Del Monte Fresh Produce (Hawaii), Inc. v. International Longshore & Warehouse Union, Local 142

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Electronically Filed
Supreme Court
SCWC-29037
22-OCT-2012
10:55 AM

IN THE SUPREME COURT OF THE STATE OF HAWAI#I

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

vs.

INTERNATIONAL LONGSHORE AND WAREHOUSE UNION,
LOCAL 142, AFL-CIO,
Respondent/Union/Appellee-Appellee,
and
HAWAII LABOR RELATIONS BOARD,
Respondent/Appellee-Appellee.

NO. SCWC-29037

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(ICA NO. 29037; CIVIL NO. 07-1-0708)
OCTOBER 22, 2012

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

OPINION OF THE COURT BY RECKTENWALD, C.J.

This case arises from Del Monte Fresh Produce Company’s

2006 decision to cease growing pineapples at its plantation on
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O#ahu. The company’s subsidiary, Del Monte Fresh Produce

(Hawaii), Inc., subsequently bargained with the International

Longshore and Warehouse Union, Local 142, with regard to the

effects of that decision on Del Monte employees in Hawai#i. The

Union believed the company was not negotiating in good faith, and

on August 21, 2006, it filed a complaint with the Hawai#i Labor

Relations Board alleging that Del Monte had engaged in unfair

labor practices.1 Following an evidentiary hearing, the HLRB

entered an order on March 21, 2007, which concluded that Del

Monte failed to bargain in good faith.2

Del Monte appealed, arguing that the Board Chairman

displayed an appearance of impropriety during the hearing, and

thus, should have been recused and/or disqualified; and that the

HLRB created a new test for effects bargaining in contravention

of federal labor policy, which led the HLRB to reach an erroneous

result. The Circuit Court of the First Circuit3 and the

Intermediate Court of Appeals affirmed. Del Monte Fresh Produce

(Hawaii), Inc. v. Int’l Longshore and Warehouse Union, Local 142,

AFL-CIO (Del Monte II), No. 29037, 2011 WL 5834630, at *5 (App.

Nov. 21, 2011) (SDO).

1
As discussed in Part I.B.1 infra, this opinion refers to the
petitioners/appellants-appellants in this case collectively as “Del Monte.”
2
Then HLRB Board Chairman Brian Nakamura, Board Member Sara
Hirakami, and Board Member Emory Springer presided.
3
The Honorable Sabrina S. McKenna presided.

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In its application, Del Monte raises the following

questions:
A. Did the [HLRB] err by failing to apply the “appearance
of impropriety” standard when ruling on [Del Monte’s] motion
for the HLRB Chairman’s recusal or disqualification?

B. Did the HLRB clearly err in denying [Del Monte’s] motion
for the HLRB Chairman’s recusal or disqualification?

C. Did the HLRB err in constructing a new test for “effects
bargaining” by requiring bargaining on numerous subjects
that federal labor policy has rejected as mandatory
bargaining subjects?

D. Did the HLRB clearly err in finding that [Del Monte]
failed to engage in good faith effects bargaining?

For the reasons set forth below, we hold that the HLRB

did not clearly err in denying Del Monte’s motion to disqualify

the HLRB Chairman. We further hold that the HLRB did not clearly

err in finding that Del Monte engaged in bad faith bargaining,

because there was substantial evidence that the “totality” of Del

Monte’s conduct did not evince “a present intention to find a

basis for agreement and a sincere effort to reach a common

ground.” See Del Monte Fresh Produce (Hawaii), Inc. v. Int’l

Longshore and Warehouse Union, Local 142, AFL-CIO (Del Monte I),

112 Hawai#i 489, 500, 146 P.3d 1066, 1077 (2006) (citations

omitted). However, to the extent that the HLRB’s order could be

construed to impose per se requirements for effects bargaining,

we also hold that bargaining on all of the subjects identified in

the HLRB’s order is not required in every effects bargaining

accompanying a plant closure. Accordingly, we affirm the

judgment of the ICA.

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I. Background

The following factual background is taken from the

record on appeal.

A. Announcement of Del Monte Fresh Produce (Hawaii), Inc.
Closure

The International Longshore and Warehouse Union, Local

142, AFL-CIO (ILWU or Union) is the bargaining representative for

the three bargaining units4 of Del Monte Fresh Produce (Hawaii),

Inc. (DMH). DMH is part of a larger corporation, Del Monte Fresh

Produce Company (DM Corporate), which is located in Coral Gables,

Florida. DMH and the Union were signatories to three collective

bargaining agreements for the three respective units

(collectively, “Collective Bargaining Agreement”). The

Collective Bargaining Agreement was effective from February 8,

2004 through May 30, 2009.

As of January 2006, DMH was a pineapple plantation

located at Kunia on O#ahu, which employed more than 700

employees. DMH and its local management, Edward Littleton and

Stacie Sasagawa, reported to Richard Contreras, the Vice

President of Finance and Administration of Del Monte Fresh

Produce North America.

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

4
The three respective bargaining units include O#ahu Plantation,
Kunia Processing and Packing Operations (Fresh Fruit or KFF), and Kunia
Chilled/Frozen Operation (KCFO).

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DMH, sent a letter to Fred Galdones, President of the Union,

which stated that “effective February 19, 2006, [DMH] will cease

its planting of pineapple in Hawaii.” The letter further stated

that “operations would still continue (at a diminished scale over

time) over approximately the next 2 ½ years.” On the same day,

DMH publicly issued its “Local Company Statement”:
It should be noted that Del Monte is not leaving
Hawaii immediately. Pineapple has a crop cycle of
three years and the Company’s current crop cycle will
continue to produce quality fruit through mid-2008.
Del Monte expects to continue harvesting and packing
pineapple in Hawaii through that time. In fact, the
Company expects significant volumes during 2006.

. . . Prior to the close of the Kunia plantation at
the end of 2008, Del Monte will work with its
employees and union representatives to reduce the
impact of this decision. The Company has been
discussing measures to help its employees, including
notifying other potential employers and potentially
transferring the Kunia housing to the current
employees/tenants. Del Monte is mindful of the
Company’s obligations to its employees and the local
community, and is committed to making every reasonable
effort to lessen the impact on all individuals
involved.

In response to these announcements, Galdones sent a

letter to Littleton dated February 9, 2006 to request effects

bargaining5 over DMH’s closure. Over six months in 2006, the

parties met for eight bargaining sessions from February 16

through July 18. During these bargaining sessions the Union was

principally represented by Union President Galdones, while DMH

was represented by a bargaining committee composed of

5
In labor relations, “effects bargaining” refers to the requirement
that an employer bargain over the effects of an operational change, including
the effects of a decision to close a plant. 48A Am. Jur. 2d. Labor and Labor
Relations § 2345 (2005).

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spokesperson Tim Ho, who was from the Hawai#i Employers Council,

Littleton and Sasagawa.

On February 22, 2006, the Union submitted in writing

its proposals regarding the “effects of ceasing planting

operations and closure of business.” The proposals included

three “cost items”: “enhanced severance, six months of medical

and dental coverage after closure, and protecting the residents

of Kunia Camp by providing seed money to retain a housing

association.” The “non-cost proposals” included administrative

items. The parties agreed to form a housing subcommittee to

negotiate with respect to Company-provided housing, and on or

around February 23, 2006, the Union submitted its housing

proposals.

In April 2006, the parties reached certain tentative

agreements on the effects of the closure. These tentative

agreements related to non-cost items and housing; DMH made no

concessions over the other items. On April 12, 2006, DMH

proposed a new cost item, a cash “retention bonus” to be paid to

fourth year covered seasonal employees, i.e., non-regular

employees who had worked for four years, and who remained

employed at DMH into 2007. Prior to the filing of the Union’s

original complaint, the parties last met on July 18, 2006, with

no movement by either party regarding cost items.

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B. HLRB Proceedings

1. Unfair Labor Practice Complaint

The Union filed its initial administrative unfair labor

practice complaint with the HLRB on August 21, 2006, naming as

respondents DMH, Littleton, Sasagawa, and Ho. On December 21,

2006, the Union filed an amended complaint, which named Dixon

Suzuki and DM Corporate as additional respondents.6 The Union’s

amended unfair labor practice complaint alleged, inter alia, that

Del Monte breached its duty to bargain in good faith in violation

of Hawai#i Revised Statutes (HRS) § 377-6(4).7 Specifically, the

Union alleged that “[o]n and after July 18, 2006[,]” Del Monte

“willfully refused to bargain in good faith with the [Union] over

the effects of the closure of its operations in Hawaii” by: (1)

“their refusal to consider cost proposals that would exceed

benefits previously negotiated into the [C]ollective [B]argaining

[A]greement[]”; (2) “their claim of impasse”; and (3) their

6
For ease of reference, DMH, Littleton, Sasagawa, Ho, Suzuki, and
DM Corporate will be referred to collectively here as “Del Monte.”
7
HRS § 377-6 (1993) provides in pertinent part:

It shall be an unfair labor practice for an employer
individually or in concert with others:
. . . .
(4) To refuse to bargain collectively with the
representative of a majority of the employer’s
employees in any collective bargaining unit provided
that if the employer has good faith doubt that a union
represents a majority of the employees, the employer
may file a representation petition for an election and
shall not be deemed guilty of refusal to bargain[.]

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“fail[ure] to appoint a representative with authority to

negotiate and reach agreement on cost items[.]” Del Monte filed

its answer to the amended complaint on January 5, 2007.

In August 2006, DM Corporate announced that it would

close KCFO, one of DMH’s bargaining units, in September 2006.

On November 13, 2006, DM Corporate informed Sasagawa

that it was accelerating the closing of the Kunia plantation to

January 22, 2007. The Union was informed by phone of the

accelerated closing date the following day, and by public

announcement on November 17, 2006.

On November 16, 2006, Del Monte filed a motion to

dismiss and/or for summary judgment, which the HLRB denied after

holding a hearing on the motion.

2. HLRB Evidentiary Hearings

Evidentiary hearings were held on November 29, 2006,

November 30, 2006, December 12, 2006, December 15, 2006,

December 21, 2006, and February 7, 2007.

a. Union’s Case-in-Chief8

i. Timothy Ho

Ho, President and CEO of Hawai#i Employers Council and

spokesperson in negotiations for DMH, testified that in 2004, the

Union and Del Monte negotiated a new five-year Collective

8
In addition to the following testimony from Ho, Sasagawa, and
Galdones, several DMH employees testified about the pineapple operations.

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Bargaining Agreement. Ho acknowledged that the Union had

expressed concerns during negotiations that DMH would be closing,

and recalled that the Union “wanted to make sure that [DMH] was

going to be here for the long haul.” According to Ho, DMH gave

an affirmative response.

The first time that Ho heard that DMH was “not going to

be in Hawaii for a long haul” was “[p]robably a day or two”

before DMH announced the decision to the Union, i.e., “late

January [2006].” Ho recalled that the reason for the decision to

cease plantation operations was that “it was not economically

feasible to continue the operations in Hawaii.”

Ho acknowledged that on February 9, 2006, the Union

sent a letter requesting effects bargaining and information on

the timing and reasons for the planned closure. Effects

bargaining commenced on February 16, 2006. The Union’s counsel

then asked Ho about the first effects bargaining meeting and

whether he recalled Galdones commenting that “he appreciated that

the people in the bargaining there, on the Del Monte side, had

their marching orders from corporate.” Ho responded, “That

sounds correct.” Ho further acknowledged that on February 22,

2006, the Union sent its proposal regarding the “effects of

ceasing planting operations and closure of business” to DMH.

Ho testified that in February 2006, “the plan was [for

DMH] to continue its operations, given the production volumes

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that were ongoing. And at the time, the company expected to

continue its harvesting operation through 2008.” Ho further

testified that “[a]t several points in time during the course of

our effects bargaining,” “things changed a little bit in terms of

what the operation was looking like.”

ii. Stacie Sasagawa

Sasagawa had been working for DMH as the Human

Resources Manger, but became General Manager in September or

October 2006 after Littleton left that position. Sasagwa

testified that she was “sure” Littleton assured the Union in 2004

that DMH was “here to stay[.]”

In regard to an April 2006 bargaining session, the

Union’s counsel asked Sasagawa whether she could recall Ho

indicating that DMH “could not provide enhancement; they received

marching orders[.]” Sasagawa did not recall Ho making that

statement. However, Sasagawa’s notes from that meeting

indicated, “Remaining items take into consideration what you’ve

said. You know difficult to provide additional economic

benefits. Received marching orders, cannot provide

enhancements.” Sasagawa explained that her understanding with

regard to “severance” and “medical benefits,” was that DM

Corporate was not willing to provide beyond what was agreed upon

in the Collective Bargaining Agreement.

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

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concluded their initial questioning of Sasagawa, the Chairman

asked Sasagawa further questions, and the following exchange

occurred:
[Chairman]: In our [Waiakamilo Honolulu
Chilled/Frozen Operation] hearings, we entertained
testimony from employees who had been there for 20
years. A surprising number of employees who had 20-
year tenure.
A lot of your 500 firees are going to be 20-year
guys?

[Sasagawa]: There is a large amount of people with
many years of service. As far as specifically over
20, I’m not sure.

[Chairman]: And a lot of testimony we received were
from people who were extraordinarily proud of doing
their job to the best of their ability for 20 years.
A proportion of your firees are going to be
those people, yeah?

[Sasagawa]: Yes.

[Chairman]: Why didn’t the company think that those
people deserved to remain separate?

[Sasagawa]: Why did the company not believe –-

[Chairman]: Why did the company think that those
people did not deserve enhanced severance, since they
were being terminated for no fault of their own?

[Sasagawa]: I’m not sure how to even answer that.

[Chairman]: The company had a reason for turning down
the enhanced severance. Yeah?

[Sasagawa]: Right.

[Chairman]: And these are good people, loyal workers
who have devoted half their life to the company.
Why did the company not give them enhanced
severance?

[Sasagawa]: I guess that was just their decision to
not increase their severance beyond the nine days they
were getting in the contract.

. . . .

[Chairman]: Now, in January, you are personally going
to be firing 500 people with no enhanced medical for
themselves or their families?

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[Sasagawa]: Yes.

[Chairman]: You can do that?

[Sasagawa]: It’s a job. I have to.

The Chairman also questioned Sasagawa about whether

employees had relied on Sasagawa’s prior representations that the

plantation would not close until at least December 2008. For

example, the Chairman asked Sasagawa whether people “bought a

car[,]” “had babies[,]” or “got married,” “expecting that they

would have a job, at least until December of [2008.]” Sasagawa

responded in the affirmative, and the Chairman further asked, “Is

that fair?” Sasagawa responded, “It’s not fair.” Del Monte’s

counsel objected, stating that “we’re talking about something

emotional or in moral sense that is not at issue here.” The

Chairman responded, “[Sasagwa] has responded honestly and

sincerely. I’m not going to strike that. And it’s the bottom

line in this case, ethically. It’s not legally.” The Chairman

then continued, “Sorry. I didn’t mean to make you cry. But that

is the bottom line.” After a recess was taken, the Chairman

stated, “On the record, I’d like to apologize to [] Sasagawa

[for] effectively getting emotional in my line of questioning. I

personally appreciate your candor and honesty.” After further

questioning of Sasagawa by counsel, the Chairman again

apologized, “In real life, when I use the court interrogation

tone of voice, my wife slaps me directly. I’d like to ask you to

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do so if I ever do so again.”

iii. Frederico Galdones

Galdones, President of the Union, testified that he was

the spokesperson for the Union when they were negotiating the

2004 Collective Bargaining Agreement. Galdones testified about

the Union’s proposals for the Collective Bargaining Agreement in

2004, one of which concerned severance. Galdones stated that the

Union withdrew that proposal based on DMH’s representation in

negotiations that it “had been in Hawaii for about 100 years, and

[it] would like to be here for another hundred years[.]”

Galdones testified that after the February 2006

announcement that DMH would be closing in 2008, he “met with the

Union’s Negotiating Committee to discuss the announcement . . .

[a]nd we established a set of demands for the discussions.”

Galdones further testified that prior to doing so, he reviewed

previous effects bargaining agreements reached between the Union

and other industries, which included “enhancing the benefits

beyond what the Collective Bargaining Agreement provided for.”

With regard to the proposals that the Union submitted to DMH in

2006, Galdones testified that some of the proposals had “economic

effects,” i.e., the medical and dental extensions, enhanced

severance, and housing proposals. With regard to these economic

proposals, Galdones testified that during the course of the

effects bargaining with DMH, it appeared that the Union was

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

counteroffers.

Galdones testified that during the meetings in

February, March, and April 2006, the Union had no reason to

believe that 2008 was not a firm closing date. Galdones recalled

that at some point in the negotiations, Ho talked about “marching

orders” and that he “cannot provide any enhancements[,]” and

Galdones understood Ho’s comments to mean that “they weren’t

going to give any more than what the Collective Bargaining

Agreement provided for.” Galdones asserted that Ho used the word

“impasse” in April. However, Galdones disagreed that the parties

were at an impasse at the time.

When asked why the Union filed the unfair labor

practice complaint against Del Monte, Galdones replied:
Well, first off, in 2004, we had an indication
that they were here for the long haul, and that we
would -- and that is the reason why we had established
a five-year contract.
February of 2006, . . . they had indicated to us
that they would be closing in 2008. And in the
bargaining, when we were in the bargaining, the
indication given to us was that the major decision
maker was not sitting at the table, but was coming
from Coral Gables.
And that kind of put us at a disadvantage. And
that is why we felt that because of the position that
we were placed in and how the dynamics of the
negotiation was going, we felt that it was not –-
we’re not treated in accordance to what the labor law
provides in negotiation, and we felt it was bargaining
in bad faith.

Galdones explained that when the “decision maker on

cost items is not present[,]” the person is “so far removed from

the emotions” that it makes it “much more difficult” to “reach

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agreements on cost items.” Galdones also testified that the

September 2006 announcement of the KCFO closure came as a

surprise because they were “under the impression that it may be a

gradual phaseout, but this was a total closure of KCFO.”

Galdones also testified about the first time Del Monte made what

he considered a cost proposal, which occurred on April 12, 2006

and concerned fourth year covered seasonal employees. According

to Galdones, Ho told the Union that the “offer was just good for

the day[,]” and Galdones did not find DMH’s action “to be

conducive to bargaining in good faith.”

Galdones testified that the Union amended its August

2006 complaint to include conduct that occurred thereafter,

because the Union considered what Del Monte did in November to be

“bad-faith bargaining” as the Union “had been given indication by

the company that they were going to be harvesting and working

through mid 2008.” Galdones stated, “instead of from 2006 to

2008, it’s now a two-month period.” He further stated, “It’s

difficult for the Union, because it’s a moving target.” Galdones

claimed that the Union was “never forewarned at all” that “there

were some problems that might lead towards the closure of the

company.” Accordingly, Galdones requested that “because of the

commitment [DMH] made in February of 2006 that [DMH] would be

operating until 2008, that the loss of income that the employees

had suffered or will be suffering would be replaced.”

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b. HLRB Hearing on Del Monte’s Motion to Disqualify

Del Monte filed a Motion to Disqualify or for Recusal

of Board Member (Disqualification Motion), arguing that the

Chairman should recuse himself or be disqualified based on his

questioning of Sasagawa on the second day of the hearing.

After hearing arguments on the Disqualification Motion

on December 15, 2006, the Chairman stated:
Okay. Since the recusal is personal to me, I’m going
to rule on the [Disqualification] Motion without
consultation with my colleagues.
Since in my tenure as Chairman, witnesses have a
frequent tendency to burst into tears, the last two
witnesses that did were 300-pound refuse workers with
a penchant for violence. I asked my questions because
I don’t know the answer, and I really want to know the
answer, not because I want to make anybody’s case.
And my position is to represent the public
interest on this Board. And I assume and will
continue to assume that a passion for fairness and
some compassion is a minimal qualification.
So your [Disqualification] Motion is denied.

Thereafter, Del Monte’s counsel requested that, because

Del Monte filed its motion “as recusal or disqualification, that

in addition to the Honorable Chairman’s ruling on the recusal

component, there also be a ruling as to the disqualification

issue.” After the HLRB conferred, the Chairman stated, “Pursuant

to [Del Monte’s] request, the Board has conferred regarding the

[Disqualification Motion]. And at least a Board majority

supports the Chair’s ruling on the matter.”

c. Del Monte’s Case-in-Chief

i. Richard Contreras

Richard Contreras, Vice President of Finance and

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Administration for Del Monte Fresh Produce North America,

testified that he is “responsible for all of the financial

aspects of North America[,]” including DMH.

Contreras testified that in 2004, DMH operations were

profitable, but that changed in 2005 “because of what was going

on in the worldwide market.” Contreras sent a letter to Burt

Hatton, a representative of Campbell Estate, on June 8, 2004,

seeking to extend DMH’s lease, which was to expire in December of

2008. Contreras further testified that in 2004, at the time the

Collective Bargaining Agreement with the Union went into effect,

there was no decision to stop planting or to shut down

operations.

Contreras testified that the January 2006 decision to

stop planting in Hawai#i was based on the fact that 2005 was not

a profitable year, DMH’s lease was to expire in 2008, and there

was increased competition from Latin America. Contreras

testified affirmatively that at the time of the January 2006

decision to stop planting, it was his intention to continue the

operations through 2008. When asked about his “communications

with the Hawai#i Committee about the bargaining[,]” Contreras

responded that he spoke to Littleton almost “every day,” and that

it was “very easy” to reach Littleton or Sasagawa. Contreras

testified that the DMH Committee had authority to bargain without

consulting with corporate on everything but “the three large

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dollar items proposals, which were the increased severance, the

extended medical benefits, and the housing[.]” “But on

everything else, they had free independence.” Contreras was

aware that the committee entered into “numerous tentative

agreements with the Union this past year in effects

bargaining[,]” and that the committee had “full authority to

reach those agreements” “[e]xcept for the three [items]

mentioned[.]” Contreras testified that Del Monte considered the

Union’s financial proposals, “even though [Del Monte] did not

ultimately agree to all the proposals[.]” Contreras further

testified that “the main factor” in their decision was that “the

employees were being given about two or three years’ notice

before they were to be terminated or laid off.” Contreras denied

that the DMH committee was told at the start of negotiations that

it could not agree to any particular item.

Del Monte’s counsel asked Contreras to explain DM

Corporate’s November 2006 decision to accelerate the shutdown of

DMH from 2008 to early 2007. Contreras responded that, by

November 2006, DM Corporate could see that DMH had lost almost

five million dollars in 2006 and that the best projection for

2007 was a loss of a million dollars.

On cross-examination, Contreras acknowledged that Del

Monte’s February 2006 letter to Galdones regarding the initial

closure did not “reference the loss of profit in 2005 as a reason

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as to why [they] were closing[.]” Contreras admitted that he did

not have any discussions with Littleton “before the meetings on

effects bargaining as to what [DM Corporate] would be willing to

do or not do[,]” and further admitted that the large cost items

would have to be approved by corporate.

ii. Timothy Ho

Ho was called to testify again in Del Monte’s case-in-

chief. Ho testified that the 2004 Collective Bargaining

Agreement “included separation allowance” for employees who might

be laid off. Ho testified that he believed the nine-day

severance allowance provided for in the Collective Bargaining

Agreement was “generous” compared with other contracts that he

had seen. Ho denied that the five-year duration in the contract

was used to “conceal some kind of existing decision to shut

down[.]”

With regard to the 2006 effects bargaining, Ho

testified that DMH had “always accommodated the [U]nion’s

requests for meetings” and that he was “routinely in contact with

[] Galdones.” Ho further testified that he “believe[d] the [DMH]

committee had full authority to negotiate the effects of the

close down.” Ho stated that the DMH committee “spent a

considerable amount of time doing research, considering every one

of the company’s proposals[,]” and “answer[ing] every proposal

that has been made.” Ho further stated that he “had full

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authority to enter into [the tentative] agreements” with the

Union. Del Monte’s counsel asked Ho whether it was “accurate”

that “the company would not and has not offered anything more

than the [Collective Bargaining Agreement,]” to which Ho

responded, “No, we had already arrived at some tentative

agreements that extend beyond the [C]ollective [B]argaining

[A]greement, so I don’t see that being correct.”

Del Monte’s counsel also asked about “impasse” and if

Ho could “recall who first said that the parties were at

impasse[.]” Ho recalled that Galdones had said it first, but

admitted that Ho “may have asked the question in an off-the-

record meeting of whether or not we were at impasse on the

issues[.]” Ho denied that Del Monte imposed any adverse

consequences when the Union did not accept its latest offer.

On cross-examination, the Union’s counsel asked whether

the 2006 DMH bargaining committee had “full authority on the

table to negotiate with the [U]nion a counterproposal for the

extended medical benefits, or [whether] that [was] something

[they] had to consult and get approval from corporate” for, to

which Ho responded, “It would have required approval.” Ho

admitted that Del Monte did not make any counterproposal to the

Union’s proposal for enhanced severance or extended medical or

dental benefits. On examination by the Chairman, Ho admitted

that during the effects bargaining in April he did not have “any

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authority in the company to accept or offer anything regarding

medical, dental, or severance[,]” and that the same was true for

Sasagawa.

iii. Stacie Sasagawa

Sasagawa was called again to testify. Sasagawa

testified that during the 2004 Collective Bargaining Agreement

negotiations, there was no indication that DMH would cease

planting in the future. Sasagawa denied that Ho or Littleton

ever said that the company could not or would not give more than

what the Collective Bargaining Agreement provided. Sasagawa

recalled that “they had made a statement saying to the effect

that they would entertain reasonable requests.”

d. Testimony Regarding Second Phase of Negotiations

On December 21, 2006, the HLRB concluded the

evidentiary hearing. Upon Del Monte’s request, however, the HLRB

subsequently reopened the hearing to permit testimony on

negotiations that occurred in December 2006 and January 2007

(“second phase of negotiations”).9 The second phase of

negotiations led to the parties executing a Memorandum of

Agreement on January 10, 2007, which ended the effects

bargaining. The HLRB heard additional testimony from Ho and

9
More specifically, on December 5, 2006, at DMH’s invitation, the
parties held another bargaining session, which marked the start of the second
phase of negotiations. The parties met several more times in December 2006.
On January 9, 2007, the parties met again, and they mitigated their positions
on the various cost items.

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Galdones on February 7, 2007.

3. HLRB’s Findings of Fact, Conclusions of Law, and Order

On March 21, 2007, the HLRB issued its HLRB Order, in

which it referenced this court’s decision in Del Monte Fresh

Produce (Hawaii), Inc. v. Int’l Longshore and Warehouse Union,

Local 142, AFL-CIO (Del Monte I), 112 Hawai#i 489, 146 P.3d 1066

(2006). The HLRB acknowledged that in Del Monte I, this court

applied, but did not expressly adopt, the HLRB’s standard for

determining whether a violation of the duty to bargain

collectively has occurred: “‘whether the totality of an

employer’s conduct evinces a present intention to find a basis

for agreement and a sincere effort to reach a common ground.’”

(Quoting Del Monte I, 112 Hawai#i at 500, 146 P.3d at 1077).

Additionally, the majority opinion recognized that the

“bargaining at issue took place in two discrete phases; one

following [Del Monte’s] announcement of closure in January 2006

and the other following its announcement of accelerated closure

in November of that year.” As to the second phase of

negotiations, which were conducted in December 2006, the HLRB

found that the negotiations took place in “good faith.” In

contrast, the HLRB could not “so conclude with respect to the

first phase of negotiations and f[ound] and conclude[d] based on

its understanding of the totality of the disclosed circumstances

that [Del Monte] failed to bargain in good faith in violation of

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HRS § 377-6(4) during this phase.” The Board majority stated:
In the opinion of the Board majority, rational
foundational prerequisites of information must be
available, or the subjects of open good faith
exchange, in the course of effects bargaining
accompanying a closure should at least include [sic]:
1) why the closure is taking place; 2) what, if
anything, the Union, employees or the employer could
reasonably do to delay, forestall the closure or
mitigate the detrimental effects of the closure; 3)
the reasons for positions taken in developing,
modifying or rejecting offers or counter offers; 4)
the resources which might be available to effect
compromise; 5) the possible retention, redeployment or
liquidation of effected [sic] human or material
resources; 6) what is necessary to establish an open
and meaningful avenue of communication with decision
makers; 7) steps that can be reasonably taken to
mitigate the detrimental effects of the pending
unemployment to employees, their dependent families or
their community; and 8) the precise timing of the
closure.

The Board majority then acknowledged that “[e]ach of

these elements existed, albeit largely through testimonial

disclosure, during the second phase of negotiations[,]” but

stated that this could not “be said for the first phase which was

marked by a withholding, frustration or unilateral change with

respect to each identified element.” The Board majority cited

the following as examples of how DMH failed to bargain in good

faith during the first phase of negotiations:
1. The Union was advised of only competitive
pricing and lease expiration as the initial
reasons for closure; profitability and
production concerns, much less continuing and
exacerbated profitability and production
concerns were never transmitted to the Union.

2. In the absence of this information and naturally
any substantive exchanges between the parties in
this regard, the Union had no reason or ability
to modify, sweeten or invent new proposals in
order to possibly extend the life of the
enterprise and its members’ jobs. Any hope or
possibility of creative collaboration was lost

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within the confines of spreadsheets which were
totally unavailable.

3. [Del Monte’s] bargaining representatives
dutifully transmitted and costed the Union’s
costs proposals to Corporate. They also
dutifully and steadfastly transmitted
Corporate’s rejection. But the record is devoid
of an instance of the Company’s bargaining team
ever advising the Union of the reasons for its
rejections. Thus, the Union was again left in
an informational vacuum. They couldn’t obtain
the reasons for rejection or reasonably craft a
compromise, short of complete capitulations,
that might generate movement.

4. The Union and its members were led to believe,
based on [Del Monte’s] representation, that
employment would be available until December
2008, almost three years after its January 2006
announced closure. The closing date implicitly
assured crop retention and cultivation, active
and gainful employment until that time, and time
to plan, budget and live accordingly. Both the
Union and [Del Monte] relied upon this
representation in establishing its positions.
The sudden unilateral acceleration of closure
wiped out these expectations and betrayed these
reliance[s].

5. In its public statement accompanying its first
announcement of closure, [Del Monte] committed
to: “. . . Del Monte will work with its
employees and [U]nion representatives to reduce
the impact of this decision. The Company has
been discussing measures to help its employees,
including notifying other potential employers
and potentially transferring Kunia housing to
the current employees/tenants. Del Monte is
mindful of the Company’s obligations to its
employees and the local community, and is
committed to making every reasonable effort to
lessen the impact on all individuals involved.”
In the course of the first round of bargaining,
except for a handful of locally generated well-
intended classes and a job fair, virtually none
of this happened.

6. The Board can identify no piece of information
more foundationally relevant to effects
bargaining accompanying a closure than the date
of the closure. That date defines the time for
bargaining, the Company’s continued need for
employees and hence the Union’s economic
leverage, the time available for employee
mitigation of damages, and the time pressure
parameters on the taking and establishment of
bargaining positions. The closing date is not

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necessarily, and was not here argued to be, a
subject of bargaining. But the information
establishes critical and foundational and
operational parameters. Hence [Del Monte]
essentially made disappear the foundation and
therefore substance of the first phase of
bargaining when it accelerated closure.

After listing the aforementioned factors, the Board

majority stated:
The Board does not conclude that any of the
factors discussed above, standing alone is necessarily
dispositive of this issue. But taken together, as
representative of a totality of the circumstances
presented before us the Board must conclude that the
totality of an employer’s conduct during the first
phase of bargaining does not evince “a present
intention to find a basis for a basis for [sic]
agreement and a sincere effort [to] reach a common
ground.” [Del Monte I, 112 Hawai#i at 500, 146 P.3d
at 1077] Instead, its efforts and its conduct
indicates an intention to create an informational
vacuum and temporal box around negotiations which
would induce and require complete capitulation.

In its conclusions of law, the Board majority stated in

relevant part:
Based on the totality of the circumstances presented,
the Board majority must conclude that with respect to
the first phase of bargaining, the totality of the
employer’s conduct during the first phase of
bargaining does not evince “a present intention to
find a basis for [] agreement and a sincere effort
[to] reach a common ground.” [Del Monte I, 112
Hawai#i at 500, 146 P.3d at 1077] Instead, its
efforts and its conduct indicates an intention to
create an informational vacuum and temporal box around
negotiations which would induce and require complete
capitulation. The Union was not provided any
information regarding profitability or production
concerns. The representatives at the bargaining table
either remained silent on the financial condition of
[DMH] or were unaware as to how DMH was financed.
This lack of knowledge or information as to the
financial considerations of the plans for continued
operation precluded meaningful bargaining. Moreover,
upon questioning as to the future of [DMH], the Union
was misled by DMH’s assurances that DMH would be in
Hawaii at least until December 2008, and that there
would be no more operational changes in September
2006. Shortly thereafter, [Littleton] left his
General Manager position to [Sasagawa]. The Union was

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further misled to believe that it had time to
negotiate the impact of the final closure to the
majority of employees until 2008. Accordingly, the
Board concludes that [Del Monte] failed or refused to
bargain in good faith and thereby committed a
prohibited practice in violation of HRS § 377-6(4).

Having found that Del Monte violated its duty to

bargain in good faith, the Board majority ordered that: (1) Del

Monte “pay additional severance at the contractually provided

rate to all employees terminated as a result of closure for the

almost two years between actual closure and December 2008”; and

(2) “the parties reopen negotiations with respect to medical

insurance and attempt to reach an agreement which supplements and

expands their current agreement (two months of medical) with a

program that would provide at least 12 months extended coverage

to the workers (and their families) who have not as yet acquired

insurance.”

Board Member Hirakami concurred in part and dissented

in part. Board Member Hirakami concurred with the Board

majority’s conclusion that Del Monte “failed to bargain

collectively in good faith during the first phase of

negotiations,” but “for different reasons[.]” Board Member

Hirakami focused on the fact that the DMH bargaining committee

received “marching orders” from DM Corporate, and accordingly,

she concluded that DMH could not meaningfully consider the three

cost items proposed by the Union. Thus, she concurred in the

conclusion reached by the Board majority that Del Monte had

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failed to bargain in good faith. Board Member Hirakami

disagreed, however, with the Board majority’s discussion of the

eight “rational foundational prerequisites of information which

must be available” in the course of effects bargaining. She also

disagreed with the majority as to the remedy, and stated that she

would “award four additional months of enhanced medical coverage”

for “a total extended period of six months.”

C. Circuit Court Proceedings

On April 20, 2007, Del Monte filed its notice of appeal

to the circuit court. On February 1, 2008, after hearing

arguments and receiving briefing from the parties, the circuit

court filed its Order Affirming HLRB’s Decision No. 464 Dated

March 21, 2007. The circuit court explained:
With respect to the issue of the recusal and
disqualification raised by [Del Monte] as to the
Chair, the [c]ourt finds recusal and/or
disqualification was not required for the reasons and
law cited by the Union []. With respect to the Board
decision on its merits, the factors considered by the
Board in finding bad faith bargaining are
discretionary issues that could be considered by the
Board in deciding the issue of bad faith bargaining.
The fact that the Board characterized any of the
factors as mandatory when they might be discretionary
is harmless.

On the same day, the circuit court entered judgment in

favor of the Union and the HLRB.

D. ICA Appeal

On February 29, 2008, Del Monte timely filed its notice

of appeal to the ICA. In its opening brief, Del Monte’s first

two points of error concerned the HLRB’s ruling on Del Monte’s

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Disqualification Motion, while Del Monte’s remaining two points

of error concerned the portions of the HLRB Order that addressed

bad faith bargaining. Regarding the Disqualification Motion, Del

Monte argued that the HLRB did not apply the proper “appearance

of impropriety standard” in ruling on the Disqualification

Motion, and erred in denying the Disqualification Motion on the

merits.

Regarding the HLRB’s finding of bad faith, Del Monte

argued that “[t]he HLRB Order is affected by an error of law

because it sets forth per se requirements for effects bargaining

that are inconsistent with well-settled principles of labor

law.”10 Del Monte also argued that the HLRB erred in finding bad

faith. Accordingly, Del Monte argued that the circuit court

erred in affirming the HLRB Order.

In a summary disposition order, the ICA affirmed the

circuit court’s February 1, 2008 Judgment. Del Monte II, 2011 WL

5834630, at *5. As to Del Monte’s points of error concerning the

HLRB allegedly failing to apply the objective “appearance of

impropriety” standard and denying the Disqualification Motion,

the ICA stated that the “proper test for disqualifying an

administrative adjudicator for bias or impartiality is whether

10
Specifically, Del Monte argued that the HLRB Order required
employers to bargain about subjects that are not required under federal labor
policy. Del Monte disputed the propriety of the first six “requirements” of
the eight imposed by the HLRB.

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‘the circumstances fairly give rise to an appearance of

impropriety and reasonably cast suspicion on [the adjudicator’s]

impartiality.’” Id. at *1 (citing Sussel v. City and Cnty. of

Honolulu Civil Service Comm’n, 71 Haw. 101, 109, 784 P.2d 867,

871 (1989)). The ICA concluded that the “HLRB and the circuit

court did not err because [the Chair’s] comments did not rise to

the level of displaying deep-seated favoritism or antagonism,

give rise to an appearance of impropriety, or reasonably cast

suspicion on his impartiality.” Id. at *2.

The ICA then addressed Del Monte’s contention that the

HLRB Order erroneously set forth per se requirements for effects

bargaining. Id. The ICA stated that the “standard adopted by

[the] HLRB to determine whether an employer has met its statutory

duty to bargain in good faith is ‘whether the totality of the

employer’s conduct evinces a present intention to find a basis

for agreement and a sincere effort to reach a common ground.’”

Id. (quoting Del Monte I, 112 Hawai#i at 500, 146 P.3d at 1077).

The ICA rejected Del Monte’s argument that the HLRB Order set

forth per se requirements for effects bargaining, and stated that

Del Monte “inaccurate[ly] characteriz[ed] [the] HLRB’s holding.”

Id. at *3. The ICA cited other parts of the HLRB’s Order, which

showed that the HLRB properly considered “the totality of the

circumstances” in determining that Del Monte engaged in bad faith

bargaining. Id. (citing Del Monte I, 112 Hawai#i at 500-02, 146

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P.3d at 1077-79).

Lastly, the ICA addressed Del Monte’s contention that

the HLRB erred in finding that Del Monte bargained in bad faith.

Id. The ICA rejected each of Del Monte’s arguments regarding the

six points of conduct listed in the HLRB Order. Id. at *3-5.

The ICA, thus, affirmed the circuit court’s judgment. Id. at *5.

The ICA subsequently entered its judgment on appeal on

December 15, 2011.

Del Monte timely filed its application for writ of

certiorari, and the ILWU timely filed its response.

II. Standards of Review

A. Motion for Disqualification

The test for disqualifying a board member whose

impartiality is challenged is whether the movant has shown “an

appearance of impropriety” on the part of the challenged board

member. Sussel, 71 Haw. at 109, 784 P.2d at 871 (1989). “[T]he

test for disqualification due to the ‘appearance of impropriety’

is an objective one, based not on the beliefs of the petitioner

or [adjudicator], but on the assessment of a reasonable impartial

onlooker apprised of all the facts.” In re Water Use Permit

Applications, 94 Hawai#i 97, 122, 9 P.3d 409, 434 (2000) (quoting

State v. Ross, 89 Hawai#i 371, 380, 974 P.2d 11, 20 (1998)).

B. Administrative Agency Decisions

Review of a decision made by the circuit court upon

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its review of an agency’s decision is a secondary appeal.
The standard of review is one in which [the appellate] court
must determine whether the circuit court was right or wrong
in its decision, applying the standards set forth in HRS
§ 91-14(g) (1993) to the agency’s decision.

HRS § 91-14, entitled “Judicial review of contested
cases,” provides in relevant part:

(g) Upon review of the record the court
may affirm the decision of the agency or remand
the case with instructions for further
proceedings; or it may reverse or modify the
decision and order if the substantial rights of
the petitioners may have been prejudiced because
the administrative findings, conclusions,
decisions, or orders are:

(1) In violation of constitutional or
statutory provisions; or
(2) In excess of the statutory authority or
jurisdiction of the agency; or
(3) Made upon unlawful procedure; or
(4) Affected by other error of law; or
(5) Clearly erroneous in view of the reliable,
probative, and substantial evidence on the
whole record; or
(6) Arbitrary, or capricious, or
characterized by abuse of discretion
or clearly unwarranted exercise of
discretion.

Under HRS § 91-14(g), conclusions of law are
reviewable under subsections (1), (2), and (4); questions
regarding procedural defects under subsection (3); findings
of fact under subsection (5); and an agency's exercise of
discretion under subsection (6).

United Pub. Workers, AFSCME, Local 646, AFL-CIO, v. Hanneman, 106

Hawai#i 359, 363, 105 P.3d 236, 240 (2005) (brackets omitted)

(quoting Paul’s Elec. Serv., Inc. v. Befitel, 104 Hawai#i 412,

416, 91 P.3d 494, 498 (2004)).

C. Administrative Agency Conclusions of Law and Findings
of Fact

An agency’s conclusions of law are reviewed de
novo, while an agency’s factual findings are reviewed
for clear error. A conclusion of law that presents
mixed questions of fact and law is reviewed under the
clearly erroneous standard because the conclusion is
dependent upon the facts and circumstances of the

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particular case.

As a general matter, a finding of fact or a
mixed determination of law and fact is clearly
erroneous when (1) the record lacks substantial
evidence to support the finding or determination, or
(2) despite substantial evidence to support the
finding or determination, the appellate court is left
with the definite and firm conviction that a mistake
has been made. Substantial evidence is credible
evidence which is of sufficient quality and probative
value to enable a person of reasonable caution to
support a conclusion.

Del Monte I, 112 Hawai#i at 499, 146 P.3d at 1076 (internal

quotation marks, citations, and brackets omitted).

III. Discussion

We hold that there was no error in (1) the HLRB’s

denial of Del Monte’s Disqualification Motion, and (2) the HLRB’s

determination that Del Monte bargained in bad faith. As set

forth below, there was substantial evidence that the “totality”

of Del Monte’s conduct did not evince “a present intention to

find a basis for agreement and a sincere effort to reach a common

ground.” See Del Monte I, 112 Hawai#i at 500, 146 P.3d at 1077.

However, we further acknowledge that the HLRB Order

could erroneously be construed to impose the eight factors listed

in the HLRB Order as per se requirements in all effects

bargaining cases accompanying a plant closure. Such an

interpretation would be inconsistent with the standard for

determining whether an employer has breached its obligation to

bargain in good faith previously adopted by the HLRB and approved

by this court: “whether the totality of the employer’s conduct

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evinces a present intention to find a basis for agreement and a

sincere effort to reach a common ground.” Del Monte I, 112

Hawai#i at 500, 146 P.3d at 1077 (brackets omitted). In light of

this standard, we clarify that the eight factors may be

considered only on a case-by-case basis, depending on whether

they are relevant to the facts of a particular case.

A. The ICA did not err in affirming the HLRB’s ruling on Del
Monte’s disqualification motion

In its application, Del Monte argues that the HLRB did

not apply the objective “appearance of impropriety” standard, but

rather applied a “subjective test.” Del Monte further argues

that the ICA failed to address whether the HLRB applied the

correct standard. Finally, Del Monte argues that the HLRB erred

in denying its Disqualification Motion, and that the error was

prejudicial. Del Monte’s arguments lack merit.

The HLRB did not expressly state whether it was

applying the “appearance of impropriety” standard in ruling on

Del Monte’s Disqualification Motion. However, the ICA identified

and applied the proper objective standard for disqualifying an

administrative adjudicator. The ICA stated: “The proper test for

disqualifying an administrative adjudicator for bias or

impartiality is whether ‘the circumstances fairly give rise to an

appearance of impropriety and reasonably cast suspicion on [the

adjudicator’s] impartiality.’” Del Monte II, 2011 WL 5834630, at

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*1 (brackets in the original) (quoting Sussel, 71 Haw. at 109,

784 P.2d at 871). The ICA further stated that “‘the test for

disqualification due to the appearance of impropriety is an

objective one, based not on the beliefs of the petitioner or the

judge, but on the assessment of a reasonable impartial onlooker

apprised of all the facts.’” Id. at *2 (emphasis added) (quoting

Office of Disciplinary Counsel v. Au, 107 Hawai#i 327, 338, 113

P.3d 203, 214 (2005)). Thus, the ICA properly identified the

“objective” standard that Del Monte argues should apply, and as

discussed below, the record establishes that under this standard,

Del Monte’s arguments lack merit.

Del Monte argues that the Chairman displayed an

appearance of impropriety by expressing sympathy for the Union

members, speculating on their hardship, declaring that the

company’s actions were not fair, and derisively questioning

Sasagawa. Del Monte takes excerpts of the Chairman’s comments,

such as describing the Union members as “extraordinarily proud”

and “good people, loyal workers” and apologizing for “getting

emotional” and using his “interrogation tone,” and argues that it

was “clearly erroneous to find that the HLRB Chairman had not

created an ‘appearance of impropriety.’”

The Chairman’s comments, however, must be viewed in the

context in which they arose. The Chairman’s questions to

Sasagawa came after the Union’s counsel and Del Monte’s counsel

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questioned Sasagawa about Del Monte’s representations to the

employees regarding the closure date. The Union’s counsel also

asked Sasagawa about certain cost proposals rejected by Del

Monte. Accordingly, the Chairman’s questions regarding severance

and the employees’ reliance on Del Monte’s representations

regarding the closure date concerned matters that had already

been put in issue by the parties. The Chairman clarified on the

record, “I asked my questions because I don’t know the answer,

and I really want to know the answer, not because I want to make

anybody’s case.” Viewing the Chairman’s comments from the point

of view of “a reasonable impartial onlooker apprised of all the

facts[,]” Au, 107 Hawai#i at 338, 113 P.3d at 214, the Chairman’s

comments “did not rise to the level of displaying deep-seated

favoritism or antagonism, give rise to an appearance of

impropriety, or reasonably cast suspicion on his impartiality.”

Del Monte II, 2011 WL 5834630, at *2. Thus, even assuming

arguendo the HLRB applied the wrong standard, the error was

harmless. Accordingly, the ICA and the circuit court properly

affirmed the HLRB’s ruling with regard to Del Monte’s

Disqualification Motion.

B. The circuit court correctly affirmed the HLRB’s
determination that Del Monte failed to bargain in good faith
during the first phase of negotiations

For the reasons set forth below, the circuit court

correctly affirmed the HLRB’s decision that Del Monte bargained

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in bad faith during the first phase of negotiations.

HRS § 91-14(g) concerns “Judicial review of contested

cases,” and provides in relevant part:
Upon review of the record the court may affirm the
decision of the agency or remand the case with
instructions for further proceedings; or it may
reverse or modify the decision and order if the
substantial rights of the petitioners may have been
prejudiced because the administrative findings,
conclusions, decisions, or orders are:
. . .
(4) Affected by other error of law[.]

(Emphasis added).

In addition, this court can affirm the decision of a

lower tribunal on any ground appearing in the record. Nihi Lewa,

Inc. v. Dep’t of Budget and Fiscal Servs., 103 Hawai#i 163, 168,

80 P.3d 984, 989 (2003) (“Where the decision below is correct it

must be affirmed by the appellate court though the lower tribunal

gave a wrong reason for its action.”) (citation omitted). Here,

the record established that Del Monte bargained in bad faith

during the first phase of negotiations. The Board majority’s

FOFs support the conclusion that the “totality” of Del Monte’s

conduct did not “evince[] a present intention to find a basis for

agreement and a sincere effort to reach a common ground.” Del

Monte I, 112 Hawai#i at 500, 146 P.3d at 1077 (citation omitted).

Accordingly, Del Monte’s “substantial rights” were not prejudiced

by the Board’s decision. See 91-14(g).

When this court examined the issue of bad faith

bargaining in Del Monte I, this court stated that:

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[W]hether an employer has bargained in good faith
presents a mixed question of law and fact reviewed
under the clearly erroneous standard. Even though
there is evidence in the record of discrete actions by
Del Monte suggestive of good faith, the HLRB’s
determination of the “totality” is not a counting game
of good and bad acts, and its expertise in labor
relations entitle the HLRB to judicial deference in
this area.

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

This court further stated that the “clearly erroneous

standard” is limited to “(1) determining whether there is

substantial evidence in the record to support the ruling and (2)

if there is such evidence, determining whether the record

nevertheless leaves the court with the definite and firm

conviction that a mistake has been made.” Id.

Here, the HLRB’s ruling that Del Monte did not meet its

bargaining obligation under HRS § 377-6(4) was supported by

credible evidence in the record. Effects bargaining requires,

inter alia, that an employer “meet with the union, provide

information necessary to the union’s understanding of the

problem, and in good faith consider any proposals the union

advances.” First Nat’l Maint. Corp. v. N.L.R.B., 452 U.S. 666,

679 n.17 (1981). “The requirement of conferring in good faith

involves more than just meeting, more than just sterile or

repetitive discussion of formalities or differences between

management and the union, and more than formal replies that, in

effect, constitute a refusal to deal with the union.” C.C.

Borklund, Good Faith in Collective Bargaining, 25 Am. Jur. Proof

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of Facts 2d. § 333:6 (1981). “[T]he offering of a proposal that

is predictably unacceptable, coupled with an inflexible attitude

on major issues and no proposal of reasonable alternatives, has

been condemned as violative of the good faith obligation.” 1 The

Developing Labor Law: The Board, The Courts, and the National

Labor Relations Act 867 (John E. Higgins, Jr. et al. eds., 5th

ed. 2006) (footnote omitted).

With regard to Del Monte’s consideration of the Union’s

proposals in the instant case, the Board majority’s FOF No. 18

stated:
At the first meeting, the Union presented its
proposals. These included three cost items: enhanced
severance, six months of medical and dental coverage
after closure, and protecting the residents of Kunia
Camp by providing seed money to retain a housing
association. The Union also presented numerous,
mostly administrative non-cost proposals. At the
onset, [Ho] advised the Union that the Company’s
committee had “received their marching orders” and
that nothing would be negotiated beyond the scope of
the [C]ollective [B]argaining [A]greement in force.

Because the DMH bargaining committee was given

“marching orders” from DM Corporate to deny enhancements beyond

the Collective Bargaining Agreement as to the three cost items,

the Union’s cost proposals could not be considered in a

meaningful way. Any costing of the Union’s three proposals would

be futile in the face of such “marching orders,” and in light of

DMH’s understanding that “nothing would be negotiated beyond the

scope of the [C]ollective [B]argaining [A]greement in force.”

Moreover, this FOF was supported by credible evidence in the

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record. Sasagawa’s notes from one of the meetings referenced

that it would be difficult for DMH to “provide additional

economic benefits” because it received “marching orders.” When

questioned about these notes, Sasagawa explained that with regard

to “severance” and “medical benefits,” her understanding was that

DM Corporate was not willing to provide anything beyond what was

agreed upon in the Collective Bargaining Agreement.

In addition, the Board majority found that on April 12,

2006, DMH proposed a new cost item, a cash “retention bonus” to

be paid to fourth year covered seasonal employees who remained

employed at DMH into 2007. The record indicates that this offer

was available to the Union for only one day, even though Galdones

requested more time to discuss the proposal with the Union. This

type of “take-it-or-leave-it” cost proposal, under the

circumstances presented here, is inconsistent with an employer’s

duty to bargain in good faith, as previously recognized by the

HLRB and this court. See Del Monte I, 112 Hawai#i at 502, 146

P.3d at 1079 (pointing to a “take-it-or-leave-it” proposition as

part of the “evidence upon which the HLRB may have concluded that

Del Monte did not bargain in good faith”).

In sum, the Board majority made specific findings,

based on credible evidence in the record, which supported the

conclusion that Del Monte did not bargain in good faith during

the first phase of negotiations. Thus, the totality of Del

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Monte’s conduct did not “evince[] a present intention to find a

basis for agreement and a sincere effort to reach a common

ground.” Del Monte I, 112 Hawai#i at 500, 146 P.3d at 1077.

Although this reasoning may differ from the Board majority’s

discussion, the Board majority’s decision does not require

reversal. The circuit court affirmed the Board majority’s FOFs,

and the reasons stated herein for affirming the circuit court’s

and ICA’s judgments are supported by specific findings in the

HLRB Order. Cf. Nakamine v. Bd. of Trs. of the Emps. Ret. Sys.,

65 Haw. 251, 255, 649 P.2d 1162, 1165 (1982) (reversing the

circuit court’s order and remanding for further proceedings

because the circuit court failed to make specific findings as to

what procedural irregularities occurred in the administrative

agency proceedings and whether such errors prejudiced the

claimant’s substantial rights); see also Borklund at § 333:23

(1981) (“In an enforcement proceeding, the court can sustain an

ultimate conclusion of lack of good faith without sustaining the

Board on each and every one of its subsidiary findings of fact;

nor need the court agree as to every incident specially

emphasized in the Board’s decision as indicating lack of good

faith.”) (footnote omitted).

C. The eight factors identified in the HLRB Order are not per
se requirements in every effects bargaining case

Del Monte argues that the HLRB erred by creating a new

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test for effects bargaining in contravention of federal labor

policy. Del Monte argues that certain factors listed in the HLRB

Order are not mandatory bargaining subjects under federal labor

law, but that the HLRB Order “effectively compels employers to

bargain about” these subjects.11 Del Monte further argues that

it was “erroneous for the ICA to state that the HLRB’s new

requirements are lawful because they are only a part of the

‘totality of circumstances.’” In light of our holding that the

HLRB did not err in concluding that Del Monte bargained in bad

faith during the first phase of negotiations, we need not address

this argument for purposes of this appeal. However, we recognize

that an employer “must have some degree of certainty beforehand

as to when it may proceed to reach decisions without fear of

later evaluations labeling its conduct an unfair labor practice.”

First Nat’l Maint. Corp., 452 U.S. at 678-79. Accordingly, since

the HLRB Order could be read as imposing per se requirements, we

consider whether all eight factors identified in the HLRB Order

11
Del Monte specifically challenges the following six factors: (1)
“why the closure is taking place”; (2) “[how] to delay [or] forestall the
closure”; (3) “reasons for positions taken in developing, modifying or
rejecting offers [or] counter offers”; (4) resources which might be available
to effect compromise”; (5) “possible retention, redeployment, or liquidation
of effected [sic] human or material resources”; and (6) “what is necessary to
establish an open and meaningful avenue of communication with decision
makers[.]” (Some brackets in original and some added).
Del Monte acknowledges that the following two factors are
recognized components of effects bargaining: (1) “steps that can be reasonably
taken to mitigate the detrimental effects of the pending unemployment to
employees, their dependent families, or their community”; and (2) “the precise
timing of the closure.” It would appear that those factors would be relevant
in most, if not all, cases.

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are mandatory subjects of disclosure and negotiation in every

effects bargaining case. We conclude that they are not, since

such an approach would be inconsistent with the case-by-case

approach we adopted in Del Monte I. See Del Monte I, 112 Hawai#i

at 501 n.17, 146 P.3d at 1078 n.17 (“Determining whether

bargaining parties exhibited a ‘mutually genuine effort to reach

an agreement with reference to the subject under negotiation,’

HRS § 377-1(5), is by its nature an inquiry where hard-and-fast

rules do not apply.”).

HRS § 377-6(4) makes it an unfair labor practice for an

employer “[t]o refuse to bargain collectively” with the

employees’ collective bargaining representative. In addition,

“Regardless of whether an employer is obligated to bargain with

the union over a decision involving an operational change, the

employer must bargain over the effects of the change[,]” i.e.,

engage in “effects bargaining.” 48A Am. Jur. 2d. Labor and Labor

Relations § 2345 (2005) (emphasis added); see also Providence

Hosp. v. N.L.R.B., 93 F.3d 1012, 1018 (1st Cir. 1996) (noting

that “unions generally enjoy the right to bargain over the

effects of decisions which are not themselves mandatory subjects

of collective bargaining”). Under HERA, “collective bargaining”

is defined as “the negotiating by an employer and a majority of

the employer’s employees in a collective bargaining unit (or

their representatives) concerning representation or terms and

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conditions of employment of such employees in a mutually genuine

effort to reach an agreement with reference to the subject under

negotiation.” HRS § 377-1(5) (1993) (emphasis added). In Del

Monte I, this court approved the following standard to assess

whether an employer has met its statutory duty to bargain in good

faith: “whether the totality of the [employer’s] conduct evinces

a present intention to find a basis for agreement and a sincere

effort to reach a common ground.” 112 Hawai#i at 500-01, 501

n.17, 146 P.3d at 1077-78, 1087 n.17 (brackets in original)

(quoting Bd. of Educ., 6 HLRB 173, 177 (2001)).

Here, the HLRB Order stated:
In the opinion of the Board majority, rational
foundational prerequisites of information which must
be available, or the subjects of open good faith
exchange, in the course of effects bargaining
accompanying a closure should at least include [sic]:
1) why the closure is taking place; 2) what, if
anything, the Union, employees or employer could
reasonably do to delay, forestall the closure or
mitigate the detrimental effects of the closure; 3)
the reasons for positions taken in developing,
modifying or rejecting offers [or] counter offers; 4)
the resources which might be available to effect
compromise; 5) the possible retention, redeployment or
liquidation of effected [sic] human or material
resources; 6) what is necessary to establish an open
and meaningful avenue of communication with decision
makers; 7) steps that can be reasonably taken to
mitigate the detrimental effects of the pending
unemployment to employees, their dependent families or
their community; and 8) the precise timing of the
closure.

(Emphasis added).

The portion of the Order that reads, “rational

foundational prerequisites of information which must be

available, or the subjects of open good faith exchange, in the

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course of effects bargaining accompanying a closure should at

least include[,]” implies that all eight factors are per se

requirements for an employer in every effects bargaining case

accompanying a closure. However, imposing such requirements in

every case is inconsistent with our case law.

In Del Monte I, this court noted that “[d]etermining

whether bargaining parties exhibited a ‘mutually genuine effort

to reach an agreement with reference to the subject under

negotiation,’ HRS § 377-1(5), is by its nature an inquiry where

hard-and-fast rules do not apply.” Id. at 501 n.17, 146 P.3d at

1078 n.17 (emphasis added). Thus, evaluating an employer’s

conduct against per se requirements is inconsistent with focusing

on the “totality of the employer’s conduct.” Id. at 500, 146

P.3d at 1078 (brackets omitted). Put another way, all eight

factors listed in the HLRB Order may not be relevant in every

effects bargaining case. Thus, imposing those requirements on an

employer in every effects bargaining would be improper. This

conclusion is consistent with an extensive body of federal

caselaw, which evaluates whether an employer bargained in good

faith by looking at the totality of the circumstances.12 See,

12
The HLRB’s standard for assessing whether an employer violated its
statutory duty to bargain in good faith, i.e., “whether the totality of the
[employer’s] conduct evinces a present intention to find a basis for agreement
and a sincere effort to reach a common ground[,]” was derived from a leading
federal labor law treatise. See Bd. of Educ., 6 HLRB 173, 177 (2001) (citing
1 The Developing Labor Law: The Board, The Courts, and the National Labor
Relations Act 608 (Patrick Hardin et al. eds., 3d ed. 1992)). This court has
also looked to the NLRA in interpreting the HERA’s substantive provisions.
(continued...)

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e.g., N.L.R.B. v. Truitt Mfg. Co., 351 U.S. 149, 153-154 (1956)

(noting that “[e]ach case must turn upon its particular facts”

and that “[t]he inquiry must always be whether or not under the

circumstances of the particular case the statutory obligation to

bargain in good faith has been met”); Int’l Chem. Workers Council

of the United Food & Commercial Workers Int’l v. N.L.R.B., 467

F.3d 742, 748 (9th Cir. 2006) (considering “whether the Company’s

actions as a whole satisfied its statutory obligation to bargain

in good faith”); Frankl v. HTH Corp., 650 F.3d 1334, 1358 (9th

Cir. 2011) (“To determine a party’s good faith, the Board looks

to the ‘totality of the respondent’s conduct, both at and away

from the bargaining table.’”) (citation and brackets omitted).

In sum, the law does not require employers to furnish

all eight types of information, or bargain over the subject

matter of that information, in every instance of effects

bargaining accompanying a closure. Accordingly, this court’s

holding does not foreclose the possibility that a particular

factor may be relevant, and thus appropriate for the HLRB to take

into consideration, in evaluating the totality of an employer’s

conduct in an effects bargaining case.

IV. Conclusion

We hold that the HLRB did not err in denying Del

Monte’s Disqualification Motion. We further hold that the HLRB

12
(...continued)
See Del Monte I, 112 Hawai#i at 503, 146 P.3d at 1080.

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did not err in concluding that Del Monte bargained in bad faith

during the first phase of negotiations. However, we also hold

that the eight factors in the HLRB Order are not per se

requirements in every effects bargaining case. Accordingly, the

judgment of the ICA is affirmed.

Christopher S. Yeh /s/ Mark E. Recktenwald
for petitioners
/s/ Paula A. Nakayama
Rebecca L. Covert
and Davina W. Lam /s/ Simeon R. Acoba, Jr.
for respondent
/s/ Karen S.S. Ahn

/s/ Steven S. Alm

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