Chun v. Employees' Retirement System of State of Hawaii, 15241

• Decision Date: 03 March 1992
• Docket Number: No. 15241,15241
• Citation: 828 P.2d 260,73 Haw. 9
• Parties: , 73 Ed. Law Rep. 1141 Michael A.S. CHUN, Gladys Farm, Herbert T. Imanaka, Jimmy T. Izu, Samuel Y. Kakazu, Billy G. Southwood, Eishin Tengan, and Thomas Y. Yano, Plaintiffs-Appellees, v. EMPLOYEES' RETIREMENT SYSTEM OF the STATE OF HAWAII, Defendant-Appellant.
• Court: Hawaii Supreme Court

Page 260

828 P.2d 260

73 Haw. 9, 73 Ed. Law Rep. 1141

Michael A.S. CHUN, Gladys Farm, Herbert T. Imanaka, Jimmy T.

Izu, Samuel Y. Kakazu, Billy G. Southwood, Eishin

Tengan, and Thomas Y. Yano, Plaintiffs-Appellees, v. EMPLOYEES' RETIREMENT SYSTEM OF the STATE OF HAWAII,

Defendant-Appellant.

No. 15241.

Supreme Court of Hawai'i.

March 3, 1992.

Reconsideration Denied March 18, 1992.

Nathan J. Sult and James E.T. Koshiba of Koshiba & Young, Honolulu, for defendant-appellant.

Charles K.Y. Khim, Honolulu, for plaintiffs-appellees.

Syllabus by the Court

1. Under the doctrine of primary jurisdiction, where a court and an agency have concurrent original jurisdiction to decide issues which have been placed within the special competence of an administrative agency, the judicial process is suspended pending referral of such issues to the administrative body for its views.

2. Standing to invoke judicial review under the Administrative Procedure Act is contingent upon a showing that a person has been aggrieved by agency action and has participated in a contested case hearing before an administrative agency.

3. The lack of jurisdiction over the subject matter can never be waived by the parties. If the parties fail to raise the issue, a court sua sponte will. The stay of proceedings pending administrative agency review involves a jurisdictional issue which can never be waived by any party at any time.

4. Unless jurisdiction of the court over the subject matter exists, any judgment rendered is invalid.

Before LUM, C.J., and PADGETT, HAYASHI, WAKATSUKI and MOON, JJ.

WAKATSUKI, Justice.

Appellees, retired "educational officers" (principals and vice-principals) of the Department of Education, instituted a class action against Appellant Employees' Retirement System of the State of Hawaii (ERS) seeking declaratory and injunctive relief for losses sustained from alleged violations of Hawaii Revised Statutes (HRS) Chapter 88. Appellees alleged that ERS erroneously calculated their retirement benefits by excluding their "earned summer salaries" from their "high three-years" average final compensation. The trial court entered summary judgment in Appellees' favor.

We vacate the judgment.

I.

The ERS, as a matter of policy for at least 25 years, has computed average final compensation by characterizing "earned summer salaries" as "salary paid in lieu of vacation," thereby excluding it from the high three-years calculation of average final compensation upon retirement of an educational officer.

Appellees contend that this method of computing retirement benefits was incorrect. The trial court agreed with Appellees and entered summary judgment in their favor. The court held that the lump sum payment of "earned summer salary," paid upon retirement was compensation attributable to the month in which the member of the class retired. The court, therefore, ordered ERS to include such amounts and to recalculate the average final compensation of all members of Appellees' class from October 17, 1984. Thereafter, the court denied ERS' motion for reconsideration and denied ERS' motion for stay of proceedings.

II.

ERS contends that the trial court erred in denying its motion to stay proceedings pending an administrative hearing, and consequently failed to afford due deference to ERS' interpretation and implementation of the statutory scheme governing employee retirement benefits.

This court's recent decision in Hawaii Blind Vendors Association v. Department of Human Services, 71 Haw. 367, 791 P.2d 1261 (1990), mandates such a conclusion. In this case, a State statute provided for priority treatment of blind or visually handicapped persons in the operation of vending facilities in public buildings. The Department of Human Services (DHS) was given administrative responsibility for adopting rules and implementing the program. Pursuant to this authority, the DHS adopted rules governing the vending facility program which provided for announcement of vacancies to qualified blind persons, application procedures, and full hearings upon vendor complaints.

Subsequently, DHS renewed a long-standing airport lease to an organization comprised of handicapped employees whose handicaps were not limited to vision without providing appropriate notice of vacancy or opportunity to apply for the lease to the blind vendors. The trial court granted summary judgment in favor of DHS.

In reversing and remanding the case to the trial court with directions to remand to the DHS for an administrative hearing, this court concluded that the DHS agency process was the appropriate forum for an initial determination of the issues. The court reasoned:

Under the doctrine of primary jurisdiction, when a court and an agency have concurrent original jurisdiction to decide issues which have been placed within the special competence of an administrative agency, the judicial process is suspended pending referral of such issues to the administrative body for its views.

Id. at 371, 791 P.2d at 1264.

Similarly, in Kona Old Hawaiian Trails Group ex rel. Serrano v. Lyman, 69 Haw. 81, 734 P.2d 161 (1987), Kona Old's noncompliance with available administrative remedies resulted in this court's affirmance of the trial court's dismissal of the case pending agency review. The decision was based upon two principal doctrines: (1) primary jurisdiction, and (2) exhaustion of administrative remedies. Both doctrines reflect the deeply rooted principle of comity between courts and administrative agencies. This court held that the doctrine of primary jurisdiction applies

where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under the regulatory scheme, have been placed within the special competence of an administrative body. When this happens, the judicial process is suspended pending referral of such issues to the administrative body for its views. In effect, the courts are divested of whatever original jurisdiction they would otherwise possess, and...