2006 NAC 137 Hawaii Naniloa Resort and Intl Longshore and Warehouse Union, Local 142

Title: Hawaii Naniloa Resort and Intl Longshore and Warehouse Union, Local 142
Date: 2006
Arbitrator: Michael Nauyokas
Citation: 2006 NAC 137

IN THE MATTER OF THE ARBITRATION BETWEEN
INTERNATIONAL LONGSHORE AND WAREHOUSE
UNION, LOCAL 142
and
HAWAII NANILOA RESORT
(Grievance re: Severance)

INTRODUCTION

The grievance in this matter came to arbitration hearing before the Arbitrator. The hearing was held on May 30, 2006, pursuant to the Collective Bargaining Agreement (CBA). The parties stipulated as to both substantive and procedural arbitrability. The parties stipulated as to the admission of certain evidence, and the Arbitrator made a full disclosure of his relationships with other attorneys and firms and there was no objection.

Both parties were fully and fairly represented. The Union, INTERNATIONAL LONGSHORE AND WAREHOUSE UNION, LOCAL 142, was represented by Lowell K.Y. Chun-Hoon, Esq. and Elisabeth A.K. Contrades, Esq. Also present were Fred Galdones, George A. Martin, Richard B. Baker, Jr., Leinani Andrade, Andre Garner, and Elmer Gorosph. The Employer, HAWAII NANILOA RESORT was ably represented by Paul M. Saito, Esq.

The parties stipulated that the Union dues issue was resolved; that the pension credit issue was resolved; and, that vacation was paid. The parties also stipulated through their attorneys that the CBA, the Memorandum of Agreement (MOA) and an extension were in effect at all relevant times pertinent to this grievance. The parties also stipulated that the full-time employees were entitled to eight hours a day as a credit toward the computation of severance pay.

ISSUES:

This arbitration presents the following issue for the Arbitrator’s resolution:

1. Whether the employees that were offered employment or who were hired by Employer’s Successor, Hawaii Outdoor Tours (HOT) and Mr. Fujiyama are entitled to severance pay;

2. Whether all part-time employees have been properly credited with the full five days of pay at the eight hours or less per day per year of service; and

3. Whether severance credit accrues for years prior to 1999, and if so, what is the start date for severance credit.

BACKGROUND

This Arbitration involves the interpretation of the terms and conditions of the CBA, several Memorandums of Agreement, and the bargaining history of the both the agreements and the parties to them.

The Employer, HAWAII NANILOA RESORT, LLC, operated a hotel property located in Hilo, Hawai'i. Before 1986, the same facility had been owned and operated by Inter-Island Resorts under the name and style of "The Naniloa Hotel." During this period, the facility belonged to the Council of Hawaii Hotels. The hotel employees of Council members were represented by the Union.

In April of 1986, Inter-Island Resorts sold the facility to Mauna Loa Investment Company which renamed the facility to The Naniloa Surf Hotel. Mauna Loa recognized the Union as the bargaining representative for the employees and accepted the existing CBA which had been negotiated with the Council of Hawaii Hotels in 1984. At the time of the transfer, Mauna Loa, Inter-Island, and the Union entered into a Memorandum of Agreement (MOA), whereby Inter-Island agreed to pay severance to those employees who were not retained by Mauna Loa.

In October 1987, Mauna Loa, in turn, sold the Hotel to Nakano Co., Ltd. and the facility continued to operate under the title of The Hawaii Naniloa Hotel. As in the previous sale, the new buyer, Nakano, assumed the CBA then in effect between the Union and Mauna Loa, agreeing to retain the current employees and to honor their existing seniority with the predecessor. Subsequently, in early 1988, Nakano also acquired a nearby golf course and extended the rights under the existing CBA to the golf course employee, and centralized both the hotel and golf course operations.

Following these developments, the Union and Nakano entered into another Memorandum of Agreement in October of 1988 to commemorate the changes involved in the acquisitions and extensions of coverage for the CBA. Between 1988 and 2002, the Hotel struggled to survive economically. During this period there were a series of memorandums of agreement, letters of understanding, and collective bargaining agreements which perpetuated the Union's representation of the Hotel's employees. Under these agreements and understandings, those unit employees remaining with Nakano retained their seniority on the basis of their previous years of service with the prior owners. During this period, due to the facility’s poor financial performance, bargaining unit employees agreed several times to forego pay increases. Because of this situation, the Union and Nakano kept collective bargaining to a minimum because Nakano was not in a financial position to improve upon the contracts. However, in June of 1999, Nakano and the Union entered into a new CBA which was to run to December 31, 2001. This CBA was congruent with the prior agreements dating to the first contract with Mauna Loa. The 1999 CBA expressly incorporated the provisions of the first MOA from 1986.

In 2002, Nakano sold the Hotel to Employer, Hawaii Naniloa Resort, LLC, which, at the time, intended to rename the Hotel as The Hawaii Naniloa Resort. The Employer’s plan was to renegotiate the land lease for the property under the facility with the State of Hawaii. Incident to its takeover of the facility, the Employer agreed to assume Nakano's obligations under the existing CBA pursuant to a Memorandum of Agreement dated 2002. On September 30, 2005, the lease for the facility was auctioned by the State of Hawaii. The Employer, despite its previously announced intentions, did not participate in the auction.

The facility was sold by the State of Hawaii to Hawaii Outdoor Tours and is now operated as The Naniloa Volcanoes Resort 2. The sale marked the end of Union representation of the workers at the resort. The new owners took the position that they would not recognize the Union, would not honor existing seniority agreements, and would offer the facility’s employees terms and conditions of employment which were significatly different than those previously available to the employees in the bargaining unit. All but fewer than 20 of the roughly 136 employees who had been with the bargaining unit at the time lost their jobs, including several who had been with the Hotel since 1986. The remaining contentions here arise under the difference in interpretation of the various CBAs, MOUs and the course of dealings between the Union and the Employer which arise from the questions involved in whether the 1999 CBA’s terms should be interpreted in a manner which makes 1999 as the starting date for purposes of calculating years of service for the purposes of paying severance, whether the employees who have continued to work at the facility under its new owners, Hawaii Outdoor Tours, are entitled to severance, and issues arising in the computation of severance for part-time employees.

POSITIONS OF THE PARTIES

UNION’S POSITION

The Union takes the positions that:

1. All former employees are entitled to severance.

The Union argues that all former employees of the Naniloa, including those who were hired by the successful bidder, are entitled to severance pay under the terms of the 1999 CBA, the 2002 MOA, and arbitral authority. The Union argues that the proper interpretation of severance pay language in the CBA requires an examination of the underlying reason for the adoption of the provision, and that in this instance, it was clear that the function of severance pay was to provide compensation for the loss of its member’s job rights when the Union’s employees were involuntarily separated from service, through no fault of their own, as the result of the change in ownership of the facility. Because of this, in the 2002 MOA, the Union argues that it required that Section 5 of the MOA exclude situations where the "successor employer" provided similar employment with similar pay and benefits to any re-hired employee.

The Union’s position is that the right to severance laid out in the various agreements extends not only to those employees separated from their employment, but to those employees continuing to work for the successor under dissimilar employment conditions and receiving dissimilar benefits.

2. Part-time employees are entitled to have their severance pay calculated at eight (8) hours of pay per day, 5 days of pay per year of service.

The Union argues that the formula for calculating severance pay is contained in Section 24 of the 1999 CBA, which requires that employees not separated for cause shall receive a separation allowance computed on the basis of five (5) days pay for each completed year of continuous service from the effective date of the Agreement. The Union also reasons that the CBA provides that a day's pay shall be equal to a day of sick leave pay for the current year based on the number of hours the employee was scheduled to work on the day they were sick. The Union argues that the evidence shows that a normal shift at the Hotel was eight (8) hours long, and therefore, under the language of the contract, even a part-time worker is entitled to have their severance pay based upon an eight-hour day, as the scheduled work day was eight hours long, and the standard in the industry is that part-time employees just work numerically fewer days of the standard eight-hour shifts.

The Union argues that there is no indication in the CBAs, or the MOAs involved, that there is a dual standard of calculating separation pay between full-time and part-time employees which would require a separate formula for calculating severance on the number of shifts worked per week. The Union also points out that the CBA does not provide for any increase in severance for employees for full-time employees who regularly worked more than eight hours per day.

The Union therefore contends that under the plain terms of the CBA, the same formula must be used to determine the severance pay for both full-time and part-time employees, specifically, eight (8) hours of pay per day, five (5) days per year of service.

3. Severance should be paid for years of service from 1986-2006.

The Union argues that the primary purpose of seniority is to promote maximum security for workers with lengthy continuous service for the Employer. Therefore, the Union argues, just as length of service to the Employer is an integral part of the definition of seniority, it is also integral to the definition of severance pay. The Union also points out that seniority or "length of service" is used to determine severance pay is also apparent from the terms of the 1999 CBA. In the CBA, the Union argues, the concept of continuous length of service is integral to the definition of seniority and the entitlement to such benefits as vacation pay, sick leave, and severance pay. The Union takes the position that the Employer’s contention that the reference in Section 6 to "continuous length of service," and Section 12's reference to, "worked continuously," and Sections 13 and 24 language regarding, “continuous service," all contain separate and unrelated concepts, is unpersuasive and contrary to the plain meaning of each phrase. The Union contends that these are clearly uniform references to an ongoing period of employment with the facility.

The Union also points out that the Employer has repeatedly stated that it does not contest that seniority dates back to September 1, 1986, and that the Employer actually paid vacation benefits on the basis of dates of hire dating back to September 1, 1986. The Union also notes that the Employer paid pension benefits for employees based on seniority dates or dates of hire going back to 1986. The Union reasons that, pension, like vacation pay, seniority, and sick leave accumulation, is another contractual benefit that is calculated based on an employee's length of service with the company.

The Union argues that severance pay, which is clearly a contractual benefit, must also be calculated based on an employee's length of service because it is implausible that the other contractual benefits would be calculated using September 1, 1986 as the starting point for date of hire calculations, but that this date would not be applicable to the calculation for date of hire for severance pay.

4. The 1999 CBA does not supersede all prior CBAs and other agreements between the various owners of the Hotel and the Union in the sense that all prior agreements and the bargaining history are "wiped out."

The Union, first of all, objects to the Employer’s contention that the Union drafted the 1999 CBA and points out the "TKFJM&H" footer present on the pages of the document, said acronym being the initials of the Employer’s law firm. The Union therefore contends that the 1999 CBA was drafted by the Employer’s predecessor in interest and its attorneys, and not the Union. The Union also argues that the plain and atypical language of Section 32, the history of the CBA, and the actions of the Employer demonstrate that the Union and the Employer have always had an understanding that seniority and years of service for the employees are calculated using the 1986 start date. The Union’s position is that when "new" CBAs are negotiated between the Employer and the Union, the parties do not rewrite the entire document, but instead, build on the existing CBA and only change the sections which were specifically modified through negotiation.

The Union points out that the 1999 CBA contained much of the same language as the 1986, 1989, and 1992 CBAs and still incorporated the "three payment" system for severance. It also included sections which defined seniority, provided vacation and sick leave benefits and a provision on separation allowance. The Union also notes that the 1999 CBA incorporated a "Letter of Understanding" dated June 14, 1999, signed by a representative of the Employer and that the text of the letter was identical Letters of Understanding from 1989 and 1994. The Union points out that the LOU states:

"In conjunction with the collective bargaining agreement being executed

simultaneously with this letter, it is agreed and understood as follows...

All prevailing past practices that were in effect as of September 1, 1986,

will continue to remain in effect."

The Union concludes that the first Letter of Understanding in the 1989 CBA and its ratification by each subsequent CBA clearly contradicts the Employer’s theory that the "zipper" clause wipes out all of its liability for any severance prior to 1999, because it unequivocally incorporated "all prevailing past practices that were in effect as of September 1, 1986."

EMPLOYER’S POSITION

The Employer takes the following positions:

1. The 1999 CBA does not require the Employer to calculate severance from an employee's original start date before Januarv 1, 1999

The Employer argues that Paragraph 24.1 of the 1999 CBA is unambiguous and that it has complied with the express and clear terms of that provision; that the Union did not establish that Paragraph 24.1 was ambiguous because the alleged ambiguous language is not plausible, and is not susceptible to the interpretation the Union claims; and, the integration clause or “zipper clause”, Section 32, prevents Paragraph 24.1 from being interpreted to have the Union's intended meaning, because it clearly states that the 1999 CBA supersedes the 1986 CBA, that is the CBA from which the Union claims the severance benefits arise. The Employer therefore contends that it has not breached its agreement to pay severance benefits to its former employees, because Paragraph 24.1 is unambiguous and the Employer has paid a separation allowance to qualified former employees as specified by that paragraph. The Employer argues that unless there is an ambiguity, all inquiry should stop and the Union's claim should be dismissed, because the arbitrator is required to enforce the agreement of the parties, and when a contract is definite and unambiguous there is no room for interpretation and the contract must be enforced without inquiring into the intent of the parties.

The Employer argues that "continuous service from the effective date of this Agreement" is only susceptible to one interpretation, and that interpretation is that the 1999 CBA’s effective date is the start date for the calculation of severance because the 1999 CBA superseded the 1986 CBA.

The Employer also contends that under the Restatement of Contracts, that the Union's failure to disclose its interpretation of the MOA requires that the severance terms in the agreement be enforced upon the Employer's understanding, because as a matter of law, contract interpretation requires that if a party did not know, or had no reason to know of a different meaning attached by the other party and the other party knew or had reason to know of the meaning attached by the first party, the understanding of the party that was unaware of the other party’s different interpretation will govern the construction of the contract language. The Employer contends that because the Union had a different interpretation that it reasonably should have understood that the Employer did not understand, it had an obligation to advise the Employer of that interpretation, and that the Union's failure to do so prevents it from now claiming that its interpretation should be enforced.

The Employer also argues that the Union's actions in negotiating the 2002 MOA establish that the Union did not intend Paragraph 24.1 to calculate severance from September 2, 1986. The Employer reasons that if Paragraph 6 of the 2002 MOA was intended to have seniority used to calculate the severance benefits set forth in Paragraph 5 of that 2002 MOA, that argument by the Union contradicts the language of Paragraph 5, and asks the arbitrator to rewrite the CBA, to have a general provision supersede a specific provision, which the Employer contends is contrary to the established law of contract interpretation.

The Employer also takes the position that because the Union has not identified a plausible ambiguity in the interpretation of the contract language, all of the testimony explaining the Union's present intent or interpretations is extrinsic evidence which is irrelevant and inadmissible under the "parole evidence" rule and may not be considered in this arbitration. The Employer argues that the Union has not and cannot identify a plausible alternate interpretation because the language in Paragraph 24.1 is clear and unambiguous, and therefore all evidence regarding the Union’s intentions during the negotiation as to the proper interpretation of the language of the paragraph must be disregarded, as the Union's argument that Mr. Garner may have believed Paragraph 24.1 required payment of severance from September 1986 is speculative and unsupported by any evidence.

2. Part time employees are not paid severance based upon an eight hour day

The Employer argues that the Union’s argument that part-time employees must have their severance pay based on an eight hour day, is erroneous because the 1999 CBA directs that a day's pay under the separation allowance provision will be calculated using the method to calculate a day's pay under its sick leave policy, and that section reads, "A day's pay shall be equal to a day of sick leave pay for the current year at the classified or personalized rate applicable to such employee." The Employer points out that under the CBA's sick leave policy the amount of sick leave pay for each day of sick leave is to be computed on the basis of the number of hours for which the employee would normally have been scheduled during the day at the employee’s normal straight-time of pay rate. The Employer argues that this plain language does not require that the calculation of severance pay be made on the basis of an eight hour day as the Union contends, but rather on the basis of the number of hours worked by the part-time employees.

3. The Union failed to establish that employees who secured employment HOT/Fujiyama were entitled to separation benefits

Finally, the Employer argues that the 2002 MOA unambiguously mandates that two groups of employees would not be entitled to severance: (1) those who are offered similar positions; and (2) those who secured employment with the successor. The Employer contends that the Union is inappropriately mixing those two clauses in an incorrect and misleading argument that those employees who secured employment with HOT/Fujiyama are still entitled to severance pay if their employment with the new operator of the facility is not similar to the employment they had with the Employer. The Employer also argues that even if a failure to provide similar employment could be a factor to determine entitlement to a separation allowance, the Union failed to present any evidence at the hearing to establish dissimilar employment. The Employer contends that the only testimony presented by the Union was from Union Business Agent, Richard Baker, who claimed he was told by unidentified housekeepers that they received a dollar more per hour over the pay they received with the Employer, but that they were required to clean more rooms. The Employer contends that this is mere hearsay which does not establish that the employees did not receive similar employment, and if anything, should the testimony be considered, it appears that employees who secured employment received more pay than the pay they previously earned when working for the Employer.

Also on the issue of whether the benefits were substantially different, the Employer argues that the Union’s witness merely speculated that the benefits were not as good, but did not support the speculation with any credible evidence. Therefore, the Employer reasons, those bargaining unit members who were retained by HOT/Fujiyama are precluded from receiving severance under the terms of the 2002 MOA because there is no evidence before the Arbitrator that their employment was either dissimilar or that the benefits were substantially different.

ARBITRATOR’S ANALYSIS

This decision presents issues arising from topics covered in the various CBAs,

MOAs, and other documents admitted into evidence at the hearing. Where evidence and/or testimony has been admitted over objection, the Arbitrator has, as noted at the hearing, taken an inclusive view of the evidentiary rules and undertaken the obligation of ascribing the appropriate weight to the contested evidence in rendering this decision. In construing the agreements and their construction, the Arbitrator will apply the plain meaning of the language contained in the agreements to the extent that it is possible for him to do so without reaching inconsistent and improbable results. Where the Arbitrator, after reviewing the plain language of the agreements, finds either patent or latent ambiguity in either the specific terms or the past practice of the parties in dealing with the terms of the agreement, the Arbitrator will consider extrinsic evidence in an attempt to ascertain the intentions of the parties, the applicable rules of decision, and the proper weight to be given to the available evidence in an effort to resolve the ambiguity in a manner that will be consistent with his duties of fairness and impartiality in this matter.

This decision will deal with the three issues in the order in which they were submitted for decision at the hearing. Accordingly the first issue is:

1. Are the employees that were offered employment or who were hired by Employer’s Successor HOT and Mr. Fujiyama entitled to severance pay?

In addressing this issue, there is little before the Arbitrator that addresses the actual conditions under which the employees that were offered employment or were hired by Employer’s successor were employed other than uncorroborated hearsay. The record does contain a letter from Ken Fujiyama of HOT addressed to Andre Garner of the Employer regarding the severance issue. Mr. Fujiyama’s letter reads in pertinent part:

“It is my hope to offer applicants wages, hours, and other terms and conditions of employment different from those found in the current contract with the union and that I will not be adopting the terms of the current labor contract.”[Emphasis Added].

Union Exhibit 37- Letter to Andre Garner dated January 5, 2006.

The Memorandum of Agreement dated April 12, 2002, between the Employer and the Union reads in pertinent part at paragraph 5:

“The Parties further agree that bargaining unit members who are offered similar employment with similar pay and benefits or secure employment with the successful bidder on the land parcels other than the LLC shall not be entitled to a severance allowance.” [Emphasis added]

There is no dispute in the record before the Arbitrator that Mr. Fujiyama/HOT was the successful bidder on the land parcels, and the Arbitrator’s plain reading of the MOA notes that there is a critical word between the two exclusionary provisions in this language. That word is “or.” These terms are disjunctive and not conjunctive. The Arbitrator finds neither patent nor latent ambiguity in this language. A plain reading of the MOA’s language excludes those bargaining unit members who secure employment with the successful bidder on the property from entitlement to the severance allowance. Despite the Union’s artful argument that the Arbitrator must look to the function of severance pay rather than the language of the agreement, the MOA clearly does not require that severance be paid if the bargaining unit members secure employment with the successful bidder regardless of whether the pay and benefits of the unit members with the successful bidder were similar.

The extrinsic evidence shows that it was clearly not in Mr. Fujiyama’s contemplation that the conditions be similar, but that is immaterial. If, indeed, the function of severance is to provide compensation for a loss of job rights, an employee working at essentially the same job for a new employer has not had such a loss of job rights. This is particularly true where there has not been a significant break in service. The Arbitrator finds that those employees who have secured employment with Fujiyama/HOT are not entitled to severance under the specific terms of the 2002 MOA.

2. Should all part-time employees be credited with the full five days of pay at the eight hours per day per year of service?

The Union has again artfully argued that there is no indication in the CBAs or the MOAs involved that there is a dual standard of calculating severance pay which distinguishes between full-time and part-time employees in the calculation of the severance pay rate, and points to Section 24 of the 1999 CBA. There is no dispute that the language of this section provides any regular full or part-time employee who has completed more that one year of continuous service with the Employer a separation allowance of five days pay for each completed year of the employee’s continuous service. The issue presented for decision at this point is whether the five days should be computed on the basis of a full eight hour shift. The section in controversy states in pertinent part:

“24.3 A day’s pay shall be equal to a day of sick leave pay for the current year at the classified or personalized rate applicable to such employee.” [Emphasis added].

However, as the Employer points out, Section 13.1 of the CBA defines sick leave

pay as follows:

“The amount of sick leave pay for each day of sick leave shall be computed on the basis of the number of hours for which the employee would normally have been scheduled during such day at his/her then current straight time rate of pay.” [Emphasis added].

A plain reading of the language of these two sections, taken together, makes it clear that the calculation to be performed for purposes of computing severance requires that the number of hours in the shifts scheduled to be worked by the employee determines the number of hours to be considered in calculating the employee’s rate of sick leave pay; and, that this rate is the basis for the purpose of calculating the daily rate of severance received by the employee. The CBA also establishes that the rate for severance can be personalized for each employee, on the basis of the number of hours of the employee’s scheduled shift, during the year that the agreement is being given effect. At the hearing, the Union witnesses testified that the normal shift is eight hours, however, given the probability that some employees may have regularly been scheduled for, and worked shifts that were shorter than eight hours, the Arbitrator rules that the language of the agreement requires that, for purposes of calculating the rate of severance pay, the average shift length worked by the employee over the course of the final covered year of employment must be used as the basis of the computation of the daily rate for severance. If all of the employees were, in fact, scheduled for standard eight hour shifts, that is the basis of the calculation. If the part- time employees were scheduled for shorter shifts, the number of hours scheduled is the basis for the sick pay rate; and hence the calculation of the applicable personalized severance rate.

The Arbitrator is fully aware that this ruling creates computational problems, however these problems are the result of the plain language that the parties agreed to, and while there is some ambiguity in the terms as to how the calculations are to be made over the course of years of service, there is no extrinsic evidence sufficient to lead to any other result. Obviously, the language in the sick pay portion of the CBA was intended for the purposes of calculating sick pay retrospectively for a particular employee who was scheduled to work a particular day on a particular shift, but was unable to do so due to illness, and not for the purposes of specifically calculating severance pay over a multi-year term of employment. The language of the CBA allows the computation of severance pay to be personalized for each employee on the basis of the sick pay rate for that employee, which is, in turn, calculated on the basis of the length of the particular employee’s normally scheduled shift, calculated on the basis of the employee’s term of service.

To clarify, this ruling does not apply to the hours an employee may have actually worked. In overtime situations, it is possible that the time actually worked may be longer than eight hours, but the language of the CBA limits the Employer’s obligation to pay the full daily rate of employees to the time for which the employees were actually scheduled to work. This ruling addresses the situation of those employees who may have moved between being full-time employees, scheduled for eight hour shifts, and part-time employees, who were scheduled for shifts shorter than eight hours, during the relevant contract year. Under the plain language of the CBA, if the shift scheduled for a part-time employee was an eight hour shift that is, by the definition laid out in the CBA, the sick pay rate. If the employee was regularly scheduled for a four hour shift, that is the sick pay rate. If, during the year severance became payable, the employee moved between four hour shifts and eight hour shifts, the average number of hours for which the employee was scheduled on the days to be worked must be calculated. The CBA does not allow for a part-time employee, who was regularly scheduled for an eight hour shift, to be paid less on a prorated basis that a full-time employee who worked eight hour shifts, regardless of the number of days the employee may have worked during a pay period. No other result can be ascertained from the plain language of the document.

3. Does severance credit accrue for years prior to 1999, and if so, what is the start date for severance credit?

The Employer argues that the language of the 1999 CBA between the Union and Nakano, the Employer’s predecessor in interest, specifically Section 32, excludes from the Arbitrator’s consideration the terms of any of the prior collective bargaining agreements. The text of this section in its entirety follows:

“This document, exhibits and the memorandum of Agreement No. 1 the entire Agreement of the parties and neither party has made any representations to the other which are not contained herein. This Agreement supersedes and replaces all prior collective bargaining agreements between the union and the Hotel and prior owners of the Naniloa Surf Hotel, including without limitation the Agreement, dated May 31, 1984, by and between the Council of Hawaii Hotels and the Union; to the extent such Agreements concern or relate to the Naniloa Surf Hotel, and the Union and all employees covered by this Agreement hereby waive their rights and claims under all such Agreements with the understanding that the provisions of this Agreement are intended to be and are hereby made in substitution of the prior Agreements.”[Emphasis added.]

Memorandum of Agreement No. 1, as referred to in the 1999 CBA is dated September 2, 1986 and states in pertinent part in Section 2:

“All Former Employees shall receive their separation allowances and vacation pay, to the extent they are so entitled pursuant to the terms of1inthe Old Agreement.”

Letter of Understanding #1 between Nakano and the Union dated June 14, 1999 states:

“In conjunction with the collective bargaining agreement being executed simultaneously with this letter, it is agreed and understood as follows:

Past Practices

All prevailing past practices that were in effect as of September 1, 1986, will continue to remain in effect.”[Emphasis added.]

The Memorandum of Agreement of April 12, 2002 Nakano, the Employer and the Union states in pertinent part:

“WHEREAS, the LLC [Employer] will assume control of the Resort, along with all of its employees, assets and liabilities;”

The MOA of April 12, 2002 continues:

“6. The LLC[Employer] shall recognize, honor and credit all bargaining unit members’ with their accumulated seniority, as well as vacation and sick leave hours. The Parties agree that the transfer of the bargaining unit members from the Resort to the LLC shall in no way effect said employees’ uninterrupted service for the purposes of benefits calculation, including, but not limited to seniority and pension.” [Emphasis added.]

While the Employer may argue that the Union has sought to introduce ambiguity into this grievance proceeding, the language of the agreements, MOUs and LOUs clearly indicate the following state of affairs:

1. The CBA specifically incorporated Memorandum of Agreement #1 from the 1986 contract which specifically extended seniority and benefits coverage, specifically regarding the payment of a separation allowance to Unit members working under the previous contract, which dated back to 1984;

2. Letter of Understanding #1, which was entered into between the Union and Nakano, Employer’s predecessor in interest, simultaneously with the CBA of 1999 specifically incorporates past practices as of September 1, 1986 into the parties’ understanding of the new CBA;

3. Under the 2002 Memorandum of Agreement, the Employer specifically assumed all of the employees, assets and liabilities of Nakano, which had entered into the CBA and LOU #1 with the Union;

4. The Employer in the 2002 Memorandum of Agreement specifically stated that the transfer of unit members from Nakano to the Employer would in no way effect the members’ uninterrupted service for the purposes of benefits calculation.

The Arbitrator is mindful of the Employer’s argument that the Union's failure to disclose its interpretation of the MOA requires that the severance terms in the agreement be enforced upon the Employer's understanding. However, given the clear assumption of its predecessor’s employees and liabilities in the 2002 MOA with Nakano and the Union; as well as the written history of the parties’ intentions contained in the 1999 LOU, the Employer is hard pressed to make the case that it was not aware of the nature of the course of dealings with the predecessors which led to the Union’s current understanding. The Arbitrator must observe language of the 1999 CBA which incorporates the 1986 MOA #1 and the 1999 LOU #1, which all appear to clearly contemplate that, unless the covered employee had service predating 1986, the 1999 CBA would be interpreted in light of the past practices as of 1986.

If there is any ambiguity, which in this case would be an ambiguity favoring the Employer’s position, the Arbitrator must look at extrinsic evidence, such as the conduct of the parties to arrive at an understanding of how the disputed terms should be interpreted.

At the hearing, Andre Garner, President of the Employer, testified as follows:

Q. Okay. So you agreed to recognize, honor and

credit all bargaining unit members with their accumulated

seniority?

A. That's correct.

Q. Okay. And seniority accumulated back from 1986, correct?

A. Correct.

Q. And you also accepted their vacation credit?

A. That's correct.

Q. And their sick leave credit?

A. That's correct.

Q. And the parties also agreed that the transfer of bargaining unit

members from the resort to the LLC shall in no way effect said

employees' uninterrupted service for the purposes of benefits

calculation, correct?

A. That's correct.

Q. Okay. And uninterrupted means with continuous, without

interruption?

A. That's correct.

(Tr. 171)

Mr. Garner’s testimony continued:

Q. Would you agree with me that the word uninterrupted means there's

no break?

A. That's correct.

Q. So if an employee was hired back in 1986 and there was no break in

the -- for calculation of benefit purposes, that would mean it would

run continuously from1986 all the way through 2002?

A. That's correct.

Q. Okay.

MR. SAITO: Well, I raise an objection because benefit calculation is overbroad. Can you focus on severance calculation?

Q. (By Mr. Chun-Hoon) When the word benefit calculation is used, you would agree with me that separation pay is a benefit of the contract, correct?

A. Separation pay is a benefit.

Q. So separation pay is included in the phrase benefit calculation in

paragraph six? That's one kind of benefit?

A. It's a benefit.

(Tr. 172).

What this exchange establishes to the Arbitrator’s satisfaction is that the Employer understood that severance was a benefit; that the Employer used the 1986 starting date for the purposes of calculating uninterrupted service for employees for purposes of calculating other benefits; but, that the Employer balked at the concept of using 1986 as the starting date for the computation of separation pay under the 1999 CBA. This appears to be an inconsistent result given the fairly unambiguous terms of the record before the Arbitrator. For that reason, the Arbitrator rules that for purposes of calculating the start date for severance credit, the proper date is September 1, 1986.

AWARD

1. The Grievance is denied to the extent that it seeks to establish a right to payment of a separation allowance to those employees who were subsequently retained by HOT/Fujiyama;

2. The Grievance is denied in part and granted in part as to the daily rate of payment for the separation allowance for part-time employees; e.g. sick leave, is to be calculated on the basis of the average number of hours for which the employee was actually scheduled to work during the individual’s scheduled shifts for the year of service prior to the date of separation;

3. The date for the calculation of the separation allowance for employees covered by the CBA is September 1, 1986.

DATED: Honolulu, Hawaii, .

                                                                        MICHAEL F. NAUYOKAS
                                                                        Arbitrator

STATE OF HAWAII                                    )
                                                                      ) SS
CITY AND COUNTY OF HONOLULU     )

On this ______ day of ______________ 2006, before me personally appeared Michael F. Nauyokas, to me known to be the person described in and who executed the foregoing instrument and acknowledged that he executed the same as his free act and will.

___________________________________
Notary Public, State of Hawaii
My Commission expires: _______________