2007 NAC 123 Hawaii Medical Center and Hawaii Teamsters and Allied Workers, Local 996

Title: Hawaii Medical Center and Hawaii Teamsters and Allied Workers, Local 996
Date: June 21, 2007
Arbitrator: Michael Nauyokas
Citation: 2007 NAC 123

IN THE MATTER OF THE ARBITRATION BETWEEN
HAWAII TEAMSTERS AND ALLIED WORKERS, LOCAL 996
and
HAWAII MEDICAL CENTER, LLC
(REGARDING THE LAYOFF OF EMPLOYEES)

INTRODUCTION

This matter came to arbitration before the Arbitrator, Michael Nauyokas, in a series of hearings that were held at the Offices of Marr Hipp Jones & Wang, in Honolulu, Hawaii, commencing on Monday, April 2, 2007, pursuant to the Collective Bargaining Agreement (“CBA”). The Union, HAWAII TEAMSTERS AND ALLIED WORKERS, LOCAL 996 (“Union”), was represented by Sean Kim, Esq. Also present at the hearing for the Union were Mr. Ronan Kozuma, President, Ms. Nadine Kahala, Business Agent, and Mr. Alan Itomura, Overseer for the Hospital Division. The Employer, HAWAII MEDICAL CENTER, LLC (“Employer” or “HMC”), was represented by Barry Marr, Esq. and William N. Ota, Esq. Also present on behalf of the Employer were Ms. Cathy Tanaka, Chief Operating Officer, and Ms. Jessica Sphar, Director of Human Resources. Both parties were fully and fairly represented by counsel. The Arbitrator made a disclosure of his relationships with the attorneys, and other attorneys and firms, and there were no questions or objections, and any objections to bias were waived regarding the disclosures.

The parties, through their attorneys, stipulated that the issues being presented arise from layoffs that occurred, and the propriety of those layoffs, at Hawaii Medical Center (“HMC”). The parties, through their attorneys, stipulated that the grievance is arbitrable, both substantively and procedurally. The parties, through their attorneys, stipulated that this is an alleged breach of contract case, and that the Union had the burden and therefore, would present its case first. The parties entered into stipulations regarding certain confidential matters, and admitting certain exhibits.

The stipulated issues to be determined by the Arbitrator are:

1) Whether there was a breach of an agreement not to lay off for a year;

2) Whether Bargaining Unit work can be given to non-bargaining unit employees;

and,

3) Whether Bargaining Unit work can be given to other Bargaining Unit employees.

The parties requested that the Arbitrator issue a short form award within five days of the receipt of the parties’ closing briefs, to be followed by a full reasoned award at a later time. Based upon the evidence adduced at the hearing, and the arguments presented at the hearing and in the briefs, the Arbitrator issued a short form award as to the three issues before him, and now issues the full reasoned award as follows:

FACTUAL BACKGROUND

This Arbitration arises from events at Hawaii Medical Center East, which provides inpatient services, a skilled nursing facility, and various outpatient clinics. Employer, Hawaii Medical Center (“HMC”), is a Hawaii limited liability company which owns and operates two medical centers on the island of Oahu - HMC East and HMC West.

Employer HMC's facilities were previously owned by St. Francis Healthcare System of Hawaii ("St. Francis") and were operated as the "Liliha" and "West" campuses of St. Francis Medical Center, as nonprofit corporations. HMC purchased St. Francis’ general acute care hospital operations pursuant to an Asset Purchase Agreement that was completed on January 14, 2007.

At all times relevant to this arbitration, ownership in the Employer was held by CHA Hawaii (CHAH), and a local physician group that CHAH formed to allow some investors to participate in the HMC project without participating in all other CHAH projects. Cardiovascular Hospitals of America (CHA) is the majority owner of CHAH.

The record reflects that for several years prior to its acquisition by the Employer, the St. Francis Medical Center operations had been financially troubled and that its lenders were concerned about the organization's ability to meet its payment obligations. These concerned lenders required St. Francis to retain independent consultants. The consultants retained recommended that the operation address its financial problems by undertaking such measures as laying off employees and selling the medical centers.

St. Francis’ management team proposed layoffs to solve some of the financial concerns on several occasions, however the Chief Executive Officer, Sister Beatrice Tom, would not order employee layoffs. Sister Beatrice instructed management to explore other potential options for cutting costs and/or increasing revenues. In June 2005, St. Francis entered into a letter of intent to sell its hospital facilities to Employer, which at the time consisted of CHA, accompanied by a group of local physicians, and other unnamed investors. The letter of intent, specified that all of the St. Francis employees were to be terminated upon the completion of the sales transaction, although specifying that the purchasing entity e.g. Employer, indicated that it would hire those employees deemed necessary for its daily operations based on the projected volumes. The letter also indicated that Employer would exercise "reasonable efforts" to employ for one year those employees who were retained. The Union and its employees had been informed by St. Francis that it had reached an agreement with HMC that there would be no layoff of employees for a period of one year in the St. Francis Healthcare System in Hawaii Newsletter published on May 26, 2006.

St. Francis employees, Ms. Sphar, Ms. Sue Bias and Mr. Fred Tokoro, the bargaining agent for St. Francis, but acting as HMC representatives, met with Union President-elect Ron Kozuma and Union representations on November 15, 2006. Mr. Kozuma recalled that Ms. Sphar stated that HMC would be retaining all employees for a one year period. Ms. Sphar does not recollect this comment having been made, and other than the St. Francis Newsletter, there is no written verification that such a representation was ever made by the Employer.

During the negotiation of the final sale, Employer determined that St. Francis' staffing level was excessive in relation to its patient volume. At the time the staffing level was determined to be approximately 1,250 to 1,300 full-time equivalents ("FTEs"), which was in excess of the 1,100 FTE figure contemplated on the basis of financial modeling performed by Employer’s CFO, Douglas Kell. It was determined that approximately 150 FTEs needed to be eliminated prior to closing. The parties eventually agreed that St. Francis would make the reduction in FTEs via the process of attrition. St. Francis represented to the Employer that the attrition rate was normally about 25% a year. The parties to the sale therefore contemplated that the reduction would be reached by attrition before the sale was completed.

Unfortunately, the record demonstrates that St. Francis continued to fill its employee vacancies with new hires, which did not allow the reduction in force by attrition. During the same time period, the operation also experienced a notable decrease in patient volume and the number of admissions ran below projected figures, and even below the previous year's admissions. The rate at which the medical centers were losing money greatly exceeded what had been anticipated and budgeted by the Employer.

Unlike its predecessor in interest, St. Francis, the Employer is obligated to pay general excise taxes in the context of healthcare, Medicare, Medicaid, and most commercial insurers do not include GET in their reimbursements and/or payments. "Private pay" (i.e., self-paying) patients, constitute only 2% of Employer’s business. The payment of excise taxes is expected to add $8-9 million a year in new costs to the operation.

After assuming control of the operations following the sale, on February 1, 2007, Employer advised the Union that it was instituting a layoff of Bargaining Unit employees. Simultaneously, the Employer provided to the Union a layoff list and the layoff letters that were to be mailed to employees on February 2, 2007, notifying the employees that they were being laid off. There was a meeting held on February 1, 2007; however, this meeting was not called to discuss how the Employer could address its financial concerns by modifications of the Contract, adjustments to employees’ job duties or wage rate, consolidation of positions or other possible options. The meeting was used to explain Employer's financial condition and announce the layoffs. The layoff implemented by the Employer involved laying off employees and transferring their duties to non-bargaining unit employees; laying off employees and dividing their duties among the remaining Bargaining Unit employees in the same job classification; laying off employees and transferring their duties to employees in other job classifications or in newly created positions and classifications; or laying off employees because there was a lack of work.

The layoffs went into effect on February 23, 2007. There was testimony to the effect that the Employer's intent was to have the work previously performed by the laid off employees taken up by the Teamsters employees remaining in that classification and, that with respect to job classifications that were eliminated in the layoffs, the work previously performed by Teamsters employees had never been exclusively assigned to the Union, and that other non-bargaining unit employees have previously performed such work in the normal course of their professions.

It is clear from the record that the layoff resulted in the reduction in the number of Bargaining Unit workers in the Employer’s workforce and also resulted in a reduction in the hours of the remaining members. Bargaining Unit workers in the "Patient Care Technician" position ("PCT") were laid off in all but one area of the hospital. Employer also created, without bargaining with the Union, a new position called "Patient Support Aide" ("PSA") to perform the PCT's duties. The new PSAs were performing duties of the prior "Transporter" classification and that position was eliminated. The "Transporters" duties were also being performed by Registered Nurses ("RNs") who were not within the Bargaining Unit. The Patient Service Assistant had several employees demoted to the lower position of Ward Aide and the remainder were laid off.

The record also demonstrates that the Cashier Clerk's position was eliminated and some of those job duties were transferred to a non-bargaining unit employee in part and the remainder of the duties were absorbed by other Bargaining Unit employees. The Admission Registrar's position also had its job duties increased because of the layoff. In addition, the position was moved to a public area and required to staff an information desk.

Also, a Dietary Aide was laid off and one Dietary Aide had hours reduced to part-time status. The Cook’s hours were reduced to part-time and there was some evidence that a supervisor was performing the work of both the Dietary Aide and Cook. The Employer also used "Call-ins" to perform Bargaining Unit work. Further, a Special Department Aide's position was eliminated and the work was performed by a non-bargaining nurse. A Material Management Clerk was laid off, however the employee returned, was doing the same work, but the position was changed to a non-bargaining position.

Nadine Kahala, the Union business representative, attended the February 1, 2007 meeting and confirmed that there was no offer or attempt to discuss or bargain concerning the layoff by the Employer, and that the meetings with the Employer primarily discussed the “bumping” procedure for the continuing Union employees. Ms. Kahala filed a grievance regarding the layoffs and the Employer confirmed that it would arbitrate the issues regarding the layoff. A series of letters from the Union demanded that the Employer discuss and bargain on this matter. The record is clear that the Employer created new classifications or changed job classifications and did not offer to discuss or bargain with the Union over these new or changed job classifications. The record also demonstrates that the Union did not agree to the creation of the new job classifications or to the movement of Bargaining Unit work to non-bargaining unit employees.

UNION’S POSITION AND ARGUMENTS

The Union takes the following positions:

1. The layoff violated the parties' agreement because Employer promised to retain

the employees. The Union argues that St. Francis and HMC knew in 2006 that a layoff was the only way to reduce the employee count by 150 FTEs. However, St. Francis made a specific representation to its employees and the Union through the widely distributed Newsletter, that HMC had agreed to keep all employees for a one-year period after closing. Neither St. Francis nor HMC ever attempted to correct this statement. The Union also argues that HMC made the representation that all employees would be retained in the application it made to the State of Hawaii in order to obtain approval for the sale.

2. The Union also argues that in this situation the doctrine of Equitable Estoppel

Applies. The Union argues that federal labor law recognizes that equitable estoppel may be applied in the labor context and cites authority to that effect. The Union’s position is that equitable estoppel is applied where there has been a misrepresentation or concealment of pertinent facts by one party and the other party was induced to act to his or her detriment. The Union argues that the four elements of equitable estoppel e.g. that: (1) the party to be estopped must know the facts; (2) the party to be estopped must intend that his conduct shall be acted upon or must act in a manner so that the party asserting the estoppel has a right to believe it is so intended; (3) the party asserting the estoppel must be ignorant of the true facts; and (4) the party asserting the estoppel must rely on the former's conduct to his injury. The Union submits that this is a clear case for the application of equitable estoppel because a representation was made by St. Francis that HMC agreed that all employees would be retained for one year.

3. The Union also argues that the Arbitrator should enforce the Asset Purchase

Agreement because even if the Arbitrator finds that there was no promise by HMC to the Union, HMC's agreement with St. Francis stated that HMC was to use "reasonable efforts to continue to employ each such hired employee for a period of no less than one (1) year." The Union argues that the evidence is clear that HMC made no effort, let alone a reasonable effort, to retain these employees, and that the St. Francis employees were third-party beneficiaries to the Asset Purchase Agreement. The Union therefore argues that, as a third-party beneficiary, the Union and its members are entitled to the employment protection contained in the Asset Purchase Agreement; that the Employer failed to offer any evidence that the Employer used any effort, reasonable or otherwise, to retain employees for a one-year period; and, that the Employer was required to meet and confer with the Union on whether there was a solution aside from this layoff to address the Employer’s financial problems.

4. The Union’s fourth argument is that Employer violated Section 9.3 of the CBA

which specifically and unequivocally provides that the Employer is to notify and discuss with the Union "before carrying out major policy changes affecting employees . . . or carrying out layoffs." The Union argues that any layoff requires a prior discussion and that the Employer made no effort to discuss the layoff prior to carrying it out. The Union takes the position that the meeting held on February 1, 2007 was to "notify" the Union of the layoffs, inform the Union who was being laid off, and to provide the Union with copies of the layoff letters that were mailed on February 2, 2007. The Union points out that the layoff letters were mailed on February 2, 2007 and argues therefore that the layoffs were "carried" out at that time and that the layoff had been implemented without discussion and that this was a clear violation of the agreement, as there was no discussion as required under the CBA.

5. The Union Also argues that the Employer violated the CBA by causing non-

bargaining employees to perform Bargaining Unit work in violation of Section 2.3 of the CBA, which precludes excluded employees from performing Bargaining Unit work if that performance leads to a reduction in force or a reduction in hours for Bargaining Unit employees. The Union notes that it is undisputed that the layoff resulted in both a reduction in force and a reduction in work hours as this was Employer’s stated objective. It is also undisputed that excluded employees are performing Bargaining Unit work. This is a clear contractual violation.

6. The Union argues that the Employer is not permitted under the CBA to eliminate

a job classification and replace it with a lower paying classification. This is clearly a mid-term modification of the Agreement and violates Section 36 of the Agreement and federal law. The Union argues that such unilateral changes to mandatory subjects of bargaining during the term of a collective bargaining agreement are a violation of the Employer's duty to bargain pursuant to Section 8(a)(5) of the National Labor Relations Act. The Union also notes that Section 12.9 of the CBA sets out that there should be an arbitration if there is a dispute on the creation of a new position or a change in an existing position. The Union notes that in the matters being grieved here, entire classifications were effectively eliminated (PCTs and Transporters) and their work given to a new job classification (PSA). Also, the Union argues that the Employer is not permitted to unilaterally implement such changes, as the intent of the CBA as expressed in Section 9.3 is the resolution of disputes prior to them being implemented.

EMPLOYER’S POSITION AND ARGUMENTS

For its part, the Employer argues as follows:

1. The Employer did not guarantee that any of the Union's employees would be

employed for a year, and did not violate any alleged promise when it made the decision to conduct layoffs. The Employer points out that there is no written documentation of the promise alleged by the Union and, that, as the proponent of the purported one-year guarantee, the Union has the burden of proving the existence of an enforceable agreement with respect to such guarantee. The Employer points out that there is no question that the obligations arising under a collective bargaining agreement, or other contract, rest ultimately on the principle of mutual assent, and that the Union has not carried the burden of showing that the Employer ever entered into a mutual agreement of the type alleged.

2. The Union’s argument suggesting that it should be regarded as a third-party

beneficiary of the agreements between St. Francis and HMC fails for the following reasons:

Neither the letter of intent nor the Asset Purchase Agreement set forth a one-year guarantee of employment and merely indicated that the Employer would use "reasonable efforts" to continue employment for a year after closing; the Employer's agreement not to automatically terminate its predecessor’s employees and to use reasonable efforts to continue to employ all interested employees was based on the Employer's understanding that the predecessor’s workforce would be reduced by 150 FTEs prior to closing; given the financial pressures the Employer is attempting to address, there can be no suggestion that the layoffs are the result of some failure to exercise "reasonable efforts" to preserve jobs; and, finally on this point, the Employer argues that the Union has conceded the non-existence of a one-year guarantee by claiming to be concerned that its employees might not be employed for the full year necessary to be eligible for the Employer's 401(k) contributions. For these reasons, the Employer argues that it is clear that Union is not a third-party beneficiary of any agreement to employ Union employees for one year.

3. The Employer also argues that the Union is not a third-party beneficiary of the

State Agency decision to grant HMC a Certificate of Need because: the decision is neither an agreement nor a basis for private contractual/enforcement rights; any workforce-related representations made by HMC in the course of the application process were based on Employer's understanding that because of the anticipated decrease caused by workforce attrition, it would be assuming a workforce of approximately 1,100 FTEs; and, the decision does not contain the purported representation.

4. The Employer also argues that it has not improperly transferred Bargaining Unit

work to any employees outside of the Bargaining Unit and has therefore not violated Section 2.3 of the CBA because that section states;”. . . included personnel shall not perform bargaining unit work if it results in a reduction in force. . . " and it was Employer's financial problems that led to the reduction in force; not excluded personnel doing Bargaining Unit work. The Employer also argues that there was no evidence of what constituted "bargaining unit work" that was performed by excluded personnel. The Employer reasons that the CBA "covers" employees identified in the NLRB certification which lists a number of different positions that were certified and are thus now covered but, the evidence does not establish what defines or constitutes "bargaining unit work" and the evidence establishes that the work at the hospital was performed based on the needs of the patients and that particular tasks are performed by personnel from both within and outside the bargaining unit. Therefore, Employer posits, there was no violation when other non-bargaining unit employees were required to do some tasks that were also performed by Bargaining Unit members when those positions were reduced or eliminated. The Employer argues that because so many responsibilities are shared among team members of varying classifications, it is neither reasonable nor realistic to find that an increase in work accompanying a reduction in staff size somehow constitutes an improper transfer of work violating the contract.

5. On the issue of whether it violated the CBA by failing to bargain prior to the

layoff, the Employer argues that the CBA does not require any negotiation over layoffs. The Employer argues that the parties have agreed in the CBA that Employer's duties were to: (1) ". . . notify the Union as soon as possible of its intention. . . "; and (2) ". . . inform the Union of the names and job classifications of the employees who are to be laid off as well as the effective date of the layoff.” The Employer argues that it complied with the CBA when it called the Union on January 30 to set up a February 1 meeting, just two weeks after it acquired the hospital and just six days after it was determined that a layoff might be necessary. The Employer argues that this notice to the Union was prompt and in compliance with the CBA and well in advance of the February 23 effective date of the layoff. The Employer argues that as the layoffs were not effective until February 23 and the Union refused to discuss the matter and rather chose to pursue a grievance, it satisfied its obligations under the CBA.

6. The Employer argues that it has not improperly transferred Bargaining Unit work

to any other members of the Bargaining Unit, arguing that if the remaining Union employees should be required to take on additional work that was previously performed by the laid off employees, there are no conceivable contract violations because the Employer is clearly permitted to conduct layoffs and to manage the assignment of work within a particular job classification under the CBA. The Employer further argues that it is clearly permitted under Section 12.9 to create new job classifications, and that it clearly satisfied the requirements of the contract by promptly notifying the Union of the proposed wage rate and providing two copies of the new job description.

ARBITRATOR’S ANALYSIS

The Arbitrator has seldom been faced with a situation of greater gravity and with more compelling and complex countervailing concerns and issues. While sympathizing with the Employer’s significant financial problems and concerns involved in the conversion of the formerly non-profit medical center to a commercially viable operation, the Arbitrator is limited to an analysis of the terms and conditions imposed upon the parties by the clear language of the CBA, and notes that as the successor-in-interest to St. Francis Medical Center, it clearly assumed those duties pursuant to the terms of its acquisition of its predecessor’s assets and liabilities. The Arbitrator sympathizes with both parties, particularly given the statements made by the Employer’s predecessor-in-interest regarding the one year guarantee; and, given the Employer’s currently severe financial situation.

However, representations made by an absent party that were not incorporated into a letter or memorandum of understanding attached to the CBA, and Employer’s exigent financial circumstances cannot be considered in the Arbitrator’s analysis of the duties imposed on the parties under the CBA.

The Arbitrator finds on the record that the Employer did not guarantee that any of the Union's employees would be employed for a year, and did not violate any alleged promise when it made the decision to conduct layoffs. The record is clear that neither the letter of intent nor the Asset Purchase Agreement set forth a one year guarantee of employment and merely indicated that the Employer would use "reasonable efforts" to continue employment for a year after closing; and set out the Employer's agreement not to automatically terminate its predecessor’s

employees. The Arbitrator also finds that on the record before him the Union is not a third-party beneficiary of the State Agency decision to grant HMC a Certificate of Need.

In analyzing the Employer’s argument that the CBA does not require any negotiation over layoffs, and that under the CBA that Employer's duties were to: (1) ". . . notify the Union as soon as possible of its intention. . . "; and (2) ". . . inform the Union of the names and job classifications of the employees who are to be laid off as well as the effective date of the layoff.” The Arbitrator, in examining the conduct of the layoff conducted by the Employer, finds that there was a duty on the part of the Employer to do more than notify the Union of its intent to conduct the layoff. In this particular instance, the timing of the notification and the mailing out of the layoff notices to the affected employees did not afford the discussion contemplated by the parties to the agreement. Quite simply, had the Employer approached the Union with a detailed action plan and discussed its intentions prior to giving the Union a notice of its intention and mailing out the termination letters, this finding would have been different, but the record is clear that the notification and layoff became a fait accompli upon the communication of the layoff to the Union members regardless of when the members’ last day of work was to take place.

As to the creation of the new classifications and job duties, the Employer’s argument that it is clearly permitted under Section 12.9 to create new job classifications, and that it satisfied the requirements of the contract by promptly notifying the Union of the proposed wage rate and providing two copies of the new job description, misinterprets the clear language of the CBA. It was clearly contemplated that such classifications and changes were intended by the parties to be part of a negotiated process that entitled the Union to the opportunity to bargain and utilize the grievance procedure. The record reflects that the Employer, although not without good reason, made these changes unilaterally, and in a manner that violated the contract by creating a new classification within the Bargaining Unit which absorbed Bargaining Unit work at a reduced rate of compensation, without negotiation.

As to the Employer’s argument that it did not improperly transfer Bargaining Unit work to any employees outside of the Bargaining Unit, the facts lead the Arbitrator to conclude that the Employer may not rely upon the argument that shared responsibilities among some of its employees immunize it from the terms of the CBA. The facts on the record before the Arbitrator demonstrate that Bargaining Unit members were laid off, and that their duties were absorbed by employees outside of the Bargaining Unit. Therefore, the Arbitrator finds that there was a clear cause and effect link between the Employer’s decisions and a loss of Bargaining Unit jobs. This constitutes a violation of the CBA, as will be discussed in greater detail in the decision and award.

DECISION AND AWARD - ISSUE ONE

As to Issue One, the Arbitrator finds that, while there may have been a unilateral assurance issued by St. Francis as to whether or not there would be a year without the layoff of Union employees once Hawaii Medical Center took over the facility involved, the Union has not demonstrated by a preponderance of the evidence that the Employer involved in this grievance, HMC, participated in such an agreement. Even under the Purchase Agreement, HMC was required only to exercise “reasonable efforts” to avoid layoffs. Further, the Arbitrator is bound by the terms of the CBA. There is no addendum, Memorandum of Understanding, side letter agreement, or other mutually executed writing appended to or amending that agreement which

set forth the terms and conditions agreed to by the parties in the CBA. By the language of Section 34 to the CBA:

“This document contains the entire Agreement of the parties and neither party has made any representations to the other which are not contained herein.”

Further, the CBA at Section 30.2 (g) specifically limits the latitude that this Arbitrator has in interpreting the Agreement stating in pertinent part:

“All decisions of the arbitrator shall be limited expressly to the terms and provisions of this Agreement, and in no event may the terms and provisions of this Agreement be altered, amended or modified by the arbitrator.”

Accordingly, the Arbitrator denies the Grievance as to the first issue.¹

DECISION AND AWARD - ISSUE TWO

Whether Bargaining Unit work can be given to non-bargaining unit employees?

The terms of the CBA prohibit the Employer from giving Bargaining Unit work to non-bargaining unit employees, while Bargaining Unit employees are laid off. Section 24.3(b)(2), although set forth under the “Low Need day” section, reflects the spirit of the CBA and requires that before laying off members that the Employer cancel all Call-ins. To the extent that the Employer has laid off Bargaining Unit employees and is using Call-ins to perform Bargaining Unit work, the Contract expressly prohibits such conduct under Section 2.3.

Although the Employer argues forcefully that it has not improperly transferred Bargaining Unit work to any employees outside of the Bargaining Unit, and has therefore not violated Section 2.3 because it was financial forces that led to the reduction in force and not excluded personnel doing Bargaining Unit work; and further argues that there was no evidence of what constituted "bargaining unit work" because work at the hospital was performed based on the needs of the patients and particular tasks were performed by personnel from both within and outside the Bargaining Unit; the Arbitrator is forced to disagree. The Union introduced unrebutted evidence at the hearing that work previously done by its laid-off members was being performed by non-bargaining unit employees. The Employer may not rely upon the argument that shared responsibilities among some of its employees immunize it from the terms of the CBA. The facts demonstrate that Bargaining Unit members were laid off, and that their duties were absorbed by employees outside of the Bargaining Unit. Therefore on Issue two, to the extent that such work is being done by Call-ins or other non-bargaining unit employees, the Grievance is sustained.

DECISION AND AWARD - ISSUE THREE

Whether Bargaining Unit work can be given to other Bargaining Unit employees?

The Employer argues that the Union has not properly articulated its claim that Bargaining Unit work has been improperly given to other Teamsters, and has not satisfied its burden of proving a violation of the contract because the Employer is clearly permitted to conduct layoffs and manage the assignment of work within a particular job classification and that the Employer's creation of the Patient Support Aide classification satisfied the requirements of the contract. The Arbitrator cannot agree.

The Union introduced unrebutted evidence that Bargaining Unit work was unilaterally reassigned by the Employer and that: 1) A new position description for Bargaining Unit members was created without discussion or negotiation; and, 2) That the duties of the laid-off Bargaining Unit members were redistributed to a certain extent among the remaining Bargaining Unit Workers in other classifications without negotiation; and, 3) That some Bargaining Unit employees’ wage rates were reduced. The Arbitrator finds that this course of conduct violated the requirements of Section 12.9 (b) and (c) of the CBA, and therefore the Grievance is sustained as to Issue Three.

REMEDIES

The Arbitrator finds the following remedies appropriate under the circumstances:

1. That to the extent that Bargaining Unit members have been replaced by non-

bargaining unit employees and the Union has been able to demonstrate that previously the Bargaining Unit work following the layoff is being done by non-bargaining unit employees, the Bargaining Unit members reinstated to those positions identified in paragraph 2 of these remedies shall be made whole by the payment of back pay in the amount of hours of Bargaining Unit worked by non-bargaining unit employees, retroactively to the date of the layoff or any cut back in hours;

2. That prospectively, the Employer, where the Union has shown that non-

bargaining unit employees have been doing non-bargaining work, shall reinstate Bargaining Unit members most qualified in terms of seniority and qualification to fill those remaining positions that remained following the layoff

3. The Arbitrator instructs the Parties to immediately enter into negotiations with

respect to the wage rates of any New Classifications for Bargaining Unit members or significant changes in job duties and responsibilities that effect the duties and responsibilities of Bargaining Unit employees working in existing classifications;

4. That to the extent that Bargaining Unit members have been replaced by

Bargaining Unit employees in new classifications and the Union has been able to demonstrate that the work following the layoff is being done by Bargaining Unit employees that were previously outside of those classifications for that Bargaining Unit work, the Bargaining Unit members reinstated to those positions identified in paragraph 5 of these remedies shall be made whole by the payment of back pay in the amount of hours of Bargaining Unit work done by the other Bargaining Unit employees in new classifications less any earnings they have received retroactively to the date of the layoff or any cut back in hours. With regard to new classifications, the parties shall negotiate the wage rates pursuant to Section 12.9(b) and if agreement cannot be reached after negotiations, arbitrated under Section 12.9(c).

5. That prospectively, the Employer, where the Union has shown that Bargaining

Unit employees have been doing Bargaining Unit work previously done by Bargaining Unit members in other classifications, shall reinstate to fill those remaining positions that remained following the layoff, those Bargaining Unit members in that classification most qualified in terms of seniority and qualification to occupy those positions;

6. The parties shall meet and discuss what the specific remedies detailed herein require. The Arbitrator retains jurisdiction over the remedies if the parties cannot reach an agreement after good faith efforts to resolve the remedies set forth above.

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

On this _____st day of __________ 2007, 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: _______________

¹ The Arbitrator must observe that the limitation of the authority of Arbitrators to ruling on matters within the agreement is well settled and continues to be enforced. On May 10, 2007, the Illinois Appeals Court, First District (Chicago) in First Merit Realty Services, Inc. v. Amberly Square Apartments, L.P. 2007 WL 1376227 (Ill.App. 1 Dist.) in a still unpublished opinion, vacated an award based on breach of a written agreement of the parties which the arbitrators reformed based on a finding of a subsequent oral agreement. The Court found that there is NO authority for arbitrators having such power.