Robert's Hawaii School Bus v. Laupahoehoe

Decision Date15 July 1999
Docket NumberNo. 19044.,19044.
Citation982 P.2d 853,91 Haw. 224
CourtHawaii Supreme Court
PartiesROBERT'S HAWAII SCHOOL BUS, INC.; and Student Transportation, Inc., Plaintiffs-Appellants, v. LAUPAHOEHOE TRANSPORTATION COMPANY, INC.; Central Transportation Company, Inc.; Double K Transportation Services, Inc.; T & N Transportation Services, Inc.; and Nobu Shinohara, as Personal Representative of the Estate of Chiaki Matsuo, Defendants-Appellees, and John Does 1-25 and Doe Business Entities 26-50, Defendants

Paul Alston, David A. Nakashima, and Jade Lynne Holck, of Alston, Hunt, Floyd & Ing for Plaintiffs-Appellants Robert's Hawaii School Bus, Inc., and Student Transportation, Inc., on the briefs, Honolulu.

George W. Playdon, Jerrold K. Guben, and Ronald T. Ogomori, Honolulu, for Defendants-Appellees Laupahoehoe Transportation Company Inc., Central Transportation Company, Inc., Double K Transportation Services, Inc., and Nobu Shinohara, as Personal Representative of the Estate of Chiaki Matsuo

John Francis Perkins and Wayne S. Sakamoto for Defendant-Appellee T & N Transportation Services, Inc.


Opinion of the Court by RAMIL, J.

The instant appeal arises from the procurement of public school buses for 1991 to 1998 by the School Bus Transportation Branch of the State of Hawai`i Department of Accounting and General Services (DAGS). Plaintiffs-appellants Robert's Hawaii School Bus, Inc. (RHSB) and Student Transportation, Inc. (STI)1 filed a complaint, on April 8, 1993, against defendants-appellees Laupahoehoe Transportation Company, Inc. (Laupahoehoe), Central Transportation Company, Inc. (Central), Double K Transportation Services, Inc. (Double K), T & N Transportation Services, Inc. (T & N), and Chiaki Matsuo2 (collectively, appellees or defendants).

The complaint alleged, inter alia, that appellees, acting in concert, created, operated, and/or controlled shell corporations to circumvent DAGS's bidding rules and specifications in order to: (1) gain unfair competitive advantage for Laupahoehoe and Central over other bidders; (2) attempt to monopolize the school bus industry; and (3) defraud the State and all prospective bidders. The complaint contained claims of: (1) unfair competition and attempted monopolization in violation of Hawai`i Revised Statutes (HRS) §§ 480-2(a) and 480-9 (1985 & Supp.1992) brought pursuant to HRS § 480-13(a) (Supp. 1992) (Count I); (2) violations of the Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq., as to Laupahoehoe, Central, Matsuo, and Doe Defendants (Count II); (3) civil conspiracy by Laupahoehoe, Central, Double K, and Matsuo with respect to the Oahu Contract (Count III); (4) tortious interference with prospective business advantage by Laupahoehoe, Central, Double K, and Matsuo as to the Oahu Contract (Count IV); (5) civil conspiracy by Laupahoehoe, Central, T & N, and Matsuo with respect to the Big Island Contract (Count V); (6) tortious interference with prospective business advantage by Laupahoehoe, Central, T & N, and Matsuo with respect to the Big Island Contract (Count VI); and (7) punitive damages on all counts (Count VII).

After defendants moved to dismiss counts II, III, and V, the circuit court, on February 16, 1994, dismissed Count II with prejudice and declined to do so as to Counts III and V, insofar as they asserted a civil conspiracy to commit actionable wrongs. Bench trial commenced February 1, 1995 and concluded March 1, 1995. The trial court entered findings of fact (FOFs) and conclusions of law (COLs) on April 26, 1995. In short, the trial court held that there was insufficient evidence to: (1) find or conclude (a) that Double K and T & N were shell corporations or (b) that appellees engaged in unfair competition (with the exception of Matsuo and Laupahoehoe on the Big Island); (2) show a dangerous probability that defendants would successfully monopolize the geographic area of the State of Hawaii or any of its individual islands/counties; (3) establish that any two or more defendants conspired; (4) show that STI sustained injury or damages; and/or (5) show that STI's relationship with DAGS carried with it a future probability of success.

On appeal, appellants contend3 that the trial court ignored substantial evidence in the record that: (1) Double K was operated as a shell corporation of Matsuo and Central, causing injury to RHSB; (2) T & N was operated as a shell corporation of Matsuo and Laupahoehoe, causing injury to STI; (3) defendants' conduct violated HRS §§ 480-2 and 480-9, causing antitrust injury and damage to RHSB and STI; (4) Central violated DAGS's rules by leasing buses to Ground Transport, Inc. (GTI), thereby causing injury to RHSB; (5) defendants' conduct was designed to disrupt the relationship between RHSB/STI and DAGS and tortiously interfered with appellants' prospective business advantage; and (6) two or more defendants-appellees conspired to engage in unfair competition and commit tortious interference.4

For the reasons discussed below, we affirm in part and vacate in part the circuit court's (1) FOFs and COLs, filed April 26, 1995, and (2) judgment entered May 18, 1995. We remand this matter to the circuit court for further findings and conclusions to be entered consistent with this opinion.

A. The School Bus Bid Controversy
1. The Oahu Contract

On December 5, 1990, DAGS issued a request for sealed bids to procure student transportation for eighty-two designated Maui and Oahu school bus routes for the period of September 3, 1991 to June 1997 (hereinafter the "Oahu Contract"). The Oahu Contract was the first bid solicitation to include section 3.2.1 of the General Conditions and Special Provisions,5 which required successful bidders to "implement and manage" the contract, to refrain from assigning, subcontracting, or selling the contract or its operation for four years, and to maintain its own baseyard "separate and apart from that of another school bus contractor doing business with the State." Section 3.2.1 also restricted the successful bidder from using buses that had been purchased, leased, or supplied by another bidder who had bid on the same routes or groups of routes, unless the losing bidder had lost more than fifty percent of its total routes maintained during the previous school year as the result of the bid proposal. A failure to provide the location of the baseyard and the buses to be used mandated rejection of the bid. Moreover, competing subsidiaries or jointly-owned companies were prohibited from submitting bids for the same routes. If competing subsidiaries or jointly-owned companies submitted bids, section 2.5 of the Purchasing and Supply Division's General Conditions, dated April 1, 1982, required submission of certificates of non-collusion.

Incorporated into DAGS's bid solicitations since the 1970s, Specification M, entitled "Prevention Against Monopolization of School Bus Routes," also provided:

Inasmuch as the State is the sole customer of school bus services in Hawaii and therefore, school bus service seems to be a unique line of commerce, the State will deem it to be in its best interest to reject all or part of any bid if the effect of awarding part of or the entire bid may substantially lessen competition or tend to create a monopoly in the school bus industry in any one county within the State of Hawaii. Therefore, the State will consider the award of or control of more than 50% of the total routes to transport regular students to and from school in a particular county to have the effect of substantially lessening competition or tending to create a monopoly in that area of the State. The State will, therefore, reject that part of a bid which will allow a bidder to exceed the 50% figure specified herein and award that part of the bid to the next lowest bidder.
However, the State retains the right to award more than 50% of the routes in any one county to a single bidder in those situations where: (1)[the] bidder is the sole bidder on a route or group of routes; (2) in the event that the difference between the lowest bid price and the second lowest bid price is more than ten percent (10%) above the bid price submitted by the lowest price bidder; or (3) the number of routes within the group which is required to exceed the 50% figure constitutes at least 75% of the group.

Finally, section 2.12(a) of the General Conditions provided that "[a] bidder shall be disqualified and his bid automatically rejected for . . . [p]roof of collusion among bidders, in which case, all bids involved in the collusive action will be rejected and any participant [in] such collusion will be barred from future bidding until reinstated as a qualified bidder."

At trial, George Okano, a contract specialist in DAGS's student transportation branch during the relevant time period, testified that DAGS included the foregoing provisions to guarantee fairness, to prevent collusive bidding practices that DAGS suspected had occurred in the past, to address price fixing, and to insure that bidders were truly independent. Specifically, Okano testified that DAGS suspected prior collusive bidding practices between Laupahoehoe and T & N. Okano explained that Specification M was enacted to maximize competition within the industry and to address potential monopolies, but that, to his knowledge, DAGS had never enforced Specification M. According to Okano, certain defects could be waived, and Specification M was discretionary. However, defects were only waived so long as they did not violate the law, and collusion in violation of section 2.12 could not be waived.

a. The Participants on Oahu

During the relevant times herein, Central was the largest school bus company on Oahu, controlling 207 out of 263 routes, approximately 78.7% of the Oahu market. Central and Laupahoehoe were wholly owned subsidiaries of C.M. Holding...

To continue reading

Request your trial
191 cases
  • Blair v. Ing, No. 22401.
    • United States
    • Hawaii Supreme Court
    • 27 Febrero 2001
    ...a cause of action against Ing and Thayer. See HRAP Rule 28(b)(4) (1999); see also Robert's Hawaii School Bus, Inc. v. Laupahoehoe Transp. Co., Inc., 91 Hawai`i 224, 231 n.4, 982 P.2d 853, 860 n.4 (1999) (noting that, because the appellants violated Hawaii Rules of Appellate Procedure by fai......
  • Baron Financial Corp. v. Natanzon, No. SKG-03-3563.
    • United States
    • U.S. District Court — District of Maryland
    • 11 Julio 2006
    ..."there was a reasonable probability that the plaintiff would have made a profit"); Robert's Hawaii School Bus, Inc. v. Laupahoehoe Transp. Co., Inc., 91 Hawai`i 224, 258, 982 P.2d 853, 887 (Haw.1999)(existence of valid business relationship or prospective advantage or expectancy must be suf......
  • Beckmann v. Ito, Civ. No. 18-00503 ACK-RT
    • United States
    • U.S. District Court — District of Hawaii
    • 3 Enero 2020
    ...or to accomplish some purpose not in itself criminal or unlawful by criminal or unlawful means." Robert's Haw. Sch. Bus, Inc. v. Laupahoehoe Transp. Co., 982 P.2d 853, 881 n.28 (Haw. 1999) (quotations and citations omitted), superseded by statute on other grounds as stated in Haw. Med. Ass'......
  • TSA Intern. Ltd. v. Shimizu Corp.
    • United States
    • Hawaii Supreme Court
    • 8 Noviembre 1999
    ...HRS § 480-13 (1993) for unfair methods of competition in violation of HRS § 480-2. Robert's Hawai`i School Bus, Inc. v. Laupahoehoe Transp. Co., Inc., 91 Hawai`i 224, 252, 982 P.2d 853, 881 (1999). Finally, with regard to TSA's claims for partial reformation and rescission, which are remedi......
  • Request a trial to view additional results
1 books & journal articles
  • Hawaii. Practice Text
    • United States
    • ABA Antitrust Library State Antitrust Practice and Statutes (FIFTH). Volume I
    • 9 Diciembre 2014
    ...of trade, conspiracy to monopolize, and attempted monopolization”) (citing Robert’s Haw. Sch. Bus, Inc., v. Laupahoehoe Transp. Co., 982 P.2d 853 (Haw. 1999), noting that the legislature followed the “federal paradigm” in fashioning Hawaii antitrust law). 5. 15 U.S.C. § 1. HAWAII Hawaii 14-......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT