Plaintiffs in a nearly 24-year-old class-action lawsuit against the state over Hawaiian homestead claims should begin to receive their share of a $328 million settlement in September, after a final approval in court Friday.
The case, involving claims owed to 2,515 Native Hawaiians over unfulfilled and sometimes neglected state obligations, represents the biggest known legal settlement in Hawaii history.
A team led by Tom Grande and Carl Varady, two local
attorneys representing plaintiffs, also was awarded a record fee in Hawaii litigation history — $40 million —
for work that encountered daunting opposition, obstruction, two trials and two decisions appealed by the state to the Hawaii Supreme Court before a tentative settlement was agreed to in 2022.
State Circuit Judge Lisa
W. Cataldo approved the fee and the broader settlement at a hearing attended in
person by the three named plaintiffs in the case and other class members, while about 125 people including more class members and
interested parties viewed the proceeding on Zoom.
“The parties’ negotiations and work in this case have resulted in a historic settlement both by monetary and nonmonetary measures,” Cataldo said before ruling. “The case, filed more than 23 years ago in 1999, has worn a legal path few if any cases in Hawaii have tread.”
Grande recounted for Cataldo failings of the state Department of Hawaiian Home Lands to award 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.
A special commission had been created in 1991
to administratively adjudicate claims filed by Aug. 31, 1995, for harm suffered
by DHHL beneficiaries between statehood in 1959, when DHHL inherited the program from the federal government, and 1988.
Claim decisions by the commission were subject to approval by the Legislature, but the two entities failed to meet a 1999 approval deadline, and that allowed claimants to file the lawsuit, known as Kalima v. State of Hawaii.
“The actions of the state of Hawaii and the Department of Hawaiian Home Lands were frankly reprehensible, egregious and heartbreaking,” Grande told the judge, who was tasked with determining whether the settlement sum and distribution were fair, reasonable and adequate. “Lives and families were literally destroyed by the failure of the trustee to fulfill its obligations to provide homesteads to our
Native people.”
Many claimants in the case spent decades on
DHHL’s waitlist for homesteads, and the number of beneficiaries on the list today is more than 28,000.
In the Kalima case, claimants had records pertaining to their homestead applications that were incomplete, misplaced, lost and even destroyed at the hands of DHHL, according to Grande.
Richard Vierra, whose mother, Irene Cordeiro-
Vierra, applied for a homestead in 1984 and died in January at age 95, said at Friday’s hearing that his mom would be thankful, grateful and supportive of the settlement if she were present.
Vierra also praised the settlement.
“As written, it will bring closure for many Hawaiians,” he said. “But more than financial settlement,
it brings closure to the long-overdue litigation in which what was right, we believe, finally prevailed.”
Grande presented a grim tally of how many case class members died as litigation dragged on. He told Cataldo that the number had risen from 294 in 2002 to 616 in 2010. In 2022, when the settlement was agreed to, the number was 1,140. On Friday it was 1,164, or almost half the plaintiff class.
Heirs of plaintiffs are
entitled to settlement proceeds, though many have not been in contact with claims administrators.
Varady estimated that around $100 million in settlement proceeds will be handled through probate court and take longer to
process, and that as much as half of that could be redistributed among other plaintiffs if heirs cannot
be identified and reached. Varady also said that about 100 living class members cannot be found.
Another 224 class members who were among the roughly 2,700 who filed claims were excluded from the settlement because they didn’t meet certain conditions.
Proceeds for each class member vary by their length of time waiting for a homestead, the type of land lease for which they applied and how their application was treated, among other things.
After accounting for the $40 million in attorneys’
fees and about $2 million in claims administration costs, about $286 million will be available for distribution
to class members. If this amount were divided evenly among them all, the average would be $113,718.
State attorneys supported the settlement sum but objected to the size of the fee award for the plaintiffs’ attorneys, making the Kalima case contentious to the end.
Most of Friday’s 2-1/2-hour hearing dealt with the fee award, which was subject
to the judge’s discretion.
Special Deputy Attorney General Linda Lee Farm, whose involvement in the case has been relatively recent, argued that a $40 million fee was excessive and unreasonable.
Farm told the judge that 38,500 hours spent on the case by the plaintiff’s legal team would be worth $20 million if everyone including support staff were paid $500 an hour.
Terms of the settlement prohibited the state from
opposing anything less than $28 million for the opposing legal team, but Farm said
the $12 million difference between $28 million and the requested $40 million should instead go to class members.
“It would give the legacy more meaning,” she told the judge, adding that $28 million amounted to more than $1 million per year of work for the team.
Varady said getting paid for results is a better measure than an hourly rate in
a case that stretched for so long and yielded a record settlement.
“We produced excellent results,” he told the judge. “We’ve earned this.”
In class-action cases, attorneys’ fees can typically represent 25% of a total settlement, and this would amount to $82 million in the Kalima case. A $40 million fee represents 12.19%.
Varady said the plaintiffs’ team could have asked for 45%. He also said the Legislature, which in 2022 approved funding for the settlement, gave such approval only after negotiating to limit the maximum possible fee at $40 million, down from $60 million initially proposed by the attorneys.
All participating class members received notices of the $40 million proposed fee, and only one objected, according to Varady.
Leona Kalima, the case’s lead named plaintiff, noted for the judge that she and others signed contracts agreeing to a 33.3% legal team fee from any financial proceeds.
Diane Boner, another named plaintiff, said the
$40 million is fair, just, right and good.
“To this day they are still working for us,” she told Cataldo. “They didn’t give up.”
Ralph Kelekolio, who got on DHHL’s waitlist for a homestead in 1979, said the settlement money will give him closure as well as some “breathing room” to live as a senior on a fixed income. He also took issue with the state’s argument that a fee for the team led by Grande and Varady be based on straight work hours, a measure known as lodestar.
“I don’t know what lodestar is,” he told the judge.
“I don’t know if it measures mettle, which these two gentlemen have. I don’t know if it measures courage, which these two gentlemen have.
I don’t know if it measures hard work and compassion, which these two gentlemen have and have shown throughout these years and I believe deserve every last penny that they have asked for. Without them we would not be here this morning.”
Cataldo said that any amount between $28 million and $40 million was mind- boggling, and she expressed reluctance to substitute a gut feeling or random in-between figure as appropriate.
“That is an area the court is unwilling — and indeed believes it cannot exercise its discretion — to calculate such a substitute number,” she said.
After ruling, Cataldo, added, “I hope this is the start of a new day for all of you, a new reality, a new beginning.”
