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Oral Argument Before the Hawaii Supreme Court–No. SCAP-16-0000496

(Amended 04/21/17)

No. SCAP-16-0000496, Thursday, July 6, 2017, 8:45 a.m.

RICHARD NELSON III, KALIKO CHUN, JAMES AKIONA, SR., SHERILYN ADAMS, KELII IOANE, JR., and CHARLES AIPA, Respondents/Plaintiffs-Appellees-Cross-Appellants, vs. HAWAIIAN HOMES COMMISSION, THE DEPARTMENT OF HAWAIIAN HOME LANDS, JOBIE MASAGATANI, in her official capacity as Chair of the Hawaiian Homes Commission, WILLIAM K. RICHARDSON, MICHAEL P. KAHIKINA, DOREEN NAPUA GOMES, GENE ROSS DAVIS, WALLACE A. ISHIBASHI, DAVID B. KAAPU, and WREN WESCOATT, in their official capacities as members of the Hawaiian Homes Commission, Petitioners/Defendants-Appellees-Cross-Appellees, and WESLEY MACHIDA, in his official capacity as the State Director of Finance, and the STATE OF HAWAI I, Respondents/Defendants-Appellants-Cross-Appellees.

The above-captioned case has been set for argument on the merits at:

Supreme Court Courtroom
Ali iolani Hale, 2nd Floor
417 South King Street
Honolulu, HI 96813

Attorney for Defendants-Appellants/Cross-Appellees Wesley Machida, et al.:

Charleen M. Aina, Deputy Attorney General

Attorneys for Defendants-Appellees/Cross-Appellees Hawaiian Homes Commission, et al.:

Melvyn M. Miyagi, Brian A. Kang, and Ross T. Shinyama

Attorneys for Plaintiffs-Appellees/Cross-Appellants Richard Nelson II, et al.:

David Kimo Frankel, Sharla Ann Manley, and Summer L.H. Sylva

Attorney for Brief of the Hawai i State Legislature as Amicus Curiae:

Mark J. Bennett

NOTE: Order granting Application for Transfer, filed 03/08/17.

NOTE: Order granting motion to share oral argument time; plaintiffs shall have 45 minutes, defendants State, DHHL, and amicus curiae the Hawai i State Legislature shall each have 15 minutes, filed 4/21/17.

COURT: MER, C.J.; PAN, SSM, RWP, and MDW, JJ.

 [ Listen to the entire audio recording in mp3 format ]

Brief Description:

In 2007, six individual Plaintiffs filed a first amended complaint against the State of Hawai i and the State Director of Finance (collectively, the “State Defendants”), as well as the Hawaiian Homes Commission, its Chair, and its members (collectively, the Department of Hawaiian Homelands Defendants, or “DHHL Defendants”). In Count 1, the Plaintiffs alleged that the State had failed to fulfill a constitutional mandate to sufficiently fund the Department of Hawaiian Homelands (“DHHL”) for the following purposes: (1) development of home, agriculture, farm and ranch lots; (2) home, agriculture, aquaculture, farm and ranch loans; (3) rehabilitation projects, including, but not limited to, educational, economic, political, social and cultural processes to improve the general welfare and conditions of native Hawaiians; and (4) the administration and operating budget of the department of Hawaiian home lands; in furtherance of (1), (2), (3) and (4). See Hawai i Constitution, Article XII, Section 1. In Count 2, the Plaintiffs alleged that DHHL breached its trust duties to its beneficiaries by failing to request sufficient sums from the State. The Circuit Court of the First Circuit (“circuit court”) granted the State Defendants’ motion for summary judgment (in which the DHHL Defendants joined), concluding that Counts 1 and 2 raised non-justiciable political questions.

On an initial appeal to the Intermediate Court of Appeals (“ICA”), the ICA concluded that Plaintiffs’ claims were not barred by the political question doctrine. Nelson v. Hawaiian Homes Comm’n, 124 Hawai i 437, 246 P.3d 369 (App. 2011). On certiorari, this court affirmed the ICA’s judgment, but on the narrower ground that only the issue of what constituted sufficient sums for DHHL’s administration and operating budget was justiciable, as judicially discoverable and manageable standards existed, based on the 1978 Constitutional Convention history that estimated DHHL’s administration and operating costs to be between $1.3 and 1.6 million at that time. Nelson v. Hawaiian Homes Comm’n, 127 Hawai i 185, 277 P.3d 279 (2012). The case was then remanded to the circuit court.

On remand, after an eight-day bench trial, the circuit court found that “DHHL needs more than $28 million annually for its administrative and operating budget for fiscal year 2015-16, not including repairs.” The circuit court then declared and ordered the following:

1. The State of Hawai i has failed to provide sufficient funds to the Department of Hawaiian Home Lands for its administrative and operating budget in violation of the State’s constitutional duty to do so under article XII, section 1 of the Hawai i Constitution.

2. The State of Hawai i must fulfill its constitutional duty by appropriating sufficient general funds to the Department of Hawaiian Home Lands for its administrative and operating budget so that the Department does not need to use or rely on revenue directly or indirectly from general leases to pay for these expenses.

3. Although what is “sufficient” will change over the years, the sufficient sums that the legislature is constitutionally obligated to appropriate in general funds for DHHL’s administrative and operating budget (not including significant repairs) is more than $28 million for fiscal year 2015-2016.

4. Prior to 2012, the DHHL Defendants breached their trust duties by failing to take all reasonable efforts – including filing suit – to obtain all the funding it needs for its administrative and operating budget.

5. The defendants shall prospectively fulfill their constitutional duties and trust responsibilities. They are enjoined from violating these obligations.

6. Judgment on Counts 1 and 2 shall be entered in favor of Plaintiffs and against the State Defendants (as to Count 1) and the DHHL Defendants (as to Count 2).

The State Defendants filed a motion for reconsideration, which the circuit court granted in part and denied in part. The circuit court modified paragraphs 3 and 5 above to read as follows:

3. Although what is sufficient will change over the years, the amount of general funds appropriated to DHHL for its administrative and operating budget for fiscal year 2015-2016 ($9,632,000) is not sufficient. The State of Hawai`i is required to comply with the Hawai`i Constitution and must fund DHHL’s administrative and operating expenses by making sufficient general funds available to DHHL for its administrative and operating budget for fiscal year 2015-2016.

. . . .

5. The Defendants must fulfill their constitutional and trust responsibilities.

On appeal, the State Defendants assert that insufficient evidence supported the $28 million dollar figure. They also argue that the circuit court erred in using DHHL’s projected “actual expenses” to determine “sufficient sums” for DHHL’s administration and operating budget. The State contends that “sufficient sums” should have been calculated by using the 1978 baseline of $1.3 to 1.6 million and adjusting for inflation. Next, the State defendants argue that, to the extent the circuit court ordered the legislature to appropriate $28 million dollars to DHHL, such an order would raise separation of powers concerns. On cross-appeal, the Plaintiffs assert that the circuit court abused its discretion in granting in part the State Defendant’s motion for reconsideration. This court accepted transfer of this appeal from the ICA.