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                                                              Electronically Filed
                                                              Supreme Court
                                                              SCWC-XX-XXXXXXX
                                                              10-JUN-2019
                                                              09:28 AM




           IN THE SUPREME COURT OF THE STATE OF HAWAII

                                ---o0o---


             IN THE MATTER OF BCI COCA-COLA BOTTLING
                  COMPANY OF LOS ANGELES, INC.,
    Respondent/Respondent/Appellant/Appellee/Cross-Appellee,

                                    vs.

    SCOTT MURAKAMI, in his official capacity as the Director,
 Department of Labor and Industrial Relations, STATE OF HAWAII;
 DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS, STATE OF HAWAII,
        Respondents/Appellees/Appellees/Cross-Appellants,

                                    and

                        TAMMY L. JOSUE,
   Petitioner/Complainant/Appellee/Appellant/Cross-Appellee.


                            SCWC-XX-XXXXXXX

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
             (CAAP-XX-XXXXXXX; CIV. NO. 13-1-1817-06)

                              JUNE 10, 2019

 RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

                OPINION OF THE COURT BY POLLACK, J.

          Hawai‘i law protects workers who suffer injuries

arising out of and in the course of their employment from being
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discharged, suspended, or discriminated against on the sole

basis of their work injuries.       In this case, an employer hired a

permanent replacement for an employee who was taking a leave of

absence due to such an injury.       The employer thus declined to

reinstate the employee to her pre-injury position upon her

return, instead offering her only positions that were downgrades

from her previous work or that she was unqualified to perform.

The employer contends that this was not discrimination based

solely on the employee’s work injury because it was motivated by

the company’s business needs.

          We now hold that, in order for business necessity to

constitute a valid defense to a claim of work injury

discrimination, an employer must demonstrate that the employee’s

absence caused a business impairment that could not be

reasonably alleviated by means that would not result in

discrimination.    Because no such showing was made in this case,

we affirm the decision of the Director of the Hawai‘i Department

of Labor and Industrial Relations that the work injury

discrimination in this case contravened our law.           We accordingly

vacate the Circuit Court of the First Circuit’s judgment and the

Intermediate Court of Appeals’ Judgment on Appeal and remand the

case to the Hawai‘i Department of Labor and Industrial Relations

for any further proceedings as may be appropriate.




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                    I. FACTS AND PROCEDURAL HISTORY

                          A. Agency Proceedings

                            1. Hearing Officer

           On September 15, 2010, Tammy L. Josue filed a

complaint with the Wage Standards Division of the Hawaii

Department of Labor and Industrial Relations (Department)

alleging that BCI Coca-Cola Bottling Company (Coca-Cola)

discriminated against her on the basis of her work injury in

violation of Hawai‘i Revised Statutes (HRS) § 378-32(2) (1993).1

Coca-Cola responded on October 7, 2010, denying the allegations

and arguing that Josue’s claim was untimely.


      1
            HRS § 378-32(2) (1993), which has since been recodified as HRS §
378-32(a)(2), provided in relevant part as follows:

           It shall be unlawful for any employer to suspend,
           discharge, or discriminate against any of the employer’s
           employees:

                  . . .

                 (2) Solely because the employee has suffered a work
                 injury which arose out of and in the course of the
                 employee’s employment with the employer and which is
                 compensable under chapter 386 unless the employee is
                 no longer capable of performing the employee’s work
                 as a result of the work injury and the employer has
                 no other available work which the employee is capable
                 of performing. Any employee who is discharged
                 because of the work injury shall be given first
                 preference of reemployment by the employer in any
                 position which the employee is capable of performing
                 and which becomes available after the discharge and
                 during the period thereafter until the employee
                 secures new employment.

In the interest of clarity, this opinion will refer to the statute as HRS §
378-32(2), which is the codification applicable to the alleged discrimination
in this case.




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            An administrative hearing on the complaint commenced

on February 7, 2011.     Josue testified that she began working at

Coca-Cola in 2000 as a full-service driver and later received a

promotion to full-service supervisor.          On May 29, 2009, Josue

stated, she suffered an injury during the course of her

employment.    Josue explained that she was unable to work as a

result of this injury and was placed on a leave of absence in

accordance with Coca-Cola’s disability leave policy.            Josue

testified that she attempted to resume her employment on

September 1, 2010, the day after her doctor authorized her to

return to work with no restrictions, but she was informed that

Coca-Cola had hired an employee to permanently fill her

position.   Coca-Cola thereafter offered Josue several other

positions with the company, but Josue testified that these

offers were rejected because she either could not meet the

physical requirements of the positions due to a prior shoulder

injury, the positions required experience or certifications that

she did not possess, or the positions were downgrades from her

pre-injury employment.

            Coca-Cola called two witnesses: a human resources

manager and Josue’s supervisor.          The human resources manager

testified that, during Josue’s absence, she received a request




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from Josue’s supervisor that the position be filled.2            The

manager stated that, after Josue’s position had been vacant for

ten months, Coca-Cola hired a permanent replacement in April

2010.3   The vacancy had been creating a hardship, the manager

explained, because two other supervisors were covering Josue’s

job duties in addition to performing their own.           Josue’s

supervisor added that the two individuals providing coverage

were required to adjust their schedules by arriving to work two

hours prior to the time that they typically arrived.

            When asked by the hearing officer about the internal

process behind hiring a permanent replacement to fill Josue’s

position, the manager refused to answer because she said that

the process was “confidential” and “privileged.”            The manager

stated, however, that the company did not have any information

regarding whether Josue was capable or incapable of returning to

work when it hired Josue’s replacement.          The manager testified

that Coca-Cola’s disability leave policy, which allowed an

employee to take a twelve-month leave of absence after a work

injury, does not state that the injured employee’s job will

remain open for those 12 months, but rather merely provides that

the employee’s benefits end after twelve months.

     2
            Josue’s supervisor testified that he did not submit a request to
fill Josue’s position.
     3
            The replacement was a former employee who held Josue’s position
immediately prior to Josue.




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          In her post-hearing brief, Josue argued that Coca-Cola

violated HRS § 378-32(2) by failing to return her to the

position she had previously held when she was capable of

returning to work after suffering a workplace injury.            This

amounted to unlawful discrimination based solely on an injury

that arose from her employment, she contended, and any argument

that the company filled the position for business reasons was

pretextual.   In response, Coca-Cola asserted that its failure to

reinstate Josue to her former position had nothing to do with

her work injury, but rather was the result of the company

filling the position more than four months prior to when Josue

was medically released to return to work.         Additionally, Coca-

Cola argued, nothing in the language or legislative history of

HRS § 378-32(2) required it to keep Josue’s position vacant

indefinitely or return her to her same position after she was

medically cleared to work.

          On August 1, 2011, the hearing officer issued a

Recommended Decision stating that Coca-Cola’s failure to return

Josue to her position was contrary to the purpose of HRS § 378-

32(2).   The hearing officer determined that the statute did not

require Coca-Cola to keep Josue’s position open indefinitely,

but it did make it unlawful “for an employer to discriminate

against an employee in conditions or terms of employment when

the employee has been released to return to work full duty, no

restrictions to the position occupied at the time of the work
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injury.”   Because Coca-Cola knew or should have known that Josue

would one day be able to return to work without restrictions,

the hearing officer concluded, the company should have filled

her position with a temporary replacement that was subject to

her right to return.     Thus, the hearing officer determined that

Coca-Cola discriminated against Josue solely because of a

compensable work injury in violation of HRS § 378-32(2) and

recommended that Josue be returned to the position that she held

before suffering her injury.

                               2. Director

           Coca-Cola appealed the Recommended Decision to the

Director of the Hawai‘i Department of Labor and Industrial

Relations (the Director).      Coca-Cola again argued that the plain

language of HRS § 378-32(2) did not prevent it from hiring a

replacement nor did it require the company to return Josue to

her pre-work related injury position.        Specifically, Coca-Cola

argued that the “[s]olely because” language in the statute meant

that the work injury must be the only reason for the employment

action, and here the reason for not reinstating Josue was that a

replacement was hired due to the business hardship inherent in

requiring other employees to perform the duties of the position

while Josue was absent.     (Citing Fergerstrom v. Datapoint Corp.,

680 F. Supp. 1456, 1459 (D. Haw. 1988).)         Thus, Coca-Cola

concluded, the Recommended Decision was clearly erroneous

because the company’s failure to return Josue to her prior
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position was motivated by legitimate, business concerns.

          The Director, in his Decision and Order, noted that

when the legislature added the term “discriminate” to HRS § 378-

32(2) in 1981, it made unlawful the practice of reassigning an

employee to a position with other duties at a lower rate of pay

after the injured employee returned to work.          (Citing S. Stand.

Comm. Rep. No. 782, in 1981 Senate Journal, at 1249.)            Here, the

Director stated, Josue was not returned to her pre-injury

position, but instead was offered other positions that were

either downgrades or positions for which Josue did not meet the

requirements.   The Director agreed with the hearing officer that

although Coca-Cola should not be required to hold Josue’s

position open indefinitely, it could have satisfied its business

concerns by filling the position with a temporary employee.                By

instead hiring a permanent employee to fill Josue’s position,

the Director determined, Coca-Cola became unable to return Josue

to her pre-injury position “solely because she suffered a work

injury in violation of section 378-32.”         The Director’s Decision

and Order thus adopted the hearing officer’s Recommended

Decision that Coca-Cola discriminated against Josue solely

because of her work injury when it failed to return her to the

position that she held at the time of her injury.

                     B. Circuit Court Proceedings

          Coca-Cola appealed the Director’s Decision and Order

to the Circuit Court of the First Circuit (circuit court) and
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argued that it was improper for the Director to rely on

legislative history because the language of the statute was

unambiguous.4   But even if reliance on the legislative history

was proper, Coca-Cola asserted, it did not support the

conclusion that refusing to terminate a replacement employee to

open the injured employee’s position is discrimination.            In

response, Josue contended that the purpose of the statute is to

protect employees from retaliatory discharge, and therefore the

Director’s decision comported with the text and purpose of the

statute.   (Citing Purchert v. Agsalud, 67 Haw. 25, 35, 677 P.2d

449, 457 (1984).)    The Department also responded to Coca-Cola,

arguing that the Director did not err in concluding that Coca-

Cola discriminated against Josue because the company’s hiring of

a permanent replacement was not an independent, non-

discriminatory, and lawful reason for its refusal to return

Josue to her pre-injury position.

           The circuit court determined that there was no dispute

that Josue was discriminated against.        The court found, however,

that the discrimination “was not because of a work-related

injury, but it was because the position had been filled.”             In

addition, the court stated that “to only look at the

[legislative history] without looking at any references as to


     4
           The Honorable Rhonda A. Nishimura presided.




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what constitutes discrimination is . . . untenable.”               The court

therefore concluded that Coca-Cola did not violate HRS § 378-

32(2).      Accordingly, the court reversed the Director’s decision.

                              C. ICA Proceedings

              Josue and the Department each appealed the circuit

court decision to the Intermediate Court of Appeals (ICA).

Josue argued that Coca-Cola’s interpretation of the “[s]olely

because” clause was incorrect because it could have satisfied

its operational concerns by filling the position with a

replacement that was subject to Josue’s right to return.

Similarly, the Department argued that although Coca-Cola cited

operational hardship as the reason for filling Josue’s position,

it produced no evidence as to why it could not temporarily,

rather than permanently, have filled Josue’s position.               Coca-

Cola responded that it did not discriminate “[s]olely because”

of Josue’s work injury because it filled Josue’s position due to

“operation concerns” and therefore the circuit court did not

err.       (Quoting Fergerstrom, 680 F. Supp. at 1458.)

              In a memorandum opinion, the ICA affirmed the circuit

court’s decision that Coca-Cola’s actions did not violate HRS §

378-32(2).5      Although the court determined that Coca-Cola


       5
            The ICA’s memorandum opinion may be found at BCI Coca-Cola
Bottling Company of Los Angeles v. Hoshijo, No.CAAP-0001135, 2018 WL 4659561
(Haw. App. Sept. 28, 2018).




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discriminated against Josue, the ICA stated that the term

“[s]olely” was unambiguous and that a violation of HRS § 378-

32(2) clearly requires that the work injury be the sole cause of

the adverse employment action to run afoul of the statute.              The

ICA held that the Director’s conclusion that Coca-Cola

discriminated against Josue “[s]olely because” of her work

injury was clearly erroneous because Josue’s absence was

creating a hardship for the company by requiring two other

supervisors to work extra hours to perform Josue’s job duties.

The ICA thus concluded that “business necessity was also a

reason for [Coca-Cola’s] actions and there was no indication

that the justification was pretextual.”

                        II. STANDARD OF REVIEW

          We review findings of facts and mixed questions of law

and fact under the “clearly erroneous” standard and we review

conclusions of law de novo “to determine if the agency’s

decision was in violation of constitutional or statutory

provisions, in excess of statutory authority or jurisdiction of

agency, or affected by other error of law.”          In re Water Use

Permit Applications, 94 Hawaii 97, 119, 9 P.3d 409, 431 (2000)

(quoting Curtis v. Bd. of Appeals, 90 Hawaii 384, 392-93, 978

P.2d 822, 830-31 (1999)); Price v. Zoning Bd. of City & Cty. of

Honolulu, 77 Hawaii 168, 172, 883 P.2d 629, 633 (1994).            A

finding of fact is clearly erroneous when “(1) the record lacks

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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.”           In re Water Use

Permit Applications, 94 Hawaii at 119, 9 P.3d at 431.

                              III. DISCUSSION

               A. Coca-Cola Discriminated Against Josue

            Under HRS § 378-32(2), it is unlawful for an employer

“to suspend, discharge, or discriminate against any of the

employer’s employees . . . [s]olely because the employee has

suffered a work injury which arose out of and in the course of

the employee’s employment with the employer.”           Unlike the terms

“suspend” and “discharge,” which denote specific employment-

related actions, it is unclear on the face of the statute what

type of employer action constitutes discrimination in this

context.6   The term “discrimination” is not included in the

applicable definitions provided in HRS § 378-31 (1993), and the

Department has not issued any regulations providing guidance on

how to interpret the term.7       Because the term “discriminate” is


     6
            According to Black’s Law Dictionary, “discrimination” generally
means “a failure to treat all persons equally when no reasonable distinction
can be found between those favored and those not favored.” Black’s Law
Dictionary 566 (10th ed. 2014).
     7
            Chapter 378 addresses discriminatory employment practices
generally and provides enumerated examples of other forms of discrimination.
For example, HRS § 378-2 (1993 & Supp. 1995) provides that various employment
decisions amount to unlawful discriminatory acts when made on the basis of

                                                           (continued . . .)
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not defined and because the statute is not clear as to what form

of employer action amounts to discrimination on the basis of a

work injury, an ambiguity exists regarding the meaning of the

term.    When such ambiguity exists, “the meaning of the ambiguous

word[] may be sought by . . . resort[ing] to extrinsic aides in

determining legislative intent” such as the legislative history

of the statute.     Gillan v. Gov’t Emps. Ins. Co., 119 Hawaii 109,

124-25, 194 P.3d 1071, 1086-87 (2008) (quoting State v.

Toyomura, 80 Hawaii 8, 19, 904 P.2d 893, 904 (1995)).

            Prior to 1981, HRS § 378-32(2) did not contain the

term “discriminate,” but instead provided that “[i]t shall be

unlawful for any employer to suspend or discharge any of his

employees . . . [s]olely because the employee suffered a work

injury.”8   1970 Haw. Sess. Laws Act 64, § 2 at 121.           In 1981, the



(. . . continued)

race, sex, religion, or other protected characteristic, including “to refuse
to hire or employ or to bar or discharge from employment”; “to fail or refuse
to refer to employment”; and “to exclude or otherwise deny equal jobs or
benefits to a qualified individual.” HRS §§ 378-2(1)(A), 378-2(1)(B), 378-
2(6). The chapter does not contain a similar detailed enumeration of
employment actions that constitute discrimination on the basis of work
injury.
     8
            This provision was originally codified in the worker’s
compensation statute, but in 1970 the legislature moved the provision into
the title of the HRS relating to the Department of Labor and Industrial
Relations. H. Stand. Comm. Rep. No. 253-70, in 1970 House Journal, at 859.
The statute was moved because the legislature recognized that it was
“inappropriately part of the Workmen’s Compensation Law” which was “neither
concerned with nor staffed to carry on an enforcement program, while the
[Department of Labor and Industrial Relations] is structured so as to
implement the policy and purpose of the law.” Id.




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legislature amended the statute by adding discrimination to

types of conduct that are prohibited when undertaken solely

because of an employee’s injury.         See 1981 Haw. Sess. Laws Act

10, § 1 at 29.    The purpose of this amendment was explained in

both a House and Senate Standing Committee report as follows:

           The purpose of this bill is to specify discrimination as an
           unlawful employment practice and to specifically allow the
           Department of Labor and Industrial Relations to order
           reinstatement to the prior position of an employee
           discharged in violation of section 378-32, Hawaii Revised
           Statutes.

           Current law prohibits suspension or discharge of an
           employee who has suffered from a work injury or has filed
           for bankruptcy or because the employer was summoned as a
           garnishee. However, an employee can be downgraded,
           reassigned to other duties at a lower rate of pay, or
           otherwise be discriminated against in conditions or terms
           of employment under the above circumstances without
           violating the law. This bill provides further protection
           to the employee in such cases by making such discrimination
           unlawful.

S. Stand. Comm. Rep. No. 782, in 1981 Senate Journal, at 1249

(emphasis added); accord H. Stand. Comm. Rep. No. 580, in 1981

House Journal, at 1179.      These committee reports demonstrate

that the addition of discrimination as an unlawful act sought to

address a loophole in the statute that allowed an employer to

“downgrade” or “reassign[]” an employee “to other duties at a

lower rate of pay” after the employee “has suffered from a work

injury.”   Thus, the legislative history indicates that the

intent of the statute is to protect employees that have suffered

work injuries from adverse employment action by preserving the

employee’s position until the employee is able to return to work



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or by placing the employee in a comparable position upon the

employee’s return.

           It is undisputed that Josue suffered a work injury and

was placed on a leave of absence pursuant to Coca-Cola’s

disability leave policy.       It is also uncontroverted that Coca-

Cola did not reinstate Josue to a position equivalent to or

better than her pre-injury position upon her return to work

after the injury, but instead the company offered her only

positions that she either could not perform or that amounted to

downgrades from her prior employment.         Such a decision is the

precise kind of adverse employment action that prompted the

legislature to specifically add the term “discriminate” to HRS §

378-32(2) to prohibit.9      See S. Stand. Comm. Rep. No. 782, in


      9
            The briefing before the ICA and the ICA’s Memorandum Opinion
addressed the issue of whether Josue’s complaint was timely, which turned on
when the alleged discrimination occurred. Although the issue of timeliness
is not directly raised before us, we must nonetheless decide what action
actually constituted discrimination under HRS § 378-32(2) to resolve this
case. The discrimination necessarily occurred on the day that Josue
returned--and not when the company hired a permanent replacement--because
that is when the employment action adversely affected Josue. Indeed, had
Coca-Cola discharged the employee that was hired to replace Josue or offered
Josue a position that was at least equivalent to her pre-injury position when
she returned to work, no discrimination would have occurred.

            Further, HRS § 378-32(2) contained a limited exception that
allows an employer to “suspend, discharge, or discriminate against” an
employee “[s]olely because the employee has suffered a work injury” if “the
employee is no longer capable of performing the employee’s work as a result
of the work injury and the employer has no other available work which the
employee is capable of performing.” If the discriminatory behavior
prohibited by HRS § 378-32(2) was found to occur when an employer makes an
adverse employment decision rather than when the decision adversely affects
the employee, it would incentivize employers to make adverse employment
decisions as quickly as possible after a work injury occurs. Under such a
formulation, the employer would be able to bypass the protections afforded by
the statute if the still-healing injury rendered the employee incapable of

                                                           (continued . . .)
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1981 Senate Journal, at 1249; H. Stand. Comm. Rep. No. 580, in

1981 House Journal, at 1179.        Thus, Coca-Cola’s actions in this

case constituted discrimination under HRS § 378-32(2), and this

case instead turns on whether the discrimination was undertaken

“[s]olely” on the basis of Josue’s work injury.10




(. . . continued)

performing the employee’s preinjury duties or those of an equivalent or
better position at the time the adverse employment decision was made,
regardless of whether the employee would eventually regain a full capacity
for work. Thus, the employment action must be evaluated from the point at
which the employee is denied reinstatement to an equivalent or better
position upon returning to work in order to effectuate HRS § 378-32(2)’s
purpose of protecting employees who are injured during the course of their
work. In the present case, it is undisputed that Josue’s doctor medically
cleared her to work without restriction prior to the alleged discrimination.
     10
            During oral argument, Coca-Cola contended that it did not
discriminate against Josue under HRS § 378-32(2) because it was properly
following the “reasonable accommodation” procedures mandated by the Americans
with Disabilities Act (ADA). Oral Argument, BCI Coca-Cola Bottling Company
of Los Angeles v. Murakami (SCWC-XX-XXXXXXX) at 01:00:45-01:01:07,
http://oaoa.hawaii.gov/jud/oa/19/SCOA_041019_SCWC-14-1135.mp3. This argument
was raised before the Director and the circuit court but was not raised
before the hearing officer, ICA, or before this court prior to oral argument.
Even if this argument were properly before us, it is inapt here. Coca-Cola’s
requirements under federal law are wholly separate from its requirements
under HRS § 378-32(2), and Coca-Cola’s compliance with the ADA does not
abdicate its legal duty to comply with HRS § 378-32(2). Nor does the ADA
preempt HRS § 378-32(2) because the two statutes do not conflict. See
Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 516 (1992). Under the
regulations implementing the ADA, it is unlawful for an employer “not to make
reasonable accommodation to the known physical or mental limitations of an
otherwise qualified . . . employee with a disability,” and such an
accommodation includes “[j]ob restructuring” and “reassignment to a vacant
position.” 29 C.F.R. §§ 1630.9(a), 1630.2(o)(2)(ii). An employer can
fulfill its federal requirements while fulfilling its requirements under HRS
§ 378-32(2) because, as explained, the Hawaii statute does not prohibit an
employer from reassigning an employee to a position that is not a downgrade.




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B. In the Absence of True Business Necessity, Discrimination for
  Business Reasons is Discrimination “Solely Because” of a Work
                              Injury

           Determining that Coca-Cola discriminated against Josue

does not end the inquiry of whether the company violated HRS §

378-32(2) because the statute only prohibits discrimination when

it is done “[s]olely because the employee has suffered a work

injury.”   That is, an employer does not violate the statute if

it discriminates against an employee for a legitimate reason

other than the employee’s work injury.         However, HRS § 378-

32(2), like other statutes prohibiting discrimination,

“proscribes not only overt discrimination but also practices

that are fair in form, but discriminatory in operation.”            Adams

v. CDM Media USA, Inc., 135 Hawaii 1, 26 n.29, 346 P.3d 70, 95

n.29 (2015) (quoting Griggs v. Duke Power Co., 401 U.S. 424, 431

(1971)) (analogizing discrimination under HRS § 378-2, which

prohibits discrimination on the basis of race, sex, and other

protected characteristics, to discrimination under Title VII of

the Civil Rights Act of 1965)).

           In Adams, we explained that if an employer’s

discriminatory action “cannot be shown to be related to” a

legitimate reason such as “job performance, the practice is

prohibited.”   Id. (emphasis omitted).       Accordingly, “[a]

‘legitimate’ reason must be one that is justifiable in view of




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the purpose of the [statute.]”11          Id. at 15, 346 P.3d at 84

(quoting Hill v. Miss. State Emp’t Serv., 918 F.2d 1233, 1243–44

(5th Cir. 1990) (Rubin, J., dissenting) (second alteration in

original)).

              HRS § 378-32(2) was enacted specifically to protect a

vulnerable subset of employees--those who suffer work injuries--

by ensuring that they are restored to their position or placed

in a commensurate position when they return from a work-related

injury.12     S. Stand. Comm. Rep. No. 782, in 1981 Senate Journal,

at 1249; H. Stand. Comm. Rep. No. 580, in 1981 House Journal, at

1179.      Indeed, this court has explained that “the legislative

intent of HRS § 378-32(2) is to protect [employees],” Puchert v.

Agsalud, 67 Haw. 25, 36, 677 P.2d 449, 457 (1984), from

discharge, suspension, and discrimination in relation to the

employee’s compensable work injury.           Takaki v. Allied Machinery

Corp., 87 Hawaii 57, 64, 951 P.2d 507, 514 (App. 1998); see also

Hummel v. Kamehameha Schs./Bernice Pauahi Bishop Estate, 749 F.




      11
              “Legitimate” is defined by Black’s Law Dictionary as “lawful” or
“genuine.”    Black’s Law Dictionary 1040 (10th ed. 2014).
      12
            In its current form, HRS § 378-32 also protects employees from
being suspended, discharged, discriminated against, and demoted in several
other circumstances. The statute provides that an employee will not be
penalized as a direct consequence of filing a petition against an employer
for wages, testifying or being subpoenaed to testify in a discrimination
proceeding, testing positive for the presence of drugs or alcohol in a
“substance abuse on-site screening test,” or using available sick leave. HRS
§ 378-32(a)(1)-(4), (b) (2015).


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Supp. 1023, 1027 (D. Haw. 1990) (“The purpose of HRS § 378-32(2)

is to protect [employees.]”).

          In light of this purpose, for an employer to

demonstrate a “legitimate reason” for a discriminatory

employment action that was allegedly based on the needs of the

business, an employer must first adduce evidence that, at the

time the position was filled, the vacancy at issue impaired the

employer’s business operations.       Adams, 135 Hawaii at 26 n.29,

346 P.3d at 95 n.29 (explaining that when evaluating whether a

discriminatory employment action is related to a legitimate

reason, “[t]he touchstone is business necessity.”); see also

Frank’s Shoe Store v. W. Va. Human Rights Comm’n, 365 S.E.2d

251, 258 n.3 (W. Va. 1986) (rejecting an employer’s contention

that its action of downgrading an employee because she became

pregnant was “necessary for efficient operations of the

business” because there was no “impair[ment of] business

operations”).   This burden falls on the employer because, as a

practical matter, only the employer would possess all the

information necessary to demonstrate a business impairment.                See

Frank v. Am. Freight Sys., Inc., 398 N.W.2d 797, 802 (Iowa 1987)

(“[T]he burden of showing a business necessity for the

discrimination is upon the [] employer.”).

          Additionally, to demonstrate a legitimate reason for

the adverse employment action, the employer must produce


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evidence that the proffered justification for the action was the

only reasonable means by which to remedy the employer’s business

impairment.13    See Smith v. City of Jackson, 544 U.S. 228, 243

(2005) (noting that the “business necessity” test requires a

showing that “there are [no] other ways for the employer to

achieve its goals that do not result in” discrimination).              When

reasonable alternative methods of relieving the business

impairment exist that do not involve taking adverse employment

action against the injured employee, HRS § 378-32(2) obliges an

employer to use one of these means rather than discriminating.

Otherwise, an employee would be subject to a demotion or other

adverse employment action despite the employee’s value to the

business--as shown by the business impairment caused by the

employee’s absence--solely because the employee had the

misfortune of becoming injured as a result of the job.             Such an

outcome would provide no real protection to employees and would

contravene the purpose of the statute.          Accordingly, an employer

must prove that there were no feasible alternatives to the

discriminatory employment action.14


     13
            As with demonstrating a business impairment, the employer is best
situated to produce the business information necessary to justify its
decision, and the burden of demonstrating a lack of reasonable alternatives
must thus fall upon the employer. Placing the burden on the employee would
not only be burdensome, but it would also likely involve extensive discovery
that could lead to protracted and contentious litigation.
     14
            Federal courts utilize similar principles under federal
employment discrimination law. See Ricci v. DeStefano, 557 U.S. 557, 578

                                                           (continued . . .)
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           Identifying a business impairment and determining

whether it could have been alleviated through the use of a

feasible alternative is a fact-bound inquiry that will vary

based on the circumstances of the case.          For example, a

necessary consideration will often be the employer’s knowledge

of the anticipated length of the injured employee’s absence.

When an employer who is suffering a business impairment from an

employee’s absence knows that the employee will return from

injury-related leave in a matter of weeks or months, then

filling the position with a temporary employee or having another

employee cover the absent employee’s duties may be a suitable

alternative to filling it with a permanent employee.             On the

other hand, if an employer learns that the employee will be

absent indefinitely or for an extended duration, then preserving

the injured employee’s right to return to the employee’s

(. . . continued)

(2009) (explaining that the business necessity defense under the Civil Rights
Act of 1964 may be defeated by a showing of “a legitimate alternative that
would have resulted in less discrimination”); Wards Cove Packing Co., Inc. v.
Atonio, 490 U.S. 642, 658 (1989), superseded by statute, Civil Rights Act of
1991, Pub. L. No. 102-166, 105 Stat. 1074, as recognized in Raytheon Co. v.
Hernandez, 540 U.S. 44 (2003) (holding that proof of a legitimate business
justification requires “first, a consideration of the justifications an
employer offers for his use of [its] practices; and second, the availability
of alternative practices to achieve the same business ends, with less
[discriminatory] impact”); Clady v. L.A. Cty., 770 F.2d 1421, 1428 (9th Cir.
1985) (“[T]he [employment decision] does not constitute a business necessity
[when] an alternative selection device exists which would have comparable
business utility and less adverse impact.”); Blake v. City of L.A., 595 F.2d
1367, 1383 (9th Cir. 1979) (holding that “[e]ven if an employer meets his
burden of demonstrating business necessity, Title VII plaintiffs may prevail
if” there are “alternative selection devices [] available that would serve
the employer’s legitimate interests without discriminatory effects”).




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position or another position that is not a downgrade may not be

feasible given the difficulties of covering the absent

employee’s duties for a prolonged or indefinite period.             Thus,

the employer’s knowledge of the anticipated length of an

employee’s absence is often critical in the employer’s

evaluation of reasonable alternatives.          Specific alternatives,

depending on the circumstances, may include filling the vacant

position with a temporary employee, having another employee or

employees cover the duties of the position, or holding open an

equivalent or better position that does not create a business

impairment.    If any of these or another nondiscriminatory

alternative is feasible, then the employer is required to

utilize it rather than discriminating against the injured

employee.15

           In sum, an employer’s alleged discriminatory

employment action must be related to a legitimate reason for the

adverse action, which the employer has the burden to prove.                 An

employer may demonstrate that its discriminatory employment

action did not violate HRS § 378-32(2) by presenting evidence to

show that the vacancy caused operational impairment to the

business that justified filling the position at the time that it

     15
            In enacting HRS § 378-32(2), the legislature recognized that
small businesses may be more significantly affected by the absence of an
injured employee. The legislature addressed this situation by providing that
the subsection “shall not apply to an employer in whose employment there are
less than three employees at the time of the work injury.” HRS § 378-32(2).




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was filled and that there was no feasible alternative to the

adverse employment action that would have rectified the

impairment.

      C. The Director’s Decision Was Not Clearly Erroneous

          As stated, we review findings of facts of an agency

under the “clearly erroneous” standard.         In re Water Use Permit

Applications, 94 Hawaii 97, 119, 9 P.3d 409, 431 (2000).            Thus,

we will uphold the Director’s findings of fact in the case

unless “the record lacks substantial evidence to support the

finding or determination” or we are otherwise “left with the

definite and firm conviction that a mistake has been made.”                Id.

          Here, the Director found that, after Josue suffered a

work-related injury and while she was on an approved leave of

absence, Coca-Cola filled her position without knowing whether

Josue would be able to return to work.         And when Josue did

return to work without any restrictions, the company refused to

reinstate her to her pre-injury position or an equivalent or

better job that she could actually perform.          Based on these

facts, the Director concluded that Coca-Cola discriminated

against Josue.    Additionally, the Director concluded that Coca-

Cola could have satisfied its business concerns and the

requirements of HRS § 378-32(2) by filling the position with a

temporary replacement that was subject to Josue’s right to

return to her position.


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           To demonstrate that it did not discriminate “[s]olely

because” of Josue’s work injury, Coca-Cola first needed to

present evidence that Josue’s vacancy caused a business

impairment.    A human resource manager for Coca-Cola testified

that Josue’s absence was creating a hardship for her department

because other supervisors were being required to come to work

two hours early to perform Josue’s work duties in addition to

their own.    Yet there is no clear evidence in the record that

the other supervisors did not wish to perform this work for

additional compensation, that providing additional pay to the

other supervisors posed a financial burden to the business, or

that the arrangement was otherwise impairing Coca-Cola’s

business operations.      The evidence is thus unclear as to whether

business operations were being adversely affected by Josue’s

absence.

           In any event, it is ultimately unnecessary for this

court to decide whether Coca-Cola successfully established that

Josue’s absence was causing a business impairment in light of

the Director’s finding that feasible alternatives existed to

Coca-Cola’s hiring of a permanent replacement.16           As explained,


     16
            The ICA cited Fergerstrom v. Datapoint Corp., 680 F. Supp. 1456
(D. Haw. 1988), in support of its holding that Coca-Cola’s decision was not
“[s]olely because” of Josue’s work injury. In Fergerstrom, an employee
suffered a work injury and went on a leave of absence from work. Id. at
1457. Nine months later, while the employee was still on leave, the employer
notified the employee that he had been “administratively terminated” because
of the company’s policy of terminating any employee who had been on a leave

                                                           (continued . . .)
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to prove that it had a legitimate reason for its discrimination,

Coca-Cola was required to demonstrate not only that Josue’s

absence resulted in a business impairment, but also that there

were no feasible alternatives to remedy the impairment that

would not preclude Josue’s return to her position or its

equivalent.    Accordingly, Coca-Cola was required to prove that

there were no feasible alternatives to hiring a permanent

replacement that resulted in the denial of Josue’s

reinstatement.      When the hearing officer asked what the

company’s process was to fill Josue’s position, the manager

responded that information about the decision-making process was

privileged and confidential.         Coca-Cola did not present any

evidence as to why a temporary replacement or other alternative

would not have sufficiently addressed Coca-Cola’s business

concerns.



(. . . continued)

of absence for more than ninety   days. Id. The district court held that the
termination did not violate HRS   § 378-32(2) because the employee was
terminated “by operation of the   Administrative Discharge Policy, not solely
because of his injury.” Id. at    1458.

             We disagree with the analysis applied by the Fergerstrom court.
As explained, a discriminatory employment action must be related to a
legitimate reason, which in this context is a business impairment. Adams,
135 Hawaii at 26 n.29, 346 P.3d at 95 n.29 (quoting Griggs, 401 U.S. at 431).
An employer’s blanket administrative termination policy, whether of a
duration of one day, ninety days, or a year, does not, on its own,
demonstrate a business impairment. Instead, an employer must provide
evidence, on a case-by-case basis, that the employee’s absence caused a
business impairment and that there were no feasible alternatives to the
adverse employment action.




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           Indeed, the lack of evidence of the company’s

consideration of feasible alternatives is underscored by the

fact that the company did not contact Josue until after it had

filled her position with a permanent replacement.           Coca-Cola had

no indication of whether Josue would be able to work without

restrictions and, if so, the anticipated time frame when this

would occur.   Under the circumstances, Coca-Cola could not have

evaluated the feasibility of alternatives without this

information.

           Coca-Cola had the burden to prove that there was no

feasible alternative to hiring a permanent replacement for

Josue.   However, the record lacks any evidence that a temporary

employee would not have been able to fulfill Josue’s duties

during her leave of absence due to her work-related injury--nor

even that Coca-Cola considered the possibility.          The Director

concluded that in light of the evidentiary record, a temporary

employee could have addressed Coca-Cola’s business concerns, and

the company was thus not justified in discriminating against

Josue in the manner it did.      There was substantial evidence in

the record to support the conclusion that Coca-Cola failed to

meet its burden to prove that there were no feasible

alternatives to refusing to reinstate Josue to a position at

least equivalent to the one she left because of her work




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injury.17   Thus, the Director’s findings were not clearly

erroneous, and its conclusions of law were correct.            The

Director’s decision should have been affirmed, and it was error

for the ICA to hold otherwise.

                              IV. CONCLUSION

            Based on the foregoing, we vacate the ICA’s Judgment

on Appeal, vacate the circuit court’s judgment, affirm the

Director’s Decision and Order, and remand the case to the

Director for any appropriate proceedings consistent with this

opinion.


Ronald Fujiwara                           /s/ Mark E. Recktenwald
for petitioner
                                          /s/ Paula A. Nakayama
Adam S. Rosenberg
for respondents Scott Murakami,           /s/ Sabrina S. McKenna
Director of Department of Labor
and Industrial Relations, and             /s/ Richard W. Pollack
Department of Labor and
Industrial Relations                      /s/ Michael D. Wilson

Anna Elento-Sneed
for respondent BCI Coca-Cola
Bottling Company

Robert H. Thomas
Loren A. Seehase

     17
            During oral argument, the Department argued, for the first time,
that Coca-Cola was required to keep Josue’s position vacant until a medical
determination about her ability to return to work was made under the worker’s
compensation statute. Oral Argument, BCI Coca-Cola Bottling Company of Los
Angeles v. Murakami (SCWC-XX-XXXXXXX) at 00:23:00-00:23:20,
http://oaoa.hawaii.gov/jud/oa/19/SCOA_041019_SCWC-14-1135.mp3. Even if the
argument was properly raised, however, it lacks merit because, as explained,
an employer may fill the position with a permanent employee if the vacancy
caused a business impairment and there were no feasible alternatives to
utilizing a permanent replacement.




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for amicus curiae
National Federation of
Independent Business Small
Business legal Center




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