Opinion ID: 2630997
Heading Depth: 2
Heading Rank: 5

Heading: ILWU's Cross-Appeals

Text: In appeal No. 25344, ILWU advances two points of error committed by the circuit court, the first of which is raised for the first time on appeal. Specifically, ILWU argues that (1) the circuit court's order directing Receiver Park to pay accumulated severance and vacation pay only for the period attributable to the receivership violated the Hawai`i Wage Payment Act (HRS chapter 388) and (2) the circuit court erred in its ruling concerning vacation and severance benefits where the Receiver had assumed the obligations of the existing collective bargaining agreement. ILWU essentially contends that Receiver Park should have paid all of the members-employees' vacation and severance benefits due and owing at the date of termination, i.e., June 30, 2001, pursuant to the collective bargaining agreement. In appeal No. 26820, ILWU contends that, if this court determines in appeal No. 25344 that all wages and compensation of members-employees were due and owing on their June 30, 2001 termination date, then the circuit court additionally erred in: (1) denying ILWU's August 3, 2001 motion for stay of the first distribution of the Estate's monies pending appeal No. 25344; (2) permitting the disbursement of a certain sum to HWB Kalakaua in its August 22, 2002 order approving the Receiver's final report; (3) denying its March 28, 2003 motion for stay of the final distribution pending appeal No. 25344; and (4) allowing the final distribution of the balance of the Estate's monies in its May 12, 2003 order granting Receiver Park's final motion for instructions. ILWU further challenges the circuit court's order discharging Receiver Park because it believes that [t]he discharge of the Receiver was premature while major issues pertaining to the receivership's obligations remained unresolved pending appeal No. 25344.
HRS § 388-3(a) (1993) specifically mandates that, [w]henever an employer [ [35] ] discharges an employee either with or without cause, the employer shall pay the employee's wages [ [36] ] in full at the time of discharge or if the discharge occurs at a time and under conditions which prevent an employer from making immediate payment, then not later than the working day following discharge. (Emphasis added.) ILWU  for the first time on appeal  argues that, under HRS chapter 388, Receiver Park, as an employer, was required to pay the Hotel employees' their unpaid wages and accrued benefits, including those earned before the Receiver's appointment, upon their termination. As a general rule, if a party does not raise an argument [at the circuit court level], that argument will be deemed to have been waived on appeal; this rule applies in both criminal and civil cases. Kemp v. State of Hawai`i Child Support Enforcement Agency, 111 Hawai`i 367, 391, 141 P.3d 1014, 1038 (2006) (internal quotation marks and citations omitted); see also HRAP Rule 28(b)(4)(iii) (2007) (noting that an appellant's opening brief shall state where in the record the alleged error was objected to or the manner in which the alleged error was brought to the attention of the court or agency); HRS § 641-2 (Supp.2006) (The appellate court . . . need not consider a point that was not presented in the trial court in an appropriate manner.). There are sound reasons for the rule. It is unfair to the [circuit] court to reverse on a ground that no one even suggested might be error. It is unfair to the opposing party, who might have met the argument not made below. Finally, it does not comport with the concept of an orderly and efficient method of administration of justice. Querubin, 107 Hawai`i at 61 n. 5, 109 P.3d at 702 n. 5 (citation omitted) (format altered). On cross-appeal, ILWU concedes that: [Hawaii Ventures] is liable to argue that [ILWU] failed to argue below statutory wage payment law as a basis to pay the employees all of their vacation and severance benefits from the Receiver's Estate. The [circuit] court, however, was informed of a statutory basis on which to award the benefits from references in both the Receiver['s] and [the Otaka Defendants'] brief[s] on the issue of severance and vacation pay. (Emphasis added.) However, the Receiver's memorandum in support of her motion for instructions regarding vacation and severance pay did not contain any discussion of HRS chapter 388, as ILWU so contends. Rather, it appears that ILWU is referring to a statement made by Receiver Park in her memorandum, i.e., that she decided to pay employees' benefits because she believed, inter alia, that failure to do so would be illegal under state law. And, with respect to the Otaka Defendants' memorandum in support of ILWU's motion to treat severance and vacation pay as administrative expenses, ILWU relies upon a single sentence contained in a footnote that noted the Receiver's above recognition of illegality under Hawai`i law. (Citing to HRS § 388-10 (Supp.2006) (regarding penalties for failure to pay wages in accordance with this chapter).) Nonetheless, in our view, such passing references are not sufficient to preserve ILWU's argument for appeal. Clearly, the record reflects that ILWU failed to properly raise the instant argument relating to HRS chapter 388 before the circuit court. Accordingly, this argument has not been preserved for appeal, and we decline to address it.
ILWU contends that, because Receiver Park assumed the obligations of the collective bargaining agreement between HWB and ILWU, the circuit court erroneously determined that the Receiver could only pay vacation and severance pay that had accrued during the ten months of the receivership (as opposed to all benefits earned pursuant to the agreement). [37] In retort, both Receiver Park and Hawaii Ventures maintain that the Receiver did not  by her conduct  assume HWB's obligation under the collective bargaining agreement. A receiver appointed to manage or operate a business frequently finds executory contracts still subsisting between the debtor and other parties. The receiver must determine whether or not [she], with the approval of the court, will carry out these contracts on behalf of the debtor or let them go and subject the debtor and the receivership estate to the consequences of a breach of such contracts. The receiver is under no obligation to the other parties to the contract to perform such contract on behalf of the debtor. 2 Clark, A Treatise on the Law and Practice of Receivers § 428 at 720 (footnotes omitted); Fauci v. Mulready, 337 Mass. 532, 150 N.E.2d 286, 289 (1958) (An equity receiver upon appointment is not bound to perform or adopt executory contracts and leases, unless directed to do so by the court which appointed [her].). In other words, [t]he mere fact of possession does not . . . obligate the receiver to carry out executory contracts of the debtor; and, subject to the order of the court, [she] may have a reasonable time after [her] appointment to elect whether to adopt any such contract or reject it. Adoption may be signified either by express agreement or by implication, and if, without declaring [herself], [she] undertakes performance, [she] assumes the obligations of the contract and adopts it subject to its burdens and to any right of offset. H.D. Roosen Co. v. Pac. Radio Publ'g Co., 123 Cal.App. 525, 11 P.2d 873, 876 (1932) (citations omitted). Further, once having elected to accept a contract, a receiver is bound thereby. While [she] may pick which contracts [she] will honor, [she] may not pick which [p]arts of a contract [she] will honor. Real Estate Marketers, Inc. v. Wheeler, 298 So.2d 481, 484 (Fla.Dist.Ct.App.1974). Specifically, ILWU argues that the conduct of Receiver Park shows that she assumed the obligations of the collective bargaining agreement: Not only did she continue to compensate ILWU-represented hotel employees at the wage rates specified in the collective bargaining agreement, she also provided vacation time and sick leave and made contributions to the employees' collectively-bargained pension fund as set forth in the agreement. Importantly, the Receiver continued the dues check-off system that was established by the collective bargaining agreement, deducting union dues from employees' paychecks and forwarding those amounts directly to ILWU. As discussed above, complying with the dues check-off provision is strong evidence that the Receiver intended to adopt the collective bargaining agreement, because such provisions are solely creatures of contract. Moreover, the Receiver adjusted grievances with [ILWU], and even arbitrated some grievances without raising the defense that there was no valid agreement between the parties that would compel her to arbitrate. [38] We disagree. In her declaration attached to her motion for instructions that she not arbitrate ILWU's grievance pertaining to severance pay, Receiver Park averred that: 3. After I was appointed receiver, I elected not to engage for the Receiver's account any of the then-current employees covered by [ILWU]. 4. I allowed existing management employees of [HWB] to remain in place instead of using a brand manager, because (1) it was impractical to undertake such a contract given the then uncertainty about the length of the receivership, and the possibility that the hotel might have to close relatively quickly, (2) the costs was [sic] a consideration in view of the shaky finances, and (3) a brand manager would have replaced all existing management personnel and possibly [ILWU], which was contrary to the goal of maintaining stability. 5. [HWB], and not the Receiver, was the employer of record that continued to employ the employees covered by the collective bargaining agreement, pay the employees' wages, provide them vacation benefits, deduct dues from their paychecks and transmit them to [ILWU] and contribute to the pension plan. 6. Although I told the [c]ourt that it was not my intent to impair or not perform under the collective bargaining agreement during [a] hearing . . ., I did not say that I intended to assume . . . the collective bargaining agreement. [39] In a facsimile memorandum, dated September 29, 2000, directed to counsel for all parties, including ILWU's counsel, Receiver Park indicated that: [S]o long as [HWB] continues to be the employer, the Receiver is not a successor-employer but remains the agent of the [c]ourt. As such, the Receiver will monitor the activities of [HWB] and will make the decisions which would have been made by Otaka's and [HWB]'s officers and directors to carry out the terms of the [appointment order]. Consequently: . . . . 3. The Receiver proposes that [HWB] and [ILWU] sign an [agreement] extending the current [collective bargaining agreement] for the period of the receivership. Given the uncertainty relating to the length of the receivership, this would probably be a resolution that is in the best interest of [HWB] and its employees. Consequently, on February 2, 2001, ILWU and HWB executed an extension of the collective bargaining agreement, which agreement was set to expire on January 31, 2001. The extension provided that: It is hereby understood and agreed that the collective bargaining [a]greement between HAWAIIAN WAIKIKI BEACH, INC. dba HAWAIIAN WAIKIKI BEACH HOTEL and ILWU Local 142, effective as of June 1, 1999 through and including May 31, 2000, as amended by the Amendment of Agreement executed on March 4, 1999 which extended the expiration date through January 31, 2001, shall be extended [on] a day-to-day basis. . . . . This extension may be canceled upon receipt by either party from the other of a five (5) day written notice of cancellation. The agreement was signed by only HWB and ILWU. At no time did ILWU ask that the Receiver be added as a party/signator to the extension agreement. It, therefore, cannot seriously be said that Receiver Park assumed the obligations of the collective bargaining agreement by her conduct in managing the Hotel during the receivership. [40] Moreover, case law further supports our conclusion. In O'Connor Co. v. Carpenters Local Union No. 1408, 702 F.2d 824 (9th Cir.1983), the union attempted to use the doctrine of estoppel to bind the company-employer to a new collective bargaining agreement to which it was not a signatory. Id. at 825. The Ninth Circuit upheld the district court's conclusion that the company by its conduct did not manifest its intent to be bound by the new agreement. Id. at 825-26. Although the company continued making union trust fund contributions, hired carpenters at the union hiring hall, and paid increased wages and fringe benefits consistent with the new collective bargaining agreement, this conduct did not indicate [the company's] consent to be bound by the new agreement that it never executed. Id. at 826. In General Warehousemen & Employees Union Local 636 v. J.C. Penney Co., 484 F.Supp. 130 (W.D.Pa.1980), J.C. Penney (or the company) stated that, after the collective bargaining agreement expired, it would not make unilateral changes in the terms and conditions of employment during negotiations unless and until the parties' negotiations reached an impasse. Id. at 132. After the collective bargaining agreement expired, the union requested arbitration regarding J.C. Penny's discharge of an employee, and the company refused. Id. at 133. The union brought an action to compel the company to arbitrate the discharge. Id. at 132. The court held that the union failed to establish that there was an agreement to arbitrate, explaining that, [e]ven though employees continue to work under the compensation arrangements of an old contract, the court cannot imply that the entire contract was extended. . . . Nor are the checkoff of union dues and the settlement of minor grievances in accord with the old contract, alone, sufficient for the court to infer that the parties agreed to extend the old contract in its entirety. . . . Nor can extension of the duty to arbitrate be found from the continuation of wages[.] Id. at 134-35 (citations omitted); see also Procter & Gamble Indep. Union of Port Ivory, N.Y. v. Proctor & Gamble Mfg. Co., 312 F.2d 181, 184 (2d Cir.1962), cert. denied, 374 U.S. 830, 83 S.Ct. 1872, 10 L.Ed.2d 1053 (1963) (The fact that the employer chose thereafter not to change many of the working conditions which had prevailed under the expired agreement does not tend in any way to establish that that agreement was, or was considered to be, or was treated as still effective. (Footnote omitted.)). Accordingly, we hold that the circuit court did not err in directing the Receiver to pay cumulative severance and vacation pay only for the period attributable to the receivership. [41]