Union’s
original complaint, the parties last met on July 18, 2006, with
no movement by either party regarding cost items.
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B. HLRB Proceedings
1. Unfair Labor Practice Complaint
The Union filed its initial administrative unfair labor
practice complaint with the HLRB on August 21, 2006, naming as
respondents DMH, Littleton, Sasagawa, and Ho. On December 21,
2006, the Union filed an amended complaint, which named Dixon
Suzuki and DM Corporate as additional respondents.6 The Union’s
amended unfair labor practice complaint alleged, inter alia, that
Del Monte breached its duty to bargain in good faith in violation
of Hawai#i Revised Statutes (HRS) § 377-6(4).7 Specifically, the
Union alleged that “[o]n and after July 18, 2006[,]” Del Monte
“willfully refused to bargain in good faith with the [Union] over
the effects of the closure of its operations in Hawaii” by: (1)
“their refusal to consider cost proposals that would exceed
benefits previously negotiated into the [C]ollective [B]argaining
[A]greement[]”; (2) “their claim of impasse”; and (3) their
6
For ease of reference, DMH, Littleton, Sasagawa, Ho, Suzuki, and
DM Corporate will be referred to collectively here as “Del Monte.”
7
HRS § 377-6 (1993) provides in pertinent part:
It shall be an unfair labor practice for an employer
individually or in concert with others:
. . . .
(4) To refuse to bargain collectively with the
representative of a majority of the employer’s
employees in any collective bargaining unit provided
that if the employer has good faith doubt that a union
represents a majority of the employees, the employer
may file a representation petition for an election and
shall not be deemed guilty of refusal to bargain[.]
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“fail[ure] to appoint a representative with authority to
negotiate and reach agreement on cost items[.]” Del Monte filed
its answer to the amended complaint on January 5, 2007.
In August 2006, DM Corporate announced that it would
close KCFO, one of DMH’s bargaining units, in September 2006.
On November 13, 2006, DM Corporate informed Sasagawa
that it was accelerating the closing of the Kunia plantation to
January 22, 2007. The Union was informed by phone of the
accelerated closing date the following day, and by public
announcement on November 17, 2006.
On November 16, 2006, Del Monte filed a motion to
dismiss and/or for summary judgment, which the HLRB denied after
holding a hearing on the motion.
2. HLRB Evidentiary Hearings
Evidentiary hearings were held on November 29, 2006,
November 30, 2006, December 12, 2006, December 15, 2006,
December 21, 2006, and February 7, 2007.
a. Union’s Case-in-Chief8
i. Timothy Ho
Ho, President and CEO of Hawai#i Employers Council and
spokesperson in negotiations for DMH, testified that in 2004, the
Union and Del Monte negotiated a new five-year Collective
8
In addition to the following testimony from Ho, Sasagawa, and
Galdones, several DMH employees testified about the pineapple operations.
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Bargaining Agreement. Ho acknowledged that the Union had
expressed concerns during negotiations that DMH would be closing,
and recalled that the Union “wanted to make sure that [DMH] was
going to be here for the long haul.” According to Ho, DMH gave
an affirmative response.
The first time that Ho heard that DMH was “not going to
be in Hawaii for a long haul” was “[p]robably a day or two”
before DMH announced the decision to the Union, i.e., “late
January [2006].” Ho recalled that the reason for the decision to
cease plantation operations was that “it was not economically
feasible to continue the operations in Hawaii.”
Ho acknowledged that on February 9, 2006, the Union
sent a letter requesting effects bargaining and information on
the timing and reasons for the planned closure. Effects
bargaining commenced on February 16, 2006. The Union’s counsel
then asked Ho about the first effects bargaining meeting and
whether he recalled Galdones commenting that “he appreciated that
the people in the bargaining there, on the Del Monte side, had
their marching orders from corporate.” Ho responded, “That
sounds correct.” Ho further acknowledged that on February 22,
2006, the Union sent its proposal regarding the “effects of
ceasing planting operations and closure of business” to DMH.
Ho testified that in February 2006, “the plan was [for
DMH] to continue its operations, given the production volumes
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that were ongoing. And at the time, the company expected to
continue its harvesting operation through 2008.” Ho further
testified that “[a]t several points in time during the course of
our effects bargaining,” “things changed a little bit in terms of
what the operation was looking like.”
ii. Stacie Sasagawa
Sasagawa had been working for DMH as the Human
Resources Manger, but became General Manager in September or
October 2006 after Littleton left that position. Sasagwa
testified that she was “sure” Littleton assured the Union in 2004
that DMH was “here to stay[.]”
In regard to an April 2006 bargaining session, the
Union’s counsel asked Sasagawa whether she could recall Ho
indicating that DMH “could not provide enhancement; they received
marching orders[.]” Sasagawa did not recall Ho making that
statement. However, Sasagawa’s notes from that meeting
indicated, “Remaining items take into consideration what you’ve
said. You know difficult to provide additional economic
benefits. Received marching orders, cannot provide
enhancements.” Sasagawa explained that her understanding with
regard to “severance” and “medical benefits,” was that DM
Corporate was not willing to provide beyond what was agreed upon
in the Collective Bargaining Agreement.
After the Union’s counsel and Del Monte’s counsel
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concluded their initial questioning of Sasagawa, the Chairman
asked Sasagawa further questions, and the following exchange
occurred:
[Chairman]: In our [Waiakamilo Honolulu
Chilled/Frozen Operation] hearings, we entertained
testimony from employees who had been there for 20
years. A surprising number of employees who had 20-
year tenure.
A lot of your 500 firees are going to be 20-year
guys?
[Sasagawa]: There is a large amount of people with
many years of service. As far as specifically over
20, I’m not sure.
[Chairman]: And a lot of testimony we received were
from people who were extraordinarily proud of doing
their job to the best of their ability for 20 years.
A proportion of your firees are going to be
those people, yeah?
[Sasagawa]: Yes.
[Chairman]: Why didn’t the company think that those
people deserved to remain separate?
[Sasagawa]: Why did the company not believe –-
[Chairman]: Why did the company think that those
people did not deserve enhanced severance, since they
were being terminated for no fault of their own?
[Sasagawa]: I’m not sure how to even answer that.
[Chairman]: The company had a reason for turning down
the enhanced severance. Yeah?
[Sasagawa]: Right.
[Chairman]: And these are good people, loyal workers
who have devoted half their life to the company.
Why did the company not give them enhanced
severance?
[Sasagawa]: I guess that was just their decision to
not increase their severance beyond the nine days they
were getting in the contract.
. . . .
[Chairman]: Now, in January, you are personally going
to be firing 500 people with no enhanced medical for
themselves or their families?
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[Sasagawa]: Yes.
[Chairman]: You can do that?
[Sasagawa]: It’s a job. I have to.
The Chairman also questioned Sasagawa about whether
employees had relied on Sasagawa’s prior representations that the
plantation would not close until at least December 2008. For
example, the Chairman asked Sasagawa whether people “bought a
car[,]” “had babies[,]” or “got married,” “expecting that they
would have a job, at least until December of [2008.]” Sasagawa
responded in the affirmative, and the Chairman further asked, “Is
that fair?” Sasagawa responded, “It’s not fair.” Del Monte’s
counsel objected, stating that “we’re talking about something
emotional or in moral sense that is not at issue here.” The
Chairman responded, “[Sasagwa] has responded honestly and
sincerely. I’m not going to strike that. And it’s the bottom
line in this case, ethically. It’s not legally.” The Chairman
then continued, “Sorry. I didn’t mean to make you cry. But that
is the bottom line.” After a recess was taken, the Chairman
stated, “On the record, I’d like to apologize to [] Sasagawa
[for] effectively getting emotional in my line of questioning. I
personally appreciate your candor and honesty.” After further
questioning of Sasagawa by counsel, the Chairman again
apologized, “In real life, when I use the court interrogation
tone of voice, my wife slaps me directly. I’d like to ask you to
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do so if I ever do so again.”
iii. Frederico Galdones
Galdones, President of the Union, testified that he was
the spokesperson for the Union when they were negotiating the
2004 Collective Bargaining Agreement. Galdones testified about
the Union’s proposals for the Collective Bargaining Agreement in
2004, one of which concerned severance. Galdones stated that the
Union withdrew that proposal based on DMH’s representation in
negotiations that it “had been in Hawaii for about 100 years, and
[it] would like to be here for another hundred years[.]”
Galdones testified that after the February 2006
announcement that DMH would be closing in 2008, he “met with the
Union’s Negotiating Committee to discuss the announcement . . .
[a]nd we established a set of demands for the discussions.”
Galdones further testified that prior to doing so, he reviewed
previous effects bargaining agreements reached between the Union
and other industries, which included “enhancing the benefits
beyond what the Collective Bargaining Agreement provided for.”
With regard to the proposals that the Union submitted to DMH in
2006, Galdones testified that some of the proposals had “economic
effects,” i.e., the medical and dental extensions, enhanced
severance, and housing proposals. With regard to these economic
proposals, Galdones testified that during the course of the
effects bargaining with DMH, it appeared that the Union was
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“[b]argaining against [itself]” because DMH gave no
counteroffers.
Galdones testified that during the meetings in
February, March, and April 2006, the Union had no reason to
believe that 2008 was not a firm closing date. Galdones recalled
that at some point in the negotiations, Ho talked about “marching
orders” and that he “cannot provide any enhancements[,]” and
Galdones understood Ho’s comments to mean that “they weren’t
going to give any more than what the Collective Bargaining
Agreement provided for.” Galdones asserted that Ho used the word
“impasse” in April. However, Galdones disagreed that the parties
were at an impasse at the time.
When asked why the Union filed the unfair labor
practice complaint against Del Monte, Galdones replied:
Well, first off, in 2004, we had an indication
that they were here for the long haul, and that we
would -- and that is the reason why we had established
a five-year contract.
February of 2006, . . . they had indicated to us
that they would be closing in 2008. And in the
bargaining, when we were in the bargaining, the
indication given to us was that the major decision
maker was not sitting at the table, but was coming
from Coral Gables.
And that kind of put us at a disadvantage. And
that is why we felt that because of the position that
we were placed in and how the dynamics of the
negotiation was going, we felt that it was not –-
we’re not treated in accordance to what the labor law
provides in negotiation, and we felt it was bargaining
in bad faith.
Galdones explained that when the “decision maker on
cost items is not present[,]” the person is “so far removed from
the emotions” that it makes it “much more difficult” to “reach
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agreements on cost items.” Galdones also testified that the
September 2006 announcement of the KCFO closure came as a
surprise because they were “under the impression that it may be a
gradual phaseout, but this was a total closure of KCFO.”
Galdones also testified about the first time Del Monte made what
he considered a cost proposal, which occurred on April 12, 2006
and concerned fourth year covered seasonal employees. According
to Galdones, Ho told the Union that the “offer was just good for
the day[,]” and Galdones did not find DMH’s action “to be
conducive to bargaining in good faith.”
Galdones testified that the Union amended its August
2006 complaint to include conduct that occurred thereafter,
because the Union considered what Del Monte did in November to be
“bad-faith bargaining” as the Union “had been given indication by
the company that they were going to be harvesting and working
through mid 2008.” Galdones stated, “instead of from 2006 to
2008, it’s now a two-month period.” He further stated, “It’s
difficult for the Union, because it’s a moving target.” Galdones
claimed that the Union was “never forewarned at all” that “there
were some problems that might lead towards the closure of the
company.” Accordingly, Galdones requested that “because of the
commitment [DMH] made in February of 2006 that [DMH] would be
operating until 2008, that the loss of income that the employees
had suffered or will be suffering would be replaced.”
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b. HLRB Hearing on Del Monte’s Motion to Disqualify
Del Monte filed a Motion to Disqualify or for Recusal
of Board Member (Disqualification Motion), arguing that the
Chairman should recuse himself or be disqualified based on his
questioning of Sasagawa on the second day of the hearing.
After hearing arguments on the Disqualification Motion
on December 15, 2006, the Chairman stated:
Okay. Since the recusal is personal to me, I’m going
to rule on the [Disqualification] Motion without
consultation with my colleagues.
Since in my tenure as Chairman, witnesses have a
frequent tendency to burst into tears, the last two
witnesses that did were 300-pound refuse workers with
a penchant for violence. I asked my questions because
I don’t know the answer, and I really want to know the
answer, not because I want to make anybody’s case.
And my position is to represent the public
interest on this Board. And I assume and will
continue to assume that a passion for fairness and
some compassion is a minimal qualification.
So your [Disqualification] Motion is denied.
Thereafter, Del Monte’s counsel requested that, because
Del Monte filed its motion “as recusal or disqualification, that
in addition to the Honorable Chairman’s ruling on the recusal
component, there also be a ruling as to the disqualification
issue.” After the HLRB conferred, the Chairman stated, “Pursuant
to [Del Monte’s] request, the Board has conferred regarding the
[Disqualification Motion]. And at least a Board majority
supports the Chair’s ruling on the matter.”
c. Del Monte’s Case-in-Chief
i. Richard Contreras
Richard Contreras, Vice President of Finance and
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Administration for Del Monte Fresh Produce North America,
testified that he is “responsible for all of the financial
aspects of North America[,]” including DMH.
Contreras testified that in 2004, DMH operations were
profitable, but that changed in 2005 “because of what was going
on in the worldwide market.” Contreras sent a letter to Burt
Hatton, a representative of Campbell Estate, on June 8, 2004,
seeking to extend DMH’s lease, which was to expire in December of
2008. Contreras further testified that in 2004, at the time the
Collective Bargaining Agreement with the Union went into effect,
there was no decision to stop planting or to shut down
operations.
Contreras testified that the January 2006 decision to
stop planting in Hawai#i was based on the fact that 2005 was not
a profitable year, DMH’s lease was to expire in 2008, and there
was increased competition from Latin America. Contreras
testified affirmatively that at the time of the January 2006
decision to stop planting, it was his intention to continue the
operations through 2008. When asked about his “communications
with the Hawai#i Committee about the bargaining[,]” Contreras
responded that he spoke to Littleton almost “every day,” and that
it was “very easy” to reach Littleton or Sasagawa. Contreras
testified that the DMH Committee had authority to bargain without
consulting with corporate on everything but “the three large
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dollar items proposals, which were the increased severance, the
extended medical benefits, and the housing[.]” “But on
everything else, they had free independence.” Contreras was
aware that the committee entered into “numerous tentative
agreements with the Union this past year in effects
bargaining[,]” and that the committee had “full authority to
reach those agreements” “[e]xcept for the three [items]
mentioned[.]” Contreras testified that Del Monte considered the
Union’s financial proposals, “even though [Del Monte] did not
ultimately agree to all the proposals[.]” Contreras further
testified that “the main factor” in their decision was that “the
employees were being given about two or three years’ notice
before they were to be terminated or laid off.” Contreras denied
that the DMH committee was told at the start of negotiations that
it could not agree to any particular item.
Del Monte’s counsel asked Contreras to explain DM
Corporate’s November 2006 decision to accelerate the shutdown of
DMH from 2008 to early 2007. Contreras responded that, by
November 2006, DM Corporate could see that DMH had lost almost
five million dollars in 2006 and that the best projection for
2007 was a loss of a million dollars.
On cross-examination, Contreras acknowledged that Del
Monte’s February 2006 letter to Galdones regarding the initial
closure did not “reference the loss of profit in 2005 as a reason
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as to why [they] were closing[.]” Contreras admitted that he did
not have any discussions with Littleton “before the meetings on
effects bargaining as to what [DM Corporate] would be willing to
do or not do[,]” and further admitted that the large cost items
would have to be approved by corporate.
ii. Timothy Ho
Ho was called to testify again in Del Monte’s case-in-
chief. Ho testified that the 2004 Collective Bargaining
Agreement “included separation allowance” for employees who might
be laid off. Ho testified that he believed the nine-day
severance allowance provided for in the Collective Bargaining
Agreement was “generous” compared with other contracts that he
had seen. Ho denied that the five-year duration in the contract
was used to “conceal some kind of existing decision to shut
down[.]”
With regard to the 2006 effects bargaining, Ho
testified that DMH had “always accommodated the [U]nion’s
requests for meetings” and that he was “routinely in contact with
[] Galdones.” Ho further testified that he “believe[d] the [DMH]
committee had full authority to negotiate the effects of the
close down.” Ho stated that the DMH committee “spent a
considerable amount of time doing research, considering every one
of the company’s proposals[,]” and “answer[ing] every proposal
that has been made.” Ho further stated that he “had full
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authority to enter into [the tentative] agreements” with the
Union. Del Monte’s counsel asked Ho whether it was “accurate”
that “the company would not and has not offered anything more
than the [Collective Bargaining Agreement,]” to which Ho
responded, “No, we had already arrived at some tentative
agreements that extend beyond the [C]ollective [B]argaining
[A]greement, so I don’t see that being correct.”
Del Monte’s counsel also asked about “impasse” and if
Ho could “recall who first said that the parties were at
impasse[.]” Ho recalled that Galdones had said it first, but
admitted that Ho “may have asked the question in an off-the-
record meeting of whether or not we were at impasse on the
issues[.]” Ho denied that Del Monte imposed any adverse
consequences when the Union did not accept its latest offer.
On cross-examination, the Union’s counsel asked whether
the 2006 DMH bargaining committee had “full authority on the
table to negotiate with the [U]nion a counterproposal for the
extended medical benefits, or [whether] that [was] something
[they] had to consult and get approval from corporate” for, to
which Ho responded, “It would have required approval.” Ho
admitted that Del Monte did not make any counterproposal to the
Union’s proposal for enhanced severance or extended medical or
dental benefits. On examination by the Chairman, Ho admitted
that during the effects bargaining in April he did not have “any
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authority in the company to accept or offer anything regarding
medical, dental, or severance[,]” and that the same was true for
Sasagawa.
iii. Stacie Sasagawa
Sasagawa was called again to testify. Sasagawa
testified that during the 2004 Collective Bargaining Agreement
negotiations, there was no indication that DMH would cease
planting in the future. Sasagawa denied that Ho or Littleton
ever said that the company could not or would not give more than
what the Collective Bargaining Agreement provided. Sasagawa
recalled that “they had made a statement saying to the effect
that they would entertain reasonable requests.”
d. Testimony Regarding Second Phase of Negotiations
On December 21, 2006, the HLRB concluded the
evidentiary hearing. Upon Del Monte’s request, however, the HLRB
subsequently reopened the hearing to permit testimony on
negotiations that occurred in December 2006 and January 2007
(“second phase of negotiations”).9 The second phase of
negotiations led to the parties executing a Memorandum of
Agreement on January 10, 2007, which ended the effects
bargaining. The HLRB heard additional testimony from Ho and
9
More specifically, on December 5, 2006, at DMH’s invitation, the
parties held another bargaining session, which marked the start of the second
phase of negotiations. The parties met several more times in December 2006.
On January 9, 2007, the parties met again, and they mitigated their positions
on the various cost items.
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Galdones on February 7, 2007.
3. HLRB’s Findings of Fact, Conclusions of Law, and Order
On March 21, 2007, the HLRB issued its HLRB Order, in
which it referenced this court’s decision in Del Monte Fresh
Produce (Hawaii), Inc. v. Int’l Longshore and Warehouse Union,
Local 142, AFL-CIO (Del Monte I), 112 Hawai#i 489, 146 P.3d 1066(2006). The HLRB acknowledged that in Del Monte I, this court
applied, but did not expressly adopt, the HLRB’s standard for
determining whether a violation of the duty to bargain
collectively has occurred: “‘whether the totality of an
employer’s conduct evinces a present intention to find a basis
for agreement and a sincere effort to reach a common ground.’”
(Quoting Del Monte I, 112 Hawai#i at 500, 146 P.3d at 1077).
Additionally, the majority opinion recognized that the
“bargaining at issue took place in two discrete phases; one
following [Del Monte’s] announcement of closure in January 2006
and the other following its announcement of accelerated closure
in November of that year.” As to the second phase of
negotiations, which were conducted in December 2006, the HLRB
found that the negotiations took place in “good faith.” In
contrast, the HLRB could not “so conclude with respect to the
first phase of negotiations and f[ound] and conclude[d] based on
its understanding of the totality of the disclosed circumstances
that [Del Monte] failed to bargain in good faith in violation of
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HRS § 377-6(4) during this phase.” The Board majority stated:
In the opinion of the Board majority, rational
foundational prerequisites of information must be
available, or the subjects of open good faith
exchange, in the course of effects bargaining
accompanying a closure should at least include [sic]:
1) why the closure is taking place; 2) what, if
anything, the Union, employees or the employer could
reasonably do to delay, forestall the closure or
mitigate the detrimental effects of the closure; 3)
the reasons for positions taken in developing,
modifying or rejecting offers or counter offers; 4)
the resources which might be available to effect
compromise; 5) the possible retention, redeployment or
liquidation of effected [sic] human or material
resources; 6) what is necessary to establish an open
and meaningful avenue of communication with decision
makers; 7) steps that can be reasonably taken to
mitigate the detrimental effects of the pending
unemployment to employees, their dependent families or
their community; and 8) the precise timing of the
closure.
The Board majority then acknowledged that “[e]ach of
these elements existed, albeit largely through testimonial
disclosure, during the second phase of negotiations[,]” but
stated that this could not “be said for the first phase which was
marked by a withholding, frustration or unilateral change with
respect to each identified element.” The Board majority cited
the following as examples of how DMH failed to bargain in good
faith during the first phase of negotiations:
1. The Union was advised of only competitive
pricing and lease expiration as the initial
reasons for closure; profitability and
production concerns, much less continuing and
exacerbated profitability and production
concerns were never transmitted to the Union.
2. In the absence of this information and naturally
any substantive exchanges between the parties in
this regard, the Union had no reason or ability
to modify, sweeten or invent new proposals in
order to possibly extend the life of the
enterprise and its members’ jobs. Any hope or
possibility of creative collaboration was lost
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within the confines of spreadsheets which were
totally unavailable.
3. [Del Monte’s] bargaining representatives
dutifully transmitted and costed the Union’s
costs proposals to Corporate. They also
dutifully and steadfastly transmitted
Corporate’s rejection. But the record is devoid
of an instance of the Company’s bargaining team
ever advising the Union of the reasons for its
rejections. Thus, the Union was again left in
an informational vacuum. They couldn’t obtain
the reasons for rejection or reasonably craft a
compromise, short of complete capitulations,
that might generate movement.
4. The Union and its members were led to believe,
based on [Del Monte’s] representation, that
employment would be available until December
2008, almost three years after its January 2006
announced closure. The closing date implicitly
assured crop retention and cultivation, active
and gainful employment until that time, and time
to plan, budget and live accordingly. Both the
Union and [Del Monte] relied upon this
representation in establishing its positions.
The sudden unilateral acceleration of closure
wiped out these expectations and betrayed these
reliance[s].
5. In its public statement accompanying its first
announcement of closure, [Del Monte] committed
to: “. . . Del Monte will work with its
employees and [U]nion representatives to reduce
the impact of this decision. The Company has
been discussing measures to help its employees,
including notifying other potential employers
and potentially transferring Kunia housing to
the current employees/tenants. Del Monte is
mindful of the Company’s obligations to its
employees and the local community, and is
committed to making every reasonable effort to
lessen the impact on all individuals involved.”
In the course of the first round of bargaining,
except for a handful of locally generated well-
intended classes and a job fair, virtually none
of this happened.
6. The Board can identify no piece of information
more foundationally relevant to effects
bargaining accompanying a closure than the date
of the closure. That date defines the time for
bargaining, the Company’s continued need for
employees and hence the Union’s economic
leverage, the time available for employee
mitigation of damages, and the time pressure
parameters on the taking and establishment of
bargaining positions. The closing date is not
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necessarily, and was not here argued to be, a
subject of bargaining. But the information
establishes critical and foundational and
operational parameters. Hence [Del Monte]
essentially made disappear the foundation and
therefore substance of the first phase of
bargaining when it accelerated closure.
After listing the aforementioned factors, the Board
majority stated:
The Board does not conclude that any of the
factors discussed above, standing alone is necessarily
dispositive of this issue. But taken together, as
representative of a totality of the circumstances
presented before us the Board must conclude that the
totality of an employer’s conduct during the first
phase of bargaining does not evince “a present
intention to find a basis for a basis for [sic]
agreement and a sincere effort [to] reach a common
ground.” [Del Monte I, 112 Hawai#i at 500, 146 P.3d
at 1077] Instead, its efforts and its conduct
indicates an intention to create an informational
vacuum and temporal box around negotiations which
would induce and require complete capitulation.
In its conclusions of law, the Board majority stated in
relevant part:
Based on the totality of the circumstances presented,
the Board majority must conclude that with respect to
the first phase of bargaining, the totality of the
employer’s conduct during the first phase of
bargaining does not evince “a present intention to
find a basis for [] agreement and a sincere effort
[to] reach a common ground.” [Del Monte I, 112
Hawai#i at 500, 146 P.3d at 1077] Instead, its
efforts and its conduct indicates an intention to
create an informational vacuum and temporal box around
negotiations which would induce and require complete
capitulation. The Union was not provided any
information regarding profitability or production
concerns. The representatives at the bargaining table
either remained silent on the financial condition of
[DMH] or were unaware as to how DMH was financed.
This lack of knowledge or information as to the
financial considerations of the plans for continued
operation precluded meaningful bargaining. Moreover,
upon questioning as to the future of [DMH], the Union
was misled by DMH’s assurances that DMH would be in
Hawaii at least until December 2008, and that there
would be no more operational changes in September
2006. Shortly thereafter, [Littleton] left his
General Manager position to [Sasagawa]. The Union was
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further misled to believe that it had time to
negotiate the impact of the final closure to the
majority of employees until 2008. Accordingly, the
Board concludes that [Del Monte] failed or refused to
bargain in good faith and thereby committed a
prohibited practice in violation of HRS § 377-6(4).
Having found that Del Monte violated its duty to
bargain in good faith, the Board majority ordered that: (1) Del
Monte “pay additional severance at the contractually provided
rate to all employees terminated as a result of closure for the
almost two years between actual closure and December 2008”; and
(2) “the parties reopen negotiations with respect to medical
insurance and attempt to reach an agreement which supplements and
expands their current agreement (two months of medical) with a
program that would provide at least 12 months extended coverage
to the workers (and their families) who have not as yet acquired
insurance.”
Board Member Hirakami concurred in part and dissented
in part. Board Member Hirakami concurred with the Board
majority’s conclusion that Del Monte “failed to bargain
collectively in good faith during the first phase of
negotiations,” but “for different reasons[.]” Board Member
Hirakami focused on the fact that the DMH bargaining committee
received “marching orders” from DM Corporate, and accordingly,
she concluded that DMH could not meaningfully consider the three
cost items proposed by the Union. Thus, she concurred in the
conclusion reached by the Board majority that Del Monte had
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failed to bargain in good faith. Board Member Hirakami
disagreed, however, with the Board majority’s discussion of the
eight “rational foundational prerequisites of information which
must be available” in the course of effects bargaining. She also
disagreed with the majority as to the remedy, and stated that she
would “award four additional months of enhanced medical coverage”
for “a total extended period of six months.”
C. Circuit Court Proceedings
On April 20, 2007, Del Monte filed its notice of appeal
to the circuit court. On February 1, 2008, after hearing
arguments and receiving briefing from the parties, the circuit
court filed its Order Affirming HLRB’s Decision No. 464 Dated
March 21, 2007. The circuit court explained:
With respect to the issue of the recusal and
disqualification raised by [Del Monte] as to the
Chair, the [c]ourt finds recusal and/or
disqualification was not required for the reasons and
law cited by the Union []. With respect to the Board
decision on its merits, the factors considered by the
Board in finding bad faith bargaining are
discretionary issues that could be considered by the
Board in deciding the issue of bad faith bargaining.
The fact that the Board characterized any of the
factors as mandatory when they might be discretionary
is harmless.
On the same day, the circuit court entered judgment in
favor of the Union and the HLRB.
D. ICA Appeal
On February 29, 2008, Del Monte timely filed its notice
of appeal to the ICA. In its opening brief, Del Monte’s first
two points of error concerned the HLRB’s ruling on Del Monte’s
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Disqualification Motion, while Del Monte’s remaining two points
of error concerned the portions of the HLRB Order that addressed
bad faith bargaining. Regarding the Disqualification Motion, Del
Monte argued that the HLRB did not apply the proper “appearance
of impropriety standard” in ruling on the Disqualification
Motion, and erred in denying the Disqualification Motion on the
merits.
Regarding the HLRB’s finding of bad faith, Del Monte
argued that “[t]he HLRB Order is affected by an error of law
because it sets forth per se requirements for effects bargaining
that are inconsistent with well-settled principles of labor
law.”10 Del Monte also argued that the HLRB erred in finding bad
faith. Accordingly, Del Monte argued that the circuit court
erred in affirming the HLRB Order.
In a summary disposition order, the ICA affirmed the
circuit court’s February 1, 2008 Judgment. Del Monte II, 2011 WL
5834630, at *5. As to Del Monte’s points of error concerning the
HLRB allegedly failing to apply the objective “appearance of
impropriety” standard and denying the Disqualification Motion,
the ICA stated that the “proper test for disqualifying an
administrative adjudicator for bias or impartiality is whether
10
Specifically, Del Monte argued that the HLRB Order required
employers to bargain about subjects that are not required under federal labor
policy. Del Monte disputed the propriety of the first six “requirements” of
the eight imposed by the HLRB.
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‘the circumstances fairly give rise to an appearance of
impropriety and reasonably cast suspicion on [the adjudicator’s]
impartiality.’” Id. at *1 (citing Sussel v. City and Cnty. of
Honolulu Civil Service Comm’n, 71 Haw. 101, 109, 784 P.2d 867,
871 (1989)). The ICA concluded that the “HLRB and the circuit
court did not err because [the Chair’s] comments did not rise to
the level of displaying deep-seated favoritism or antagonism,
give rise to an appearance of impropriety, or reasonably cast
suspicion on his impartiality.” Id. at *2.
The ICA then addressed Del Monte’s contention that the
HLRB Order erroneously set forth per se requirements for effects
bargaining. Id. The ICA stated that the “standard adopted by
[the] HLRB to determine whether an employer has met its statutory
duty to bargain in good faith is ‘whether the totality of the
employer’s conduct evinces a present intention to find a basis
for agreement and a sincere effort to reach a common ground.’”
Id. (quoting Del Monte I, 112 Hawai#i at 500, 146 P.3d at 1077).
The ICA rejected Del Monte’s argument that the HLRB Order set
forth per se requirements for effects bargaining, and stated that
Del Monte “inaccurate[ly] characteriz[ed] [the] HLRB’s holding.”
Id. at *3. The ICA cited other parts of the HLRB’s Order, which
showed that the HLRB properly considered “the totality of the
circumstances” in determining that Del Monte engaged in bad faith
bargaining. Id. (citing Del Monte I, 112 Hawai#i at 500-02, 146
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P.3d at 1077-79).
Lastly, the ICA addressed Del Monte’s contention that
the HLRB erred in finding that Del Monte bargained in bad faith.
Id. The ICA rejected each of Del Monte’s arguments regarding the
six points of conduct listed in the HLRB Order. Id. at *3-5.
The ICA, thus, affirmed the circuit court’s judgment. Id. at *5.
The ICA subsequently entered its judgment on appeal on
December 15, 2011.
Del Monte timely filed its application for writ of
certiorari, and the ILWU timely filed its response.
II. Standards of Review
A. Motion for Disqualification
The test for disqualifying a board member whose
impartiality is challenged is whether the movant has shown “an
appearance of impropriety” on the part of the challenged board
member. Sussel, 71 Haw. at 109, 784 P.2d at 871 (1989). “[T]he
test for disqualification due to the ‘appearance of impropriety’
is an objective one, based not on the beliefs of the petitioner
or [adjudicator], but on the assessment of a reasonable impartial
onlooker apprised of all the facts.” In re Water Use Permit
Applications, 94 Hawai#i 97, 122, 9 P.3d 409, 434 (2000) (quoting
State v. Ross, 89 Hawai#i 371, 380, 974 P.2d 11, 20 (1998)).
B. Administrative Agency Decisions
Review of a decision made by the circuit court upon
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its review of an agency’s decision is a secondary appeal.
The standard of review is one in which [the appellate] court
must determine whether the circuit court was right or wrong
in its decision, applying the standards set forth in HRS
§ 91-14(g) (1993) to the agency’s decision.
HRS § 91-14, entitled “Judicial review of contested
cases,” provides in relevant part:
(g) Upon review of the record the court
may affirm the decision of the agency or remand
the case with instructions for further
proceedings; or it may reverse or modify the
decision and order if the substantial rights of
the petitioners may have been prejudiced because
the administrative findings, conclusions,
decisions, or orders are:
(1) In violation of constitutional or
statutory provisions; or
(2) In excess of the statutory authority or
jurisdiction of the agency; or
(3) Made upon unlawful procedure; or
(4) Affected by other error of law; or
(5) Clearly erroneous in view of the reliable,
probative, and substantial evidence on the
whole record; or
(6) Arbitrary, or capricious, or
characterized by abuse of discretion
or clearly unwarranted exercise of
discretion.
Under HRS § 91-14(g), conclusions of law are
reviewable under subsections (1), (2), and (4); questions
regarding procedural defects under subsection (3); findings
of fact under subsection (5); and an agency's exercise of
discretion under subsection (6).
United Pub. Workers, AFSCME, Local 646, AFL-CIO, v. Hanneman, 106
Hawai#i 359, 363, 105 P.3d 236, 240 (2005) (brackets omitted)
(quoting Paul’s Elec. Serv., Inc. v. Befitel, 104 Hawai#i 412,
416, 91 P.3d 494, 498 (2004)).
C. Administrative Agency Conclusions of Law and Findings
of Fact
An agency’s conclusions of law are reviewed de
novo, while an agency’s factual findings are reviewed
for clear error. A conclusion of law that presents
mixed questions of fact and law is reviewed under the
clearly erroneous standard because the conclusion is
dependent upon the facts and circumstances of the
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particular case.
As a general matter, a finding of fact or a
mixed determination of law and fact is clearly
erroneous when (1) the record lacks substantial
evidence to support the finding or determination, or
(2) despite substantial evidence to support the
finding or determination, the appellate court is left
with the definite and firm conviction that a mistake
has been made. Substantial evidence is credible
evidence which is of sufficient quality and probative
value to enable a person of reasonable caution to
support a conclusion.
Del Monte I, 112 Hawai#i at 499, 146 P.3d at 1076 (internal
quotation marks, citations, and brackets omitted).
III. Discussion
We hold that there was no error in (1) the HLRB’s
denial of Del Monte’s Disqualification Motion, and (2) the HLRB’s
determination that Del Monte bargained in bad faith. As set
forth below, there was substantial evidence that the “totality”
of Del Monte’s conduct did not evince “a present intention to
find a basis for agreement and a sincere effort to reach a common
ground.” See Del Monte I, 112 Hawai#i at 500, 146 P.3d at 1077.
However, we further acknowledge that the HLRB Order
could erroneously be construed to impose the eight factors listed
in the HLRB Order as per se requirements in all effects
bargaining cases accompanying a plant closure. Such an
interpretation would be inconsistent with the standard for
determining whether an employer has breached its obligation to
bargain in good faith previously adopted by the HLRB and approved
by this court: “whether the totality of the employer’s conduct
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evinces a present intention to find a basis for agreement and a
sincere effort to reach a common ground.” Del Monte I, 112
Hawai#i at 500, 146 P.3d at 1077 (brackets omitted). In light of
this standard, we clarify that the eight factors may be
considered only on a case-by-case basis, depending on whether
they are relevant to the facts of a particular case.
A. The ICA did not err in affirming the HLRB’s ruling on Del
Monte’s disqualification motion
In its application, Del Monte argues that the HLRB did
not apply the objective “appearance of impropriety” standard, but
rather applied a “subjective test.” Del Monte further argues
that the ICA failed to address whether the HLRB applied the
correct standard. Finally, Del Monte argues that the HLRB erred
in denying its Disqualification Motion, and that the error was
prejudicial. Del Monte’s arguments lack merit.
The HLRB did not expressly state whether it was
applying the “appearance of impropriety” standard in ruling on
Del Monte’s Disqualification Motion. However, the ICA identified
and applied the proper objective standard for disqualifying an
administrative adjudicator. The ICA stated: “The proper test for
disqualifying an administrative adjudicator for bias or
impartiality is whether ‘the circumstances fairly give rise to an
appearance of impropriety and reasonably cast suspicion on [the
adjudicator’s] impartiality.’” Del Monte II, 2011 WL 5834630, at
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*1 (brackets in the original) (quoting Sussel, 71 Haw. at 109,
784 P.2d at 871). The ICA further stated that “‘the test for
disqualification due to the appearance of impropriety is an
objective one, based not on the beliefs of the petitioner or the
judge, but on the assessment of a reasonable impartial onlooker
apprised of all the facts.’” Id. at *2 (emphasis added) (quoting
Office of Disciplinary Counsel v. Au, 107 Hawai#i 327, 338, 113
P.3d 203, 214 (2005)). Thus, the ICA properly identified the
“objective” standard that Del Monte argues should apply, and as
discussed below, the record establishes that under this standard,
Del Monte’s arguments lack merit.
Del Monte argues that the Chairman displayed an
appearance of impropriety by expressing sympathy for the Union
members, speculating on their hardship, declaring that the
company’s actions were not fair, and derisively questioning
Sasagawa. Del Monte takes excerpts of the Chairman’s comments,
such as describing the Union members as “extraordinarily proud”
and “good people, loyal workers” and apologizing for “getting
emotional” and using his “interrogation tone,” and argues that it
was “clearly erroneous to find that the HLRB Chairman had not
created an ‘appearance of impropriety.’”
The Chairman’s comments, however, must be viewed in the
context in which they arose. The Chairman’s questions to
Sasagawa came after the Union’s counsel and Del Monte’s counsel
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questioned Sasagawa about Del Monte’s representations to the
employees regarding the closure date. The Union’s counsel also
asked Sasagawa about certain cost proposals rejected by Del
Monte. Accordingly, the Chairman’s questions regarding severance
and the employees’ reliance on Del Monte’s representations
regarding the closure date concerned matters that had already
been put in issue by the parties. The Chairman clarified on the
record, “I asked my questions because I don’t know the answer,
and I really want to know the answer, not because I want to make
anybody’s case.” Viewing the Chairman’s comments from the point
of view of “a reasonable impartial onlooker apprised of all the
facts[,]” Au, 107 Hawai#i at 338, 113 P.3d at 214, the Chairman’s
comments “did not rise to the level of displaying deep-seated
favoritism or antagonism, give rise to an appearance of
impropriety, or reasonably cast suspicion on his impartiality.”
Del Monte II, 2011 WL 5834630, at *2. Thus, even assuming
arguendo the HLRB applied the wrong standard, the error was
harmless. Accordingly, the ICA and the circuit court properly
affirmed the HLRB’s ruling with regard to Del Monte’s
Disqualification Motion.
B. The circuit court correctly affirmed the HLRB’s
determination that Del Monte failed to bargain in good faith
during the first phase of negotiations
For the reasons set forth below, the circuit court
correctly affirmed the HLRB’s decision that Del Monte bargained
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in bad faith during the first phase of negotiations.
HRS § 91-14(g) concerns “Judicial review of contested
cases,” and provides in relevant part:
Upon review of the record the court may affirm the
decision of the agency or remand the case with
instructions for further proceedings; or it may
reverse or modify the decision and order if the
substantial rights of the petitioners may have been
prejudiced because the administrative findings,
conclusions, decisions, or orders are:
. . .
(4) Affected by other error of law[.]
(Emphasis added).
In addition, this court can affirm the decision of a
lower tribunal on any ground appearing in the record. Nihi Lewa,
Inc. v. Dep’t of Budget and Fiscal Servs., 103 Hawai#i 163, 168,
80 P.3d 984, 989 (2003) (“Where the decision below is correct it
must be affirmed by the appellate court though the lower tribunal
gave a wrong reason for its action.”) (citation omitted). Here,
the record established that Del Monte bargained in bad faith
during the first phase of negotiations. The Board majority’s
FOFs support the conclusion that the “totality” of Del Monte’s
conduct did not “evince[] a present intention to find a basis for
agreement and a sincere effort to reach a common ground.” Del
Monte I, 112 Hawai#i at 500, 146 P.3d at 1077 (citation omitted).
Accordingly, Del Monte’s “substantial rights” were not prejudiced
by the Board’s decision. See 91-14(g).
When this court examined the issue of bad faith
bargaining in Del Monte I, this court stated that:
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[W]hether an employer has bargained in good faith
presents a mixed question of law and fact reviewed
under the clearly erroneous standard. Even though
there is evidence in the record of discrete actions by
Del Monte suggestive of good faith, the HLRB’s
determination of the “totality” is not a counting game
of good and bad acts, and its expertise in labor
relations entitle the HLRB to judicial deference in
this area.
Id. at 501, 146 P.3d at 1078 (emphasis added).
This court further stated that the “clearly erroneous
standard” is limited to “(1) determining whether there is
substantial evidence in the record to support the ruling and (2)
if there is such evidence, determining whether the record
nevertheless leaves the court with the definite and firm
conviction that a mistake has been made.” Id.Here, the HLRB’s ruling that Del Monte did not meet its
bargaining obligation under HRS § 377-6(4) was supported by
credible evidence in the record. Effects bargaining requires,
inter alia, that an employer “meet with the union, provide
information necessary to the union’s understanding of the
problem, and in good faith consider any proposals the union
advances.” First Nat’l Maint. Corp. v. N.L.R.B., 452 U.S. 666,
679 n.17 (1981). “The requirement of conferring in good faith
involves more than just meeting, more than just sterile or
repetitive discussion of formalities or differences between
management and the union, and more than formal replies that, in
effect, constitute a refusal to deal with the union.” C.C.
Borklund, Good Faith in Collective Bargaining, 25 Am. Jur. Proof
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of Facts 2d. § 333:6 (1981). “[T]he offering of a proposal that
is predictably unacceptable, coupled with an inflexible attitude
on major issues and no proposal of reasonable alternatives, has
been condemned as violative of the good faith obligation.” 1 The
Developing Labor Law: The Board, The Courts, and the National
Labor Relations Act 867 (John E. Higgins, Jr. et al. eds., 5th
ed. 2006) (footnote omitted).
With regard to Del Monte’s consideration of the Union’s
proposals in the instant case, the Board majority’s FOF No. 18
stated:
At the first meeting, the Union presented its
proposals. These included three cost items: enhanced
severance, six months of medical and dental coverage
after closure, and protecting the residents of Kunia
Camp by providing seed money to retain a housing
association. The Union also presented numerous,
mostly administrative non-cost proposals. At the
onset, [Ho] advised the Union that the Company’s
committee had “received their marching orders” and
that nothing would be negotiated beyond the scope of
the [C]ollective [B]argaining [A]greement in force.
Because the DMH bargaining committee was given
“marching orders” from DM Corporate to deny enhancements beyond
the Collective Bargaining Agreement as to the three cost items,
the Union’s cost proposals could not be considered in a
meaningful way. Any costing of the Union’s three proposals would
be futile in the face of such “marching orders,” and in light of
DMH’s understanding that “nothing would be negotiated beyond the
scope of the [C]ollective [B]argaining [A]greement in force.”
Moreover, this FOF was supported by credible evidence in the
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record. Sasagawa’s notes from one of the meetings referenced
that it would be difficult for DMH to “provide additional
economic benefits” because it received “marching orders.” When
questioned about these notes, Sasagawa explained that with regard
to “severance” and “medical benefits,” her understanding was that
DM Corporate was not willing to provide anything beyond what was
agreed upon in the Collective Bargaining Agreement.
In addition, the Board majority found that on April 12,
2006, DMH proposed a new cost item, a cash “retention bonus” to
be paid to fourth year covered seasonal employees who remained
employed at DMH into 2007. The record indicates that this offer
was available to the Union for only one day, even though Galdones
requested more time to discuss the proposal with the Union. This
type of “take-it-or-leave-it” cost proposal, under the
circumstances presented here, is inconsistent with an employer’s
duty to bargain in good faith, as previously recognized by the
HLRB and this court. See Del Monte I, 112 Hawai#i at 502, 146
P.3d at 1079 (pointing to a “take-it-or-leave-it” proposition as
part of the “evidence upon which the HLRB may have concluded that
Del Monte did not bargain in good faith”).
In sum, the Board majority made specific findings,
based on credible evidence in the record, which supported the
conclusion that Del Monte did not bargain in good faith during
the first phase of negotiations. Thus, the totality of Del
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Monte’s conduct did not “evince[] a present intention to find a
basis for agreement and a sincere effort to reach a common
ground.” Del Monte I, 112 Hawai#i at 500, 146 P.3d at 1077.
Although this reasoning may differ from the Board majority’s
discussion, the Board majority’s decision does not require
reversal. The circuit court affirmed the Board majority’s FOFs,
and the reasons stated herein for affirming the circuit court’s
and ICA’s judgments are supported by specific findings in the
HLRB Order. Cf. Nakamine v. Bd. of Trs. of the Emps. Ret. Sys.,
65 Haw. 251, 255, 649 P.2d 1162, 1165 (1982) (reversing the
circuit court’s order and remanding for further proceedings
because the circuit court failed to make specific findings as to
what procedural irregularities occurred in the administrative
agency proceedings and whether such errors prejudiced the
claimant’s substantial rights); see also Borklund at § 333:23
(1981) (“In an enforcement proceeding, the court can sustain an
ultimate conclusion of lack of good faith without sustaining the
Board on each and every one of its subsidiary findings of fact;
nor need the court agree as to every incident specially
emphasized in the Board’s decision as indicating lack of good
faith.”) (footnote omitted).
C. The eight factors identified in the HLRB Order are not per
se requirements in every effects bargaining case
Del Monte argues that the HLRB erred by creating a new
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test for effects bargaining in contravention of federal labor
policy. Del Monte argues that certain factors listed in the HLRB
Order are not mandatory bargaining subjects under federal labor
law, but that the HLRB Order “effectively compels employers to
bargain about” these subjects.11 Del Monte further argues that
it was “erroneous for the ICA to state that the HLRB’s new
requirements are lawful because they are only a part of the
‘totality of circumstances.’” In light of our holding that the
HLRB did not err in concluding that Del Monte bargained in bad
faith during the first phase of negotiations, we need not address
this argument for purposes of this appeal. However, we recognize
that an employer “must have some degree of certainty beforehand
as to when it may proceed to reach decisions without fear of
later evaluations labeling its conduct an unfair labor practice.”
First Nat’l Maint. Corp., 452 U.S. at 678-79. Accordingly, since
the HLRB Order could be read as imposing per se requirements, we
consider whether all eight factors identified in the HLRB Order
11
Del Monte specifically challenges the following six factors: (1)
“why the closure is taking place”; (2) “[how] to delay [or] forestall the
closure”; (3) “reasons for positions taken in developing, modifying or
rejecting offers [or] counter offers”; (4) resources which might be available
to effect compromise”; (5) “possible retention, redeployment, or liquidation
of effected [sic] human or material resources”; and (6) “what is necessary to
establish an open and meaningful avenue of communication with decision
makers[.]” (Some brackets in original and some added).
Del Monte acknowledges that the following two factors are
recognized components of effects bargaining: (1) “steps that can be reasonably
taken to mitigate the detrimental effects of the pending unemployment to
employees, their dependent families, or their community”; and (2) “the precise
timing of the closure.” It would appear that those factors would be relevant
in most, if not all, cases.
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are mandatory subjects of disclosure and negotiation in every
effects bargaining case. We conclude that they are not, since
such an approach would be inconsistent with the case-by-case
approach we adopted in Del Monte I. See Del Monte I, 112 Hawai#i
at 501 n.17, 146 P.3d at 1078 n.17 (“Determining whether
bargaining parties exhibited a ‘mutually genuine effort to reach
an agreement with reference to the subject under negotiation,’
HRS § 377-1(5), is by its nature an inquiry where hard-and-fast
rules do not apply.”).
HRS § 377-6(4) makes it an unfair labor practice for an
employer “[t]o refuse to bargain collectively” with the
employees’ collective bargaining representative. In addition,
“Regardless of whether an employer is obligated to bargain with
the union over a decision involving an operational change, the
employer must bargain over the effects of the change[,]” i.e.,
engage in “effects bargaining.” 48A Am. Jur. 2d. Labor and Labor
Relations § 2345 (2005) (emphasis added); see also Providence
Hosp. v. N.L.R.B., 93 F.3d 1012, 1018 (1st Cir. 1996) (noting
that “unions generally enjoy the right to bargain over the
effects of decisions which are not themselves mandatory subjects
of collective bargaining”). Under HERA, “collective bargaining”
is defined as “the negotiating by an employer and a majority of
the employer’s employees in a collective bargaining unit (or
their representatives) concerning representation or terms and
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conditions of employment of such employees in a mutually genuine
effort to reach an agreement with reference to the subject under
negotiation.” HRS § 377-1(5) (1993) (emphasis added). In Del
Monte I, this court approved the following standard to assess
whether an employer has met its statutory duty to bargain in good
faith: “whether the totality of the [employer’s] conduct evinces
a present intention to find a basis for agreement and a sincere
effort to reach a common ground.” 112 Hawai#i at 500-01, 501
n.17, 146 P.3d at 1077-78, 1087 n.17 (brackets in original)
(quoting Bd. of Educ., 6 HLRB 173, 177 (2001)).
Here, the HLRB Order stated:
In the opinion of the Board majority, rational
foundational prerequisites of information which must
be available, or the subjects of open good faith
exchange, in the course of effects bargaining
accompanying a closure should at least include [sic]:
1) why the closure is taking place; 2) what, if
anything, the Union, employees or employer could
reasonably do to delay, forestall the closure or
mitigate the detrimental effects of the closure; 3)
the reasons for positions taken in developing,
modifying or rejecting offers [or] counter offers; 4)
the resources which might be available to effect
compromise; 5) the possible retention, redeployment or
liquidation of effected [sic] human or material
resources; 6) what is necessary to establish an open
and meaningful avenue of communication with decision
makers; 7) steps that can be reasonably taken to
mitigate the detrimental effects of the pending
unemployment to employees, their dependent families or
their community; and 8) the precise timing of the
closure.
(Emphasis added).
The portion of the Order that reads, “rational
foundational prerequisites of information which must be
available, or the subjects of open good faith exchange, in the
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course of effects bargaining accompanying a closure should at
least include[,]” implies that all eight factors are per se
requirements for an employer in every effects bargaining case
accompanying a closure. However, imposing such requirements in
every case is inconsistent with our case law.
In Del Monte I, this court noted that “[d]etermining
whether bargaining parties exhibited a ‘mutually genuine effort
to reach an agreement with reference to the subject under
negotiation,’ HRS § 377-1(5), is by its nature an inquiry where
hard-and-fast rules do not apply.” Id. at 501 n.17, 146 P.3d at1078 n.17 (emphasis added). Thus, evaluating an employer’s
conduct against per se requirements is inconsistent with focusing
on the “totality of the employer’s conduct.” Id. at 500, 146
P.3d at 1078 (brackets omitted). Put another way, all eight
factors listed in the HLRB Order may not be relevant in every
effects bargaining case. Thus, imposing those requirements on an
employer in every effects bargaining would be improper. This
conclusion is consistent with an extensive body of federal
caselaw, which evaluates whether an employer bargained in good
faith by looking at the totality of the circumstances.12 See,
12
The HLRB’s standard for assessing whether an employer violated its
statutory duty to bargain in good faith, i.e., “whether the totality of the
[employer’s] conduct evinces a present intention to find a basis for agreement
and a sincere effort to reach a common ground[,]” was derived from a leading
federal labor law treatise. See Bd. of Educ., 6 HLRB 173, 177 (2001) (citing
1 The Developing Labor Law: The Board, The Courts, and the National Labor
Relations Act 608 (Patrick Hardin et al. eds., 3d ed. 1992)). This court has
also looked to the NLRA in interpreting the HERA’s substantive provisions.
(continued...)
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e.g., N.L.R.B. v. Truitt Mfg. Co., 351 U.S. 149, 153-154 (1956)
(noting that “[e]ach case must turn upon its particular facts”
and that “[t]he inquiry must always be whether or not under the
circumstances of the particular case the statutory obligation to
bargain in good faith has been met”); Int’l Chem. Workers Council
of the United Food & Commercial Workers Int’l v. N.L.R.B., 467
F.3d 742, 748 (9th Cir. 2006) (considering “whether the Company’s
actions as a whole satisfied its statutory obligation to bargain
in good faith”); Frankl v. HTH Corp., 650 F.3d 1334, 1358 (9th
Cir. 2011) (“To determine a party’s good faith, the Board looks
to the ‘totality of the respondent’s conduct, both at and away
from the bargaining table.’”) (citation and brackets omitted).
In sum, the law does not require employers to furnish
all eight types of information, or bargain over the subject
matter of that information, in every instance of effects
bargaining accompanying a closure. Accordingly, this court’s
holding does not foreclose the possibility that a particular
factor may be relevant, and thus appropriate for the HLRB to take
into consideration, in evaluating the totality of an employer’s
conduct in an effects bargaining case.
IV. Conclusion
We hold that the HLRB did not err in denying Del
Monte’s Disqualification Motion. We further hold that the HLRB
12
(...continued)
See Del Monte I, 112 Hawai#i at 503, 146 P.3d at 1080.
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did not err in concluding that Del Monte bargained in bad faith
during the first phase of negotiations. However, we also hold
that the eight factors in the HLRB Order are not per se
requirements in every effects bargaining case. Accordingly, the
judgment of the ICA is affirmed.
Christopher S. Yeh /s/ Mark E. Recktenwald
for petitioners
/s/ Paula A. Nakayama
Rebecca L. Covert
and Davina W. Lam /s/ Simeon R. Acoba, Jr.
for respondent
/s/ Karen S.S. Ahn
/s/ Steven S. Alm
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