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Homestead suit going to mediation

Plaintiff representatives are pleased that talks will resume, but remain skeptical about seeing a resolution

By Rob Perez

LAST UPDATED: 4:40 p.m. HST, Feb 12, 2014

For only the second time in 14 years, the state is scheduled to begin nonbinding mediation to try to resolve a class-action lawsuit over its failure to issue timely homestead awards to Native Hawaiians.

Representatives of the plaintiffs — 2,721 mostly elderly Department of Hawaiian Home Lands' beneficiaries — applauded the development but expressed skepticism given the drawn-out, contentious history of the case.

The only other time the state participated in settlement talks was in 2007, but that ended when the state pulled out without proposing a counteroffer to what the plaintiffs presented.

Leona Kalima, the lead plaintiff in the lawsuit known as Kalima v. State, told the Star-Advertiser she was thrilled by the planned resumption of talks.

"But you just keep behind your psyche (the question of whether) the state is just throwing us a bone," she added.

A major difference this time around, though, is that a judge already has ruled the state liable for breach of trust on the central issue of failing to issue homesteads on a timely basis. That ruling came in 2009.

The current phase of the case addresses the question of how much in damages the defendants — the state and DHHL — must pay for the breaches. Some plaintiffs say the total easily could top $100 million.

The state maintains that "a significant portion" of the plaintiffs may not be entitled to damages under the rules the court has approved thus far — a position the plaintiffs dispute.

Barring an out-of-court settlement and because of anticipated appeals, a final resolution likely is years away, and roughly 300 plaintiffs already have died since the lawsuit was filed in 1999. The average age of the remaining plaintiffs is about 65, but many are in their 70s and 80s and worry they may die before receiving compensation.

The lawsuit was filed after the plaintiffs sought relief through a state panel established in the early 1990s to evaluate beneficiaries' breach-of-trust claims dating from 1959 to 1988. But the state disbanded the administrative body in 1999 without the plaintiffs getting any relief, leading to the lawsuit.

Representatives of the two sides said they agreed last week to begin mediation in January. They plan to hire mediator Keith Hunter to oversee the process.

The only potential obstacle is the question of who will pay the mediation expenses. Like almost everything else in this case, the two sides have filed opposing positions.

The first time around, the state and plaintiffs split the cost.

In court documents filed Aug. 20, Charleen Aina, the deputy attorney general who has handled the case for the past 14 years, said the two sides should continue to split the costs.

But the plaintiffs say the defendant must pay for mediation because the state already has lost the case on the liability issue and the finding that the beneficiaries suffered damages.

Carl Varady, one of two attorneys representing the plaintiffs, said Hawaii law requires the losing party to pay for court-ordered mediation.

The court has yet to order mediation. But if the state doesn't voluntarily agree to shoulder the costs, the plaintiffs will pursue a pending motion seeking court-ordered mediation, according to Varady.

The parties met in court last week to discuss the motion, and Judge Virginia Crandall told both sides she would hold off on a ruling to give them a last chance to agree to mediation.

Like Kalima, Varady said he is pleased that mediation talks are scheduled to resume, though he also expressed reservations.

Varady and the plaintiffs' co-counsel, Tom Grande, previously have told the Star-Advertiser that the plaintiffs have suggested resuming mediation multiple times since the collapse of the initial effort but that the state wasn't interested.

"I would say this is a positive development," Varady said of the scheduled talks. "But I also would say that given the history of the case and how contentious it's been, I'm not optimistic it will be resolved quickly or easily."

The case has dragged on for 14 years for many reasons, including frequent legal disputes at virtually every step of the court process.

The plaintiffs have accused the state of delay tactics, while the attorney general's office has maintained it has been acting in the best interests of the state.

When the Star-Advertiser asked Attorney General David Louie in July about the possibility of settlement talks resuming, he said the two sides were far apart in 2007 and that that was still the case now.

And in her Aug. 20 court filing, Aina said engaging in mediation would be premature until more information was available to determine which plaintiffs were not entitled to damages.

Aina said some of that information would be available by year's end.

As it turned out, Hunter, who mediated the 2007 talks, wasn't available until January anyway, so the two sides agreed to begin the mediation that month, according to both sides.

In her court filing, Aina said the state presented no counteroffer in the previous talks because that would have been unproductive given what the state considered the plaintiffs' unrealistic demands.

But the plaintiffs said they presented three reasonable alternatives for calculating damages, and that the state acted in bad faith by failing to counter their proposal.

Anne Lopez, a spokeswoman for the attorney general's office, told the Star-Advertiser on Friday that the two sides were continuing to discuss how the costs for mediation should be divided.

If the talks are held in January as planned, the question of determining damages should have more clarity by then.

In late September, a trial is scheduled to determine rental values to be used to calculate out-of-pocket expenses the eligible plaintiffs can claim for damages, based on their wait for a homestead.

The court already has ruled that a six-year wait was reasonable, and damages could be pursued only for waits beyond that.

Even if the two sides are able to reach a settlement, it would have to be approved by the court.

And the Legislature would have to authorize any appropriation to cover a state payout. A sizable one likely would get considerable scrutiny from legislators.

"I would hate to go through the process and end up with more money and time spent without producing something that the Legislature is going to agree to," Varady said.

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