* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## IN THE SUPREME COURT OF THE STATE OF HAWAI # I

---O0O---

IN THE MATTER OF THE ARBITRATION BETWEEN HAWAI # I STATE TEACHERS ASSOCIATION, Respondent/Union-Appellant,

and

STATE OF HAWAI # I, DEPARTMENT OF EDUCATION, Petitioner/Employer-Appellee.

SCWC-11-0000065

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-11-0000065; S.P. NO. 10-1-0165)

AUGUST 11, 2017

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

OPINION OF THE COURT BY NAKAYAMA, J.

I. INTRODUCTION

At issue is whether the doctrine of sovereign immunity

protects the State from an arbitrator’s award of prejudgment

interest. We hold that, under the facts of this case, it does

not. Because judicial review of an arbitration award is confined Electronically Filed Supreme Court SCWC-11-0000065 11-AUG-2017 10:03 AM* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## to the strictest possible limits, and because the arbitrator in

this case reasonably interpreted the arbitration agreement in

fashioning the award, we hold that the arbitrator did not exceed

his authority in awarding prejudgment interest against the State.

We also hold that the award of attorneys’ fees and costs on

appeal was proper.

Thus, we affirm the Intermediate Court of Appeals’

(ICA) November 21, 2016 judgment on appeal, which 1) vacated in

part the Circuit Court of the First Circuit’s (circuit court)

February 24, 2011 final judgment, 2) reversed the circuit court’s

January 4, 2011 orders, 3) affirmed the circuit court’s

January 31, 2011 order, and 4) granted Hawai # i State Teachers

Association’s (HSTA) request for fees and costs.

II. BACKGROUND

A. Arbitration Proceedings 1



## On July 18, 2008, Kathleen Morita (Morita or grievant),

a public school teacher, was terminated from her job for

allegedly smoking marijuana and possessing alcohol while in her

classroom at Hau # ula Elementary School. HSTA filed a grievance

on Morita’s behalf and an arbitration hearing was held pursuant

to the collective bargaining agreement (the agreement) between

HSTA and the Hawai # i State Department of Education (State or

W a l t e r H

. I k e d a p r e s i d e d o v e r t h e a r b i t r a t i o n p r o c e e d i n g s

. 1



## 2* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## Employer).

Article V of the agreement outlines the grievance

procedure, which provides that a grievant may request

arbitration. Article V.G.2.f provides the arbitrator with the

authority to enter an award in favor of the grievant if the

arbitrator finds that the Employer’s actions were improper:

W h e n t h e a r b i t r a t o r f i n d s t h a t a n y d i s c i p l i n a r y a c t i o n w a s i m p r o p e r , t h e a c t i o n m a y b e s e t a s i d e , r e d u c e d o r o t h e r w i s e

m o d i f i e d b y t h e a r b i t r a t o r

. T h e a r b i t r a t o r m a y a w a r d b a c k
p a y t o c o m p e n s a t e t h e t e a c h e r w h o l l y o r p a r t i a l l y f o r a n y

s a l a r y l o s t

. S u c h b a c k p a y a w a r d s h a l l b e o f f s e t b y a l l

o t h e r c o m p e n s a t i o n r e c e i v e d b y t h e g r i e v a n t ( s ) i n c l u d i n g b u t

n o t l i m i t e d t o u n e m p l o y m e n t c o m p e n s a t i o n o r w a g e s

.


## On May 7, 2010, the arbitrator issued a decision and

award, which sustained the grievance because the State lacked

just cause to terminate Morita. The arbitrator ordered that

Morita be restored to her position at Hau # ula Elementary School

and be given back wages “with interest at the rate of ten (10)

percent per annum on any unpaid amounts that are due and owing.”

The arbitrator also noted that he would “retain limited

jurisdiction for a period not to exceed 6 months from the date of

this award to assure compliance with the award.”

On July 28, 2010, HSTA filed a motion for final

decision and award requiring the State to pay Morita $30,454.57

in backpay, plus ten percent interest until the amount was fully

paid. In its memorandum in support of the motion, HSTA explained

that there “has been no compliance with the remedial terms of the

3* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## award . . . as to back pay by Employer” and requested that the

arbitrator enter a final decision in order to settle any

remaining disputes over the calculation of the award between the

parties.

On September 27, 2010, the arbitrator entered a

compliance order. In it, the arbitrator noted that the State had

filed a July 22, 2010 motion to strike or vacate the interest

portion of the award with the circuit court and that this motion

was still pending at the circuit court level. 2



## As to the issues of backpay and interest (also labeled

throughout the proceedings as prejudgment or backpay interest),

the arbitrator offered the following explanation:

W h i l e t h e U n i o n h a s r e q u e s t e d a f i n a l a w a r d a n d o r d e r

w h i c h f i x e s t h e a m o u n t o f b a c k p a y a n d i n t e r e s t , t h e A r b i t r a t o r h a s e l e c t e d t o t r e a t i t a s a c o m p l i a n c e m a t t e r p u r s u a n t t o h i s c o n t i n u i n g j u r i s d i c t i o n b e c a u s e t h e M a y 7 , 2 0 1 0 d e c i s i o n a n d a w a r d w a s f i n a l e x c e p t f o r w h a t n o r m a l l y

w o u l d h a v e b e e n m i n i s t e r i a l m a t h e m a t i c a l c a l c u l a t i o n

. A s a g e n e r a l p r o p o s i t i o n , A r b i t r a t o r s a r e a u t h o r i z e d t o p r o c e e d

u n d e r t h e a u t h o r i t y p e r m i t t e d b y t h e c o l l e c t i v e b a r g a i n i n g

a g r e e m e n t a n d t h e U n i f o r m A r b i t r a t i o n A c t , H R S , C h a p t e r 6 5 8 A

. A s p r e v i o u s l y i n d i c a t e d i n t h e o r d e r o f J u n e 1 6 , 2 0 1 0 , t h e A r b i t r a t o r b e l i e v e s t h a t h e i s a c t i n g i n

c o n f o r m i t y t i t h e [ s i c ] C o l l e c t i v e B a r g a i n i n g A g r e e m e n t a n d
t h e a u t h o r i t y g r a n t e d b y H R S , C h a p t e r 6 5 8 A i n t h e d e t e r m i n a t i o n t h a t a n y b a c k p a y a w a r d i n c l u d e s i n t e r e s t a t
t h e r a t e o f 1 0 p e r c e n t p e r a n n u m

. T h e p u r p o s e o f a n a w a r d

o f b a c k p a y i n c l u d i n g i n t e r e s t i s t o “ m a k e w h o l e ” f i n a n c i a l l y t h e G r i e v a n t h a d s h e n o t b e e n t e r m i n a t e d

. E l k o u r i &
E l k o u r i , H o w A r b i t r a t i o n W o r k s , 6 E d

. 2 0 0 3 , p

. 1 2 2 4

. th

P a y m e n t t o t h e G r i e v a n t o f w r o n g f u l l y w i t h h e l d p a y w i t h o u t i n t e r e s t w o u l d n o t r e s t o r e h e r w h o l e a s l o s s o f u s e o f f u n d s f o r t h a t p e r i o d e n t a i l e d e i t h e r d e p r i v a t i o n o r a d d i t i o n a l

c o s t s t o t h e G r i e v a n t i f s h e h a d t o b o r r o w f u n d s t o r e p l a c e l o s t w a g e s w h i l e a w a i t i n g t h e r e s u l t s o f h e r g r i e v a n c e

. T h e

T h e S t a t e ’ s m o t i o n t o s t r i k e i s d i s c u s s e d i n t h e f o l l o w i n g s e c t i o n

. 2



## 4* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

d o c t r i n e o f i n t e r e s t a s s e s s e d b y a n a r b i t r a t o r a s

c o m p e n s a t i o n o r p e n a l t y t o p r e v e n t f u r t h e r d a m a g e s i s d e m o n s t r a t e d b y M o r r i s K n u d s e n C o m p a n y v s

. M a k a h u e n a C o r p o r a t i o n a n d T e a P a c i f i c , I n c

. , 6 6 H a w

. 6 6 3 ( 1 9 8 3 ) a n d
S u s s e l l v s

. C i v i l S e r v i c e C o m m i s s i o n o f t h e C i t y & C o u n t y o f
H o n o l u l u , 7 4 H , [ s i c ] 5 9 9 ( 1 9 9 3 )

.


## As such, the arbitrator reaffirmed his May 7, 2010 determination

that Morita was entitled to interest on unpaid backpay, but left

the calculation to the parties:

T h e G r i e v a n t i s e n t i t l e d t o a r e i m b u r s e m e n t o f b a c k p a y

o f $ 2 5 , 1 6 9

. 0 5 e x c l u d i n g i n t e r e s t f o r t h e p e r i o d f r o m A u g u s t 1 , 2 0 0 8 t o M a y 3 1 , 2 0 1 0

. S h e i s a l s o e n t i t l e d t o i n t e r e s t o n a n y u n p a i d b a c k p a y a t t h e r a t e o f 1 0 p e r c e n t p e r

a n n u m

. S i n c e t h e E m p l o y e r h a s i n d i c a t e d t h e p o s s i b i l i t y o f

a p p e a l i n g a t l e a s t t h e i n t e r e s t p o r t i o n o f t h e a w a r d , n o

a m o u n t i s s e t f o r t h a s t o a c c r u e d i n t e r e s t

. I f t h e E m p l o y e r d o e s n o t c o n t e s t t h e p r i n c i p a l a m o u n t o f t h e b a c k p a y , i t

s h o u l d b e p a i d f o r t h w i t h a s i t m a y b e t h e s o u r c e o f t h e

r e p a y m e n t b y t h e G r i e v a n t o f r e t i r e m e n t b e n e f i t s r e c e i v e d
f r o m t h e S t a t e o f H a w a i i R e t i r e m e n t S y s t e m

. T h e c a l c u l a t i o n

o f a c c r u e d i n t e r e s t i s l e f t t o t h e p a r t i e s u s i n g f i n a n c i a l

m a n a g e m e n t s o f t w a r e

. T h e c a l c u l a t i o n s h o u l d a s s u m e t h e d e f i c i t i n b a c k p a y a c c r u e d m o n t h l y f r o m A u g u s t 1 , 2 0 0 8 b y d i v i d i n g t h e a g g r e g a t e d e f i c i t i n b a c k p a y f o r e a c h y e a r b y t h e n u m b e r o f m o n t h s t h a t t h e u n p a i d d e f i c i t r e m a i n e d u n p a i d

m u l t i p l i e d b y t h e r a t e o f 1 0 p e r c e n t p e r a n n u m u n t i l p a i d

.



## B. Circuit Court Proceedings 3



## On May 18, 2010, HSTA filed a motion to confirm the

arbitration award, entry of judgment and allowing costs and other

appropriate relief with the circuit court. The State filed a

response, arguing that Morita was not entitled to the awarded

interest and opposing HSTA’s request for attorneys’ fees and

costs.

Confusion appears to have arisen when the State filed

T h e H o n o r a b l e G a r y W

. B

. C h a n g p r e s i d e d

. 3



## 5* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## two separate motions, which sought the same relief from the

arbitrator’s award of interest, but relied on different statutory

grounds. The first, filed on July 9, 2010, was the State’s 4



## motion to modify or correct the arbitration award (motion to

modify award), in which the State sought to modify the portion of

the arbitrator’s decision that awarded prejudgment interest on

the backpay. This motion was brought pursuant to Hawai # i Revised

Statutes (HRS) § 658A-24 (Supp. 2010). 5



## HSTA’s motion to confirm and the State’s motion to

modify the award were heard on July 15, 2010. At the hearing,

the State also made an oral request to file a motion to vacate

T h e r e i s s o m e d i s c r e p a n c y a s t o w h e n t h i s m o t i o n w a s f i l e d

. T h e m o t i o n 4
i s d a t e d J u l y 8 , 2 0 1 0 b u t d a t e s t a m p e d J u l y 9 , 2 0 1 0

.

H R S § 6 5 8 A

- 2 4 ( S u p p

. 2 0 1 0 ) , “ M o d i f i c a t i o n o r c o r r e c t i o n o f a w a r d , ” 5

p r o v i d e s i n f u l l :

( a ) U p o n m o t i o n m a d e w i t h i n n i n e t y d a y s a f t e r t h e m o v a n t

r e c e i v e s n o t i c e o f t h e a w a r d p u r s u a n t t o s e c t i o n 6 5 8 A

- 1 9 o r

w i t h i n n i n e t y d a y s a f t e r t h e m o v a n t r e c e i v e s n o t i c e o f a

m o d i f i e d o r c o r r e c t e d a w a r d p u r s u a n t t o s e c t i o n 6 5 8 A

- 2 0 , t h e

c o u r t s h a l l m o d i f y o r c o r r e c t t h e a w a r d i f :

( 1 ) T h e r e w a s a n e v i d e n t m a t h e m a t i c a l m i s c a l c u l a t i o n

o r a n e v i d e n t m i s t a k e i n t h e d e s c r i p t i o n o f a p e r s o n , t h i n g , o r p r o p e r t y r e f e r r e d t o i n t h e a w a r d ; ( 2 ) T h e a r b i t r a t o r h a s m a d e a n a w a r d o n a c l a i m n o t

s u b m i t t e d t o t h e a r b i t r a t o r a n d t h e a w a r d m a y b e

c o r r e c t e d w i t h o u t a f f e c t i n g t h e m e r i t s o f t h e d e c i s i o n

u p o n t h e c l a i m s s u b m i t t e d ; o r ( 3 ) T h e a w a r d i s i m p e r f e c t i n a m a t t e r o f f o r m n o t

a f f e c t i n g t h e m e r i t s o f t h e d e c i s i o n o n t h e c l a i m s

s u b m i t t e d

. ( b ) I f a m o t i o n m a d e u n d e r s u b s e c t i o n ( a ) i s g r a n t e d , t h e

c o u r t s h a l l m o d i f y o r c o r r e c t a n d c o n f i r m t h e a w a r d a s

m o d i f i e d o r c o r r e c t e d

. O t h e r w i s e , u n l e s s a m o t i o n t o v a c a t e i s p e n d i n g , t h e c o u r t s h a l l c o n f i r m t h e a w a r d

. ( c ) A m o t i o n t o m o d i f y o r c o r r e c t a n a w a r d p u r s u a n t t o t h i s

s e c t i o n m a y b e j o i n e d w i t h a m o t i o n t o v a c a t e t h e a w a r d

.



## 6* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## the award.

The second of the State’s written motions, filed on

July 26, 2010, was the State’s motion to vacate in part the 6



## arbitration award (motion to vacate award), in which the State

sought to vacate the portion of the arbitrator’s decision that

awarded prejudgment interest on the backpay. This motion was

brought pursuant to HRS § 658A-23 (Supp. 2010). On 7



## September 13, 2010, a hearing was held on the State’s motion to

T h e r e i s s o m e d i s c r e p a n c y a s t o w h e n t h i s m o t i o n w a s f i l e d

. T h e r e a r e 6

t w o d a t e s t a m p s o n t h e d o c u m e n t , J u l y 2 2 , 2 0 1 0 a n d J u l y 2 6 , 2 0 1 0

.

H R S § 6 5 8 A

- 2 3 ( S u p p

. 2 0 1 0 ) , “ V a c a t i n g a w a r d , ” p r o v i d e s i n p a r t : 7

( a ) U p o n m o t i o n t o t h e c o u r t b y a p a r t y t o a n a r b i t r a t i o n

p r o c e e d i n g , t h e c o u r t s h a l l v a c a t e a n a w a r d m a d e i n t h e

a r b i t r a t i o n p r o c e e d i n g i f :

( 1 ) T h e a w a r d w a s p r o c u r e d b y c o r r u p t i o n , f r a u d , o r

o t h e r u n d u e m e a n s ; ( 2 ) T h e r e w a s : ( A ) E v i d e n t p a r t i a l i t y b y a n a r b i t r a t o r

a p p o i n t e d a s a n e u t r a l a r b i t r a t o r ; ( B ) C o r r u p t i o n b y a n a r b i t r a t o r ; o r ( C ) M i s c o n d u c t b y a n a r b i t r a t o r p r e j u d i c i n g t h e

r i g h t s o f a p a r t y t o t h e a r b i t r a t i o n p r o c e e d i n g ; ( 3 ) A n a r b i t r a t o r r e f u s e d t o p o s t p o n e t h e h e a r i n g u p o n

s h o w i n g o f s u f f i c i e n t c a u s e f o r p o s t p o n e m e n t , r e f u s e d
t o c o n s i d e r e v i d e n c e m a t e r i a l t o t h e c o n t r o v e r s y , o r

o t h e r w i s e c o n d u c t e d t h e h e a r i n g c o n t r a r y t o s e c t i o n 6 5 8 A

- 1 5 , s o a s t o p r e j u d i c e s u b s t a n t i a l l y t h e r i g h t s

o f a p a r t y t o t h e a r b i t r a t i o n p r o c e e d i n g ; ( 4 ) A n a r b i t r a t o r e x c e e d e d t h e a r b i t r a t o r ' s p o w e r s ; ( 5 ) T h e r e w a s n o a g r e e m e n t t o a r b i t r a t e , u n l e s s t h e p e r s o n p a r t i c i p a t e d i n t h e a r b i t r a t i o n p r o c e e d i n g

w i t h o u t r a i s i n g t h e o b j e c t i o n u n d e r s e c t i o n 6 5 8 A

- 1 5 ( c )

n o t l a t e r t h a n t h e b e g i n n i n g o f t h e a r b i t r a t i o n h e a r i n g ; o r ( 6 ) T h e a r b i t r a t i o n w a s c o n d u c t e d w i t h o u t p r o p e r

n o t i c e o f t h e i n i t i a t i o n o f a n a r b i t r a t i o n a s r e q u i r e d i n s e c t i o n 6 5 8 A

- 9 s o a s t o p r e j u d i c e s u b s t a n t i a l l y t h e

r i g h t s o f a p a r t y t o t h e a r b i t r a t i o n p r o c e e d i n g

.



## 7* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## vacate award. The circuit court orally granted the motion and

vacated the portion of the award that gave Morita prejudgment

interest. Counsel for HSTA was not at the hearing. Both parties

assert that there was a service error and that HSTA did not

receive notice of the hearing date until after the hearing.

On October 7, 2010, HSTA filed a motion for

reconsideration of the State’s motion to vacate award, arguing

that HSTA did not receive notice of the hearing on the State’s

motion. A hearing on HSTA’s motion for reconsideration was held

on November 22, 2010. Both parties appeared and argued as to

whether the doctrine of sovereign immunity applied when awarding

prejudgement interest. At the close of the hearing, the circuit

court took the matter under advisement. The following day,

November 23, 2010, the circuit court entered a minute order

denying HSTA’s motion for reconsideration.

Meanwhile, on October 1, 2010, the circuit court

entered three orders and one judgment: 1) Order Denying

Employer’s Oral Motion For Leave to File Motion to Vacate Award

Dated May 7, 2010, Filed Orally on July 15, 2010; 2) Order

Denying Employer’s Motion to Modify or Correct Award Dated May 7,

2010, Filed on July 18, 2010; 3) Order Granting in Part and 8

T h e c i r c u i t c o u r t a p p e a r s t o h a v e e r r e d i n n o t i n g i n t h e t i t l e o f t h e 8

o r d e r t h a t t h i s m o t i o n w a s f i l e d o n J u l y 1 8 , 2 0 1 0

. T h e c i r c u i t c o u r t , i n t h e ( c o n t i n u e d

. . . )



## 8* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## Denying in Part Motion to Confirm Arbitration Award, Entry of

Judgment and Allowing Costs and Other Appropriate Relief Filed on

May 18, 2010; and 4) Judgment (October judgment). 9



## The October judgment reads in its entirety as follows:

P u r s u a n t t o t h e 1 ) o r d e r g r a n t i n g i n p a r t a n d d e n y i n g i n p a r t m o t i o n t o c o n f i r m a r b i t r a t i o n a w a r d , e n t r y o f j u d g m e n t a n d a l l o w i n g c o s t s a n d o t h e r a p p r o p r i a t e r e l i e f
f i l e d o n M a y 1 8 , 2 0 1 0 , e n t e r e d o n O C T

. - 1 , 2 0 1 0 , 2 ) o r d e r d e n y i n g E m p l o y e r ’ s m o t i o n t o m o d i f y o r c o r r e c t a w a r d d a t e d
M a y 7 , 2 0 1 0 , f i l e d o n J u l y 1 8 , 2 0 1 0 , e n t e r e d o n O C T

. - 1 , 2 0 1 0 , a n d 3 ) o r d e r d e n y i n g E m p l o y e r ’ s m o t i o n f o r l e a v e t o f i l e m o t i o n t o v a c a t e a w a r d d a t e d M a y 7 , 2 0 1 0 , f i l e d o r a l l y

o n J u l y 1 5 , 2 0 1 0 , e n t e r e d o n O C T

. - 1 , 2 0 1 0 , J u d g m e n t i s h e r e b y e n t e r e d i n c o n f o r m i t y w i t h t h e a r b i t r a t i o n a w a r d
f i l e d o n M a y 1 8 , 2 0 1 0 i n a c c o r d a n c e w i t h S e c t i o n 6 5 8 A

- 2 5 ( a ) , H a w a i i R e v i s e d S t a t u t e s , i n f a v o r o f t h e H a w a i i S t a t e T e a c h e r s A s s o c i a t i o n a n d a g a i n s t E m p l o y e r , S t a t e o f H a w a i i , D e p a r t m e n t o f E d u c a t i o n

. T h i s j u d g m e n t i s e n t e r e d a s t o a l l c l a i m s r a i s e d b y t h e p a r t i e s , a n d i t r e s o l v e s a l l c l a i m s b y a n d a g a i n s t t h e p a r t i e s i n t h e a b o v e
- e n t i t l e d c a s e

. N o c l a i m s o r p a r t i e s

r e m a i n

. A n y a n d a l l r e m a i n i n g c l a i m s , i f a n y , a r e d i s m i s s e d

w i t h p r e j u d i c e

. 

## (Formatting altered.)

On October 11, 2010, HSTA filed a motion to alter and

(

. . . c o n t i n u e d ) 8

t e x t o f t h e o r d e r , a l s o n o t e s t h a t t h e m o t i o n w a s f i l e d o n J u l y 8 , 2 0 1 0 , w h i c h

m o r e a c c u r a t e l y r e f l e c t s t h e r e c o r d

. T h e c i r c u i t c o u r t o f f e r e d t h e f o l l o w i n g

e x p l a n a t i o n f o r d e n y i n g t h e m o t i o n :

T h e E m p l o y e r r e l i e s o n s u b s e c t i o n 3 o f S e c t i o n 6 5 8 A

- 2 4 ( a ) , H a w a i i R e v i s e d S t a t u t e s , ( H R S ) , f o r i t s m o t i o n a n d t h e C o u r t f i n d s n o a u t h o r i t y t o m o d i f y o r c o r r e c t

. T h e c h a n g e

s o u g h t b y t h e E m p l o y e r g o e s t o t h e s u b j e c t m a t t e r o f t h e

a w a r d

. T h e q u e s t i o n o f t h e 1 0 % i n t e r e s t a s a w a r d e d b y t h e

a r b i t r a t o r i s p a r t o f t h e m e r i t s o f t h e a w a r d a n d t o m o d i f y

o r c o r r e c t a s s o u g h t b y t h e E m p l o y e r w o u l d a l t e r t h e

s u b s t a n c e o f t h e a w a r d

.

T h e o r d e r g r a n t i n g i n p a r t H S T A ’ s m o t i o n t o c o n f i r m t h e a r b i t r a t i o n 9

a w a r d c o n f i r m e d t h e M a y 7 , 2 0 1 0 d e c i s i o n a n d a w a r d o f t h e a r b i t r a t o r , e n t e r e d j u d g m e n t i n a c c o r d a n c e w i t h t h e a r b i t r a t i o n a w a r d , a n d d e n i e d w i t h o u t
p r e j u d i c e H S T A ’ s r e q u e s t f o r a t t o r n e y s ’ f e e s a n d c o s t s

. W i t h n o t e t o t h e d e n i a l o f t h e f e e s a n d c o s t s , t h e c i r c u i t c o u r t e x p l a i n e d t h a t H S T A d i d n o t

r e q u e s t a s p e c i f i c a m o u n t o f f e e s a n d c o s t s , a n d t h a t H S T A c o u l d f i l e a n o t h e r

m o t i o n t h a t w o u l d a f f o r d t h e S t a t e t h e o p p o r t u n i t y t o c o n t e s t t h e a m o u n t

.



## 9* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## amend the circuit court’s October judgment (motion to amend) so

that the judgment would either include the specific amount of

backpay reflected in the arbitrator’s compliance order or to

confirm the arbitrator’s compliance order. At the November 8,

2010 hearing on HSTA’s motion to amend, the circuit court orally

granted HSTA’s motion and ordered the State to pay Morita backpay

in the amount of $25,169.05. The court noted that HSTA’s motion

for reconsideration, which addressed the issue of the prejudgment

interest, would be heard on November 22, 2010.

On January 4, 2011, the circuit court entered two

written orders: 1) granting the State’s motion to vacate the

award as to the prejudgment interest, and 2) denying HSTA’s

motion for reconsideration.

On January 31, 2011, the circuit court entered its

written order, entitled “Order Granting HSTA’s Motion to Alter

and Amend Judgment Entered October 1, 2010 or in the Alternative

to Confirm Supplemental Arbitration Award Clarifying Award of

May 7, 2010, Filed October 11, 2010.” The order states:

I t i s h e r e b y o r d e r e d , a d j u d g e d , a n d d e c r e e d t h a t t h e H S T A ’ s m o t i o n t o a l t e r a n d a m e n d j u d g m e n t e n t e r e d O c t o b e r 1 , 2 0 1 0 o r i n t h e a l t e r n a t i v e t o c o n f i r m s u p p l e m e n t a l

a r b i t r a t i o n a w a r d c l a r i f y i n g a w a r d o f M a y 7 , 2 0 1 0 , i s h e r e b y g r a n t e d

. T h e j u d g m e n t w i l l b e a m e n d e d t o s t a t e t h e E m p l o y e r

s h a l l p a y t h e e m p l o y e e $ 2 5 , 1 6 9

. 0 5

.


## (Formatting altered.) The order also addresses the issue of

retirement benefits, and then concludes with a final paragraph

10* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## that an amended judgment would be filed at a later time. The

final paragraph, originally typed, states the following:

A n a m e n d e d j u d g m e n t c o n s i s t e n t w i t h t h i s o r d e r w i l l

n o t b e f i l e d u n t i l t h e C o u r t h a s r u l e d o n t h e o t h e r m a t t e r s p e n d i n g i n t h e c a s e , i

. e

. , t h e H S T A ’ s r e q u e s t f o r a t t o r n e y f e e s a n d c o s t s a n d t h e H S T A ’ s M o t i o n f o r R e c o n s i d e r a t i o n o f
E m p l o y e r ’ s M o t i o n t o V a c a t e i n P a r t A w a r d D a t e d M a y 7 , 2 0 1 0 , F i l e d J u l y 2 6 , 2 0 1 0 w h i c h w i l l b e h e a r d o n N o v e m b e r 2 2 , 2 0 1 0

.


## (Emphasis added.) The portion underlined above was subsequently

crossed out and in its place is the following handwritten

sentence: “An amended judgment consistent with this order shall

be filed at an appropriate time.”

On February 24, 2011, the circuit court entered a final

judgment, which reads as follows:

P u r s u a n t t o t h e 1 ) O r d e r G r a n t i n g I n P a r t A n d D e n y i n g I n P a r t M o t i o n T o C o n f i r m A r b i t r a t i o n A w a r d , E n t r y O f
J u d g m e n t A n d A l l o w i n g C o s t s A n d O t h e r A p p r o p r i a t e R e l i e f
F i l e d O n M a y 1 8 , 2 0 1 0 , e n t e r e d o n O c t o b e r 1 , 2 0 1 0 , 2 ) O r d e r D e n y i n g E m p l o y e r ’ s M o t i o n T o M o d i f y O r C o r r e c t A w a r d D a t e d
M a y 7 , 2 0 1 0 , F i l e d O n J u l y 1 8 , 2 0 1 0 , e n t e r e d o n O c t o b e r 1 , 2 0 1 0 , 3 ) O r d e r D e n y i n g E m p l o y e r ’ s M o t i o n F o r L e a v e T o F i l e M o t i o n T o V a c a t e A w a r d D a t e d M a y 7 , 2 0 1 0 , F i l e d O r a l l y O n J u l y 1 5 , 2 0 1 0 , e n t e r e d o n O c t o b e r 1 , 2 0 1 0 , 4 ) M i n u t e O r d e r

o n D e c i s i o n R e g a r d i n g H S T A ’ s M o t i o n t o A l l o w A t t o r n e y ’ s F e e s

a n d C o s t s , f i l e d J a n u a r y 3 , 2 0 1 1 , 5 ) O r d e r D e n y i n g H S T A ’ s M o t i o n F o r R e c o n s i d e r a t i o n O f E m p l o y e r ’ s M o t i o n T o V a c a t e I n P a r t A w a r d D a t e d M a y 7 , 2 0 1 0 , f i l e d J a n u a r y 4 , 2 0 1 1 , 6 )
O r d e r G r a n t i n g E m p l o y e r ’ s M o t i o n T o V a c a t e I n P a r t A w a r d
D a t e d M a y 7 , 2 0 1 0 , f i l e d J a n u a r y 4 , 2 0 1 1 , F i n a l J u d g m e n t i s h e r e b y e n t e r e d i n a c c o r d a n c e w i t h S e c t i o n 6 5 8 A

- 2 5 ( a ) H a w a i i
R e v i s e d S t a t u t e s , i n f a v o r o f H a w a i i S t a t e T e a c h e r s A s s o c i a t i o n ( H S T A ) a n d a g a i n s t E m p l o y e r , S t a t e o f H a w a i # i , D e p a r t m e n t o f E d u c a t i o n ( D O E ) o n t h e r e i n s t a t e m e n t a n d b a c k
p a y t o t h e g r i e v a n t i n c o n f o r m i t y w i t h t h e a r b i t r a t i o n a w a r d
f i l e d o n M a y 1 8 , 2 0 1 0 , a n d i n f a v o r o f t h e D O E a n d a g a i n s t
H S T A o n t h e 1 0 % i n t e r e s t o n t h e b a c k p a y i n t h e a r b i t r a t i o n

a w a r d a n d o n H S T A ’ s r e q u e s t f o r f e e s

. T h i s f i n a l j u d g m e n t i s e n t e r e d a s t o a l l c l a i m s r a i s e d b y t h e p a r t i e s , a n d i t r e s o l v e s a l l c l a i m s b y a n d a g a i n s t
t h e p a r t i e s i n t h e a b o v e
- e n t i t l e d c a s e

. N o c l a i m s o r p a r t i e s r e m a i n

.



## 11* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## (Emphasis added.)

C. ICA Proceedings

On appeal, HSTA argued that the circuit court exceeded

its authority in vacating the interest portion of the arbitration

award because the doctrine of sovereign immunity was not

implicated in this case. 1 0



## 1. The ICA’s 2013 Opinion

On November 26, 2013, the ICA issued a published

opinion in which it: 1) vacated the circuit court’s February 24,

2011 final judgment; 2) reversed the circuit court’s January 4,

2011 orders (order granting State’s motion to vacate award, and

the order denying HSTA’s motion for reconsideration); and 3)

dismissed HSTA’s appeal of the circuit court’s January 31, 2011

order granting HSTA’s motion to alter and to amend the October 1,

2010 judgment. Haw. State Teachers Ass’n v. State Dep’t of

Educ., 131 Hawai # i 301, 312, 318 P.3d 591, 602 (App. 2013),

vacated, CAAP-11-0000065, 2014 WL 4548491, at *1 (Haw. Ct. App.

Sept. 15, 2014) (HSTA I).

The ICA’s opinion held, inter alia, that the circuit

court erred when it vacated the portion of the arbitration award

O n F e b r u a r y 3 , 2 0 1 1 , H S T A f i l e d i t s f i r s t n o t i c e o f a p p e a l f r o m t h e 10

c i r c u i t c o u r t ’ s J a n u a r y 4 , 2 0 1 1 o r d e r s , w h i c h w a s d o c k e t e d a s C A A P

- 1 1

- 0 0 0 0 0 6 5

. O n M a r c h 9 , 2 0 1 1 , H S T A f i l e d a s e c o n d n o t i c e o f a p p e a l f r o m t h e c i r c u i t

c o u r t ’ s F e b r u a r y 2 4 , 2 0 1 1 f i n a l j u d g m e n t , w h i c h w a s d o c k e t e d a s C A A P

- 1 1

- 0 0 0 0 1 4 0

. T h e I C A c o n s o l i d a t e d t h e s e a p p e a l s u n d e r C A A P

- 1 1

- 0 0 0 0 0 6 5

.



## 12* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## pertaining to interest, concluding that “[n]either sovereign

immunity nor the statutory prohibition against the award of prejudgment interest against the State are implicated here.” Id. at

302, 318 P.3d at 592.

On September 15, 2014, the ICA entered an order

vacating the opinion sua sponte, “[i]n light of the Hawai # i

Supreme Court’s Opinion in Association of Condominium Homeowners

of Tropics at Waikele v. Sakuma, 131 Hawai # i 254, 319 P.3d 94

(December 17, 2013).” Haw. State Teachers Ass’n v. State Dep’t

of Educ., CAAP-11-0000065, 2014 WL 4548491, at *1 (Haw. Ct. App.

Sept. 15, 2014). The order further stated that a “new opinion

shall be filed.” Id.

2. The ICA’s 2016 Opinion

On September 30, 2016, the ICA issued an unpublished

memorandum opinion. Haw. State Teachers Ass’n v. State Dep’t of

Educ., CAAP-11-0000065, 2016 WL 5719745, at *1 (Haw. Ct. App.

Sept. 30, 2016) (HSTA II). This opinion, other than resolving

the procedural issues raised by Sakuma, was substantially similar

to its 2013 opinion in its analysis and disposition of the

issues.

Before reaching HSTA’s points on appeal, the ICA first

addressed two preliminary questions: 1) whether the ICA had

appellate jurisdiction to review all of the issues on appeal, and

13* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## 2) whether the circuit court had the authority to proceed to

enter orders and a second judgment after it entered the

October 1, 2010 judgment. Id. at *6.

In addressing the first question, the ICA first

concluded that the October judgment was “a final and appealable

judgment” pursuant to HRS §§ 658A-25 and 658A-28. Id. Next, the

ICA examined whether there was a timely appeal from the October

judgment. Id. The ICA noted that neither party timely appealed

the judgment, but that HSTA timely filed a post-judgment motion--

its motion to amend the October judgment. Id. The ICA further

explained that, under Hawai # i Rules of Appellate Procedure (HRAP)

Rule 4(a)(3), the circuit court failed to enter an order within

ninety days after the date that HSTA’s motion to amend was filed.

Id. at *6-7. In HSTA I, the ICA concluded that under HRAP Rule

4(a)(3), HSTA’s motion to amend was deemed denied on January 10,

2011 and that the parties would have had thirty days from that

date to timely file an appeal from the October judgment. Id. at

*7. The following excerpt from HSTA II explains why this

conclusion was incorrect:

H o w e v e r , i n S a k u m a , t h e m a j o r i t y o p i n i o n h e l d t h a t w h e n a t i m e l y p o s t

- j u d g m e n t m o t i o n f o r r e c o n s i d e r a t i o n i s d e e m e d d e n i e d , i t d o e s n o t t r i g g e r a t h i r t y
- d a y d e a d l i n e f o r f i l i n g

a n o t i c e o f a p p e a l u n t i l t h i r t y d a y s a f t e r t h e e n t r y o f a n

o r d e r d i s p o s i n g o f t h e m o t i o n

. . . . T h u s , t h e H S T A ’ s M o t i o n t o A m e n d 1 0 / 1 / 1 0 J u d g m e n t w a s n o t “ d e e m e d d e n i e d ” o n J a n u a r y 1 0 , 2 0 1 1 ( a s w e p r e v i o u s l y h a d h e l d ) , a n d t h e J a n u a r y 3 1 , 2 0 1 1 O r d e r G r a n t i n g H S T A ’ s M o t i o n t o A m e n d 1 0 / 1 / 1 0 J u d g m e n t

c o n s t i t u t e s t h e e f f e c t i v e d i s p o s i t i o n o n t h i s m o t i o n

. F i n a l l y , t h e J a n u a r y 3 1 , 2 0 1 1 O r d e r G r a n t i n g H S T A ’ s M o t i o n



## 14* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

t o A m e n d 1 0 / 1 / 1 0 J u d g m e n t s p e c i f i c a l l y s t a t e s t h a t : “ A n

a m e n d e d j u d g m e n t c o n s i s t e n t w i t h t h i s o r d e r s h a l l b e f i l e d

a t a n a p p r o p r i a t e t i m e

. ” T h i s j u d g m e n t a p p e a r s t o b e t h e 2 / 2 4 / 1 1 J u d g m e n t , w h i c h e x p r e s s l y e n t e r s j u d g m e n t o n s i x

o r d e r s

. . . [ a n d ] t h e H S T A t i m e l y f i l e d a N o t i c e o f A p p e a l
f r o m t h e 2 / 2 4 / 1 1 J u d g m e n t

. 

## Id. Thus, the ICA concluded that it had appellate jurisdiction

over all of the issues raised in HSTA’s appeal. Id.

In addressing the second question, the ICA examined HRS

Chapter 658A, which sets out the framework for judicial action of

arbitration proceedings, and explained that the framework does

not contemplate the convoluted procedural posture of this case:

H R S C h a p t e r 6 5 8 A d o e s n o t c o n t e m p l a t e a c a s e l i k e t h i s o n e ,
w h e r e o n e p a r t y s e c u r e s a n o r d e r c o n f i r m i n g a n a w a r d , a n d
t h e c o u r t e n t e r s f i n a l j u d g m e n t o n t h e c o n f i r m a t i o n o r d e r ,
w h i l e t h e o t h e r p a r t y l a t e r s e c u r e s a n o r d e r v a c a t i n g i n p a r t t h e s a m e a w a r d , w i t h o u t c h a l l e n g i n g t h e c o u r t ’ s e n t r y

o f f i n a l j u d g m e n t o n t h e c o n f i r m a t i o n a w a r d

. W e c a n n o t s p e c u l a t e a s t o w h y t h e C i r c u i t C o u r t

e n t e r e d t h e 1 0 / 1 / 1 0 J u d g m e n t n o t w i t h s t a n d i n g t h e p a r a l l e l

r e q u e s t s f o r r e l i e f

. W e a l s o c a n n o t s p e c u l a t e a s t o w h y t h e S t a t e f a i l e d t o s e e k r e l i e f f r o m t h e 1 0 / 1 / 1 0 J u d g m e n t

.

. . . .

H R S § 6 5 8 A

- 2 3 p r o v i d e s s t a t u t o r y a u t h o r i t y f o r r e l i e f
f r o m a n a r b i t r a t i o n a w a r d , b u t n o t f r o m a f i n a l j u d g m e n t o n

a n o r d e r c o n f i r m i n g a n a r b i t r a t i o n a w a r d

. I n o r d e r t o s e e k

r e l i e f i n t h e C i r c u i t C o u r t f r o m a f i n a l j u d g m e n t e n t e r e d
p u r s u a n t t o H R S § 6 5 8 A

- 2 5 ( a ) , s u c h a s t h e 1 0 / 1 / 1 0 J u d g m e n t , t h e S t a t e h a d t o f i l e a t i m e l y m o t i o n t o a l t e r o r a m e n d t h e j u d g m e n t

. I t d i d n o t

. U n d e r t h e s e c i r c u m s t a n c e s , w e m u s t

c o n c l u d e t h a t t h e C i r c u i t C o u r t w a s n o l o n g e r a u t h o r i z e d t o

e n t e r a n i r r e c o n c i l a b l y i n c o n s i s t e n t o r d e r b a s e d o n t h e S t a t e ’ s M o t i o n t o V a c a t e A w a r d

. S e e W o n g , 7 9 H a w a i # i a t 2 9

- 3 0 , 8 9 7 P

. 2 d a t 9 5 6

- 5 7

. O n t h i s b a s i s a l o n e , w e c o n c l u d e t h a t t h e C i r c u i t C o u r t e r r e d w h e n i t e n t e r e d t h e O r d e r P a r t i a l l y V a c a t i n g A w a r d a n d t h e O r d e r D e n y i n g H S T A ’ s M o t i o n f o r R e h e a r i n g

.


## Id. at *8-9. As such, the ICA concluded that the circuit court

did not have authority to enter subsequent orders or another

15* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## judgment after the October judgment. Id. at *9.

Despite arriving at this conclusion, the ICA went on to

analyze the substantive claims raised on appeal. The ICA

determined that, even if the circuit court could have vacated in

part the award, the circuit court erred in doing so in this case

because the State expressly waived sovereign immunity with

respect to Morita’s grievance. Id. The ICA explained that

Morita’s grievance was a contract claim pursuant to the

collective bargaining agreement and that, as such, the State

“waived its immunity with respect to the submission of the claim

to binding arbitration.” Id.

The ICA examined the collective bargaining agreement,

which provided that the “arbitrator may award back pay to

compensate the teacher wholly or partially for any salary lost,”

and determined that it was “clear from the record of the

arbitration proceedings that the Arbitrator interpreted this

contract provision to allow an award to include interest on back

pay in order to ‘wholly’ compensate a teacher for lost salary.”

Id. The ICA concluded that the arbitrator did not exceed his

powers in this regard and that “[e]ven if he incorrectly

construed the agreement or misinterpreted applicable law, he

acted within his power to interpret the agreement and fashion a

remedy in accordance with his interpretation.” Id. at *10

16* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## (citing Daiichi Haw. Real Estate Corp. v. Lichter, 103 Hawai # i

325, 336, 82 P.3d 411, 422 (2003)).

Citing Kenneth H. Hughes, Inc. v. Aloha Tower

Development, Corp., 654 F. Supp. 2d 1142, 1149 (D. Haw. 2009),

the ICA further concluded that neither the doctrine of sovereign

immunity nor the statutory prohibition against awards of

prejudgment interest against the State prevented the arbitrator

from awarding interest against the State. Id. Therefore, the

ICA held that the circuit court erred in vacating that part of

the arbitrator’s award. Id.

As such, the ICA entered the following order:

F o r t h e f o r e g o i n g r e a s o n s , w e : ( 1 ) v a c a t e i n p a r t t h e C i r c u i t C o u r t ’ s F e b r u a r y 2 4 , 2 0 1 1 F i n a l J u d g m e n t ; ( 2 )

r e v e r s e t h e C i r c u i t C o u r t ’ s J a n u a r y 4 , 2 0 1 1 o r d e r s , t h e O r d e r G r a n t i n g E m p l o y e r ’ s M o t i o n t o V a c a t e i n P a r t A w a r d
D a t e d M a y 7 , 2 0 1 0 , a n d t h e O r d e r D e n y i n g H S T A ’ s M o t i o n f o r R e c o n s i d e r a t i o n o f E m p l o y e r ’ s M o t i o n t o V a c a t e i n P a r t A w a r d
D a t e d M a y 7 , 2 0 1 0 ; a n d ( 3 ) a f f i r m t h e C i r c u i t C o u r t ’ s J a n u a r y 3 1 , 2 0 1 1 O r d e r G r a n t i n g H S T A ’ s M o t i o n t o A l t e r a n d
t o A m e n d J u d g m e n t E n t e r e d O c t o b e r 1 , 2 0 1 0 o r i n t h e A l t e r n a t i v e t o C o n f i r m S u p p l e m e n t a l A r b i t r a t i o n A w a r d
C l a r i f y i n g A w a r d o f M a y 7 , 2 0 1 0 , F i l e d O c t o b e r 1 1 , 2 0 1 0

. T h i s c a s e i s r e m a n d e d t o t h e C i r c u i t C o u r t f o r f u r t h e r p r o c e e d i n g s c o n s i s t e n t w i t h t h i s M e m o r a n d u m O p i n i o n

.



## Id. at *11.

On October 12, 2016, the ICA entered an order granting

in part and denying in part HSTA’s request for attorneys’ fees

and costs filed on December 20, 2013. The ICA awarded HSTA fees

in the amount of $13,696.33 pursuant to HRS § 658A-25(c) and

17* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## costs in the amount of $371.30 pursuant to HRS § 685A-25(b). 1 1



## The ICA noted that HSTA “may submit a supplemental motion for

costs within (5) days from the date of this order.”

On October 17, 2016, HSTA filed a supplemental motion

for expenses, requesting an additional $24.08 for the costs of

ordering a transcript of the November 8, 2010 proceeding. On

November 9, 2016, the ICA granted HSTA’s October 17, 2016

supplemental motion for expenses, awarding HSTA an additional

$24.08 in costs.

On November 21, 2016, the ICA entered its judgment on

appeal pursuant to its September 30, 2016 memorandum opinion,

October 12, 2016 order granting in part and denying in part

HSTA’s request for attorneys’ fees and costs, and November 9,

2016 order granting HSTA’s supplemental motion for expenses.

H R S § 6 5 8 A

- 2 5 ( 2 0 1 6 ) , “ J u d g m e n t o n a w a r d ; a t t o r n e y ’ s f e e s a n d l i t i g a t i o n 11

e x p e n s e s , ” p r o v i d e s i n f u l l :

( a ) U p o n g r a n t i n g a n o r d e r c o n f i r m i n g , v a c a t i n g w i t h o u t d i r e c t i n g a r e h e a r i n g , m o d i f y i n g , o r c o r r e c t i n g a n a w a r d , t h e c o u r t s h a l l e n t e r a j u d g m e n t i n c o n f o r m i t y t h e r e w i t h

. T h e j u d g m e n t m a y b e r e c o r d e d , d o c k e t e d , a n d e n f o r c e d a s a n y

o t h e r j u d g m e n t i n a c i v i l a c t i o n

. ( b ) A c o u r t m a y a l l o w r e a s o n a b l e c o s t s o f t h e m o t i o n a n d

s u b s e q u e n t j u d i c i a l p r o c e e d i n g s

. ( c ) O n a p p l i c a t i o n o f a p r e v a i l i n g p a r t y t o a c o n t e s t e d j u d i c i a l p r o c e e d i n g u n d e r s e c t i o n 6 5 8 A

- 2 2 , 6 5 8 A

- 2 3 , o r 6 5 8 A

- 2 4 , t h e c o u r t m a y a d d r e a s o n a b l e a t t o r n e y ’ s f e e s a n d

o t h e r r e a s o n a b l e e x p e n s e s o f l i t i g a t i o n i n c u r r e d i n a j u d i c i a l p r o c e e d i n g a f t e r t h e a w a r d i s m a d e t o a j u d g m e n t

c o n f i r m i n g , v a c a t i n g w i t h o u t d i r e c t i n g a r e h e a r i n g ,
m o d i f y i n g , o r c o r r e c t i n g a n a w a r d

.



## 18* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## III. STANDARDS OF REVIEW

A. Judicial Review of Arbitration Awards

“[J]udicial review of an arbitration award is confined

to ‘the strictest possible limits,’ and a court may only vacate

an award on the grounds specified in HRS § 658A-23 and modify or

correct on the grounds specified in HRS § 658A-24.” State of

Haw. Org. of Police Officers (SHOPO) v. County of Kaua # i, 135

Hawai # i 456, 461, 353 P.3d 998, 1003 (2015) (alteration in

original) (quoting Daiichi, 103 Hawai # i at 336, 82 P.3d at 422).

“This standard applies to both the circuit court and the

appellate courts.” Id.

J u d i c i a l r e v i e w o f a n a r b i t r a t i o n a w a r d i s l i m i t e d b y t h e f o l l o w i n g p r e c e p t s :

F i r s t , b e c a u s e o f t h e l e g i s l a t i v e p o l i c y t o e n c o u r a g e

a r b i t r a t i o n a n d t h e r e b y d i s c o u r a g e l i t i g a t i o n , a r b i t r a t o r s h a v e b r o a d d i s c r e t i o n i n r e s o l v i n g t h e d i s p u t e

. U p o n

s u b m i s s i o n o f a n i s s u e , t h e a r b i t r a t o r h a s a u t h o r i t y t o d e t e r m i n e t h e e n t i r e q u e s t i o n , i n c l u d i n g t h e l e g a l

c o n s t r u c t i o n o f t e r m s o f a c o n t r a c t o r l e a s e , a s w e l l a s t h e d i s p u t e d f a c t s

. I n f a c t , w h e r e t h e p a r t i e s a g r e e t o

a r b i t r a t e , t h e y t h e r e b y a s s u m e a l l t h e h a z a r d s o f t h e

a r b i t r a t i o n p r o c e s s , i n c l u d i n g t h e r i s k t h a t t h e a r b i t r a t o r s

m a y m a k e m i s t a k e s i n t h e a p p l i c a t i o n o f l a w a n d i n t h e i r f i n d i n g s o f f a c t

.

S e c o n d , c o r r e l a t i v e l y , j u d i c i a l r e v i e w o f a n

a r b i t r a t i o n a w a r d i s c o n f i n e d t o t h e s t r i c t e s t p o s s i b l e l i m i t s

. A n a r b i t r a t i o n a w a r d m a y b e v a c a t e d o n l y o n t h e f o u r g r o u n d s s p e c i f i e d i n H R S § 6 5 8

- 9 a n d m o d i f i e d a n d

c o r r e c t e d o n l y o n t h e t h r e e g r o u n d s s p e c i f i e d i n H R S § 6 5 8

- 1 0

. M o r e o v e r , t h e c o u r t s h a v e n o b u s i n e s s w e i g h i n g t h e

m e r i t s o f t h e a w a r d

.

T h i r d , H R S § § 6 5 8

- 9 a n d

- 1 0 a l s o r e s t r i c t t h e

a u t h o r i t y o f a p p e l l a t e c o u r t s t o r e v i e w j u d g m e n t s e n t e r e d b y

c i r c u i t c o u r t s c o n f i r m i n g o r v a c a t i n g t h e a r b i t r a t i o n

a w a r d s

.



## 19* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## Schmidt v. Pac. Benefit Servs., Inc., 113 Hawai # i 161, 165-66,

150 P.3d 810, 814-15 (2006) (citing Daiichi, 103 Hawai # i at 336,

82 P.3d at 422).

IV. DISCUSSION

The State presents both procedural and substantive

arguments in support of its position that the ICA erred in

vacating the circuit court’s judgment and upholding the

arbitrator’s award of interest against the State. Additionally,

the State takes issue with the ICA’s award of appellate fees and

costs to HSTA.

A. Procedural Issues

The State argues that the ICA erred in concluding that

the circuit court was not authorized to enter orders and

judgments that were irreconcilable with its October judgment.

The State provides four grounds for this argument: 1) this issue

was not raised before the ICA by either party; 2) the October

judgment was not final; 3) subsequent outstanding issues rendered

the October judgment non-final; and 4) HSTA’s motion to alter or

amend the October judgment rendered the October judgment nonfinal.

1. The ICA did not err in considering an issue not raised by the parties on appeal.

The State first argues that the ICA improperly reached

20* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## an issue that was not raised by the parties during the circuit

court or appellate proceedings. Specifically, the State contends

that the “ICA decided this case primarily on the procedural issue

of whether the 10/1/10 Judgment had binding effect on and

superseded the subsequent orders in the case,” but that neither

of the parties raised this as an issue in their briefings before

the ICA.

HRS § 641-2(b) (2016) provides:

T h e a p p e l l a t e c o u r t m a y c o r r e c t a n y e r r o r a p p e a r i n g o n t h e

r e c o r d , b u t n e e d n o t c o n s i d e r a p o i n t t h a t w a s n o t p r e s e n t e d i n t h e t r i a l c o u r t i n a n a p p r o p r i a t e m a n n e r

. N o j u d g m e n t ,
o r d e r , o r d e c r e e s h a l l b e r e v e r s e d , a m e n d e d , o r m o d i f i e d f o r

a n y e r r o r o r d e f e c t , u n l e s s t h e c o u r t i s o f t h e o p i n i o n t h a t i t h a s i n j u r i o u s l y a f f e c t e d t h e s u b s t a n t i a l r i g h t s o f t h e

a p p e l l a n t

.


## (Emphasis added.) See also HRAP Rule 28(b)(4)(D) (2016) (“Points

not presented in accordance with this section will be

disregarded, except that the appellate court, at its option, may

notice a plain error not presented.” (emphasis added)).

Thus, while an appellate court need not consider a

point not properly raised on appeal, it is within its discretion

to consider and correct an error not raised. Additionally, as a

matter of jurisdiction, this issue needed to be addressed before

the ICA could consider the other issues. As such, the ICA did

not err in considering the issue of the October judgment even

though neither party raised it as a point of error.

21* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## 2. The ICA did not err in concluding that the October judgment was a final and appealable judgment.

Second, the State argues that, even if the ICA could

raise the October judgment issue sua sponte, “the ICA erred in

giving the [October judgment] binding effect because it was not

in fact a final judgment.” According to the State, the October

judgment “was only a non-final, interim judgment.”

HRS Chapter 658A provides statutory authority for

courts to enter judgments on arbitration awards. HRS § 658A25(a) (Supp. 2010) reads in full: “Upon granting an order

confirming, vacating without directing a rehearing, modifying, or

correcting an award, the court shall enter a judgment in

conformity therewith. The judgment may be recorded, docketed,

and enforced as any other judgment in a civil action.”

Additionally, Hawai # i Rules of Civil Procedure (HRCP) Rule 58

(2010) provides in part that the “filing of the judgment in the

office of the clerk constitutes the entry of the judgment; and

the judgment is not effective before such entry.”

The October judgment, filed on October 1, 2010, reads

in full as follows:

P u r s u a n t t o t h e 1 ) o r d e r g r a n t i n g i n p a r t a n d d e n y i n g i n p a r t m o t i o n t o c o n f i r m a r b i t r a t i o n a w a r d , e n t r y o f j u d g m e n t a n d

a l l o w i n g c o s t s a n d o t h e r a p p r o p r i a t e r e l i e f f i l e d o n M a y 1 8 , 2 0 1 0 ,
e n t e r e d o n O C T

. - 1 , 2 0 1 0 , 2 ) o r d e r d e n y i n g E m p l o y e r ’ s m o t i o n t o

m o d i f y o r c o r r e c t a w a r d d a t e d M a y 7 , 2 0 1 0 , f i l e d o n J u l y 1 8 , 2 0 1 0 ,
e n t e r e d o n O C T

. - 1 , 2 0 1 0 , a n d 3 ) o r d e r d e n y i n g E m p l o y e r ’ s m o t i o n f o r l e a v e t o f i l e m o t i o n t o v a c a t e a w a r d d a t e d M a y 7 , 2 0 1 0 , f i l e d

o r a l l y o n J u l y 1 5 , 2 0 1 0 , e n t e r e d o n O C T

. - 1 , 2 0 1 0 , J u d g m e n t i s h e r e b y e n t e r e d i n c o n f o r m i t y w i t h t h e a r b i t r a t i o n a w a r d f i l e d o n



## 22* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

M a y 1 8 , 2 0 1 0 i n a c c o r d a n c e w i t h S e c t i o n 6 5 8 A

- 2 5 ( a ) , H a w a i i R e v i s e d
S t a t u t e s , i n f a v o r o f t h e H a w a i i S t a t e T e a c h e r s A s s o c i a t i o n a n d

a g a i n s t E m p l o y e r , S t a t e o f H a w a i i , D e p a r t m e n t o f E d u c a t i o n

. T h i s j u d g m e n t i s e n t e r e d a s t o a l l c l a i m s r a i s e d b y t h e p a r t i e s , a n d i t r e s o l v e s a l l c l a i m s b y a n d a g a i n s t t h e p a r t i e s i n t h e a b o v e
- e n t i t l e d c a s e

. N o c l a i m s o r p a r t i e s r e m a i n

. A n y a n d

a l l r e m a i n i n g c l a i m s , i f a n y , a r e d i s m i s s e d w i t h p r e j u d i c e

. 

## (Formatting altered) (emphasis added).

It is unclear how the October judgment could be

interpreted as anything other than a final judgment. It was

titled “JUDGMENT,” entered in accordance with HRS § 658A-25(a),

which provides authority for courts to enter judgments on

arbitration awards, and filed on October 1, 2010 pursuant to HRCP

Rule 58. Additionally, the language of the judgment is plain and

unambiguous. The judgment states in no uncertain terms:

“[j]udgment is hereby entered in conformity with the arbitration

award . . . in favor of [HSTA] and against [the State]”;

“judgment is entered as to all claims . . . and resolves all

claims”; “[n]o claims or parties remain”; and “[a]ny and all

remaining claims, if any, are dismissed with prejudice.” Given

its procedural conformity and clear, unambiguous language, the

October judgment cannot be interpreted as anything other than

what it was entitled--a judgment. See Wohlschlegel v. UhlmannKihei, Inc., 4 Haw. App. 123, 130, 662 P.2d 505, 511 (1983)

(“Obviously, a court order which is unambiguous and certain on

its face leaves no room for construction.”). As such, the

State’s argument that the October judgment was merely a “non23* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## final, interim judgment” has no basis in the law or facts.

3. The ICA did not err in concluding that the October judgment was final despite the State’s contention that “outstanding issues” existed.

Third, the State argues that, even if the October

judgment appeared to be initially final, the existence of

outstanding issues rendered it non-final. The State relies on

Contrades v. Reis, 112 Hawai # i 367, 145 P.3d 910 (App. 2006), for

this argument.

In Contrades, the plaintiff (John) filed an action

against a property owner, alleging co-ownership of a parcel of

land. Id. at 368, 145 P.3d at 911. After the circuit court

entered an order and judgment in favor of the defendant, two

significant filings were made: 1) John filed a timely motion for

reconsideration that stayed the finality of the judgment, and 2)

another party (Louise) filed a motion to intervene as a

counterclaim defendant. Id. The circuit court orally granted 1 2



## Louise’s motion to intervene before entering a written order

denying John’s motion for reconsideration. Id. at 368-69, 145

P.3d at 911-12. Now a party to the case, Louise moved to set

aside the court’s judgment, arguing that it was no longer a final

judgment pursuant to HRCP Rule 58 because it did not resolve all

issues and claims. Id. at 369, 145 P.3d at 912. Additionally,

L o u i s e c o n t e n d e d t h a t s h e w a s a c o
- o w n e r o f a n d h a d a n i n t e r e s t i n t h e 12

s u b j e c t p r o p e r t y

. I d

. a t 3 6 8 n

. 3 , 1 4 5 P

. 3 d a t 9 1 1 n

. 3

.



## 24* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## both Louise and John filed notices of appeal from the circuit

court’s judgment. Id. The circuit court denied Louise’s motion

to set aside the judgment. Id. at 370, 145 P.3d at 913.

On appeal, the ICA explained that “a judgment, order,

or decree may not be appealed unless it is final” and that

“[g]enerally, a judgment, order, or decree is not final unless it

completely adjudicates all the claims or rights and liabilities

of all the parties.” Id. (quoting Sturkie v. Han, 2 Haw. App.

140, 145-46, 627 P.2d 296, 301 (1981)). Then, the ICA concluded

that:

p r i o r t o t h e t i m e L o u i s e a n d J o h n f i l e d t h e i r n o t i c e s o f

a p p e a l , L o u i s e h a d b e c o m e a p a r t y

. W h e n L o u i s e a n d J o h n f i l e d t h e i r n o t i c e s o f a p p e a l , L o u i s e w a s a p a r t y b u t h e r d e f e n s e s a n d a f f i r m a t i v e d e f e n s e s r e m a i n e d u n d e c i d e d

. A l l

c l a i m s a g a i n s t a l l p a r t i e s n o t h a v i n g b e e n f i n a l l y d e c i d e d

w h e n t h e n o t i c e s o f a p p e a l w e r e f i l e d , w e d o n o t h a v e

a p p e l l a t e j u r i s d i c t i o n

.


## Id. at 371, 145 P.3d at 914. Therefore, the ICA dismissed the

appeal for lack of appellate jurisdiction. Id.

The State argues that the Contrades case “is similar to

the present case” and points out that, in Contrades, the

existence of an intervening party with new claims after the

filing of the judgment destroyed the judgment’s finality.

However, the current case can be distinguished from Contrades in

a number of ways. First, Contrades involved an intervening party

who raised new claims after the judgment was filed. The circuit

court granted Louise’s motion to intervene before disposing of

25* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## the motion for reconsideration; as a matter of law, the judgment

did not resolve all claims in the Contrades case.

In contrast, in the current case, subsequent to the

October judgment, there were no new parties or new claims.

Instead, new motions were filed seeking a different disposition

of the same claims. Additionally, the State’s motion to vacate

award and motion to modify award were both filed in July of 2010,

before the circuit court entered its October judgment. The

hearing on the State’s motion to modify was held in July, and the

hearing on the State’s motion to vacate was held in September,

both before the October judgment. Unlike in Contrades, where the

court was unaware of another party’s claims until a motion to

intervene was filed, the circuit court in the current case knew

of the State’s arguments regarding the arbitrator’s award of

interest before it entered the October judgment as to “all claims

raised by the parties.”

Thus, unlike in Contrades, no new parties or claims

were brought to the attention of the court prior to the judgment

becoming final. The State’s argument that “outstanding issues”

eviscerated the finality of the October judgment is unpersuasive.

26* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## 4. The ICA erred in concluding that the circuit court did not have the authority to enter a subsequent judgment after HSTA filed a motion to amend; however, such error was harmless because the ICA also addressed the substantive issues.

Finally under this point, the State argues that, even

if the October judgment was initially final, it was subsequently

set aside or rendered non-final by HSTA’s motion to alter or

amend.

This argument has merit. The procedural history of

this case, although convoluted, clearly shows that the circuit

court entered a subsequent final judgment in February 2011, and

that this final judgment was properly entered after an

appropriate motion by HSTA.

Parties have many tools at their disposal in dealing

with an unfavorable judgment. For instance, pursuant to HRCP

Rule 59, a party may petition for a new trial or file a motion to

alter or amend a judgment. Specifically, HRCP Rule 59(e) (2000)

provides that “[a]ny motion to alter or amend a judgment shall be

filed no later than 10 days after entry of the judgment.”

Additionally, pursuant to HRAP Rule 4(a)(1) (2016), a party may

file a notice of appeal “within 30 days after entry of the

judgment or appealable order.”

While neither party appealed the October judgment, HSTA

did file a timely post-judgment motion pursuant to HRCP Rule

27* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## 59(e) seeking to amend the October judgment. This motion was

filed on October 11, 2010, within the ten day window mandated by

HRCP Rule 59(e). On January 31, 2011, the circuit court entered

an order granting HSTA’s motion to amend the October judgment. 1 3



## While this order did not touch on the interest issue, it did note

that “[a]n amended judgment consistent with this order shall be

filed at an appropriate time.” On February 24, 2011, the circuit

court entered a final judgment, which expressly entered judgment

on six orders:

P u r s u a n t t o t h e 1 ) O r d e r G r a n t i n g I n P a r t A n d D e n y i n g

I n P a r t M o t i o n T o C o n f i r m A r b i t r a t i o n A w a r d , E n t r y O f
J u d g m e n t A n d A l l o w i n g C o s t s A n d O t h e r A p p r o p r i a t e R e l i e f
F i l e d O n M a y 1 8 , 2 0 1 0 , e n t e r e d o n O c t o b e r 1 , 2 0 1 0 , 2 ) O r d e r D e n y i n g E m p l o y e r ’ s M o t i o n T o M o d i f y O r C o r r e c t A w a r d D a t e d
M a y 7 , 2 0 1 0 , F i l e d O n J u l y 1 8 , 2 0 1 0 , e n t e r e d o n O c t o b e r 1 , 2 0 1 0 , 3 ) O r d e r D e n y i n g E m p l o y e r ’ s M o t i o n F o r L e a v e T o F i l e M o t i o n T o V a c a t e A w a r d D a t e d M a y 7 , 2 0 1 0 , F i l e d O r a l l y O n J u l y 1 5 , 2 0 1 0 , e n t e r e d o n O c t o b e r 1 , 2 0 1 0 , 4 ) M i n u t e O r d e r

o n D e c i s i o n R e g a r d i n g H S T A ’ s M o t i o n t o A l l o w A t t o r n e y ’ s F e e s

a n d C o s t s , f i l e d J a n u a r y 3 , 2 0 1 1 , 5 ) O r d e r D e n y i n g H S T A ’ s M o t i o n F o r R e c o n s i d e r a t i o n O f E m p l o y e r ’ s M o t i o n T o V a c a t e I n P a r t A w a r d D a t e d M a y 7 , 2 0 1 0 , f i l e d J a n u a r y 4 , 2 0 1 1 , 6 )
O r d e r G r a n t i n g E m p l o y e r ’ s M o t i o n T o V a c a t e I n P a r t A w a r d
D a t e d M a y 7 , 2 0 1 0 , f i l e d J a n u a r y 4 , 2 0 1 1 , F i n a l J u d g m e n t i s h e r e b y e n t e r e d i n a c c o r d a n c e w i t h S e c t i o n 6 5 8 A

- 2 5 ( a ) H a w a i i
R e v i s e d S t a t u t e s , i n f a v o r o f H a w a i i S t a t e T e a c h e r s A s s o c i a t i o n ( H S T A ) a n d a g a i n s t E m p l o y e r , S t a t e o f H a w a i # i , D e p a r t m e n t o f E d u c a t i o n ( D O E ) o n t h e r e i n s t a t e m e n t a n d b a c k
p a y t o t h e g r i e v a n t i n c o n f o r m i t y w i t h t h e a r b i t r a t i o n a w a r d
f i l e d o n M a y 1 8 , 2 0 1 0 , a n d i n f a v o r o f t h e D O E a n d a g a i n s t
H S T A o n t h e 1 0 % i n t e r e s t o n t h e b a c k p a y i n t h e a r b i t r a t i o n

a w a r d a n d o n H S T A ’ s r e q u e s t f o r f e e s

. T h i s f i n a l j u d g m e n t i s e n t e r e d a s t o a l l c l a i m s r a i s e d b y t h e p a r t i e s , a n d i t r e s o l v e s a l l c l a i m s b y a n d a g a i n s t
t h e p a r t i e s i n t h e a b o v e
- e n t i t l e d c a s e

. N o c l a i m s o r p a r t i e s r e m a i n

. 

## (Emphasis added.)

T h e I C A ’ s H S T A I I o p i n i o n e x p l a i n e d t h a t , u n d e r t h i s c o u r t ’ s d e c i s i o n i n 13

S a k u m a , t h e J a n u a r y 3 1 , 2 0 1 1 o r d e r c o n s t i t u t e d t h e e f f e c t i v e d i s p o s i t i o n o f
H S T A ’ s m o t i o n

. H S T A I I , 2 0 1 6 W L 5 7 1 9 7 4 5 , a t * 7

.



## 28* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## Thus, HSTA’s motion to amend the October judgment

essentially opened the door for the circuit court to enter

another judgment, one that was unfavorable to HSTA. See Wong v.

Wong, 79 Hawai # i 26, 30, 897 P.2d 953, 957 (1995) (“Once a valid

judgment is entered, the only means by which a circuit court may

thereafter alter or amend it is by appropriate motion under HRCP

59(e).”). As such, the ICA erred in concluding that the circuit

court lacked authority to enter the February judgment.

However, regardless of whether the ICA erred in

ultimately concluding that the October judgment was the final

judgment in this case, such an error is harmless because the ICA

then went on to address the substantive claims: “Even assuming,

arguendo , that the Circuit Court could have vacated in part the

Award, after entering the 10/1/10 Judgment on the Order

Confirming Award, we conclude that the Circuit Court erred in

doing so in this case.” HSTA II, 2016 WL 5719745, at *9. The

ICA subsequently provided an in-depth analysis for this

conclusion. Id. at *9-10.

As such, our disposition of this case turns on the

ICA’s analysis and ultimate conclusion as to the substantive

issues, as detailed in the following section.

B. The Arbitrator’s Award of Prejudgment Interest

The State argues that even if the ICA did not err on

29* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## the procedural issues, it did err in its resolution of the

substantive issues. According to the State, the ICA erred in

upholding the arbitrator’s award of prejudgment interest for two

reasons. First, the State contends that the ICA erred when it

concluded that the award of prejudgment interest did not violate

the doctrine of sovereign immunity. Second, the State contends

that the ICA erred in not applying the public policy exception to

arbitrations. As such, the State asserts that the circuit court

properly vacated the arbitrator’s award of prejudgment interest.

Before addressing the State’s substantive arguments

here, an overview of the statutory framework for vacating an

arbitration award provides useful context.

“[J]udicial review of an arbitration award is confined

to the ‘strictest possible limits,’ and a court may only vacate

an award on the grounds specified in HRS § 658A-23 and modify or

correct on the grounds specified in HRS § 658A-24.” SHOPO, 135

Hawai # i at 461, 353 P.3d at 1003 (alteration in original)

(quoting Daiichi, 103 Hawai # i at 336, 82 P.3d at 422).

HRS § 658A-23 provides six grounds that a court can

rely on when vacating an arbitration award:

( a ) U p o n m o t i o n t o t h e c o u r t b y a p a r t y t o a n a r b i t r a t i o n p r o c e e d i n g , t h e c o u r t s h a l l v a c a t e a n a w a r d m a d e i n t h e

a r b i t r a t i o n p r o c e e d i n g i f :

( 1 ) T h e a w a r d w a s p r o c u r e d b y c o r r u p t i o n , f r a u d , o r

o t h e r u n d u e m e a n s ; ( 2 ) T h e r e w a s : ( A ) E v i d e n t p a r t i a l i t y b y a n a r b i t r a t o r

a p p o i n t e d a s a n e u t r a l a r b i t r a t o r ;



## 30* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *

( B ) C o r r u p t i o n b y a n a r b i t r a t o r ; o r ( C ) M i s c o n d u c t b y a n a r b i t r a t o r p r e j u d i c i n g t h e

r i g h t s o f a p a r t y t o t h e a r b i t r a t i o n p r o c e e d i n g ; ( 3 ) A n a r b i t r a t o r r e f u s e d t o p o s t p o n e t h e h e a r i n g u p o n

s h o w i n g o f s u f f i c i e n t c a u s e f o r p o s t p o n e m e n t , r e f u s e d
t o c o n s i d e r e v i d e n c e m a t e r i a l t o t h e c o n t r o v e r s y , o r

o t h e r w i s e c o n d u c t e d t h e h e a r i n g c o n t r a r y t o s e c t i o n 6 5 8 A

- 1 5 , s o a s t o p r e j u d i c e s u b s t a n t i a l l y t h e r i g h t s

o f a p a r t y t o t h e a r b i t r a t i o n p r o c e e d i n g ; ( 4 ) A n a r b i t r a t o r e x c e e d e d t h e a r b i t r a t o r ’ s p o w e r s ; ( 5 ) T h e r e w a s n o a g r e e m e n t t o a r b i t r a t e , u n l e s s t h e p e r s o n p a r t i c i p a t e d i n t h e a r b i t r a t i o n p r o c e e d i n g

w i t h o u t r a i s i n g t h e o b j e c t i o n u n d e r s e c t i o n 6 5 8 A

- 1 5 ( c )

n o t l a t e r t h a n t h e b e g i n n i n g o f t h e a r b i t r a t i o n h e a r i n g ; o r ( 6 ) T h e a r b i t r a t i o n w a s c o n d u c t e d w i t h o u t p r o p e r

n o t i c e o f t h e i n i t i a t i o n o f a n a r b i t r a t i o n a s r e q u i r e d i n s e c t i o n 6 5 8 A

- 9 s o a s t o p r e j u d i c e s u b s t a n t i a l l y t h e

r i g h t s o f a p a r t y t o t h e a r b i t r a t i o n p r o c e e d i n g

. 

## In this case, the relevant subsection of this statute

is part (a)(4) because the State contends that the arbitrator’s

interest award “exceeded the arbitrator’s powers.” “In

determining whether an arbitrator has exceeded his or her

authority under the agreement, ‘there should be no second

guessing by the court’ of the arbitrator’s interpretation of his

or her authority so long as the arbitrator’s interpretation

‘could have rested on an interpretation and application of the

agreement.’” SHOPO, 135 Hawai # i at 463, 353 P.3d at 1005

(quoting Local Union 1260 Int’l Bhd. of Elec. Workers v. Hawaiian

Tel. Co., 49 Haw. 53, 56, 411 P.2d 134, 136 (1966)).

We now address the State’s specific arguments regarding

the arbitrator’s award of prejudgment interest.

1. The ICA correctly concluded that the State waived its sovereign immunity in the arbitration proceedings.

“The doctrine of sovereign immunity ‘refers to the

31* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## general rule, incorporated in the Eleventh Amendment to the

United States Constitution, that a state cannot be sued in

federal court without its consent or an express waiver of its

immunity. The doctrine also precludes such suits in state

courts.’” Nelson v. Hawaiian Homes Comm’n, 130 Hawai # i 162, 168,

307 P.3d 142, 148 (2013) (quoting Sierra Club v. Dep’t of

Transp., 120 Hawai # i 181, 225-26, 202 P.3d 1226, 1270-71 (2009)).

See also Taylor-Rice v. State, 105 Hawai # i 104, 109, 94 P.3d 659,

664 (2004) (“[T]he State’s liability is limited by its sovereign

immunity, except where there has been a ‘clear relinquishment’ of

immunity and the State has consented to be sued.” (quoting Bush

v. Watson, 81 Hawai # i 474, 481, 918 P.2d 1130, 1137 (1996))).

When determining whether the State has waived its sovereign

immunity, Hawai # i has adopted the following guidance from federal

law:

( 1 ) a w a i v e r o f t h e G o v e r n m e n t ’ s s o v e r e i g n i m m u n i t y w i l l b e

s t r i c t l y c o n s t r u e d , i n t e r m s o f i t s s c o p e , i n f a v o r o f t h e

s o v e r e i g n ; ( 2 ) a w a i v e r o f s o v e r e i g n i m m u n i t y m u s t b e

u n e q u i v o c a l l y e x p r e s s e d i n s t a t u t o r y t e x t ; ( 3 ) a s t a t u t e ’ s l e g i s l a t i v e h i s t o r y c a n n o t s u p p l y a w a i v e r t h a t d o e s n o t

a p p e a r c l e a r l y i n a n y s t a t u t o r y t e x t ; ( 4 ) i t i s n o t a

c o u r t ’ s r i g h t t o e x t e n d t h e w a i v e r o f s o v e r e i g n i m m u n i t y

m o r e b r o a d l y t h a n h a s b e e n d i r e c t e d b y t h e [ l e g i s l a t u r e ] ;

a n d ( 5 ) s o v e r e i g n i m m u n i t y i s n o t t o b e w a i v e d b y p o l i c y

a r g u m e n t s [

. ]



## Kaleikini v. Yoshioka, 129 Hawai # i 454, 467, 304 P.3d 252, 265

(2013) (alteration in original) (quoting Taylor-Rice, 105 Hawai # i

at 110, 94 P.3d at 665).

The State argues that the ICA erred in holding that the

32* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## State had waived its sovereign immunity with respect to the

arbitrator’s award of interest against the State. According to

the State, the ICA’s decision regarding sovereign immunity

directly conflicts with HRS § 661-8 (1993), and two Hawai # i 1 4



## cases: Taylor-Rice and Garner v. State Dep’t of Educ., 122

Hawai # i 150, 223 P.3d 215 (App. 2009). The State contends that

these two cases held that a general waiver of sovereign immunity

is not enough to specifically waive sovereign immunity as to

prejudgment interest and that “any waiver of sovereign immunity

is to be strictly construed in favor of the State.”

In Taylor-Rice, this court considered the following

question in the context of a tort case: “Whether Appellee State

of Hawai # i, as a joint and several judgment debtor to [the

plaintiffs] under [HRS §] 663-10.9 . . . must pay statutory

interest on the full value of the judgment per [HRS] § 478-3, or

may pay only limited interest under section 662-8?” 105 Hawai # i

at 109, 94 P.3d at 664 (alteration in original). This court

concluded that the State was not required to pay prejudgment

interest for three reasons. First, this court noted that “the

H R S § 6 6 1

- 8 ( 1 9 9 3 ) p r o v i d e s t h a t “ [ n ] o i n t e r e s t s h a l l b e a l l o w e d o n a n y 14

c l a i m u p t o t h e t i m e o f t h e r e n d i t i o n o f j u d g m e n t t h e r e o n b y t h e c o u r t , u n l e s s

u p o n a c o n t r a c t e x p r e s s l y s t i p u l a t i n g f o r t h e p a y m e n t o f i n t e r e s t , o r u p o n a

r e f u n d o f a p a y m e n t i n t o t h e ‘ l i t i g a t e d c l a i m s f u n d ’ a s p r o v i d e d b y l a w

. ”
T h i s c o u r t h a s h e l d t h a t t h i s s t a t u t e i m m u n i z e s t h e S t a t e a g a i n s t a w a r d s o f i n t e r e s t u n l e s s t h e S t a t e h a s e x p r e s s l y o r s t a t u t o r i l y w a i v e d i t s s o v e r e i g n i m m u n i t y

. C h u n v

. B d

. o f T r s

. o f E m p s

. ’ R e t

. S y s

. , 1 0 6 H a w a i # i 4 1 6 , 4 3 3 , 1 0 6
P

. 3 d 3 3 9 , 3 5 6 ( 2 0 0 5 )

.



## 33* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## State was not found to be jointly and severally liable for prejudgment interest on the plaintiffs’ damages.” Id. at 110, 94

P.3d at 665. Second, this court explained that the plaintiffs

waived this claim because they did not challenge the circuit

court’s failure to hold the State liable for prejudgment

interest. Id. at 111, 94 P.3d at 666. Finally, this court noted

that “HRS § 662-2 provides in clear and unambiguous language that

‘the State . . . shall not be liable for interest prior to

judgment’” and that this “constitutes a plain reservation of

immunity with respect to pre-judgment interest on judgments

rendered against the State.” Id.

Similarly, in Garner, the ICA held that the State had

not waived its sovereign immunity from an award of prejudgment

interest in a case brought by a class action of substitute

teachers seeking backpay. 122 Hawai # i at 162-63, 223 P.3d at

227-28. The circuit court held that the doctrine of sovereign

immunity did not bar the plaintiffs’ claim for breach-of-contract

damages, but that it did bar the plaintiffs’ claim for

prejudgment interest. Id. at 156, 223 P.3d at 221. The ICA

affirmed the circuit court on these issues. Citing HRS § 661-8,

which provides that “[n]o interest shall be allowed on any claim

[against the State] up to the time of the rendition of judgment

thereon by the court,” the ICA determined that the circuit court

34* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## did not err in denying the substitute teachers’ request for

prejudgment interest. Id. at 163, 223 P.3d at 228.

While both Taylor-Rice and Garner hold that prejudgment

interest cannot be awarded against the State in court

proceedings, neither of these cases address the issue of

prejudgment interest in arbitration proceedings. As such, they

are distinguishable from the case before us. This court has not

reached the specific issue presented in the current case;

however, other jurisdictions, including the federal district

court of Hawai # i, have considered this issue.

In Kenneth H. Hughes, Inc. v. Aloha Tower Development,

Corp., 654 F. Supp. 2d 1142 (D. Haw. 2009), the United States

District Court for the District of Hawai # i (district court)

considered an issue almost identical to the one before this

court. Hughes involved an arbitration award for damages relating

to a contract dispute between the State of Hawai # i and a Texas

corporation, Hughes, over the development of the Aloha Tower

complex in Honolulu. Id. at 1144-45. After the project failed,

Hughes filed a demand for arbitration pursuant to their

Development Agreement, which required that disputes be brought

before a mediator or arbitrator within the jurisdiction of the

Federal Arbitration Act (FAA). Id. at 1145. The arbitrator

awarded Hughes over $900,000 in reliance damages, over $270,000

35* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## in pre-award interest, and more than $60,000 in attorneys’ fees

and costs. Id. The State filed a motion to vacate or modify the

arbitration award with the district court, arguing, inter alia,

that the award of interest violated the State’s sovereign

immunity.

Before addressing the issues before it, the district

court explained that the FAA “provides limited circumstances

under which a federal court may vacate or modify a binding

arbitration award” and that “[t]his authority is extremely narrow

and designed to preserve due process but not to permit

unnecessary intrusion into private arbitration procedures.” Id.

The district court also noted that 9 U.S.C. § 10(a)(4) provides

that a federal court may vacate an arbitration award “where the

arbitrators exceeded their powers , or so imperfectly executed

them that a mutual, final, and definite award upon the subject

matter submitted was not made.” Id. at 1146. The district court

further explained that the “Ninth Circuit has interpreted Section

(4) of the FAA, when an arbitrator exceeds its powers, to

encompass situations where an arbitrator’s decision is

‘completely irrational’ or exhibits a ‘manifest disregard of

law.’” Id. (quoting Kyocera Corp. v. Prudential-Bache Trade

Servs., 341 F.3d 987, 997 (9th Cir. 2003)).

In analyzing the State’s sovereign immunity claim, the

36* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## district court construed the State’s argument to be that the

arbitrator exceeded his power under 9 U.S.C. § 10(a)(4) of the

FAA. Id. at 1148. The district court explained that, in order

to prevail, the State “must demonstrate that the arbitrator’s

decision to include interest was ‘completely irrational’ or

exhibited a ‘manifest disregard of law’ in violation of the

State’s sovereign immunity protections.” Id. at 1148-49. The

district court concluded that the State “fail[ed] to meet this

exceedingly high burden” for the following reasons. Id. at 1149.

First, the district court explained that, while Hawai # i

law does prohibit courts from awarding prejudgment interest,

there is no Hawai # i law that prohibits arbitrators from making

such awards:

R e s p o n d e n t r e l i e s o n c a s e l a w a n d H a w a i i s t a t u t e

r e g a r d i n g p r e
- a n d p o s t j u d g m e n t s m a d e i n a c o u r t o f l a w a s

e v i d e n c e o f t h e a r b i t r a t o r ’ s e r r o r

. B u t t h e a r b i t r a t o r ’ s d e c i s i o n i s n o t a j u d g m e n t o f a c o u r t o f l a w

. H a w a i i
R e v i s e d S t a t u t e s ( “ H R S ” ) s e c t i o n 6 6 1

- 8 , r e l i e d o n b y R e s p o n d e n t , s t a t e s t h a t : “ N o i n t e r e s t s h a l l b e a l l o w e d o n

a n y c l a i m u p t o t h e t i m e o f t h e r e n d i t i o n o f j u d g m e n t
t h e r e o n b y t h e c o u r t , u n l e s s u p o n a c o n t r a c t e x p r e s s l y

s t i p u l a t i n g f o r t h e p a y m e n t o f i n t e r e s t

. ” T h e a r b i t r a t i o n d e m a n d w a s n o t a c l a i m a n d t h e a w a r d w a s n o t a j u d g m e n t b y t h e c o u r t , a n d t h e r e f o r e H R S § 6 6 1

- 8 i s n o t c o n t r o l l i n g

.



## Id.

Second, the district court determined that the State

“explicitly availed itself of arbitration.” Id. The district

court explained that the agreement that the State and Hughes

entered into stated that “any claims or disputes, not resolved in

37* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## good faith, may be brought before a mediator or arbitrator within

the jurisdiction of the FAA.” Id. As such, the district court

determined that “the arbitrator did not manifestly disregard the

law when determining that the State waived sovereign immunity as

to interest in conjunction with its waiver as to damages.” Id.

The district court explained its reasoning for this

determination:

B e c a u s e t h e F A A e x p l i c i t l y l i s t s t h e g r o u n d s u p o n w h i c h a

c o u r t m a y v a c a t e , c o u r t s w i l l n o t f i n d a m a n i f e s t d i s r e g a r d

o f t h e l a w w h e r e a n a r b i t r a t o r m e r e l y i n t e r p r e t s o r a p p l i e s t h e g o v e r n i n g l a w i n c o r r e c t l y , a n d c o n f i r m a t i o n i s r e q u i r e d

e v e n i f a n a r b i t r a t o r m a k e s a n e r r o n e o u s f i n d i n g o f f a c t

. .

. . R a t h e r , “ i t m u s t b e c l e a r f r o m t h e r e c o r d t h a t t h e

a r b i t r a t o r s r e c o g n i z e d t h e a p p l i c a b l e l a w a n d t h e n i g n o r e d i t

. ”



## Id. at 1146 (quoting Mich. Mut. Ins. Co. v. Unigard Sec. Ins.

Co., 44 F.3d 826, 832 (9th Cir. 1995)).

Although not controlling, Hughes is persuasive for

three reasons. First, the FAA’s statutory framework analyzed in

Hughes is nearly identical to that of Hawaii’s Uniform

Arbitration Act. For instance, under both the FAA and HRS

Chapter 658A, courts may vacate arbitration decisions where,

inter alia, “the arbitrators exceeded their powers.” 9 U.S.C. §

10(a); see also HRS § 658A-23(a)(4). Similarly, under both the

FAA and HRS Chapter 658A, courts may modify or correct an

arbitration award on three grounds: where there was a

mathematical miscalculation of the award, where there was an

award on a claim or matter not submitted to the arbitrator, or

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## where the award was “imperfect in matter of form not affecting

the merits of the controversy.” 9 U.S.C. § 11; see also HRS §

658A-24(a).

In both Hughes and the current case, the State claimed

that the arbitrator had exceeded his authority in awarding the

prevailing party prejudgment interest. According to the district

court, an arbitrator exceeds its powers only when the

arbitrator’s decision is “completely irrational” or “exhibits a

manifest disregard for the law.” Hughes, 654 F. Supp. 2d at

1146. Although Hawai # i courts use a different standard for

determining whether an arbitrator has exceeded his or her powers,

the standard is similar in that it strongly curtails the court’s

ability to vacate an arbitrator’s award on such grounds: “In

determining whether an arbitrator has exceeded his or her

authority under the agreement, ‘there should be no second

guessing by the court’ of the arbitrator’s interpretation of his

or her authority so long as the arbitrator’s interpretation

‘could have rested on an interpretation and application of the

agreement.’” SHOPO, 135 Hawai # i at 463, 353 P.3d at 1005

(quoting Local Union 1260, 49 Haw. at 56, 411 P.2d at 136). As

such, although the district court relied, in part, on the FAA in

reaching its decision, Hawaii’s arbitration law mirrors the

federal law in important ways.

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## Second, the district court’s analysis of the

applicability of HRS § 661-8 to arbitration proceedings is

reasonable and supported by the statutory framework of HRS

Chapter 658A. The language of HRS § 661-8 clearly states that

interest shall not be awarded against the State through a

“judgment thereon by the court.” HRS § 661-8 does not state that

an arbitrator is prohibited from awarding prejudgment interest

against the State. This reading is supported by HRS § 658A-21(c)

(Supp. 2010), which provides that arbitrators are authorized to

award remedies a court might be prohibited from granting:

A s t o a l l r e m e d i e s o t h e r t h a n t h o s e a u t h o r i z e d b y

s u b s e c t i o n s ( a ) a n d ( b ) , a n a r b i t r a t o r m a y o r d e r s u c h

r e m e d i e s a s t h e a r b i t r a t o r c o n s i d e r s j u s t a n d a p p r o p r i a t e

u n d e r t h e c i r c u m s t a n c e s o f t h e a r b i t r a t i o n p r o c e e d i n g

. T h e f a c t t h a t s u c h a r e m e d y c o u l d n o t o r w o u l d n o t b e g r a n t e d b y t h e c o u r t i s n o t a g r o u n d f o r r e f u s i n g t o c o n f i r m a n a w a r d

u n d e r s e c t i o n 6 5 8 A

- 2 2 o r f o r v a c a t i n g a n a w a r d u n d e r s e c t i o n 6 5 8 A

- 2 3

. 

## (Emphasis added.) Thus, HRS § 661-8 appears to be inapplicable

in the arbitration context under the facts of this case.

Third and finally, as in Hughes, the State in the

current case availed itself of the arbitration proceedings. The

district court in Hughes noted that the State “explicitly availed

itself of arbitration in paragraph 21 of the Development

Agreement,” which stated that “ any claims or disputes, not

resolved in good faith, may be brought before a mediator or

arbitrator within the jurisdiction of the FAA.” Hughes, 654 F.

Supp. 2d at 1149.

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## Similarly, in the current case, the State was a party

to the collective bargaining agreement, which explicitly provided

for disputes to go to arbitration and stated that “[t]he

arbitrator may award back pay to compensate the teacher wholly or

partially for any salary lost.” This court has recognized that

“arbitrators have the authority to make an award of interest as

part of the determination of the total amount of compensation to

which the prevailing party is entitled” and that prejudgment

interest is “an element of complete compensation.” Hamada v.

Westcott, 102 Hawai # i 210, 217, 74 P.3d 33, 40 (2003) (quoting

Kalawaia v. AIG Haw. Ins. Co., 90 Hawai # i 167, 172-73, 977 P.2d

175, 180-81 (1999)). Thus, under Hawai # i law, the arbitrator’s 1 5



## interpretation of “wholly compensate” was a reasonable reading of

the agreement and the arbitrator did not exceed his authority in

awarding prejudgment interest against the State. See also State

v. Alaska Pub. Emps. Ass’n, 199 P.3d 1161, 1165 (Alaska 2008)

(“Considering the closeness of this question, the policy favoring

effective arbitration, and the fairness of awarding interest, we

T h i s c o u r t i n K a l a w a i a c o n c l u d e d t h a t “ w h e r e t h e e n t i r e d i s p u t e i s 15

s u b m i t t e d t o a r b i t r a t i o n a n d p r e
- a w a r d i n t e r e s t i s n o t s p e c i f i c a l l y e x c l u d e d b y c o n t r a c t , a r b i t r a t o r s h a v e t h e a u t h o r i t y t o m a k e a n a w a r d o f i n t e r e s t a s p a r t o f t h e d e t e r m i n a t i o n o f t h e t o t a l a m o u n t o f c o m p e n s a t i o n t o w h i c h t h e p r e v a i l i n g p a r t y i s e n t i t l e d

. ” 9 0 H a w a i # i a t 1 7 3 n

. 1 1 , 9 7 7 P

. 2 d a t 1 8 1 n

. 1 1

. T h i s c o u r t e x p l a i n e d t h a t t h i s c o n c l u s i o n “ i s s e n s i b l e b e c a u s e t h e a w a r d o f i n t e r e s t i s a n e l e m e n t o f c o m p e n s a t i o n , a n d t h e e n t i r e d i s p u t e h a s b e e n

s u b m i t t e d t o a r b i t r a t i o n t o d e t e r m i n e t h e a m o u n t o f c o m p e n s a t i o n d u e t o t h e i n j u r e d p a r t y

. ” I d

. T h e K a l a w a i a h o l d i n g s u p p o r t s o u r c o n c l u s i o n i n t h e p r e s e n t c a s e , a s p r e
- a w a r d i n t e r e s t w a s n o t s p e c i f i c a l l y e x c l u d e d b y t h e

a r b i t r a t i o n a g r e e m e n t

.



## 41* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## are unable to conclude that the arbitrator’s decision to award

prejudgment interest against the State was gross error.”); John

Rocchio Corp. v. Town of Coventry, 919 A.2d 418, 419-20 (R.I.

2007) (upholding an arbitrator’s award of prejudgment interest

against a town after noting that the court has limited authority

to vacate an arbitration award).

Given the broad discretion afforded to arbitrators and

the strict limits confining judicial review of arbitration

awards, the State’s argument that the arbitrator exceeded his

powers is unavailing. For these reasons, the ICA did not err in

concluding that the State waived its sovereign immunity in the

arbitration proceedings, even as to the issue of interest.

2. The ICA correctly concluded that the public policy exception to arbitrations does not apply in this case.

The State argues that the ICA also erred when it

“ignored the public policy exception” to arbitration awards.

The State contends that sovereign immunity is an explicit public

policy and that the violation of the public policy exception was

“clearly shown” when “the arbitrator awarded pre-judgment

interest despite the fact that the Collective Bargaining

Agreement did not ‘expressly’ provide for interest and despite

the rule requiring strict construction of waiver.”

Hawai # i recognizes a “limited public policy exception

to the general deference given arbitration awards.”

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## Inlandboatmen’s Union of the Pac. v. Sause Bros., 77 Hawai # i 187,

194, 881 P.2d 1255, 1262 (App. 1994). Quoting the Supreme Court

of the United States, the ICA explained the exception:

A c o u r t ’ s r e f u s a l t o e n f o r c e a n a r b i t r a t o r ’ s a w a r d

. .

. b e c a u s e i t i s c o n t r a r y t o p u b l i c p o l i c y i s a s p e c i f i c

a p p l i c a t i o n o f t h e m o r e g e n e r a l d o c t r i n e , r o o t e d i n t h e

c o m m o n l a w , t h a t a c o u r t m a y r e f u s e t o e n f o r c e c o n t r a c t s t h a t v i o l a t e l a w o r p u b l i c p o l i c y

. [ T h e ‘ p u b l i c p o l i c y ’

e x c e p t i o n ] d e r i v e s f r o m t h e b a s i c n o t i o n t h a t n o c o u r t w i l l
l e n d i t s a i d t o o n e w h o f o u n d s a c a u s e o f a c t i o n u p o n a n i m m o r a l o r i l l e g a l a c t , a n d i s f u r t h e r j u s t i f i e d b y t h e

o b s e r v a t i o n t h a t t h e p u b l i c ’ s i n t e r e s t s i n c o n f i n i n g t h e

s c o p e o f p r i v a t e a g r e e m e n t s t o w h i c h i t i s n o t a p a r t y w i l l
g o u n r e p r e s e n t e d u n l e s s t h e j u d i c i a r y t a k e s a c c o u n t o f t h o s e i n t e r e s t s w h e n i t c o n s i d e r s w h e t h e r t o e n f o r c e s u c h

a g r e e m e n t s

. 

## Id. at 193, 881 P.2d at 1261 (quoting United Paperworkers Int’l

Union v. Misco, Inc., 484 U.S. 29, 42 (1987)). The public policy

exception is applicable only in cases where enforcing an

arbitration award or contract would involve illegality or violate

public policy. SHOPO, 135 Hawai # i at 465-67, 353 P.3d at 1007-

09; see also Inlandboatmen, 77 Hawai # i at 194, 881 P.2d at 1262

(providing examples of Hawai # i courts applying the public policy

exception).

The public policy exception is inapplicable in this

case. We have already determined in the previous section that

the State waived its sovereign immunity as to the arbitration

proceedings. Additionally, we have determined that the

arbitrator operated within his considerable discretion when he

interpreted the collective bargaining agreement to include an

award of prejudgment interest. Thus, an arbitrator’s reasonable

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## award against the State when the State has availed itself of

arbitration and waived its sovereign immunity is not against

public policy or illegal. As such, the ICA did not err in

dismissing the State’s contention that the public policy

exception to arbitration awards should apply in this case.

C. Attorneys’ Fees and Costs on Appeal

“In contrast to compensation awarded to a party, the

well-accepted ‘American rule’ is that ‘in absence of contract or

statute a litigant has no inherent right to have his [or her]

attorney’s fees paid by his [or her] opponent.’” Hamada, 102

Hawai # i at 217, 74 P.3d at 40 (alteration in original) (quoting

Larsen v. Pacesetter Sys. Inc., 74 Haw. 1, 51, 837 P.2d 1273,

1297 (1992)); see also Sierra Club, 120 Hawai # i at 218, 202 P.3d

at 1263 (“[P]ursuant to the ‘American Rule,’ each party is

responsible for paying his or her own litigation expenses. This

general rule, however, is subject to a number of exceptions:

attorney’s fees are chargeable against the opposing party when so

authorized by statute, rule of court, agreement, stipulation, or

precedent.”)

In the current case, the ICA awarded HSTA fees and

costs incurred at the appellate level pursuant to HRS § 658A-25.

The State asserts that the ICA erred in this regard because HRS §

658A-25 does not provide for an award of fees and costs at the

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## appellate level. This is an issue of first impression for this 1 6



## court.

1. The ICA did not err in awarding fees and costs pursuant to HRS § 658A-25.

HRS § 658A-25 (2016), “Judgment on award; attorney’s

fees and litigation expenses,” provides in full:

( a ) U p o n g r a n t i n g a n o r d e r c o n f i r m i n g , v a c a t i n g w i t h o u t d i r e c t i n g a r e h e a r i n g , m o d i f y i n g , o r c o r r e c t i n g a n a w a r d , t h e c o u r t s h a l l e n t e r a j u d g m e n t i n c o n f o r m i t y t h e r e w i t h

. T h e j u d g m e n t m a y b e r e c o r d e d , d o c k e t e d , a n d e n f o r c e d a s a n y

o t h e r j u d g m e n t i n a c i v i l a c t i o n

. ( b ) A c o u r t m a y a l l o w r e a s o n a b l e c o s t s o f t h e m o t i o n a n d

s u b s e q u e n t j u d i c i a l p r o c e e d i n g s

. ( c ) O n a p p l i c a t i o n o f a p r e v a i l i n g p a r t y t o a c o n t e s t e d j u d i c i a l p r o c e e d i n g u n d e r s e c t i o n 6 5 8 A

- 2 2 , 6 5 8 A

- 2 3 , o r 6 5 8 A

2 4 , t h e c o u r t m a y a d d r e a s o n a b l e a t t o r n e y ’ s f e e s a n d o t h e r

r e a s o n a b l e e x p e n s e s o f l i t i g a t i o n i n c u r r e d i n a j u d i c i a l
p r o c e e d i n g a f t e r t h e a w a r d i s m a d e t o a j u d g m e n t c o n f i r m i n g ,
v a c a t i n g w i t h o u t d i r e c t i n g a r e h e a r i n g , m o d i f y i n g , o r

c o r r e c t i n g a n a w a r d

. 

## The State points out that “court” is defined as “any

district or circuit court of competent jurisdiction in this

State, unless otherwise indicated.” HRS § 658A-1 (2016). The

State contends that HRS § 658A-25(b) and (c), when read in

conjunction with the definition section found in HRS § 658A-1,

T h e S t a t e p r e s e n t s t w o o t h e r a r g u m e n t s u n d e r t h i s s e c t i o n

. F i r s t , t h e 16

S t a t e a r g u e s t h a t H S T A s h o u l d n o t h a v e p r e v a i l e d o n a p p e a l a n d i s t h e r e f o r e

n o t e n t i t l e d t o f e e s a n d c o s t s

. B e c a u s e w e h e l d i n t h e p r e v i o u s s e c t i o n t h a t
t h e I C A d i d n o t e r r i n c o n c l u d i n g t h a t H S T A w a s t h e p r e v a i l i n g p a r t y o n

a p p e a l , w e d o n o t a d d r e s s t h i s a r g u m e n t f u r t h e r

. S e c o n d , t h e S t a t e a r g u e s t h a t s o v e r e i g n i m m u n i t y p r o t e c t s t h e S t a t e a g a i n s t a n a w a r d o f a t t o r n e y s ’ f e e s

a n d c o s t s

. T h i s a r g u m e n t a l s o f a i l s b e c a u s e H R S § 6 5 8 A

- 2 5 e x p r e s s l y a l l o w s f o r a n a w a r d o f f e e s a n d c o s t s t o t h e p r e v a i l i n g p a r t y i n a c o n t e s t e d j u d i c i a l
p r o c e e d i n g

. T h e S t a t e a v a i l e d i t s e l f o f H R S C h a p t e r 6 5 8 A w h e n i t e n t e r e d i n t o

a n a r b i t r a t i o n a g r e e m e n t w i t h H S T A ; t h i s s e r v e s a s a s t a t u t o r y w a i v e r o f t h e S t a t e ’ s s o v e r e i g n i m m u n i t y w i t h r e g a r d t o a t t o r n e y s ’ f e e s a n d c o s t s u n d e r t h e C h a p t e r a s w e l l

. S e e S i e r r a C l u b , 1 2 0 H a w a i # i a t 2 2 8

- 2 9 , 2 0 2 P

. 3 d a t 1 2 7 3

- 7 4 ( h o l d i n g t h a t a s t a t u t o r y w a i v e r o f t h e S t a t e ’ s s o v e r e i g n i m m u n i t y a s t o t h e

u n d e r l y i n g c l a i m a l s o w a i v e s t h e S t a t e ’ s s o v e r e i g n i m m u n i t y a s t o a t t o r n e y s ’
f e e s r e s u l t i n g f r o m t h e l i t i g a t i o n o f t h a t c l a i m )

.



## 45* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## provide for an award of fees and costs only at the circuit or

district court level.

However, the legislative history reveals that the

statute was not intended to be interpreted so narrowly. The

Hawai # i legislature enacted Chapter 658A in 2001 in order to

“standardize Hawaii’s arbitration laws with those used in other

states by replacing the current statutory chapter on arbitration

and awards with the Uniform Arbitration Act.” Conf. Comm. Rep.

No. 115, in 2001 House Journal, at 1093, 2001 Senate Journal, at

905. Under its original iteration in 2001, “court” was defined

as “the circuit court of the appropriate judicial circuit in this

State, unless otherwise indicated.” 2001 Haw. Sess. Laws Act

265, § 1 at 810. In 2006, the legislature amended the definition

to include district courts for the following reasons:

U n d e r t h e e x i s t i n g l a w s , t h e d i s t r i c t c o u r t s h a v e

e x c l u s i v e j u r i s d i c t i o n o v e r c i v i l c l a i m s i n w h i c h t h e d i s p u t e d a m o u n t i s $ 1 0 , 0 0 0 o r l e s s

. H o w e v e r , t h e c i r c u i t

c o u r t s h a v e e x c l u s i v e j u r i s d i c t i o n o v e r d i s p u t e s s u b j e c t t o

a r b i t r a t i o n r e g a r d l e s s o f t h e a m o u n t i n d i s p u t e

. M a n y d i s p u t e s s u b j e c t t o a r b i t r a t i o n a r e w e l l b e l o w t h e $ 1 0 , 0 0 0
l i m i t a t w h i c h t h e d i s t r i c t c o u r t s w o u l d n o r m a l l y h a v e j u r i s d i c t i o n

. T h e l e g i s l a t u r e f i n d s t h a t t h i s i s n o t a n

e c o n o m i c a l o r e f f i c i e n t u s e o f j u d i c i a l r e s o u r c e s a n d i t d i s c o u r a g e s t h e u s e o f a r b i t r a t i o n i n t h e a r e a o f s m a l l d i s p u t e s

. T h e r e f o r e , t h e m e r e e x i s t e n c e o f a n a r b i t r a t i o n

a g r e e m e n t s h o u l d n o t i m p a c t w h i c h c o u r t h a s j u r i s d i c t i o n

o v e r c i v i l c l a i m s

. T h e p u r p o s e o f t h i s A c t i s t o g i v e t h e d i s t r i c t c o u r t s j u r i s d i c t i o n o v e r c i v i l a c t i o n s s u b j e c t t o a r b i t r a t i o n

a g r e e m e n t s w h e r e t h e a m o u n t i n d i s p u t e i s l e s s t h a n $ 1 0 , 0 0 0 ,
u n l e s s t h e a r b i t r a t i o n i s s u b j e c t t o c h a p t e r 8 9 , c h a p t e r 3 7 7 , o r t h e N a t i o n a l L a b o r R e l a t i o n s A c t

.


## 2006 Haw. Sess. Laws Act 72, § 1 at 128.

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## The legislative history shows that the legislature, in

defining “court,” was interested in articulating which court had

jurisdiction over the arbitration proceedings when the litigation

was initiated; nothing in the legislative history indicates that

the legislature intended that “court” be limited to the district

or circuit courts after these initial proceedings were appealed.

This interpretation is supported by the commentary to

the 2000 Revised Uniform Arbitration Act (UAA), which HRS Chapter

658A is modeled after. Under the UAA, “court” is defined as “a

court of competent jurisdiction in this State.” Unif.

Arbitration Act § 1 (Nat’l Conference of Comm’rs on Unif. State

Laws 2000). Significantly, the commentary to this section

explains that “[d]ifferent States determine which court in its

system has jurisdiction over arbitration matters in the first

instance.” UAA § 1 cmt. n.3 (emphasis added). As such, the UAA

directs states to define “court” in order to resolve the issue of

which court, district or circuit, a party turns to when initially

contesting an arbitration award.

Additionally, commentary to UAA § 25 explains the 1 7

H R S § 6 5 8 A

- 2 5 ( c ) w a s m o d e l e d a f t e r U A A § 2 5 ( c ) a n d t h e t w o s e c t i o n s a r e 17

n e a r l y i d e n t i c a l

. U A A § 2 5 ( c ) p r o v i d e s :

O n [ a p p l i c a t i o n ] o f a p r e v a i l i n g p a r t y t o a c o n t e s t e d j u d i c i a l p r o c e e d i n g u n d e r S e c t i o n 2 2 , 2 3 , o r 2 4 , t h e c o u r t

m a y a d d r e a s o n a b l e a t t o r n e y ’ s f e e s a n d o t h e r r e a s o n a b l e

e x p e n s e s o f l i t i g a t i o n i n c u r r e d i n a j u d i c i a l p r o c e e d i n g

a f t e r t h e a w a r d i s m a d e t o a j u d g m e n t c o n f i r m i n g , v a c a t i n g

w i t h o u t d i r e c t i n g a r e h e a r i n g , m o d i f y i n g , o r c o r r e c t i n g a n

a w a r d

.



## 47* * * F O R P U B L I C A T I O N I N W E S T ’ S H A W A I # I R E P O R T S A N D P A C I F I C R E P O R T E R * * *



## policy behind allowing courts to award attorneys’ fees and costs

in a contested judicial proceeding. Notably, the policy

articulated in the commentary applies equally to trial and

appellate courts reviewing arbitration awards:

S e c t i o n 2 5 ( c ) p r o m o t e s t h e s t a t u t o r y p o l i c y o f
f i n a l i t y o f a r b i t r a t i o n a w a r d s b y a d d i n g a p r o v i s i o n f o r

r e c o v e r y o f r e a s o n a b l e a t t o r n e y ’ s f e e s a n d r e a s o n a b l e

e x p e n s e s o f l i t i g a t i o n t o p r e v a i l i n g p a r t i e s i n c o n t e s t e d j u d i c i a l a c t i o n s t o c o n f i r m , v a c a t e , m o d i f y o r c o r r e c t a n

a w a r d

. P o t e n t i a l l i a b i l i t y f o r t h e o p p o s i n g p a r t i e s ’ p o s t

a w a r d l i t i g a t i o n e x p e n d i t u r e s w i l l t e n d t o d i s c o u r a g e a l l b u t t h e m o s t m e r i t o r i o u s c h a l l e n g e s o f a r b i t r a t i o n a w a r d s

. I f a p a r t y p r e v a i l s i n a c o n t e s t e d j u d i c i a l p r o c e e d i n g o v e r

a n a r b i t r a t i o n a w a r d , S e c t i o n 2 5 ( c ) a l l o w s t h e c o u r t
d i s c r e t i o n t o a w a r d a t t o r n e y ’ s f e e s a n d l i t i g a t i o n e x p e n s e s

.


## UAA § 25 cmt. n.3 (emphasis added). As such, attorneys’

fees serve the purpose of discouraging a party from a

nonmeritorious challenge to an arbitration award; this holds

true even for appellate proceedings, as other jurisdictions

have noted.

For instance, in Blitz v. Beth Isaac Adas Israel

Congregation, 720 A.2d 912, 920 (Md. 1998), the Court of Appeals

of Maryland concluded that, under a statute substantially similar

to HRS § 658A-25, “the prevailing party is entitled to recover

attorneys’ fees incurred both at trial and on appeal in

confirming and enforcing an arbitration award.” In making this

decision, the Maryland court noted that there was a “significant

difference” between the initial arbitration proceedings, where

attorneys’ fees are only allowed if provided for in the

arbitration agreement, and the subsequent confirmation

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## proceedings. Id. at 917. In the confirmation proceedings, the

Maryland court explained that the UAA specifically provides for

attorneys’ fees because such a policy encourages speedy

resolutions of arbitration disputes. Id. at 917-18. The

Maryland court also noted that other jurisdictions have

recognized the importance of preventing drawn-out confirmation

proceedings:

T h e i n t e r p r e t a t i o n s o f o u r s i s t e r s t a t e s a l s o p r o m o t e t h e p u b l i c p o l i c y o f e n c o u r a g i n g e a r l y p a y m e n t o f v a l i d

a r b i t r a t i o n a w a r d s a n d t h e d i s c o u r a g e m e n t o f n o n m e r i t o r i o u s p r o t r a c t e d c o n f i r m a t i o n c h a l l e n g e s

. T h e p r e f a t o r y c o m m e n t
t o t h e 1 9 5 4 d r a f t o f t h e U n i f o r m A r b i t r a t i o n A c t s t a t e d t h a t

c o u r t i n t e r v e n t i o n i n a r b i t r a t i o n ‘ m u s t b e p r o m p t a n d s i m p l e

o r t h e v a l u e s o f a r b i t r a t i o n w i l l b e l a r g e l y d i s s i p a t e d
t h r o u g h p r o l o n g e d l i t i g a t i o n

. ’



## Id. (quoting Canon Sch. Dist. No. 50 v. W.E.S. Constr. Co., 882

P.2d 1274, 1279 (Ariz. 1994)); see also Buzas Baseball, Inc. v.

Salt Lake Trappers, Inc., 925 P.2d 941, 952-53 (Utah 1996)

(holding that petitioners, who had received an arbitration award,

were entitled to reasonable attorneys’ fees incurred in defending

the award on appeal under the Utah Arbitration Act).

Given the legislative history of HRS Chapter 658A, the

language and commentary of the UAA, and the guidance offered by

other jurisdictions, we conclude that the ICA did not err in

awarding HSTA attorneys’ fees and costs on appeal pursuant to

HRS § 658A-25.

V. CONCLUSION

For the reasons stated above, the ICA’s November 21,

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## 2016 judgment on appeal, which 1) vacated in part the circuit

court’s February 24, 2011 final judgment, 2) reversed the circuit

court’s January 4, 2011 orders, 3) affirmed the circuit court’s

January 31, 2011 order, and 4) granted HSTA’s request for fees

and costs, is affirmed.

Robert T. Nakatsuji for petitioner

Herbert R. Takahashi and Rebecca L. Covert for respondent /s/ Mark E. Recktenwald

/s/ Paula A. Nakayama

/s/ Sabrina S. McKenna

/s/ Richard W.Pollack

/s/ Michael D. Wilson

50