by Tia Blankenfeld, Derek Kauanoe, Malina Koani-Guzman

The Center for Excellence in Native Hawaiian Law focuses on education and legal scholarship, community outreach, and the preservation of invaluable historical, legal, traditional, and customary materials. It also offers new courses and supports Native Hawaiian law students as they pursue legal careers and various leadership roles. One of the Center’s important objectives is to engage in discourse with the Hawaiian community about legal issues that affect their lives. As part of this objective, the Center is providing brief summaries of selected state and federal court decisions that impact Native Hawaiians. This issue of Ka He‘e includes summaries of Kalima v. State, Day v. Apoliona, and Kelly v. 1250 Oceanside Partners.

1. Kalima v. State, 111 Hawai‘i 84, 137 P.3d 990 (2006).

Plaintiffs Leona Kalima, Dianne Boner, Raynette Nalani Ah Chong, individually and as class representatives, brought a class action on behalf of more than 2,700 other similarly-situated individuals against the State of Hawai‘i, Department of Hawaiian Home Lands, Hawaiian Home Lands Trust Individual Claims Review Panel, and Governor Linda Lingle, among others, for breach of trust under the Hawaiian Homes Commission Act (HCCA).

The HCCA had sought to provide the declining number of native Hawaiians (defined as those of 50% or more Hawaiian blood quantum) with the opportunity to “receive the benefits of homesteading through leased land and related programs from the trust.” However, “[d]espite the HHCA’s admirable goals, controversy plagued the trust from its inception in 1921 and continued after its transfer to the State in 1959.”

Responding to continuing allegations of mismanagement, in 1984 a Federal-State Task Force was created, which “identified several areas of concern” in the administration of the HHCA, and “made recommendations for improvements.” Following the Task Force’s suggestions, in 1988, the Hawai‘i State Legislature enacted a limited waiver of sovereign immunity for beneficiaries to bring suits, prospectively, for money damages relating to breaches of the State's trust responsibilities occurring after July 1, 1988. The Governor was also tasked with formulating a plan to address past trust controversies; if the Governor did not formulate the plan and if the plan was not approved by the 1991 Legislature, an expansive right to sue provision - retroactive to statehood – would automatically kick-in. The Governor’s Action Plan, among other things, resulted in Act 323, allowing individual beneficiaries to pursue claims for breaches of trust occurring from statehood to 1988. Hawai‘i Revised Statutes (HRS) chapter 674 established an administrative process for such claims under the guidance of the Hawaiian Home Lands Trust Individual Claims Review Panel.

The Panel’s duty was to review claims made by individual beneficiaries “for actual damages arising out of or resulting from a breach of trust, which occurred between August 21, 1959, and June 30, 1988, and was caused by an act or omission of an employee of the State in the management and disposition of trust resources.” By the August 31, 1995 claims filing deadline, the Panel had received 4,327 claims from some 2,752 beneficiaries. In the Panel’s 1997 progress report, it recommended damages awards totaling approximately $6.7 for some 162 claims. The Panel also requested an extension of its reviewing deadline due to “the large number of claims and the Panel's limited staff and resources.”

However, the Legislature took issue with “the formula utilized by the [Panel] to arrive at award amounts” calculated on completed claims. Therefore, while the Legislature agreed to extend the Panel’s existence, it also established a “Working Group,” via Act 382, which adopted a new formula for calculating actual damages. The Working Group’s adjusted formula was “significantly” different from the Panel's original one, and it “effectively eliminated nearly sixty percent of the claims from consideration,” essentially rejecting any “waiting list claims,” or “those claims involving claimants who had been waiting an unreasonable amount of time.”

In Apa v. Cayetano, claimants brought suit alleging a due process violation “[i]n response to the Working Group’s proposed formula.” The Circuit Court ruled that certain portions of Act 382 resulted in an unconstitutional denial of due process and delegation of legislative power and that plaintiffs’ rights to equal protection had been violated. Furthermore, the court found that the Working Group’s “distinction between the [waiting list claims and non-waiting list claims] [was] arbitrary and capricious, as there was no rational basis to treat them differently.” Apa, which was never appealed, prevented the Working Group “from taking any further action in determining the formula for compensation.”

Despite the fact that the Panel had lost “almost a year of productive time due to Act 382” and the Working Group's interference, the Panel reported to the 1999 Legislature that it had made “significant progress in reviewing claims.” Nevertheless, with more than half of the claims incomplete, the Panel requested a further extension. Despite pressure from the Attorney General and other State Officials, the 1999 Legislature passed House Bill No. 1675, which “extended the notice, filing, and Panel report deadlines by one year, to allow additional time for all claims to be reviewed.”

Then-Governor Benjamin Cayetano, who “concluded that the administrative process was not working,” vetoed the Bill, thereby terminating the Panel. Cayetano felt that the time needed for the completion of the claims process was “totally unacceptable.” Hence, despite the fact that each of the Plaintiffs had timely participated in the administrative process, none were provided any remedy for their individual damages, which included claims of: “(1) mismanagement of the extensive waiting list; (2) mishandling of the plaintiffs’ applications; (3) preference policies regarding eligibility requirements; and (4) the awarding of raw lands lacking infrastructure.”

Following a hearing, the trial court ruled in favor of the Plaintiffs, concluding, among other things, that the Circuit Court had jurisdiction to hear the complaint, Plaintiffs were entitled to judgment, the State could be sued because it had waived its sovereign immunity, administrative remedies had been exhausted, the claims were actionable, the State was contractually obligated to provide remedies, and that Plaintiffs were “entitled to pursue their claims for money damages and other relief…for breaches of the HHCA trust obligations by DHHL.”

On appeal, the Hawai‘i Supreme Court affirmed the Circuit Court’s “determination that the plaintiffs are entitled to pursue their claims under HRS chapter 674” and reversed its determination that the plaintiffs had the right to sue for breach of contract.

Importantly, the Court did not adopt a strict and narrow interpretation of the waiver of sovereign immunity set forth in HRS chapter 674. Rather, it interpreted the waiver in light of the chapter’s remedial purpose. The court held that HRS chapter 674 establishes a “process under which individual beneficiaries under the Hawaiian home lands trust may resolve claims for actual damages…for past breaches of trust” and “the chapter as a whole provides a remedy for the redress of the individual beneficiaries’ injuries and, thus, falls squarely within the definition of a remedial statute.” The Court remanded the case to the Circuit Court for further proceedings.

In conclusion, this means that the more than 2,700 claimants can pursue breach of trust claims and seek monetary damages from the State for its alleged mismanagement of the Hawaiian Home Lands program.

2. Day v. Apoliona, __F.Supp.2d __, 2006 WL 2338212 (D.Hawai‘i 2006).

The State of Hawai‘i holds public lands, as well as the proceeds and income derived from those lands as trustee of a “public trust,” and is therefore obligated to use trust lands and funds for one or more of five enumerated purposes—one of those purposes being for the betterment of the conditions of native Hawaiians, as defined in the Hawaiian Homes Commission Act of 1920.

Plaintiffs, as “native Hawaiians” defined by the Hawaiian Homes Commission Act as “any descendant of not less than one-half part of the blood of the races inhabiting the Hawaiian Islands previous to 1778,” brought suit against former and current trustees of the State’s Office of Hawaiian Affairs (OHA). Plaintiffs asserting federal 42 U.S.C. §1983 claims under the Equal Protection Clause and the Admission Act, and state law claims for breach of fiduciary duty and breach of fidelity. Plaintiffs alleged that the State delegated its public trust duties to OHA, which receives 20 percent of all income derived from the trust lands. They further alleged that former and current trustees have violated OHA’s public trust duties by failing to use trust funds solely for betterment of conditions of native Hawaiians.

The issues presented in the case were: (1) Did Congress create rights that it intended to have enforced through a §1983 action when it enacted the Admission Act?; (2) Should a Native Hawaiian law clerk be able to work on the case?; (3) Are defendants violating the Equal Protection Clause of the Fourteenth Amendment by spending trust funds to lobby in support of the Akaka Bill?; and (4) Did defendants breach their duty of fidelity under the common law of the State of Hawai‘i and HRS §10-16(c) owed to Plaintiffs as native Hawaiian beneficiaries?

The federal district court held that plaintiffs do not have the individual right to bring actions under § 1983 for alleged breaches of the public trust established in the Admission Act. According to the court, Congress did not intend to create rights enforceable through a §1983 action when it enacted the Admission Act, and therefore, plaintiffs may not enforce the public trust duties in the Admission Act under §1983.

In its analysis, the court turned to the leading U.S. Supreme Court case on the issue, Gonzaga Univ. v. Doe, 536 U.S. 273 (2002), in which the Court examined whether a federal statute conferred individual rights enforceable under § 1983. In that case, the Court concluded that “only rights and remedies created and conferred by ‘clear and unambiguous terms’ set out by Congress itself are enforceable through § 1983.”

The district court also relied heavily on the Ninth Circuit Court of Appeals’ conclusion in Keaukaha-Panaewa Community Association v. Hawaiian Homes Commission, 588 F.2d 1216 (9th Cir.1978) (“Keaukaha I”) that “neither the text nor the legislative history of the Admission Act indicates any congressional intent to create a private right of action requires [and therefore] the Admission Act confers no individual rights enforceable under § 1983.”

The district court thus concluded that claims for statutory violations may be brought under § 1983 only if the text or legislative history of the statute shows clear and unambiguous congressional intent to create individual rights, and the Ninth Circuit previously concluded that neither the text nor the history of the Admissions Act indicates such congressional intent. The court thus held that Plaintiffs may not enforce the Admission Act under § 1983.

The court also held that a Native Hawaiian law clerk is permitted to work on the case. “A judicial employee should avoid conflicts of interest in the performance of official duties. A conflict of interest [exists] . . . when a[n] . . . employee knows that he . . .might be so . . . affected . . . that a reasonable person . . . would question the . . . employee’s ability properly to perform official duties . . . impartial[ly] . . . .” Codes of Conduct for Judicial Employees. Canon3(f)(1). Neither the law clerk nor her native Hawaiian family members presently receive or intend to seek funds or other benefits from OHA and therefore do not have a financial interest in the outcome of the current case. Mere eligibility does not give a Hawaiian law clerk and his or her family a financial interest in a case’s outcome. Such an argument would “stretch recusal principles out of all recognition and make it impossible for judges and law clerks to perform their jobs.”

The court then dismissed plaintiffs’ Equal Protection Clause claim. Plaintiffs had alleged that because OHA trustees were spending trust funds to support the Akaka Bill, and “[i]f the Akaka Bill is enacted into law without a blood quantum as set forth in the HHCA, Plaintiffs and all other 'native Hawaiian' beneficiaries will be deprived of their right to equal protection under the law[.]” Under the Equal Protection Clause “no state shall deny to any person within its jurisdiction the equal protection of the laws . . . that all person similarly situated should be treated alike. High Tech Gays v. Defense Indus. Sec. Clearance Office, 895 F.2d 536, (9th Cir. 1990). According to the court, because plaintiffs made no allegation that they had been treated differently from similarly situated persons, plaintiffs failed to properly allege a violation of the Equal Protection Clause.

Finally, the court declined to exercise supplemental jurisdiction over plaintiffs’ state law claims of breach of fidelity under Hawai‘i state common law and H.R.S. § 10-16(c). “Supplemental jurisdiction over state claims exists when a federal claim is sufficiently substantial to confer federal jurisdiction and there is "a common nucleus of operative fact between the state and federal claims." Even though there is a common nucleus of operative fact between the claims, a district court may nevertheless decline to exercise supplemental jurisdiction over a state law claim for a number of reasons, including if the district court has dismissed all claims over which it has original jurisdiction. Because all of plaintiffs’ federal claims were dismissed by the court, the court declined to exercise supplemental jurisdiction over the remaining state law claims.

3. Kelly v. 1250 Oceanside Partners, 111 Hawai‘i 205, 140 P.3d 985 (2006).

In the early 1990s, 1250 Oceanside Partners planned a large-scale residential, recreational, and agricultural development, which included residential lots, a golf course, a members’ lodge, a golf clubhouse, a beach lodge, and a shoreline park, spanning approximately 1.9 miles of coastline between Kailua-Kona and Kealakekua on the Island of Hawai‘i. The waters off Kealakekua are classified as “Class AA, which is the most protective classification for marine waters, and requires that the waters remain pristine, or in ‘wilderness’ condition.”

In 1994, 1996, and 1997, Oceanside received County zoning and subdivision approvals. In 1998, the County and Oceanside entered into an agreement ensuring Oceanside’s right to proceed with the development. In 1999, the Department of Health (DOH) approved Oceanside’s permit application to perform erosion control measures and implement construction site best management practices, while still being allowed to “discharge storm water associated with construction activity from the [Property] to the receiving waters of unnamed dry gulches.”

Heavy rains one year later caused the erosion control methods set by Oceanside to fail, causing significant sediment discharge into the waters off of Kealakekua. DOH inspectors inspected the site, but did not issue any reports of violations. Thus, the Kelly Plaintiffs filed a complaint against DOH and Oceanside alleging that Oceanside violated its permit and various state laws when its construction project, along with the storm, caused a significant sediment discharge into Class AA waters. Plaintiffs also later alleged that the DOH violated the public trust doctrine by failing to take remedial action when Oceanside’s erosion control measure failed.

On appeal, the Hawai‘i Supreme Court held that: (1) the County and DOH both held public trust duties imposed by the Hawai‘i State Constitution; (2) the County had an affirmative duty to ensure that effective soil erosion control measures were being met by Oceanside to protect the waters adjacent to the development; and (3) DOH had an affirmative duty under H.R.S. §342D and §342E to “hold violators of water quality standards liable for their actions, including the prosecution . . . and the imposition of fees where necessary to enforce measures to prevent future harm.” The Hawai‘i Supreme Court affirmed the trial court’s judgment “to the extent that it properly applied the public trust doctrine with respect to the County and DOH,” but reversed the portion of the judgment that held the County and DOH in breach of their public trust duties, finding an insufficient showing of evidence to prove any breach occurred. Specifically, the court held that plaintiffs “failed to establish that the County breached its public trust duties with respect to water pollution that occurred in ‘Class AA’ waters abutting the Property,” and that plaintiffs failed to show that DOH violated its public trust duties “in relation to construction activities on the Property.”