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Title: Safeway Stores, Inc. and United Food & Commercial Workers Union, Local 480
Date: October 25, 2006
Michael Nauyokas
Citation: 2006 NAC 145




In the Matter of the Arbitration Between 








          Grievance Re:            Gerrit Chinen
Arbitration Hearing Date:          
          October 25, 2006














Michael F. Nauyokas
Attorney, Mediator & Arbitrator
733 Bishop Street, Suite 2300
Honolulu, Hawaii 96813
Telephone: (808) 538-0553
Facsimile:   (808) 531-3860     
Email: michaelnauyokas@hawaii.rr.com












            This matter came to arbitration before the Arbitrator, Michael Nauyokas, at a hearing that was held at the offices of Marr, Hipp, Jones & Wang in Honolulu, Hawaii, on October 25, 2006, pursuant to the Collective Bargaining Agreement (“CBA”).  The Union, UNITED FOOD & COMMERCIAL WORKERS UNION, LOCAL 480 (“Union”), and the Grievant, GERRIT CHINEN (“Grievant”), were represented by Antonio Ruiz, Esq.  Also present at the hearing for the Union were Rusti gephart, Gwen Rulona, and Pat Loo.  The Employer, SAFEWAY STORES, INC. (“Employer”) was represented by Barry W. Marr, Esq.  Also present at the hearing on behalf of the Employer were George Glukfeld and Penny Schumacher.  Both parties were fully and fairly represented.  The Arbitrator made a full disclosure of his relationships with other attorneys and firms and there was no obligation.  The Employer submitted a post-arbitration hearing brief; the Union did not engage in further briefing.

            The parties, through their attorneys, stipulated that this was a discipline case; that just cause applies; and that the primary clause from the CBA in issue in this matter is Section 13.1.  The parties further stipulated that the Employer would present its case first.  The Arbitrator ruled, over the Employer’s objection, that the Employer had the burden of proof on the issue of just cause.  The parties stipulated to the admission of the CBA as a Joint Exhibit, and that the matter was substantively and procedurally arbitrable.  The Union made a motion to sequester, which was granted by the Arbitrator.


            The stipulated issues to be determined by the Arbitrator are:

1.      Whether there was just cause for the termination of Gerrit Chinen, the Greivant; and,

2.      If there was not just cause for the termination, what is the appropriate remedy?



            Employer, SAFEWAY STORES, INC. (“Employer” or “Safeway”), operates a national supermarket chain, including a store in Kapolei, Hawaii.  Grievant, Gerrit Chinen (“Grievant”), was hired by the Safeway store in Kapolei, Hawaii in 1985 and was employed by Safeway for approximately 20 years.  For approximately 18 of those years, Grievant worked the “graveyard” shift from 12:00 midnight to 9:00 a.m.  Over the course of his employment at Safeway, Grievant held various jobs in the store, and at the time of his termination, Grievant held the position of stock clerk at Safeway’s Kapolei store.  Throughout his 20 years of employment at Safeway, Grievant worked as a cashier on an as-needed basis and performed cashiering duties approximately one to two times per week.  As an employee with cashiering responsibilities, Grievant was required to check the Employee Bulletin Board, which was located near the time clock, whenever he clocked in for his shift.

            The Employer offers various promotions for its customers to encourage sales and customer loyalty.  In this vein if offers a program that rewards customers loyalty through the use of a “Club Card”, which any customer can obtain.  These cards are linked to the holder’s name and other identifying information.  When the Club Card is presented as a purchase is being made, promotional discounts on items being purchased, and any other applicable discounts, are automatically computed and deducted from the card holder’s cash-register total.  Employees are allowed by the Employer to have such a Club Card which entitles them to any applicable promotions and discounts, and includes a 10% discount for employees when purchasing Employer’s Safeway-brand products.

            The instant grievance arose from events which occurred over the period of August 31 to September 9, 2005, during which time the Employer ran a promotion that allowed a customer using a Safeway Club Card, who purchased 10 participating Quaker or Tropicana products, to receive a $10.00 savings certificate to be used on future purchases at the Safeway stores.  The promotion was advertised in a weekly insert in a local newspaper.

            The Employer transmitted via e-mail, advertising bulletins, and related documentation for the Quaker/Tropicana savings certificate promotion to all division store managers and stores.  The bulletins described the terms and details of the promotion, including its conditions and limitations.  The e-mail also included a second bulletin about the promotion, entitled “Checker Instructions” that set forth detailed instructions informing cashiers as to what steps to follow when processing sales covered by the promotion.  This bulletin was posted on the Employee Bulletin Board over the period of the promotion.

            According to the record of the hearing, in September 2005, while about to go on break from his normal graveyard shift, at approximately 1:30 a.m., Grievant walked by the customer service counter at the Kapolei store and saw fellow employees, Jolene Carter and Mi Shodai, looking in the rain check box maintained at the counter.

            According to the testimony at the hearing, Grievant approached Carter and Shodai and asked them “What you guys doing?”  The record reflects that Carter showed Chinen a promotional certificate and told him, “There’s a coupon in this box if you buy $10.00 worth of groceries, you get $10.00 off.”

            Grievant Chinen then asked Carter and Shodai for a certificate and they gave him one certificate.  Grievant then asked the pair for more certificates, and they gave him a total of between five and ten certificates, which were actually photocopies of the Quaker/Tropicana $10.00 savings certificate.

            The face of each certificate clearly stated: “$10 Savings Certificate.”  Further, the certificate stated: “DO NOT DOUBLE” and “Void if transferred or copied and where prohibited by law.”  Grievant apparently inquired as to why the certificate was photocopied and was informed that photocopying was allowed when the store ran out of coupons and that First Assistant Manager, Gina Nitta, “knows about it.”  Grievant testified that he never actually heard Ms. Nitta say anything about the certificate and never inquired about the certificate or its use with her or any other manager.

            After his break, Grievant gave some of the certificates to other employees at the store.  He gave a savings certificate to Edna Mendoza, Joie Apolinario, Josie Amaisu, and another employee identified as “Melba”.

            The record reflects that Grievant processed three of the certificates himself.  Two on September 29, 2005, and one on September 30, 2005.  He used his Club Card when making these purchases, and the presentation of the card by Grievant at the time of purchase was clearly reflected in Employer’s Exhibit 4.  The record is also clear that Grievant did not purchase the requisite $10.00 worth of the promotional items required to be entitled to the discount, prior to accepting the three $10.00 discounts off of his purchases of the Employer’s merchandise.  The record demonstrates that Christian Young, a grocery manager, walked by a checkstand at some point and saw Grievant using a certificate but did not intervene or question Grievant, nor did Grievant request any clarification regarding the use of the certificate.

            In November, after the last day to redeem the certificates, October 31, 2005, the Employer ran two audit reports regarding the promotion involved in this grievance.  The first report showed the number of the $10.00 savings certificates earned by the purchase of the requisite ten participating items; and, the second displaying the number of certificates that were redeemed.  There was a large variance between the two reports which indicated that significantly more certificates were redeemed for the credit than were earned by purchases.  The Kapolei Safeway store showed the largest discrepancy among the more than 250 other stores in its division.

            Jeff Britton, a data analyst for the Employer, examined the certificate redemption transactions for the promotion at the Kapolei store and determined that of 75 certificate redemptions at the store, only one of the redemptions had actually been earned by a customer.  His analysis also indicated that the majority of the redemptions were certificates that had been redeemed by Kapolei store employees without the required purchase of the promotional items.

            On November 8, 2005, Britton contacted Heidi Sparks, a Senior Investigator in Employer’s Security Department, via telephone and e-mail, and informed Ms. Sparks what he had discovered at the Kapolei store and asked her to investigate the matter.  Britton also sent Ms. Sparks a spreadsheet detailing the history of the use of the promotional savings certificates at the Kapolei store.

            That day, Ms. Sparks immediately went to the Kapolei store and began her investigation.  She first interviewed the Store Manager, Rodney Fujii, Raynelle Diggs, a front-end manager, and the First Assistant Manager, Ms. Nitta.  Ms. Sparks determined that they were not aware of the employees using the Quaker/Tropicana certificates.

            Ms. Sparks then began interviewing the employees identified on Britton’s spreadsheet as having redeemed the certificates.  Between November 8, 2005 and November 21, 2005, Ms. Sparks interviewed a total of 24 employees regarding the discrepancies noted in the audit report.  Twenty-three employees were interviewed at the Kapolei store, and one at the Waimalu store.  Ms. Sparks determined that 18 of the 24 employees interviewed had potentially misused the certificates.

            Ms. Sparks’ investigation determined that Ms. Nitta has posted the “Checker Instructions” for the Quaker/Tropicana promotion on the Employee Bulletin Board, where they had remained posted over the period of the promotion, and that Ms. Nitta had taken photocopies of the $10.00 savings certificates to the booth along with the copy of the informational Advertising Bulletins.  Ms. Sparks also concluded that Ms. Nitta had instructed the booth employees to make copies of the certificates as needed. It became apparent during the investigation that an unidentified employee made unauthorized copies of the $10.00 certificates and began redeeming them and distributing them to other employees and non-employees.  The investigation concluded that with one exception, non of the certificates were redeemed following the purchase of the requisite 10 items, to qualify for the certificate’s benefits.


Grievant was first interviewed by Ms. Sparks on November 10, 2005, with Employer’s Assistant Manager, Grant Matsumoto, present.  Ms. Sparks questioned Grievant about his general knowledge of various store policies, including Employer’s coupon policy, as well as his employment history and training.  Grievant’s responses apparently showed that he understood the policy and knew what the proper procedures were in redeeming coupons and savings certificates.  When asked if he remembered the promotion and if he had purchase 10 qualifying products, Grievant responded that he remembered a $10.00 coupon that was passed around, then requested to have a Union representative present before answering any more questions.  Ms. Sparks made arrangements with Union representative, Rusti Gephart, to continue Grievant’s interview the next day and suspended Grievant pending further investigation in the interim.

The record shows that at the next meeting Ms. Sparks reviewed her notes from the prior interview with Grievant, and asked him if he had corrections or additions, and he did not.  At this meeting, when Grievant was asked as to how he had obtained the certificate, he first responded that “it was being passed around and given to me.”  Following a review of his responses to her inquiries, and the evidence at hand, it was concluded that Grievant had used the savings certificates on three occasions, and that he had distributed certificates to four other employees.

            Due  to the large number of employees possibly engaged in misconduct and therefore exposed to potential discipline, Ms. Sparks prepared separate investigation reports for each employee, including only the portions of the investigation that were relevant to that employee.  These reports were based upon a review of the investigator’s notes and incorporated anything that was said by or about the employee involved, within the scope the overall investigation.  The investigation concluded that the employees involved had engaged in varying levels of misuse.  The Employer determined that the misuse fell into four categories:

1.                  Employees who redeemed one savings certificate;

2.                  Employees who redeemed two or more certificates;

3.                  Employees who:

a.       Redeemed multiple certificates and

b.      Distributed certificates to others, including fellow employees, friends, family members, and/or other customers;

4.                  Employees who:

a.       Redeemed multiple certificates and

b.      Distributed certificated to others, including fellow employees, friends, family members, and/or other customers;

c.       Attempted to mask their use of the certificates by either not using a Club Card and/or using a different telephone number

All investigation reports were submitted to the investigator’s department and to George Glukfeld, Employer’s General Manager for Hawaii, who had been consulted throughout the investigation.  Ms. Sparks and Mr. Glukfeld conferred extensively about the appropriate disciplinary actions to take with respect to the employees involved.  Mr. Glukfeld made the final decisions as to the discipline imposed, depending upon the category of the transgression.

Two employees were cleared of any misconduct.  It was determined that 10 of the 16 employees eventually disciplined fell into the first and second categories of misuse.  These employees were placed on suspension without pay and were not terminated.

Grievant and other six employees not within the first two tiers of offenses, fell into either the third and fourth categories of misuse, because the investigation determined that they had used certificates for themselves on multiple occasions and had distributed certificates to others.  All six of these employees in the later two categories were terminated.  The basis for Grievant’s termination, as well as the other five employees involved in categories 3 and 4 conduct, was the violation of the Employer’s policies and procedures, including the Employee Purchase policy and Safeway’s rules against theft and misappropriation of company property.  In accordance with the CBA, this grievance ensued.



            UNION’S POSITION

            The Union takes the position that this was not a just cause termination because the Employer failed to give Grievant forewarning of the possible or probable disciplinary consequences of his conduct.  The Union argues that the conduct complained of was not a “Cardinal Offense” and that the misconduct here, if any, was not intentional misconduct.  The Union argues that in order for the discipline to stand against the Grievant, the burden is on the Employer to prove that Grievant had the requisite state of mind, or mens rea, to show intentional misconduct.

            The Union argues further, that given the fact that 18 employees were involved in this situation, that two of them were not subjected to discipline, that 10 were subjected only to a suspension, and, that as Grievant and five other employees were terminated upon the Employer’s assignment of some indicia of intentionality to the nature of their conduct, brings Grievant’s state of mind directly into play, and that because the Grievant acted with a “clean heart” the Employer cannot carry the evidentiary burden required for the Employer to demonstrate a just cause termination in this matter.

            The Union also argues that because the Employer is alleging stigmatizing criminal conduct, e.g. theft, the higher quantum of proof of “clear and convincing evidence” of the offense is required to make the termination for just cause viable.  The Union argues that the Employer contends that the Grievant stole the certificates from the booth, but the evidence demonstrates that he asked for the certificates and was given the certificates by other employees, who he believed wouldn’t have given him the certificates if it was improper.  The Union also points out that the distinction made as to the Grievant in terms of the level of discipline administered to him is that he distributed the coupons to other employees.  The Union posits that Grievant would not have distributed the certificates to his friends, buddies and confidantes if he had thought anything was wrong with doing so.  The Union argues that if he was engaged in culpable conduct, Grievant would have retained the coupons for his own benefit.

            Further, on the issue of the Grievant’s multiple uses of the certificates, the Union argues that this is further evidence of the Grievant’s non-culpable state of mind.  Essentially the Union argues, if Grievant knew the conduct was wrong, he would have only done it once, not the three times alleged by the Employer.  The Union argues that Grievant was not aware of the prerequisite promotional 10-item purchase requirement, and that the Employer had the responsibility to make sure that its employees were aware of the requirement or the Employer is foreclosed from imposing discipline.

            The Union also points out that had Grievant had the necessary state of mind to be disciplined, he would not have used his Club Card when making the purchases, or that he would have somehow attempted to make the purchase surreptitiously.

            Finally, the Union argues that Grievant’s conduct did not justify termination because the degree of discipline administered by the Employer was not reasonably related to the seriousness of the employee’s proven offense and the record of the employee in his service with the Company.  The Union contends that despite the Employer’s position that Grievant’s actions were tantamount to theft and deceit, the Employer was unable to meet the burden of proof to show that Grievant’s actions amounted to theft and deceit.  The Union argues that because the Grievant acted with an honest belief that he had the right to use the certificates, and the Employer failed to inform him of the limitations of the program, that the Employer cannot prove that Grievant’s violations were intentionally against the rules, particularly in light of the subsequent participation of a substantial number of other employees in the same conduct.  The Union therefore concludes that the Grievant must be reinstated and made whole.



            The Employer takes the following positions:

            First, that in order to carry its burden of proof, Employer must demonstrate that it had “just cause” to terminate Grievant’s employment, however Employer argues that proof of “just cause” does not require that Employer demonstrate “just cause” by the criminal law standard of “proof beyond a reasonable doubt” because that heightened standard is not appropriate in this case, because no criminal charges have been brought, and there has been no evidence that the reason for discharge has impaired Grievant’s employability.  Employer argues that the “prevailing” preponderance of the evidence standard of proof should be applied in this case.

            Second, the Employer argues that it has met the burden and that there was sufficient evidence that it met the “just cause” standard in this case because Grievant was forewarned of the consequences of his actions, because it was undisputed that Grievant received a copy of Safeway’s Store Rules, and that those rules expressly prohibit misappropriation and theft of Company property, and further provide that such misconduct “shall be grounds for immediate discharge.”  Employer notes that the Grievant acknowledged that he read and understood the rules.  Employer also argues that the evidence demonstrates that Grievant was also fully aware of, and understood, Safeway’s policies on employee purchases and the use of the coupons/savings certificates.  The Store Rules contain a specific section on Employee Purchases, which requires express approval from the Store Manager any time an employee applies a discount for themselves or another individual.

            Employer also notes that as an employee who regularly performed cashiering duties, Grievant was trained on, and expected to understand, all rules, policies, and procedures regarding purchases and discounts in order to properly apply them in customer transactions.  Grievant acknowledged to Ms. Sparks during her interview that he understood that coupons and savings certificates had conditions attached to them and that he was responsible for reading the coupon/certificate in order to understand what the conditions and restrictions were.  Grievant admitted at the hearing that he knew and understood the difference between a coupon and a savings certificate and therefore should have known just by looking at the face of the certificate that there would be conditions and limitations on its use.

            Further, the Employer argues that information on the promotion, including the conditions and limitations on the use of the savings certificates, were described in detail in a Bulletin that was posted on the Employee Bulletin Board located next to the time clock, which Grievant acknowledged he was responsible for reviewing when clocking in to work.  The Employer notes that unlike a coupon, which can be presented for instant savings, a savings certificate must be earned by meeting a pre-established purchase requirement and then used on a future transaction so, there is no need to list the requirements and conditions for earning a savings certificate on the certificate itself, because by the time a customer receives the certificate, they must have already met the conditions of the promotion.

            The Employer also argues that its Store Rules regarding theft, misappropriation of Company property and employee purchases are reasonably related to the business efficiency of its stores, and are necessary for the stores to operate properly and efficiently and that arbitrators generally recognize, with little discussion, that such rules are reasonable.

            The Employer further argues that it conducted an investigation before imposing any discipline; and in fact, that it commenced an investigation immediately after the incident became known.  Employer argues that Ms. Sparks compiled the results of her investigation in a thorough and detailed report, and reviewed her findings with Mr. Glukfeld before any disciplinary decision was made.  The Employer states, therefore, that it has satisfied the just cause requirement to make an effort to determine whether Grievant was guilty as charged prior to his termination, and that Grievant was given the opportunity to explain his actions and to provide evidence, and that Grievant had the opportunity to be represented by a Union representative as soon as it was requested.

            The Employer likewise argues that its investigation was conducted fairly and objectively by a higher, detached management official.  In this case, Employer notes that its investigation was conducted by Ms. Sparks, an experienced Senior Investigator in Safeway’s Security Department, whose job is to investigate employee theft and other forms of misconduct.  Employer notes that Ms. Sparks was not a percipient witness to any of the events involving Grievant’s conduct which gave rise to the investigation, and therefore as such, Ms. Sparks clearly met the definition of a “higher, detached management official” required for a fair and objective investigation under the “just cause” requirements.

            Additionally, Employer argues that it has met its burden because prior to termination it obtained substantial evidence of Grievant’s guilt, because Grievant admitted to all of the essential elements of the offense: he admitted that he received numerous copies of the savings certificate from another employee and had not purchased the qualifying items to validly earn even one certificate; he admitted during the hearing that he had personally used three savings certificates and had distributed certificates to at least four other employees; he demonstrated his understanding of what a savings certificate is and of the Employer’s policies and procedures regarding their use and processing and that he understood that use of the savings certificates would have required express approval from the Store Manager; and, finally, he admitted that he never obtained approval from any manager to use the certificate; nor was he informed by anyone else that such management approval had been given.

            The Employer argues that the Union’s position regarding the open and notorious nature of the Grievant’s conduct does not indicate a lack of the requisite intent, but rather the facts instead demonstrate that Grievant’s priority was to receive any and all discounts and promotions available, and that he in all likelihood did not even consider that the Employer might detect his improper usage of the savings certificates through his Club Card information.

            The Employer also argues Grievant’s conduct does not demonstrate any concern for the potential consequences of using the certificate, and in fact show a lack of concern regarding the potential job loss of his fellow employee.  Further, like Grievant’s decision to use the savings certificates himself, his distribution of the certificates to other employees may show lack of judgment (in addition to lack of concern), but not lack of intent.  Further Grievant’s encounter with Christian Young illustrates an attempt by Grievant to validate his use of the certificate to one of his supervisors who caught him in the act of redeeming it, but do not indicate Grievant “volunteering to an individual in management: his use of the certificate.  The Employer argues that Grievant’s assertions that he believed it was proper to use and distribute the savings certificates should be discredited simply because as the accused employee, he has an incentive to create evidence that is most favorable to him.

            The Employer also argues that this was a just cause termination because it applied its rules fairly and without discrimination; that Grievant cannot dispute that Safeway applied its rules fairly and without discrimination, because Grievant is unable to cite a single example in which the Employer failed to impose the same disciplinary measures on other employees who were in the Grievant’s position.  The Employer imposed the same disciplinary measures on other employees who were similarly situated to Grievant.  The Employer argues that specifically with regard  to the employees investigated in conjunction with the misuse of the savings certificates, Employer separated the employees into four categories based on their level of misuse of the certificates, and all employees within each category were issued the same level of discipline.

            Finally, the Employer argues that the degree of discipline was reasonably related to the seriousness of Grievant’s conduct, because theft and misappropriation of the Employer’s property were and are exceedingly serious offenses.  The Employer argues that theft is universally regarded as one of the cardinal sins of employment which warrants immediate termination, even under a just cause standard and even for a long-term employee with an otherwise clean record.  The Employer concludes that there are no mitigating factors present, and that the termination must be uphelf.



            Issue 1:            Was Gerrit Chinen terminated for just cause?



            In this matter, pursuant to the CBA and the body of decisions governing the interpretation of just cause and the parties’ arguments, the Employer must show that just and proper case existed for the Grievant’s discipline by the Employer.  “Just Cause,” as defined by Arbitrators Hill, Sinicropi, and Evenson is as follows:

“Just Cause.  The standard by which it is determined that the Employer has sufficient reason to remove an individual from employment.  Basically synonymous with “reasonable,” “good,” or “proper cause.”  Perhaps the most often-quoted statement of just cause criteria used by Arbitrators is in the form of a series of questions provided by Arbitrator Carroll Daugherty in Enterprise Wire Co., 46 LA 359, 363-64 (1966) and Grieft Brothers Cooperage Corp., 42 LA 555, 558 (1964).”


Marvin F. Hill, Jr., Anthony V. Sinicropi, Amy L. Evenson, Winning Arbitration Advocacy (1997).


            In order to satisfy this standard, the Employer must meet the following tests required to show just cause for the Grievant’s termination:

1.                  The Employee was forewarned of the consequences of his actions.

2.                  The Employer’s rules are reasonably related to business efficiency and the performance the Employer might expect from an Employee.

3.                  An effort was made before discipline to determine whether the Employee was guilty as charged.

4.                  The investigation was conducted fairly and objectively.

5.                  Substantial evidence of the Employee’s guilt was obtained.

6.                  The rule was applied fairly and without discrimination.

7.                  The degree of discipline was reasonably related to the seriousness of the Employee’s offense and the Employee’s past record.


Enterprise Wire Co., 46 Lab. Arb. (BNA) 359, 363-65 (1966) (C. Daugherty, Arb.); Koven and Smith, Just Cause The Seven Tests (1st ed., 2d ed. 1992 & 3d ed.); State of Hawaii, 109 Lab. Arb. (BNA) 289, 291 (7/11/97) (Nauyokas, Arb.); State of Hawaii, (7/27/97) (Nauyokas, Arb.); UFCW Union Local 480, AFL-CIO and Safeway (10/30/98) (Nauyokas, Arb.); IAM and Aloha Airlines (8/23/99) (Nauyokas, Arb.); Sheraton Waikiki Hotel, 114 Lab. Arb. (BNA) 1595, 1598-99 (2000) (Nauyokas, Arb.); SHOPO and City & County of Honolulu (9/20/00) (Nauyokas, Arb.); UPW and Hawaii Health Systems Corp. (2/24/01) (Nauyokas, Arb.); HERE, Local 5 and Hyatt Regency Waikiki (11/13/01) (Nauyokas, Arb.); Sheraton Waikiki Hotel, 119 lab. Arb. (BNA) 372, 381 (10/2/03) (Nauyokas, Arb.); KSL Grand Wailea Resort, 120 Lab. Arb. 833, 836 (5/26/04)


(Nauyokas, Arb.); see also Ogden, 111 Lab. Arb. (BNA) 251, 253 (8/31/99) (Nauyokas, Arb.)


This decision will deal with each of these tests in turn:


1.                  Was the Grievant forewarned of the consequences of his actions?


Grievant did not dispute receiving and understanding SAFEWAY STORES RULES Policies promulgated by the Employer, or that the rules prohibited theft or misappropriation of the Employer’s good and/or property.  The only question in the mind of the Arbitrator is whether these rules clearly communicated the consequences of the conduct for which the Grievant was terminated, given the argument raised by the union regarding the fact that Grievant did not have requisite mental state or mens rea, to be found responsible for his conduct.  Was this a situation where the Grievant was unsure as to whether giving the equivalent of $40.00 worth of unearned savings certificates to other employees, and redeeming an additional $30.00 of such certificates was properly within the scope of the promotion involved?

The Arbitrator is persuaded by the evidence in this case that had such a belief been reasonable under the circumstances, the termination could not be upheld.  However, the Arbitrator is not able to believe that based upon the testimony at the hearing, and a commonsense lay understanding of the purposes of the promotional nature of the certificates, and the plain language of their faces, that such a belief by the Grievant could have been per se reasonable under the circumstances.

A reasonably prudent employee in Grievant’s position should have know that without some sort of authorization from a cognizant manager processing the coupons, as they were here by the Grievant and other employees, was clearly a misappropriation fo the Employer’s property and a “cardinal sin” as is forcefully argues by the Employer.

As to the scienter argument raised by the Union as to the lack of wrongful intent and acting with a “clean heart” by the Grievant, in this particular instance, the Arbitrator is persuaded by the Employer’s argument that the “clear and convincing” standard does not apply to this particular offense.  Here, the preponderance test and the standard of a reasonably prudent person in the same circumstance seems most appropriate.  As to the Union’s argument that Grievant would not have given the certificates to the other store employees if he believed that it would get them into trouble; or, that he would not have used his Club Card had thought that the transaction was a wrongful misappropriation of the Employer’s property, the Arbitrator is not persuaded that this shows a lack of intent.

As this Arbitrator has ruled previously, the fact that Grievant did not more actively conceal the misappropriation shows a lack of judgment, not a lack of intent to commit the offense.  Here the Grievant took advantage of the certificate’s savings three times in a two-day period, and never once made a reasonable inquiry with a cognizant manager as to whether or not his utilization of the certification in this manner was within the scope of the promotion.

The Arbitrator therefore finds that the Grievant was forewarned of the consequences of his actions.

2.                  Were the Employer’s rules reasonably related to business efficiency and the performance the Employer might expect from an employee?


There seems to be no dispute between the Union and the Employer that a rule against misappropriation or theft is per se reasonable.  Therefore, the Arbitrator finds that the Employer’s rules were reasonably related to the Employer’s business efficiency and the performance that the Employer could reasonably expect from its Employees.


3.                  Was an effort made before discipline to determine whether the Grievant was guilty as charged?


A review of the record in this matter does show that the Employer, once alerted to the discrepancies at the Kapolei store related to the promotion, took reasonable actions through Ms. Sparks’ interviews of the employees and other percipient witnesses involved, to determine what has transpired at the Kapolei store prior to the imposition present upon his request. 

For purposes of the Arbitrator’s analysis, there does not seem to be much dispute as to the facts at issue, only as to the interpretation of those facts in the light of the argument regarding the fact that he did not actively “steal” the certificates themselves.  The record is clear that the Grievant did not “steal” the certificates themselves, however how he obtained the copies of the certificates is not dispositive as to the issue of scienter.

The decision here requires a two step analysis.  Once he received the supplicate certificates, the record is clear that Grievant did distribute at least $40.00 worth of certificates into the possession of other employees, whom he knew did not participate in a promotion, and without obtaining authorization from the store management or requesting a determination as to whether it was acceptable.  The record is likewise clear that the Grievant redeemed at least another $30.00 worth of savings certificates himself.  The nature of the circumstances surrounding this use of the Employer’s property does not lend itself to a reasonable belief that the Grievant could have had a good faith belief that this constituted legitimate participation on the Employer’s sales promotion; therefore, the fact that he obtained the certificates without subterfuge or force is immaterial if he could not reasonably have believed that he or the other employees were entitled to redeem the Certificates without complying with the specific terms of the promotion.

It is too long a stretch of this Arbitrator’s credulity for him to accept the Union’s assertion that the Grievant could not have known that a straight $10.00 savings certificate that had been photocopies came without some preconditions, and this Arbitrator is unwilling to put the burden on the Employer, as is suggested by the union, to go to each employee individually and make certain that they understand the limitations of a specific promotion.  The old saw that “if something is too good to be true, it usually is” applies here.  The burden of reasonable inquiry in this instance was on the Grievant, and he did not carry it.

Grievant was terminated for a violation of the Employer’s Rule regarding theft of misappropriation of Store property.  The Arbitrator finds that the Employer made a reasonable effort to determine whether the Grievant was guilty as charged prior to the imposition of discipline.

4.                  Was the investigation conducted fairly and objectively?

In reviewing the record of the hearing, the exhibits and the submissions of the parties after the hearing, the Arbitrator determines that the investigation was conducted fairly and objectively.  A higher level management employee who was not an eye witness conducted the investigation and questioned Grievant and all relevant witnesses.

5.                  Was substantial evidence of the Grievant’s guilt obtained?

The lack of dispute as to the underlying facts leads to the Arbitrator to the determination that substantial evidence of the conduct described in statement of facts took place.



6.                  Was the rule applied fairly and without discrimination?

The Employer forcefully argues that the across-the-board penalty for the offense of misappropriation or theft is termination, and provided the testimony of Heidi Sparks to support this argument.  The Arbitrator is also influences by the fact that the Employer went to the trouble to come up with a disciplinary scheme which fitted the punishment to the crime, and which actually involved a four-tiered analysis of the potential offenses.  The Union did not demonstrate that any other employees guilty of equally offensive conduct in this matter had received a lesser degree of discipline for the offenses charged, when substantial evidence of their guilt was obtained.  On that basis, the Arbitrator finds that the Employer applied the rule fairly and without discrimination.

7.                  Was the degree of discipline reasonably related to the seriousness of the employee’s offense and the employee’s past record?\


The Arbitrator reviews and does not redetermine discipline, and should not substitute his own judgment for that of the Employer, and in this particular instance, the record indicates that there are few mitigating factors present.  Of particular concern to the Arbitrator were the statements attributed to Grievant when one of the recipients of the certificates asked if the use of the certificates were allowed.  Regarding the fact that allegedly “everyone else was doing it,” when one of the same recipients specifically asked again because she had concerns about possible discipline including the possible loss of her job, Grievant responded, “Well, everyone else will because everyone else is using it.”  Under the circumstances, this statement undermines the credibility of Grievant’s argument regarding lack of intent and the fact that he did not know that the improper use of the Certificates could potentially cost him his job.


Therefore the Arbitrator finds that there was “just cause” for the Grievant’s termination by the Employer.



The Grievance is DENIED.  The Arbitrator finds that the termination of Grievant by the Employer was for just cause.  Having sustained the termination, there are no further issues before the Arbitrator.

            DATED:  Honolulu, Hawaii, _______________, 2007.




STATE OF HAWAII                                      )                      
                                                                       )           SS


            On this _____ 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: _______________



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