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Annual Hawaii Real Estate Litigation Update - HSBA Real Property Section

Full disclosure:  most of my practice involves LAND and not the ocean.  We live on an island after all.

In any event, on Friday, my partner Greg Kugle and I will be providing our annual Real Estate Litigation Update to the HSBA's Real Property and Financial Services Section. This is about our third time providing the update and last year it even made it to youtube  (Materials from last year's talk available here.)  

Details:

• Date: Friday, November 20, 2015 (like tomorrow)
• Time: 12 noon - 1:00 p.m.
• Location: HSBA Conference Room, 1100 Alakea Street, 10th Floor, Honolulu
• Cost: FREE for RPFSS members. 

As a teaser, we will cover Hawaii decisions from the last year involving land use, administrative appeals, quiet title, shoreline, reg takings and condemnation, and preemption. We will also cover decisions from other jurisdictions which have an impact on Hawaii property law practice.

 

Edmund Fitzgerald: Investigating Marine Casualties

Today marks the 40th anniversary of the sinking of the M/V Edmund Fitzgerald on Lake Superior in 1975.  It sank in rough weather, taking with it the lives of 29 officers and crew. Commemorative events are outlined here.  

With this anniversary and with the sinking of the M/V El Faro last month, it seemed timely to outline the marine casualty investigation roles of the U.S. Coast Guard and the National Transportation Safety Board.  The agencies have overlapping authorities to investigate marine casualties and they have entered a Memorandum of Understanding regarding their independent roles in a marine casualty.  

Typically, the U.S. Coast Guard investigates all marine casualties but some investigations trigger NTSB involvement.  Under 49 U.S.C. 1131, the NTSB has authority to investigate:

a major marine casualty (except a casualty involving only public vessels) occurring on or under the navigable waters, internal waters, or the territorial sea of the United States as described in Presidential Proclamation No. 5928 of December 27, 1988, or involving a vessel of the United States (as defined in section 2101 (46)  [1] of title 46), under regulations prescribed jointly by the Board and the head of the department in which the Coast Guard is operating.

"Major marine casualties" are defined by regulation (49 C.F.R. 850.5) and the current regulation states:

(e) Major marine casualty means a casualty involving a vessel, other than a public vessel, that results in—(1) The loss of six or more lives;(2) The loss of a mechanically propelled vessel of 100 or more gross tons;(3) Property damage initially estimated as $500,000 or more; or(4) Serious threat, as determined by the Commandant and concurred in by the Chairman, to life, property, or the environment by hazardous materials.

The NTSB has appellate review over decisions of the U.S. Coast Guard with regard to merchant marine licensing which can lead to unusual court decisions like, Collins v. National Transportation Safety Board.  Collins is Admiral Thomas Collins, then Commandant of the U.S. Coast Guard.

In Collins, the D.C. Circuit Court of Appeals reviewed an administrative appeal from a proceeding before a Coast Guard Administrative Law Judge.  The ALJ below found that a licensed mariner committed misconduct leading to a collision in Miami Harbor.  The ALJ suspended the mariner's license for five months.  The mariner appealed to the Commandant of the U.S. Coast Guard who affirmed the decision.  The mariner then appealed to the NTSB under 49 U.S.C. 1133 which reversed the Commandant's decision.  The Coast Guard appealed to the D.C. Circuit Court of Appeals.

As is common with judicial review of administrative decisions, the court wanted to provide the executive branch with "deference" on matters that the agencies were better suited to judge (like mariner misconduct).  This case was unusual because the court had to decide which agency was entitled to deference:  the U.S. Coast Guard or the NTSB.

The court held that the U.S. Coast Guard's interpretation of the regulations at issue were entitled to deference both by the court and the NTSB.

Back to the Edmund Fitzgerald, the National Transportation Safety Board report published its findings in a report and the abstract of the report stated:

About 1915 EST on November 10, 1975, the Great Lakes bulk cargo vessel SS EDMUND FITZGERALD, fully loaded with a cargo of taconite pellets, sank in eastern Lake Superior in position 46 59.91 N, 85 06.61 W, approximately 17 miles from the entrance to Whitefish Bay, MI. The ship was en route from Superior, WI, to Detroit, MI, and had been proceeding at a reduced 3 speed in a severe storm. All the vessel’s 29 officers and crewmembers are missing and presumed dead. No distress call was heard by vessels or shore stations. The Safety Board considered many factors during the investigation including stability, hull strength, operating practices, adequacy of weathertight closures, hatch cover strength, possible grounding, vessel design, loading practices, and weather forecasting. The National Transportation Safety Board determines that the probable cause of this accident was the sudden massive flooding of the cargo hold due to the collapse of one or more hatch covers. Before the hatch covers collapsed, flooding into the ballast tanks and tunnel through topside damage and flooding into the cargo hold through nonweathertight hatch covers caused a reduction of freeboard and a list. The hydrostatic and hydrodynamic forces imposed on the hatch covers by heavy boarding seas at this reduced freeboard and with the list caused the hatch covers to collapse. Contributing to the accident was the lack of transverse watertight bulkheads in the cargo hold and the reduction of freeboard authorized by the 1969, 1971, and 1973 amendments to the Great Lakes Load Line Regulations.

The tale was memorialized in a song by Gordon Lightfoot which, in full disclosure, has been hummed or sang on every ship I have ever sailed on.  As the song reminds us, the sea is, and always has been, an ever present danger to sailors worldwide. 

Territorial Status Case Headed for Supreme Court

October 1st and the Supreme Court just granted hearing in several cases.  Of note, to this humble island attorney, is the case of Puerto Rico v. Valle. Those pesky Insular Cases....(my posts here and here).

This case arises from a criminal prosecution in Puerto Rico.  A criminal defendant was convicted of federal crimes in federal court, but then subsequently tried and convicted of violations of Puerto Rico law.  He challenged the second conviction on Double Jeopardy grounds.  The Double Jeopardy clause of the U.S. Constitution provides:  Nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb.  Amend. V.  This provision does not protect criminal offenders who are charged for the same conduct by different sovereigns.  Consider a bank robber:  bank robbery is a federal crime (18 U.S.C. 2113) and armed robbery is a state crime.  Because a State and the Federal Government are separate sovereigns, no double jeopardy violation.

So, from a Constitutional perspective, is Puerto Rico the same sovereign as the federal government OR, as the Question Presented asks:  Whether the Commonwealth of Puerto Rico and the Federal Government are separate sovereigns for purposes of the Double Jeopardy Clause of the United States Constitution.

Puerto Rico says: No.  It has a Congressionally approved organic act and constitution which gave the people's sovereign power to the Puerto Rico government, which in turn, passed the criminal code.

Mr. Valle says:  Yes.  Under the Constitution, there are only two sovereigns:  states and the federal government and Puerto Rico is not a state.

SCOTUSBLOG has the cert briefs here.  When the merits briefs are available, we will post them here.

This blogger's answer?  Stay tuned.

Ninth Circuit - Jones Act is Constitutional

The Ninth Circuit struck down a challenge to the constitutionality of the Jones Act or Merchant Marine Act of 1920.  The case was Novak v. United States and the opinion can be found here.

The litigated component of the Jones Act (rest easy merchant mariners, you didn't lose your worker compensation causes of action) was the requirement that any ship carrying cargo between two points in the United States - say Long Beach and Honolulu - be "built in the United States."  

Per the Court:

Plaintiffs’ theory is that, by excluding foreign competition, the cabotage provisions have created “an essentially monopolistic Hawaiian ocean shipping market” that has resulted in “high prices” and “a de facto duopoly” of two established firms in the Hawaii-mainland shipping market. Plaintiffs contend that all Hawaii residents and businesses, including themselves, have been harmed not only by the increased shipping costs, but also by the resultant inflated cost of doing business in Hawaii because higher shipping costs lead to higher prices for imported goods. Plaintiffs assert that interstate trade between Hawaii and the rest of the United States has been significantly stifled to such an extent that the effect of the Jones Act’s restrictions amounts to “an unlawful restraint of trade and interstate commerce, thereby violating the Commerce Clause of the United States Constitution.” Plaintiffs filed this action against the United States, asserting a single cause of action under the Commerce Clause.

The basic issue on appeal is the Standing doctrine which requires you to be the right plaintiff with an injury caused by some conduct and that injury can be redressed by a favorable decision.

The Ninth Circuit rejected this challenge to the Jones Act because the harm alleged by plaintiffs - increased prices for goods purchased in Hawaii - was not caused by the Jones Act itself, but was rather based on the prices set by the shipping companies carrying the cargo.  As such, absent showing that BUT FOR the Jones Act, the prices would have assuredly been less, the Plaintiffs did not have standing to bring the challenge.

Classically, amendment of a complaint could cure a standing problem, so the Ninth Circuit analyzed whether amendment could cure the problem.  Under the federal rules, amendment of complaints should be allowed, unless it would be futile.  Or, if the amended complaint would fail for any reason, the court won't allow you to amend it.

In this case, the Ninth Circuit found the Jones Act to be a valid exercise of Congress' commerce clause powers.

9th Circuit - California Shark Fin Law Not Preempted by Fed Fisheries Law

The Ninth Circuit rejected a challenge to California's Shark Fin Law, Cal. Fish & Game Code § 2021(b) which makes it "unlawful for any person to possess, sell, offer for sale, trade, or distribute a shark fin" in the state.  The case is Chinatown Neighborhood Ass'n v. Harris and the opinion can be found here.

Shark finning is a practice of harvesting shark fins to make shark fin soup.  The rest of the living shark is discarded.

The practice was prohibited by Congress in 2000.  California outlawed possession of fins without the shark carcass in 1995, then in 2011 criminalized the possession of detached shark fins in the California Shark Fin Law.

Several trade associations filed a federal challenge to the Shark Fin Law asserting that California's law was preempted by federal fisheries law.

The Ninth Circuit found that the federal fisheries law, the Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C.§§ 1801-1884 did not preempt California's Shark Fin Law.  The Court similarly rejected a dormant commerce clause challenge to the law.

Fisheries laws are a complex web of federal and state laws and regulations.  For sure, the States have the power to regulate fisheries within their waters, typically seaward of the 3 nautical mile line from the baseline.  Similarly, States can regulate fish LANDED in their ports.  

Federal law can and does preempt state law under the Supremacy Clause of the Constitution.  Federal fisheries laws does not preempt California's Shark Fin Law.  So says the Ninth Circuit.

 

ABA Litigation Section - FREE Roundtable on Cotenancy Clauses in Retail Leases

The ABA Section of Litigation announced a free roundtable to discuss Cotenancy clauses after a recent decision by a California appeals court, Grand Prospect Partners, LP v. Ross Dress for Less.  You can find the link for registration here.

Cotenancy clauses in retail leases are common provisions that allow a tenant to abate rent and/or terminate the lease if the landlord fails to meet a cotenancy requirement under the lease.  In a case of first  impression, in Grand Prospect Partners, LP v. Ross Dress for Less,  although the California  Court  of Appeal upheld the termination right, it struck down the rent abatement remedy as an unenforceable penalty.  Does the case have a sweeping impact for negotiated retail leases in shopping centers across the country?  Panelists will explore the implications of the case for retail landlords and tenants and its impact on the drafting of cotenancy clauses and the enforceability of the remedies negotiated by the landlords and tenants.

The program will be moderated by Howard K. Jeruchimowitz of Greenberg Traurig and will include speakers addressing what this decision means to commercial landlords and tenants.  The panelists will be Rosie Rees of Pircher, Nichols & Meeks who will discuss the the landlord's perspective and Ellen Sinreich of the Sinreich Group who will discuss the tenant's perspective.

Sign up and join us.  No CLE credit but this is a burning issue in retail leases and is causing some disruption in the industry.

Hawaii Campaign Finance Law Survives Constitutional Challenge

As a random quirk of our law practice, we have done some work with the Hawaii Campaign Spending Commission.  Not surprisingly, the Commission's laws and regulations were challenged after the Citizen's United case and today, we have the Ninth Circuit's take on Hawaii's election laws in light of Citizen's United.  It upheld Hawaii's election laws and noncandidate committee requirements.  The case is A-1 A-Lectricians v. Snipes.  The opinion is here.

This case was a challenge to the constitutionality of Hawaii's campaign finance laws following the Supreme Court's decision in Citizen's United v. Federal Election Comm'n, 558 U.S. 310 (2010).  Hawaii election laws, available at the Campaign Spending Commission's website, here, require the creation of noncandidate committees for those entities who expend more than $1,000, requires those committees to have certain disclaimers, requires identifying information in electioneering communication and the ban on contributions from governmental contractors.

The court's summary, a reading aid, states:

The panel affirmed in part and reversed in part the district court’s summary judgment in an action brought by two individuals and a Hawaii for-profit corporation, A-1 A-Lectrician, Inc., challenging the constitutionality of Hawaii’s campaign finance laws. During the 2010 election, plaintiff A-1 contributed over $50,000 to candidates, candidate committees and party committees. It also purchased three newspaper advertisements. As a result of these expenditures and contributions, A-1 was required to register as a “noncandidate committee,” and was subjected to reporting and disclosure requirements (HRS § 11-302) and advertising disclaimer requirements (HRS § 11-391). A1, which plans to run similar advertisements and make similar contributions to candidates in the future, objects to both the disclaimer requirement and the noncandidate committee registration and reporting requirements.

Addressing A-1's Fourteenth Amendment due process vagueness challenge to Hawaii’s reporting and disclosure requirements, the panel held that HRS § 11-302’s definitions of “expenditure,” and “noncandidate committee” were not vague given the narrowing construction of the term “influence” proffered by Hawaii’s Campaign Spending Commission. The panel also held that § 11-302’s definition of “advertisement” was not unconstitutionally vague because read as a whole and in context it was sufficiently clear to give a person of ordinary intelligence a reasonable opportunity to know what was prohibited. Addressing the First Amendment challenges, the panel held that the registration, reporting and disclosure requirements that Hawaii places on “noncandidate committees” survived exacting scrutiny as applied to A-1. The panel held that the requirements were substantially related to Hawaii’s important interests in informing the electorate, preventing corruption or its appearance, and avoiding the circumvention of valid campaign finance laws. The panel also held that Hawaii’s requirement that political advertising include a disclaimer as to the affiliation of the advertiser with a candidate or candidate committee did not violate the First Amendment as applied to A-1’s political advertisements.

The panel declined to consider A1’s challenge to Hawaii’s electioneering communication reporting requirements (HRS § 341) because it determined that A-1 was not subject to those requirements as of the date the complaint was filed. The panel rejected A-1’s First Amendment challenge to Hawaii’s ban on campaign contributions by government contractors to candidates or candidate committees, (HRS § 11-355). The panel held that Hawaii’s government contractor contribution ban survived closely drawn scrutiny even as applied to A-1’s proposed contributions to candidates who neither decide whether A-1 receives contracts nor oversee A-1’s contracts. The panel held that the individual plaintiffs were entitled to attorney’s fees arising from their prior interlocutory appeal challenging HRS § 11-358, which prohibited any person from making contributions to a noncandidate committee in an aggregate amount greater than $1,000 in an election.

The panel held that because plaintiffs prevailed in the interlocutory appeal, and subsequently became prevailing parties after the district court entered judgment in their favor, the district court erred by failing to consider whether to award them reasonable appellate attorney’s fees. The panel referred the matter to the Ninth Circuit Appellate Commissioner to determine the amount of fees to be awarded.

Seems likely that Supreme Court review will be coming...stay tuned.

Hawaii Governor Ige Considering Amendment to Hawaii Information Practices Law

The Honolulu Star-Advertiser had a front page story today on a bill passed by the Legislature proposing an amendment to Hawaii's Uniform Information Practices Act, Hawaii Revised Statutes Ch. 92F.

The bill, H.B. 287, underwent re-writes throughout the session.  The version that passed, and is awaiting Governor signature or veto, is:

     SECTION 1.  Section 92F-14, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     ****

     (8)  Information comprising a personal recommendation or evaluation; [and]

     (9)  Social security numbers[.]; and

    (10)  Information that if disclosed would create a substantial and demonstrable risk of physical harm to an individual."

The State of Hawaii Judiciary testified in favor of changes to Ch. 92F and Civil Beat's Law Center for the Public Interest opposed the changes.  The testimony of both the Judiciary and the Law Center is available here.  

The Judiciary's position appears to be tied to the physical safety and security vulnerable from the public disclosure of information:

This legislation is designed to promote the safety and security of individuals by ensuring that a review of matters relating to personal safety and security is part of the equation in determining whether particular documents shall be disclosed pursuant to Hawaii's Uniform Information Practices Act. While the present law states that government records shall not be disclosed if their disclosure would constitute a "clearly unwarranted invasion of personal privacy," the law does not specifically address situations where disclosure could result in a threat to one's physical safety or security.

The Law Center for Public Interest's testimony outlines its observation that personally identifiable information (read: social security number, etc) is already protected by Ch. 92F.

In addition to the Judiciary, the Honolulu Police Department supported the bill.  Several others opposed the bill, including Common Cause Hawaii, the Office of Information Practices, the Society of Professional Journalists and the American Civil Liberties Union.

Governor Ige has a few weeks to decide whether to sign the bill, veto the bill or let it become law without his signature.

On balance, Hawaii's law favors disclosure of government records.  The Star-Advertiser prevailed on its suit to compel Governor Abercrombie to produce the list of candidates he was considering for a supreme court justice-ship.  [Disclosure:  we represented the Star-Advertiser in that litigation].  

One wonders how many folks are at risk of physical harm from the government disclosure of this information. Hawaii is not known for high incidence of violent crime, in fact, those crimes are on the decline, and it seems unusual to change the law without an incident triggering the need for this law change, but most violent offenders probably find their victims through other means than Ch. 92F.  

Stay tuned for the Governor's action.

ABA Section of Litigation Annual Conference 2015

We are headed to the Big Easy tonight for the American Bar Association's Section of Litigation Annual Conference.  

The Real Estate Litigation Committee is pleased to present a seminar of complex claims resolution, entitled When the Levee Breaks - Resolving Complex Claims; Lessons of the Deepwater Horizon, Katrina and More.  Our panelists are Deborah Greenspan of Dickstein Shapiro, Professor Marilyn Berger of Seattle University School of Law, Daniel Cantor of Arnold & Porter and Stephen J. Herman of Herman Herman & Katz.  The panel will be moderated by Judge Nannette Brown of the District Court for the Eastern District of Louisiana.

Stay tuned.

Rocket Docket? Federal Court Stats Say D. Haw. is FAST

 

The Federal Judiciary just released its business report for the fiscal year ending September 30, 2014.

Where does the District of Hawaii, conceptually rendered above, stack up?

For civil cases, in terms of median time from filing to trial, D. Haw. has a median time interval of 15.5 months.  The average median time from filing to trial for all district courts was 24.9 months.  Hawaii placed third behind the Eastern District of Virginia's blazing 12.5 months and the Southern District of Florida's 14.6 months.

Hawaii had 667 civil cases in FY2014.  That is nearly three times the District of Alaska, double the District of Idaho, 30% more than the District of Montana and almost as much as the Eastern District of Washington.

For the 649 civil cases terminated in FY2014, 81 were contract, 45 involved real property, 18 were maritime personal injury, 56 involved personal injury, 192 were civil rights actions, 26 were intellectual property and 28 were labor suits.  82 cases were commenced with involving the federal government, either as plaintiff or defendant.  One odd phenomena of Hawaii is the relative dearth of social security litigation. In FY2014, only four social security cases were brought. The District of Idaho had 40.

Hawaii has a good chunk of cases brought by parties not represented by counsel.  For non-prisoner cases, 20% of cases were brought by pro se litigants.

Nationwide, the Federal Judiciary reports:

This fiscal year, filings in the U.S. courts of appeals fell 3 percent to 54,988. Total filings in the U.S. district courts remained stable, rising less than 1 percent to 376,536 as civil case filings increased 4 percent to 295,310, but filings for criminal defendants dropped 11 percent to 81,226. Petitions filed in the U.S. bankruptcy courts decreased 13 percent to 963,739.