Tuesday, March 17, 2009

Men (and Large-Capacity Ferry Vessels) Governed by (General) Laws.

Sierra Club v. DOT (HSC March 16, 2009)

Background. The Hawai'i Superferry was an interisland boat service that used state harbors throughout the islands. The Sierra Club and two other non-profit organizations sued the Department of Transportation and the Superferry on the grounds that no environmental assessment was prepared prior to launch of the Superferry. After the circuit court dismissed the case, the HSC vacated and remanded it back to Maui in Sierra Club v. Dept. of Transp., 115 Hawai'i 299, 167 P.3d 292 (2007). On remand, the circuit court entered summary judgment against the DOT and Superferry. It also granted a permanent injunction against the Defendants. The circuit court concluded that Sierra Club was the prevailing party and awarded attorney's fees and costs.

In the meantime, the Legislature, at Governor Lingle's urging, convened a special session and promulgated "A Bill for an Act Relating to Transportation," known as Act 2, in order "to facilitate the establishment of an inter-island ferry service and, at the same time, protect Hawai'i's fragile environment[.]" The Act exempted "large capacity ferry vessel companies" from the requirements of HRS chapter 343, the Hawai'i Environmental Protection Act, and was set to expire on July 31, 2009. The circuit court granted the Superferry and DOT's motion to dissolve the permanent injunction pursuant to Act 2. The Sierra Club appealed.

Legislative Powers over State Lands Limited to General Laws. "The legislative power over the lands owned by or under the control of the State . . . shall be exercised only by general laws[.]" Haw. Const. Art. XI § 5. Act 2 § 15 stated that "state lands previously authorized to be used to facilitate or support the operation of a large capacity ferry vessel[] shall be authorized to be used to effectuate the provisions of this Act." Thus, according to the HSC, Act 2 is an exercise of the legislative power over State land. The big question was whether Act 2 was a "general law."

But what About Bulgo? The HSC explained that the term "general law" appeared throughout the Hawai'i Constitution, had already been interpreted in Bulgo v. County of Maui, 50 Haw. 51, 430 P.2d 321 (1967), where the HSC held that a statute regulating the replacement of county officials was a "general law." The Bulgo court defined a "general law" as "laws which apply uniformly throughout all political subdivisions of the State." Id. at 58, 430 P.2d at 326. The HSC distinguished Bulgo on the grounds that the statute at issue in Bulgo had uniform applicability and did not create a class with only one member of a temporary duration.

Finding a "General" law with the Colorado Two-Step. To determine if an act was a "general law" rather than special legislation, the HSC imported a two-step test from Colorado: (1) whether the classification adopted by the legislature is a "real or potential" class rather than one "logically or factually limited to a class of one and thus illusory" and (2), if it is indeed a real or potential class, whether that class was reasonable. People v. Canister, 110 P.3d 380, 383 (Colo. 2005). The HSC, relying on cases from Colorado, Nebraska, and Arizona, summarized that "in determining whether a law creates an illusory class depends not only on whether others may theoretically enter the class, but on the 'actual probability' that others will enter the class in the future." See Id. at 384; Haman v. Marsh, 467 N.W.2d 836, 848 (Neb. 1991); Republic Inv. Fund I v. Town of Surprise, 800 P.2d 1251, 1259 (Ariz. 1990).

The HSC applied the Canister case to Act 2. According to the HSC, Act 2 created a class that was logically and factually a class of one and thus was illusory. Act 2 exempted from environmental assessments a "large capacity ferry vessel company." The 21-month viability of Act 2 limits any realistic application of "large capacity ferry vessel companies" other than the Superferry. The HSC explained that no other ferry company could get the requisite agreements and permits with the Public Utilities Commission, the State, and the federal government in order to benefit from Act 2. The Superferry has the only operating agreement in the State. Thus, Act 2 created a class of one. Act 2 fails to create a genuine class and is not a "general law."

The Spectre of Populism? The Hawai'i constitution limits the exercise of legislative power to exercise only "general laws" rather than special legislation. The majority concluded that this limitation was intended to prevent the inherent dangers in passing special legislation that favors specific individuals or entities. This, according to the HSC, was a corollary of the constitutional prohibition against governmental discrimination against persons or entities. By comparing the equal protection with the "general laws" limitation, the HSC has hit upon an old debate raging over the interpretation of the Fourteenth Amendment. If that is the case, then the Hawai'i Constitution neither permits legislation favoring entities and legislation discriminating against entities.

This latter principle actually began in a piece of dictum from Santa Clara County v. Southern Pac. R. R. Co., 118 U.S. 394 (1886), in which the U.S. Supreme Court announced that the 14th Amendment forbids a State from denying corporations as well as persons equal protection under the laws. This sparked the beginning of personhood for corporations, a concept well established in the law today (and subject to much scholarly debate). Of course, there was no balance in the federal constitution, which does not have a "general laws" limitation. That meant that a large corporation, like Jay Gould's railroad company, could lobby a state legislature for special laws and attack state railroad regulations and taxes on the grounds that they were in violation of the 14th Amendment.

The opponents of special interests and railroads were the Populists, a political party that was prevalent in Western States like Nebraska and Colorado. Perhaps this "general laws" limitation is their lasting legacy? So if the Superferry is a modern day railroad company, then the HSC's analysis, which relied heavily on cases from states with similar limitations would have made the Populists proud.

The Private Attorney General Doctrine. The HSC agreed with the circuit court that the Sierra Club was the prevailing party and was entitled to attorney's fees. See Food Pantry, Ltd. v. Waikiki Business Plaza, Inc., 58 Haw. 606, 620, 575 P.2d 869, 879 (1978). And because the Sierra Club was the prevailing party, the HSC examined whether it could recover under the private attorney general doctrine. An exception to the "American Rule" that each party is responsible for paying its own expenses, is the private attorney general doctrine.

Under that doctrine, courts can award attorney's fees "to plaintiffs who have vindicated important public rights. Courts applying this doctrine consider three basic factors: (1) the strength or societal importance of the public policy vindicated by the litigation, (2) the necessity for private enforcement and the magnitude of the resultant burden on the plaintiff, [and] (3) the number of people standing to benefit from the decision." Maui Tomorrow v. BLNR, 110 Hawai'i 234, 244, 131 P.3d 517, 527 (2006). According to the HSC, the Sierra Club's case met these three factors and was entitled to fees and costs.

Other Issues. The HSC examined other issues relating to the award of attorney's fees. In particular, it held that the State waived sovereign immunity to both liability and an award of attorney's fees under the private attorney general doctrine.

Justice Nakayama's Concurrence and Dissent. Justice Nakayama wrote separately and Chief Justice Moon joined. Justice Nakayama agreed that Act 2 was unconstitutional, that the Sierra Club was the prevailing party, and that the private attorney general doctrine authorized a fee award. However, Justice Nakayama took issue with the relinquishment of sovereign immunity. According to Justice Nakayama, "both the issue of attorney's fees and the private attorney general doctrine are beyond the scope of the state's waiver of sovereign immunity."

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