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### IN THE SUPREME COURT OF THE STATE OF HAWAI # I ---o0o---

DEL MONTE FRESH PRODUCE (HAWAII), INC.; EDWARD C. LITTLETON; STACIE SASAGAWA; TIM HO; DIXON SUZUKI; and DEL MONTE FRESH PRODUCE COMPANY,

Petitioners/Appellants-Appellants,

vs. INTERNATIONAL LONGSHORE AND WAREHOUSE UNION,

LOCAL 142, AFL-CIO, Respondent/Union/Appellee-Appellee,

and HAWAII LABOR RELATIONS BOARD, Respondent/Appellee-Appellee.

NO. SCWC-29037
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (ICA NO. 29037; CIVIL NO. 07-1-0708)

OCTOBER 22, 2012 RECKTENWALD, C.J., NAKAYAMA, ACOBA, JJ., CIRCUIT JUDGE AHN, IN PLACE OF DUFFY, J., RECUSED, and CIRCUIT JUDGE ALM, IN PLACE OF MCKENNA, J., RECUSED

OPINION OF THE COURT BY RECKTENWALD, C.J. This case arises from Del Monte Fresh Produce Company’s 2006 decision to cease growing pineapples at its plantation on Electronically Filed Supreme Court SCWC-29037 22-OCT-2012 10:55 AM***FOR PUB LICAT ION I N WES T’S HAWAI # I REPORTS AND PACIFI C REPORTER ***



### O # ahu. The company’s subsidiary, Del Monte Fresh Produce (Hawaii), Inc., subsequently bargained with the International Longshore and Warehouse Union, Local 142, with regard to the effects of that decision on Del Monte employees in Hawai # i. The Union believed the company was not negotiating in good faith, and on August 21, 2006, it filed a complaint with the Hawai # i Labor Relations Board alleging that Del Monte had engaged in unfair labor practices. Following an evidentiary hearing, the HLRB 1 

### entered an order on March 21, 2007, which concluded that Del Monte failed to bargain in good faith. 2



### Del Monte appealed, arguing that the Board Chairman displayed an appearance of impropriety during the hearing, and thus, should have been recused and/or disqualified; and that the HLRB created a new test for effects bargaining in contravention of federal labor policy, which led the HLRB to reach an erroneous result. The Circuit Court of the First Circuit and the 3 

### Intermediate Court of Appeals affirmed. Del Monte Fresh Produce (Hawaii), Inc. v. Int’l Longshore and Warehouse Union, Local 142, AFL-CIO (Del Monte II), No. 29037, 2011 WL 5834630, at *5 (App. Nov. 21, 2011) (SDO).

As di scuss ed in Part I.B. 1 inf ra, t his o pinio n ref ers t o the 1 petit ioner s/app ellan ts-ap pella nts i n thi s cas e col lecti vely as “D el Mo nte.”

Then HLRB BoardChai rman Brian Naka mura, Boar d Member S ara 2 Hirak ami, and B oard Membe r Emo ry Sp ringe r pre sided
.

The H onora ble S abrin a S. McKen na pr eside d. 3 

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### In its application, Del Monte raises the following questions:

A. D id th e [HL RB] e rr byfail ing t o app ly th e “ap peara nce

of impropr iety” stan dard when rulin g on [Del Monte ’s] m otion for t he HL RB Ch airma n’s r ecusa l or disqu alifi catio n?
B. D id th e HLRB cle arly err i n den ying [Del Monte ’s] m otion for t he HL RB Ch airma n’s r ecusa l or disqu alifi catio n?
C. D id th e HLRB errin c onstr uctin g a n ew te st fo r “ef fects barga ining ” by requi ring barga iningon n umero us su bject s that feder al la bor p olicyhas rejec ted a s man dator y barga iningsubj ects?
D. D id th e HLRB cle arly err i n fin ding that [Del Monte ] faile d to engag e in good faitheffe cts b argai ning? 

### For the reasons set forth below, we hold that the HLRB did not clearly err in denying Del Monte’s motion to disqualify the HLRB Chairman. We further hold that the HLRB did not clearly err in finding that Del Monte engaged in bad faith bargaining, because there was substantial evidence that the “totality” of Del Monte’s conduct did not evince “a present intention to find a basis for agreement and a sincere effort to reach a common ground.” See Del Monte Fresh Produce (Hawaii), Inc. v. Int’l Longshore and Warehouse Union, Local 142, AFL-CIO (Del Monte I), 112 Hawai # i 489, 500, 146 P.3d 1066, 1077 (2006) (citations omitted). However, to the extent that the HLRB’s order could be construed to impose per se requirements for effects bargaining, we also hold that bargaining on all of the subjects identified in the HLRB’s order is not required in every effects bargaining accompanying a plant closure. Accordingly, we affirm the judgment of the ICA.

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### I. Background The following factual background is taken from the record on appeal.
A. Announcement of Del Monte Fresh Produce (Hawaii), Inc. Closure The International Longshore and Warehouse Union, Local 142, AFL-CIO (ILWU or Union) is the bargaining representative for the three bargaining units of Del Monte Fresh Produce (Hawaii), 4 

### Inc. (DMH). DMH is part of a larger corporation, Del Monte Fresh Produce Company (DM Corporate), which is located in Coral Gables, Florida. DMH and the Union were signatories to three collective bargaining agreements for the three respective units (collectively, “Collective Bargaining Agreement”). The Collective Bargaining Agreement was effective from February 8, 2004 through May 30, 2009.

As of January 2006, DMH was a pineapple plantation located at Kunia on O # ahu, which employed more than 700 employees. DMH and its local management, Edward Littleton and Stacie Sasagawa, reported to Richard Contreras, the Vice President of Finance and Administration of Del Monte Fresh Produce North America.

On February 1, 2006, Littleton, then General Manager of

The t hree respe ctive barg ainin g uni ts in clude O # ahu P lanta tion, 4 Kunia Proc essin g andPack ing O perat ions (Fres h Fru it orKFF) , andKuni a Chill ed/Fr ozen Opera tion (KCFO ). 

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### DMH, sent a letter to Fred Galdones, President of the Union, which stated that “effective February 19, 2006, [DMH] will cease its planting of pineapple in Hawaii.” The letter further stated that “operations would still continue (at a diminished scale over time) over approximately the next 2 1⁄2 years.” On the same day, DMH publicly issued its “Local Company Statement”:

It sh ould be no ted t hat D el Mo nte i s not leav ing Hawai i imm ediat ely. Pine apple has a cro p cyc le of three year s andthe Compa ny’s curre nt cr op cy cle w ill conti nue t o pro duce quali ty fr uit t hroug h mid -2008
. Del M onte expec ts to cont inue harve stingand packi ng pinea pple in Ha waii throu gh th at ti me. In fa ct, t he Compa ny ex pects sign ifica nt vo lumes duri ng 20 06.

. . . Prio r to the c lose of th e Kun ia pl antat ion a t the e nd of2008 , Del Mont e wil l wor k wit h its emplo yees and u nion repre senta tives to r educe the impac t of this decis ion. The Compa ny ha s bee n discu ssingmeas ures to he lp it s emp loyee s, in cludi ng notif ying otherpote ntial empl oyers and poten tiall y trans ferri ng th e Kun ia ho usingto t he cu rrent emplo yees/ tenan ts. Del M onte is mi ndful of t he Compa ny’s oblig ation s to its e mploy ees a nd th e loc al commu nity, and is co mmitt ed to maki ng ev ery r eason able effor t to lesse n the impa ct on all indiv idual s invol ved. 

### In response to these announcements, Galdones sent a letter to Littleton dated February 9, 2006 to request effects bargaining over DMH’s closure. Over six months in 2006, the 5 

### parties met for eight bargaining sessions from February 16 through July 18. During these bargaining sessions the Union was principally represented by Union President Galdones, while DMH was represented by a bargaining committee composed of

In la bor r elati ons, “effe cts b argai ning” refe rs to the requi remen t 5 that an employe r bar gain over the e ffect s of an op erati onal chang e, in cludi ng the e ffect s of a dec ision to c lose a pla nt. 48A Am. Ju r. 2d . Lab or an d Lab or Relat ions § 234 5 (20 05). 

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### spokesperson Tim Ho, who was from the Hawai # i Employers Council, Littleton and Sasagawa.

On February 22, 2006, the Union submitted in writing its proposals regarding the “effects of ceasing planting operations and closure of business.” The proposals included three “cost items”: “enhanced severance, six months of medical and dental coverage after closure, and protecting the residents of Kunia Camp by providing seed money to retain a housing association.” The “non-cost proposals” included administrative items. The parties agreed to form a housing subcommittee to negotiate with respect to Company-provided housing, and on or around February 23, 2006, the Union submitted its housing proposals. In April 2006, the parties reached certain tentative agreements on the effects of the closure. These tentative agreements related to non-cost items and housing; DMH made no concessions over the other items. On April 12, 2006, DMH proposed a new cost item, a cash “retention bonus” to be paid to fourth year covered seasonal employees, i.e., non-regular employees who had worked for four years, and who remained employed at DMH into 2007. Prior to the filing of the Union’s original complaint, the parties last met on July 18, 2006, with no movement by either party regarding cost items.

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### B. HLRB Proceedings 1. Unfair Labor Practice Complaint The Union filed its initial administrative unfair labor practice complaint with the HLRB on August 21, 2006, naming as respondents DMH, Littleton, Sasagawa, and Ho. On December 21, 2006, the Union filed an amended complaint, which named Dixon Suzuki and DM Corporate as additional respondents. The Union’s 6 

### amended unfair labor practice complaint alleged, inter alia, that Del Monte breached its duty to bargain in good faith in violation of Hawai # i Revised Statutes (HRS) § 377-6(4). Specifically, the 7 

### Union alleged that “[o]n and after July 18, 2006[,]” Del Monte “willfully refused to bargain in good faith with the [Union] over the effects of the closure of its operations in Hawaii” by: (1) “their refusal to consider cost proposals that would exceed benefits previously negotiated into the [C]ollective [B]argaining [A]greement[]”; (2) “their claim of impasse”; and (3) their

For e ase o f ref erenc e, DM H, Li ttlet on, S asaga wa, H o, Su zuki, and 6 DM Co rpora te wi ll be refe rred to co llect ivelyhere as “ Del M onte. ”

HRS § 377- 6 (19 93) p rovid es in pert inent part : 7
It sh all b e an unfai r lab or pr actic e foran e mploy er indiv idual ly orin c oncer t wit h oth ers:

. . . . (4) T o ref use t o bar gain colle ctive ly wi th th e repre senta tive of a major ity o f the empl oyer’ s emplo yees in an y col lecti ve ba rgain ing u nit p rovid ed that if th e emp loyerhas good faithdoub t tha t a u nion repre sents a ma jorit y of the e mploy ees, the e mploy er may f ile a repr esent ation peti tion for a n ele ction and shall not be de emed guilt y of refus al to barg ain[. ]



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### “fail[ure] to appoint a representative with authority to negotiate and reach agreement on cost items[.]” Del Monte filed its answer to the amended complaint on January 5, 2007.

In August 2006, DM Corporate announced that it would close KCFO, one of DMH’s bargaining units, in September 2006.

On November 13, 2006, DM Corporate informed Sasagawa that it was accelerating the closing of the Kunia plantation to January 22, 2007. The Union was informed by phone of the accelerated closing date the following day, and by public announcement on November 17, 2006.

On November 16, 2006, Del Monte filed a motion to dismiss and/or for summary judgment, which the HLRB denied after holding a hearing on the motion. 2. HLRB Evidentiary Hearings Evidentiary hearings were held on November 29, 2006, November 30, 2006, December 12, 2006, December 15, 2006, December 21, 2006, and February 7, 2007.

a. Union’s Case-in-Chief 8


### i. Timothy Ho Ho, President and CEO of Hawai # i Employers Council and spokesperson in negotiations for DMH, testified that in 2004, the Union and Del Monte negotiated a new five-year Collective

In ad ditio n to the f ollow ing t estim ony f rom H o, Sa sagaw a, an d 8 Galdo nes, sever al DM H emp loyee s tes tifie d abo ut th e pin eappl e ope ratio ns. 

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### Bargaining Agreement. Ho acknowledged that the Union had expressed concerns during negotiations that DMH would be closing, and recalled that the Union “wanted to make sure that [DMH] was going to be here for the long haul.” According to Ho, DMH gave an affirmative response.

The first time that Ho heard that DMH was “not going to be in Hawaii for a long haul” was “[p]robably a day or two” before DMH announced the decision to the Union, i.e., “late January [2006].” Ho recalled that the reason for the decision to cease plantation operations was that “it was not economically feasible to continue the operations in Hawaii.”

Ho acknowledged that on February 9, 2006, the Union sent a letter requesting effects bargaining and information on the timing and reasons for the planned closure. Effects bargaining commenced on February 16, 2006. The Union’s counsel then asked Ho about the first effects bargaining meeting and whether he recalled Galdones commenting that “he appreciated that the people in the bargaining there, on the Del Monte side, had their marching orders from corporate.” Ho responded, “That sounds correct.” Ho further acknowledged that on February 22, 2006, the Union sent its proposal regarding the “effects of ceasing planting operations and closure of business” to DMH.

Ho testified that in February 2006, “the plan was [for DMH] to continue its operations, given the production volumes

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### that were ongoing. And at the time, the company expected to continue its harvesting operation through 2008.” Ho further testified that “[a]t several points in time during the course of our effects bargaining,” “things changed a little bit in terms of what the operation was looking like.”

ii. Stacie Sasagawa Sasagawa had been working for DMH as the Human Resources Manger, but became General Manager in September or October 2006 after Littleton left that position. Sasagwa testified that she was “sure” Littleton assured the Union in 2004 that DMH was “here to stay[.]”

In regard to an April 2006 bargaining session, the Union’s counsel asked Sasagawa whether she could recall Ho indicating that DMH “could not provide enhancement; they received marching orders[.]” Sasagawa did not recall Ho making that statement. However, Sasagawa’s notes from that meeting indicated, “Remaining items take into consideration what you’ve said. You know difficult to provide additional economic benefits. Received marching orders, cannot provide enhancements.” Sasagawa explained that her understanding with regard to “severance” and “medical benefits,” was that DM Corporate was not willing to provide beyond what was agreed upon in the Collective Bargaining Agreement.

After the Union’s counsel and Del Monte’s counsel

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### concluded their initial questioning of Sasagawa, the Chairman asked Sasagawa further questions, and the following exchange occurred: [Chai rman] : In our [Waia kamil o Hon olulu

Chill ed/Fr ozen Opera tion] hear ings, we e ntert ained testi mony from emplo yees who h ad be en th ere f or 20 years . A surpr isingnumb er ofempl oyees who had 2 0- year tenur e. A lot of y our 5 00 fi rees are g oing to be 20-y ear guys? [Sasa gawa] : Th ere i s a l arge amoun t of peopl e wit h many years of s ervic e. A s faras s pecif icall y ove r 20, I ’m no t sur e. [Chai rman] : An d a l ot oftest imonywe r eceiv ed we re from peopl e who were extr aordi naril y pro ud ofdoin g theirjob to th e bes t of theirabil ity f or 20 year s. A pro porti on ofyourfire es ar e goi ng to be those peop le, y eah? [Sasa gawa] : Ye s. [Chai rman] : Wh y did n’t t he co mpanythin k tha t tho se peopl e des ervedto r emain sepa rate? [Sasa gawa] : Wh y didthe compa ny no t bel ieve

–- [Chai rman] : Wh y didthe compa ny th ink t hat t hose peopl e didnot deser ve en hance d sev eranc e, si nce t hey were beingterm inate d forno f ault of th eir o wn? [Sasa gawa] : I’ m not sure how to ev en an swer that. [Chai rman] : Th e company had a reas on fo r tur ning down the e nhanc ed se veran ce. Yeah? [Sasa gawa] : Ri ght. [Chai rman] : An d the se ar e goo d peo ple, loyal work ers who h ave d evote d hal f the ir li fe to the compa ny. Why d id th e company not g ive t hem e nhanc ed sever ance? [Sasa gawa] : I guess that was just theirdeci sion to not i ncrea se th eir s evera nce b eyondthe nine days they were getti ng in the contr act.

. . . . [Chai rman] : No w, in Janu ary, you a re pe rsona lly g oing to be firi ng 50 0 peo ple w ith n o enh ancedmedi cal f or thems elves or t heir famil ies?



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[Sasa gawa] : Ye s. [Chai rman] : Yo u can do t hat? [Sasa gawa] : It ’s a job. I ha ve to . 

### The Chairman also questioned Sasagawa about whether employees had relied on Sasagawa’s prior representations that the plantation would not close until at least December 2008. For example, the Chairman asked Sasagawa whether people “bought a car[,]” “had babies[,]” or “got married,” “expecting that they would have a job, at least until December of [2008.]” Sasagawa responded in the affirmative, and the Chairman further asked, “Is that fair?” Sasagawa responded, “It’s not fair.” Del Monte’s counsel objected, stating that “we’re talking about something emotional or in moral sense that is not at issue here.” The Chairman responded, “[Sasagwa] has responded honestly and sincerely. I’m not going to strike that. And it’s the bottom line in this case, ethically. It’s not legally.” The Chairman then continued, “Sorry. I didn’t mean to make you cry. But that is the bottom line.” After a recess was taken, the Chairman stated, “On the record, I’d like to apologize to [] Sasagawa [for] effectively getting emotional in my line of questioning. I personally appreciate your candor and honesty.” After further questioning of Sasagawa by counsel, the Chairman again apologized, “In real life, when I use the court interrogation tone of voice, my wife slaps me directly. I’d like to ask you to

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### do so if I ever do so again.”

iii. Frederico Galdones Galdones, President of the Union, testified that he was the spokesperson for the Union when they were negotiating the 2004 Collective Bargaining Agreement. Galdones testified about the Union’s proposals for the Collective Bargaining Agreement in 2004, one of which concerned severance. Galdones stated that the Union withdrew that proposal based on DMH’s representation in negotiations that it “had been in Hawaii for about 100 years, and [it] would like to be here for another hundred years[.]”

Galdones testified that after the February 2006 announcement that DMH would be closing in 2008, he “met with the Union’s Negotiating Committee to discuss the announcement . . . [a]nd we established a set of demands for the discussions.” Galdones further testified that prior to doing so, he reviewed previous effects bargaining agreements reached between the Union and other industries, which included “enhancing the benefits beyond what the Collective Bargaining Agreement provided for.” With regard to the proposals that the Union submitted to DMH in 2006, Galdones testified that some of the proposals had “economic effects,” i.e., the medical and dental extensions, enhanced severance, and housing proposals. With regard to these economic proposals, Galdones testified that during the course of the effects bargaining with DMH, it appeared that the Union was

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### “[b]argaining against [itself]” because DMH gave no counteroffers.

Galdones testified that during the meetings in February, March, and April 2006, the Union had no reason to believe that 2008 was not a firm closing date. Galdones recalled that at some point in the negotiations, Ho talked about “marching orders” and that he “cannot provide any enhancements[,]” and Galdones understood Ho’s comments to mean that “they weren’t going to give any more than what the Collective Bargaining Agreement provided for.” Galdones asserted that Ho used the word “impasse” in April. However, Galdones disagreed that the parties were at an impasse at the time.

When asked why the Union filed the unfair labor practice complaint against Del Monte, Galdones replied: Well, firs t off , in 2004, we h ad an indi catio n that they were here for t he lo ng ha ul, a nd th at we would-- a nd th at is the reaso n whywe h ad es tabli shed a fiv e-yea r con tract . Febru ary o f 200 6, . . . t hey h ad in dicat ed to us that they wouldbe c losin g in 2008. Andin t he barga ining , whe n we were in th e bar gaini ng, t he indic ation give n to us wa s tha t the majo r dec ision makerwas not s ittin g at the t able, but was c oming from Coral Gabl es. And t hat k ind o f put us a t a d isadv antag e. A nd that is wh y we felt that becau se ofthe posit ion t hat we we re pl aced in an d howthe dynam ics o f the negot iatio n was goin g, we felt that it w as no t –- we’re not treat ed in acco rdanc e to what the l abor law provi des i n neg otiat ion, and w e fel t it was b argai ning in ba d fai th. 

### Galdones explained that when the “decision maker on cost items is not present[,]” the person is “so far removed from the emotions” that it makes it “much more difficult” to “reach
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### agreements on cost items.” Galdones also testified that the September 2006 announcement of the KCFO closure came as a surprise because they were “under the impression that it may be a gradual phaseout, but this was a total closure of KCFO.” Galdones also testified about the first time Del Monte made what he considered a cost proposal, which occurred on April 12, 2006 and concerned fourth year covered seasonal employees. According to Galdones, Ho told the Union that the “offer was just good for the day[,]” and Galdones did not find DMH’s action “to be conducive to bargaining in good faith.”

Galdones testified that the Union amended its August 2006 complaint to include conduct that occurred thereafter, because the Union considered what Del Monte did in November to be “bad-faith bargaining” as the Union “had been given indication by the company that they were going to be harvesting and working through mid 2008.” Galdones stated, “instead of from 2006 to 2008, it’s now a two-month period.” He further stated, “It’s difficult for the Union, because it’s a moving target.” Galdones claimed that the Union was “never forewarned at all” that “there were some problems that might lead towards the closure of the company.” Accordingly, Galdones requested that “because of the commitment [DMH] made in February of 2006 that [DMH] would be operating until 2008, that the loss of income that the employees had suffered or will be suffering would be replaced.”

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### b. HLRB Hearing on Del Monte’s Motion to Disqualify Del Monte filed a Motion to Disqualify or for Recusal of Board Member (Disqualification Motion), arguing that the Chairman should recuse himself or be disqualified based on his questioning of Sasagawa on the second day of the hearing.

After hearing arguments on the Disqualification Motion on December 15, 2006, the Chairman stated:

Okay. Sin ce th e rec usal is pe rsona l to me, I ’m go ing to ru le on the [Disq ualif icati on] M otion with out consu ltati on wi th mycoll eague s. Since in m y ten ure a s Cha irman , wit nesse s hav e a frequ ent t enden cy to burs t int o tea rs, t he la st tw o witne sses that did w ere 3 00-po und r efuse work ers w ith a pen chant for viole nce. I as ked m y que stion s bec ause I don ’t kn ow th e ans wer, and I real ly wa nt to knowthe answe r, no t bec ause I wan t to make anybo dy’s case. And m y pos ition is t o rep resen t the publ ic inter est o n thi s Boa rd. And I assu me an d wil l conti nue t o ass ume t hat a pass ion f or fa irnes s and some compa ssion is a mini mal q ualif icati on. So yo ur [D isqua lific ation ] Mot ion i s den ied. 

### Thereafter, Del Monte’s counsel requested that, because Del Monte filed its motion “as recusal or disqualification, that in addition to the Honorable Chairman’s ruling on the recusal component, there also be a ruling as to the disqualification issue.” After the HLRB conferred, the Chairman stated, “Pursuant to [Del Monte’s] request, the Board has conferred regarding the [Disqualification Motion]. And at least a Board majority supports the Chair’s ruling on the matter.”

c. Del Monte’s Case-in-Chief i. Richard Contreras Richard Contreras, Vice President of Finance and
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### Administration for Del Monte Fresh Produce North America, testified that he is “responsible for all of the financial aspects of North America[,]” including DMH.

Contreras testified that in 2004, DMH operations were profitable, but that changed in 2005 “because of what was going on in the worldwide market.” Contreras sent a letter to Burt Hatton, a representative of Campbell Estate, on June 8, 2004, seeking to extend DMH’s lease, which was to expire in December of 2008. Contreras further testified that in 2004, at the time the Collective Bargaining Agreement with the Union went into effect, there was no decision to stop planting or to shut down operations.

Contreras testified that the January 2006 decision to stop planting in Hawai # i was based on the fact that 2005 was not a profitable year, DMH’s lease was to expire in 2008, and there was increased competition from Latin America. Contreras testified affirmatively that at the time of the January 2006 decision to stop planting, it was his intention to continue the operations through 2008. When asked about his “communications with the Hawai # i Committee about the bargaining[,]” Contreras responded that he spoke to Littleton almost “every day,” and that it was “very easy” to reach Littleton or Sasagawa. Contreras testified that the DMH Committee had authority to bargain without consulting with corporate on everything but “the three large

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### dollar items proposals, which were the increased severance, the extended medical benefits, and the housing[.]” “But on everything else, they had free independence.” Contreras was aware that the committee entered into “numerous tentative agreements with the Union this past year in effects bargaining[,]” and that the committee had “full authority to reach those agreements” “[e]xcept for the three [items] mentioned[.]” Contreras testified that Del Monte considered the Union’s financial proposals, “even though [Del Monte] did not ultimately agree to all the proposals[.]” Contreras further testified that “the main factor” in their decision was that “the employees were being given about two or three years’ notice before they were to be terminated or laid off.” Contreras denied that the DMH committee was told at the start of negotiations that it could not agree to any particular item.

Del Monte’s counsel asked Contreras to explain DM Corporate’s November 2006 decision to accelerate the shutdown of DMH from 2008 to early 2007. Contreras responded that, by November 2006, DM Corporate could see that DMH had lost almost five million dollars in 2006 and that the best projection for 2007 was a loss of a million dollars.

On cross-examination, Contreras acknowledged that Del Monte’s February 2006 letter to Galdones regarding the initial closure did not “reference the loss of profit in 2005 as a reason

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### as to why [they] were closing[.]” Contreras admitted that he did not have any discussions with Littleton “before the meetings on effects bargaining as to what [DM Corporate] would be willing to do or not do[,]” and further admitted that the large cost items would have to be approved by corporate.

ii. Timothy HoHo was called to testify again in Del Monte’s case-inchief. Ho testified that the 2004 Collective Bargaining Agreement “included separation allowance” for employees who might be laid off. Ho testified that he believed the nine-day severance allowance provided for in the Collective Bargaining Agreement was “generous” compared with other contracts that he had seen. Ho denied that the five-year duration in the contract was used to “conceal some kind of existing decision to shut down[.]” With regard to the 2006 effects bargaining, Ho testified that DMH had “always accommodated the [U]nion’s requests for meetings” and that he was “routinely in contact with [] Galdones.” Ho further testified that he “believe[d] the [DMH] committee had full authority to negotiate the effects of the
close down.” Ho stated that the DMH committee “spent a considerable amount of time doing research, considering every one of the company’s proposals[,]” and “answer[ing] every proposal that has been made.” Ho further stated that he “had full

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### authority to enter into [the tentative] agreements” with the Union. Del Monte’s counsel asked Ho whether it was “accurate” that “the company would not and has not offered anything more than the [Collective Bargaining Agreement,]” to which Ho responded, “No, we had already arrived at some tentative agreements that extend beyond the [C]ollective [B]argaining [A]greement, so I don’t see that being correct.”

Del Monte’s counsel also asked about “impasse” and if Ho could “recall who first said that the parties were at impasse[.]” Ho recalled that Galdones had said it first, butadmitted that Ho “may have asked the question in an off-therecord meeting of whether or not we were at impasse on the issues[.]” Ho denied that Del Monte imposed any adverse consequences when the Union did not accept its latest offer.

On cross-examination, the Union’s counsel asked whether the 2006 DMH bargaining committee had “full authority on the table to negotiate with the [U]nion a counterproposal for the extended medical benefits, or [whether] that [was] something [they] had to consult and get approval from corporate” for, to which Ho responded, “It would have required approval.” Ho admitted that Del Monte did not make any counterproposal to the Union’s proposal for enhanced severance or extended medical or dental benefits. On examination by the Chairman, Ho admitted that during the effects bargaining in April he did not have “any

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### authority in the company to accept or offer anything regarding medical, dental, or severance[,]” and that the same was true for Sasagawa. iii. Stacie Sasagawa

Sasagawa was called again to testify. Sasagawa testified that during the 2004 Collective Bargaining Agreement negotiations, there was no indication that DMH would cease planting in the future. Sasagawa denied that Ho or Littleton ever said that the company could not or would not give more than what the Collective Bargaining Agreement provided. Sasagawa recalled that “they had made a statement saying to the effect that they would entertain reasonable requests.”

d. Testimony Regarding Second Phase of Negotiations On December 21, 2006, the HLRB concluded the evidentiary hearing. Upon Del Monte’s request, however, the HLRB subsequently reopened the hearing to permit testimony on negotiations that occurred in December 2006 and January 2007 (“second phase of negotiations”). The second phase of 9 

### negotiations led to the parties executing a Memorandum of Agreement on January 10, 2007, which ended the effects bargaining. The HLRB heard additional testimony from Ho and

More speci fical ly, o n Dec ember5, 2 006, at DM H’s i nvita tion, the 9 parti es he ld an otherbarg ainin g ses sion, whic h mar ked t he st art o f the seco nd phase of n egoti ation s. The p artie s met seve ral m ore t imes in De cembe r 200 6. On Ja nuary9, 2 007, the p artie s met agai n, an d the y mit igate d the ir po sitio ns on th e var ious cost items
. 

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### Galdones on February 7, 2007. 3. HLRB’s Findings of Fact, Conclusions of Law, and Order On March 21, 2007, the HLRB issued its HLRB Order, in which it referenced this court’s decision in Del Monte Fresh Produce (Hawaii), Inc. v. Int’l Longshore and Warehouse Union, Local 142, AFL-CIO (Del Monte I), 112 Hawai # i 489, 146 P.3d 1066 (2006). The HLRB acknowledged that in Del Monte I, this court applied, but did not expressly adopt, the HLRB’s standard for determining whether a violation of the duty to bargain collectively has occurred: “‘whether the totality of an employer’s conduct evinces a present intention to find a basis for agreement and a sincere effort to reach a common ground.’” (Quoting Del Monte I, 112 Hawai # i at 500, 146 P.3d at 1077). Additionally, the majority opinion recognized that the “bargaining at issue took place in two discrete phases; one following [Del Monte’s] announcement of closure in January 2006 and the other following its announcement of accelerated closure in November of that year.” As to the second phase of negotiations, which were conducted in December 2006, the HLRB found that the negotiations took place in “good faith.” In contrast, the HLRB could not “so conclude with respect to the first phase of negotiations and f[ound] and conclude[d] based on its understanding of the totality of the disclosed circumstances that [Del Monte] failed to bargain in good faith in violation of

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### HRS § 377-6(4) during this phase.” The Board majority stated:

In th e opi nion of th e Boa rd ma jorit y, ra tiona l found ation al pr erequ isite s of infor matio n mus t be avail able, or t he su bject s of open good faith excha nge, in th e cou rse o f eff ects barga ining accompanyi ng a closu re sh ould at le ast i nclud e [si c]: 1) wh y the clos ure i s tak ing p lace; 2) w hat, if anyth ing, the U nion, empl oyees or t he employe r cou ld reaso nablydo t o del ay, f orest all t he cl osure or mitig ate t he de trime ntal effec ts ofthe closu re; 3 ) the r eason s forposi tions take n in devel oping , modif ying or re jecti ng of fers or co unteroffe rs; 4 ) the r esour ces w hich might be a vaila ble t o eff ect compr omise ; 5) the p ossib le re tenti on, r edepl oymen t or liqui datio n of effec ted [ sic] human or m ateri al resou rces; 6) w hat i s nec essar y to estab lish an op en and m eanin gful avenu e of commu nicat ion w ith d ecisi on maker s; 7) step s tha t can be r eason ably taken to mitig ate t he de trime ntal effec ts ofthe pendi ng unemp loyme nt to empl oyees , the ir de pende nt fa milie s or theircommunity ; and8) t he pr ecise timi ng ofthe closu re. 

### The Board majority then acknowledged that “[e]ach of these elements existed, albeit largely through testimonial disclosure, during the second phase of negotiations[,]” but stated that this could not “be said for the first phase which was marked by a withholding, frustration or unilateral change with respect to each identified element.” The Board majority cited the following as examples of how DMH failed to bargain in good faith during the first phase of negotiations:

1. The U nion was a dvise d of only compe titiv e prici ng an d lea se ex pirat ion a s the init ial reaso ns fo r clo sure; prof itabi lity and produ ction conc erns, muchless cont inuin g and exace rbate d pro fitab ilityand produ ction conce rns w ere n ever trans mitte d to the U nion. 2. In th e abs ence of th is in forma tion and n atura lly any s ubsta ntive exch anges betw een t he pa rties in this regar d, th e Uni on ha d no reaso n or abili ty to mo dify, swee ten o r inv ent n ew pr oposa ls in orderto p ossib ly ex tend the l ife o f the enter prise and its m ember s’ jo bs. Any h ope o r possi bilit y of creat ive c ollab orati on wa s los t



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withi n the conf ines of sp reads heets whic h wer e total ly un avail able. 3. [Del Monte ’s] b argai ning repre senta tives dutif ully trans mitte d andcost ed th e Uni on’s costs prop osals to C orpor ate. Theyalso dutif ully and s teadf astlytran smitt ed Corpo rate’ s rej ectio n. B ut th e rec ord i s dev oid of an inst ance of th e Company’ s bar gaini ng te am ever advis ing t he Un ion o f the reas ons f or it s rejec tions . Th us, t he Un ion w as ag ain l eft i n an in forma tiona l vac uum. Theycoul dn’t obtai n the r eason s forreje ction or r eason ably craft a compr omise , sho rt ofcomp lete capit ulati ons, that might gene rate movem ent. 4. The U nion and i ts me mbers were led to be lieve , basedon [ Del M onte’ s] re prese ntati on, t hat emplo yment woul d be avail able until Dece mber 2008, almo st th ree y ears afterits Janua ry 20 06 annou nced closu re. The c losin g dat e imp licit ly assur ed cr op re tenti on an d cul tivat ion, activ e and g ainfu l emp loyme nt un til t hat t ime, and t ime to pl an, b udget and live accor dingl y. B oth t he Union and [Del Monte ] rel ied u pon t his repre senta tion in es tabli shingits posit ions. The s udden unil atera l acc elera tion of cl osure wipedout these expe ctati ons a nd be traye d the se relia nce[s ]. 5. In it s pub lic s tatem ent a ccomp anyin g its firs t annou nceme nt ofclos ure, [Del Monte ] committe d to: “. . . Del Mont e wil l wor k wit h its emplo yees and [ U]nio n rep resen tativ es to redu ce the i mpact of t his d ecisi on. The C ompan y has been discu ssingmeas ures to he lp it s emp loyee s, inclu ding notif ying otherpote ntial empl oyers and p otent iallytran sferr ing K unia housi ng to the c urren t emp loyee s/ten ants. Del Mont e is mindf ul ofthe Compa ny’s oblig ation s to its emplo yees and t he lo cal c ommun ity, and i s commi tted to ma king everyreas onabl e eff ort t o lesse n the impa ct on all indiv idual s inv olved .” In th e cou rse o f the firs t rou nd ofbarg ainin g, excep t fora ha ndful of l ocall y gen erate d wel linten ded c lasse s anda jo b fai r, vi rtual ly no ne of th is ha ppene d. 6. The B oard can i denti fy no piec e of infor matio n more found ation ally relev ant t o eff ects barga iningacco mpany ing a clos ure t han t he da te of th e clo sure. Tha t dat e def ines the t ime f or barga ining , the Comp any’s cont inuedneedfor emplo yees and h ence the U nion’ s eco nomic lever age, the t ime a vaila ble f or employe e mitig ation of d amage s, an d the time pres sure param eters on t he ta king and e stabl ishme nt of barga iningposi tions . Th e clo sing date is no t



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neces saril y, an d was not here argue d to be, a subje ct ofbarg ainin g. B ut th e inf ormat ion estab lishe s cri tical and found ation al an d opera tiona l par amete rs. Hence [Del Mont e] essen tiall y mad e dis appea r the foun datio n and there fore subst ance of th e fir st ph ase o f barga iningwhen it a ccele ratedclos ure. 

### After listing the aforementioned factors, the Board majority stated:

The B oard does not c onclu de th at an y of the facto rs di scuss ed ab ove, stand ing a lone is ne cessa rily dispo sitiv e of this issue . Bu t tak en to gethe r, as repre senta tive of a total ity o f the circ umsta nces prese nted befor e us the B oard must concl ude t hat t he total ity o f an emplo yer’s cond uct d uringthe first phase of b argai ning does not e vince “a p resen t inten tion to fi nd a basis for a bas is fo r [si c] agree ment and a sinc ere e ffort [to] reac h a c ommon groun d.” [Del Monte I, 1 12 Ha wai # i at 500, 146 P .3d at 10 77] Inste ad, i ts ef forts and its c onduc t indic ates an in tenti on to crea te an info rmati onal vacuu m andtemp oral box a roundnego tiati ons w hich wouldindu ce an d req uire compl ete c apitu latio n. 

### In its conclusions of law, the Board majority stated in relevant part:

Basedon t he to talit y of the c ircum stanc es pr esent ed, the B oard major ity must c onclu de th at wi th re spect to the f irst phase of b argai ning, the total ity o f the emplo yer’s cond uct d uringthe first phas e of barga iningdoes not evinc e “a prese nt in tenti on to find a bas is fo r [] agree ment and a sinc ere e ffort [to] reacha co mmon groun d.” [Del Monte I, 1 12 Hawai # i at 500, 146 P .3d a t 107 7] I nstea d, it s effor ts an d its cond uct i ndica tes a n int entio n to creat e an infor matio nal v acuumand tempo ral b ox ar ound negot iatio ns wh ich w ould induc e andrequ ire c omple te capit ulati on. The U nion was n ot pr ovide d any infor matio n reg ardin g pro fitab ilityor p roduc tion conce rns. The repre senta tives at t he ba rgain ing t able eithe r rem ainedsile nt on the finan cial condi tion of [DMH] or w ere u nawar e as to ho w DMHwas finan ced. This lack of kn owled ge orinfo rmati on as to t he finan cial consi derat ions of th e pla ns fo r con tinue d opera tion precl uded meani ngful barg ainin g. M oreov er, upon quest ionin g as to th e fut ure o f [DM H], t he Un ion was m isledby DMH’s assur ances that DMH wouldbe i n Hawai i at least unti l Dec ember2008 , andthat ther e wouldbe n o mor e ope ratio nal c hange s in Septe mber 2006. Sho rtly there after , [Li ttlet on] l eft h is Gener al Ma nagerposi tion to [S asaga wa]. The Union was 

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furth er mi sled to be lieve that it h ad ti me to negot iate the i mpact of t he fi nal c losur e to the major ity o f emp loyee s unt il 20 08. Accor dingl y, th e Boardconc ludes that [Del Mont e] fa iled or re fusedto barga in in goodfait h andther eby c ommit ted a prohi bitedprac tice in vi olati on ofHRS § 377 -6(4)
. 

### Having found that Del Monte violated its duty to bargain in good faith, the Board majority ordered that: (1) Del Monte “pay additional severance at the contractually provided rate to all employees terminated as a result of closure for the almost two years between actual closure and December 2008”; and (2) “the parties reopen negotiations with respect to medical insurance and attempt to reach an agreement which supplements and expands their current agreement (two months of medical) with a program that would provide at least 12 months extended coverage to the workers (and their families) who have not as yet acquired insurance.”

Board Member Hirakami concurred in part and dissented in part. Board Member Hirakami concurred with the Board majority’s conclusion that Del Monte “failed to bargain collectively in good faith during the first phase of negotiations,” but “for different reasons[.]” Board Member Hirakami focused on the fact that the DMH bargaining committee received “marching orders” from DM Corporate, and accordingly, she concluded that DMH could not meaningfully consider the three cost items proposed by the Union. Thus, she concurred in the conclusion reached by the Board majority that Del Monte had

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### failed to bargain in good faith. Board Member Hirakami disagreed, however, with the Board majority’s discussion of the eight “rational foundational prerequisites of information which must be available” in the course of effects bargaining. She also disagreed with the majority as to the remedy, and stated that she would “award four additional months of enhanced medical coverage” for “a total extended period of six months.”
C. Circuit Court Proceedings

On April 20, 2007, Del Monte filed its notice of appeal to the circuit court. On February 1, 2008, after hearing arguments and receiving briefing from the parties, the circuit court filed its Order Affirming HLRB’s Decision No. 464 Dated March 21, 2007. The circuit court explained:

With respe ct to the issue of t he re cusal and disqu alifi catio n rai sed b y [De l Mon te] a s to the Chair , the [c]o urt f inds recus al an d/or disqu alifi catio n was not requi red f or th e rea sons and law c ited by th e Uni on [] . Wi th re spect to t he Bo ard decis ion o n its meri ts, t he fa ctors cons idere d by the Boardin f indin g badfait h bar gaini ng ar e discr etion ary i ssues that coul d be consi deredby t he Boardin d ecidi ng th e iss ue ofbad faithbarg ainin g. The f act t hat t he Bo ard c harac teriz ed an y of the facto rs as mand atorywhen theymigh t be discr etion ary is ha rmles s. 

### On the same day, the circuit court entered judgment in favor of the Union and the HLRB.
D. ICA Appeal

On February 29, 2008, Del Monte timely filed its notice of appeal to the ICA. In its opening brief, Del Monte’s first two points of error concerned the HLRB’s ruling on Del Monte’s -27-***FOR PUB LICAT ION I N WES T’S HAWAI # I REPORTS AND PACIFI C REPORTER ***



### Disqualification Motion, while Del Monte’s remaining two points of error concerned the portions of the HLRB Order that addressed bad faith bargaining. Regarding the Disqualification Motion, Del Monte argued that the HLRB did not apply the proper “appearance of impropriety standard” in ruling on the Disqualification Motion, and erred in denying the Disqualification Motion on the merits. Regarding the HLRB’s finding of bad faith, Del Monte argued that “[t]he HLRB Order is affected by an error of law because it sets forth per se requirements for effects bargaining that are inconsistent with well-settled principles of labor
law.” Del Monte also argued that the HLRB erred in finding bad

1 0 

### faith. Accordingly, Del Monte argued that the circuit court erred in affirming the HLRB Order.

In a summary disposition order, the ICA affirmed the circuit court’s February 1, 2008 Judgment. Del Monte II, 2011 WL 5834630, at *5. As to Del Monte’s points of error concerning the HLRB allegedly failing to apply the objective “appearance of impropriety” standard and denying the Disqualification Motion, the ICA stated that the “proper test for disqualifying an administrative adjudicator for bias or impartiality is whether

Speci fical ly, D el Mo nte a rguedthat the HLRB Orderrequ ired 10 emplo yers to ba rgain abou t sub jects that are not r equir ed un der f edera l lab or polic y. Del Monte disp uted the p ropri ety o f the firs t six“req uirem ents” of the e ight impos ed bythe HLRB. 

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### ‘the circumstances fairly give rise to an appearance of impropriety and reasonably cast suspicion on [the adjudicator’s] impartiality.’” Id. at *1 (citing Sussel v. City and Cnty. of Honolulu Civil Service Comm’n, 71 Haw. 101, 109, 784 P.2d 867, 871 (1989)). The ICA concluded that the “HLRB and the circuit court did not err because [the Chair’s] comments did not rise to the level of displaying deep-seated favoritism or antagonism, give rise to an appearance of impropriety, or reasonably cast suspicion on his impartiality.” Id. at *2.

The ICA then addressed Del Monte’s contention that the HLRB Order erroneously set forth per se requirements for effects bargaining. Id. The ICA stated that the “standard adopted by [the] HLRB to determine whether an employer has met its statutory duty to bargain in good faith is ‘whether the totality of the employer’s conduct evinces a present intention to find a basis for agreement and a sincere effort to reach a common ground.’” Id. (quoting Del Monte I, 112 Hawai # i at 500, 146 P.3d at 1077). The ICA rejected Del Monte’s argument that the HLRB Order set forth per se requirements for effects bargaining, and stated that Del Monte “inaccurate[ly] characteriz[ed] [the] HLRB’s holding.” Id. at *3. The ICA cited other parts of the HLRB’s Order, which showed that the HLRB properly considered “the totality of the circumstances” in determining that Del Monte engaged in bad faith bargaining. Id. (citing Del Monte I, 112 Hawai # i at 500-02, 146

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### P.3d at 1077-79).

Lastly, the ICA addressed Del Monte’s contention that the HLRB erred in finding that Del Monte bargained in bad faith. Id. The ICA rejected each of Del Monte’s arguments regarding the six points of conduct listed in the HLRB Order. Id. at *3-5. The ICA, thus, affirmed the circuit court’s judgment. Id. at *5. The ICA subsequently entered its judgment on appeal on December 15, 2011.

Del Monte timely filed its application for writ of certiorari, and the ILWU timely filed its response.
II. Standards of Review
A. Motion for Disqualification

The test for disqualifying a board member whose impartiality is challenged is whether the movant has shown “an appearance of impropriety” on the part of the challenged board member. Sussel, 71 Haw. at 109, 784 P.2d at 871 (1989). “[T]he test for disqualification due to the ‘appearance of impropriety’ is an objective one, based not on the beliefs of the petitioner or [adjudicator], but on the assessment of a reasonable impartial onlooker apprised of all the facts.” In re Water Use Permit Applications, 94 Hawai # i 97, 122, 9 P.3d 409, 434 (2000) (quoting State v. Ross, 89 Hawai # i 371, 380, 974 P.2d 11, 20 (1998)).
B. Administrative Agency Decisions

Revie w of a dec ision made by t he ci rcuit cour t upo n


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its r eviewof a n age ncy’s deci sion is a secon dary appea l. The s tanda rd ofrevi ew is one in wh ich [ the a ppell ate] court must deter mine wheth er th e cir cuit court was right or w rong in it s dec ision , app lyingthe stand ards set f orth in HR S § 91- 14(g) (199 3) to the agenc y’s d ecisi on. HRS § 91-1 4, en title d “Ju dicia l rev iew o f con teste d cases ,” pr ovide s in relev ant p art:

(g) Upon revie w of the r ecordthe court may a ffirmthe decis ion o f the agen cy orrema nd the c ase w ith i nstru ction s forfurt her proce eding s; orit m ay re verse or m odifythe decis ion a nd or der i f the subs tanti al ri ghts of the p etiti oners may have been preju dicedbeca use the a dmini strat ive f indin gs, c onclu sions , decis ions, or o rders are: (1) In vi olati on ofcons titut ional or statu tory provi sions ; or (2) In ex cess of th e sta tutor y aut horit y or juris dicti on ofthe agenc y; or (3) Made upon unlaw ful p roced ure; or (4) Affec ted b y oth er er ror o f law ; or (5) Clear ly er roneo us in viewof t he re liabl e, proba tive, and subst antia l evi dence on t he whole reco rd; o r (6) Arbit rary, or c apric ious, or chara cteri zed b y abu se ofdisc retio n or cl earlyunwa rrant ed ex ercis e of discr etion
. UnderHRS § 91- 14(g) , con clusi ons o f laware revie wable unde r sub secti ons ( 1), ( 2), a nd (4 ); qu estio ns regar ding proce dural defe cts u nder subse ction (3); find ings of fa ct un der s ubsec tion (5); and a n age ncy's exer cise of discr etion unde r sub secti on (6 ). 

### United Pub. Workers, AFSCME, Local 646, AFL-CIO, v. Hanneman, 106 Hawai # i 359, 363, 105 P.3d 236, 240 (2005) (brackets omitted) (quoting Paul’s Elec. Serv., Inc. v. Befitel, 104 Hawai # i 412, 416, 91 P.3d 494, 498 (2004)).
C. Administrative Agency Conclusions of Law and Findings of Fact
An ag ency’ s con clusi ons o f laware revie wed d e novo, whil e an agenc y’s f actua l fin dings are revie wed for c lear error . A concl usion of l aw th at pr esent s mixedques tions of f act a nd la w is revie wed u nder the clear ly er roneo us st andar d bec ause the c onclu sion is depen dent upon the f acts and c ircum stanc es ofthe



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parti cularcase . As a gener al ma tter, a fi ndingof f act o r a mixeddete rmina tion of la w andfact is c learl y erron eous when (1) t he re cord lacks subs tanti al evide nce t o sup port the f indin g or deter minat ion, or (2) d espit e sub stant ial e viden ce to supp ort t he findi ng ordete rmina tion, the appel late court is l eft with the d efini te an d fir m con victi on th at a mista ke has b een m ade. Subs tanti al ev idenc e is credi ble evide nce w hich is ofsuff icien t qua lity and p robat ive value to e nable a pe rson of re asona ble c autio n to suppo rt a concl usion
. 

### Del Monte I, 112 Hawai # i at 499, 146 P.3d at 1076 (internal quotation marks, citations, and brackets omitted). III. Discussion We hold that there was no error in (1) the HLRB’s denial of Del Monte’s Disqualification Motion, and (2) the HLRB’s determination that Del Monte bargained in bad faith. As set forth below, there was substantial evidence that the “totality” of Del Monte’s conduct did not evince “a present intention to find a basis for agreement and a sincere effort to reach a common ground.” See Del Monte I, 112 Hawai # i at 500, 146 P.3d at 1077.

However, we further acknowledge that the HLRB Order could erroneously be construed to impose the eight factors listed in the HLRB Order as per se requirements in all effects bargaining cases accompanying a plant closure. Such an interpretation would be inconsistent with the standard for determining whether an employer has breached its obligation to bargain in good faith previously adopted by the HLRB and approved by this court: “whether the totality of the employer’s conduct

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### evinces a present intention to find a basis for agreement and a sincere effort to reach a common ground.” Del Monte I, 112 Hawai # i at 500, 146 P.3d at 1077 (brackets omitted). In light of this standard, we clarify that the eight factors may be considered only on a case-by-case basis, depending on whether they are relevant to the facts of a particular case.
A. The ICA did not err in affirming the HLRB’s ruling on Del Monte’s disqualification motion In its application, Del Monte argues that the HLRB did not apply the objective “appearance of impropriety” standard, but rather applied a “subjective test.” Del Monte further argues that the ICA failed to address whether the HLRB applied the correct standard. Finally, Del Monte argues that the HLRB erred in denying its Disqualification Motion, and that the error was prejudicial. Del Monte’s arguments lack merit.

The HLRB did not expressly state whether it was applying the “appearance of impropriety” standard in ruling on Del Monte’s Disqualification Motion. However, the ICA identified and applied the proper objective standard for disqualifying an administrative adjudicator. The ICA stated: “The proper test for disqualifying an administrative adjudicator for bias or impartiality is whether ‘the circumstances fairly give rise to an appearance of impropriety and reasonably cast suspicion on [the adjudicator’s] impartiality.’” Del Monte II, 2011 WL 5834630, at

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### *1 (brackets in the original) (quoting Sussel, 71 Haw. at 109, 784 P.2d at 871). The ICA further stated that “‘the test for disqualification due to the appearance of impropriety is an objective one, based not on the beliefs of the petitioner or the judge, but on the assessment of a reasonable impartial onlooker apprised of all the facts.’” Id. at *2 (emphasis added) (quoting Office of Disciplinary Counsel v. Au, 107 Hawai # i 327, 338, 113 P.3d 203, 214 (2005)). Thus, the ICA properly identified the “objective” standard that Del Monte argues should apply, and as discussed below, the record establishes that under this standard, Del Monte’s arguments lack merit.

Del Monte argues that the Chairman displayed an appearance of impropriety by expressing sympathy for the Union members, speculating on their hardship, declaring that the company’s actions were not fair, and derisively questioning Sasagawa. Del Monte takes excerpts of the Chairman’s comments, such as describing the Union members as “extraordinarily proud” and “good people, loyal workers” and apologizing for “getting emotional” and using his “interrogation tone,” and argues that it was “clearly erroneous to find that the HLRB Chairman had not created an ‘appearance of impropriety.’”

The Chairman’s comments, however, must be viewed in the context in which they arose. The Chairman’s questions to Sasagawa came after the Union’s counsel and Del Monte’s counsel

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### questioned Sasagawa about Del Monte’s representations to the employees regarding the closure date. The Union’s counsel also asked Sasagawa about certain cost proposals rejected by Del Monte. Accordingly, the Chairman’s questions regarding severance and the employees’ reliance on Del Monte’s representations regarding the closure date concerned matters that had already been put in issue by the parties. The Chairman clarified on the record, “I asked my questions because I don’t know the answer, and I really want to know the answer, not because I want to make anybody’s case.” Viewing the Chairman’s comments from the point of view of “a reasonable impartial onlooker apprised of all the facts[,]” Au, 107 Hawai # i at 338, 113 P.3d at 214, the Chairman’s comments “did not rise to the level of displaying deep-seated favoritism or antagonism, give rise to an appearance of impropriety, or reasonably cast suspicion on his impartiality.” Del Monte II, 2011 WL 5834630, at *2. Thus, even assuming arguendo the HLRB applied the wrong standard, the error was harmless. Accordingly, the ICA and the circuit court properly affirmed the HLRB’s ruling with regard to Del Monte’s Disqualification Motion.
B. The circuit court correctly affirmed the HLRB’s determination that Del Monte failed to bargain in good faith during the first phase of negotiations For the reasons set forth below, the circuit court correctly affirmed the HLRB’s decision that Del Monte bargained

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### in bad faith during the first phase of negotiations.

HRS § 91-14(g) concerns “Judicial review of contested cases,” and provides in relevant part:

Upon revie w of the r ecordthe court may affir m the decis ion o f the agen cy orrema nd th e cas e wit h instr uctio ns fo r fur ther proce eding s; orit m ay rever se ormodi fy th e dec ision and orderif t he subst antia l rig hts o f the peti tione rs ma y hav e bee n preju dicedbeca use t he adminis trati ve fi nding s, concl usion s, de cisio ns, o r ord ers a re:



### . . . (4) Affec ted b y oth er er ror o f law [.] 

### (Emphasis added).

In addition, this court can affirm the decision of a lower tribunal on any ground appearing in the record. Nihi Lewa, Inc. v. Dep’t of Budget and Fiscal Servs., 103 Hawai # i 163, 168, 80 P.3d 984, 989 (2003) (“Where the decision below is correct it must be affirmed by the appellate court though the lower tribunal gave a wrong reason for its action.”) (citation omitted). Here, the record established that Del Monte bargained in bad faith during the first phase of negotiations. The Board majority’s FOFs support the conclusion that the “totality” of Del Monte’s conduct did not “evince[] a present intention to find a basis for agreement and a sincere effort to reach a common ground.” Del Monte I, 112 Hawai # i at 500, 146 P.3d at 1077 (citation omitted). Accordingly, Del Monte’s “substantial rights” were not prejudiced by the Board’s decision. See 91-14(g).

When this court examined the issue of bad faith bargaining in Del Monte I, this court stated that:

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[W]he ther an employe r has barg ainedin g ood f aith prese nts a mixe d que stion of l aw an d fac t rev iewed underthe clear ly er roneo us st andar d. E ven t hough there is e viden ce in the recor d of discr ete a ction s by Del M onte sugge stive of g ood f aith, the HLRB’ s deter minat ion o f the “tot ality ” is not a coun ting game of go od an d badacts , andits exper tise in la bor relat ions entit le th e HLRB to judic ial d efere nce i n this area. 

### Id. at 501, 146 P.3d at 1078 (emphasis added).

This court further stated that the “clearly erroneous standard” is limited to “(1) determining whether there is substantial evidence in the record to support the ruling and (2) if there is such evidence, determining whether the record nevertheless leaves the court with the definite and firm conviction that a mistake has been made.” Id.

Here, the HLRB’s ruling that Del Monte did not meet its bargaining obligation under HRS § 377-6(4) was supported by credible evidence in the record. Effects bargaining requires, inter alia, that an employer “meet with the union, provide information necessary to the union’s understanding of the problem, and in good faith consider any proposals the union advances.” First Nat’l Maint. Corp. v. N.L.R.B., 452 U.S. 666, 679 n.17 (1981). “The requirement of conferring in good faith involves more than just meeting, more than just sterile or repetitive discussion of formalities or differences between management and the union, and more than formal replies that, in effect, constitute a refusal to deal with the union.” C.C. Borklund, Good Faith in Collective Bargaining, 25 Am. Jur. Proof

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### of Facts 2d. § 333:6 (1981). “[T]he offering of a proposal that is predictably unacceptable, coupled with an inflexible attitude on major issues and no proposal of reasonable alternatives, has been condemned as violative of the good faith obligation.” 1 The Developing Labor Law: The Board, The Courts, and the National Labor Relations Act 867 (John E. Higgins, Jr. et al. eds., 5th ed. 2006) (footnote omitted).

With regard to Del Monte’s consideration of the Union’s proposals in the instant case, the Board majority’s FOF No. 18 stated:

At th e fir st me eting , the Unio n pre sente d its

propo sals. The se in clude d thr ee co st it ems: enha nced sever ance, six month s of medic al an d den tal c overa ge afterclos ure, and p rotec ting the r eside nts o f Kun ia Camp by pr ovidi ng se ed mo ney t o ret ain a hous ing assoc iatio n. T he Un ion a lso p resen ted n umero us, mostl y adm inist rativ e non -cost prop osals . At the onset , [Ho ] adv ised the U nion that the C ompan y’s commi ttee had “ recei ved t heir march ing o rders ” and that nothi ng wo uld b e neg otiat ed be yond the s cope of the [ C]oll ectiv e [B] argai ning [A]gr eemen t in force
. 

### Because the DMH bargaining committee was given “marching orders” from DM Corporate to deny enhancements beyond the Collective Bargaining Agreement as to the three cost items, the Union’s cost proposals could not be considered in a meaningful way. Any costing of the Union’s three proposals would be futile in the face of such “marching orders,” and in light of DMH’s understanding that “nothing would be negotiated beyond the scope of the [C]ollective [B]argaining [A]greement in force.” Moreover, this FOF was supported by credible evidence in the

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### record. Sasagawa’s notes from one of the meetings referenced that it would be difficult for DMH to “provide additional economic benefits” because it received “marching orders.” When questioned about these notes, Sasagawa explained that with regard to “severance” and “medical benefits,” her understanding was that DM Corporate was not willing to provide anything beyond what was agreed upon in the Collective Bargaining Agreement.

In addition, the Board majority found that on April 12, 2006, DMH proposed a new cost item, a cash “retention bonus” to be paid to fourth year covered seasonal employees who remained employed at DMH into 2007. The record indicates that this offer was available to the Union for only one day, even though Galdones requested more time to discuss the proposal with the Union. This type of “take-it-or-leave-it” cost proposal, under the circumstances presented here, is inconsistent with an employer’s duty to bargain in good faith, as previously recognized by the HLRB and this court. See Del Monte I, 112 Hawai # i at 502, 146 P.3d at 1079 (pointing to a “take-it-or-leave-it” proposition as part of the “evidence upon which the HLRB may have concluded that Del Monte did not bargain in good faith”).

In sum, the Board majority made specific findings, based on credible evidence in the record, which supported the conclusion that Del Monte did not bargain in good faith during the first phase of negotiations. Thus, the totality of Del

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### Monte’s conduct did not “evince[] a present intention to find a basis for agreement and a sincere effort to reach a common ground.” Del Monte I, 112 Hawai # i at 500, 146 P.3d at 1077. Although this reasoning may differ from the Board majority’s discussion, the Board majority’s decision does not require reversal. The circuit court affirmed the Board majority’s FOFs, and the reasons stated herein for affirming the circuit court’s and ICA’s judgments are supported by specific findings in the HLRB Order. Cf. Nakamine v. Bd. of Trs. of the Emps. Ret. Sys., 65 Haw. 251, 255, 649 P.2d 1162, 1165 (1982) (reversing the circuit court’s order and remanding for further proceedings because the circuit court failed to make specific findings as to what procedural irregularities occurred in the administrative agency proceedings and whether such errors prejudiced the claimant’s substantial rights); see also Borklund at § 333:23 (1981) (“In an enforcement proceeding, the court can sustain an ultimate conclusion of lack of good faith without sustaining the Board on each and every one of its subsidiary findings of fact; nor need the court agree as to every incident specially emphasized in the Board’s decision as indicating lack of good faith.”) (footnote omitted).
C. The eight factors identified in the HLRB Order are not per se requirements in every effects bargaining case Del Monte argues that the HLRB erred by creating a new

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### test for effects bargaining in contravention of federal labor policy. Del Monte argues that certain factors listed in the HLRB Order are not mandatory bargaining subjects under federal labor law, but that the HLRB Order “effectively compels employers to bargain about” these subjects. Del Monte further argues that 1 1 

### it was “erroneous for the ICA to state that the HLRB’s new requirements are lawful because they are only a part of the ‘totality of circumstances.’” In light of our holding that the HLRB did not err in concluding that Del Monte bargained in bad faith during the first phase of negotiations, we need not address this argument for purposes of this appeal. However, we recognize that an employer “must have some degree of certainty beforehand as to when it may proceed to reach decisions without fear of later evaluations labeling its conduct an unfair labor practice.” First Nat’l Maint. Corp., 452 U.S. at 678-79. Accordingly, since the HLRB Order could be read as imposing per se requirements, we consider whether all eight factors identified in the HLRB Order

Del M onte speci fical ly ch allen ges t he fo llowi ng si x fac tors: (1) 11 “why the c losur e is takin g pla ce”; (2) “ [how] to d elay [or] fores tall the closu re”; (3) “ reaso ns fo r pos ition s tak en in deve lopin g, mo difyi ng or rejec ting offer s [or ] cou nter offer s”; ( 4) re sourc es wh ich m ight be av ailab le to ef fect compr omise ”; (5 ) “po ssibl e ret entio n, re deplo yment , or liqui datio n of ef fecte d [si c] hu man o r mat erial reso urces ”; an d (6) “wha t is neces sary to estab lish an op en an d mea ningf ul av enue of co mmuni catio n wit h dec ision maker s[.]” (So me br acket s in origi nal a nd so me ad ded).

Del M onte ackno wledg es th at th e fol lowin g two fact ors a re recog nizedcomp onent s of effec ts ba rgain ing: (1) “ steps that can be re asona bly taken to m itiga te th e det rimen tal e ffect s of the p endin g une mployment to emplo yees, thei r dep enden t fam ilies , or theircommunity ”; an d (2) “the prec ise timin g of the c losur e.” It wo uld a ppearthat thos e fac tors wouldbe r eleva nt in mo st, i f not all, case s. 

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### are mandatory subjects of disclosure and negotiation in every effects bargaining case. We conclude that they are not, since such an approach would be inconsistent with the case-by-case approach we adopted in Del Monte I. See Del Monte I, 112 Hawai # i at 501 n.17, 146 P.3d at 1078 n.17 (“Determining whether bargaining parties exhibited a ‘mutually genuine effort to reach an agreement with reference to the subject under negotiation,’ HRS § 377-1(5), is by its nature an inquiry where hard-and-fast rules do not apply.”).

HRS § 377-6(4) makes it an unfair labor practice for an employer “[t]o refuse to bargain collectively” with the employees’ collective bargaining representative. In addition, “Regardless of whether an employer is obligated to bargain with the union over a decision involving an operational change, the employer must bargain over the effects of the change[,]” i.e., engage in “effects bargaining.” 48A Am. Jur. 2d. Labor and Labor Relations § 2345 (2005) (emphasis added); see also Providence Hosp. v. N.L.R.B., 93 F.3d 1012, 1018 (1st Cir. 1996) (noting that “unions generally enjoy the right to bargain over the effects of decisions which are not themselves mandatory subjects of collective bargaining”). Under HERA, “collective bargaining” is defined as “the negotiating by an employer and a majority of the employer’s employees in a collective bargaining unit (or their representatives) concerning representation or terms and

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### conditions of employment of such employees in a mutually genuine effort to reach an agreement with reference to the subject under negotiation.” HRS § 377-1(5) (1993) (emphasis added). In Del Monte I, this court approved the following standard to assess whether an employer has met its statutory duty to bargain in good faith: “whether the totality of the [employer’s] conduct evinces a present intention to find a basis for agreement and a sincere effort to reach a common ground.” 112 Hawai # i at 500-01, 501 n.17, 146 P.3d at 1077-78, 1087 n.17 (brackets in original) (quoting Bd. of Educ., 6 HLRB 173, 177 (2001)).

Here, the HLRB Order stated:

In th e opi nion of th e Boa rd ma jorit y, ra tiona l found ation al pr erequ isite s of infor matio n whi ch mu st be av ailab le, o r the subj ects of op en go od fa ith excha nge, in th e cou rse o f eff ects barga ining accompanyi ng a closu re sh ould at le ast i nclud e [si c]: 1) wh y the clos ure i s tak ing p lace; 2) w hat, if anyth ing, the U nion, empl oyees or e mploy er co uld reaso nablydo t o del ay, f orest all t he cl osure or mitig ate t he de trime ntal effec ts ofthe closu re; 3 ) the r eason s forposi tions take n in devel oping , modif ying or re jecti ng of fers [or] count er of fers; 4) the r esour ces w hich might be a vaila ble t o eff ect compr omise ; 5) the p ossib le re tenti on, r edepl oymen t or liqui datio n of effec ted [ sic] human or m ateri al resou rces; 6) w hat i s nec essar y to estab lish an op en and m eanin gful avenu e of commu nicat ion w ith d ecisi on maker s; 7) step s tha t can be r eason ably taken to mitig ate t he de trime ntal effec ts ofthe pendi ng unemp loyme nt to empl oyees , the ir de pende nt fa milie s or theircommunity ; and8) t he pr ecise timi ng ofthe closu re. 

### (Emphasis added).

The portion of the Order that reads, “rational foundational prerequisites of information which must be available, or the subjects of open good faith exchange, in the

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### course of effects bargaining accompanying a closure should at least include[,]” implies that all eight factors are per se requirements for an employer in every effects bargaining case accompanying a closure. However, imposing such requirements in every case is inconsistent with our case law.

In Del Monte I, this court noted that “[d]etermining whether bargaining parties exhibited a ‘mutually genuine effort to reach an agreement with reference to the subject under negotiation,’ HRS § 377-1(5), is by its nature an inquiry where hard-and-fast rules do not apply.” Id. at 501 n.17, 146 P.3d at 1078 n.17 (emphasis added). Thus, evaluating an employer’s conduct against per se requirements is inconsistent with focusing on the “totality of the employer’s conduct.” Id. at 500, 146 P.3d at 1078 (brackets omitted). Put another way, all eight factors listed in the HLRB Order may not be relevant in every effects bargaining case. Thus, imposing those requirements on an employer in every effects bargaining would be improper. This conclusion is consistent with an extensive body of federal caselaw, which evaluates whether an employer bargained in good faith by looking at the totality of the circumstances. See, 1 2

The H LRB’s stan dard for a ssess ing w hethe r an emplo yer v iolat ed it s 12 statu tory duty to ba rgain in g ood f aith, i.e. , “wh etherthe total ity o f the [empl oyer’ s] co nduct evin ces a pres ent i ntent ion t o fin d a b asis for a greem ent and a sinc ere e ffort to r each a common g round [,]” was d erive d fro m a l eadin g feder al la bor l aw tr eatis e. S ee Bd . of Educ. , 6 H LRB 1 73, 1 77 (2 001) (citi ng 1 The Deve lopin g Lab or La w: Th e Boa rd, T he Co urts, and the N ation al La bor Relat ions Act 6 08 (P atric k Har din e t al. eds. , 3d ed. 1 992)) . Th is co urt h as also looke d to the N LRA i n int erpre ting the H ERA’s subs tanti ve pr ovisi ons. (cont inued ...) 

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### e.g., N.L.R.B. v. Truitt Mfg. Co., 351 U.S. 149, 153-154 (1956) (noting that “[e]ach case must turn upon its particular facts” and that “[t]he inquiry must always be whether or not under the circumstances of the particular case the statutory obligation to bargain in good faith has been met”); Int’l Chem. Workers Council of the United Food & Commercial Workers Int’l v. N.L.R.B., 467 F.3d 742, 748 (9th Cir. 2006) (considering “whether the Company’s actions as a whole satisfied its statutory obligation to bargain in good faith”); Frankl v. HTH Corp., 650 F.3d 1334, 1358 (9th Cir. 2011) (“To determine a party’s good faith, the Board looks to the ‘totality of the respondent’s conduct, both at and away from the bargaining table.’”) (citation and brackets omitted).

In sum, the law does not require employers to furnish all eight types of information, or bargain over the subject matter of that information, in every instance of effects bargaining accompanying a closure. Accordingly, this court’s holding does not foreclose the possibility that a particular factor may be relevant, and thus appropriate for the HLRB to take into consideration, in evaluating the totality of an employer’s conduct in an effects bargaining case. IV. Conclusion We hold that the HLRB did not err in denying Del Monte’s Disqualification Motion. We further hold that the HLRB

(...c ontin ued) 12 See D el Mo nte I , 112 Hawa i # i at 503, 146 P .3d a t 108 0. 

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### did not err in concluding that Del Monte bargained in bad faith during the first phase of negotiations. However, we also hold that the eight factors in the HLRB Order are not per se requirements in every effects bargaining case. Accordingly, the judgment of the ICA is affirmed. Christopher S. Yeh for petitioners Rebecca L. Covert and Davina W. Lam for respondent /s/ Mark E. Recktenwald /s/ Paula A. Nakayama /s/ Simeon R. Acoba, Jr. /s/ Karen S.S. Ahn /s/ Steven S. Alm

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