Arbitration: A Game Like No Other

Larry Price
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Wednesday - September 09, 2009
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There were so many exciting things going on here last week. The UH Rainbow Warriors opened their football season at Aloha Stadium, the UH’s Wahine volleyball team hosted its mega-tournament at Stan Sheriff Center and the OIA featured some of its best teams in action on the Waianae coast.

Every one a star attraction, but nothing can compare to what was going on at the arbitration hearing in the state Labor Department’s conference room.

If you’ve never been to an arbitration hearing, it’s more often than not more interesting, educational and exciting than any of the aforementioned events. There are no marching bands or bone-rattling “katooshes,” but there is total excitement. The tense cloak of uncertainty and suspense hangs over the hearings from beginning to end. This particular hearing began Sept. 4 and is supposed to be completed by Dec. 21. Hanging in the balance are government workers’ jobs, medical insurance and retirement benefits, and an almost bankrupt government’s ability to pay its work force and fund its many benefit delivery programs.


Arbitration is the most high-profile third-party dispute resolution because of its use in labor relations and the setting of compensation and benefits for professional athletes. Simply put, in the typical negotiation, the idea is to reach an agreement between two parties. Arbitration is totally different because it resolves a disagreement by having a neutral third party impose a decision on both sides. The arbitration panel is made up of only three members: One is picked by the union leadership, one is picked by the management and one is neutral. They sit there like the rulers of the NCAA do when they are judging the behavior of the participants on the field from an air-conditioned press box. The big difference, of course, is the playing field is not 100 yards long with a score board, goal posts and a goal line to cross so you know who’s winning. None of that exists in an arbitration hearing. There is no 25-second clock to warn the participants how long they have to snap or shoot the ball. And probably toughest of all, there is no time limit. Arbitration hearings can go on for hours. You could call this negotiation by fatigue, because they have been negotiating this contract for years and now it’s been intensified by a huge budget deficit that keeps getting bigger every month, and a statute that says the state cannot submit a budget that is not balanced. It says generally that no one can spend money they don’t have, and if you have a surplus, you have to give it back to the taxpayers, who are also government employees.

Imagine this: Both parties have to show up with their all-stars, the best experts they have or can afford to rent to present their cases. Each side presents its witnesses, usually not more than six. The management side is always under-represented at arbitration hearings because it usually only brings its witnesses and a few experts, and the experts are truly impressive. Their expertise is spectacular and their presentations flawless, especially when they compare Hawaii’s financial condition to other countries and states. It makes so much sense to someone whose economic future is dependent on the outcome. It’s not uncommon to have many hand-picked union members present. They don’t carry signs or cheer (at least they are not supposed to). They are there to intimidate the panel with their hushed silence and beady-eyed stares. You can’t blame them; there is so much at stake for them.

No question, seeing a football team moving down the field in a two-minute drill trying to win the game with seconds to spare is exciting, but it pales in comparison to the kind of true intellectual excitement that goes on at an arbitration hearing.

Guess what? More often than not, the union provides food throughout the hearings. That’s the main reason arbitration hearings are not held in convention centers, hotel ballrooms or stadiums, because in commercial venues, you can’t bring in food from the outside. It’s a local tradition: Food is part of the negotiation.


One last tip. There are several types of arbitration. There is voluntary arbitration where the parties are not obligated to comply with their ruling. In binding arbitration, both parties must comply with the decision, either by law or by contractual agreement, and it becomes part of the agreement for the remaining life of the contract. What causes the suspense in the arbitration before the taxpayer and government workers is that it’s final. There is no ratification vote for union members; there is no sudden-death playoff.

Can you imagine how exciting an athletic contest would be if, when the clock ran out and the game was over, it would be over for years, not weeks? The finality of an arbitrator’s ruling can be a blessing to one side and the kiss of death to the other, and the tension is mounting. This is what the unions apparently wanted and the management dreaded. They wanted a third party to decide the future of their workers.

It’s nail-biting time for spectators. But beware, it’s possible there may be no winners in the end.

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