Title: Tamashiro v. Department of Human Services, State of Hawaii. Dissenting Opinion by J. Pollack, with whom J. Acoba joins [pdf].

State: hawaii

Issuer: Hawaii Supreme Court

Document:

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ME COURT OF THE STATE OF HAWAI'I

 

THE st

 
 

00 -

 

 

MYLES TANASHIRO, WARREN TOYAWA, HEATHER FARMER,
FILO 7U, JEANETTE TU, LYNN MISAKI, CLYDE OTA,
MIRIAN NOMURA, and YOSHIKO NISHIMURA
aintiffs-Appellees/Cross-Appellarits

 

 

DEPARTMENT OF HUMAN SERVICES, STATE OF HAWAI'I
STEPHEN TEETER, in his capacity as Business Manager
for Ho'Oponc, JOE CORDOVA, in his capacity ae
Administrator of the Division of Vocational Rehabilitation,

State of Hawai'i, Department of Human Services; .
DAVE EVELAND, in his capacity as Administrator of the
Services to the Blind Branch of the State of Hawa!’
Department of Human Services; and LILLIAN B. KOLLER,
in her capacity ae Director of the State of
Hawas'i, Department of Human Services,’
Defendante-Appellanta/Cross-Appelleee,

 

 

and
CITY AND COUNTY OF HONOLULU, Defendant.
No. 24552
APPEAL FROM THE FIRST CIRCUIT COURT £
(Civ. NO. 96-3022) E
3 c
OCTOBER 27, 2006 . nt
MOON, C.J., NAKAYAMA, J., AND CIRCUIT JUDGE WATANABE,
IN PLACE OF DUFFY, 3., RECUSED; CIRCUIT JUDGE POLLACK,
IN PLACE OF LEVINSON, J., RECUSED, DISSENTING,
‘WITH WHOM ACOBA, J., JOINS
Appellate Procedure Rule 43(c) (2004),
parties

 

 

» Pursuant to Hawai"! Rules
Stephen Teeter, Joe Corsovs, ane Lillian 8. Koller were subsrisueed

to the instant appeal.

 
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ON OFTHE COURT BY MOON, C.

   

Thie case arises from the alleged failure of
defendante-appel lante/cross-appellees Department, of Human

Lillian B. Koller,

 

Services (DHS), State of Hawai'i (the stat

nd, and Stephen Teeter* [hereinatter,

 

see Cordova, Dave Eve

 

 

collectively, the State defendants) te enforce Hawai"! Revised
Statutes (HRS) $$ 102-14 (Supp. 2008) and 347-12.5 (2993), quoted
Anfra, and the inplenenting regulation, Hawai": Administrative

1, qucted intra, (hereinafter,

 

Rules (HAR) § 17-402

 

collectively, the Hawai's Randolph-Shepparé Act (the Hawad"s RSA)]
ae against defendant City and County of Honolulu (the City).
Briefly stated, the Hawai'i RSA sa nodeled after the federal
Randolph-Sheppard Vending Stand Act, discussed intra, which
grants priority to blind and vieually handicapped individuals who
desire to operate vending facilities on federal property. The
Hawai'i RSA applies to state and county properties. The city
allegedly (1) did not give priority to visually handicapped
individuals licensed by DHS to operate vending facilities
(hereinafter, the blind vendors] in its public buildings and

(2) did not transfer to the State defendants the commissions

 

‘The named individuals are sued in their official capacities of
exploysent with the State. Lillian B. Koller is the Director ef DHS) Joe
Ccbdcve ip the Aéministrator of DhS'e Division of Vocational Renabilitation

Dis’ Services to the Blind Branch; and
fn the branch of

 

    

Bave Eveland is the Administrator
Stephen Teeter ie the fusiness Manager for the #14)
known ae "Ho'opone.” ee supra rote 4.

 

 
 

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vending machine operation, both of

 

cted from the City's o

 

 

contravention of the Hawai'i RSA.

  

which were allegedly i
Plaintiffs-sppellees/croes- appellants Myles Tamashiro,

mer, Filo Tu, Jeanette Tu, Lynn Misaki,

  

Warren Toyama, Heather

Clyde Ota, Miriam Onomura, and Yoshike Niehihara hereinafter,

 

collectively, the plaintiffs], who are licensed blind vendors,
sought declaratory, monetary, and equitable relief (including
injunctive relief) against the state defendants and the City’ for

vely, enforce and comply with

 

their alleged failure to,

 

the requirenents of the Hawai"! RSA. The plaintstfs maintained
that the State defendante were required to ensure that

(2) vending machine incone generated from state and county
operations be paid into the Randolph-Sheppard Revolving Account
Iereinatter, the RSR Account]; and (2) those funds were reserved
for the use and benefit of the State's blind vendors,

The State defendants appealed, and the plaintiffs cross
appealed, from the August 22, 2001 final judgment of the Circuit
Court of the First Circuit, the Honorable Eden B. Hifo presiding,
finding in favor of the plaintiffs and against the state
defendants. The trial court awarded the plaintiffs, inter alia,
money damages in the anount of approximately $3.67 million.

The State defendante, on appeal, and the plaintiffs, on

their cross appeal, challenged various pre-trial and post-

° Ag discussed infra, the plaintifte settled with the City: therefore,
the city ie not # party £0 the inetent appea

 
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judgment rulinge made by the trial court. However, inasmuch

19, we need not

 

we hold that subject matter jurisdiction is lac}

 

various pretrial and

 

address the parties’ chatlenge to thé

post-judgment rulinge. Accordingly, we reverse the circuit

 

court's August 22, 2001 final judgment
X. BACKGROUND

A. Legal _Backorouné
2, The Randolph-Sheppard Vending Stand Act

Congress enacted the Randolph-Sheppard Vending Stané

 

Act [hereinafter, the federa) RSA] in 1936, amending the federa?

 

 

RSA twice, in 1954 and 1574. Pub. L, No. 74-732, 86 1-7, 49
Stat. 1859, 1859-60 (2936); Pub. L. No. 83-565, § 12, 68 Stat
652, 663-65 (1954); Pub. L. No. 93-516, §§ 200-11, 68 Stat. 1637,

 

3622-31 (1974); see also Pub. L. No. 93-651, 8§ 200-21, 89 stat.
2-3, 2-7 te 2-16 (1974) (codified as anended at 20 U.S.C. §§ 107
to 107f (2000)). The federal RSA establishes a cooperative
federal-state program [hereinafter, the federal RSA program or
the program] that “providles] blind persons with remnerative
employment, enlarg[es] the economic opportunities of the bling,
and stimilat les] the blind to greater efforts in striving to nake
themselves self-supporting" by authorizing licensed blind persons
“to operate vending facilities on any [flederal property” and
granting then “priority” in euch operation. 20 U.S.C.

§ 207(a)-(b).

 
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Under the federal RSA, states can gain access to

 

 

federal properties in their respective states to operate blind

 

 

ee apply to

 

vending facilities by having one of its state ager

the United States Department of Education (USDOB) to be

 

designated as a ‘state licensing agency” (SLA), and, as discui
more fully infra, states met agree to a number of conditions.

See New Hampshire v. Ramsey, 366 F.3d 1, 6 (1st Cir. 2004)
(*states’ participation in the program is voluntary.*). The

SLAs, in turn, license blind persons to operate vending .
facilities and match them with available contracts on federal
property. 20 U.S.C. § 107b.

Examination of the evolution of this unique federal
statutory schene reveals that the original federal RSA was
designed to create employment opportunities for the blind on
federal property and for further federal rehabilitative efforts
on behalf of the blind. H.R. Rep. No. 1094, 74th Cong., 1st
Sess. 1, 2 (1936). As originally designed, no priority or
preference was given to blind vendors to operate vending
facilities on federal property. Id.; see algo Pub. L. No.

74-732, $§ 1-7, 49 Stat. at 1559-60, The 1954 amendment,
however, strengthened the federal RSA by, intex alia:

(2) authorizing a preference, where feasible, to blind vendors to
set up vending stands on federal property, Pub. L. No. 83-565,
$4, 68 Stat. at 663; gee also 20 U.S.C. § 107a(b) (providing

that SLAs "give preference to blind persons who are in need of
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and (2) requiring that participating states (i.e,

 

employment*
atiefsed with any

 

SLAs) agree "te provide any blind licensee

 

1g from the operation or administrabion of the

 

action aril
vending stand program an opportunity for a fair hearing," Pub. L.
No. 83-565, § 4, 68 Stat. at 664. The 1954 amendment did rot,

however, specify the nature of the hearing or the relief which

 

should be afforded as a result of such a hearing.

In 1969, Congress proposed additional amendments

becouse of the weak showing in the munber of blind vencore
operating on federal property, the growing trend toxare

GEstallation, of vending machines and the exclusive use of
machines in sexe federal bulldinge, ae well as increasing
Use of vending machine incone by federal enployees for

Fecrestion ane welfare purpccer: 5. 2461 was cessgned to
protect the biind preference ertabiiehed in the 195¢

 

 

   

Enendsent()." 5. Rep. No, 235, sist Cong., 24 Sess
as70)
Texas State Conm'n for the Blind v. United States, 6 Cl. ct. 730,
732 (1984) (footnote omitted), rev'd on other rounds, 796 F.26

400 (Fed. Cir. 1986) (en banc), cert. denied, 479 U.S. 1030
(2987). Although hearings on Senate Bill No. 2463 were held in
both the senate and the House of Representatives, the Sist
Congress adjourned without considering it further. See Delaware
Dep't of Health & Soc. Serve ited States Dep't of Educ.,
772 F.2d 1123, 1127 (34 Car. 1985). In September 1971, a similar

ee Bill No. 2506, wae introduced in the 92¢ Congres:

 

bill, Ser

However,

 

 

Congress requested the General Accounting Office (G40) to
feview vending operaticns ca federal ly-controlled property
ind te Getermine if blind vendors were receiving preference
20 requires by the 1554 amendment (]-

 
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‘The report concluded that the program wae languishing et the
federal level while flouriehing at the state level ane in
the private sector. GAO foune that net only her little
attention beer paid to the Blind vender program, bot that
Rajor abuces rad cccurred!, g.g., che perent Defence
Departent association at 4 major federal space installation
Genanced Eling vendors give # portion of their income 20 the
atsociaticr; and the Department of Defense reguiatsone, 32
ClPvR. § 260.81B) (3) (31). (2866), provsced thst ne permite
would be Granted to blind vencofe for the operation cf
Vending stands if morale and welfare programe would be
placed in jecparay!

Texas State Comm'n for the Bling, € cl. ct. at 7

omitted). Consequently, ancther bill, Senate Bill No. 2561,

  

 

 

 

 

   

 

 

(Zeotnote

which reflected sone of the findings contained in the GAO's

report, was introduced. Delaware Dep‘ a soe. .

 

772 F.2d at 1127 (citing S. 2581, 934 Cong., Ist Sess. (1973))

Eventually, House Resolution No. 14228, substantially similar to
Senate Bill No. 2561, was passed and became law on Noverber 21,
1974. Id, (citing Pub. L. No. 93-651, 89 Stat. 2-3 (1974)*).

The 1974 amendment expanded the statute to increase the
fair treatment of blind vendors and to provide oversight of the

federal RSA’s application in the federal government, among other

+ an the 1974 anencnent, Congress epecifically made the following
findings:

(2) [alfter review of the operation of the blind vending
stand program authorized under the (RSA) of Sune 20, 1538,
that the program has net developed, ang had not bees
Sustained, in the nanner and epiric in which the Congress
intended at the tine of ite enectnent, and chet, in fa
the growth of the program has been inhibited by'a number of
external forces; [anal

@) oipibe

t]he potential existe for doubling the number of
bling’ obeyatore on Federal ond ster pecberey Unter the

Randolph: Sheppara program within the next five years.
provided the cbetacies to growth are renoved, that
Tesisistive and aduinietrative means eviet co renove euch
obetacies, and that Congress should adopt legieiation te
that ena")

  

 

 

Pub. 1. Ne. 93-681, § 202, €9 seat. at 2-7 (emphasis added).

 
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objectives. ©. Rep, No, 937, 93rd Cong., 2d Sess. § (1974),

 

reprinted in, 1974 U.S.C.C.A.N. 6417 [hereinafter, &. Rep. No
93-937]; see also Pub. L. No. 93-652, $§ 200-21, 89 Stat. 2-3,
2-7 to 2-16 (1574). The 1974 amendment, in part, resulted in
giving blind vendors exicrity (as opposed to preference) to
operate vending facilities on federal property. 20 U.£.C.

§ 107(b). Thus, in eum and as nore succinctly described by the

United states Court of Appeals for the Sixth Circuit in Tennessee

ices v, United partment :

 

ment of Hu!

Education, 979 F.2d 1162 (6th Cir. 1992): .
BEA) grante priority te those bling persons whe

 

 

 

The [feeer
Serize to operate vending facilities on federal property.
20 U.s.c. £ 107ib). The [federal RSA] civicer

poneibisity fer the Blind vendor procran between the
Habe and federal agencies, The Secretary of Education
Tihereinatter, the Secretary]], is responsible for
Incerpreting and enforcing the’ (federal RSR"e) provisions,
ani nee specificslly, for designeting [slas). "20 U.8.c.
Fioveia) (2), if] 30%b: 34 C.F-R. $8 398.5, 395.8. h person
decking « position sz 2 blind vendor appii¢e to the
designated state agency and ie licensed by that agency. The
Stare agency 12 turn applies to the federa? governnent tor
the placevent of the licensee on federal property. 20
Ui.€, § 10%). Onee the state and the federal governnent
hove agreed of an appropriate location for the vending
fecilicy, the (SiAl if responsible for equipping the
fecility and furniehing the initial stock and saventory. 20
Uis.c. f io%bi2l. the blind vendor thereafter operates as 2
Scle proprietor who ie entitled to the profite of the
Sesding facility and sho ie responsible for the facility's

es

 

 

 

  

 

 

Ad, at 1263-64.
‘the 1974 amendment aleo revised the renedial schene for

aggrieved blind vendors. See Pub. L. No. 93-561, §§ 204, 206, a9

stat. at 2-10 to 2-11, codified at 20 U.S.C. §§ 107b(6) and

 

1o7d-1; §. Rep. No. 93-927. At that time, in addition to the

ng tates provide dissatisfied

 

1954-requirement that participa

 
 

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opportunity for a fair hearing,” Pub. 1. Ne

 

blind licensees “a

at 20 U.S.C. § 107b(6),

 

83-565, § 4, 68 Stat. at 664, Codi,

 

Congress imposed the additional requirement that participating

states “agree to submit the orievances of any blind licensee not
otherwise resolved by the fairl hearing to arbitration

provided in section § of thie Act [20 U.S.C. § 107d~

 

"Pub. Le

 

No. 93-652, § 204, @9 Stat. at 2-10, codified at 20 U.S.C.

 

§ 107B(6) (emphasie added). The term “fair hearing” was defined
ae Ya full evidentiary hearing” in section §(a) of the 1974

amendment, which states: .

Any blind Licensee who Je diesatiefied vith any action
ising from the operation of sduizistraticn of the vending
fecility program may submit tos (sta) 2 requect for a full

guident aby hearing, which shall be provides by even sgency
Sv eccordance with section 2(€) of thir Act (dit,, 20 D.Sse.

S'n07bi6)}
Pub, L. No. 93-651, § 206, 69 Stat, at 2-12, codified at 20

 

 

U.S.C. § 107d-1(a) (emphasis added). Additionally, Section 5(a)

 

provides tha:

 

If such blind licensee fe diseatiefied with any action taken
or decision renderea se 2 result of such hearing, he may

 

 

hg aignute purcuant to section € of this
Bet (ier, 20-U.8.C. § 2076-2], and the decieicn of euch
Panel shail be final and binding on the parties except as
Otherwise provided in this Act

of the 1974 amendment

 

Id, (emphasis added). Section 6

 

provides in relevant part:
Such [arbitvation] panel shall, in accordance with the
provisions of subchapter T1 of chapter * of Title 5, give
Rotice, cercuct a hearing, ang render its cecieion shich

Action for eursoses of “nape >of Title

 

 
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20 U.S.C. § 107d-2(a) lenphasie added). The

  

Ids, codified
‘eference to chapters 5 and 7 of Title 5 are to the
acminiotrative procedures and judicial review provieione of the
Adminietrative Procedure Act (AFA) .

Thue, in sum, the renediai echene mandated by the 1974
amendment include: (1) a full evidentiary hearing at the state
level before the SLA; (2) an opportunity to appeal the SLA
decision te the USDOE for review by an arbitratien panel; and,

arbitration panel

 

finally, (3) judicial review of the USDOE
decision in the federal courte (hereinafter, collectively, the

federal adjudication path]. Pub. L. No. 93-561, $§ 204, 206, 69

 

Stat. at 2-10 to 2-21, codified at 20 U.S.C. $§ 207D(6), 1074

and 107d-2(a) .
‘The Hawai'i Randolph-Shepparé Act

 

As previously stated, the Hawai": RSA, consisting of
HRS §§ 102-14 and 347-12 and their implementing regulation, HAR
§ 17-402-17, is modeled after the federal RSA and applies to

state and county properties.‘ HRS § 102-14 provides in relevant

part:

 

 

Section 706 of 5 U.S.C. permite the reviewing court to set aside
agency adjudicative actions which are, inter alla, "arbitrary, capricious, an
absce of giacretion or otherwise ner in accordance to law,” or “unsuppereee By
substantial evidence.”

 

 dissenting
op: at 34; "such application of the rule would vielate state law ané well”
eftablished principles of agency lay." Dissenting Op. st 36. Thue, the

nt maineaine that, “Af HAR § 17-402-17(]) attempts to divest the erate
courts of their jurisdiction, it ie invalid." Dissenting Op. at 38. The

nt, however, faile to recognize that the Hawaii Legislature delegeted to
the agencies the’ authority €©

 

   

   

accept, receive on behalf of the State, and receipt for, any
ang ali granee or allotrente for federal-aie moneys made
available to the State by oF pursuant to an act of Congr

ane enter Inco or mate such plan, aareerent, or other
with the agency desionated my the act of

arrangerent
Scnarese as in necessary to carry cut the purpose of the
act]
HRS § 25-14 (1953) (emphases added). Specifically, with respect to the Bling
oF visually handicappes persone

 

 

[OHS] may, a8 an agency of the State for the
assistance of blind or visually handicapped persons, do
Shlngs, hich win)" eye the stare and the bind and the

 

HRS § 347-5 (2953) (emphases agéed). Under the federal RSA, Congress mandated
States to agree to certain conditions, including the acceptance of the feders)
adjudication path, sn order to gin access to federal properties and to cbtain
federal funds, whieh are derives prisarily in the ferm of vending machine

incone fron non-Blind vendors’ machines on federsl properties, 20 U.8.¢.
(cont inves...)

 

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402, 425, 63 F.3d 664, 666 (2004) (“If an administrative rule’e

ion ie neither

 

Janguage ie unambiguous, and ite literal applic:

inconsistent with the policies of the statute the rule implemente

 

nor produces an seurd or unjust result, courte enforce the
ryle‘s plain meaning.” (Citation omitted.)); see algo State v.
Kotis, 91 Hawai'i 329, 331, 984 P.2é 78, 80 (2988)
("Administrative rules, like statutes, have the force and effect
of law." (Citations omitted.)).

The dissent, however, aeserte that the leoielature
wvested juriadiction in the circuit court for a claim arieing
under the Hawai'i RSA," dissenting op. at 40, because it mandated
that rules be adopted in accordance with HRS chapter 91, which
vepecifically provides for judicial relief in the circuit court
for persons agorieved by an agency declaratory ruling or @
decision ina contested case.” Id. (citing HRS § 91-7(8) (2993))
(interna) quotation marke omitted). We note that the provisions
contained in HRS chapter $1 can essentially be divided into two

parts that authorize (2) the promulgation of rules and (2) the

 

continued)
‘See Davie v. Monroe County 54, of Bduc., £26 U.S. «25, 640 (1595)

 

(citen Congress acts poYsuant to ite spending power, it generates legislation
much in the nature of s contract: in return fer federal funde, the states
agree to comply with the federally imposed conditicns.* (citation and
Sneernal quotation marke omitted.}); gee also Office of Hawaiian Affaire ve
State, s6 Hawai 368, 397, 32 P.3d $0, 910 (2001). Clearly, Das wae given
Ehe authority to enter into a contractual relationship with che Unieed staves
fo participate in exe program for the benefit of the State's blind and
Webally handleapped persone. In turn, DMS promulgated HAR § 27-402-17 and
Incorporated one of the fecere) conditions within ive relee, that is, the
federal aojudication path. We note further that the USDOE, in 34 C.F.
§°395-2(b) (2), see gubra note 13, cbligates the chief executive

fo approve DHS's application for Gesignaticn ae an SLA)
executive of the State, George R. Ariyeshi, approves Dis

 

 

 

 

 

 

    

 
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establishment of adjudicatory procedures. The rule-raking
procedures provide for, inter alia: (1) the adoption of rules by

agencies, HRS § 91-3 (Supp. 2005); (2) the filing and

 

effectuating of rules, HRS § 93-4 (1993); and (3) the publication

 

of.rules, HRS § 91-5 (Supp. 2005), The provieions governing the

establishment of adjudicatery procedures provide for, inter alia

 

(2) declaratory rulings by agencies, HRS § 91-8 (1993);
(2) contested case hearings, HRS § 91-9 (1993 & Supp. 2005); and
(2) judicial review of contested cases, HRS ¢ $1-24 (Supp. 2005).
HRS § 102-14(b) specifically states that DHS “shall
adopt rules in accordance with [C]hapter 91," which the dissent
maintains includes the authority to establish adjudicatory
procedures of Chapter $1. However, had the legislature intended
that the adjudicatory provisions of Chapter 91 be followed, it
would have expressly indicated such intent as it has done in
other statutes on various subjects. For instance, in enacting
HRS § 174C-8 (1983), relating to the State Water Code, the
legislature provided that rules concerning water resources "shall.
be adopted in conformity with [Clhapter 91," (emphasis added),

mandating further tha

 

211 proceedings before the commission (on water
resource managenent) concerning the enfercenent oF

 

 

application of any provision of this chapter... or the
Stevance, modification, or revocation of any permit or
Lice

 

sell be conducted in scoordasce with
(Ginante: fa!

HRS § 1740-9 (1993) (emphasis added). Similarly, other statutes

demonstrate the legislature's express adoption of the rule-making

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and adjudicatory procedures of Chapter 91. See, e.g., (1) HRS

nts commission to

  

§ 368-3 (Supp. 2005) (requiring the civil
pter 91") and HRS § 366-24 (2993)

 

vadept rules under [¢

(providing that civil rights conmiseion hearings to be conducted

 

10B-213(a) (2008)

 

in accordance with Chapter 91); (2) HRS § 43
(adopting Chapter 91's rule-making procedures for credit life
insurance) and HRS § 431:10B-108(k) (2005) (adopting Chapter 92's
adjudicatory process for approval and denial of, inter alia, the
schedules of premium rates by the insurance’ conmissicner) ;

(3) HRS § 491:10C-214 (2005) (adopting the rule-making procedures
for the disposition of insurance claims arising out of motor
vehicle accidents) and HRS § 421:20C-212(e) (2005) (adopting the
adjuéicatory procedures for the denial of claim by insurer): and
(4) HRS § 4328-12 (2005) (adopting the rule-naking procedures for
patients’ bill of rights) and HRS § 4328-6(4) (2005). (adopting

w of manage care plans). Here,

 

the adjudicatory process for revi.
the Hawai'i RSA statutes do not contain language denonstrating
the legislature's intent that Chapter 91's adjudicatory
provisions be followed.

Moreover, even when a statute's reference to Chapter 91
is silent as to the adoption of ite adjudicatery provisions, it
appears that the agency hae the discretion to decide whether to
adopt the adjudicatory provisions of HRS chapter 91 when

promigating ite administrative rules. For example, although the

 

specifically, HHCA § 222

 
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reesly indicates 1

 

the department of

 

(Supp. 2005) -- exz
Hawaiian home lanée “shall adopt rules and regulations and
policies in accordance with [Chapter $1,” it ie silent as to the

ne. Nevertheless, the

     

adoption of the adjudicatery provi

Gepartment adopted the adjudicatory provisions of Chapter 92.
Seq HAR § 10-5-32, Similarly, HRS chapter 4468, concerning the
Licensure of dietitians, provides that the director of health
shall “[aldopt, amend, cr repeal rules pursuant to [C)hapter 92

as the director finde necessary to carry out this chapter.” HRS

 

§ 448B-3(2) (Supp. 2005). Yet, chapter 4488 ie eilent as to the
application of the adjudicatery provisions. Title 1, chapter 79
of the HAR, applicable to dietitians, however, clearly
incorporated the adjudicatory provisions of Chapter 91 into its
dispute resolution procedures. HAR § 11-79-13(f). Such is not
the case here. HAR § 17-402-17 does not dictate that the
grievance process is te be conducted in accordance with chapter
$i. In fact, HAR § 17-402-17 clearly establishes @ procedure
that is consistent with the purpose of the Hawai'i RSA and the
federal RSA. As required by the federal RSA, HAR § 17-402-17
recognizes the federal adjudication path, @ condition that the
State must accept to becone a designated SLA. Accordingly, we

are unconvinced that the reference to the rule-making procedures

 

of Chapter $1 in HRS § 102-14(b) mandates the adoption of the

chapter's adjudicatory provisions.

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we

 

 

that jurisdiction

 

which establishes the RSR Account, provides that

 

ir ‘The (RER A)ecount shall be veed by (Hs) for:
ia) “ine provision of the fellowing Benefite for
biine vendors:
a iSitenent or pension

(®) Eeaish imurance; ane
(e) _ Eltkeane vacation leave:

(2) The maintenance and replacenent of equionent
Used_in the blind vending orearan;

is) Hetgabchese of new eguipment 10 be used in che
Eline vending program: ene

(a) The provision of manacerent services, which

Ghali inelude, But not be limited te
(A) The hiring of consultants,
(ine sponearing of training ceninares
(C) Trangportat ion;
(S) Fer diem for vendore to ettend meetings ef
the reate comittee of biine vendore:
le) Services for the state conmittee of bling
vencers; and
ir) Other ecete relat
progran.
(b)_incone fron vending machines on federal. state. and
Scunty ‘prosertice that are within reasonable proximity to,
Gnd in Girect competition with, a blind vercor say be
Scporited into the account and then disbursed to the bling
vender.
te w cunt ‘ o

tron

 

 

 

 

1d to the blind venéing

a
‘and county operations;

(2) Any otber legally accepted source of income; and

G) Donations

(Emphases added.) Thus, Hawaii's statute acknowledges its

© note that HRS § 347-12. lends further support

ee with federal courte. Section 347-12.5,

acceptance of the federal RSA program and sete out regulations,

to the extent permitted by the federal RSA, that are applicable

to federal, as well ae state and county, properties. The RSR

 

Account provides 4 strong imp!

ation that the state and county

properties fall within “other property” because income generated

from state and county vending facilities, as well as federal

 

facilities, are deposited into one central accou

 

-42-

from which
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fit of blind vendors in Hawai'i.

 

funds may be used for the ben
In other worde, the Hawai'i RSA unequivocally authorizes the use
of funde in the RSR Account “derived in whole or in part,

@irectly or indirectly, from the operation of vending facilities

on any [f]ederal property," 34 C.F.R. § 398.1(n), to, inter alia,

 

nt

 

provide managenent services, maintain and replace equipment, and
purchase new equipnent for vending facilities on non-federal
property.

Norecver, pursuant to the authority granted by the
legislature to promileste rules and regulations, DHS recognized
the legislative intent thet state and county properties are to be

considered “other property" when it defi

 

166 the phrase to mean
“property which is not federally controlled property ané on which
vending stands are.established or operated.” HAR § 17-402-17(a).

It also defined ‘vendor as va blind licensee who is operating a

 

vending facility on federal or other property." HAR

§ 17-402-17(a) (emphasis added). ‘Thus, under the Hawai'i RSA’s
rules and regulations, “other property" clearly includes state

and county properties.

® the diseent suggests that reliance upon “other property” ie “without

factual basie” because “there ie absolutely no evidence in the record to
conclude that the City received funds from federal property and used those
funds to establish or operate vending facilities en city property. It i8 also
undisputed that the state did not operate vending machines on [C]ity
property.” Dissenting Op. st 23-24 (emphases omitted). It is undisputed that
the City violated the Hawaii REA by placing ite own leased sachines in ite
public fuilaines, rather than providing blind vendre those spaces for their
Sending establishment. Had the City couplied with the Havas Rea, biine
vendors would be given priority to place their vending sachines in the City’s
buildings, In turn, the funds held inthe ASR Account, toe. "income

(eon inved.

     

 

  

 

43+
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in West's Hawai'i Reports and the Pacific Reporter

 

If we were to accept the diesent’s flawed-theory that
the federal R&A applies to federal property and the Hawai's REA

applies to state and county properties, there would have been no

 

need for DHS to define the phrase “other property.” In fact, +
the diesent’s theory is correct, the above stated definitions are

nonsensical. For example, if the Hawai'i RSA applies only to

 

6, ae the dissent maintains, then

 

state and county propert:

 

ily be defined as “federally

 

sother property” must neces:
controlled property” -- rather than “not federally’ controlled
property. Likewise, a “vendor” must necessarily be defined as
va blind Licensee who is operating a vending facility on (state
and county property] or other property [(i.e., federally

crafting ite

 

controlled property)].* The fact that DHS,
administrative rules pertaining to blind vendors adhered to the
federal "viewpoint," clearly denonstrates ite recognition of the
relationship between the federal and the Hawai'i RSAs, including
its incorporation of the federal adjudication path

our conclusion that the federal adjudication path

prescribed in HAR § 17-402-17(3) is applicable to vending

 

(, continued)
deriving! from Vending machines on federal, state, ané county properties,"
HES § 247-2.5(b), would be uses for "the naintenance and replacement of
equipeent” and the “purchase of new equiprent,” HRS § 347-2.5(a), thereby,
Tendering the Vending nachines on the City's properties as “other property."
Seg alg HAR § 27-402-27(m) (2) (OHS “shall furnish each vending stand with
Edequate suitable equipment and adequate initial steck of rercnandise
hecessary for she catablisiment and operation of the fecilsey.")
Recorsingly, the Iack of “evidence in the record” Beare no relevance to the
Getersinacion se to whether the county property would constitute "ocber
property." Ae Siecusees punta. the state snd county properties clearly
Under ‘other propert [ies] of the federal REA.

 

 

 

  

nate
*** FOR PUBLICATION ***
in West’s Hawai'i Reports and the Pacific Reporter

operations in all state, county, and federal properties in

 

 

Hawai'i is consistent with federal case law, where federal court
have reviewed decisions rendered by an ad hoc arbitration panel

states’ blind

 

convened by the Secretary involving cert!

vendors’ programs operating in state or county properties. For

 

8. Smith v. Rhode Ieland State Serve. for the
ind 6 Visually Handi o1 FE, su
oe

In Smith, the United States District Court for the

district court) examined

 

District of Rhode Island (the U.S
certain regulations promiigated by Rhode Island's Department of
Social and Rehabilitative Services, Division of Services for the

Blind and Visually Impaired (RISE), i.e., Rhode Island's SLA.

 

iff appealed from the decision of

 

There, the blind-vendor-plai
an ad hoc arbitration panel, such panel having (a) denied the
plaintiff’e request that he be appointed to a particular
concession stand, Stand #54 at the Garrahy Judicial Complex in
Providence, Rhode Island, and (b) remanded for proper
promgation of clear and unambiguous regulations regarding the

seniority system. 581 F. Supp. at 567

 

 

me Carrahy Judicisl Complex houses beth state and county entities,
euch a2 the fanily cours, cistrict cours, workers’ compensation court, trafic,
tribunal, county sherife’e office, and the public Geender®

 

   

-45-
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outlining the rules and recujetions applicable co tne
State's bling vendor prosrap, including the ruler relating
fo the transfer and pronction of licensees [at issued in
this case). 34 C-P-R. §§ 398.3, 395-5. In accordance with
thie requirenent, the RISB conceived, incubated, nurtured
and thereafter submitted an lehnographic masterpiece yclept
“Baby Randolph" se an adjunct to RISB's applicsticn fer
yedetignation ae a(n Sua] during the winter of 1975-2980,
The rule governing the method of selection, transfer and
Bronotion of bling vendors if found in Attachment Tih.
Paragraph C.1 of that plas. That section provides in
substance that the transfer and pronotion of vendors ehali
be based upon sencrity, and outlines the nethog by which
senority ie to be calesleted.

Ad. at 568 (emphacie added). Thereafter, in approxinately 1977,

 

 

 

  

 

 

in response to newly enacted federal regulations, “RISE becan

£ rules and regulations for the Rhode

 

developing = state plan
id. at 568. The state’s rules and

 

Island bliné vender program.*

ly promilgated and subsequently approved

 

regulations were eventua!

by the federal government. Pertinent to thie case, Article IX,

entitled “selection, Transfer and Promotion of Vendors” provided:

‘The SLA... with the active participaticn of the state
Comittee of'slind Vendors, hereby esteblishes a selection
transfer and promotion systen for vendors which will be
Unifersly applied to all vendor vacancies that develop of
occur in the vending facilities progres as outlines in
Retacheent 17a

Id, at 570.

Actacheent IX-A, Paragraph C.1 addressed the method of
Selection, transfer and pronotion of vendors in the
following verbiage:

In accordance with the standards as outlined in Paragraphe A
ane B, the selection, transfer and pronction of vendors
shall ‘be based upon seniority. The SEA shall establieh ané
Baintain a roster containing the name ef each vendor, the
Gate of hie or her original Licensing, any subeequent

'e(s) of velicensing and their vending facility address
slority, then, shall be calculated from the criginal date

of Iicenting which shall be mltipiied by the fonber of
Tisenses to

   

 

 

 

 
 
 
 

    

Operate any vending
this sla

-46-
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Subsequently, RISE compiled an updated seniority
roster, wherein the plaintiff was ranked junior to another
Licensed blind vendor who eventually was assigned to Stand #54.
RISE did not count employment at any agency stand towards
seniority in the blind vendor program. The plaintiff appealed
the decision of the RISB, arguing that hie tine in service at an
agency stand should have been counted. 1d. The hearing officer

Geclined to disturb RISB’s award of Stand #54. Jd. Thereafter,

the plaintiff appealed that decision to an arbitration panel

 

pursuant to 20 U.S.C. § 1074-2. Therein, the arbitrator
determined that the seniority rules as promlgated by RISB were
ambiguous and ordered RISB to adopt a clear and unambiguous
seniority scheme. Id, at 571. The arbitrator specified that
Stand #54 was to renain with the other licensed blind vendor
pending @ permanent award of Stand #54.

On appeal to the U.S. district court, the plaintiff
pressed hie claims for monetary damages and for modification of

jexted wi

   

the seniority list to reflect what he a his proper
rank. Id, at 572, The court denied and diemiesed the
plaintiff’s claims, holding that the arbitrator's finding with

ned in the state's

 

respect to the ambiguity of the language cont:

seniority rule was supported by the evidence and vas neither

 

arbitrary nor capricious. Id. at 5:
*** FOR PUBLICATION ***
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b. MoNabb v. Unite

E.2d 66] (eth cir, 1288)
‘The factual ané procedural background in McNabb further

arising from the operation of the state's

 

indicates that disput

blind vending program on state property are reviewable by federal

courts
‘The facts are as follows

NeNabe ie a blind person Licensed under the (RSA to operate
Sivencing facility in Arkansac. On Septenter 12, 1860,
Nexabe bie for three telepnone company venaing facilities:
Ye vieletion of applicable laws ane reguletions, two of
these facilities, which were more profitable than the stand
Mesabe then operated, were awarded to blind vendore with
Jese seniority than McNabb. .

 

on October 26, 1960, McNabb’ filed a grievance, requesting
#511 evidentiary hearing ax provided for in 20 0.e.c
f1076-a(a), On Februsry 22, 1981, the hearing officer
uphelé the denial of the vending stance te Nclskb.

 

Nollabb then fled 2 complaint with the USD0E), Zico

pursvant to 20 U.8.C. § 207d-2(a), requesting that an

Erbitration panel be convened to decide pie entitierent to

She of the facilities ne had been denied. He later amended
specific relief:

 

 

    
 

862 F.2d at 682. THe USDOE arbitration panel tock the position
that neither compensatory relief nor attorney's fees were
contemplated under the RSA and that such awards would be contrary
to the principle of sovereign immunity. Id. at 683.
Subsequently, another arbitration decision was issued, finding
that McNabb had wrongfully been denied one of the stands. “AS
relief, the panel gave McNabb[, inter alia,] @ continuing right

of assignnent to the firet of the two stande at issue that became

vacant." 862 F.2d at 662

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t the USDOE arbitration

 

‘Thereafter, McNabb requested thi

 

panel reconvene to award him additional relief. The arbitration
panel refused to reconvene, taking the same position that the RSA

Atution

 

and the Eleventh Anendnent to the United States Cona
precluded the pane] from awarding compensatory relief or
attorney's fees againet state agencies. 16, McNebb appealed to
the federal district court, wherein the court held that

arbitration panels convened pursuant to the (RSA) have the
authority te aware compensatory relief and attorney's feet

Without specifically discussing the leeve of whether the

eleventh anendvent barred euch awards, che district court .
Stated thar it chore eo follow the Thirs Circuit’ Gecseion

Sn [Beavare Desartnent of Health and Socia! Services.

Divison for the Visually Joaired v. nites Statee
Departnent of education.) 772 P-2d ii23 (Se cir- 1965). In
Delavare, the Tare Circuit, which ie the only ciresit that
hae considered thie question, held that: (2) the (REA)
Inpliesly autnerizes ‘compencatery damage avarde against
atate agencies; (2) states that choose co participate sn
this federsily-cresced program for bling vendors thereby
waive their eleventh amendment swmunity; and (2) atsorney’®.
fees are an appropriate elenent of compensatory Ganagee, for
breach of contract between a blind vendor and ¢ state
agency.

Id, Accordingly, the USDOE and the Arkansas Department of Human

   

 

Services appealed the federal district court's decision to the
United States Court of Appeals for the Eighth Circuit. The
Eighth Circuit essentially affirmed the judgment, holding that
the arbitration panel, convened pursuant to the RSA, did not have
authority to award retroactive money damages against the state
for wrongful denial of stands to blind vendors, but wee
authorized to award prospective damages fron the date of the
arbitration panel’s decision to the date vendor accepted

assignment to a new vending facility. Id. at 683-88. For

“49+
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subsequent history, see McNabb v. Riley, 29 F.3d 1303 (th Cir
ags4)
©. Dep't of Health & Soc. Serve., Div.
for_the Visually Impaired v. United States

Depwr of z i
As mentioned gupra, Delaware involves an action by the

state agency designated to administer the blind vender procram in
Delaware, challenging  USDOE arbitration panel's award of
retroactive monetary damages and attorney's fees to a bling

vender who was found to have been improperly denied a vending

facility by the SIA.
‘The facts in Delaware indicate the following:

4 bling vendor Licensed by the
‘vieualay impairea for participstion
ip the Randolph-Sheppard program... . A federal
Fegulation requires that [stae] eevablieh in writing and
rsintain policies which govern transfer, promotion, an
financial participation of vendors. 34 C-F-R. § 395-7(c)
(3986). Delaware's roles set forth a comprehensive schene
for the distribution of funds generated to each blind vendor
facilicy. Of particular significance to thie case, 18 the
State regulation which deals with transfer and proscticn of

blind vencore.

  

 

 

  

in'auguet of 1975, the Delaware Division of visually
impaired solicited applications for managenent of ite food
Vending facility at the Paramount. Foulsry Company, on
Georgetown, Delaware. Two applicante responded. Albanese
elained to be the sect senior qualified applicant, but the
Division of Visually Inpaired in October, 1979 appointes the
Tees senior applicant. Albanese, pursuant to the Delaware
regulations, mandsted by 20 ..¢. § 107(b) (6) and 34 CPR
£395.13(a) | (1984), £20 « grievance, which resulted in a
full evicentiary hearing before a state hesring exaniner on
February 24, 1962

he nearing examiner found that Albanese wae the =oet
senior qualified applicant, ané ordered the Delaware
Division of Visually inpaived to instal) him as manager of
the Georgetown facility. Albanese commenced work there on
April 2, 1961, The hearing examiner also ordered the arate
agency to pay a porticn of Alnenese’® iegal expences
The nearing examiner declined, however, to award Aleanese
the increased incone ne would nave carnea between the time
he should nave been appointed and April 1, 1988, when
Commenced werk.

    

 

 

 

 

  

 

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772 F.26 at 1132 (citations omitted). Accordingly, Albanese

filed a complaint with the USDOE, alleging hie dissatisfaction

 

with the failure of the state hearing examiner to award back pay
and full legal attorney's fees. Id. An arbitration panel was
convened and awarded Albanese monetary damages in the form of

back pay and full attorneys fees. Id, at 1134. On appeal to

the federal district court, the court vacated the arbitration
decision and granted the state agency summary judgment. Id. at
1136. On appeal to the United States Court of Appeals for the,
‘Third Circuit by Albanese, the Thiré Circuit Court essentially
reversed the federal district court's decision.

4. Hillincer v. the Cleveland Soc'y for the
2lind, $87 F.2d 336 (6th Cir, 1978)

In Eillinger, the blind-vendor-plaintiffe operated
vending stands in Cleveland, Ohic, under the management of the
Clevezané Society for the Blind (the defendant). The plaintifte
f41ed auit against the defendant, ite executive director, and the

Ohio Rehabilitation Services Conmiseion, “which eupervise(d) in

 

Ohio a vending stand program established pursuant to federal

law[.]*" 87 F.2d at 337, The plaintiffs alleged numerous abuses

in the operation of the program.

‘The gist of their suit is that for many years the
[defendant], acting without the consent of the blind
vendors Collected a higher percentage of gross sales
than i¢ "reasonable under tne [RSA] and has spent these
funds for unauthorized purpore:

 

 

Id, The federal district court dismissed the complaint, and the

plaintiffs appealed. id, The United States Court of Appeals for

 

 
*** FORPUBLICATION ***
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the Sixth Circuit reversed and remanded the case. The sixth
Circuit granted the plaintiffs ‘an opportunity to exhaust their

administrative and arbitration remedies. After such renedies are

 

exhausted, any party aggrieved by the arbitrator's decision my

 

petition the district court . . . for review." 14. at 336."

Therefore, based on our examination of the overall
scheme of the federal RSA and ite relationship to the Hawai's
RSA, as well as feders case law, we hold that, inasmuch as the

federal adjudication path applies to disputes arising from the

Hawai'i RSA, the circuit court lacks subject matter jurisdiction

 

of the instant case

 

to decide the ner:

3. Hawai'i Blind Vendor Age’n v. Dep't of Human Serve., 72

Maw, 367, 791 P.24 1262 (1990)
Lastly, the plaintiffs maintain that thie court has

ablishnent of

   

juriediction to decide iesues relating to the e
vending operations in state and county buildings for blind

vendore under the Hawai'i RSA inasmuch as this state’s only blind

 

 

vendor case, Hawai'i Blind Vendore v. Departne:
Human Services, 71 Haw. 367, 791 P.2d 1262 (1990), has so
% ke digcusted supra, the foregoing cases involved dieputer arieing

 

from the Operstion of vending machines on ctate properties or the
Adninistration of the etate REA program, which wae established pursuant to the
federal REA. However, the dissent sttespes to distinguish the above cages
fron the facce of thie case by contending that chese cases “involves federal
Claime brought under the federal REA where the federal adjudication pats wae
applicable-* (Eephasic in original.) Dissenting Op. at 52. The dissent

thken such position because of ite reliance upon ite flawed bright-line
treatoant cf the federsl end Hawai'i RSXe- As previously aiscussed, the
federal and Hawai's RAs are closely intertwine in that the participation of
the federal REA requires ‘the creation of the Heuaii REA ane seceptance of
Stain conditsone set fortn in the federal RSA, euch az the feceral
Sdjudication path

 

 

 

 

 

 

 

-52-
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Getermined. In that case, Maka'ala, @ Hawai's non-profit

 

corporation that provides employment preferences to handicapped

individuals, leased space at the airport for a retail concession.

 

Ad, at 370, 791 P.2d at 1263-64. Thereafter, DHS renewed the

Make'ala airport lease, without firet providing notice of vacancy

 

or opportunity for blind vendors to apply for the concession
Ad. at 270, 782 P.2d at 1264. Consequently, the Hawai'i Blind
Vendors Association (the plaintiff) brought action against DHS,
alleging violations of the substantive and procedural law
governing the blind vendor program. Id, at 368, 791 P.26 1263.
‘The circuit court granted summary judgnent in favor of DHS, ané
the plaintiff appealed. id,

On appeal, DHS argued that the issue mist first be
brought through an administrative hearing before bringing an
original action in the circuit court. Id, at 370-72, 791 P.2d at
1264. This court, however, held that it “need not decide this
issue" inasmuch as,

lulader the doctrine of prisary jurisdiction, ven @ court
and an agency have concurrent original jurisdiction te
decide issues which have been placed within the special
coupetence of an adsinistrative agency, the Judicial proc
is Suspended pending referral of auch issues to che
adinistrative body for ite views. Thos, the DES egency
process, if available, is the appropriate forum for an
initial deternination cf the icsues raised in thie case.

 

 

 

 

 

Id, at 371, 791 P.2d at 1264 (citation omitted). Consequently,
this court “remand[ed the blind vendors’ claims] to DES for an
agency full and fair hearing.” Id, at 374, 781 P.2d at 1266.

8 discussion is an examination of

 

Notably missing from this cou:

53.
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the interplay between the federal and the Hawai'i REAS, which ie
understandable given the fact that the issue cf subject matter
jurisdiction was never raised. As a result, this court wae not
given the opportunity to examine the overall federal achene and
its relationship to the Hawai'i RSA as we have been compelled to
Go in the instant case. Thus, based on the foregoing examination
and discussion, we overrule Hawai'i Blind Vendore to the extent
that it can be interpreted to mean that this court hae subject

matter jurisdiction over issues arising from the Hawai'i RSA. :

 

 

B. State Defendante’ Appeal/Cross-Appeal and the +

In light of cur holding today, we need not address any.

 

of the remaining contentions raised by the State defendante and

 

the plaintiffe’ in their respective appeals and cross-appeals.
IV. CONCLUSION
Based on the foregoing, we reverse the circuit court’s

August 22, 2001 final judgment for lack of subject matter

jurisdiction.
on the briefs:

dorothy sellers, yer

Deputy Attorney Genera, Bete C-neanjare-

for defendant
cress-appell

 

 

sppeliance/
Ganong, Wk

Evan R. Shirley, Gregory
A. Ferren, Stanley 5.
Levin, and Ann Williams,
for plaintiffs-appellees/
cross-appellants