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Matched Legal Cases: ['§ 1291', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 10', '§ 5', '§ 10', '§ 5', '§ 5', '§ 10', '§ 5', '§ 7', '§ 7', '§ 7', '§ 3', '§ 201', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 87', '§ 87', '§ 5', '§ 87', '§ 87', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 2']

| Day v. Apoliona
VIRGIL E. DAY; MEL HOOMANAWANUI; JOSIAH L. HOOHULI; PATRICK L. KAHAWAIOLAA; SAMUEL L. KEALOHA, JR., PLAINTIFFS-APPELLANTSv.HAUNANI APOLIONA, INDIVIDUALLY AND IN HER OFFICIAL CAPACITY AS CHAIRPERSON AND TRUSTEE OF THE OFFICE OF HAWAIIAN AFFAIRS; ROWENA AKANA; DANTE CARPENTER; DONALD CATALUNA; LINDA KEAWE'EHU DELA CRUZ; COLETTE Y. PI'IPI'I MACHADO; BOYD P. MOSSMAN; OSWALD SOM-BMK STENDER; JOHN D. WAIHE'E, IV, TRUSTEES OF THE OFFICE OF HAWAIIAN AFFAIRS OF THE STATE OF HAWAII SUED IN THEIR OFFICIAL CAPACITIES FOR DECLARATORY AND PROSPECTIVE INJUNCTIVE RELIEF SUED IN INDIVIDUAL CAPACITIES FOR DAMAGES; CLAYTON HEE; CHARLES OTA, FORMER TRUSTEES OF THE OFFICE OF HAWAIIAN AFFAIRS OF THE STATE OF HAWAII, SUED IN THEIR INDIVIDUAL CAPACITIES FOR DAMAGES, DEFENDANTS-APPELLEES,STATE OF HAWAII, DEFENDANT-INTERVENOR-APPELLEE.
Appeal from the United States District Court for the District of Hawaii Susan Oki Mollway, Chief District Judge, Presiding. No. 1:05-CV-00649-D.C.
Argued and Submitted October 13, 2009 -- Honolulu, Hawaii
Plaintiffs are "native Hawaiians," defined in section 201(a) of the Hawaiian Homes Commission Act, Pub. L. No. 67-34, 42 Stat. 108 (1921) ("HHCA"), to mean "any descendant of not less than one-half part of the blood of the races inhabiting the Hawaiian Islands previous to 1778."*fn1 As such they are beneficiaries of a "public trust" created in the Hawaii Admission Act, Pub. L. No. 86-3, 73 Stat. 4 (1959) ("Admission Act"). They contend that the trustees of the Office of Hawaiian Affairs ("OHA"), a Hawaii state agency that administers a portion of the public trust's proceeds, breached the trust. Plaintiffs appeal from the district court's grant of summary judgment to the OHA trustees. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
The Admission Act granted to the State of Hawaii title to most of the federal government's public land within the state. Id. § 5(b)-(e), 73 Stat. at 5-6. Section 5(f) of the Admission Act requires the state to hold much of that land and profits from it in "public trust" (the "§ 5(f) trust") for five enumerated purposes. Id. § 5(f), 73 Stat. at 6. One such purpose is "for the betterment of the conditions of native Hawaiians, as defined in the Hawaiian Homes Commission Act." Id. The other purposes - for public schools, development of farm and home ownership, public improvements and the provision of land for public use - are not limited to native Hawaiians. Id. After setting forth these purposes, § 5(f) further specifies that the trust "shall be managed and disposed of for one or more of the foregoing purposes in such manner as the constitution and laws of said State may provide, and their use for any other object shall constitute a breach of trust." Id. Hawaii has provided that a portion of the § 5(f) trust's proceeds shall be administered by OHA.
OHA is a Hawaii state agency that administers a portion of the § 5(f) trust's proceeds as well as some other funds. See generally Haw. Rev. Stat. ch. 10. In particular, state law entitles OHA to receive "[t]wenty per cent of all funds derived from" the § 5(f) trust, Haw. Rev. Stat. §§ 10-3, 10-13.5, and requires this portion of the § 5(f) trust's proceeds to "be held and used [by OHA] solely as a public trust for the betterment of the conditions of native Hawaiians." Id. § 10-3.*fn2 State law thus appears to limit OHA's uses of § 5(f) trust proceeds to only one of the five purposes enumerated in the federal statute. See Day v. Apoliona, 496 F.3d 1027, 1029 (9th Cir. 2007) ("Day I") ("OHA receives a portion of the § 5(f) trust monies, which it is to devote 'to the betterment of the conditions of [n]ative Hawaiians.' " (quoting Haw. Rev. Stat. § 10-3)).
1. The Akaka Bill
OHA used § 5(f) trust money to lobby for and support the proposed Native Hawaiian Government Reorganization Act of 2007, commonly referred to as the "Akaka Bill" after Senator Daniel Akaka of Hawaii, one of its chief proponents. The Akaka Bill would create a process through which the United States could recognize a governing entity for Hawaii's indigenous people. See Native Hawaiian Government Reorganization Act of 2007, S. 310, 110th Cong. (2007). The governing entity would have the power to establish its own criteria for citizenship. Id. § 7(c)(2)(B)(iii)(I)(aa). Initially, however, it would be governed by an "interim governing council," id. § 7(c)(2)(A), to be elected by "adult members of the Native Hawaiian community who elect to participate in the reorganization of the Native Hawaiian governing entity and are certified to be Native Hawaiian," id. § 7(c)(1)(A). For the purposes of the Akaka Bill, the term "Native Hawaiian" includes (essentially) any direct descendant of the indigenous people of Hawaii. Id. § 3(10). This definition is broader than the class of "native Hawaiians" (like plaintiffs) comprised only of individuals with "not less than one-half part" indigenous Hawaiian lineage. See HHCA § 201(a).
2. Native Hawaiian Legal Corporation ("NHLC")
NHLC identifies itself as "a non-profit corporation that specializes in Hawaiian land and Hawaiian rights issues." OHA used § 5(f) trust money to fund a contract with NHLC, under which NHLC agrees to render a range of legal services including "[a]ssertion and defense of quiet title actions," protection of water rights, "[p]reservation of Native Hawaiian Land Trust entitlements" and preservation of traditional practices and culturally significant places. The contract does not restrict NHLC to providing legal services to "native Hawaiians." Its recitals explain that OHA "has established a program whereby all Hawaiians can receive" certain legal services and that "the program is intended to better the conditions of all Hawaiians." In addition, the contract defines "Hawaiian" to include not only "native Hawaiians" under the HHCA (like plaintiffs) but also any descendant of the aboriginal peoples inhabiting the Hawaiian islands in 1778, without regard to proportional ancestry.
3. Na Pua No'eau Education Program ("Na Pua")
Na Pua identifies itself as "a Hawaiian Culture-based Education Resource Center within the University of Hawaii . . . that provides educational enrichment program activities to Hawaiian children and their families." OHA used § 5(f) trust money to fund a contract with Na Pua. Na Pua does not appear to restrict the services it provides under the contract to "native Hawaiians" either generally or under the OHA contract.
4. Alu Like, Inc
Alu Like is a nonprofit service organization that strives to help Hawaiians achieve social and economic self-sufficiency by providing early childhood education, services to the elderly, employment preparation and training, library and genealogy services, specialized services for at-risk youth and information and referral services. OHA used § 5(f) trust money to fund a contract with Alu Like. Alu Like does not appear to restrict its services to "native Hawaiians" either generally or under the OHA contract.
The State of Hawaii participated as amicus curiae in the district court proceedings from an early stage and successfully moved for intervenor status during the first appeal. Hawaii filed an answering brief in this appeal proposing an alternative basis for affirming summary judgment.*fn3
The district court implicitly rejected plaintiffs' first argument - that the OHA trustees, as a matter of federal law, must spend the portion of the § 5(f) trust they manage only "for the betterment of the conditions of native Hawaiians." We agree with the district court. Alleged violations of state laws regarding the management and disposition of § 5(f) funds are not necessarily breaches, under federal law, of the § 5(f) trust itself.
The [§ 5(f) trust] shall be held by [Hawaii] as a public trust for the support of the public schools and other public educational institutions, for the betterment of the conditions of native Hawaiians, . . . for the development of farm and home ownership on as widespread a basis as possible[,] for the making of public improvements, and for the provision of lands for public use. Such lands, proceeds, and income shall be managed and disposed of for one or more of the foregoing purposes in such manner as the constitution and laws of said State may provide, and their use for any other object shall constitute a breach of trust . . . ."
Admission Act § 5(f).*fn4 The Admission Act ceded certain property owned by the United States in the former territory of Hawaii to the new State of Hawaii to be held in public trust. See Admission Act § 5(b)-(e). The natural and logical reading of the quoted passage is that Congress, in transferring valuable assets from the United States to Hawaii, wanted to assure that those assets would be used for public benefits as spelled out in the five enumerated purposes. Use for any other purpose would be a breach of trust, a violation of federal dimension. So long as trust funds are used for "one or more" of the enumerated purposes, however, Congress intended to leave the manner in which the trust is managed in Hawaii's sovereign control.
Plaintiffs read the statute not simply as permitting Hawaii to decide, through state law, the manner in which the trust shall be managed, but investing any such discretionary, state-provided rules or restrictions with the status of federal law. According to plaintiffs, to the extent Hawaii law restricts the OHA trustees' spending authority over their portion of § 5(f) trust funds to uses benefitting only native Hawaiians, failure to comply with those restrictions violates not just state law but also § 5(f) itself. This construction of the statute does not withstand analysis.
[5] We begin with the text of the statute. Section 5(f) of the Admission Act establishes a public trust and the purposes for which it may be used and then provides an express and narrow enforcement mechanism, specifying that "use for any other object shall constitute a breach of trust." Admission Act § 5(f). To establish a breach of trust under that section, therefore, plaintiffs must prove that trust funds were used for a purpose not enumerated in § 5(f).*fn5
[7] "When a trustee has discretion with respect to the exercise of a power, its exercise is subject to supervision by a court only to prevent abuse of discretion." Id. § 87. In the context of the narrow federal inquiry into whether an expenditure is a use for a trust purpose, an abuse of discretion occurs when a trustee "has acted unreasonably - that is, beyond the bounds of a reasonable judgment." Id. § 87 cmt. c. We therefore examine the challenged expenditures to determine whether any of them is beyond the bounds of a trustee's reasonable judgment that the project in question would serve § 5(f) trust purposes.
[8] We reject such a rule because nothing in the trust's terms or purposes either requires the kind of comparative analysis plaintiffs propose or suggests that Congress intended to prohibit expenditures whose benefits may extend beyond the trust's purposes. Absent express standards, courts apply " 'a general standard of reasonableness,' taking account of other terms and purposes of the trust." Restatement (Third) Trusts § 87 cmt. c. Under this standard, although the trustees must reasonably act in pursuit of trust purposes and no others, they are not required to ensure that a given expenditure will provide only "collateral benefits" to nonbeneficiaries or purposes not listed in the trust. Cf. Akaka II, 3 F.3d at 1226 (granting OHA trustees qualified immunity where they "reasonably believed that [funding] a referendum to determine Hawaiian opinion" on whether to expand the definition of "native Hawaiian" was for the "betterment of the conditions of native Hawaiians" without any showing that native Hawaiians would benefit more than or differently from non-native Hawaiians). The trustees need only ensure that each expenditure "is one that would . . . be accepted as reasonable by persons of prudence." Restatement (Third) Trusts § 87 cmt. c.
[10] NHLC. The trustees had discretion to use § 5(f) funds for the NHLC contract. Among the "substantive areas" in which the contract requires NHLC to provide legal representation to Hawaiians is the "[p]reservation and perpetuation of traditional and customary practices [and] [p]rotection of culturally significant places, including burial sites and material culture." Under a general standard of reasonableness, it was within the trustees' broad discretion to determine that expanding the provision of legal services of this kind will "better[ ] . . . the conditions of native Hawaiians." Admission Act § 5(f).*fn6
[11] Na Pua. So too was it reasonable for the trustees to fund the Na Pua contract. Na Pua is an educational center within the University of Hawaii, which the parties agree is "a public educational institution." The record shows that OHA gave Na Pua § 5(f) money to provide educational services to Hawaiians that would "connect [their] learning and education to [their] Hawaiian identity." A reasonable trustee could view this contract as serving at least two of the § 5(f) purposes - "support[ing] . . . public schools and other public educational institutions" and "betterment of the conditions of native Hawaiians." Nothing in § 5(f) suggests that it would be unreasonable to consider Na Pua a "public educational institution" even though it serves only Hawaiian students, and a trustee could reasonably believe that native Hawaiians will benefit from additional funding for education directed to Hawaiian culture and identity. As the district court found, "[n]ative Hawaiians stand to benefit if Hawaiian identity in general is preserved and pride in Hawaiian identity fostered."
[12] Alu Like. Finally, the OHA trustees had discretion to fund the Alu Like contract. That contract obligates Alu Like to provide "a comprehensive system for beneficiaries [including native Hawaiians and Hawaiians] to receive information, referrals, . . . case management, personal financial management, and emergency fund assistance" consistent with a proposal that Alu Like submitted to OHA. As the district court found, the trustees could have reasonably determined that the conditions of native Hawaiians would benefit from Alu Like's efforts to "help[ ] Hawaiians and native Hawaiians achieve social and economic self-sufficiency."
Because we affirm the district court's grant of summary judgment on the merits, we do not reach its alternative holding that the OHA trustees are "simultaneously and redundantly . . . entitled to qualified immunity."
We also do not reach the State of Hawaii's alternative argument in support of summary judgment, except insofar as it raises a jurisdictional issue. To the extent Hawaii contends that plaintiffs lack standing under its theory of the case, we disagree. Hawaii points out that the state spends far more each year on public education - one of the enumerated trust purposes - than it receives from the trust, and argues that this deprives any trust beneficiary of standing to bring a claim for breach of trust for lack of injury. In short, Hawaii contends that no beneficiary of the § 5(f) trust can claim to be injured so long as the federally mandated purposes collectively are receiving more from the state than the § 5(f) trust produces.
This argument fails because, as we have previously held, the § 5(f) obligations bind OHA trustees even after funds have been directed to OHA by the state. See Akaka I, 928 F.2d at 827 ("So long as § 5(f) trust income remained in the hands of the state, as it did when transferred from the § 5(f) corpus to the OHA corpus, the § 5(f) obligations applied."); cf. Akaka II, 3 F.3d at 1222 ("[T]he issue here is whether the [OHA] trustees breached their fiduciary duties under the Admission Act by expending trust funds for purposes other than those set out in § 5(f)."). How Hawaii spends other, nontrust money on trust purposes is irrelevant. Although § 5(f) gives Hawaii considerable flexibility to choose the manner in which it shall manage the trust, it cannot ignore the fundamental principle of trust law that a trustee's obligations (however broad or narrow they may be) apply with respect to the particular property or money in the corpus. Those obligations generally cannot be discharged through the use of property or money outside the corpus. Cf. Akaka I, 928 F.2d at 826 ("Because the OHA share of 'public trust' income at issue in this case derives directly from the § 5(b) lands, § 5(f)'s limitation on uses applies to that income." (emphasis added)); Restatement (Third) of Trusts § 2 ("Definition of Trust") ("A trust, as the term is used in this Restatement . . . is a fiduciary relationship with respect to property . . . subjecting the person who holds title to the property to duties to deal with it for the benefit of charity or for one or more persons, at least one of whom is not the sole trustee." (emphasis added)).