Native Hawaiian homestead case to be heard by Hawaii Supreme Court

Sixty years to the day after Hawaii became a state, attorneys for about 2,700 Native Hawaiians will appear before the state’s highest court today to argue that the government has failed in its duty to award homestead lots to Hawaiians.

The case being heard today may be the last major legal battle in a contentious, complex class-action lawsuit that has dragged on for 20 years — a span in which two trials were held, about half a dozen different judges presided over the case, a Hawaii Supreme Court appeal was decided and as many as 400 of the mostly elderly plaintiffs died waiting for a final resolution.

“I am just horrified for our people who have been made to wait and wait and wait for justice,” said Oahu resident Raynette Ah Chong, one of the plaintiffs. “Too many are dying.”

Attorneys for the state and the plaintiffs are scheduled to present oral arguments to the five justices of the high court today, the 60th anniversary of Hawaii statehood.

The state is appealing a 2009 Circuit Court ruling that found the Department of Hawaiian Home Lands, overseer of a 203,000-acre federally created land trust, had breached its fiduciary duty by not awarding homestead lots on a timely basis to waiting beneficiaries. The state also was found liable for damages, a tab that potentially could reach tens of millions of dollars.

Not a dime has been paid thus far.

After the 2009 decision, the court process for determining how to calculate damages became just as contentious as the liability phase, adding years to the litigation.

Throughout this case the court has had to decide many issues for the first time, unable to rely on past precedent, contributing to the litigation’s complexities. That also has added to the time lag.

And even if the plaintiffs prevail at the high court, some fear the state will appeal to the U.S. Supreme Court or challenge aspects of the claims process, delaying a final resolution well into the future.

For some Native Hawaiians the prolonged battle has parallels to the ongoing Thirty Meter Telescope fight at Mauna Kea, the state’s tallest peak.

Native Hawaiians are leading the effort to block construction of the $1.4 billion Hawaii island project, which they say would further desecrate a mountain considered sacred.

The telescope and trust battles have a key feature in common: a history of state mismanagement of land important to Native Hawaiians.

“The parallels are the continued negligence of the state to (its statehood obligations) and to the rights of the recognized indigenous people of Hawaii,” said Leona Kalima, lead plaintiff in the class-action lawsuit Kalima v. State.

One of the conditions of statehood was that Hawaii had to assume responsibility for managing the trust, which was created by Congress in 1921 to help those at least 50% Native Hawaiian return to the land and assist in their economic self-­sufficiency.

After a five-week trial in 2009, the lower court issued its landmark breach-of-trust ruling, finding the violations spanned from Aug. 21, 1959, the day Hawaii became a state, to June 30, 1988, the cutoff date in which plaintiffs covered by the lawsuit had to apply for a homestead.

DHHL’s main task is to develop lots that can be leased to beneficiaries for residential, agricultural or ranching homesteads at $1 per year for 99 years. Because of a variety of factors, including inadequate funding, misman­agement and an inventory of poorly situated lands, the agency has had a spotty track record in producing homesteads.

About 28,000 beneficiaries statewide are on a waiting list, up from roughly 26,000 in 2013. Some have been on the list for decades. Others died waiting for lots.

“This is not something the state is giving Hawaiians,” Carl Varady, one of two attorneys representing the plaintiffs, said of the state’s liability for breaching its trust obligation. “This is something the state owes to Hawaiians.”

But the state contended that the lower court’s 2009 decision was wrong, and appealed to the high court.

In legal briefs Clyde Wadsworth, solicitor general for Hawaii, argued that the court erred in holding the state liable for hundreds of claims that were not viable and for failing to recover lands that were withdrawn from the trust by the federal government prior to statehood. The state had no legal ability to recover such lands, Wadsworth wrote.

The court also erred by adopting a damages model that cannot reasonably or accurately determine damages, according to Wads­worth.

He said the model was fundamentally flawed for several reasons, including the use of a “baseless” rule that made the state responsible for delays in homestead awards after bene­ficiaries spent six years on the wait list.

A representative for the Attorney General’s Office declined comment.

Plaintiffs’ appeal

While the plaintiffs agreed with the court’s liability and damages finding, they are disputing some aspects of the ruling and have filed their own appeal.

The group, through attorneys Varady and Tom Grande, is challenging the court’s decision that damages should be based on dollar values from when the breaches occurred, not present values, the typical standard in civil litigation awards. Using past values would substantially reduce the amount an eligible plaintiff receives.

The plaintiffs also are objecting to excluding the first six years on the wait list from the damages calculation, saying the state is required to make the plaintiffs whole for losses caused during the entire breach period.

They also are contesting the finding that plaintiffs are entitled only to damages for out-of-pocket expenses paid to live on nonhomestead land and only for those amounts for which they have receipts or other proof, potentially going as far back as 1959.

That means affluent beneficiaries who live in upscale areas and kept receipts could receive large awards while homeless ones with no receipts or beneficiaries who lived with their parents because they couldn’t afford to be on their own might get nothing, according to Grande.

“It’s the exact opposite of how the statute is supposed to work,” he said.

Calculating damages

If the plaintiffs prevail at the Supreme Court, the process for calculating individual damages for the wait-list claims would be an administrative one, overseen by a special master. That process was hashed out in the litigation.

The plaintiffs would submit records to prove they are members of the class, and once eligibility is determined, the special master would calculate damages for each eligible claimant based on the court-approved model. (Aspects of the model are being challenged in the appeal.)

The special master’s recommendations would have to be approved by the court.

The special master also would decide liability and damages questions for claims not related to the wait list, such as lost homestead applications. All the plaintiffs have wait-list claims, but not all will be entitled to damages. Far fewer have claims unrelated to the wait list.

The class-action lawsuit was filed in 1999 after an administrative panel established by the state to address breach-of-trust claims disbanded without a single DHHL beneficiary getting compensation or other relief.

Two decades later Ah Chong, 58, the Oahu beneficiary, hopes the Supreme Court justices will side with the plaintiffs and move the case closer to resolution — before too many others die.

“We need justice for our people,” she said. “Enough is enough.”