Day v. Apoliona, 06-16625.

• Decision Date: 07 August 2007
• Docket Number: No. 06-16625.,06-16625.
• Citation: 496 F.3d 1027
• Parties: Virgil E. DAY; Mel Hoomanawanui; Josiah L. Hoohuli; Patrick L. Kahawaiolaa; Samuel L. Kealoha, Jr., Plaintiffs-Appellants, v. Haunani APOLIONA, individually and in her official capacity as Chairperson and Trustee of the Office of Hawaiian affairs; Rowena Akana; Dante Carpenter; Donald Cataluna; Linda Keawe'Ehu Dela Cruz; Colette Y. Pi'ipi Machado; Boyd P. Mossman; Oswald K. Stender; John D. Waihee, IV, Trustees of the Office of Hawaiian Affairs of the State of Hawaii, sued in their official capacities for declaratory and prospective injunctive relief; sued in individual capacities for damages; Clayton Hee; Charles Ota, Former Trustees of the Office of Hawaiian Affairs of the State of Hawaii, sued in their individual capacities for damages, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

496 F.3d 1027

Virgil E. DAY; Mel Hoomanawanui; Josiah L. Hoohuli; Patrick L. Kahawaiolaa; Samuel L. Kealoha, Jr., Plaintiffs-Appellants, v. Haunani APOLIONA, individually and in her official capacity as Chairperson and Trustee of the Office of Hawaiian affairs; Rowena Akana; Dante Carpenter; Donald Cataluna; Linda Keawe'Ehu Dela Cruz; Colette Y. Pi'ipi Machado; Boyd P. Mossman; Oswald K. Stender; John D. Waihee, IV, Trustees of the Office of Hawaiian Affairs of the State of Hawaii, sued in their official capacities for declaratory and prospective injunctive relief; sued in individual capacities for damages; Clayton Hee; Charles Ota, Former Trustees of the Office of Hawaiian Affairs of the State of Hawaii, sued in their individual capacities for damages, Defendants-Appellees.

No. 06-16625.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 5, 2007.

Filed August 7, 2007.

Walter R. Schoettle, Honolulu, HI, for the plaintiffs-appellants.

Robert G. Klein, Honolulu, HI, for defendants-appellees Apoliona, et al.

Charleen M. Aina, Deputy Attorney General, Honolulu, HI, for defendants-appellees Hee and Ota.

William J. Wynhoff, Deputy Attorney General, Honolulu, HI, for amicus curiae, State of Hawaii.

Appeal from the United States District Court for the District of Hawaii; Susan Oki Mollway, District Judge, Presiding. D.C. No. CV-05-00649-SOM.

Before: DAVID R. THOMPSON, MARSHA S. BERZON, and RICHARD C. TALLMAN, Circuit Judges.

BERZON, Circuit Judge:

The Hawaii Admission Act, Pub.L. No. 86-3, 73 Stat. 4 (1959) ("Admission Act") granted Hawaii title to most of the federal government's public land within the state, id. at § 5(b)-(e), 73 Stat. at 5-6, and required the state to hold that land and profits from it in "public trust" for five purposes, id. at § 5(f), 73 Stat. at 6. One such purpose is "for the betterment of the conditions of Native Hawaiians." Id. The other purposes — for public schools, development of farm and home ownership, public improvements, and the provision of land for public use — are not limited to Native Hawaiians. Id.

The plaintiffs in this case, whom we call "Day" after the first-named of them, are Native Hawaiians, defined under federal law as "descendant[s] of not less than one-half part of the blood of the races inhabiting the Hawaiian Islands previous to 1778." Hawaiian Homes Commission Act, Pub.L. No. 67-34, 42 Stat. 108 (1921) ("HHCA"); see generally Rice v. Cayetano, 528 U.S. 495, 507, 120 S.Ct. 1044, 145 L.Ed.2d 1007 (2000).¹ Based on the Admission Act and state law, these Native Hawaiians contend that the defendants, current and former trustees of the state's Office of Hawaiian Affairs ("OHA"), have not properly considered ethnic distinctions in spending the assets of the Admission Act trust ("§ 5(f) trust"). To enforce their asserted right to ensure that the § 5(f) trust funds are spent in accordance with the Admission Act's specifications, Day filed suit under 42 U.S.C. § 1983.

A considerable line of precedent in this circuit holds that Native Hawaiians, as beneficiaries of the § 5(f) trust, have a right under the Admission Act that is enforceable by § 1983. The district court, however, held to the contrary, taking the view that recent Supreme Court cases have so undermined our prior case law that suits like this one may no longer be maintained. After a careful comparison of our prior cases with the recent Supreme Court § 1983 cases on which the district court relied, we cannot agree that there is a conflict sufficient to justify a district court or a three-judge panel of this court disregarding well-established precedent. We therefore reverse the district court's dismissal of the case and, without expressing any opinion of the merits of Day's allegations, remand for further proceedings.²

I. PROCEDURAL HISTORY

State law assigns to the OHA the promotion of "[t]he betterment of conditions of Native Hawaiians . . . [and] Hawaiians." Haw.Rev.Stat. § 10-3. To effectuate this assignment, OHA receives a portion of the § 5(f) trust monies, which it is to devote "to the betterment of the conditions of Native Hawaiians," id. at § 10-3(1).³ The agency receives other funds as well, which it uses to fund projects that do not meet the § 5(f) restrictions. See generally Rice, 528 U.S. at 508-09, 120 S.Ct. 1044.

In this case, Day alleges that OHA misspent § 5(f) trust funds in two ways: (1) by lobbying in favor of a federal bill (the "Akaka Bill") "that purports to create a Native Hawaiian Governing Entity to be established by persons . . . without regard to the blood quantum requirements set out under HHCA,"⁴ and (2) by supporting three social service programs whose "funds are not subject to the limitation that they may be expended only for the betterment of the conditions of `native Hawaiians.'"⁵ Such expenditures, the amended complaint alleges, are inconsistent with the purposes listed in § 5(f) and constitute a violation of (1) the Admissions Act and the HHCA, enforceable by 42 U.S.C. § 1983; (2) the Equal Protection Clause of the Fourteenth Amendment; and (3) a state common law statutory duty of fidelity, see Haw.Rev.Stat. § 10-16(c). Day seeks an accounting; monetary, injunctive, and declaratory relief; and attorneys' fees.

The district court sua sponte dismissed the amended complaint. Ruling on an argument raised not by the defendants but by the state of Hawaii in an amicus curiae brief, the court held that the complaint failed to allege any Admission Act violation enforceable under § 1983. The court additionally concluded that the Equal Protection allegations failed to state a claim and dismissed the state law claims as a matter of discretion. See 28 U.S.C. § 1367(c).

Day does not contest the dismissal of his Equal Protection claims or the discretionary dismissal of the state claims. He also does not contest the dismissal of all claims against the two defendants, Clayton Hee and Charles Ota, who are former rather than current trustees.⁶ We thus consider only whether Day's Admission Act cause of action against the remaining defendants, all current trustees, rests on a right enforceable under § 1983.

Dismissal of a § 1983 claim for the lack of an enforceable right amounts to dismissal for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). See Bollard v. Cal. Province of the Soc'y of Jesus, 196 F.3d 940, 950-51 (9th Cir.1999); United States v. Stanley, 483 U.S. 669, 691 n. 7, 107 S.Ct. 3054, 97 L.Ed.2d 550 (1987). We review such a dismissal de novo. Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir.2004).⁷

II. ANALYSIS

The question in this case, whether a violation of § 5(f) of the Admission Act is enforceable via § 1983, is not new to this court. Over the last two decades, we have established the broad contours of Native Hawaiians' right to sue for breach of the state's § 5(f) trust obligations and held that § 5(f) does not create an implied private right of action for breach of the § 5(f) trust, see Keaukaha I, 588 F.2d 1216, but does create a right enforceable via 42 U.S.C. § 1983, see Price v. Akaka, 3 F.3d 1220 (9th Cir.1993) ("Akaka II"); Keaukaha-Panaewa Cmty. Ass'n v. Hawaiian Homes Comm'n, 739 F.2d 1467 (9th Cir. 1984) ("Keaukaha II"). We have repeatedly applied this latter holding.⁸

The district court concluded, however, that Akaka II's holding is no longer good law because it has been effectively overruled by Gonzaga University v. Doe, 536 U.S. 273, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002). There are indeed circumstances in which a district court or a three-judge panel of this court can disregard circuit precedent because of intervening Supreme Court authority: "[W]here intervening Supreme Court authority is clearly irreconcilable with our prior circuit authority[,] . . . a three-judge panel of this court and district courts should consider themselves bound by the intervening higher authority and reject the prior opinion of this court as having been effectively overruled." Miller v. Gammie, 335 F.3d 889, 900 (9th Cir.2003) (en banc). But, this is simply not one of those instances. Gonzaga and other recent Supreme Court cases concerning § 1983 rights have not so changed the law that it is now irreconcilable with our prior cases. The Miller standard is thus not met, and we (and the district court) are bound by our earlier precedent. Therefore, the district court should not have dismissed the case for failure to allege a right enforceable under § 1983.

A. Breach of trust actions under the Admission Act

Before explaining our conclusion regarding the impact of Gonzaga, we set the scene by describing our existing case law regarding the enforcement of the § 5(f) trust by beneficiaries in some detail.

Section 5(f) of the Admissions Act provides that the relevant lands and income from them

shall be held by said State as a public trust for the support of the public schools and other public educational institutions, for the betterment of the conditions of Native Hawaiians, as defined in the Hawaiian Homes Commission Act, 1920, as amended, for the development of farm and home ownership on as widespread a basis as possible for the making of public improvements, and for the provision of lands for public use. Such lands, proceeds, and income shall be managed and disposed of for one or more of the foregoing purposes in such manner as the constitution and laws of said State may provide, and their use for any other object shall constitute a breach of trust for which suit may be brought by the United States.

73 Stat. at 6 (emphasis added).

Prior to Gonzaga, we twice explicitly held that because it creates a trust, § 5(f) also creates a right enforceable under § 1983 by the trust's beneficiaries. In Keaukaha II, we reached that conclusion by relying on "a presumption that a federal statute creating enforceable rights may be enforced in a section 1983 action." 739 F.2d at 1470 (citing Pennhurst State Sch. & Hosp. v. Halderman, 451...