State settling historic litigation over Hawaiian homesteads for $328 million

A 23-year legal battle between the state and Native Hawaiians waiting for homestead land leases is over.

Attorneys representing both sides of the landmark class-action litigation agreed to a $328 million settlement that was unsealed Tuesday. Described as historic, the agreement comes after more than one-third of the plaintiffs, most of whom are seniors, died while waiting for a resolution.

“It’s a joyous occasion, but it is also bittersweet for all those people who were not here to see the end of the struggle,” said Tom Grande, a local attorney who helped file the case known as Kalima v. State of Hawaii.

Of roughly 2,700 plaintiffs, 953 have died since the case was filed in 1999.

Leona Kalima and two other named plaintiffs filed the lawsuit in state court alleging that the state Department of Hawaiian Home Lands, overseer of a 203,000-acre federally created land trust, had breached its fiduciary duty by not awarding homestead lots on a timely basis to qualified applicants, who must be at least half Hawaiian and can receive house, farm or pastoral lots under 99-year leases that cost $1 a year.

Many plaintiffs spent decades on DHHL’s waitlist for homesteads, and the number of beneficiaries on the list today is over 28,000.

Kalima, in a statement, said, “We are happy that this long struggle is nearly over and that our class members who have waited decades for a homestead will finally get some compensation. This settlement has the potential to change thousands of lives for the better and we’re looking forward to it being resolved, finally.”

The settlement is subject to funding approval by the Legislature and Gov. David Ige as well as a state judge.

On Tuesday a joint House-Senate conference committee approved a bill to pay more than a dozen claims against the state, including the Kalima case settlement, which was added Tuesday. The move sets up the measure for a vote by all members of the House and Senate. State lawmakers are expected to approve the deal.

“Thousands of people have waited over 25 years for this day,” said House Speaker Scott Saiki. “I’m glad the Legislature is able to approve this.”

If the settlement were divided evenly among all plaintiffs, including successors of deceased original plaintiffs, it would amount to about $121,481 per plaintiff. However, proceeds will vary by a plaintiff’s length of time on the waitlist, the type of land lease for which they applied and how their application was treated, among other things.

Ige said the $328 million will cover damages along with attorneys’ fees and other litigation expenses, including the cost to administer claims overseen by a court-appointed special master.

“This necessary resolution fairly compensates the Hawaiian Home Lands beneficiaries and brings this litigation to a close, but it is not the end of the story,” he said in a statement. “I remain committed to developing and delivering homes for the Hawaiian Home Lands beneficiaries.”

The agreement was reached following 15 days of nearly back-to-back settlement conferences with state Circuit Judge Gary W.B. Chang between March 24 and April 13.

Hawaii Attorney General Holly Shikada described the negotiations as intensive and productive. “We may now put 23 years of litigation to rest and, if funds are appropriated, move forward with implementation of the settlement,” she said in a statement.

Historic lawsuit

Though the Kalima litigation began in 1999, the state has been trying to resolve DHHL breach-of-trust claims for upward of 30 years.

In 1988 then-Gov. John Waihee adopted recommendations from a task force to resolve such claims over DHHL’s administration of the Hawaiian Homes land trust, which was created by the federal government in 1921 and passed to the state in 1959.

Hawaii’s Legislature enacted a law in 1991 that created a special panel to administratively adjudicate claims filed by Aug. 31, 1995, for harm suffered between statehood in 1959 until 1988. Some 2,721 claimants met the deadline.

Any claim decisions by the panel were subject to approval by the Legislature, but the panel and lawmakers roundly failed to achieve their mission by a 1999 deadline after which claimants were allowed to, and did, sue.

The legal case was vigorously challenged by the state and included two trials along with two decisions appealed by the state to the Hawaii Supreme Court.

One big milestone in the case was a 2009 Circuit Court ruling that followed a five-week trial and found DHHL in breach of its trust duty. The ruling also said the state was liable for yet-to-be-determined damages.

Two years ago the Hawaii Supreme Court, following one appeal by the state, ruled that the case could progress to calculating actual damages based on a model largely tied to market rental value of land.

Filing a claim

Since then, claims have been prepared and submitted to a court-appointed special master and a claims administrator.

In October, state attorneys said in a filing that the Department of the Attorney General was seeking alternatives to the claim administration process because of budget cuts.

“As this court is no doubt aware, the State is facing serious uncertainty caused by the COVID-19 pandemic,” the filing said.

More recently, excess revenue has been flowing to the state in large part due to federal coronavirus relief funds and a rebounding economy, which added an incentive to settle the Kalima case.

“We have had unprecedented revenues this year, and that really prompted the discussion between the state and the claimants to come to a resolution,” state Rep. Sylvia Luke, House Finance Committee chair, said at Tuesday’s committee hearing.

Fair conclusion

Carl Varady, another local attorney representing plaintiffs, expressed appreciation for state officials stepping forward to finally and fairly end the dispute.

“Our appreciation is tempered by the knowledge that nearly a third of the class members will not be with us to witness or celebrate the conclusion,” he said in a statement. “That conclusion will take some time, to make sure the class members are treated fairly, but we are looking ahead to the final stage when our clients will be compensated for their lost opportunity to obtain a homestead.”

Grande said if remaining approvals are obtained smoothly, the state would deposit the $328 million into an account July 1, followed by distributions to plaintiffs, perhaps in early 2023, after claims administration work.

Irene Cordeiro-Vierra, 94, said in 2014 that she didn’t expect to see a penny of relief from the state. Now she expects not much personal benefit at her age but is grateful for what the resolution will mean for her son and many others.

“I’m happy for the Hawaiians that they are going to get something,” she said.

Raynette Ah Chong, a named plaintiff whose father, Joseph Ching, died during the litigation, regarded the settlement as a blessing.

“It’s been a long, long, long, long time,” she said. “On behalf of my father and others who did not live to see the end of this struggle, we are thankful for this result.”