Court Opinion

ID: 2655112
Source: CourtListenerOpinion
Date Created: 2014-02-27 22:55:15.703192+00
Date Added: 2024-06-11T12:59:08.654110
License: Public Domain

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                                                              Electronically Filed
                                                              Supreme Court
                                                              SCWC-12-0000295
                                                              27-FEB-2014
                                                              11:11 AM

           IN THE SUPREME COURT OF THE STATE OF HAWAI#I

                                ---o0o---

                 HAWAII STATE TEACHERS ASSOCIATION,
                     Petitioner/Union-Appellant,

                                    vs.

                  UNIVERSITY LABORATORY SCHOOL;
 EDUCATION LABORATORY PUBLIC CHARTER SCHOOL LOCAL SCHOOL BOARD,
                  Respondent/Employer-Appellee.

                            SCWC-12-0000295

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
              (CAAP-12-0000295; S.P. NO. 11-1-0411)

                           FEBRUARY 27, 2014

               NAKAYAMA, MCKENNA, AND POLLACK, JJ.,
          WITH RECKTENWALD, C.J., CONCURRING SEPARATELY,
                AND ACOBA, J., CONCURRING SEPARATELY

                OPINION OF THE COURT BY NAKAYAMA, J.

          This case concerns a dispute over whether agreements

between the Petitioner/Union-Appellant Hawai#i State Teachers
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Association (HSTA)1 and the Respondent/Employer-Appellee

University Laboratory School (ULS)2 mandate arbitration of a

grievance filed by the HSTA against the ULS.           The HSTA’s

grievance alleged that the ULS refused to implement a step

placement chart for a salary schedule agreed to in a supplemental

agreement negotiated by the HSTA and the School Board.             The ULS

responded that the step placement chart the HSTA sought to

enforce had never been agreed upon or incorporated into the

agreement.

            The HSTA filed, as a special proceeding in the Circuit

Court of the First Circuit (circuit court), a motion to compel

arbitration of its grievance.        The circuit court denied the

HSTA’s motion to compel arbitration and the HSTA appealed to the

Intermediate Court of Appeals (ICA).         The ICA concluded that the

Hawai#i Labor Relations Board (HLRB) had primary jurisdiction

over the issues raised in the HSTA’s grievance and that the

HSTA’s motion to compel arbitration was premature.            We hold that

because the parties agreed to leave questions of arbitrability to

the arbitrator, our case law mandated that the circuit court

grant the HSTA’s motion to compel arbitration after concluding

      1
            The HSTA is the bargaining representative of teachers and other
personnel of the State of Hawai#i Department of Education.
      2
            The ULS is also known as the Local School Board of the Education
Laboratory Public Charter School or as the Education Laboratory Public Charter
School Local School Board.

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that an arbitration agreement existed.

                              I. BACKGROUND

            On June 30, 2009, the ULS was transferred from the

University of Hawai#i College of Education at the University of

Hawai#i at Manoa to the local school board as a public charter

school.   At that time, the ULS and the HSTA entered into a

Memorandum of Agreement (MOA) that memorialized the collective

bargaining agreement (Master Agreement) already in effect between

the HSTA and the State of Hawai#i Board of Education.           The

parties agreed that the HSTA was thereafter the employees’

bargaining representative and the ULS was the employer.             The MOA

also stipulated that the parties were subject to future

supplemental agreements.

            On June 21, 2010, the HSTA and the ULS signed a

supplemental agreement (Supplemental Agreement) governing the

salaries of the ULS’s unit 5 employees.         Appendix XIV of the

Supplemental Agreement provided:
            [A]n employee’s appropriate salary placement
            designation (class and step) is made onto the unit 5
            master agreement salary schedule. For step placement,
            parties shall use the attached chart (Exhibit 1)
            indicating negotiated step increments for unit 5
            members.

(Emphasis added).     To calculate a unit 5 teacher’s salary, the

salary schedule and the step placement chart from Exhibit 1 were

required.   However, no document entitled Exhibit 1 was attached

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to the Supplemental Agreement.

             On October 29, 2010, during an ongoing inquiry into the

proper step placement of certain ULS employees, the HSTA informed

the ULS via email that “it was brought to [the HSTA’s] attention

that [it] had inadvertently omitted ‘Exhibit 1’ for Appendix

XIV.”     The HSTA attached a document to its email that was

purportedly the “inadvertently omitted” Exhibit 1 and it

instructed the ULS that this document “should be included as part

[of] the [S]upplemental [A]greement.”

             On November 9, 2010, the ULS denied having agreed to

the terms of the purported “Exhibit 1,” stating that, although it

recalled the chart in the document, “[a]t no time during the

negotiations did [ULS] assume that [it] would be following that

[chart] in setting [teachers’] salaries.”          The ULS had assumed

that a different chart used during subsequent negotiations was

the “missing Exhibit 1” and it had used that other chart when

calculating teachers’ salaries.

             On April 13, 2011, pursuant to Article V of the

Supplemental Agreement3, the HSTA filed a grievance alleging that

Appendix XIV and Exhibit 1 were bargained for in good faith and

      3
            Article V of both the Supplemental Agreement and the Master
Agreement contain identical provisions regarding grievances whereby the
parties assented to submit unresolved claims to arbitration and to leave
questions of arbitrability to the arbitrator.

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that the ULS “refused to implement the proper salary placement

for teachers, thereby, repudiating Appendix XIV of the

supplemental agreement.”       Then, on April 21, 2011, the HSTA

notified the ULS that it wished to proceed to arbitration.

           The ULS contested HSTA’s request for arbitration and

responded by filing a prohibited practice complaint with the HLRB

on April 28, 2011.     In its complaint, the ULS alleged that the

HSTA refused to bargain in good faith and to comply with the

terms of the Supplemental Agreement, in violation of Hawai#i

Revised Statutes (HRS) §§ 89-13(b)(1), (2), (4), and (5) (Supp.

2010).4   Furthermore, the ULS alleged that the HSTA violated HRS

§ 89-10.8(a)(1) (Supp. 2010)5 by attempting to use the grievance

process to alter the Supplemental Agreement.

     4
           HRS § 89-13(b) provided then, as it does now, in pertinent part:

           It shall be a prohibited practice for a public employee or
           for an employee organization or its designated agent
           wilfully to:

           (1) Interfere, restrain, or coerce any employee in the
           exercise of any right guaranteed under this chapter;

           (2) Refuse to bargain collectively in good faith with the
           public employer, if it is an exclusive representative, as
           required in section 89-9;

           . . . .

           (4) Refuse or fail to comply with any provision of this
           chapter; or

           (5) Violate the terms of a collective bargaining agreement.

     5
             HRS § 89-10.8(a)(1) provided then, as it does now: “A dispute
over the terms of an initial or renewed agreement shall not constitute a
grievance.”

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           Before the HLRB, the HSTA filed a motion on May 12,

2011 to dismiss the ULS’s complaint and the ULS filed a motion on

July 13, 2011 to stay all arbitration proceedings.            At a hearing

on August 12, 2011, the HLRB denied the motion to dismiss the

complaint and took the motion to stay arbitration under

advisement.6

           Due to the ULS’s continued refusal to enter

arbitration, on August 3, 2011, the HSTA filed a motion in a

special proceeding in the circuit court to compel arbitration of

its grievance pursuant to HRS § 658A-7 (Supp. 2010).7            The

      6
            After almost two years of no action from the HLRB, on July 23,
2013, the ULS filed a motion for partial summary judgment on its complaint.
On August 14, 2013, the HSTA filed a motion to stay proceedings before the
HLRB until this court’s review was completed. By order of November 5, 2013,
the HLRB granted in part the ULS’s motion for partial summary judgment and
denied the HSTA’s motion to stay the proceedings before the HLRB pending this
court’s review of this case. The HLRB also granted the ULS’s July 13, 2011
motion to stay the arbitration proceedings.

            The HLRB’s order is not ripe for review by this court and has no
bearing upon our resolution of this case. However, we note that the HLRB
cites to no statutory or legal authority granting it the authority to stay a
pending arbitration proceeding or a court’s review of a motion to compel
arbitration. The HLRB’s powers derive from and are limited by HRS chapter 89.
No provisions in HRS chapter 89 grant the HLRB the power to stay proceedings
before any other body. Therefore, the HLRB’s purported stay of the
arbitration proceedings is of no legal effect.
     7
           HRS § 658A-7 provided then, as it does now, in pertinent part:

           (a) On motion of a person showing an agreement to arbitrate
           and alleging another person’s refusal to arbitrate pursuant
           to the agreement:

                 (1) If the refusing party does not appear or does not
           oppose the motion, the court shall order the parties to
           arbitrate; and

                 (2) If the refusing party opposes the motion, the
                                                               (continued...)

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circuit court denied HSTA’s motion to compel arbitration by order

of March 2, 2012.8    The circuit court did not provide an

explanation of its reasoning in denying the motion, although it

noted during argument on the motion that this case raised novel

issues regarding the jurisdiction of the HLRB.

           The HSTA appealed the circuit court’s March 2, 2012

order, and March 28, 2012 final judgment, to the ICA.            In its

opening brief, the HSTA argued that the circuit court had

jurisdiction over the agreement and that the HSTA fulfilled the

conditions to compel arbitration.        In response, the ULS argued

that the matter was unripe for adjudication and that the HLRB had

original jurisdiction over the dispute.

           On April 15, 2013, the ICA issued its opinion

concluding that the circuit court did not err in denying HSTA’s

motion to compel arbitration.       Haw. State Teachers Ass’n v. Univ.

Lab. School, Educ. Lab. Pub. Charter School Local School Bd.

(HSTA v. ULS), No. CAAP-12-0000295, 2013 WL 1578338 at *1, *4

(App. Apr. 15, 2013).     Referencing the probability of conflicting

or redundant results, the ICA reasoned that denying the motion

     7
      (...continued)
           court shall proceed summarily to decide the issue and order
           the parties to arbitrate unless it finds that there is no
           enforceable agreement to arbitrate.
     8
           The Honorable Patrick W. Border presided.

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was proper because HSTA’s motion implicated technical and policy

issues over which the HLRB had primary jurisdiction.9             Id. at *4.

            On July 16, 2013, the HSTA timely filed an application

for writ of certiorari to this court in which it contended that

the ICA erred in applying the doctrine of primary jurisdiction

and in affirming the circuit court’s denial of HSTA’s motion to

compel arbitration.       We accepted certiorari on August 28, 2013,

and held oral argument on October 17, 2013.

                          II. STANDARD OF REVIEW

A.    Petition to Compel Arbitration

            We review a petition to compel arbitration de novo.

Douglass v. Pflueger Hawai#i, Inc., 110 Hawai#i 520, 524, 135 P.3d

129, 133 (2006).      “The standard is the same as that which would

be applicable to a motion for summary judgment, and the trial

court’s decision is reviewed ‘using the same standard employed by

the trial court and based upon the same evidentiary materials as

were before [it] in determination of the motion.’”             Id. at 524-

25, 135 P.3d at 133-34 (alterations in original) (quoting Koolau

Radiology, Inc. v. Queen’s Med. Ctr., 73 Haw. 433, 439-40, 834

      9
            Rather than affirming the circuit court’s order, the ICA vacated
the order and remanded the case with instructions to consider whether a stay
or dismissal without prejudice would be appropriate. HSTA v. ULS, 2013 WL
1578338 at *4. The ICA reasoned that under the primary jurisdiction doctrine,
without a finding that the parties would not be “unfairly disadvantaged” by a
dismissal, the circuit court was required to stay the proceedings. Id.
(emphasis omitted) (quoting Pavsek v. Sandvold, 127 Hawai#i 390, 402, 279 P.3d
55, 67 (App. 2012).

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P.2d 1294, 1298 (1992)).

                            III. DISCUSSION

A.   Parties may reserve questions of arbitrability for the
arbitrator

          This court has repeatedly acknowledged the general

enforceability of arbitration agreements.         See, e.g., Douglass,

110 Hawai#i at 530, 135 P.3d at 139; Luke v. Gentry Realty, Ltd.,

105 Hawai#i 241, 247, 96 P.3d 261, 267 (2004); Brown v. KFC Nat’l

Mgmt. Co., 82 Hawai#i 226, 232, 921 P.2d 146, 152 (1996).             The

Uniform Arbitration Act, adopted in Hawai#i in 2001 and codified

at HRS chapter 658A, provides that when a court has “jurisdiction

over the controversy and the parties[, it] may enforce an

agreement to arbitrate.”      HRS § 658A-26 (Supp. 2010).        An

arbitration agreement is “valid, enforceable, and irrevocable

except upon a ground that exists at law or in equity for the

revocation of a contract.”      HRS § 658A-6(a) (Supp. 2010).

          Our statutes have delineated the roles of courts and

arbitrators in enforcing arbitration agreements; “[t]he court

shall decide whether an agreement to arbitrate exists or a

controversy is subject to an agreement to arbitrate” and “[a]n

arbitrator shall decide whether a condition precedent to

arbitrability has been fulfilled and whether a contract

containing a valid agreement to arbitrate is enforceable.”             HRS

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§§ 658(b)-(c).    “When presented with a motion to compel

arbitration, the court is limited to answering two questions: 1)

whether an arbitration agreement exists between the parties; and

2) if so whether the subject matter of the dispute is arbitrable

under such agreement.”     Koolau, 73 Haw. at 445, 834 P.2d at 1300.

The second prong of this rule -- “whether the subject matter of

the dispute lies within the arbitrator’s jurisdiction” -- is

termed the “arbitrability” of the dispute.         Hokama v. Univ. of

Haw., 92 Hawai#i 268, 274 n.6, 990 P.2d 1150, 1156 n.6 (1999).

          We have modified this general rule for cases in which

the parties have agreed to leave questions of arbitrability to

the arbitrator.    See Bateman Constr., Inc. v. Haitsuka Bros.,

Ltd., 77 Hawai#i 481, 485, 889 P.2d 58, 62 (1995) (“[T]he

question of arbitrability is usually an issue to be decided by

the courts, ‘unless the parties clearly and unmistakably provide

otherwise.’” (alterations omitted) (quoting FSC Sec. Corp. v.

Freel, 14 F.3d 1310, 1312 (8th Cir. 1994)).          Where the parties

have “clearly and unmistakably” reserved the issue of

arbitrability for the arbitrator, courts lack the authority to

rule upon this issue because “[a]fter all, ‘it was the

arbitrator’s judgment [the parties] had bargained for, not a

court’s.’”   Id. (alterations omitted) (quoting Morrison Knudsen

Co. v. Makahuena Corp., 66 Haw. 663, 670, 675 P.2d 760, 766

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(1983)); see also Bronster v. United Public Workers, Local 646,

90 Hawai#i 9, 14-16, 975 P.2d 766, 771-73 (1999) (“[P]arties are

free to agree among themselves to vest sole authority in an

arbitrator to determine the issue of the arbitrability of a

particular subject matter so long as they do so ‘clearly and

unmistakably.’” (quoting Bateman Constr., Inc., 77 Hawai#i at

485, 889 P.2d at 62)).     “Parties may contractually excise the

court from the determination” of whether the dispute is

arbitrable and, in these cases, the court may only consider

whether there is a valid agreement to arbitrate.           Bronster, 90

Hawai#i at 15, 975 P.2d at 772; see also In re United Public

Workers, Local 646, 124 Hawai#i 372, 378, 244 P.3d 609, 615

(2010) (“When agreements reserve questions of arbitrability for

the arbitrator, as they do here, the court may only consider the

first prong[ -- whether there is a valid agreement to

arbitrate].”)

     1.   The HSTA and the ULS contracted to leave questions of
          arbitrability to the arbitrator

          The Master Agreement and the Supplemental Agreement

contained identical provisions regarding the grievance process:
          ARTICLE V - GRIEVANCE PROCEDURE
          A.    DEFINITION. Any claim by the [HSTA] or a teacher that
          there has been a violation, misinterpretation or
          misapplication of a specific term or terms of this Agreement
          shall be a grievance.

          . . . .

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          H.    ARBITRATION. If a claim made by the [HSTA] or teacher
          has not been satisfactorily resolved, the Association may
          present a request for arbitration of the grievance within
          ten (10) days after the receipt of the decision.

          . . . .

                e) If the Employer disputes the arbitrability of any
          grievance submitted to arbitration, the arbitrator shall
          first determine the question of arbitrability. If the
          arbitrator finds that it is not arbitrable, the grievance
          shall be referred back to the parties without decision or
          recommendation on its merits.

(Emphasis added).    These provisions establish that the HSTA and

the ULS agreed to arbitrate grievances and reserved questions of

arbitrability for the arbitrator.

          In Bronster, we interpreted similar arbitration

provisions.   In that case, Attorney General Bronster sought a

declaration that the Office of the Attorney General was not

subject to arbitration pursuant to an agreement between the State

of Hawai#i and the United Public Workers Union (UPW).           Bronster,

90 Hawai#i at 9-10, 975 P.2d at 766-67.        The circuit court denied

the UPW’s motions to stay proceedings pending arbitration, to

compel arbitration, and for summary judgment and granted

Bronster’s motion for summary judgment.         Id.   On appeal to this

court, we first concluded that, “as a ‘representative’ or agent

of the State, the Attorney General was a ‘party’ to the

agreement.”   Id. at 10, 975 P.2d at 767.        We then interpreted the

arbitration provision in the agreement between the UPW and the

State which provided: “[i]f the Employer disputes the

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arbitrability of any grievance under the terms of this Agreement,

the Arbitrator shall first determine whether he has jurisdiction

to act; and if he finds that he has no such power, the grievance

shall be referred back to the parties without decision on its

merits.”     Id. (alteration and emphasis in original).            We reasoned

that “[w]ithout question, here . . . the agreement calls ‘clearly

and unmistakably’ for the arbitrator to decide the arbitrability

of a grievance.”       Id. at 15, 975 P.2d at 772.        While Attorney

General Bronster contended that UPW failed to comply with certain

provisions of the agreement in bringing its grievance, we

characterized this as a question of arbitrability.              We concluded

that the issue of arbitrability had been “expressly reserved by

the parties for determination by the arbitrator” and thus the

circuit court erred in addressing this question.              Id. at 16, 975

P.2d at 773.      We held that, because there was an arbitration

agreement between the parties that reserved the question of

arbitrability for the arbitrator, the circuit court erred in

granting Bronster’s motion for summary judgment and in denying

UPW’s motions for summary judgment and to compel arbitration.

Id.

             Here, it is uncontested that there was an arbitration

agreement between the parties.          Using similar language to that in

Bronster, the agreement in the instant case “clearly and

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unmistakably” left the issue of arbitrability to the arbitrator.

Therefore, because the question of whether there was a valid

arbitration agreement between the parties was uncontested, the

circuit court should have granted the HSTA’s motion to compel

arbitration.

     2.    The determination of whether a grievance exists is
           a question of arbitrability reserved for the arbitrator

           The ULS contends that pursuant to the laws for

“Collective Bargaining in Public Employment” codified in HRS

chapter 89, this is a bargaining dispute and therefore it is not

a grievance subject to the parties’ arbitration agreement.             HRS §

89-10.8 governs the “Resolution of disputes; grievances” and

states: “A public employer shall enter into written agreement

with the exclusive representative setting forth a grievance

procedure culminating in a final and binding decision, to be

invoked in the event of any dispute concerning the interpretation

or application of a written agreement.”         This statute clarifies

that “[a] dispute over the terms of an initial or renewed

agreement” is not a grievance.       HRS § 89-10.8(a)(1) (emphasis

added).   HRS § 89-11 (Supp. 2010) governs the “Resolution of

disputes; impasses” and states that parties may enter into an

agreement establishing an “alternate impasse procedure” that may

“be invoked in the event of an impasse over the terms of an

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initial or renewed agreement.” (Emphasis added).

          The ICA erred in stating that pursuant to the parties’

agreements, and HRS § 89-10.8, the circuit court may only order

arbitration after finding that a grievance exists.           HSTA v. ULS,

2013 WL 1578338 at *3.     It is immaterial whether this case

involves a “grievance” or a “dispute over the terms of an initial

or renewed agreement.”     “[A]s with any contract, the parties’

intentions control, but those intentions are generously construed

as to issues of arbitrability.”       Lee v. Heftel, 81 Hawai#i 1, 4,

911 P.2d 721, 724 (1996) (quoting Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)).             We

have previously classified the issue of whether claims fall

within the scope of an arbitration clause to be a question of

arbitrability.    See Haw. Med. Ass’n v. Haw. Med. Servs. Ass’n,

113 Hawai#i 77, 92, 148 P.3d 1179, 1194 (2006) (discussing

whether the disputes fall within the scope of the arbitration

agreement as an issue of arbitrability); see also Univ. of Haw.

Prof’l Assembly v. Univ. of Haw., 66 Haw. 207, 210, 659 P.2d 717,

719 (1983) (“The arbitration process may only be used when the

grievance involves the violation of a provision of the agreement.

Thus the questions of arbitrability and whether the agreement is

involved are one and the same.”).

          Here, the question of whether the HSTA’s claim

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constitutes a grievance subject to the arbitration provisions of

the Supplemental Agreement is a question of arbitrability.               As

discussed above, the HSTA and the ULS explicitly agreed to leave

all questions of arbitrability to the arbitrator.             Therefore, it

was not necessary for the circuit court to determine whether

HSTA’s claim constituted a grievance before granting the motion

to compel arbitration.

B.    The doctrine of primary jurisdiction does not apply

            “The primary jurisdiction doctrine is designed to

promote uniformity and consistency in the regulatory process.”

Aged Hawaiians v. Hawaiian Homes Comm’n, 78 Hawai#i 192, 202, 891

P.2d 279, 289 (1995) (quoting United States v. Western Pac. R.R.,

352 U.S. 59, 64 (1956)).        This doctrine recognizes that “‘in

cases raising issues of fact not within the conventional

experience of judges or cases requiring the exercise of

administrative discretion, agencies created by [the legislature]

for regulating the subject matter should not be passed over.’”

Kona Old Hawaiian Trails Group v. Lyman, 69 Haw. 81, 93, 734 P.2d

161, 169 (1987) (emphasis in original) (quoting Far East

Conference v. United States, 342 U.S. 570, 574-75 (1952)).               “The

primary jurisdiction doctrine applies to a claim that is

originally cognizable in the courts but which requires the

resolution of issues that are within the special competence of an

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administrative agency.”     Fratinardo v. Emps. Ret. Sys. of Haw.,

121 Hawai#i 462, 468, 220 P.3d 1043, 1049 (App. 2009) (quoting

Jou v. Nat’l Interstate Ins. Co. of Haw., 114 Hawai#i 122, 128-

29, 157 P.3d 561, 567–68 (App. 2007)).

           Here, the ICA concluded that the primary jurisdiction

doctrine was applicable because the “HSTA’s motion to compel

arbitration implicat[ed] technical and policy issues” within the

jurisdiction of the HLRB.      HSTA v. ULS, 2013 WL 1578338 at *4.

The ICA reasoned that “the issue which HSTA wishes to compel to

arbitration is closely related to the issues raised in ULS’s

prohibited practice complaint” and the HLRB had “exclusive

original jurisdiction” over the issues raised in the ULS’s

complaint.   HSTA v. ULS, 2013 WL 1578338 at *3.

           The ICA need not have reached the issue of the HLRB’s

possible primary jurisdiction over this dispute.           Before a court,

or an arbitrator, can apply the doctrine of primary jurisdiction,

it must first determine that it has jurisdiction over the

dispute.   Fratinardo, 121 Hawai#i at 468, 220 P.3d at 1049.           As

discussed above, the only issue before the circuit court was

whether an arbitration agreement between the HSTA and the ULS

existed.   This issue was uncontested and, regardless, it did not

implicate the expertise of the HLRB.        Thus, the ICA erred in

applying the doctrine of primary jurisdiction to conclude that

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the HSTA’s motion to compel arbitration was premature.

                             IV. CONCLUSION

          Because, it is undisputed that the Master Agreement and

the Supplemental Agreement contained arbitration clauses that

‘clearly and unmistakably’ reserved questions of arbitrability

for determination by the arbitrator, the circuit court erred in

failing to grant the HSTA’s motion to compel arbitration.             We

therefore vacate the ICA’s May 17, 2013 Judgment on Appeal filed

pursuant to its April 15, 2013 opinion and remand this case to

the circuit court for further proceedings.

Rebecca L. Covert                        /s/ Paula A. Nakayama
(Herbert R. Takahashi and
Davina W. Lam with her on                /s/ Sabrina S. McKenna
the briefs) for petitioner
                                         /s/ Richard W. Pollack
Richard H. Thomason
(James E. Halvorson
with him on the briefs)
for respondent

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