Court Opinion

ID: 4689170
Source: CourtListenerOpinion
Date Created: 2021-05-21 21:04:33.645158+00
Date Added: 2024-06-11T08:04:52.553977
License: Public Domain

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                                                         Electronically Filed
                                                         Supreme Court
                                                         SCWC-XX-XXXXXXX
                                                         21-MAY-2021
                                                         10:35 AM
                                                         Dkt. 26 OP

           IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

                           ---oOo---
________________________________________________________________

            IN THE MATTER OF THE ARBITRATION BETWEEN
       UNITED PUBLIC WORKERS, AFSCME, LOCAL 646, AFL-CIO,
                   Respondent/Union-Appellant,
                               and
         STATE OF HAWAI‘I, DEPARTMENT OF TRANSPORTATION;
               LA-15-02 (GLEN TANAKA) (2016-003),
                  Petitioner/Employer-Appellee.
________________________________________________________________

                          SCWC-XX-XXXXXXX

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
              (CAAP-XX-XXXXXXX; S.P. NO. 16-1-0081)

                              MAY 21, 2021

  RECKTENWALD, C.J., NAKAYAMA, McKENNA, WILSON, AND EDDINS, JJ.

               OPINION OF THE COURT BY McKENNA, J.

                         I.     Introduction

     We address whether the State of Hawaiʻi (“State”) “incurred”

attorney’s fees under Hawaiʻi Revised Statutes (“HRS”) § 658A-25
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(2011)1 in a grievance arbitration when it was represented by an

attorney employed by the State’s Department of Attorney General.

The State sought $20,044.49 in appellate attorney’s fees and

$35.20 in costs under HRS § 658A-25 as the “prevailing party” in

an appeal of a grievance arbitration with the United Public

Workers, AFSCME, Local 646, AFL-CIO (“UPW”).             The Intermediate

Court of Appeals (“ICA”) awarded costs but no attorney’s fees,

on the grounds the State "failed to demonstrate that it incurred,

as an expense, liability, or legal obligation to pay, appellate

attorney’s fees[.]”2

        We hold that the State “incurred” attorney’s fees for the

purposes of HRS § 658A-25.           We grant the State’s request for

attorney’s fees in the amount of $16,197.50.

                               II.    Background

A.      Underlying proceedings

        On April 13, 2015, UPW filed a grievance on behalf of an

employee who had been discharged from his employment with the

1       HRS § 658A-25 provides, in relevant part:

              (c) On application of a prevailing party to a contested
              judicial proceeding under section 658A-22, 658A-23,
              or 658A-24, the court may add reasonable attorney’s fees
              and other reasonable expenses of litigation incurred in a
              judicial proceeding after the award is made to a judgment
              confirming, vacating without directing a rehearing,
              modifying, or correcting an award.
2     The State only appeals the ICA’s orders denying attorney’s fees and
does not appeal the ICA’s memorandum opinion or judgment on the merits of the
case.

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State.      UPW and the State entered arbitration.         The State moved

to dismiss the grievance based on procedural grounds.              The

arbitrator denied the motion to dismiss in a February 3, 2016

“Decision on Arbitrability.”

        On March 7, 2016, UPW filed a motion to confirm the

Decision on Arbitrability in the Circuit Court of the First

Circuit (“circuit court”).3         The circuit court denied the motion,

ruling that the Decision on Arbitrability was not an “award”

subject to confirmation under HRS § 658A-22 (2011).4

        On June 20, 2016, the arbitrator issued a “Decision and

Award,” reducing the employee’s discipline to 20 days suspension

with no back pay.       On July 8, 2016, UPW filed a “Motion to

Confirm Arbitration Decisions and Awards, to Enter Final

3       The Honorable Karen T. Nakasone presided.
4       HRS § 658A-22 provides:

              After a party to an arbitration proceeding receives notice
              of an award, the party may make a motion to the court for
              an order confirming the award at which time the court shall
              issue a confirming order unless the award is modified or
              corrected pursuant to section 658A-20 or 658A-24 or is
              vacated pursuant to section 658A-23.

In addition, HRS § 658A-18 (2011) provides:

              If an arbitrator makes a pre-award ruling in favor of a
              party to the arbitration proceeding, the party may request
              the arbitrator to incorporate the ruling into an award
              under section 658A-19. A prevailing party may make a motion
              to the court for an expedited order to confirm the award
              under section 658A-22, in which case the court shall
              summarily decide the motion. The court shall issue an order
              to confirm the award unless the court vacates, modifies, or
              corrects the award under section 658A-23 or 658A-24.

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Judgment, and For Appropriate Relief.”           UPW requested that the

circuit court confirm both the Decision on Arbitrability and the

Decision and Award pursuant to HRS § 658A-22,5 enter judgment on

the arbitration award, and to grant UPW attorney’s fees and

costs.      On September 16, 2016, the circuit court partially

granted and partially denied this motion.            It granted UPW’s

request to confirm the Decision and Award, which incorporated

the Decision on Arbitrability, but it denied a separate

confirmation of the Decision on Arbitrability.            The circuit

court also denied UPW’s request for costs and attorney’s fees.

B.      State’s request for attorney’s fees and costs

        UPW appealed the circuit court’s denial of its request to

confirm the Decision on Arbitrability to the ICA.            The ICA

affirmed the circuit court.         United Public Workers, AFSCME,

Local 646, AFL-CIO v. Dep’t of Transp., CAAP-XX-XXXXXXX (App.

Mar. 13, 2020) (mem.).

        Then, on April 3, 2020, the State filed a request for

appellate attorney’s fees and costs with the ICA, citing HRS

§ 658A-256 and Hawai‘i Rules of Appellate Procedure (“HRAP”) Rule

39(a) (2016).7      The State asserted entitlement to attorney’s fees

5       See supra note 4 for the text of HRS § 658A-22.
6       See supra note 1 for the text of HRS § 658A-25.
7       HRAP Rule 39(a) provides in relevant part:

                                                            (continued . . .)

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as the prevailing party for fees “incurred”          by the State’s

attorney, who is employed by the State Department of Attorney

General.   The State pointed out the ICA had affirmed the circuit

court’s orders in their entirety.         The State argued attorney’s

fees may be awarded even if State attorneys are not paid on an

hourly basis, and that Hawai‘i courts had awarded attorney’s fees

in favor of and against government entities in the past.

Similarly, Hawai‘i courts had awarded attorney’s fees to public

interest attorneys, who, like State attorneys, did not bill

their clients.

     The State requested attorney’s fees using the “lodestar

method” by multiplying an hourly rate of $325.00 by the hours

spent on the appeal.      The State’s attorney maintained he had 24

years of experience, was an appellate specialist, and $325.00

per hour was a reasonable rate based on attorney’s fees awarded

in other cases.     The State thus requested a total of $20,044.49

in fees as well as $35.20 in costs.

(. . . continued)
            Except in criminal cases or as otherwise provided by law,
            if an appeal or petition is dismissed, costs shall be taxed
            against the appellant or petitioner upon proper application
            unless otherwise agreed by the parties or ordered by the
            appellate court; if a judgment is affirmed or a petition
            denied, costs shall be taxed against the appellant or
            petitioner unless otherwise ordered; if a judgment is
            reversed or a petition granted, costs shall be taxed
            against the appellee or the respondent unless otherwise
            ordered; if a judgment is affirmed in part and reversed in
            part, or is vacated, or a petition granted in part and
            denied in part, the costs shall be allowed only as ordered
            by the appellate court.

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     UPW opposed the State’s request for attorney’s fees and

costs, arguing the requested fees were unreasonable and that the

hourly rate should be based on the State attorney’s salary,

which it alleged was the actual expense the State “incurred.”

     The State’s reply contended that an award of “reasonable

attorney’s fees” required the consideration of prevailing market

rates.    The State also pointed out this court had previously

awarded fees to public interest attorneys based on reasonable

hourly rates and had not limited fees to a share of the public

interest attorney’s actual salary, citing Kaleikini v. Yoshioka,

129 Hawai‘i 454, 304 P.3d 252 (2013).

     On July 6, 2020, the ICA issued an order granting the

State’s request for costs but denying its request for attorney’s

fees.    The ICA ruled that while the State was entitled to

attorney’s fees pursuant to HRS § 658A-25(c), it “failed to

demonstrate that it actually ‘incurred’ appellate attorney’s

fees.”    The ICA cited Vinson v. Association of Apartment Owners

of Sands of Kahana, 130 Hawai‘i 540, 548-49, 312 P.3d 1247, 1255-

56 (App. 2013), which had held that the prevailing party “must

have paid or be legally obligated to pay such fees and costs” to

its attorneys in order to have “incurred” fees.

     On July 16, 2020, the State filed a first amended request

for attorney’s fees and costs further arguing it had “incurred”

attorney’s fees.    As HRS Chapter 658A did not define “incur,”

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the State cited Black’s Law Dictionary, which defined “incur” as,

“[t]o suffer or bring on oneself (a liability or expense).”

Incur, Black’s Law Dictionary (11th ed. 2019).      The State

contended it had “suffered the liability” of spending 58.9 hours

defending against UPW’s nonmeritorious appeal, which was time

its attorney could have spent on other cases.

    The State distinguished Vinson, asserting that case

involved private parties and attorneys, not government attorneys.

The State maintained the ICA’s interpretation of Vinson would

“categorically deny[] attorney’s fees to the State,” which would

contravene the purpose of HRS § 658A-25 to discourage

nonmeritorious challenges.    The State contended Vinson actually

stood for the proposition that there must be a “sufficient legal

connection” between the party and attorney “such that an

attorney’s fees award . . . would not result in unjust

enrichment.”   The State asserted there was a sufficient legal

connection here because government lawyers and their client

agencies are both part of the State.

    On September 4, 2020, the ICA issued an order also denying

the State’s first amended request for attorney’s fees and costs.

The ICA again determined that the State “failed to demonstrate

that it incurred, as an expense, liability, or legal obligation

to pay, appellate attorney’s fees of $20,044.49.”

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                         III. Standard of Review

A.    Statutory interpretation

      “Statutory interpretation is a question of law reviewable

de novo.”    State v. Wheeler, 121 Hawai‘i 383, 390, 219 P.3d 1170,

1177 (2009) (internal quotation marks omitted).

      This court’s construction of statutes is shaped by the

following rules:

            First, the fundamental starting point for statutory
            interpretation is the language of the statute itself.
            Second, where the statutory language is plain and
            unambiguous, our sole duty is to give effect to its plain
            and obvious meaning. Third, implicit in the task of
            statutory construction is our foremost obligation to
            ascertain and give effect to the intention of the
            legislature, which is to be obtained primarily from the
            language contained in the statute itself. Fourth, when
            there is doubt, doubleness of meaning, or indistinctiveness
            or uncertainty of an expression used in a statute, an
            ambiguity exists.

Id. (quoting Citizens Against Reckless Dev. v. Zoning Bd. of

Appeals of the City & Cty. of Honolulu, 114 Hawai‘i 184, 193–94,

159 P.3d 143, 152–53 (2007)).        “When there is ambiguity in a

statute, ‘the meaning of the ambiguous words may be sought by

examining the context, with which the ambiguous words, phrases,

and sentences may be compared, in order to ascertain their true

meaning.’”    Citizens Against Reckless Dev., 114 Hawai‘i at 194,

159 P.3d at 153 (citations omitted).         “Moreover, the courts may

resort to extrinsic aids in determining legislative intent, such

as legislative history, or the reason and spirit of the law.”

Id.

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                           IV.   Discussion

     The State’s Application presents two questions:

          [1]. Did the ICA commit grave errors or act inconsistently
          with prior case law by denying the State’s requests for
          appellate attorney’s fees based on an extreme and
          irrational interpretation of the word “incur” that
          categorically denies attorney’s fees awards to government
          attorneys?

          [2]. Did the ICA commit grave errors or act inconsistently
          with prior case law by failing to award attorney’s fees to
          the State according to the prevailing hourly rate?

A.   The State incurred attorney’s fees under HRS § 658A-25(c)

     The State argues it “incurred” attorney’s fees for purposes

of HRS § 658A-25(c) because it spent 58.9 hours defending

against UPW’s nonmeritorious appeal.       The State maintains the

ICA’s interpretation of Vinson would categorically deny

attorney’s fees to the State, which is inconsistent with HRS

§ 658A-25’s purpose of discouraging nonmeritorious challenges.

     HRS § 658A-25(c) provides:

          (c) On application of a prevailing party to a contested
          judicial proceeding under section 658A-22, 658A-23,
          or 658A-24, the court may add reasonable attorney’s fees
          and other reasonable expenses of litigation incurred in a
          judicial proceeding after the award is made to a judgment
          confirming, vacating without directing a rehearing,
          modifying, or correcting an award.

(Emphasis added.)   Therefore, HRS § 658A-25(c) allows for the

award of attorney’s fees and expenses “incurred” by a prevailing

party in certain situations.      However, as the State notes, HRS

ch. 658A does not define “incur.”       Black’s Law Dictionary

defines “incur” as “[t]o suffer or bring on oneself (a liability

or expense).”   Incur, Black’s Law Dictionary (11th ed. 2019).

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Black’s Law Dictionary defines “liability” as “[t]he quality,

state, or condition of being legally obligated[.]”              Liability,

Black’s Law Dictionary (11th ed. 2019).

        As a matter of first impression, we agree with the State

that it “incurred” attorney’s fees for the purposes of HRS

§ 658A-25(c) based on the time its attorney spent on this case,

which was time he could not spend on other cases.

        Other courts have also awarded attorney’s fees to

government attorneys under similarly worded statutes.              For

instance, in Wisconsin v. Hotline Industries, Inc., the Seventh

Circuit Court of Appeals stated that “salaried government

lawyers, like in-house and non-profit counsel, do incur expenses

if the time and resources they devote to one case are not

available for other work” in awarding attorney’s fees to the

State of Wisconsin under 28 U.S.C. § 1446(c).8             236 F.3d 363, 365

(7th Cir. 2000) (emphasis added).           The court also noted that,

8       28 U.S.C. § 1446(c) (1996) provided:

              A motion to remand the case on the basis of any defect
              other than lack of subject matter jurisdiction must be made
              within 30 days after the filing of the notice of removal
              under section 1446(a). If at any time before final
              judgment it appears that the district court lacks subject
              matter jurisdiction, the case shall be remanded. An order
              remanding the case may require payment of just costs and
              any actual expenses, including attorney fees, incurred as a
              result of the removal. A certified copy of the order of
              remand shall be mailed by the clerk to the clerk of the
              State court. The State court may thereupon proceed with
              such case.

(Emphasis added.)

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“[t]o deny reimbursement under these circumstances would

indirectly penalize the institution, be it public or private,

for providing its own legal counsel throughout a case.”      236

F.3d at 366.   See also Bond v. Blum, 317 F.3d 385, 400 (4th Cir.

2003) (“[A] State’s own attorneys representing the State may be

awarded attorneys fees under a fee-shifting statute.”),

abrogated on other grounds by Kirtsaeng v. John Wiley & Sons,

Inc., 136 S.Ct. 1979 (2016).

     Similarly, courts have also awarded attorney’s fees to

public interest attorneys and to in-house counsel even when

those attorneys did not charge their clients an hourly rate.

See Bond, 317 F.3d at 400 (“[I]n-house counsel representing the

corporation for whom they work may also be awarded attorneys

fees.”); Textor v. Bd. of Regents of Northern Illinois Univ.,

711 F.2d 1387, 1397 (7th Cir. 1983) (reasoning that in-house

counsel incurred attorney’s fees because “for every hour in-

house counsel spent on this case defendants lost an hour of

legal services that could have been spent on other matters”);

Sierra Club v. Dep’t. of Transp., 120 Hawai‘i 181, 202 P.3d 1226

(2009) (awarding attorney’s fees to the Sierra Club); Wiginton v.

Pac. Credit Corp., 2 Haw. App. 435, 446, 634 P.2d 111, 120 (App.

1981) (awarding attorney’s fees to the Legal Aid Society of

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Hawai‘i);9 Softsolutions, Inc. v. Brigham Young Univ., 1 P.3d

1095, 1106 (Utah 2000) (“[W]e are persuaded by the ample

authority from other jurisdictions that a successful litigant

who is not primarily engaged in providing legal services may

recover attorney fees when represented by salaried in-house

counsel.”).

        Also, this case is distinguishable from Vinson.         Vinson

ruled that the client would be entitled to attorney’s fees under

HRS § 658A-25(c) if he could show that he was legally obligated

to pay the fees of the law firm representing him.            130 Hawai‘i at

548-49, 312 P.3d at 1255-56.        The ICA based its holding on the

reasoning that the client should not receive a windfall if they

did not pay for their attorney’s work.         130 Hawai‘i at 548, 312

P.3d at 1255 (citing Wiginton, 2 Haw. App. at 446-47, 634 P.2d

at 120 (holding a client represented by the Legal Aid Society of

Hawai‘i could be awarded attorney’s fees if they were obligated

to pay Legal Aid whatever fees they received)).           Unlike Vinson,

the client in this case, the State, actually pays its attorney.

Like the Wiginton case cited in Vinson, the State would receive

9     The State’s Application notes that Legal Aid attorneys now require
their clients to sign formal retainer agreements providing that Legal Aid
will be allowed to keep attorney’s fees awarded to the client, even when the
client does not pay for legal services. However, we do not require public
interest attorneys to enter into formal retainer agreements with their
clients in order to recover attorney’s fees under HRS § 658A-25(c).

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whatever fees awarded for fees “incurred” by the attorney in

this case.

     We therefore hold that attorney’s fees may be “incurred”

for the purposes of HRS § 658A-25(c), even if the attorney did

not charge their client on an hourly basis, “if the time and

resources they devote to one case are not available for other

work.”   Hotline Industries, Inc., 236 F.3d at 365.     Therefore,

the State sufficiently demonstrated that it incurred attorney’s

fees in this case.

     While an award of attorney’s fees is appropriate in this

case, HRS § 658A-25(c) specifically provides that courts “may

add reasonable attorney’s fees and other reasonable expenses of

litigation incurred[.]”    Therefore, we note that courts still

have discretion to grant or deny requests for attorney’s fees

under the statute.   In this case, however, the fees were

erroneously denied on the grounds they were not “incurred.”

B.   “Reasonable attorney’s fees” are determined based on
     prevailing market rates

     The State also argues attorney’s fees should be awarded

based on prevailing market rates, not the government attorney’s

actual salary.   The State asserts an hourly rate of $325.00 was

reasonable in this case.

     HRS § 658A-25(c) provides that courts may award “reasonable

attorney’s fees and other reasonable expenses of litigation

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incurred[.]”    (Emphasis added.)    “This court employs the

‘lodestar’ method in determining a reasonable attorney’s fee.”

Kaleikini, 129 Hawai‘i at 469, 304 P.3d at 267.     “Under the

lodestar method, the court multiplies the number of hours

reasonably expended by a reasonable hourly rate.”      Id.

Additionally, this court calculates “reasonable hourly rates”

according to “prevailing market rates in the relevant community.”

129 Hawai‘i at 472, 304 P.3d at 270; see Gurrobat v. HTH Corp.,

135 Hawai‘i 128, 139, 346 P.3d 197, 208 (2015); Cty. of Hawai‘i v.

C&J Coupe Family Ltd., 120 Hawai‘i 400, 407, 208 P.3d 713, 720

(2009).   Therefore, an award of reasonable attorney’s fees to

the State would be calculated based on the prevailing market

rates in the community.

     The State maintains a $325.00 hourly rate is reasonable for

its attorney who had 24 years of experience and was an appellate

specialist.    The State cited Kaleikini, in which this court

determined $300.00 was a reasonable hourly rate for a local

attorney with 20 years of experience.      129 Hawai‘i at 473, 304

P.3d at 271.

     The State also cited a request for attorney’s fees filed in

another case by the attorney representing UPW in this case.       See

In re HSTA, 140 Hawai‘i 381, 400 P.3d 582 (2017).     UPW’s

attorney’s request, which was included as one of the State’s

exhibits, noted she had over 20 years of experience in

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employment law, and that the hourly rate of law partners

specializing in labor and employment law ranged from between

$280.00 to $480.00.      UPW’s attorney requested an hourly rate of

$275.00, which this court granted.      We therefore determine that

$275.00 is a reasonable hourly rate for the State’s attorney in

this case.   Hence, we     grant the State’s request for attorney’s

fees in the amount of $16,197.50 (58.9 hours x $275.00 per hour).

                            V.   Conclusion

   We therefore reverse the ICA’s July 6, 2020 and September 4,

2020 orders denying the State attorney’s fees and grant the

State $16,197.50 in attorney’s fees.      The ICA’s judgment on

appeal is otherwise affirmed.

Jonathan E. Spiker,              /s/ Mark E. Recktenwald
for UPW
                                 /s/ Paula A. Nakayama

Robert T. Nakatsuji,             /s/ Sabrina S. McKenna
for the State
                                 /s/ Michael D. Wilson

                                 /s/ Todd W. Eddins

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