Thursday, July 31, 2008

Liquor Commission Subject to Judicial Review

E & J Operating Co. v. Liquor Comm'n of HNL (HSC July 29, 2008)

Background. E & J Lounge applied for a liquor license with the Liquor Commission in HNL. The Commission held a preliminary hearing and determined to schedule a public hearing for the application. Three of the five commissioners appeared at the first public hearing, where it received testimony and evidence from neighbors. All five were at the continued hearing, but a different three presided over the third and final hearing. The Commission denied the application. E & J sought appealed to the circuit court pursuant to the Hawai'i Administrative Procedures Act (HRS chapter 91) on the grounds that the Commission violated various provisions of HAPA, including HRS § 91-11, which requires members who did not preside over all of the contested case to review the record before rendering a decision. The circuit court ruled that the public hearing was a "contested case" and that it had judicial review. The ICA held that the public hearing was not a "contested case," but that there was judicial review.

Simply put, the Public Hearing IS a Contested Case. A contested case is an agency hearing that (1) is required by law and (2) determines the rights, duties, or privileges of specific parties. Pub. Access Shoreline Haw. v. Hawaii County Planning Comm'n, 79 Hawai'i 425, 431, 903 P.2d 1246, 1252 (1995); HRS § 91-1. Under the first prong, a hearing is "required by law" when there is a "statutory, rule-based, or constitutional mandate for [the] hearing[.]" Bush v. Hawaiian Homes Comm'n, 76 Hawai'i 128, 137, 870 P.2d 1272, 1281 (1994). The HSC agreed with the ICA that the first prong was met. HRS chapter 281 regulates all county liquor commissions and those statutes require a public hearing like the one here. The HSC, in applying the second prong, likened this case to Mahuiki v. Planning Comm'n, 65 Haw. 506, 654 P.2d 874 (1982), where the it held that a hearing pursuant to a public notice meets the second prong when the applicant seeks to have its legal rights, duties, or privileges "declared over the objectives of other landowners and residents[.]" Id. at 513, 654 P.2d at 879. A liquor license, according to the HSC, confers the licensee with various rights and privileges such as the right to make liquor and sell it wholesale, the right to import and sell, and sell liquor while aboard a ship. HRS § 281-31. A licensee is also saddled with various duties. HRS §§ 281-75 to -85. The HSC, therefore, found the public hearing that would determine a liquor license in step with Mahuiki and concluded that the second prong was met. Thus, a public hearing to hear testimony and receive evidence regarding an application for a liquor license is a "contested case" under HRS § 91-1. This invokes HAPA and judicial review under HRS § 91-14.

Just Apply the test; Express Labels, Property Interests, or Adversarial Proceedings Irrelevant. It appears that the only thing that determines a contested case is the application of the two-prong test. The HSC dismantled the reasoning behind the ICA's opinion. First, it concluded that a public hearing is the contested case. It disagreed with the ICA's conclusion that the contested case was something additionally required or something that needed to be expressly labeled a "contested case." It also rejected the ICA's distinction of Town v. Land Use Comm'n, 55 Haw. 538, 524 P.2d 84 (1974). According to the HSC, Town does not stand for the proposition that a property interest is a prerequisite for a contested case. Finally, the HSC pointed out that a "trial-like" setting with adversarial parties is not a determinant of a contested case.

But what about Conflicting Statutes? The HSC also rejected the ICA's approach to judicial review without applying the rest of HRS chapter 91. The HSC concluded that the most of the statutes in HRS chapter 91 and HRS chapter 281 do not conflict and, therefore, all must be given full effect. Richardson v. City and County of HNL, 76 Hawai'i 46, 55, 868 P.2d 1193, 1202 (1994) (repeal by implication is disfavored so statutes must be given effect). However, when there is a true conflict, the more specific one applies. HRS chapter 91, according to the HSC, is designed for this. For example, "[u]nless otherwise provided by law," all parties shall be given written notice of the hearing by mail at least fifteen days before the hearing. HRS § 91-9.5. This conflicts with HRS § 281-57, which requires the applicant to provide notice of the hearing to "not less than two-thirds" of the owners and lessees, registered voters and small businesses located within 500 feet of the premises. In this case, the more specific provision controls and HRS chapter 91 acts a gap-filler or default.

Most Statutes, However, do not Conflict. This means that because it was a "contested case" and because HRS chapter 91 is to be given full effect, the Commission violated HRS § 91-11. On the other hand, HRS chapter 281 also applies in full force. So that means when a sufficient number of neighbors appear at the public hearing to oppose the license, the application is denied. HRS § 281-59(a). It is unclear whether E & J properly served the number of neighbors as required under HRS chapter 281.

And the Remedy? The HSC noted that although the Commission violated HRS § 91-11, it still denied the permit and rendered a decision by denying the application. This meant that HRS § 91-13.5, which forces the agency to take action of some kind within 15 days of the hearing lest the license be deemed granted, did not apply. The HSC explained that "[t]he fact that the decision was legally ineffective does not mean that the Commission failed to act[.]" And so the HSC vacated the ICA's decision and remanded it back to the Commission. The Commission must now determine if E & J properly served notices to its neighbors pursuant to HRS § 281-57. If it did, then it must re-consider the application in accordance with HRS chapter 91. If it did not, then the application is "not [to] be considered"-- a most cryptic phrase. Is that akin to a dismissal without prejudice thereby allowing E & J to apply from scratch?

A new era of Judicial Review for Liquor Commissions? The HSC made it very clear that when the Commission holds a public hearing on an application for liquor license, it is holding a contested case and its decision is subject to judicial review. And given the application of the two-prong test in determining a contested case, it is arguable that the preliminary hearing pursuant to HRS § 281-57(a) is also a contested case. It need not be "trial-like" to be a contested case. So if the denial of an application is subject to judicial review and if the Commission is required to comply with those provisions in HRS chapter 91 that do not conflict with HRS chapter 281, what would the court on an agency appeal examine? In this case, it would not examine much. The only thing that would be the subject of the agency appeal would be whether a sufficient number of neighbors opposed the applicant. The Commission is in some cases required by law to deny the application. Only when the Commission exercises its discretion will the agency appeal become more important.

Monday, July 28, 2008

Consecutive Mandatory Minimums Allow (or Require?) Consecutive Indeterminate Maximums.

State v. Kamana'o (HSC July 23, 2008)

Background. In 1983, a jury convicted Kamana'o of three class A felonies: two counts of sex assault in the first degree (HRS § 707-730) and one count of sodomy in the first degree (HRS § 707-733). Kamana'o was sentenced to the maximum of twenty years per count, but the sentence was vacated. The sentence, however, was vacated on Fifth Amendment grounds. At resentencing, the circuit court granted the State's motion for extended sentencing. The United States District Court, however, vacated that sentence based on Apprendi v. New Jersey, 530 U.S. 466 (2000) and its progeny. At the second resentencing, the circuit court sentenced Kamana'o to the maximum twenty-year sentence for all three counts. The circuit court ordered that the two counts for sex assault run concurrently, while the sodomy count run consecutively. The circuit court also determined that Kamana'o was a repeat offender and was subject to a mandatory minimum of five years for each count. Like the indeterminate maximums, the five-year minimums for the sex assault counts ran concurrently, while the five years for sodomy ran consecutively. All in all, Kamana'o faced a 40-year indeterminate maximum sentence with a hard ten years. Kamana'o appealed.

The Conflicting Statutes. The HSC rejected Kamana'o's argument that the circuit court was not authorized to impose consecutive terms of imprisonment. Back in 1983, the sentences "shall be served concurrently." HRS § 706-668 (Special Pamphlet 1975). However, noted the HSC, the repeat-offender statute allows the sentencing court to impose the mandatory minimum consecutively "notwithstanding . . . any other law to the contrary[.]" HRS §§ 706-606.5(1) and (3). The HSC concluded that the statutes overlapped when it came to sentencing and both ought to be given effect. See Richardson v. City and County of Honolulu, 76 Hawai'i 46, 55, 868 P.2d 1193, 1202 (1994).

The Specifics on General Rules. As the statutes overlapped, the HSC read them in pari materia, that is, "[w]hat is clear in one statute may be called upon in aid to explain what is doubtful in another." Barnett v. State, 91 Hawai'i 20, 31, 979 P.2d 1046, 1057 (1999); HRS § 1-16. Here, the repeat-offender statute is a specific statute carving out an exception to the general rule requiring concurrent sentences. Therefore, when the sentencing court exercises its discretion and imposes mandatory minimums to run consecutively, the indeterminate maximum sentences must also run consecutively. The HSC explained that the mandatory minimum is part of the indeterminate maximum. According to the HSC, they are two parts of the same sentence and are inseparable. This way, a sentencing court cannot impose a series of consecutive minimums beyond the indeterminate maximum. See State v. Saufua, 67 Haw. 616, 699 P.2d 988 (1985).

Justice Levinson's Dissent. Justice Levinson did not think that the mandatory-minimum statute authorized a sentencing court to impose consecutive maximum sentences. According to Justice Levinson, HRS § 706-606.5 simply does not speak to the issue of consecutive maximum sentences. The plain and unambiguous language of HRS § 706-606.5 concerns only the mandatory minimum. Nothing, according to Justice Levinson, requires the minimum to run consecutively with the maximum and vice-versa. As for the "notwithstanding" clause in HRS § 706-606.5, the two statutes are so vastly apart that HRS § 706-668 is not even implicated. This means that Justice Levinson does not think the statutes should be read in pari materia at all. This did not mean, however, that the circuit court was deprived from imposing consecutive minimums. Under Justice Levinson's view, a sentencing court can impose consecutive minimums even when the maximums must run concurrently so long as the consecutive minimums must be lesser than or equal to the maximum. Justice Levinson recognized that State v. Saufua, 67 Haw. 616, 699 P.2d 988 (1985), supported the majority's position, and believed it should be overruled.

Chief Justice Moon's Dissent. Chief Justice Moon also dissented. He agreed with Justice Levinson that HRS § 706-606.5(3) does not authorize the sentencing court to impose consecutive maximum terms. The Chief Justice pointed out that for purposes of the repeat-offender statute, "convictions on several counts . . . are to be treated as only one conviction[.]" State v. Tavares, 63 Haw. 509, 515, 630 P.2d 633, 637 (1981). And while that holding may have been criticized, State v. Cornelio, 84 Hawai'i 476, 935 P.2d 1021 (1997), it has yet to be overruled. Furthermore, the legislature amended HRS § 706-606.5 to harmonize the term "conviction" with Tavares. HRS § 706-606.5(7). Thus, even in 1983, the term "conviction" meant all three counts. According to the Chief Justice, where multiple sentences arise from multiple counts, the sentence must run concurrently. All three of Kamana'o's twenty-year counts should be served concurrently.

The Chief Justice also departed from the majority and Justice Levinson when he took issue with the imposition of consecutive mandatory minimums. The mandatory minimum, for the Chief Justice, can only run consecutively to other "sentences," i.e. prior offenses. See State v. Tavares. This explains why the Chief Justice finds no real reason to overturn State v. Safua, 67 Haw. 616, 699 P.2d 988 (1985), (affirmed consecutive mandatory minimums at the resentencing defendant convicted of an offense while on probation; sentencing court imposed the consecutive terms to the current sentence and the offense underlying probation).

Interpreting a Repealed Statute. It appears that the HSC has resolved a conflict that no longer exists. HRS § 706-668, the "general" statute that requires all sentences to run concurrently, was repealed and replaced in 1986 with HRS § 706-668.5, which affords the sentencing court power to impose consecutive terms in no unambiguous terms. The conflicting statutes in this case, therefore, is probably moot for any defendant that has yet to be sentenced.

The Sentencing Court's Dilemma. But other questions remain. The HSC held that consecutive maximum terms are part of the mandatory minimum. Thus, when the sentencing court orders consecutive minimums, the maximums are also consecutive. But must it be that way? Does this mean that the sentencing court must impose consecutive indeterminate maximums when it opts to impose consecutive minimums? It seems so. That said, it also seems that the sentencing court would be prohibited from imposing consecutive minimums while allowing the maximums to run concurrently. It could get tough. The HSC pointed out that while the sentencing court has the authority to impose these consecutive mandatory minimums (and thus impose consecutive maximums), that power is not unlimited. Imposing consecutive mandatory minimums are reviewed for an abuse of discretion. State v. Putnam, 93 Hawai'i 362, 372, 3 P.3d 1239, 1249 (2000). Would a sentencing court who wants a longer mandatory minimum risk a challenge to its discretion by forcing itself to impose the long and arguably excessive consecutive indeterminate maximum terms? Perhaps.

Editor's Note. Special mahalo to Justin F. Kollar on Kauai for his contribution to this piece.

Tuesday, July 22, 2008

ICA puts law on Orders in Order

Peters v. Aipa (ICA July 14, 2008)

Background. Peters was one of the five trustees for the Bishop Estate. Aipa was the estate's general counsel and chief legal advisor for the trust. In 1998, the Attorney General brought various claims and prayed for the removal of all five trustees. The trustees settled and executed a Settlement Agreement that released, waived, and settled the claims. The probate court approved of the Agreement. The Agreement included the AG, the trustees, and "their respective Representatives," which expressly included attorneys. After the settlement, Aipa was called by the AG in a grand jury proceeding. Aipa testified against Peters. The grand jury indicted Peters of theft in the first degree and criminal conspiracy arising from a real estate transaction. Aipa never notified Peters before he testified and Peters did not waive the attorney-client privilege. The circuit court later dismissed the indictment based in part on the AG's conduct.

Peters sued Aipa for breach of various duties and breach of the attorney-client privilege in the grand jury proceedings. Aipa filed a motion for summary judgment or, in the alternative, a motion to compel arbitration. Both motions were based on the Settlement Agreement. The circuit court denied both motions and Aipa appealed.

Appellate Jurisdiction: the Final-Judgment Rule and its Exceptions. The ICA first considered whether the order denying both motions was subject to appellate review. Generally, a party can only appeal from a final judgment, order, or decree. HRS § 641-1(a); Cisela v. Reddish, 78 Hawai'i 18, 20, 889 P.2d 702, 704 (1995). A judgment or order is not "final" until "all claims of the parties have been terminated." Id. The ICA pointed to two exceptions to this general rule. An interlocutory order is subject to appellate review even though it is not yet final. Abrams v. Cades, Schutte, Fleming & Wright, 88 Hawai'i 319, 321, 966 P.2d 631, 633 (1998). The other exception is even narrower. When the court denies a party's request for arbitration, the order denying the request is subject to appellate review. Ass'n of Owners of Kukui Plaza v. Swinerton & Walburg Co., 68 Haw. 98, 106, 705 P.2d 28, 35 (1985); HRS chapter 658A. This "small class" of orders warrants quicker appellate review because the rights under an arbitration agreement would be lost if the aggrieved party had to wait for final judgment. Ass'n of Owners of Kukui Plaza at 106, 705 P.2d at 34.

Aipa is the Defendant. The denial of his motion for summary judgment does not terminate Peters' claims. Under the general rule, the ICA has no jurisdiction to hear Aipa's arguments for that part of the order. As for the denial of the motion to compel arbitration, however, the ICA concluded that it was among that "small class" of orders that warrant appellate review. Furthermore, Peters, as the appellee, argued that the circuit court correctly denied Aipa's motion to compel arbitration. Thus, the ICA held that it had appellate jurisdiction to consider whether the circuit court erred in denying Aipa's motion to compel arbitration.

The Scope of the Agreement Covers the Claims. This particular Agreement is part of modern Hawaiian history. It was already examined by the Hawai'i Supreme Court when another trustee, Richard Wong, sued Governor Cayetano and other government officials for malicious prosecution. The HSC held that the Agreement precluded Wong's claims. Wong v. Cayetano, 111 Hawai'i 462, 481-82, 143 P.3d 1, 20-21 (2006). The ICA held that the Peters' claims against Aipa were also barred by the same Agreement, and, therefore, vacated that part in the circuit court's order denying Aipa's motion to compel arbitration.

A Partially-Appealable Order? The ICA confronted an odd situation. Aipa appealed from a single order that denied two motions. One part of the order--the denial of the summary judgment--was not yet final and no exception applied. The ICA, in dicta, pointed out that this would not have been a problem had the circuit court certified the order pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rule 54(b) (circuit court may certify that a single claim arising from a multiple-claim lawsuit is "final"). For that part, the ICA had no jurisdiction and there was no review. The other part of the same order was the denial of the motion to compel arbitration. This met one of the exceptions to the final-judgment rule and the ICA reviewed, vacated, and remanded that denial. In other words, the ICA held that "a single order is not appealable in its entirety just because a portion of that order is appealable."

So what Happens now? The ICA rejected Aipa's argument to hear the denial of the summary judgment on the grounds that it would save a lot of time. The ICA was not persuaded. Aipa has to wait for the circuit court to reduce the entire case to a final judgment. But can the lawsuit proceed with a compelled arbitration? If Peters wins at arbitration, then he may want to drop the lawsuit and the dismissal order would then terminate the claim and become final. At that point, Aipa could appeal from the denial of the summary judgment. On the other hand, if Aipa wins at arbitration, Peters would want to proceed with the lawsuit (even if its viability is dubious). In any case, the circuit court proceeding will be reduced to a final judgment, order, or decree that would terminate Peters' claims. Aipa would still be able to appeal.

Friday, July 18, 2008

Rule 40 and Retroactivity Revisited

Loher v. State (ICA July 14, 2008)

Background. Loher was on trial for kidnapping and attempted sex assault in the first degree. He was represented at trial by Kugiya. To Kugiya's surprise, the State rested on the afternoon of the first day of trial. Kugiya asked the court to present Loher's case the next day, when it could get the other two witnesses to testify. The circuit court refused and instructed Loher that he had to choose between testifying that day or else he would waive his testimony. Kugiya objected because Loher may not have to testify depending on the testimonies of the two other witnesses. The circuit court still refused and Loher testified. The trial continued the next day, the two other witnesses testified, and the jury found Loher guilty of attempted sex assault in the first degree. The State moved for various enhanced sentencing. Kugiya withdrew and a new lawyer, Shintani, took over. Shintani did not oppose the sentencing motions. Loher was sentenced to life with the possibility of parole. Shintani represented Loher on appeal, which challenged the evidence at trial, Kugiya's effectiveness, and some sentencing errors. The ICA affirmed. Loher then filed pro se a petition pursuant to HRPP Rule 40. It was denied by the circuit court without a hearing. Loher appealed.

HRPP Rule 40's "Extraordinary" Waiver Rule. When an issue--other than an illegal sentence--is not raised at trial or at any other proceeding prior to the HRPP Rule 40 petition and when the petitioner fails to show the "existence of extraordinary circumstances to justify the petitioner's failure to raise the issue[,]" the issue is waived. HRPP Rule 40(a)(3). Loher claimed that he was denied due process and a fair trial. He also averred prosecutorial misconduct. The ICA concluded that these issues could have been raised at a proceeding prior to the HRPP Rule 40 petition and held that Loher failed to demonstrate the "extraordinary circumstances necessary to rebut the presumption that he knowingly waived the newly[-]raised issues." It appears that the ICA treats the showing of "extraordinary circumstances" as a presumption of waiver. The ICA does say just exactly how "extraordinary" the circumstances have to be in this case. Or, to characterize it as a presumption, the ICA does not determine what would refute this presumption of waiver or even if it can be refuted at all. We will just have to wait.

Waiver and Ineffective Assistance of Counsel--when to Raise it. This waiver rule includes claims of ineffective assistance of counsel. But remember, the first part of the waiver is that the issue must be newly-raised. When the petitioner is represented by the same counsel at trial and on appeal, there can be no meaningful time to raise the ineffective assistance claim until the HRPP Rule 40 claim; which renders the waiver rule inapplicable. State v. Briones, 74 Haw. 442, 459, 848 P.2d 966, 975 (1993). As for ineffective assistance of appellate counsel, the issue is never waived because it cannot be raised until the appeal is finished. Id. at 460, 848 P.2d at 975. For Loher, the ICA held that ineffective assistance of trial counsel was waived because it could have been raised by appellate counsel. As for issues pertaining to sentencing and appeal, there was no waiver. This was the first appropriate time to raise the issue.

Forced Testimony, the Failure to Raise it on Appeal, and a Procedural Snit. So what was Loher's ineffective assistance of appellate counsel claim? According to the ICA, Loher avers that appellate counsel's failure to argue that the circuit court erred in forcing Loher to testify before evaluating the testimonies of the other defense witnesses violated his right against self-incrimination and the right to remain silent. The ICA noted that the U.S. Supreme Court struck down a statute that required a defendant to testify before any other defense witnesses on the grounds that it "impermissibl[y] restrict[s] . . . the defendant's right against self-incrimination, to remain silent unless he chooses to speak in the unfettered exercise of his own free will[.]" Brooks v. Tennessee, 406 U.S. 605, 609 (1972). Trial is full of uncertainties, explained the U.S. Supreme Court, and whether a defendant needs to testify is simply not known ahead of time. Id. at 609-10. The ICA, however, pointed out that Brooks error may not arise in certain circumstances. State v. Kido, 102 Hawai'i 369, 76 P.3d 612 (App. 2003).

The ICA never answered the question of whether the circuit court committed a Brooks error. When a petitioner claims ineffective assistance of counsel, the counsel in question must be served so he or she can explain the issue. HRPP Rule 40(f). Loher never served Shintani with notice of the ineffective assistance of counsel claim. Furthermore, the circuit court denied the motion without a hearing. With an inadequate record to assess the issue, the ICA had no choice but to remand the case with instructions for the circuit court to hold a hearing as to whether Shintani's failure to raise the forced-testimony issue arose to ineffective assistance of appellate counsel. New counsel must also be appointed. HRPP Rule 40(i).

A Study in Retroactivity. Issues relating to illegal sentencing are not subject to the "extraordinary circumstances" waiver. The ICA nevertheless rejected Loher's claim that his extended term sentence violated Apprendi v. New Jersey, 530 U.S. 466 (2000) and its progeny. Loher was sentenced in 2001, and his appeal was affirmed in 2003. The argument, according to the ICA, is not about Apprendi. Loher made that argument in 2003 and it was rejected. Since that time, however, the controlling case law at the time Loher's sentencing was overruled by State v. Maugaotega, 115 Hawai'i 432, 446-47, 168 P.3d 562, 576-77 (2007) and Cunningham v. California, 549 U.S. 270 (2007). According to the ICA, Loher is really arguing that Maugaotega and Cunningham apply retroactively.

A three-part test. In determining whether a constitutional rule applies retroactively, the court must determine (1) when the conviction became final; (2) whether the rule is "new" (i.e. whether, under the constitutional landscape at the time, the rule is constitution compels the rule); and (3) whether the new rule falls within one of the two exceptions to non-retroactive application. Beard v. Banks, 542 U.S. 406, 411 (2004); see also State v. Gomes, 107 Hawai'i 308, 112 P.3d 184 (2005).

But Which rule is Subject to this three-part test? In determining if Maugaotega-Cunningham announced a "new" rule, the ICA surveyed Ninth Circuit opinions. Some hold that it was not a new rule, while others have held that two opinions prior to Cunningham, Blakely v. Washington, 542 U.S. 296 (2004) and United States v. Booker, 543 U.S. 220 (2005), are "new rules." The ICA, in a footnote, even suggests that the Hawai'i Supreme Court would most likely reject the Ninth Circuit's holding that Cunningham did not change the legal landscape. State v. Jess, 117 Hawai'i 381, 184 P.3d 133, 146 (2008). But the ICA never answered this question either. Instead, the ICA held that Loher's appeal became final on or about July 2003, long before Booker and Blakely were announced. These cases clarified the legal landscape after Apprendi. "Therefore, in this case, we need to look no further than the Supreme Court's 2004 and 2005 decisions in Blakely and Booker." According to the ICA, nearly every federal court of appeals held that Blakely and Booker announced new rules of constitutional criminal procedure, but were not retroactive. The ICA agreed and held that Loher was not entitled to retroactive application of Blakely and Booker.

The ICA's analysis might have provided a preliminary issue before undergoing the three-step analysis. Do we have to first ask which rule of constitutional criminal procedure is subject to the analysis? Loher wanted Cunningham, but the ICA gave him Blakely and Booker because they cleared the legal landscape after Loher's conviction. Still, one can't help but wonder what Cunningham and Maugaotega did to the legal landscape, if anything. Are these lines being arbitrarily drawn? This may be a new issue entirely.