Hawaii Bar Journal - July 2020 by Hawaii Bar Journal

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TABLE O F C ON TE NTS VO LUM E 24 , N U M B E R 7

EDITOR IN CHIEF Carol K. Muranaka BOARD OF EDITORS Christine Daleiden David Farmer Susan Gochros Ryan Hamaguchi Cynthia Johiro Edward Kemper Laurel Loo Melvin M.M. Masuda Melissa Miyashiro Eaton O'Neill Lennes Omuro Brett Tobin

ARTICLES 44

by Tred R. Eyerly

19 13 24

President-Elect Karin Holma Vice President Levi Hookano Secretary Russ Awakuni

Are Hawaii’s Businesses Facing a Wave of Future COVID-19-Related Workplace Safety Lawsuits? by Christopher J. Cole

OF NOTE

HSBA OFFICERS President P. Gregory Frey

Is The Presence of Coronavirus “Direct Physical Loss or Damage” Under A Property Policy?

HSBA Happenings

Court Briefs

Case Notes

30 20

Off the Record

Treasurer Paul Naso

31 22

Classifieds

YLD OFFICERS

President Addison Dale Bonner Vice President/President-Elect Christopher St. Sure Secretary Kyleigh Nakasone Treasurer Tiffany Kaeo

30 31

EXECUTIVE DIRECTOR Patricia Mau-Shimizu GRASS SHACK PRODUCTIONS Publisher Brett Pruitt Art Direction Debra Castro Production Beryl Bloom

Hawaii Bar Journal is published monthly with an additional issue in the fourth quarter of each year for the Hawaii State Bar Association by Grass Shack Productions, 1111 Nuuanu Ave., Suite 212, Honolulu, Hawaii 96817. Annual subscription rate is $50. Periodical postage paid at Honolulu, Hawaii and additional mailing offices. POSTMASTER: Send address changes to the Hawaii Bar Journal (ISSN 1063-1585), 1100 Alakea St., Ste. 1000, Honolulu, Hawaii 96813.

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On the cover: Properity by: Lilian Storino is an artist who came from Hong Kong. She studied under several master painters in China when she was young. She has learned the unique techniques of painting, handwriting, stamp-making and mounting of oriental paintings. In 2002, she moved to Hilo, Hawaii. Lilian’s work was published in the International Dictionary of Artists in 2011 and her work was shown in the New York Art Expo in 2015.She has sold more than 2000 pieces of her original paintings. To see more of her work visit: www.lilianstorino.com

Notices and articles should be sent to Edward C. Kemper at edracers@aol.com, Cynthia M. Johiro at cynthia.m.johiro@hawaii.gov, or Carol K. Muranaka at carol.k.muranaka@gmail.com. All submitted articles should be of significance to and of interest or concern to members of the Hawaii legal community. The Hawaii Bar Journal reserves the right to edit or not publish submitted material. Statements or expressions of opinion appearing herein are those of the authors and not necessarily the views of the publisher, editorial staff, or officials of the Hawaii State Bar Association. Publication of advertising herein does not imply endorsement of any product, service, or opinion advertised. The HSBA and the publisher disclaim any liability arising from reliance upon information contained herein. This publication is designed to provide general information only, with regard to the subject matter covered. It is not a substitute for legal, accounting, or other professional services or advice. This publication is intended for educational and informational purposes only. Nothing contained in this publication is to be considered as the rendering of legal advice.

Is The Presence of

Coronavirus

“Direct Physical Loss or Damage” Under A Property Policy?

By Tred R. Eyerly To secure coverage for property damage, most property policies require a showing of “direct physical loss or damage” to covered property. Typical policy language reads: Coverage We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss. With the closure of businesses throughout Hawaii and across the nation due to the onset of the coronavirus, policyholders have submitted claims to insurers for their business losses under business interruption or civil authority provisions of commercial property policies. Here, also, the policyholder must also demonstrate “direct physical loss or damage” to trigger coverage. For example, business interruption coverage typically reads as follows: We will pay for the actual Business Income you sustain due to the necessary “suspension” of your “operations” during the “period of restoration.” The “suspension” must be caused by direct physical loss of or damage to property at the described premises. Whether the presence of coronavirus creates “direct physical loss or damage” is currently a hotly contested issue. Early indications are that coronavirus remains on objects and surfaces. The duration can be from a few hours to three weeks, depending on the type of surface material. If a customer or employee is infected and the store or restaurant must close because the virus may rest on surfaces within the building, is there direct physical loss or damage, even though the building structure itself is unharmed? 4 July 2020

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While Hawaii case law offers no definitive answers, cases from other jurisdictions offer contrasting opinions.1 Cases Finding Direct Physical Loss or Damage When No Harm to Structure Many cases have determined there is “direct physical loss or damage” where a building, although structurally unchanged, is unusable or uninhabitable. For example, in a case from Louisiana, the presence of excessive levels of organic lead forced the homeowner out of her home. Widder v. La. Citizens Prop. Ins. Corp., 82 So. 3d 294 (La. Ct. App. 2011). The insurer denied coverage because there was no direct physical loss. Id., 82 So. 2d at 295.The trial court agreed; since the home was still intact, no direct physical loss had occurred, and no coverage was available under the policy. Id. The appellate court reversed. The home was contaminated with inorganic lead that made it unusable and uninhabitable. Id. at 296. The intrusion of lead was a direct physical loss even if the building itself was not harmed. See id. In another case, smoke from a nearby wildfire filled an outdoor theater, forcing cancellation of performances and loss of business income. Oregon Shakespeare Festival Ass’n v. Great Am. Inc. Co., No. 1:15-cv-01932-CL, 2016 U.S. Dist. LEXIS 74450 (D. Ore. June 7, 2016). Wildfires in the area caused smoke, soot, and ash to accumulate on the surface of seats and concrete ground of the open-air theater. The air quality was poor, but no federal, state or local agency ordered cancellation of the performances. Further, the theater did not

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suffer any permanent or structural damage to its property. Id., 2016 U.S. Dist. LEXIS 74450, at *7. The insurer denied coverage, contending the loss or damage must be structural to the building itself. After all, the smoke in the air at the theater did not require any repairs to the structure of the property. The court disagreed. The theater sustained “physical loss or damage to property” when the wildfire smoke infiltrated the theater and rendered it unusable for its intended purpose. Id., 2016 U.S. Dist. LEXIS 74450, at *26. The decision was eventually vacated by a joint stipulation of the parties, Oregon Shakespeare Festival Ass’n v. Great Am. Ins. Co., 2017 U.S. Dist. LEXIS 33208 (D. Ore. March 6, 2017), but the reasoning is still sound. A pervasive odor in a home caused by a subtenant’s illegal methamphetamine operation was considered a “direct physical loss.” The court concluded odor was “physical” because it damaged the house. Farmers Ins. Co. of Oregon v. Trutanich, 858 P.2d 1332 (Ore. Ct. App. 1993). An accidental release of ammonia into a packaging facility caused the facility to shut down for one week while the ammonia dissipated. Gregory Packaging, Inc. v. Travelers Prop. Cas. Co. of Am., Civ. No. 2:12-cv-04418 (WHW) (CLW), 2014 U.S. Dist. LEXIS 165232 (D. N.J., Nov. 25, 2014). The court noted that while structural alteration provided the most obvious sign of physical damage, property could sustain physical loss or damage without experiencing structural alteration. Id., 2014 U.S. Dist. LEXIS 165232, at *13. The release of ammonia into the building, rendering the building unfit for occupancy, constituted “physical loss or damage.” Id., 2014 U.S. Dist. LEXIS 165232, at *17. Where gasoline vapors penetrated the foundation of the insured church and accumulated, rendering the building uninhabitable, the property was held to have suffered a “direct, physical loss.” Western Fire Ins. Co. v. First Presbyterian Church, 437 P. 2d 52 (Colo. 1968). Carbon monoxide levels in an

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apartment building sufficient to render the building uninhabitable was a “direct, physical loss.” Matzner v. Seaco Ins. Co., No. 0498-B,1998 Mass. Super. LEXIS 407 (Mass. Super. 1998). Contamination due to microscopic asbestos fibers was found to cause the physical loss or damage required to trigger coverage under a property policy. United State Fidelity & Guar. Co. v. Wilkin Insulation Co., 144 Ill. 2d 64 (1991). When e-coli bacteria was found in the homeowners’ well, they had to move out of their home. Motorists Mut. Ins. Co. v. Hardinger, 131 Fed. Appx. 823, 2005 U.S. App. LEXIS 9030 (3d Cir.2005). The insurer denied the insureds’ property damage claim because the loss was excluded. The district court granted summary judgment to the insurer because the homeowners failed to establish a physical loss under the policy. Id., 131 Fed. Appx. at 825. The court believed the Pennsylvania Supreme Court would follow Port Authority of New York & New Jersey v. Affiliated FM Ins. Co., 311 F.3d 226 (3d Cir. 2002), involving a similar fact pattern. In addressing the presence of asbestos, Port Authority set forth the “proper standard for ‘physical loss or damage’ to a structure”: only if an actual release of asbestos fibers from asbestos containing materials has resulted contamination of the property such that its function is nearly eliminated or destroyed, or the structure is made useless or uninhabitable, or if there exists an imminent threat of the release of a quantity of asbestos fibers that would cause such loss of utility. Motorists Mut., 131 Fed. Appx. at 826 (quoting Port Authority, 311 F.3d at 236) (emphasis in original). The Third Circuit found Port Authority instructive in a case where sources unnoticeable to the naked eye had allegedly reduced the use of the property to a substantial degree. Motorists Mut., 131 F.3d. Appx. at 826. Therefore, the district court’s grant of summary judgment to the insurer was vacated because there was

a genuine issue of fact whether the functionality of the insured’s home was nearly eliminated or destroyed, or whether their property was made useless or uninhabitable. Id. at 826-27. Accordingly, many cases would seemingly find the presence of coronavirus in a building constitutes “direct physical loss or damage” under a property policy. Of course, even if direct physical loss or damage were established, exclusions would also have to be considered. Cases Finding No “Direct Physical Loss or Damage” Insurance companies have universally taken the position that traditional property insurance policies were never intended to provide coverage for a global pandemic due, in part, to the absence of “direct physical loss or damage” even if the virus is present within the property. This position is supported by many cases that hold the phrase “direct physical loss or damage” requires the actual harm to property, affecting the structural integrity of a building or its function. In Mama Jo’s, Inc. v. Sparta Ins. Co., No. 17-cv-23362-KMM, 2018 U.S. Dist. LEXIS 201852 (D. S. Fla. June 11, 2018), there was no direct physical loss or damage after a restaurant performed extensive cleaning to remove dust, debris, and “possibly noxious and toxic chemicals” from the floors, wall, tables, chairs and countertops due to a nearby construction project. Mere cleaning within the restaurant was not direct physical loss. Id., 2018 U.S. Dist. LEXIS 201852, at *24. “A direct physical loss ‘contemplates an actual change in insured property then in a satisfactory state, occasioned by accident or other fortuitous event directly upon the property causing it to become unsatisfactory for future use or requiring that repairs be made to make it so.’” Id. (quoting MRI Healthcare Ctr. of Glendale, Inc. v. State Farm Gen. Ins. Co., 187 Cal. App. 4th 766, 779 (2010)). The restaurant in Mama Jo’s, Inc. was not uninhabitable or unusable, but remained open every day. There was no evidence that dust had an impact on the business operation other than requiring daily cleaning. Mama Jo’s,

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Inc., 2018 U.S. Dist. LEXIS 201852, at *25. A narrow interpretation of “direct physical loss or damage” was made by the court in Columbiaknit, Inc. v. Affiliated FM Insurance Co., No. 98-434-HU, 1999 U.S. Dist. LEXIS 11873 (D. Or. 1999). Rainwater entered the plaintiff insured’s warehouse, saturating some of the garments and fabric stored therein. During the clean-up process, dry goods were stored with wet goods. Some months later, the boxes of dry repackaged goods were found to have mold. The court denied the insurer’s motion for summary judgment where plaintiff could establish the presence of a pervasive, persistent or noxious odor, or mold or mildew on fabric and garments. Columbiaknit, Inc., 1999 U.S. Dist. LEXIS 11873, at *21. Significantly, however, the court noted, “The recognition that physical damage or alteration of property may occur at the microscopic level does not obviate the requirement that physical damage need be distinct and demonstrable. . . The mere adherence of molecules to porous surfaces, without more, does not equate physical loss or damage.” Id., 1999 U.S. Dist. LEXIS 11873, at *18. In Universal Image Productions, Inc. v. Chubb Corp., 703 F. Supp. 2d 705 (E.D. Mich. 2010), the court found mold contamination did not constitute “direct physical loss.” An employee was infected with bacterial pneumonia after a heavy rainfall created mold. Employees were advised to wear respirators because there were high levels of bacteria on the premises. Nevertheless, there was no coverage because the insured failed to show “that it suffered any structural or any other tangible damage to the insured property.” Id. at 710. Property damage near the insured’s theater forcing a closure of the theater did not constitute direct physical loss or damage to the insured’s building. Roundabout Theatre Co. v. Cont’l Cas. Co., 751 N.Y.S. 2d 4 (N.Y. App. Div. 2002). An exterior elevator being used to construct a 48-story building collapsed onto the street and adjacent buildings. The theater sustained only minor damage to its roof and air

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conditioning system. Nevertheless, because of substantial damage to the area and danger of the partially collapsed scaffold, the City closed the street for nearly month. The theater was inaccessible to the public and 36 performances were cancelled. Id. at 3. The insurer denied coverage for the loss because there was no direct, physical loss to the theater. The appellate court agreed. Business interruption coverage was limited to losses involving physical damage to the insured’s property. Id. at 8. Therefore, carriers appear to have support from cases across the country that the mere presence of coronavirus without actual damage to the property does not meet the policyholder’s burden of demonstrating “direct physical loss or damage.”

damaged is in the immediate area of the Insured Properties.” Id., Complaint at ¶23. Setting up a claim for Civil Authority coverage, the complaint states, “[a]s a direct and proximate result of this Order, access to the Insured Properties has been specifically prohibited.” Id., Complaint at ¶ 24. The third case to be filed seeking coverage for losses caused by closures due to the coronavirus was Choctaw Nation of Oklahoma v. Lexington Ins. Co., No. CV-20-42, Okla. Dist. Ct. (Petition for Declaratory Judgment filed March 24, 2020). The complaint does not allege loss or damage due to mandated closures. Notable for its brevity, the four-page complaint asserts that a nationwide pandemic has “caused direct physical loss or damage” to plaintiff ’s property:

The First Lawsuits for Loss Caused Due to Coronavirus Vary in Addressing “Direct Physical Loss or Damage” The initial lawsuits filed in March and April 2020, to establish coverage for business interruption due to closures mandated by local governments alleged direct physical loss or damage in a variety of ways. The same law firm representing restaurants in New Orleans and Napa County, California filed the first lawsuits seeking coverage for business loss due to coronavirus. Cajun Conti LLC, et al, v. Certain Underwriters at Lloyd’s, London, et al, No. 20-02558, Civil District Court for the Parish of Orleans, State of Louisiana (Complaint filed March 16, 2020); French Laundry Partners, LP, et al v. Hartford Fire Ins. Co., Calif. Super. Ct., Napa County (Complaint filed March 25, 2020). Both complaints make clear they are seeking only a declaratory judgment, and not “any determination of whether the Coronavirus is physically in the insured premises, amount of damages, or any other remedy besides the declaratory relief.” E.g., Cajun Conti, Complaint at ¶ 37. The Cajun Conti complaint, however, further alleges, “it is clear that contamination of the insured premises by the Coronavirus would be a direct physical loss needing remediation to clean the surfaces of the establishment.” Id., Complaint at ¶ 23. The French Laundry case utilizes the County’s Order closing of non-essential businesses. The complaint alleges, “The Order specifically states that is being issued based on evidence of physical damage to property. The property that is

On or about March of 2020, the United States of American became infected by COVID-19 resulting in a pandemic. As a result of this pandemic and infection, the Nation’s Property sustained direct physical loss or damage and will continue to sustain direct physical loss or damage covered by the policies, including but not limited to business interruption, extra expense, and interruption by civil authority, limitation on ingress and egress and expenses to reduce loss. As a direct result of this pandemic and infection, the Nation’s Property has been damaged, as described above, and cannot be used for its intended purpose. Id., Complaint at ¶ 16. Therefore, these first cases did not attempt to allege actual damage to a structure or building to demonstrate “direct physical loss or damage” due to the presence of coronavirus. More assertive class actions followed on behalf of restaurants who had been denied coverage for losses caused by coronavirus. Each case alleged the existence of government closure orders based on the coronavirus had caused business income losses. For example, in Truhaven Enterprises, Inc. v. Chubb Ltd., No. 2:20-cv-04586 (D. N.J.) (Complaint filed April 20, 2020), plaintiff requested a declaratory judgment that the closure orders caused physical property loss and damage in the insured property. The closure orders caused “loss of use of the property that has not been physically altered” which constitutes physical loss or damage for purposes of a first-party property policy. Id., Complaint at ¶ 44. Likewise, closure orders issued in Florida were alleged

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to cause direct physical loss. See Café Int’l Holding Co., LLC v. Chubb Limited, No. 1:20-cv-21641 (S.D. Fla.) (Complaint filed April 20, 2020). There, the complaint alleged, The presence of COVID-19 caused direct physical loss of and/or damage to the covered premises under the Policy by, among other things, damaging the property, denying access to the property, preventing customers from physically occupying the property, causing the property to be physically uninhabitable by customers, causing its function to be nearly eliminated or destroyed, and/or causing a suspension of business operations on the premises. Id., Complaint at ¶ 43. See also GIO Pizzeria & Bar Hospitality, LLC v. Certain Underwriters at Lloyd’s, London, No. 1:20-cv-03107 (S.D.N.Y) (Complaint filed April 17, 2020) at ¶ 36 (“The presence of COVID-19 caused direct physical loss of or damage to the covered property under the Plaintiffs’ policies . . . by denying use of and damaging the covered property, and by causing a necessary suspension of operations during a period of restoration”). Decisions in these and other pending coronavirus-related cases will likely not be issued for months, but they will eventually provide guidance on whether shutdown orders based upon coronavirus establish “direct physical loss or damage.” Decision from the Pennsylvania Supreme Court May Offer Guidance In an early decision involving shutdown orders related to coronavirus, the Pennsylvania Supreme Court rejected a challenge from petitioner business owners to the governor’s actions. Friends of Devito v. Wolf, No. 68 MM 2020, 2020 Pa. LEXIS 1987 (Pa. April 13, 2020). The case does not involve coverage issues, but the court’s acknowledgment and description of the dangers of coronavirus may have an impact on future coverage litigation. In challenging the order, petitioners contended the COVID-19 pandemic was not a natural disaster as defined by the state’s Emergency Code. The court disagreed and found the pandemic qualified as a “natural disaster” under the Emergency Code for two reasons. Wolf, 2020 Pa. LEXIS 1987, at *31. First, and of significance for future coverage litigation over coronavirus claims, the common theme among disasters described in the Code was that all involved substantial damage to property, hardship, suffering, and possible loss of life. Thus, COVID-19 was a type of “natural disaster” referred to in the Code. Id. Petitioners alternatively argued that even if the pandemic was a natural disaster, the Governor only had authority to act in the “disaster area,” and there were no disasters in the areas in which their businesses were located. In an-

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other important statement for future coverage issues, the court found this argument ignored the nature of the virus and the manner in which it was transmitted. The virus spread primarily through person-to-person contact, had an incubation period of up to fourteen days, one in four carriers of the virus was asymptomatic, and the virus could live on surfaces for up to four days. Thus, any location (including Petitioners’ businesses) where two or more people could congregate was within the disaster area. 2020 Pa. LEXIS 1987, at *34. The Petitioners’ second argument, that there is no significant risk of the spread of COVID-19 in locations where the disease had not been detected (including at their places of business), was also unpersuasive. The court again stated that COVID-19 does not spread because the virus is “at” a particular location. Instead, it spreads because of person-toperson contact, as it has an incubation period of up to fourteen days and that one in four carriers of the virus was asymptomatic. Id., 2020 Pa. LEXIS 1987, at *39. Accordingly, the court found that the Governor had statutory authority to issue the Executive Order. The request to vacate or strike the Executive Order was denied. Id. 2020 Pa. LEXIS 1987, at *69. Conclusion Undoubtedly, Hawaii courts will face suits filed against carriers for denial of property damage and business interruption claims caused by the presence of coronavirus. With no appellate guidance on the meaning of “direct physical loss or damage” to property, the circuit courts will be left to decide this issue of first impression. The Hawaii Supreme Court has provided extensive rules for the construction of insurance policies. Among the various rules, “courts are to construe insurance policies in accord with the reasonable expectations of a layperson.” Hart v. Ticor Title Ins. Co., 126 Haw. 448, 456 (2012). If the numerous lawsuits recently filed across the country in response to the pandemic are any indication, insured businesses are united in their understanding that closures due to shut down orders fulfills the “direct physical loss or damage” requirement. Moreover, at least seven state legislatures have proposed legislation that would mandate insurers to provide business interruption coverage in response to the pandemic. As noted above, there are contrasting opinions from various jurisdictions on whether “direct physical loss or damage” requires structural harm to a building in order to trigger coverage. If there has been no decision on the meaning of a policy provision by a particular jurisdiction, courts typically, consider interpretations from other jurisdictions. Some courts have held that where there are contradictory interpretations across the country, a legal ambiguity exists which must be construed against the insurer. See, e.g., Am. Best Food, Inc. v. Alea London, Ltd., 168 Wn.2d 398 (Wash. 2010); Textron, Inc. v. Aetna Cas. & Sur. Co., 754 A.2d 742 (RI 2000); St. Paul Fire & Marine Ins. Co.,

Inc. v. McCormick & Baxtor Creosoting Co., 923 P. 2d 1200 (Ore.1996); Darner Motor Sales v. Universal Underwriters, Inc. Co., 140 Ariz. 393 (Ariz. 1984). The Hawaii Supreme Court adopted the legal ambiguity rule in Sentinel Ins. Co., Ltd. v. First Ins. Co. of Hawaii, Ltd., 76 Haw. 277, 875 P.2d 84, 904-07 (Haw. 1994). The court stated a liability insurer owes a duty to defend upon the mere potential for coverage and found a defense duty where coverage depended upon a legal uncertainty in Hawaii law. Id., 875 P.2d at 904-07; see also Pacific Employers Ins. Co. v. SERVCO Pacific Inc., 273 F. Supp. 2d 1149 (D. Haw. 2003) (predicting Hawaii courts would adopt the majority rule where issue is not yet decided in Hawaii). Therefore, when a duty to defend issue under a liability is undecided in Hawaii and there are competing opinions across the country, the issue should be decided in favor of the insured. Accordingly, Sentinel suggests Hawaii courts may adopt the legal ambiguity rule when presented with the undecided issue of whether a property policy is triggered by the presence of coronavirus, even if a

building has suffered no structural harm. __________________ 1

Hawaii appellate courts have not had occasion to address the meaning of “direct physical loss of damage” in a property policy. In a decision by Judge Kay, however, the Federal District Court for the District of Hawaii noted that to demonstrate coverage under a property policy, the policyholder must first establish the property suffered “direct physical loss or damage.” Ass’n of Apt. Owners of Imperial Plaza v. Fireman’s Fund Ins. Co., 939 F. Supp. 2d 1059, 1068 (D. Haw. 2013). The issue in Imperial Plaza was whether the policy covered the cost of remediating the building in which arsenic was found. Judge Kay noted that the term “direct physical loss or damage” was not defined in the policy. A common definition of “damages” was “Loss or injury to a person or property”. Id. (quoting BLACK’S LAW DICTIONARY 445 (9th ed. 2009)). “Direct loss” was defined as “a loss that results immediately and proximately from an event.” Imperial Plaza, 939 F. Supp. at 1069 (quoting BLACK’S LAW DICTION-

ARY 1030 (9th ed. 2009)). “Physical” meant

“of or relating to natural or material things.” Imperial Plaza, 939 F. Supp. at 1069 (quoting WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1706 (3rd ed. 2002}). Therefore, the insured had to demonstrate that an event had a direct impact and proximately caused a loss related to the physical matter of the property. Imperial Plaza, 939 F. Supp. at 1069. With these definitions in mind, the court found that the policyholder had established “direct physical loss or damage.” Id. A Director at Damon Key Leong Kupchak Hastert, Tred R. Eyerly is a founding member and past chair of the Hawaii State Bar Association’s Insurance Coverage Litigation section. He currently serves as a co-editor the ABA’s Insurance Coverage Litigation Committee’s social media site. His blog, insurancelawhawaii.com, has been continuously recognized nationally in its eleven years of existence. He frequently writes and speaks on insurance coverage issues. His passion is assisting clients work through coverage issues to reach a satisfactory result.

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ii’s a w a H Are ing c a F s e s Busines of Future a Wave

By Christopher J. Cole

9 1 D I COV afety S e c a l orkp W d e t ts? Rela i u s w a L

As Hawaii reopens its economy in the midst of a global pandemic, business leaders may find that workers who had been sheltering at home are now afraid to return to work. Employers may wonder if employees can sue them for contracting COVID-19 while on the job. Unfortunately, among the many legal perils employers must navigate in 2020 lurks the prospect of what some fear may be a torrent of COVID19 litigation, including allegations that an unsafe workplace forced workers to make the untenable choice between their safety and their jobs. Thus far, Hawaii has among the lowest infection and fatality rates in the country. However, the virus might rebound once Hawaii reopens to tourism in an effort to reboot our economy. In addition, COVID-19 has heightened public awareness about the risks of infectious diseases generally. This article discusses the potential civil liability in Hawaii outside of the workers’ compensation system arising out of an employee’s injury or death from an infectious disease allegedly contracted at work.

compensation exclusivity defense the “keystone” of the social compact underlying the WCL.4 Through this bargain, employees and their heirs receive a prompt and certain, but limited, remedy for work related injuries or deaths without having to prove fault. In exchange, they cannot pursue common-law remedies that are less certain but potentially more wide-ranging and costly for employers to defend.5 Without the protection of the workers’ compensation exclusivity defense, employers in Hawaii could otherwise be subject to liability under tort law for claims sounding in negligence, wrongful death, loss of consortium, or similar causes of action. Such lawsuits may be uninsured, inasmuch as they are brought outside of the WCL remedial scheme. Fortunately for employers, Hawaii’s appellate courts have repeatedly rejected creative arguments by claimants seeking to limit or evade the WCL’s exclusivity bar for pursuit of various intentional torts, emotional distress, “dual capacity” claims, and others.6

Civil Lawsuits and the Workers’ Compensation Exclusivity Bar The starting point for evaluating non-workers’ compensation liability exposure in this context is, ironically enough, Hawaii’s Workers’ Compensation Law (WCL).1 That is because the exclusivity of workers’ compensation remedies provides the first line of defense against any personal injury lawsuit for alleged workplace exposure to a communicable disease. Under the WCL, “rights and remedies herein granted to an employee or the employee’s dependents on account of a work injury suffered by the employee shall exclude all other liability of the employer to the employee, the employee’s legal representative, spouse, dependents, next of kin, or anyone else entitled to recover damages from the employer, at common law or otherwise . . ..”2 Hawaii patterned this provision after the “New York” model, which offers the broadest immunity among the three alternative formulations prevailing in the United States.3 The Hawaii Supreme Court has called the workers’

Applicability of the Exclusivity Defense to Infectious Diseases The workers’ compensation exclusivity defense applies when a lawsuit asserts a claim arising out of a “work injury suffered by the employee.”7 The WCL defines “work injury,” in turn, to include “personal injury . . . by disease proximately caused by or resulting from the nature of the employment.”8 That begs the question: Can a global pandemic coursing through the entire community truly give rise to a “work injury” covered by workers’ compensation? The case law has evolved on this point, but the short answer is, yes, it could. Many states have adopted a rule narrowing workers’ compensation coverage to only those “occupational” diseases to which an employee is especially vulnerable due to the nature of his or her job. On the other hand, this rule would exclude as “non-occupational” those diseases for which the particular workplace exposure is no worse than the baseline general risk faced by other workers or the public at large.9 As the California Supreme Court explained, the “narrower

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rule applicable to infectious diseases arises from the obvious problems of determining causation when the source of injury is of uncertain etiology, the product of invisible and often widespread viral, bacterial, or other pathological organisms.”10 By contrast, Hawaii has historically applied a more liberal “unitary” test in which a work injury, including a physical or mental disease, is deemed compensable so long as there is a reasonable connection to working conditions.11 In Lawhead v. United Air Lines,12 for example, the Hawaii Supreme Court applied this more liberal test to hold that a flight attendant who claimed to have contracted influenza while on a layover suffered a compensable work injury under the WCL. The Supreme Court in 2000 appeared to narrow this liberal unitary rule with regard to infectious diseases in the case of a dental hygienist who contracted Hepatitis C while working for one of three successive employers, in Flor v. Holguin.13 The Flor court held that a “work injury” occurs when the disease: (1) is caused by conditions peculiar to the particular trade or employment; (2) results from an actual

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exposure to such working conditions; and (3) is due to causes in excess of the ordinary hazards of employment.14 However, more than a decade later the court clarified in Van Ness v. State Dep’t of Educ.15 that the unitary test applies to all diseases that have a reasonable work connection, and that satisfying the 3-part Flor test is not always required to establish such a connection. Van Ness marked an important expansion of coverage for work-related illnesses under the WCL. In the underlying claim, Lynedon Van Ness, a teacher, filed for workers’ compensation benefits based on an aggravation of his preexisting asthma condition allegedly caused by his exposure to vog while working at a school in Kona. Following Flor, the Labor and Industrial Relations Appeals Board (LIRAB) and Intermediate Court of Appeals (ICA) ruled in favor of the Hawaii Department of Education on the basis that Van Ness failed to meet the second and third Flor elements. On appeal, the Hawaii Supreme Court reversed, holding that a claimant may meet the “by disease” prong of the WCL’s definition of a work injury via two alternative sub-prongs: “by disease proximately

caused by . . . the employment” or “by disease . . . resulting from the nature of the employment.”16 According to Van Ness, the Flor court focused on the second “nature of the employment” sub-prong under the particular facts of that case, but did not limit the otherwise broad coverage under the first “proximate cause” sub-prong.17 After Van Ness, the expansive unitary test applies to any disease claimed to have been “proximately caused by” the employment under the first sub-prong of Haw. Rev. Stat. § 386-3(a), even if caused by an exposure at work to a widespread pathological agent, such as a pervasive contaminant or virus that does not pose a distinct workplace hazard. Of course, Van Ness was strictly a workers’ compensation case in which the law broadly presumes coverage, not a civil personal injury case in which the employer raises the exclusivity of WCL remedies as a defense. Nevertheless, the Hawaii Supreme Court had long ago established that the WCL’s liberal construction as a remedial statute carries over and applies in favor of employers asserting its exclusivity as a defense in a civil lawsuit.18 In addition, a plaintiff claiming that an em-

ployer’s unsafe workplace actionably caused an employee’s death or injury by infectious disease would necessarily have to allege and prove that the unsafe workplace “proximately” caused the harm, which would ipso facto supply the requisite workplace nexus to trigger the defense. Even before Van Ness, the ICA affirmed the dismissal of a case seeking to hold the employer liable for a disease allegedly caused by work-related exposure to toxic chemicals.19 In summary, especially after Van Ness reaffirmed that the unitary test applies to all alleged work-related illnesses, the exclusivity defense would likely defeat any lawsuit claiming that a work related exposure to a communicable disease such as COVID-19 proximately caused an employee’s personal injury or death. Limits of the WCL Exclusivity Defense The scope of the workers’ compensation exclusivity defense, while exceptionally broad, is not limitless. First, the WCL does not bar remedies for categories of harm that the WCL is not designed to remedy. For instance, the exclusivity defense cannot

defeat bad faith claims against insurers.20 Similarly, claims sounding in defamation do not implicate “personal” injuries barred by the defense.21 Also, the exclusivity defense only applies if the claim arises from an alleged injury to an employee. Thus, an employee may pursue a civil lawsuit for injuries to her unborn fetus.22 Conversely, only “employers” can assert the defense, which may or may not apply to claims against an affiliated entity. There are also statutory exceptions for statutory discrimination claims, sexual harassment and sexual assault.23 In cases where an employee sues a third party for an injury, indemnity claims against an employer based on commonlaw joint tortfeasor principals are barred; however, third party claims for indemnity based on a contract or some other independent duty are not barred.24 Finally, independent contractors may choose whether to sue in court or file a claim under the WCL. So long as the claimant does not recover remedies under the WCL as a mislabeled, actual employee, any business classifying such person as a putative “independent contractor” is estopped from asserting the defense.25

Individual Managers and Executives In addition to protecting employers, the WCL provides a limited protection against personal injury lawsuits in favor of co-employees, including managers and executives who may be responsible for ensuring workplace safety.26 Under this qualified exclusivity defense, employees who claim they were sickened at work due to the actionable conduct of an individual manager or supervisor must prove by “clear and convincing evidence” that the defendant engaged in “willful and wanton misconduct.”27 The extent to which such individuals may be entitled to indemnification from the employer by contract or some other independent duty remains uncertain under existing Hawai`i law, but employers frequently defend or indemnify them voluntarily even in the absence of a legal obligation. Applicable corporate statutes and/or the employer’s organizing articles or bylaws may prescribe when an employer may, must or cannot indemnify a co-employee who is also an officer or director.28

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Possible Liability Protections under Federal Law As of the writing of this article, federal law does not affect the available state law remedies and immunities discussed in this article. However, anticipating a wave of COVID-19 litigation, Congress is considering possible legislation to provide “safe harbor” immunity for employers against such lawsuits. While impossible to predict as of this article’s writing, legal observers believe that, if passed, such federal liability protections will probably augment, but not preempt, state law workers’ compensation exclusivity defenses. Occupational Safety and Health Statutes (OSHA, HIOSH) Another source of potential civil liability resides in state and federal occupational safety and health laws enforced by the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) and Hawaii’s Department of Labor and Industrial Relations, Occupational Safety and Health Division (“HIOSH”). All employers in Hawaii are required under the “general duty clause” to maintain a workplace free of recognized safety hazards, including exposure to harmful contagions.29 Serious violations, especially those leading to death or multiple serious infections, could result in costly and disruptive investigations, citations, fines, shutdown orders, and other enforcement actions. OSHA has not yet issued formal COVID-19 safety standards, but has issued numerous informal guidance bulletins as of the writing of this article. For instance, OSHA advises all employers to prepare or update a formal “infectious disease preparedness and response plan.” Employers should carefully read and follow all applicable OSHA guidelines and standards, as well as the many various reopening guidance issued by the Center for Disease Control (CDC), state and local agencies, and any relevant guidance issued by their trade organizations.

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Of particular note, CDC guidelines have suggested disinfection measures that may prompt some employers to use harsher cleaning products than they normally would use, which could in turn trigger specific OSHA standards regarding hazardous chemicals that are unfamiliar to them. Such standards, where applicable, may necessitate special training, higher-level personal protective equipment (PPE), and safety data sheets as part of the employer’s safety plan. The critical importance of such measures was tragically illustrated by a November 2019 incident at a Massachusetts Buffalo Wild Wings restaurant in which workers mixed chlorine-based cleaners with acid-based cleaners, triggering the release of toxic gas that killed one employee and sickened several others.30 Conclusion How can employers protect against unsafe workplace litigation? Although the exclusivity of WCL remedies provides a strong defense, the overall best strategy is prevention: Keep the workplace safe. Workplace safety standards and best practices have evolved at a dizzying rate during the COVID-19 crisis. Employers must stay informed. Especially when they implement recommended safety measures, Hawaii businesses should feel reasonably insulated against lawsuits of the kind addressed in this article. Many employers already have safety plans in place with training, masks/PPE, regular disinfections, spacing, structural barriers, and other proactive steps in compliance with OSHA, CDC, state, local and industry guidelines. Employers should publish their plans in writing to all employees with clearly defined expectations about the shared duty of all to maintain a safe workplace. Businesses may also want to consult their insurance brokers on the availability of insurance coverage. Such steps will enable Hawaii’s business leaders to focus on rebuilding their operations in the “new normal” without undue fear of unsafe workplace liability. __________________

Hawaii Revised Statutes Chapter 386. Haw. Rev. Stat. § 386-5. 3 Kamanu v. E.E. Black, Ltd., 41 Haw. 442, 455 (1956). 4 Costa v. Flintkote Co., 42 Haw. 518, 531-532 (1958). 5 Id. 6 See Kamanu, 41 Haw. 442 (wrongful death and loss of consortium claim); Estate of Coates v. Pacific Eng’g, 71 Haw. 358, 791 P.2d 1297 (Haw. 1990) (rejecting “dual capacity” exception); Yang v. Abercrombie & Fitch Stores, 128 Haw. 173, 284 P.3d 946 (Haw. App. 2012) (rejecting intentional tort exception as to claims for intentional infliction of emotional distress (IIED), tortious interference, false imprisonment), overruled in part on other grounds, Nakamoto v. Kawauchi, 142 Haw. 259, 272, 418 P.3d 600, 613 (Haw. 2018) (as to defamation and false light claims); Adams v. Dole Foods Co., 132 Haw. 478, 323 P.3d 122 (Haw. App. 2014) (IIED and civil conspiracy claims, barred). 7 Nakamoto, 142 Haw. at 271, 418 P.3d at 612. 8 Haw. Rev. Stat. § 386-3(a). 9 See, e.g., Latourette v. Workers’ Comp. Appeals Bd., 951 Cal. 4th 644, 654-5, 951 P.2d 1184, 1189-1190 (Cal. 1998). 10 Id. at 654, 951 P.2d at 1189. 11 Chung v. Animal Clinic, 63 Haw. 642, 648-9, 636 P.2d 721 (Haw. 1972). 12 59 Haw. 551, 584 P.2d 119 (Haw. 1978). 13 94 Haw. 70, 9 P.3d 382 (Haw. 2000), recons. granted in part, 94 Haw. 92, 9 P.3d 404 (Haw. 2000). 14 Id. at 81, 9 P.3d at 393. 15 131 Haw. 545, 319 P.3d 464 (Haw. 2014). 16 Haw. Rev. Stat. § 386-3(a). The other “prong” of the definition is “by accident arising out of and in the course of the employment.” Id. 17 Van Ness, 131 Haw. at 559-561, 319 P.3d at 478480. 18 Evanson v. Univ. of Hawaii, 52 Haw. 595, 600, 483 P.2d 187, 191(Haw. 1971). 19 Adams, supra note 6. 20 Hough v. Pacific Ins. Co., 83 Haw. 457, 927 P.2d 858 (Haw. 1996). 21 Nakamoto, supra note 6. 22 Omori v. Jowa Haw. Co., 91 Haw. 157, 981 P.2d 714 (Haw. App. 1999), aff’d and clarified, 91 Haw. 146, 981 P.2d 703 (Haw. 1999). 23 Haw. Rev. Stat. § 386-5; 368-17(b). 24 Kamali v. Hawaiian Elec. Co., 54 Haw. 153, 162, 504 P.2d 861 (Haw. 1972). 25 Potter v. Hawaii Newspaper Agency, 89 Haw. 411, 974 P.2d 51 (Haw. 1999). 26 Haw. Rev. Stat. § 386-8(k). 27 Iddings v. Mee-Lee, 82 Haw. 1, 919 P.2d 263 (Haw. 1996). 28 See, e.g., Haw. Rev. Stat. § 414-32(b)(5), 414-241, et seq. 29 29 U.S.C. § 654(a)(1); Haw. Rev. Stat. § 396-6(a). 30 JT & K Wings Inc. dba Buffalo Wild Wings, Insp. No. 1443690 (5/6/20 Notice of Citation and Proposed Penalty). 2

Christopher J. Cole, a graduate of UCLA and UC Hastings College of the Law, is a partner at Marr Jones & Wang. He has practiced labor and employment law in Hawaii including employment litigation since 1992.

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H SBA HAP PE NIN GS Board Action The HSBA Board took the following actions at its meeting in April: • Ratified HSBA’s decision to submit the Small Business Administration loan application for the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act passed by U.S. Congress; • Approved the recommendation of the HSBA Nominating Committee to request appointment of the following individuals to the Special Committee on Judicial Performance for a term of 3 years: Rosemary Fazio (reappointment) Jeen Kwak (reappointment) John Nishimoto (reappointment) Richard Sing (new appointment)

2021 HSBA Board Nominees In accordance with Article VII, Section 3, of the HSBA Constitution and Bylaws, a committee has made nominations for officer and director positions of the HSBA Board and publishes its list of nominees below. Ballots will be distributed in early-mid September, and the election results announced in late October. HSBA members of active status may also be nominated by written petition signed by at least 20 regular members and submitted to the HSBA Board Secretary: 1100 Alakea Street, Suite 1000, Honolulu, HI 96813, or elections@hsba.org, within fifteen days of the publication date (the date this issue is received at the HSBA office). Vice President Rhonda Griswold Secretary Russ Awakuni Michael Cashman

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Treasurer Alika Piper Director: East Hawaii Geraldine Hasegawa Director: Maui Jacob Lowenthal Director: Oahu Tristan Andres Steven Chow Vladimir Devens William Harrison Erin Kobayashi Paul Naso Zale Okazaki

Announcement – Mandatory Continuing Legal Education Board Openings The Hawaii State Board of Continuing Legal Education is looking for applicants to fill three expiring attorney terms on its Board beginning on October 2, 2020 and expiring October 1, 2023. Responsibilities and duties include but are not limited to: attending quarterly board meetings, reviewing applications for CLE credits, and providing recommendations to various oversight issues that arise. Board positions are uncompensated. If interested in serving, please submit a resume, cover letter, and area of law practice concentration to the Nominating Committee at nominations@hsba.org no later than Friday, July 31, 2020.

Congratulations 2020 Leadership Institute Fellows Lauren M. Akitake, Law Office of Lauren M. Akitake, LLLC Nelisa K. M. Asato, Matson, Inc. Pohai Nuuhiwa Campbell, Cades Schutte LLP

Clarissa Y. Malinao, Attorney at Law Mallory T. Martin, Cades Schutte LLP A. Jacqueline N. Mena, Oliveros Law, LLLC Michael Moskowitz, Office of the Prosecuting Attorney, County of Kauai Kelcie K. Nagata, Bronster Fujichaku Robbins, A Law Corporation Page C. K. Ogata, Department of the Corporation Counsel, City & County of Honolulu Miyoko T. Pettit-Toledo, McCorriston Miller Mukai MacKinnon LLP Ikaika B. Rawlins, Chun Kerr LLP Tawnee E. Sakima, Ashford & Wriston LLP Christine Terada, Cox Fricke LLP Steven Kiyoto Uejio, United States Department of Justice Sylvia Wan, Office of the Prosecuting Attorney, County of Hawaii

Lawyer Referral & Information Service (“LRIS”) For over 45 years, the HSBA LRIS has provided bar members with an easy and affordable way to build and maintain their practice with new and repeat business. Through the intake process, LRIS staff screens inquiries from potential clients to determine whether inquiries are appropriate for LRIS panel members or better served through the efforts of either governmental or social services organizations. LRIS membership is available to bar members statewide. The number of inquiries from those looking to hire attorneys on the neighbor islands have increased. Membership includes receiving referrals for 12 months from the 14 major categories, and 80 sub-categories that may be selected as part of enrollment. Once a referral is made, the panel member is notified by email to expect a call.

Through the years, panel members have expressed the fact that joining the LRIS “was the best thing they ever did” for their practice. Join now and pay only $325.00, which will provide referrals until the end of the LRIS fiscal cycle June 30, 2021, a twelve-month period. For more information email LRIS@hsba.org or call 808-537-9140.

Member Benefits Spotlight Coffee Talk Coffee House Great Coffee is just the beginning. Coffee Talk is Kaimuki’s happening spot for amazing coffee, delicious food, and captivating conversation. For over 23 years, they have served food and drink that patrons love and have become part of the fabric of East Honolulu, serving customers each day and making their quaint little coffee house a hideaway for customers young and old, regulars and first timers, kamaaina and malihini. Members will receive 10% off their order when they show their bar cards. Cool Action Suit by Carson Introducing the Cool Action Suit by Carson, a patented, lightweight, moisture-wicking business suit that helps you maintain a professional appearance while staying cool. Highlights of the suit include: • Breathable, moisture-wicking performance fabric • Extra interior jacket pockets for carrying gear • A lightweight and wrinkle free design • Proudly made in the USA Log on to their website (http://www.coolactionsuit.com/) and use the code HAWAII17 to get 20% off your order. Ergonomic Educators Ergonomic Educators is a team of licensed occupational and physical ther-

apists specializing in office ergonomic consultation. With added stress, deadlines, and the increasing demands of the law practice in the digital age, work has become more desk-bound and sedentary. Incorrect office/workstation design can limit productivity and lead to injuries including carpal tunnel syndrome, tendinitis, back and neck pain. Their expert team is passionate about designing cost effective and sustainable ergonomic, health, and wellness programs for progressive law firms in Hawaii. Their goal is to help restore productivity, comfort, health, and wellbeing back into the workplace. It’s time to invest in what matters most; save money, reduce injury, and increase productivity all with one click of a mouse. They are happy to offer 15% off their ergonomic consultation services for HSBA members. Visit their website (http://www.ergonomiceducators. com/). Gifts.com Gifts.com provides tens of thousands of expertly curated gifts and unique ideas. Receive a 15% discount using the code: BLUEGOLD15. Visit their website (https://www.gifts.com/) for more information. Island Olive Oil Company Island Olive Oil Co., is a locally owned and operated olive oil and balsamic tasting room. Island Olive Oil Co. proudly features over 50 unique oils and vinegars on tap, which are perfect for the simplest of home cooks to the most discerning chefs. They carefully curate a variety of locally sourced, as well as imported gourmet products, and specialize in creating custom and specialorder gourmet gift baskets that are perfect for corporate, client gifts, and special occasions. Conveniently located in Ward Center next to the Paul Brown Salon and in

Kailua Town Center between California Pizza Kitchen and Miyoshi Ramen. Visit their website (https://www.islandoliveoil.com/) for more information. Bar members will receive 15% off all gift baskets. Visit or email them at info@islandoliveoil.com for pre-orders. LawPay Vetted and approved by all 50 state and more than 70 local and specialty bars, LawPay is proud to be the preferred payment partner of more than 35,000 law firms. Designed specifically for the legal industry, LawPay provides attorneys with a simple, secure way to accept online payments in their practice. LawPay understands the unique compliance and financial requirements placed on attorneys, which is why their solution was developed specifically to correctly separate earned and unearned fees, giving you peace of mind that your credit card and eCheck transactions are always handled correctly. For more than a decade, LawPay has made it as easy as possible for attorneys to receive payment for their services, and HSBA members receive a three- month free trial. To learn more, call 866-376-0950 or visit their website (https://lawpay.com/member-programs/hawaii-state-bar/). Skechers Direct Heaven on Earth Receive 30% off select Work and Corporate Casual styles including OSHA Compliant footwear and work boots. Enroll with NPP (https://mynpp.com/association/hsba/) and start saving today. Visit https://hsba.org/memberbenefits to receive information on the more than 70 member benefits available.

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C O URT BR IEF S Peter K. Kubota Sworn In as New Circuit Court Judge of the Third Circuit

Hawaii Supreme Court’s First Live Broadcast of Oral Argument

Peter K. Kubota was sworn-in as Judge of the Circuit Court of the Third Circuit during a special session convened by the Hawaii Supreme Court on May 15. For the first time in state history, a judicial swearingin ceremony was conducted by videoconference and broadcast live on the Judiciary’s YouTube channel where friends, family, and members of the public could watch. This break from traditional proceedings was implemented since February to ensure community health and safety while maintaining court operations during the COVID19 pandemic. Chief Justice Mark E. Recktenwald administered the oath of office from the Hawaii Supreme Court courtroom in Honolulu, while Kubota appeared before him in the Hale Kaulike Courthouse in Hilo. Guest speakers also participated by videoconference. They were, in order of presentation: Hawaii County Bar Association President Michelle S.K. Oishi, West Hawaii Bar Association President Rebecca H. Colvin, Hawaii State Bar Association President P. Gregory Frey, Hawaii State Trial Judges Association Vice-President Margaret K. Masunaga, Judicial Selection Commission Chair Ronette M. Kawakami, Hawaii State Representative Richard H.K. Onishi, Hawaii State Senate President Ronald D. Kouchi, and Governor of Hawaii David Y. Ige.

The Hawaii Supreme Court made history on May 5 when it conducted its first live broadcast of an oral argument. The five justices and three participating attorneys were connected from remote locations by Cisco Webex for oral argument in Carmichael v. BLNR. The livestream was broadcast via the Judiciary’s YouTube channel where nearly 500 people tuned in to watch.

Judge Peter K. Kubota shares a copy of the April 17, 1974 edition of the Hawaii Tribune-Herald newspaper featuring his father, Judge Ernest H. Kubota (ret.), being sworn-in as Third Circuit Court Judge by Governor George R. Ariyoshi.

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Volunteer Attorneys Now Providing Free Legal Help by Phone to the Community Volunteer attorneys are providing limited legal help to the community by telephone through the statewide Courthouse Self-Help Centers in areas such as landlordtenant, family, and other district court matters. Phones are answered by an AmeriCorps Advocate who connects callers with the attorney. If you would like to join this important effort, please contact Legal Aid Society of Hawai‘i’s Pro Bono Coordinator Maya Scimeca at: maya.scimeca@legalaidhawaii.org.

Discover Hawaii’s Legal History – Now Online The King Kamehameha V Judiciary History Center is excited to share its museum exhibits and research on its new Exhibits web page. Follow an engaging timeline of Hawaiian language and the law. See over 25 captivating photos illustrating how laws were used to manage the spread of disease in the 19th century. Take the tours at: www.jhchawaii.net/exhibits.

CAS E NOTES Hawaii Supreme Court Criminal State v. Abihai, No. SCWC-170000546, April 28, 2020, (McKenna, J.; Nakayama, J. dissenting with whom Recktenwald, C.J. joins). On June 9, 2014, Allan H. Abihai (“Abihai”), who was serving a life term of imprisonment for multiple felonies committed in 1984, left the Laumaka Work Furlough Center (“Laumaka”) in Honolulu and did not return. On June 29, 2014, Abihai was arrested at a former cellmate’s apartment in Honolulu. He was later charged with escape in the second degree. In his jury trial on the escape charge, Abihai raised a choice of evils defense, contending he left Laumaka because he was threatened he would be hurt if he testified in an upcoming federal criminal trial involving a prison gang. The jury was instructed on the choice of evils defense, then convicted Abihai of escape in the second degree. The circuit court imposed a five-year prison term for the escape conviction, to run concurrent to his life sentence for the 1984 felonies, and denied him credit for time served. Abihai raised two points of error on appeal to the ICA: (1) that trial counsel was ineffective for substantially impairing his choice of evils defense by failing to elicit certain testimony from his witnesses; and (2) that the circuit court erred when it denied him credit for time served on the sentence imposed for the escape conviction. The ICA affirmed the circuit court’s judgment of conviction and sentence. Abihai raised the same issues on certiorari. The Hawaii Supreme Court resolved Abihai’s points of error as follows: (1) Because the record on appeal was insufficient to determine whether there has been ineffective assistance of counsel, it affirmed Abihai’s conviction without prejudice to a subsequent Hawaii Rules of Penal Procedure Rule 40 petition on the ineffective assistance of counsel claim; and (2) the ICA erred in affirming the circuit court’s decision to deny Abihai credit for time served on his escape conviction. Nakayama, J., joined by Recktenwald,

Appeal Pointer A motion for extension of time to file an opening, answering or reply brief will be approved only upon good cause shown. The submission of the motion does not toll the time for filing the brief. HRAP 29(b). C.J. dissented. Nakayama, J. opined that the majority’s interpretation that Haw. Rev. Stat. § 706-671(1) entitled Abihai to pre-sentence detention credit created a new rule, disregarded precedent, and ignored the plain language of Haw. Rev. Stat. § 706-671(3) and its legislative history. Prior to this decision, the Hawaii Supreme Court had consistently interpreted Haw. Rev. Stat. § 706-671(1) to mean that a defendant was not entitled to credit for time served in connection with an unrelated criminal offense. This interpretation was supported by the statute’s plain language, the legislative history, the purpose behind granting credit for time served, and the relevant commentary. Yet, the majority announced a new rule in this case with no explanation for departing from prior interpretation or analysis as to why this new rule should apply retroactively to Abihai. In 2012, the legislature added Haw. Rev. Stat. § 706-671(3) specifically to foreclose the possibility of pre-sentence detention credit for a subsequent crime committed while a defendant was already serving a term of imprisonment. Under the plain language of Haw. Rev. Stat. § 706-671(3), because Abihai was convicted of a crime committed while he was serving a life sentence for separate, unrelated felony convictions, he could not receive credit for time served against the sentence he received for his subsequent escape conviction. Therefore, Nakayama, J. dissented. State v. Gallagher, No. SCWC-140001300, May 15, 2020, (Pollack, J., with Recktenwald, C.J., and Nakayama, J., dissenting). In this case, the defendant was charged with criminal property damage in the second degree for damaging the complainants’ vehicle. Over the defense’s ob-

jections, the circuit court allowed the State to present evidence during trial of four prior incidents of aggressive and erratic behavior by the defendant directed at the complaining witnesses and their home. The circuit court also permitted the State to adduce evidence of the fear the complaining witnesses experienced as a result of the prior incidents and the various countermeasures they undertook in response to these incidents. The defendant was convicted as charged, and the conviction was affirmed on appeal. On review, the Hawaii Supreme Court concluded that the risk of unfair prejudice posed by the introduction of the four prior incidents substantially outweighed their limited probative value. Recktenwald, C.J., dissented. Recktenwald, C.J. stated that the majority held that Appellee’s testimony about the four prior incidents in which Gallagher aggressively confronted the Appellees was “only marginally probative,” and that the likelihood of unfair prejudice substantially outweighed its probative value, making the evidence inadmissible under Haw. R. of Evid. 403. Recktenwald, C.J. would have held, first, that testimony about what happened during the prior incidents was relevant and admissible. Second, while Recktenwald, C.J. agreed with the majority that testimony about the impact of the incidents on the Appellees was irrelevant and prejudicial, he concluded that Gallagher did not specifically object to that evidence and so any error was waived. Nakayama, J., also dissented. Gallagher was convicted by a jury of one count of criminal property damage in the second degree. The charge for which Gallagher was convicted stemmed from a 2013 incident in which Gallagher kicked a truck that belonged to the complaining witnesses Jessica Norman (Ms. Norman) and Garron Norman (Mr. Norman) (collectively, the “Normans”) numerous times while it was parked in the Normans’ driveway. At trial, Ms. Norman testified that this event was not an isolated incident and described four prior incidents in which Gallagher harassed and threatened her in

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the six months leading up to the criminal property damage. Ms. Norman also testified that she was afraid of Gallagher and feared for her life. The issue on appeal was whether the probative value of the prior acts evidence was substantially outweighed by the danger that it would unfairly prejudice Gallagher. In vacating the ICA’s judgment on appeal and remanding the case to the circuit court, the Majority held that the circuit court abused its discretion in erroneously admitting unfairly prejudicial evidence of Gallagher’s prior acts and that the admission of this evidence was not harmless beyond a reasonable doubt. Nakayama, J. disagreed. The evidence of Gallagher’s prior bad acts was highly probative of his state of mind at the time he attacked the Normans’ truck and of his intent to cause, or knowledge that he was causing, more than $1,500.00 worth of damage to the vehicle. By comparison, this evidence was not prejudicial because Gallagher’s behavior, which involved screaming obscenities and making obscene gestures at the Normans’ home, is not the type that tends to “rouse overwhelming hostility in the minds of the jurors” and because the circuit court issued multiple instructions advising the jury that it could only use the evidence for a limited permissible purpose. Based on the record of Gallagher’s trial, Nakayama, J. concluded that the circuit court correctly admitted evidence of Gallagher’s prior bad acts, but that the circuit court erred in allowing Ms. Norman to testify about her fear of Gallagher. Ms. Norman’s fear was not relevant to any element of the crime for which Gallagher was on trial, and therefore should have been excluded pursuant to Haw. R. Evid. Rule 401. However, there was no reasonable possibility that the circuit court’s admission of Ms. Norman’s testimony that she was afraid might have contributed to Gallagher’s conviction because it had no bearing on Gallagher’s subjective intent to damage the vehicle – the main issue at trial. Therefore, this error was, in her opinion, harmless beyond a reasonable doubt. State v. Melendez, No. SCWC-180000522, April 24, 2020, (Pollack, J.). In this case, the defendant was found to be in possession of .005 grams of a substance containing cocaine, and he was charged with possession of a dangerous drug in the

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third degree, a class C felony. The defendant moved to dismiss the charge, arguing that his violation of the statute was so trivial that it did not warrant the condemnation of conviction. The circuit court agreed, finding that the violation was de minimis and dismissing the charge. On appeal, the ICA vacated the order dismissing the charge. It concluded that the circuit court had erred in finding that the cocaine the defendant possessed could not have had any pharmacological or physiological effect upon consumption, and that this error required the order of dismissal to be vacated. The defendant sought certiorari review of the ICA’s decision. The Hawaii Supreme Court concluded that the ICA erred in holding that a defendant, in order to prevail on a motion to dismiss a possessory drug violation as de minimis, must prove that the possessed drugs could not have any pharmacological or physiological effect. Thus, the ICA’s vacatur of the dismissal order was erroneous. State v. Uchima, No. SCWC-170000081, May 19, 2020, (Pollack, J., with Recktenwald, C.J., concurring in part and dissenting in part, and with Nakayama, J., dissenting from the judgment). In Hawaii, a defendant in a criminal case has a statutory right to appeal from a district or circuit court judgment. In situations when defense counsel has inexcusably or ineffectively failed to timely file the notice of appeal, the Hawaii Supreme Court has determined that not allowing the appeal to proceed would result in the deprivation of the defendant’s due process rights. Defendants in criminal cases also have a statutory right to seek review of an ICA judgment on appeal by filing an application for writ of certiorari to this court. The effect of counsel’s failure to timely file a certiorari application is no different than counsel’s failure to timely file a notice of appeal—the defendant has forfeited a statutory right and been deprived of the effective assistance of counsel. Upon review of applicable precedent, the Hawaii Supreme Court held that certiorari review is a critical stage of the criminal proceedings during which a defendant has the constitutional right to effective assistance of counsel, which includes counsel’s procedural compliance with the steps required to timely file an application for a writ of certiorari. In this case the application for

writ of certiorari was untimely filed due to an error of defense counsel or as a result of a computer system error. Regardless of the source of the error, defense counsel failed to ensure the timely filing of the certiorari application, which counsel has acknowledged. As a result, the defendant was deprived of the constitutional right to the effective assistance of counsel on discretionary review. Under these circumstances, the Hawaii Supreme Court may consider the merits of the issues raised in the certiorari application, and the Hawaii Supreme Court elected to do so here. Based upon its review of the certiorari application, the Hawaii Supreme Court affirmed the ICA’s judgment on appeal. Rectenwald, C.J., concurred in part and dissented in part, and concurred in the judgment. Recktenwald, C.J., stated that the majority correctly concluded that Haw. Rev. Stat. § 602-59(a) confers a right to appeal to the Hawaii Supreme Court; that criminal defendants have the right to counsel -and the concomitant right to effective counsel on application for writ of certiorari; and that counsel’s procedural failures cannot deprive a defendant of their statutory right to seek this court’s review. However, Recktenwald, C.J. wrote separately because the right to counsel on appeal after the first appeal as of right is guaranteed by statute, and accordingly, the Hawaii Supreme Court need not determine at that time whether the Hawaii constitution affords the same protection. Nakayama, J. dissented from the judgment. Nakayama, J. stated that the Hawaii Supreme Court lacked jurisdiction to review the merits of Petitioner/Defendant-Appellant Jason Uchima’s (“Uchima”) untimely application for writ of certiorari (Application). In disregarding the unambiguous statutory language establishing a thirty-day deadline for filing an Application, Haw. Rev. Stat. § 602-59(c), the Majority impermissibly expanded the Hawaii Supreme Court’s jurisdiction. The Majority justified this expansion by creating a criminal defendant’s right that the Hawaii Supreme Court review the merits of the defendant’s Application. Such a right has never been recognized and was not expressed by statute.

Family DL v. CL, No. SCWC-18-0000630, April 29, 2020, (McKenna, J.). This case

arose from the family court’s determination of child custody, child support, and property division in a divorce proceeding between DL (“Father”) and CL (“Mother”). This was Father’s third appeal in this divorce proceeding. Father’s application for certiorari (“Application”) presented two questions: (1) Did the ICA gravely err in finding [Father’s] motions untimely, and not reviewing the motions on their merits? (2) Did the ICA gravely err by not reviewing the family court’s denial of [Father’s] motion for new trial? (Capitalization altered.) The Hawaii Supreme Court held that the ICA erred in holding that Father’s Hawaii Family Court Rules Rule 52(b) (2015) motion to amend findings of fact and conclusions of law, enter additional findings of fact and conclusions of law, and to amend judgment accordingly and motion for new trial pursuant to Haw. Family Court R. Rule 59 (2015) were untimely. The Hawaii Supreme Court also held that the ICA erred in holding that the family court’s orders denying Father’s motion to amend and motion for new trial were void for lack of jurisdiction.

Labor Botelho v. Atlas Recycling Ctr., LLC, No. SCWC-16-0000349, May 4, 2020, (McKenna, J.). This case concerned the Labor and Industrial Relations Appeals Board’s (“LIRAB”) award of attorney’s fees to Stanford Masui (“Masui”) for his representation of Reginald Botelho (“Botelho”) in a workers’ compensation case. Masui submitted a request for attorney’s fees to LIRAB requesting an hourly rate of $325. LIRAB approved Masui’s request for attorney’s fees, but it reduced his hourly rate from $325 to $165. Masui appealed LIRAB’s order reducing his requested hourly rate to the ICA, and the ICA affirmed LIRAB’s order in a summary disposition order (“SDO”). Masui’s application for certiorari (“Application”) presented three questions: 1. Did the [ICA] gravely err in failing to construe Haw. Rev. Stat. § 386-94 in light of its language and legislative history, since the statute does not explicitly grant the LIRAB nor the Director of Labor and Industrial Relations (“DLIR”) the power of setting hourly fee rates for attorneys providing services under the Workers’ Compensation chapter, Haw. Rev. Stat. Ch. 386, but only

allows the LIRAB and DLIR (collectively, “agencies”) to “consider” hourly rates of attorneys “possessing similar skills and experience?” 2. Did the ICA gravely err in utilizing the incorrect standard of review of whether the LIRAB’s order was “ultra vires”, i.e., should the ICA have applied the standard of whether the LIRAB’s order was in “violation of constitutional or statutory provisions”, and/or “in excess of the statutory authority or jurisdiction of the agency” instead of only an “abuse of discretion” standard as required for statutory interpretation under Haw. Rev. Stat. § 9114 (g) (1), (2), and (6)? 3. Did the ICA gravely err by failing to find that the LIRAB Order was arbitrary, or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion since the LIRAB failed to articulate any standard to establish hourly fee rate schedules for highly specialized secondary workers’ compensation appeals, when no standards are stated in the enabling fee statute, Haw. Rev. Stat. § 386-94, nor any LIRAB Rules of Practice and Procedure, nor any other justification for using an outdated hourly fee rate from 2009 to 2012 for secondary appellate work? With regard to Masui’s first question on certiorari, the Hawaii Supreme Court held that Haw. Rev. Stat. § 386-94 authorized LIRAB to amend an attorney’s requested hourly rate in awarding reasonable attorney’s fees. The Hawaii Supreme Court concluded that pursuant to the legislative intent of the 2005 amendment to Haw. Rev. Stat. § 38694, however, LIRAB was not authorized to predetermine a workers’ compensation attorney’s “authorized” hourly rate to be applied to that attorney’s future cases. Therefore, the ICA erred to the extent it held that Haw. Rev. Stat. § 386-94 authorized LIRAB to predetermine an attorney’s hourly rate. With regard to Masui’s second question, the Hawaii Supreme Court held that the ICA implicitly determined that LIRAB’s order was not in violation of constitutional or statutory provisions or in excess of its statutory authority when it held that LIRAB did not abuse its discretion. Therefore, the ICA did not err. With regard to Masui’s third question, the Hawaii Supreme Court held that the ICA erred in holding that LIRAB provided an adequate explanation for its reduction of Masui’s requested attorney’s fee as required by McLaren v. Paradise Inn Haw. LLC,

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132 Hawaii 320, 321 P.3d 671 (2014). In explaining its reduction of attorney’s fees, LIRAB must provide more than a recitation of the factors it considers.

Land HawaiiUSA Federal Credit Union v. Monalim, No. SCWC-16-0000807, April 30, 2020, (Pollack, J. with Nakayama, J., joined by Recktenwald, C.J., concurring and dissenting). The mortgagors defaulted on their loans, their property was sold, and the foreclosure sale price was less than the amount due on the mortgage. Thereafter, the mortgagee waited over four years, without explanation, before attempting to collect a deficiency judgment. The mortgagors contended that this delay was unreasonable and prejudiced them because they had begun to rebuild their lives in the years since the sale, and the mortgagee should therefore be barred from now seeking a deficiency judgment by the doctrine of laches. They also argued that, because the circumstances of a foreclosure auction are likely to result in the sale of the property for less than its fair market value, the process by which Hawaii courts calculate a deficiency judgment is unfair. They asked that the Hawaii Supreme Court instead adopt the approach favored by a majority of other jurisdictions and the Restatement (Third) of Property, in which the greater of the fair market value as of the date of the foreclosure sale or the sale price of the property is deducted from the money owed when calculating the deficiency. On review, the Hawaii Supreme Court held that the mortgagors’ challenge to the deficiency judgment was not barred by res judicata and that the circuit court erred by failing to rule on their laches defense. The Hawaii Supreme Court also held that, because the traditional approach could result in unjust enrichment and the majority rule protected all parties to the mortgage, the equities weighed in favor of adopting the method of calculating a deficiency judgment employed by a majority of other jurisdictions. However, the Hawaii Supreme Court’s adoption of the majority rule was prospective in effect and applied only to foreclosure cases in which a deficiency judgment was entered after the date of this opinion. Nakayama, J., joined by Recktenwald, C.J., concurred and dissented. As a result of the mortgagors’ failure to make their

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loan payments, the property was sold at a public foreclosure auction to a third party bidder who placed a bid that was more than the taxed assessed valuation of the property but less than the mortgagors’ outstanding debt. Because the sale proceeds were not sufficient to fully satisfy the mortgagors’ outstanding debt to the credit union, the credit union exercised its rights under the mortgages and obtained a deficiency judgment against the mortgagors. The deficiency amount was calculated, in accordance with Hawaii’s long-standing practice, based on the difference between the sale proceeds and the total outstanding debt. The Majority opined that the method the circuit court used to calculate the deficiency amount was unfair. Nakayama, J. respectfully disagreed. Nakayama, J. stated that the Majority adopted a new rule that will change Hawaii’s traditional method of calculating deficiency judgments. Under the new rule, mortgagors are entitled to a hearing to determine the “fair market value” of a property at the time of a foreclosure sale. The circuit court will be required to calculate the amount of the deficiency judgment based on a new formula in which the greater of the “fair market value” or the court-confirmed sale price will be deducted from the outstanding debt. Claiming that “the traditional approach can result in unjust enrichment,” the Majority relied on a hypothetical unjust enrichment windfall to justify adopting the new rule. Parts III(C) and (D) of the Majority opinion was premised on preventing such an inequitable result that did not occur in this case and was not supported by the record. Therefore, Nakayama, J. dissented from parts III(C) and (D) of the Majority opinion, but agreed with part III(B) of the Majority opinion, that held that the circuit court failed to address the mortgagors’ laches argument. However, Nakayama, J. believed that a review of the record revealed that the mortgagors’ laches argument failed on the merits because the mortgagors did not demonstrate that the delay was unreasonable under the circumstances or that they were prejudiced by the delay. Kahawaiolaa v. Hawaiian Sun Investments, Inc., No. SCWC-17-0000317, April 30, 2020, (Recktenwald, C.J.). Defendants Hawaiian Sun Investments, Inc., Ronald

Blanset, and Janice Blanset (collectively referred to as “Hawaiian Sun”) performed a self-help eviction (also called a lockout) after Plaintiff Francis Kahawaiolaa allegedly breached the lease. After a bench trial, the circuit court found that (1) Kahawaiolaa was not entitled to damages because two of the breaches were material; and (2) his claims for equitable relief, including a claim for replevin seeking access to his personal property, were moot. The ICA vacated the circuit court’s judgment and concluded that the circuit court erred by (1) finding that the breaches were material; (2) failing to shift the burden of proof to Hawaiian Sun on Kahawaiolaa’s replevin claim; and (3) failing to exercise its equitable powers to weigh the relative harms to each party. The ICA’s first conclusion was correct - the breaches did not go to the root of the parties’ intent in contracting, as evidenced by the contract itself. As to the second finding, while the ICA correctly stated the law, it incorrectly applied the law to the circuit court’s decision. The circuit court found that the replevin claim was moot since Kahawaiolaa had already retrieved his personal property by the time of trial. Thus, the ICA should not have analyzed the merits of the replevin claim. Similarly, the ICA misapplied the law of equitable relief to this case because the only issue on appeal was damages for the lockout - all the equitable claims were moot. Lanaians for Sensible Growth v. Land Use Commission, No. SCOT-17-0000526, May 15, 2020, (McKenna, Pollack, JJ. with Wilson, J. joining in Parts I-III(A) –(D) and Dissenting in Parts III(E) and IV, and with Recktenwald, C.J., concurring in the judgement and dissenting, with whom Nakayama, J., joined; Opinion of the Court by Pollack, J., except as to Parts III(E) and IV). In 2017, the Land Use Commission of the State of Hawaii determined that, when it prohibited a resort from irrigating its golf course with “potable” water as a condition of its administrative order issued almost thirty years earlier, it did not mean “potable” by any common definition of the term. Instead, the Land Use Commission found that the term was intended to carry a special meaning that the Commission did not define—other than to say it excluded brackish water that contained chlorides

over an unspecified level. Based upon this special interpretation of “potable,” the Land Use Commission determined that the resort had not violated the administrative order. But neither the text of its administrative order nor the circumstances in which it was adopted offer any reason to depart from the plain meaning of the condition, which was intended to prohibit the resort from watering its golf course with water that was suitable for drinking under county water quality standards. This plain meaning was consistent with the common meaning of “potable” that the Hawaii Supreme Court recognized in its previous ruling in this case and served to fulfill the constitutional duties with which the Land Use Commission is presumed to have complied. The Hawaii Supreme Court thus concluded that the Land Use Commission erred in its 2017 Order by interpreting a condition in its administrative order to mean that brackish water is per se “non-potable.” Accordingly, the Hawaii Supreme Court also considered whether the Commission erred in determining that the resort did not violate this condition under its plain meaning, which prohibits the utilization for golf course irrigation water suitable for drinking under the county’s water quality standards. Wilson, J. dissented. Wilson, J. stated that the Decision of the State Land Use Commission (“LUC”) in 2017 authorized—for the first time—the irrigation of golf courses on Lanai with water that is eligible for drinking as defined by county water quality standards. To do so, it defined all brackish water as non-potable—a definition that is without support in science, principles of public health, or precedent. The novel “brackish-meansnon-potable” proposition removed the protection afforded to high-level potable groundwater by the LUC in its 1991 Findings of Fact, Conclusions of Law, and Decision and Order (“1991 Order”) prohibiting the use of high-level aquifer (“HLA”) drinking water for golf course irrigation. Despite overwhelming evidence to the contrary, the “brackish-means-nonpotable” definition applied by the 2017 LUC established that all brackish water of the HLA with a chloride concentration heretofore legally potable is non-potable and available for golf course use. The 2017 LUC erred in its failure to define the terms “potable” and “non-potable” in

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Condition 10 in accordance with their common sense meanings. The test to determine potability must take into consideration federal, state, and county laws that set standards for safe drinking water. Accordingly, Wilson, J. joined Parts I-III(A-D) of the Majority opinion. However, Wilson, J. disagreed with the conclusion in Part III(E) of the Majority opinion that application of the wrong potability standard by the 2017 LUC was not an abuse of discretion. In his view, if the correct standard had been properly applied by the LUC in 2017, its finding in 1991 that the water from wells 1 and 9 was not potable would not have been clearly erroneous. Discretion is abused when it is exercised pursuant to an improper legal standard. Lanaians for Sensible Growth’s (“LSG”) right to due process guarantees it the opportunity to establish under the correct potability standard that Wells 1 and 9 contain potable water that cannot be used for golf course irrigation. LSG has never been provided the process it is due to present its case to the LUC pursuant to correct county water quality standards defining potability. Once granted its due process right to have the LUC apply the correct legal definition of potability, LSG would have the opportunity to prove that the 1996 LUC correctly concluded that potable water from Wells 1 and 9 was being used for golf course irrigation in violation of the LUC’s 1991 Findings of Fact, Conclusions of Law, and Decision and Order (“1991 Order”) prohibiting the use of HLA drinking water for golf course irrigation. Thus, Wilson, J. dissented from Parts III-E and IV of the Majority opinion and with the Chief Justice’s concurring/dissenting opinion. Recktenwald, C.J. also dissented. Recktenwald, C.J. stated the LUC determination that the Resort complied with Condition 10 is supported by substantial evidence, and accordingly, Recktenwald, C.J. concurred in the judgment affirming the LUC’s 2017 Order. However, Recktenwald, C.J. disagreed with the majority’s analysis in reaching this result. This dispute began in 1991, when the LUC issued an Order (“1991 Order”) granting the Resort’s petition for a district boundary amendment for purposes of building a golf course. The Order imposed Conditions on the Resort, including Condition 10, which provides in relevant part: [The Resort] shall not utilize the potable water

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from the high-level groundwater aquifer for golf course irrigation use, and shall instead develop and utilize only alternative non-potable sources of water (e.g., brackish water, reclaimed sewage effluent) for golf course irrigation requirements. In 1996, the LUC determined that the Resort violated Condition 10 by using water from the high-level aquifer to irrigate the golf course (1996 Order). In 2004, the Hawaii Supreme Court vacated and remanded the LUC’s 1996 Order and held that Condition 10 did not preclude use of all water from the high-level aquifer, only the “potable” water. Lanai Co. v. Land Use Commission, 105 Hawaii 296, 314, 97 P.3d 372, 390 (2004). Because the LUC’s 1996 Order did not contain reasonably clear findings as to whether the Resort used potable water in violation of Condition 10, the Hawaii Supreme Court directed the LUC on remand to clarify its findings and conclusions and, if necessary, conduct further hearings. Id. On remand, the LUC concluded that the Resort complied with Condition 10 and that the Resort’s use of Wells 1 and 9 to irrigate the Mânele golf course did not pose a threat to public trust resources (2017 Order). The LUC’s conclusions were supported by the record and correctly apply the law. The Resort’s use of brackish water from Wells 1 and 9 did not violate Condition 10, nor does such a reading of the Condition violate the public trust doctrine. Condition 10 clarified, by way of an “e.g.” clause, that “brackish” water was an example of water that was nonpotable within the context of the Order and thus available for use by the Resort. The majority, however, defined potable in reference to “county water quality standards.” This reading ignored the terms of the Condition, for “county water quality standards” appears nowhere in it. Because the majority created a standard contrary to the text of the Condition, deprived the Resort of fair warning of its ongoing obligations under the LUC’s Order, and provided little useful guidance to the Resort for future water use, Recktenwald, C.J. respectfully dissented.

Torts Estate of Robert Frey v. Mastroianni, No. SCWC-14-0001030, May 5, 2020, (Wilson, J.). Following the death of Robert Frey (“Frey”) in 2004, his estate and several family members initiated proceedings

against Dr. Robert Mastroianni (“Dr. Mastroianni”) before a medical claim conciliation panel (“MCCP”), claiming that Dr. Mastroianni’s negligence was the cause of Frey’s death. The case eventually led to a 2014 trial in the circuit court. After the sole remaining plaintiff, the Estate of Robert Frey (“the Estate”), rested its case, the circuit court granted judgment as a matter of law to Dr. Mastroianni. The circuit court held that it had no jurisdiction over the Estate’s “loss of chance” claim— that is, its claim that Dr. Mastroianni’s negligence caused Frey to lose a chance of recovery or survival—because such a claim was not raised before the MCCP. And it held that the Estate had failed, as a matter of law, to present sufficient evidence of causation to make out a claim. The ICA affirmed. The ICA concluded that “loss of chance” claims sought recovery for a “separate compensable injury[,]” and that the Estate’s failure to raise loss of chance before the MCCP deprived the circuit court of jurisdiction. It also concluded that, during trial, the Estate had “failed to provide any expert medical testimony establishing that Dr. Mastroianni caused Frey’s death ‘‘to a reasonable degree of medical probability.’” The Hawaii Supreme Court accepted certiorari to resolve the question of whether the “loss of chance” doctrine is consistent with Hawaii law and to provide additional guidance regarding the MCCP pleading process. The Hawaii Supreme Court held that while a “loss of chance” is not a separate compensable injury under Hawaii law, a factfinder in a medical malpractice case involving the death of a patient may consider a loss of chance theory in determining legal causation under our traditional framework for negligence, which considers whether an actor’s conduct was a substantial factor in bringing about the harm. The Hawaii Supreme Court also clarified that the pleading requirements before MCCPs, now renamed MICPs, are intended to be relatively simple, requiring only a brief description of the facts underlying the claim, not a detailed legal theory of the case. Thus, the Hawaii Supreme Court held that the circuit court had jurisdiction over the Estate’s negligence claim, including its loss of chance arguments, in the present case. The Hawaii Supreme Court held further that the circuit court erred in holding that the Estate failed as a matter of law to

present sufficient evidence of causation to make out a claim. Haynes v. Haas, No. SCWC-160000570, May 5, 2020, (Recktenwald, C.J.). This appeal required the Hawaii Supreme Court to address whether a plaintiff can recover damages for injury from a common-law public nuisance. The Hawaii Supreme Court concluded that, as a matter of law, such a claim was cognizable when the plaintiff has suffered individualized harm. Plaintiff Shadley Haynes (“Shadley”) was allegedly assaulted by Gregory Haas (“Haas”) in the parking lot of Rockstarz, a bar that Shadley and his wife, Kurstin Haynes, owned and operated. Shadley sustained serious injuries. Rockstarz - now closed - was located about 0.3 miles from Allied Self Storage Center (Allied). Shadley, Kurstin, and The Other Side - Rockstarz - LLC (collectively, “Plaintiffs”), filed suit in the circuit court alleging that Allied and Chung Partners (collectively, “Defendants”) had created and maintained a public nuisance by permitting Haas and other homeless individuals to live on their premises in violation of Hawaii County zoning codes. Plaintiffs alleged that the nuisance was a substantial factor in causing Plaintiffs’ injuries and that they were entitled to damages. The circuit court granted summary judgment in favor of Defendants. The ICA affirmed the circuit court’s summary judgment orders on the grounds that Plaintiffs could not recover damages for public nuisance in the absence of a statute designating the activity as a public nuisance. On certiorari, Plaintiffs argued that the ICA gravely erred in its conclusion that they were foreclosed from recovering damages as a matter of law. The Hawaii Supreme Court held that a plaintiff can recover damages stemming from a public nuisance even absent an explicit statutory prohibition of the challenged conduct when the plaintiff has suffered individualized harm.

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Intermediate Court of Appeals Criminal State v. Thompson, No. CAAP-170000631, April 24, 2020, (Wadsworth, J.). Appellant filed a criminal complaint charging Appellee with Abuse of Family or Household Member, in violation of

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Haw. Rev. Stat. § 709-906(1). Thompson was summoned to appear before the Family Court to answer the charge. Following Thompson’s appearance and a subsequent motion, the Family Court dismissed the Complaint without prejudice on the grounds that: (1) the Complaint was not signed by the complainant under oath or made by declaration in accordance with the rules of court, in violation of Haw. Rev. Stat. § 805-1; (2) no affidavit in support of the Complaint was provided to Thompson at the time of his arraignment, in violation of Haw. R. of Penal P. Rule 5(b)(1); and (3) a penal summons was issued to Thompson based upon a defective complaint and without a probable cause affidavit, in violation of Haw. R. Penal P. Rule 9(a). The State appealed from the Family Court’s “Findings of Fact/Conclusions of Law Granting Defendant’s Motion to Dismiss for Penal Summons Issued Absent Probable Cause Affidavit, Complaint Lacking Supporting Affidavit, and Improper Arraignment” (“FOFs/COLs”), entered on April 17, 2017. The State contended that the Family Court erred in dismissing the Complaint on the stated grounds. The State argued that: (1) the Complaint complied with Haw. Rev. Stat. § 805-1 and Haw. R. Penal P. Rule 7(d) because it was signed by the prosecutor; (2) an affidavit in support of the Complaint was not required under Haw. R. Penal P. Rule 5(b)(1); and (3) a sworn complaint or affidavit showing probable cause that Thompson had committed an offense was not required for the issuance of a penal summons under Haw. R. Penal P. Rule 9(a). Here, the Complaint that charged Thompson with abuse of a family or household member was signed by the prosecutor in compliance with the current version of Haw. R. Penal P. Rule 7(b). The Complaint was not a basis for issuance of an arrest warrant under Haw. Rev. Stat. § 805-1 or Haw. R. Penal P. Rule 9(b). Rather, Thompson appeared in the district family court pursuant to a lawful penal summons and was not arrested. Accordingly, the ICA concluded that the Family Court erred in dismissing the Complaint on the ground that it was neither signed by the complainant under oath nor made by declaration in accordance with the rules of court. Here, Thompson appeared in the district family court pursuant to a penal summons, acknowledged receipt of the

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Complaint, and waived an oral reading of the charge. The Complaint was not the basis for an arrest warrant, and no arrest warrant was issued. Under these circumstances, Haw. R. Penal P. Rule 5(b)(1) did not require the State to furnish Thompson with an affidavit in support of the Complaint. Accordingly, the ICA concluded that the Family Court erred in dismissing the Complaint on the ground that no supporting affidavit was provided to Thompson at the time of his arraignment. In concluding that the issuance of a penal summons required a probable cause showing, the Family Court wrongly relied on United States v. Millican, 600 F.2d 273, 277 (5th Cir. 1979). There, the Fifth Circuit, construing the then-effective version of Rule 9(a) of the Federal Rules of Criminal Procedure, stated that even absent pretrial arrest or detention, a probable cause determination should be made on the request of a defendant who responds to a summons. Here, however, Thompson did not ask for a probable cause determination. Moreover, Millican and Gerstein made clear that a probable cause determination is not a constitutional prerequisite to a charging decision, i.e., to the filing of the Complaint. In addition, the version of Fed. R. Crim. P. Rule 9(a) that the Millican court considered differs from Haw. R. Penal P. Rule 9(a) in important respects. Most notably, the final sentence of the federal Rule 9(a) provided that if a defendant failed to appear in response to a summons, a warrant “shall issue.” This language created the possibility that a summons could be issued on information not supported by oath, and a warrant then issued for failure to appear in response to the summons, the end result being that the defendant could be arrested on warrant without a probable cause showing. In contrast, Haw. R. Penal P. Rule 9(a)(5) provides that if a defendant fails to appear in response to a summons, a warrant “may issue,” and Haw. R. Penal P. Rule 9(a)(2) makes clear that a warrant may not issue upon a complaint or information without a probable cause showing. Millican is therefore inapposite. Accordingly, the ICA concluded that the Family Court erred in dismissing the Complaint on the ground that a penal summons was issued to Thompson in violation of Haw. R. Penal P. Rule 9(a).

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OFF THE RECORD Thomas J. Hughes joined Goodsill Anderson Quinn & Stifel as a Litigation Associate. He received his J.D. degree from Harvard Law School in 2018 and his B.A. degree in political science from the University of California, Berkeley in 2012. Prior to entering law school, Hughes worked in state politics and lobbying in Sacramento, California. Erika Gustin is an associate at Carlsmith Ball in the Litigation and Alternative Dispute Resolution practice group in Honolulu. Trisha Nishimoto was named a partner in the Litigation Department of Cades Schutte and Andrea K. Ushijima is a partner in the firm’s Finance and Real Estate Department. Diana Kim recently joined the Legal Aid Society of Hawaii as Director of External Relations. This year, the Hawaii Women Lawyers will be honoring the following five individuals at its Annual Awards Reception: Outstanding Woman Lawyer of the Year: Senator Laura H. Thielen; Outstanding Judicial Achievement Award Judge Alexa D. M. Fujise; Lifetime Achievement Award: Judge Barbara P. Richardson; Distinguished Service Award: Tracey S. Wiltgen; President’s Award: Rachael Wong. In February, 2020, the Hawaii legislature honored Melody Kapilialoha MacKenzie in a Resolution commending “her strong commitment to the betterment of our society and advancement of the Native Hawaiian community” and recognizing “her career in advocating for Native Hawaiian issues.” Pacific Business News chose Coralie Chun Matayoshi as this year’s Career Achievement honoree for Women Who Mean Business. They “were especially interested in celebrating her success as business leader running three consecutive statewide nonprofits. Each job was bigger than the last, culminating in her position as chief executive officer of the American Red Cross Pa-

cific Islands Region, from which she retired at the end of 2019. And each organization was struggling when she came aboard and thriving by the time she left.” Catherine Taschner was recognized by the United States Small Business Administration as the 2020 Advocate for Women In Business. She was nominated by the Patsy T. Mink Center for Business and Leadership for her volunteer work to support the creation and growth of women-owned businesses. Taschner is a partner at the McCorriston Miller Mukai MacKinnon law firm and vice chair of Business Law Corps, a nonprofit that offers pro bono legal advice to small-business owners and entrepreneurs.

News for “Off the Record” Please send in information about movement within the bar, about elections to various boards, awards, and other news to any one of the editors on the editorial board, Carol K. Muranaka at <carol.k.muranaka@gmail.com> or Cynthia M. Johiro at <Cynthia.M.Johiro@hawaii.gov>.

Articles Wanted If you are interested in writing either a short or long article of general interest to members of the bar, please send your submissions to Ed Kemper at edracers@aol. com; Cynthia M. Johiro at cynthia.m.johiro@hawaii.gov; or Carol K. Muranaka at carol.k.muranaka@gmail.com; or to any of the volunteer editors on the editorial board. All submitted articles should be of significance to and of interest or concern to members of the Hawaii legal community. A short article is approximately 500 to 1,500 words. The longer law-review type articles are published in a special issue. The Cades Foundation has been gracious and generous in funding this special issue. These articles exceed 7,000 words. The Hawaii Bar Journal reserves the right to edit or not publish submitted material.

ATTORNEY WANTED ASSOCIATE ATTORNEY (Downtown Honolulu) Established mid-sized firm is seeking an experienced Associate Attorney, licensed in Hawaii, to join our team. We are looking for someone with 5+ years of litigation experience, and is looking to gain more experience in a wide variety of areas of law. We hope to find someone with excellent writing skills, strong research skills, written and verbal communication skills, and who is able to multi-task. We need to add another team player to our already outstanding team. We offer a very competitive salary and benefits package. Please email your resume and writing sample for immediate consideration or mail to: BRONSTER FUJICHAKU ROBBINS, Attn: Administrator. 1003 Bishop Street Suite 2300 Honolulu, Hawaii 96813. pbraun@bfrhawaii.com. All inquiries are held in strict confidence. BIG ISLAND personal injury firm seeking an associate attorney for Hilo office. Must be an active Hawaii Bar member in good standing. Three years of experience preferred but willing to consider someone with a commitment to personal injury trial and arbitration practices. Competitive salary depending on experience. Please send resume, writing samples, and three references to : Robert P. Marx, 688 Kinoole Street #105, Hilo, Hawaii, 96720. or email: ouroffice@marx-law.com. DEPUTY PROSECUTING ATTORNEY The County of Maui Department of the Prosecuting Attorney, seeks to fill position(s) at the entry to high experience level(s) as a Deputy Prosecuting Attorney. Applicants must have an active Hawaii State Bar license, be in good standing and experience in criminal law. Competitive salary commensurate with years of experience ranging from $66,000 to $130,000. Please send letter of interest, resume, writing sample, and three references to: Don S. Guzman, Prosecuting Attorney, 150 South High Street Wailuku, Maui, Hawaii 96793 E-mail: Prosecuting.Attorney@co.maui.hi.us LITIGATION DEPARTMENT of Honolulu boutique law firm that has served Hawaii for more than 25 years seeks a talented, conscientious associate. Practice areas include maritime defense and insurance, insurance coverage, commercial, products liability, and insurance defense litigation. Candidate must have strong academic credentials and well-

developed research and writing skills. Will have direct client contact, so strong verbal and written communication skills are a must. Experience with Microsoft Office, including Word, Excel, and Outlook a plus. Expected to work independently, but in a team-based environment. Candidates must already be licensed to practice in the State of Hawaii at time of application. Competitive salary commensurate with experience and excellent benefits that include: Medical/Dental/Vision insurance, parking, vacation and sick leave, 12 holidays per year, and enrollment in company retirement/401(k) plan after one year. Please reply to this ad by sending your cover letter, resume, and writing sample to info@ macdonaldrudy.com. No phone calls please. All submissions will be held in strict confidence.

EXPERT WITNESS CONSTRUCTION, 30 yrs; P.E., MS/BS Civil Eng’g, CCM, CEP; excellent written/oral comm; utilities, road, bridge, treatment plant, pump station, transit, multi-story; claims, scheduling, estimating; sj@sjcivil.com, 808-271-5150. CONSTRUCTION DEFECTS, contractor issues, premises liability, real estate disclosure. National Building Expert. Best Selling Author. www.lanceluke.com 808-422-2132 PPREMISES SECURITY EXPERT Case Evaluation • Expert Witness • 45 Expert Retentions • Court-Qualified in Hawaii 1st, 2nd & 5th Circuits • Consulting (surveys, documents, procedures, design) Albert B. “Spike” Denis, CPP, CFE. Pacific Security Group LLC. 1050 Bishop Street, Suite 303, Hono, HI 96813. Spikedenis@hawaii.rr.com Tel:808.224.4559 REAL ESTATE: Over 45-years as a Developer, Broker, Builder and Realty Advisor. HI Broker’s License, MBA/USC, extensive development and brokerage background. Seasoned real estate veteran with substantial “Real-World” experience and proven Trial testimony. Web: www.castlelyonshawaii.net. Watch 2-minute video. Call Michael K. Ryan, President, CastleLyons Corp. -- 808.282.4059. REAL ESTATE/PROPERTY MGMT/AOAO expert. See www.jurispro.com. Search for “Griswold”. Robert S. Griswold, CRE, CPM, CCIM, PCAM, CCAM, GRI, ARM. www.griswoldremgmt.com (858) 597-6100

LEGAL CONSULTING LEGAL NURSE CONSULTING Assistance in managing the medical aspects of your case. Legal Nurse Consulting, Life Care Planning, & Workers’ Compensation Nurse Case Management. Cynthia L. Fricke, RN, BSN, CCM, CLCP. (808) 253-0232. www.islandlegalnurse.com frickec001@hawaii.rr.com

LEGAL WRITING /RESEARCH EXPERIENCED ATTORNEY will provide legal writing services. Motions, memos, complaints, appellate briefs, and other writing assignments. Reasonable rates. Writing samples, and references provided on request. Call (808) 7358701 or (808) 227-2141.

OFFICE SPACE 2 office spaces in the Historic Hawaii Times Bldg 928 Nu’uanu Ave. 1- 130 sq ft with shared reception area & kitchen. Furnished. 2-290 sq ft furnished, separate entrance. Available July 1. 808-534-1040 jslawsky@1stallied.com AVAILABLE -Immediately. Located in Waterfront Plaza, Executive Suite. Two window offices (1 or both). 2 secretary carrels, storage closet available too. Includes use of conference room, kitchen, reception area. Shared law/CPA office. Ample parking. Call Scott @ 295-9577. SUB-LEASE Available in historic Dillingham Transportation Building, at 735 Bishop Street Small, private corner office perfect for a solo or small private practice. Beautifully restored and maintained: wood floors in outer conference room, new carpet in the inner office, small storage closet, wet bar (sink) hidden. Well located: walking distance to the court house, post office, federal buildings Contact current tenant: Stacy Uyekubo MD at 808-234-3421, ext. #9 or email: drstacy@ psychgrouphawaii.com for more information. AVAILABLE - Two window offices (1 or both), in a friendly, shared law office suite, located downtown, with beautiful 28th floor views. Includes conference room, kitchen, room for support staff, if necessary. Available July 1, 2020. If interested, call Ben at 524-7331.

RECRUITING / TEMP STAFFING HiEmployment is Hawaii's best choice for finding top legal talent. Professional recruiting and temp staffing services available. 695-3974. email: info@hi-employment.com

July 2020

HAWAII BAR JOURNAL

Depositions & Arbitrations during the

Pandemic

At Ralph Rosenberg Court Reporters we have a whole new range of options to provide depositions and arbitrations that are Safe, Secure, and Seamless.

Oral Depositions & Arbitrations: Can be accomplished in a variety of ways depending on the situation. Remote depositions via video conferencing can be easy even for the techno challenged. In conjuction with Certified Legal Video, everything is set up beforehand and each party receives a link. We are also offering attorneys free training sessions to make sure everyone is comfortable with video conferencing. If an attorney has a question or concern, our experts can assist. All of our reporters have recently received extensive training on conducting remote video depositions. The only requirement is that participants have a computer, laptop, or phone with a camera and access to the internet. If attorneys are more comfortable with in-person depositions, our conference rooms can be properly set up to comply with current social distancing directives. We can arrange for a mix of in-person and remote participation.

Records Depositions: The Records Department

continues to follow-up regarding the status of subpoenaed business and medical records. Our team is out there picking up records and preparing transcripts for electronic delivery to attorneys and their staffs. While we all face changes during this time, one thing stays the same: our commitment to our clients and their needs. Regardless of the challenges this pandemic presents, we’ll be there for you!

RALPH ROSENBERG COURT REPORTERS, INC. A Full-Service Court Reporting Firm Tel: 808-524-2090 • Web:

www.hawaiicourtreporters.com • Email: courtreporters@hawaii.rr.com