Preble v. Board of Trustees of Ers of State
| Decision Date | 20 September 2006 |
| Docket Number | No. 26186.,No. 26292.,26186.,26292. |
| Citation | 143 P.3d 37 |
| Parties | Duane PREBLE and Marion Everson, Plaintiffs-Appellants, v. BOARD OF TRUSTEES OF the EMPLOYEES' RETIREMENT SYSTEM OF the STATE OF HAWAI`I, Administrator of the Employees' Retirement System of the State of Hawai`i, and Employees' Retirement System of the State of Hawai`i, Defendants-Appellees. Duane Preble and Marion Everson, Petitioners-Appellants-Appellants, v. Employees' Retirement System of the State of Hawai`i, Respondent-Appellant-Appellant, and Board of Trustees of the Employees' Retirement System of the State of Hawai`i, Appellant-Appellant. |
| Court | Hawaii Supreme Court |
Kevin P.H. Sumida, of Matsui Chung Sumida & Tsuchiyama, on the briefs, Honolulu, for the defendant-appellee David Shimabukuro, Administrator of the ERS and the respondent-appellee-appellee/defendant-appellee ERS.
Kimberly Tsumoto, Deputy Attorney General, on the briefs, for the appellee-appellee/defendant-appellee Board of Trustees of the ERS.
In these consolidated appeals, the petitioners-appellants-appellants/plaintiffs-appellants Duane Preble and Marion Everson [hereinafter, collectively, "the Appellants"] appeal from: (1) the October 3, 2003 judgment of the circuit court of the first circuit, the Honorable Virginia Lea Crandall presiding, in favor of the respondent-appellee-appellee/defendant-appellee Employees' Retirement System of the State of Hawai`i (ERS), the appellee-appellee/defendant-appellee Board of Trustees of the ERS [hereinafter, "the Board"], and the defendant-appellee David Shimabukuro [hereinafter, collectively, "the Appellees"], and (2) the November 18, 2003 judgment of the circuit court of the first circuit, the Honorable Eden Elizabeth Hifo presiding, in favor of the Board and the ERS.
On appeal, the Appellants contend that the circuit court: (1) erred in dismissing No. 26292 on grounds of mootness; and (2) erred in dismissing No. 26186 through misapplication of the primary jurisdiction doctrine and in violation of their right to a hearing.
For the reasons discussed infra in section III.A.2, we vacate the circuit court's dismissal of Civ. No. 03-1-1659 (No. 26292) and remand with instructions to: (1) remand to the Board for hearing and further factfinding for the limited purpose discussed infra in section III.A.2 and with due regard for the change in the law highlighted therein; and (2) affirm the Board's July 17, 2003 judgment in other respects. For the reasons discussed infra in section III.B, we affirm the circuit court's dismissal of Civ. No. 02-1-0832 (No. 26186).
On August 18, 1998, the Appellants, who are apparently retired University of Hawai`i (UH) faculty members, tendered a "complaint"1 to the Board purporting to be a "class action" against the ERS, alleging that the ERS miscalculated and underpaid certain similarly situated UH professors' pensions and praying that the Board: (1) certify the proposed class; (2) award the class members their recalculated pensions with interest; and (3) award costs and attorney's fees. The Appellants endeavored to define the "class" as "all members of [the ERS], except retired public school principals, vice principals and teachers," who, at the time of retirement, worked less than a twelve-month year but whose monthly salary had been apportioned uniformly throughout the year (the "earned summer salary" method of computing retirement allowance, see Chun v. Bd. of Trs. of the ERS, 87 Hawai`i 152, 155 n. 2, 952 P.2d 1215, 1218 n. 2 (1998) ("Chun II")).
On January 11, 1999, the ERS administrator, Shimabukuro, wrote to the Board "recommend[ing] that [it]: (1) authorize the ERS staff to utilize the new `High 3' [Average Final Compensation (]AFC[)] computation methodology for all employees whose annual salaries are prorated over a 12-month period, and (2) authorize retroactive adjustments to the retirees from August 18, 1996," which was presumably the same policy change that the Appellants sought.
On February 8, 1999, the Board met in executive session 2 and unanimously adopted Shimabukuro's recommendations. (Emphasis added.)
On February 16, 2001, the Appellants submitted a motion to the Board "for an order directing the [ERS] . . . to deduct and pay from the common fund created in the above-captioned matter of back retirement benefit increases and the share of investment income earned thereon being moved for herein . . . attorney's fees for the [Appellants]' attorney." According to the Appellants, in Chun v. Bd. of Trs. of the ERS, 92 Hawai`i 432, 992 P.2d 127 (2000) ("Chun III"), this court "held that in common fund cases3 such as the instant case, attorney's fees are awarded to the [petitioners] and their attorney since they prevailed in this matter and since a common fund, which in this case constitutes the back retirement benefits and investment income that will be paid thereon, is created by reason of said case."
On April 3, 2002, the Appellants filed a separate action in the circuit court, captioned as Civil4 No. 02-1-0832. The Appellants prayed for a writ of mandamus "requir[ing the Appellees] to withhold, as attorney's fees, a percentage of the back retirement pay that [the class is] entitled to." (Citing Chun III.) Furthermore, the Appellants alluded to the "futility exception" to the rule of exhaustion of administrative remedies, see, e.g., In re Doe Children, 105 Hawai`i 38, 60, 93 P.3d 1145, 1167 (2004): "It is futile to have . . . [the Board] decide th[e] issue of attorney's fees because such a motion was filed . . . over one year ago without [the Board] taking action on said motion. . . ."
On May 21, 2002, the Appellees, in two separate motions, moved to dismiss Civ. No. 02-1-0832 on the grounds that primary jurisdiction over the question of fees rested with the Board and that only this court has jurisdiction to issue a writ of mandamus against a public officer. (Quoting Hawai`i Revised Statutes (HRS) § 88-23 (1993)5 (); Hawai`i Administrative Rules (HAR) § 6-20-16(b) (1993) ( ); Hawai`i Rules of Appellate Procedure (HRAP) Rule 21(b) ( ); Chun v. ERS, 73 Haw. 9, 12-14, 828 P.2d 260, 262-63 (1992) ("Chun I").) In its own motion, the Board further proposed that "any powers the Board . . . may have to award attorney's fees would be discretionary, not ministerial, and thus not subject to mandamus."
Without a hearing, the circuit court granted the Appellees' motions on June 27, 2002 and, by means of its October 3, 2003 judgment, dismissed Civ. No. 02-1-0832 without prejudice.
On September 9, 2002 and June 9, 2003, the Board met in executive session "to consult and discuss with legal counsel regarding . . . [the present matter]."
According to the Board's minutes, on July 14, 2003, it "proceeded with . . . [Hawai`i Administrative Procedure Act] proceedings" on the Appellants August 18, 1998 petition. On July 17, 2003, the Board filed its "final order," finding and concluding in relevant part:
FINDINGS OF FACT [(FOFs)]
. . . .
6. On or about February 8, 1999, the Board (1) authorized the ERS to utilize a new [AFC] methodology for all employees whose work year is less than a 12-month work year but whose salaries are prorated over a 12-month period so that deducted pay for the non-working months is factored into the AFC calculation, and (2) authorized retroactive adjustments to retirees in said group. . . . The Board's decision was based on . . . Chun [II], which upheld the . . . [c]ircuit [c]ourt's ruling that lump sum summer salary payments of retired principals, vice-principals, and school teachers should be included in their AFC calculations. [The Appellants]' instant [petition] was not the catalyst for the Board's decision.
. . . .
CONCLUSIONS OF LAW [(COLs)]
1. The Board does not have legal authority to certify a class, as requested by [the Appellants], as there is no legal authority that expressly allows (1) such certification, or (2) for class action administrative hearings to take place. . . .
2. The Board does not have legal authority to award attorney's fees and costs, including interest, . . . as no such authority exists in the HRS or [HAR]. Generally, administrative agencies have only the powers expressly granted to them by the legislature, as well as implied or incidental powers that are reasonably necessary to carry out their express powers. Courts disagree as to how much latitude administrative agencies have with respect to implied powers, but any reasonable doubts . . . should be resolved against the exercise of such authority. . . .
. . . .
4. . . . [T]he Board does not have legal authority to entertain [the Appellants' February 16, 2001 m]otion. . . .
5. Due to the Board's . . . February 8, 1999 decision to utilize a new AFC methodology . . ., [the Appellants]' request . . . for the ERS to make proper and back benefits payments to the aforesaid group of retirees is moot.
(Quoting Medley Investors, Ltd. v. Lewis, 465 So.2d 1305, 1306 (Fla.App.1985); Lyons v. Illinois Dep't of Rev., 116 Ill.App.3d 1072, 72 Ill.Dec. 577, 452 N.E.2d 830, 834 (1983); Pyro Mining Co. v. Kentucky...
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