A bitter — and increasingly costly — dispute between an Office of Hawaiian Affairs trustee and her fellow trustees is entering its third year, with no settlement in sight.
Earlier this month a state Circuit Court judge in Honolulu set a trial date of Oct. 31, 2016, in the case of Akana v. Machado, named for Rowena Akana and Colette Machado, a former chairwoman of the OHA Board of Trustees.
Should the civil case go to trial, it likely would entail the trustees and OHA employees being called to testify. That would mean airing dirty laundry over whether any trustees breached their fiduciary responsibilities in spending $21 million to buy the Gentry Pacific Design Center to be the OHA headquarters.
It would pile more legal fees atop what could already be hundreds of thousands of dollars paid to well-known local law firms representing the plaintiffs and defendants — money that could instead have been used for OHA’s Native Hawaiian beneficiaries.
Akana filed her suit in September 2013. In addition to naming Machado and the seven other trustees, it also lists 10 John and Jane Does as defendants — “agents, servants, employees, representatives, contractors, subcontractors” and others who will be named “as soon as they become known.”
Machado — OHA’s chair at the time and a trustee since 1996 — and the seven other trustees soon responded with a counterclaim alleging a breach of fiduciary responsibility by Akana, a trustee since 1990.
“Alston is really racking up the fees, subpoenaing this, subpoenaing that, when all we want to get is the information.” —Trustee Rowena Akana
The legal battle could play out even as several OHA trustees are running for re-election. It may continue through a spring convention that could lead to the formation of a Native Hawaiian self-governing entity — one that could conceivably dissolve OHA and incorporate its assets. Akana is running to be a convention delegate in the Nai Aupuni election that takes place throughout November.
Tangentially, Akana v. Machado also roped in a former trustee, Mililani Trask, who has been highly critical of OHA on her online “First Friday Show — The Unauthorized News.“
Trask has been subpoenaed by OHA’s attorneys to provide documents, some relating to the Gentry purchase, that Akana gave to Trask. OHA says that release constitutes a confidentiality violation. But Trask and Akana say the release of documents was inadvertent.
Akana is also accused by OHA of disclosing confidential information without board authorization on her personal website, leading to its dissemination elsewhere online.
OHA declined to provide the dollar amount paid so far to Alston Hunt Floyd and Ing, the lead attorneys, and to Robert Klein, a former Hawaii Supreme Court associate justice who provides legal counsel to the OHA board.
Klein — who is not one of the attorneys filing the claims in Akana v. Machado but who is mentioned frequently in the case — is a partner with McCorriston Miller Mukai MacKinnon, which, along with Alston Hunt, is among the five largest Hawaii law firms. Paul Alston declined to reveal how much his firm has been paid, but said it was billing “at a very substantial discounted rate.”
“The case has been tendered to an insurance company and the insurance company is carrying much of the defense’s cost, but not all of it,” he said.
Akana’s lawyers, Bickerton Dang, also declined to say how much they’ve been paid, or by whom. Jim Bickerton is a high-profile attorney who this month settled with the University of Hawaii — to the tune of $700,000 — over its firing of basketball coach Gib Arnold. Bickerton took over the Akana case this year from another high-profile attorney, Eric Seitz.
Bridget Morgan, a Bickerton Dang attorney, is leading an unrelated lawsuit by Campbell Estate heiress Abigail Kawananakoa arguing that ethical lapses tainted votes of the Honolulu City Council on the $6 billion rail project. Morgan is also the lead attorney on Akana v. Machado.
Several local attorneys say that the contentious case could easily total seven figures by the time all the billable hours are added up. Those rates can start at about $250 an hour for lower-level staff and go well over $500 an hour.
Morgan said the case boils down to Akana’s desire for the OHA board and staff to comply with the state’s Sunshine Law governing open meetings. Akana has been frustrated in her attempts to obtain documents related to meetings held in executive session regarding OHA’s purchase of the Gentry Pacific Design Center in 2012.
The case is “basically about the mishandling of confidential materials related to the Gentry purchase.” —Attorney Paul Alston
Akana opposed buying the building, arguing that it was overpriced and aging. She also charged Trustee Haunani Apoliona with having a conflict of interest in voting on the deal because of her role as a member of the board of the Bank of Hawaii, which was involved in the purchase.
Apoliona was found by the State Ethics Commission not to have had a conflict. OHA now has its headquarters in the building, which is on Nimitz Highway in Iwilei.
Akana and her attorney, Morgan, say that their key aim is get OHA to rewrite its rules and procedures to bring them into compliance with the Sunshine Law. Fundamentally, they say that government transparency is in the best interest of OHA beneficiaries because a public trust is involved.
Akana also claims that OHA’s attorneys are only interested in making money off the case.
“Alston is really racking up the fees, subpoenaing this, subpoenaing that, when all we want to get is the information,” said Akana. “It’s only about trying to get them to follow Sunshine Law. But he files motions against it, all these stop-gap measures, and each time it costs the beneficiaries money.”
Akana added, “This is just nonsense. It’s insane and irresponsible. The only people who are winning are attorneys.”
Paul Alston has a different take on the legal dispute.
“It started out as Trustee Akana complaining about the difficulties she encountered trying to get access to privileged and confidential information, and the difficulties she encountered were the result of her own making,” he said. “When she sued, that precipitated the authority of the board deciding to take action against her.”
He added, “I know she would like nothing more to present this as — falsely, in my view — as somebody who is interested in an open and transparent operation, but that’s not what this case is about. It’s basically about the mishandling of confidential materials related to the Gentry purchase.”
In a related matter, OHA board minutes from July 30 state that Akana was removed from her position as chair of the Asset and Resource Management committee because of breach of confidentiality and complaints from staff alleging “oppressive” and “harassing” treatment by her. Akana said she has asked to see the complaints but has not been successful.
The ARM committee was merged with OHA’s Land and Property committee last month. The new Resource Management committee is chaired by Machado with Apoliona the vice chair.
Circuit Court Judge Virginia Crandall last week suggested the parties consider mediation to settle the matter.
“She suggested that we try to reach an agreement, and if we cannot, we need to go back and let her know,” said Morgan. “She may decide to just order mediation.”
For his part, Alston said, “Every judge in every case inquires about whether parties are interested in alternative dispute resolution. … That could include a variety of things including mediation. But whether and when that will occur has not been decided.”