In re Investigation of: Kahea. ( 2021 )

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Electronically Filed
Supreme Court
SCAP-XX-XXXXXXX
21-SEP-2021
08:00 AM
Dkt. 31 OP
IN THE SUPREME COURT OF THE STATE OF HAWAI‘I
---o0o---
IN RE INVESTIGATION OF: KAHEA
(Department of the Attorney General, State of Hawai‘i,
AG Subpoena No. 2019-158)
SCAP-XX-XXXXXXX
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CAAP-XX-XXXXXXX; S.P. NO. 1CSP-XX-XXXXXXX)
SEPTEMBER 21, 2021
RECKTENWALD, C.J., NAKAYAMA, McKENNA, WILSON, AND EDDINS, JJ.
OPINION OF THE COURT BY EDDINS, J.
In July 2019, construction of an astronomical observatory
(the Thirty Meter Telescope or TMT) near the Mauna Kea summit
loomed. That month, law enforcement officers arrested over
thirty protesters on Mauna Kea’s slopes. Hoping to thwart the
Thirty Meter Telescope’s construction, the protesters had
blocked the road leading to the TMT’s planned site. Later, the
State charged these protesters with obstructing a highway or
public passage.
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The arrests and charges followed a lengthy legal and
political battle over Mauna Kea’s future. KAHEA: The Hawaiian
Environmental Alliance, is an outspoken anti-TMT partisan in
that scrap. One way KAHEA opposed development on Mauna Kea was
through its Aloha ʻĀina Support Fund. According to KAHEA’s
website, the Aloha ʻĀina Support Fund “prioritizes frontline
logistical support for non-violent direct actions taken to
protect Mauna Kea from further industrial development.”
In November 2019, the State of Hawai‘i Attorney General (the
State AG or Attorney General) issued a subpoena duces tecum to
First Hawaiian Bank (the Subpoena). The Subpoena commanded the
bank to produce eighteen categories of records from KAHEA’s
accounts. KAHEA moved to quash the Subpoena. It claimed the
Subpoena was retaliatory harassment. KAHEA said the State AG
wanted to punish it for its anti-TMT advocacy.
The State AG maintained that the Subpoena was not
retaliatory. The Attorney General said an ongoing investigation
justified the Subpoena. The State wondered whether the
Aloha ʻĀina Support Fund’s (the Fund) financial support for
“direct action” on Mauna Kea meant KAHEA had an “illegal
purpose” that made it ineligible for an income taxation
exemption under Internal Revenue Code section 501(c)(3).
The circuit court did not quash the entire Subpoena. But
it disallowed fifty percent of the Subpoena’s requests. And
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though the Subpoena sought documents connected to “all financial
records of KAHEA,” the court trimmed the Subpoena’s scope to
“any account that holds assets belonging to the Aloha ʻĀina
Support Fund.”
On appeal, KAHEA argues that the whole Subpoena should have
been quashed because it: (1) exceeds the Attorney General’s
statutory authority under Hawaiʻi Revised Statutes (HRS) § 28-2.5
(2009); (2) is unreasonable, oppressive, and subject to quashing
under HRS § 28-2.5(e); and (3) violates KAHEA’s First Amendment
rights.
Each of these arguments in some way flows from KAHEA’s
underlying contention that the Subpoena is retaliatory.
The State AG portrays the Subpoena as a legitimate and
reasonable exercise of its investigatory powers. The Attorney
General rejects KAHEA’s retaliation claim as unsupported by the
record. It asserts the Subpoena’s constitutionality.
We agree with the State AG that its investigatory powers
validated the Subpoena. But we conclude that two Subpoena
requests seeking information about monies going into rather than
coming out of KAHEA’s bank accounts are unreasonable.
We also conclude that KAHEA’s argument about the Subpoena
curtailing its First Amendment freedom of speech rights fails:
the Subpoena neither punishes nor forbids KAHEA’s speech. And –
though KAHEA’s contention that the State AG had some retaliatory
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animus towards KAHEA is not entirely unpersuasive — we further
conclude that KAHEA’s First Amendment retaliation claim also
fails; the record lacks a showing that retaliatory motive was a
substantial or motivating factor in the Subpoena’s issuance.
I. BACKGROUND
A. KAHEA and its opposition to development on Mauna Kea
KAHEA is a community-based charitable organization in
Hawai‘i; it describes itself as promoting “cultural understanding
and environmental justice.”
KAHEA opposes development on Mauna Kea. One way it does
this is by operating the Aloha ʻĀina Support Fund. KAHEA touts
the Fund as “prioritiz[ing] frontline logistical support for
non-violent direct actions taken to protect Mauna Kea from
further industrial development.” Its website announces that the
“logistical support” the Fund provides includes the “provision
of bail where appropriate.”
KAHEA has also pursued legal challenges to the TMT’s
construction. In two appeals before this court, KAHEA was
adverse to the State of Hawaiʻi Board of Land and Natural
Resources (the BLNR). Both appeals stemmed from contested cases
before the BLNR concerning a conservation district use permit
issued for the TMT’s construction. In these appeals, attorneys
from the Attorney General’s office represented the BLNR. See
Mauna Kea Anaina Hou v. Bd. of Land & Nat. Res., 136 Hawaiʻi 376,
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363 P.3d 224 (2015); Matter of Conservation Dist. Use
Application HA-3568, 143 Hawaiʻi 379, 431 P.3d 752 (2018).
B. The Subpoena
On November 14, 2019, the Attorney General served First
Hawaiian Bank with the Subpoena. The Subpoena covered bank
records generated between January 1, 2017, and November 12,
2019. It sought eighteen categories of records relating to
KAHEA:
1. Monthly Statements;
2. Signature/Account cards;
3. All Debit card assignments and numbers from the dates
you need;
4. Power of attorneys;
5. Deposit tickets with offset items;
6. Cancelled checks;
7. Debit memos;
8. Credit memos;
9. Applications of loans;
10. All notice of adverse action against account holders;
11. Other subpoenas requesting records from the account;
12. Request for money/wire transfers;
13. Application for cashier’s checks with the cancelled
cashier’s checks;
14. Tax returns submitted with application for loans;
15. All delinquency notices of account sent to account
holders.
16. Photo of debit card issued;
17. Directory that translate [sic] the numerical bank code
information to an address of the branch;
18. Bank surveillance photos to include those from ATM
machines.
The Subpoena declared that it was issued “in accordance
with [HRS §] 28-2.5.” HRS § 28-2.5(a) provides that “[t]he
attorney general shall investigate alleged violations of the law
when directed to do so by the governor, or when the attorney
general determines that an investigation would be in the public
interest.” Under HRS § 28-2.5(b), “[t]he attorney general, when
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conducting a civil, administrative, or criminal
investigation . . . may . . . require the production of any
books, papers, documents, or other objects designated therein or
any other record however maintained, including those
electronically stored, which are relevant or material to the
investigation.”
C. Circuit court proceedings
KAHEA moved to quash the Subpoena in a special proceeding
before the Circuit Court of the First Circuit. 1 It argued that
the State AG’s investigation was not “in the public interest”
because it was retaliatory harassment for KAHEA’s opposition to
development on Mauna Kea. KAHEA also argued that the Subpoena
was unreasonable, overly broad and oppressive.
The State AG opposed KAHEA’s motion to quash. It
maintained that the Subpoena advanced two ongoing investigations
into KAHEA’s “alleged violations of the law”: (1) an
investigation into KAHEA’s “continued failure to file required
financial reports” and related allegedly improper solicitation
of donations; 2 and (2) an investigation into whether the Fund’s
support of putatively illegal anti-TMT actions gave KAHEA an
1 The Honorable James H. Ashford presided.
2 Under HRS § 467B-9(h) (2013), charitable organizations that have not
complied with the financial reporting requirements of Chapter 467B may not
“solicit contributions from persons in the State or otherwise operate in the
State as a charitable organization . . . .”
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illegal purpose such that it could not properly claim Internal
Revenue Code § 501(c)(3) tax-exempt status. 3 The State AG
highlighted its affirmative duty to oversee Hawai‘i’s charitable
organizations. See HRS § 28-5.2(a) (“The attorney general shall
represent the public interest in the protection of charitable
assets . . . .”). It argued that both of its investigations
into KAHEA were good faith efforts to fulfill that duty.
The circuit court rejected the State AG’s arguments
concerning the need to investigate KAHEA’s noncompliance with
state financial reporting requirements. 4 But the court accepted
the State AG’s argument that it had a responsibility to
investigate whether KAHEA had an illegal purpose and was
therefore improperly claiming tax-exempt status under
§ 501(c)(3). The court ruled that the Attorney General could
subpoena KAHEA’s financial records on those grounds.
But the circuit court had concerns about several of the
Subpoena’s document requests. After providing the parties an
opportunity to resolve their differences over specific document
requests (they did not), the court exercised its discretion. It
disallowed nine of the eighteen requests, specifically Subpoena
3 Section 501(c)(3) of the Internal Revenue Code allows a federal tax
exemption for nonprofit organizations.
4 The court stated: “I’m not going to be approving a subpoena based on
the [financial reports] issue. I thought I made that clear. Just so you
know . . . that ship’s not going to sail.”
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request numbers two, three, four, ten, eleven, fifteen, sixteen,
seventeen, and eighteen. 5 Further, though the Subpoena sought
documents relating to “all financial records of KAHEA,” the
court narrowed the Subpoena’s reach to “any account that holds
assets belonging to the Aloha ʻĀina Support Fund.”
D. Proceedings on appeal
On appeal, 6 KAHEA attacks the Subpoena on three fronts.
First, KAHEA argues that despite HRS § 28-2.5’s broad
language, the State AG lacked statutory authority to issue the
Subpoena because the State AG’s putative “investigation”: (1)
does not involve KAHEA’s alleged violations of law; (2) was not
directed by the governor; and (3) is not in the public interest.
The State AG rejects KAHEA’s claim. The Subpoena, it asserts,
was justified by an ongoing investigation into whether KAHEA
financially supported illegal activities while claiming tax
benefits reserved for charitable organizations.
In explaining the need for its investigation, the State AG
discussed a 1975 IRS revenue ruling concerning an antiwar
5 These requests sought: two (Signature/Account cards); three (All Debit
card assignments and numbers from the dates you need); four (Power of
attorneys); ten (All notice of adverse action against account holders);
eleven (Other subpoenas requesting records from the account); fifteen (All
delinquency notice of account sent to account holders); sixteen (Photo of
debit card issued); seventeen (Directory that translate [sic] the numerical
bank code information to an address of the branch); and eighteen (Bank
surveillance photos to include those from ATM machines).
6 KAHEA appealed to the Intermediate Court of Appeals. It then applied
for, and received, direct transfer of the case to this court.
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protest organization that planned and sponsored acts of civil
disobedience. In its ruling, the IRS determined that the
organization had an “illegal purpose.” 7 As a result, the
organization did not “qualify for exemption from Federal income
tax under section 501(c)(3) of the Code” because it was “not
operated exclusively for charitable purposes . . . .” See Rev.
Rul. 75-384, 1975-2 C.B. 204.
Second, KAHEA argues that the Subpoena should be quashed
because it is unreasonable or oppressive under HRS § 28-2.5(e),
under which the court, “on motion promptly made, may quash or
modify the subpoena if compliance would be unreasonable or
oppressive or violate any privilege the witness may be entitled
to exercise in a court proceeding.”
KAHEA generally brands the Subpoena as an overbroad
“fishing expedition.” KAHEA does not pointedly explain why any
particular Subpoena request is unreasonable or oppressive 8 given
the nature of the Attorney General’s investigation. In its
answering brief, the State AG says KAHEA “simply cannot show”
that the Subpoena was a “fishing expedition.” The State AG also
7 In reaching this determination, the IRS considered that the
organization sponsored antiwar demonstrations where participants violated
local ordinances and “breache[d] public order” by “deliberately block[ing]
vehicular or pedestrian traffic, disrupt[ing] the work of government, and
prevent[ing] the movement of supplies.” Rev. Rul. 75-384, 1975-2 C.B. 204.
8 KAHEA’s arguments about the Subpoena’s oppressiveness are largely
coextensive with its claims that the Subpoena is overbroad and
unconstitutional.
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argues that because the circuit court significantly narrowed the
Subpoena’s scope during litigation, KAHEA has no basis for
claiming that the circuit court’s decision not to quash the
entire Subpoena was arbitrary.
Third, KAHEA argues that the Subpoena is unconstitutional.
KAHEA advances two distinct theories regarding the Subpoena’s
unconstitutionality. First, KAHEA describes the Subpoena as a
“significant encroachment upon the constitutional rights of
KAHEA and its members.” It suggests the Subpoena is only valid
if it survives strict scrutiny, the standard of review used in
evaluating content-based speech restrictions. Second, KAHEA
asserts that the Subpoena - even if otherwise lawful - is still
unconstitutional because it was motivated by the State AG’s
retaliatory animus towards KAHEA. 9 KAHEA identifies three
circumstances it says show that retaliatory intent motivated the
Attorney General’s issuance of the Subpoena.
9 Various other constitutional arguments are either cursorily gestured
towards in KAHEA’s briefing or advanced exclusively by amici curiae. KAHEA
has not articulated any cognizable legal arguments about its members’ First
Amendment associational rights or about it or its members’ rights under
article I, sections 4, 6, or 7 of our state constitution. We therefore limit
our constitutional analysis to KAHEA’s First Amendment retaliation claim.
See Kahoʻohanohano v. Dep’t of Hum. Servs., State of Haw., 117 Hawaiʻi 262,
297 n.37, 178 P.3d 538, 573 n.37 (2008) (cleaned up) (stating that this court
will “disregard a particular contention if the appellant makes no discernible
argument in support of that position”). See also Hawai‘i Rules of Appellate
Procedure (HRAP) Rule 28(b)(7) (2007) (“Points not argued may be deemed
waived.”); Zango, Inc. v. Kaspersky Lab, Inc., 568 F.3d 1169, 1177 n.8 (9th
Cir. 2009) (“An amicus curiae generally cannot raise new arguments on appeal
and arguments not raised by a party in an opening brief are waived.”
(citation omitted)).
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First, KAHEA points to its adversarial relationship with
the State. It says it has engaged in sustained advocacy in
opposition to “the State’s facilitation of a foreign
corporation’s development of the Thirty Meter Telescope on
Public Lands on Mauna Kea.” It also states it was adverse to a
party represented by the Attorney General in two appeals before
this court.
Second, KAHEA mentions that the State AG issued
investigative subpoenas to Hawaiian Airlines and the Office of
Hawaiian Affairs. KAHEA says these subpoenas sought documents
about support for, or supporters of, the protests on Mauna Kea.
It suggests that the Hawaiian Airlines and OHA subpoenas show
the Subpoena comprises part of a larger harassment campaign
targeting those who oppose development on Mauna Kea.
Third, KAHEA implies that the Subpoena’s overbreadth
signals that the State AG retaliated against KAHEA for its
advocacy. The circuit court disallowed half of the Subpoena’s
initial requests. It then narrowed the Subpoena’s sweep to
accounts related to the Aloha ʻĀina Fund. The court also
rejected the Attorney General’s claim that it needed to
investigate KAHEA’s failure to satisfy state financial reporting
requirements. KAHEA’s briefing insinuates that the Subpoena’s
wide-ranging demands show it was not issued to further a
legitimate investigation.
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KAHEA also claims that the Subpoena will “chill” it and its
members’ protected speech.
The State AG contests each element of KAHEA’s First
Amendment retaliation claim. Responding to KAHEA’s position
that the group’s advocacy is constitutionally protected, the
Attorney General proclaims that “[a] blockade of a public road,
no matter for what purpose, is not a constitutionally protected
activity.” The State AG also rejects the premise that a single
subpoena could chill expressive rights. Finally, the State AG
contends that the record contains “no evidence” whatsoever that
the State AG has retaliated against KAHEA for its anti-TMT
advocacy.
II. DISCUSSION
A. The Attorney General had authority to issue the Subpoena
under HRS § 28-2.5
HRS § 28-2.5(a) provides that the Attorney General “shall
investigate alleged violations of the law . . . when the
attorney general determines that an investigation would be in
the public interest.” Under subsection (b) of the same statute,
the Attorney General may, when conducting an administrative
investigation, subpoena witnesses and require the production of
books, papers, documents or other records which are “relevant or
material to the investigation.” 10
10 For the reasons discussed in section II(B), the documents sought by
Subpoena requests numbers five and eight are likely neither relevant nor
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The Attorney General’s subpoena power under this statute is
broad. But it is not unbounded. It is hemmed by the
constitution and the safeguards of the statute itself. 11 HRS
§ 28-2.5(a), however, does not check the Attorney General’s
discretion to determine when an investigation is “in the public
interest.” Nor does it require that an “allegation” of unlawful
conduct be sufficiently serious or credible before it may be
investigated. A subpoena may always be challenged on state or
federal constitutional grounds. And parties who feel compliance
with a subpoena would be unreasonable or oppressive may move to
quash or modify it under HRS § 28-2.5(e). But they cannot
second-guess the Attorney General’s discretion under HRS § 28-
2.5(a).
KAHEA’s claims that the State AG’s investigation is “not in
the public interest” are unconvincing. The Attorney General has
a duty to “represent the public interest in the protection of
charitable assets . . . .” See HRS § 28-5.2(a). The
material to the State AG’s investigation. Because KAHEA does not make a
discrete statutory argument under HRS § 28-2.5(b), and because we hold that
compliance with Subpoena request numbers five and eight would be unreasonable
under HRS § 28-2.5(e), we decline to consider whether the State AG exceeded
its statutory authority under HRS § 28-2.5(b) by seeking documents which were
neither relevant nor material to its investigation.
11 In addition to HRS § 28-2.5(e), which authorizes the court to quash or
modify a subpoena if compliance with it would be “unreasonable or oppressive
or violate any privilege the witness may be entitled to exercise in a court
proceeding,” the statute contains procedural safeguards. For example,
subpoenas issued under HRS § 28-2.5 must “contain a short, plain statement of
the recipient’s rights and the procedure for enforcing and contesting the
subpoena.” HRS § 28-2.5(c)(4).
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legislature has expressly authorized the State AG to use HRS
§ 28-2.5’s subpoena power to advance this goal. See HRS § 28-
5.2(b). The determination of whether an investigation is “in
the public interest” rests squarely with the Attorney General.
Not with KAHEA. And not with this court. 12
We conclude that the Attorney General did not exceed its
authority under HRS § 28-2.5 in issuing the Subpoena.
B. The Subpoena’s requests seeking information concerning
monies going into the Fund are unreasonable
The Attorney General’s discretion under HRS § 28-2.5(a) is
counterbalanced by courts’ powers under HRS § 28-2.5(e). This
subsection gives trial courts leeway to hew unreasonable or
oppressive subpoenas - with a battle ax, scalpel, or butter
knife - as justice so requires. The circuit court in this case
was an effective first line of defense against governmental
overreach: it disallowed nine of the Subpoena’s eighteen
requests and limited its scope to accounts related to the Aloha
ʻĀina Fund.
12 The decision to launch an investigation, or issue a subpoena buoying an
investigation, is, like a prosecutor’s decision to prosecute or not prosecute
a charge, ill-suited to judicial review. See Wayte v. United States, 470
U.S. 598, 607 (1985) (observing that “[s]uch factors as the strength of the
case, the prosecution’s general deterrence value, the Government’s
enforcement priorities, and the case’s relationship to the Government’s
overall enforcement plan are not readily susceptible to the kind of analysis
the courts are competent to undertake”).
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KAHEA argues the circuit court should have gone further and
fully quashed the Subpoena because compliance with it would be
unreasonable and oppressive.
There is nothing intrinsically unreasonable or oppressive
about the Subpoena. Charitable organizations in our state are
regulated, see HRS Chapter 467B, and the Attorney General has a
duty to “represent the public interest in the protection of
charitable assets.” See HRS § 28-5.2(a). The contours of that
duty are partly contingent on federal law: Hawai‘i’s definition
of a “charitable organization” expressly relies on the
501(c)(3)-eligibility determination. See HRS § 467B-1(1)
(defining “charitable organization” as “[a]ny person determined
by the Internal Revenue Service to be a tax-exempt organization
pursuant to section 501(c)(3) of the [IRC]”).
KAHEA’s eligibility for 501(c)(3) status falls within the
State AG’s purview. So the AG’s call to investigate the
potential effects of KAHEA’s support for anti-TMT “direct
action” on that eligibility is entitled to deference.
Still, Subpoena request numbers five and eight are
unreasonable. These requests are for deposit tickets and credit
memos. They concern monies going into, rather than coming out
of the Fund. But the Attorney General’s investigation concerns
money going out of the Aloha ʻĀina fund, not into it. These
requests are therefore unreasonable.
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At a hearing on KAHEA’s motion to quash, the deputy
attorney general said that reviewing deposit tickets associated
with KAHEA’s bank accounts would allow the State AG to
distinguish charitable donations to KAHEA from other income
going into KAHEA’s accounts. This differentiation mattered, the
deputy attorney general represented, because the government’s
investigation was focused on the misuse of charitable donations.
This explanation doesn’t make sense.
The State AG’s investigation is not about the “misuse” of
charitable funds per se but rather about whether KAHEA is
improperly claiming 501(c)(3) tax exempt status while advancing
an illegal purpose. 13 Where KAHEA gets its money does not matter
when the inquiry involves whether KAHEA has used the Fund to
advance an illegal purpose. And knowing who gave how much to
the Aloha ʻĀina Fund will not help the State AG determine whether
KAHEA has an “illegal purpose.” Money is fungible: even if none
of the Fund’s assets came from charitable donations, the State
AG could still claim that KAHEA’s purpose was not exclusively
charitable if KAHEA used any of its assets to advance “illegal”
aims.
13 Since the circuit court did not issue the Subpoena on the basis of the
Attorney General’s investigation into KAHEA’s delinquency in filing its
financial reports and concomitant alleged improper solicitation of donations,
our analysis focuses on the Attorney General’s investigation into whether
KAHEA has an illegal purpose and is, by extension, improperly claiming
501(c)(3) status.
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Because the source of KAHEA’s funds is irrelevant to the
State AG’s investigation, the circuit court’s denial of KAHEA’s
motion to quash regarding request numbers five and eight was
plainly arbitrary and unsupported by the record.
But the record does not support KAHEA’s contention that
request numbers one, six, seven, nine, twelve, thirteen, and
fourteen are unreasonable. Each of these requests seeks records
which are, or could be, relevant and material to the State AG’s
investigation. Therefore, the circuit court’s decision to allow
these requests was not plainly arbitrary or unsupported by the
record. See Powers v. Shaw, 1 Haw. App. 374, 376, 619 P.2d
1098, 1101 (1980) (“On review, the action of a trial court in
enforcing or quashing the subpoena will be disturbed only if
plainly arbitrary and without support in the record.”).
C. KAHEA’s constitutional arguments
1. The Subpoena does not unconstitutionally burden
KAHEA’s First Amendment rights
KAHEA’s position that the Subpoena unconstitutionally
encroaches on its First Amendment free speech rights lacks
merit.
KAHEA’s First Amendment argument incorrectly treats the
Subpoena – which was issued as part of an investigation launched
in response to KAHEA’s advocacy – as legally equivalent to a law
proscribing or punishing KAHEA’s advocacy. KAHEA argues that
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the Subpoena is unconstitutional because the government could
not constitutionally ban KAHEA from, or punish it for,
supporting non-violent direct actions on Mauna Kea. 14 But the
Subpoena is not a law censoring or forbidding KAHEA’s advocacy.
And here, through the Subpoena, the State AG is not seeking to
hold KAHEA criminally liable because it supports direct action
on Mauna Kea. This is why KAHEA’s reliance on NAACP v. Button,
14 Much of KAHEA’s First Amendment argumentation is best understood as a
preview of constitutional arguments KAHEA could advance if the State were to
try and punish KAHEA for bankrolling civil disobedience on Mauna Kea. But
KAHEA is wrong to suggest that the existence of potential constitutional
defenses to any charges or claims that may arise from the State AG’s
investigation make the investigation unconstitutional (or illegitimate or
unreasonable).
KAHEA’s reasoning implicitly asks us to adopt something akin to a
“likelihood of success on the merits” requirement whereby administrative
subpoenas are only constitutional (or legitimate under HRS § 28-2.5(a) or
“reasonable” under HRS § 28-2.5(e)) when they are issued during
investigations that the court believes will give rise to charges or claims
for which the defendant will not have a valid constitutional defense. This
approach is unsupported by the law and would represent a significant and
inappropriate encroachment on the Attorney General’s powers of inquisition.
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371 U.S. 415 (1963), is misplaced. 15,16
In Button, the Supreme Court considered the
15 KAHEA’s reliance on NAACP v. Claiborne Hardware Co., 458 U.S. 886(1982), is also misplaced. In Claiborne, the Court considered whether the
NAACP could be held civilly liable for damages suffered by merchants as a
result of a boycott that, though largely nonviolent, had included some acts
of violence. The court held that the NAACP could not be held liable for
damage caused by boycotters’ acts of violence because there was “no evidence
that the NAACP ratifieds [sic] or even had specific knowledge of—any of the
acts of violence or threats of discipline associated with the boycott.” Id.
at 930-31. In a footnote, the Court observed that the NAACP “had posted bond
and provided legal representation for arrested boycott violators.” Id. at
931 n.78. But this conduct, the Court said, did not “support a determination
that the national organization was aware of, and ratified, unauthorized
violent conduct” because the NAACP “regularly provides such assistance to
indigent black persons throughout the country.” Id.KAHEA argues that because the NAACP’s posting of bail for arrested
boycotters could not support a finding that the NAACP ratified violent
boycotters’ conduct, KAHEA’s “posting of bond” and “providing of legal
representation for those arrested [on Mauna Kea] could not be a basis for the
circuit court to allow for the production of bank and financial records of
KAHEA’s Aloha ʻAina account held at the First Hawaiian Bank.”
As a preliminary matter, Claiborne is inapplicable because the State AG
doesn’t seek to hold KAHEA liable for damages arising out of the arrests on
Mauna Kea. The limits on exposure to civil liability for the acts of another
discussed in Claiborne are irrelevant to the questions this case presents
about the scope of the State AG’s investigatory powers and the legality of
their exercise.
Claiborne is also distinguishable from this case because the record
here provides ample evidence that KAHEA knew about, financially supported,
and ratified “direct action” on Mauna Kea. Whereas the NAACP “supplied no
financial aid to the boycott,” KAHEA established the Fund with the express
purpose of financially supporting “direct action” on Mauna Kea. Moreover,
the Supreme Court says that the NAACP’s support for arrested boycotters was
not evidence of its support for, or ratification of, boycotters’ violent acts
because the NAACP “regularly provides [bond and legal] assistance to indigent
black persons throughout the country.” The record here does not suggest
KAHEA regularly provides bail support to indigent persons throughout the
country or state. To the contrary, the record suggests that KAHEA provided
bail support for arrested protestors as part of a targeted campaign
supporting “direct action” on Mauna Kea.
16 NAACP v. State of Ala. ex rel. Patterson, 357 U.S. 449 (1958), is also
distinguishable. That case – like the Supreme Court’s recently decided
Americans for Prosperity Found. v. Bonta, ___ U.S. ___, 141 S. Ct. 2373(2021) — concerned First Amendment association rights. Since KAHEA failed to
adequately advance any First Amendment freedom of association claims on
behalf of its members, see supra n.9, Patterson and Americans for Prosperity
are inapplicable. We express no opinion about the viability of any First
Amendment freedom of association claims KAHEA could have asserted on behalf
of its members.
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constitutionality of a Virginia law that made it a crime for the
plaintiff, the NAACP, to hold meetings where it invited
prospective litigants to sign documents authorizing NAACP
lawyers to represent them. The Supreme Court held that
Virginia’s law was an unconstitional imposition on the NAACP’s
First Amendment rights as absorbed by the Fourteenth Amendment.
Unlike the Virginia statute at issue in Button, the
Subpoena is not a law. It does not forbid or proscribe KAHEA
from doing, saying, funding, or supporting anything. KAHEA’s
arguments miss the critical point that a governmental
investigation triggered in response to constitutionally-
protected speech is not the same thing as a law criminalizing
that speech. Any burden on KAHEA’s speech here is purely
incidental.
We conclude that the Subpoena is not an inherently
unconstitutional imposition on KAHEA’s First Amendment freedom
of speech rights.
2. The record does not support KAHEA’s First Amendment
retaliation claim
Even an otherwise lawful governmental action may be
unconstitutional if it is initiated in retaliation for speech or
conduct covered by the First Amendment. See Hartman v. Moore,
547 U.S. 250, 256 (2006) (“[T]he law is settled that as a
general matter the First Amendment prohibits government
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officials from subjecting an individual to retaliatory
actions . . . for speaking out.”).
A plaintiff bringing a First Amendment retaliation claim
must show that: “(1) [they were] engaged in a constitutionally
protected activity, (2) the defendant’s actions would chill a
person of ordinary firmness from continuing to engage in the
protected activity and (3) the protected activity was a
substantial or motivating factor in the defendant’s conduct.”
O’Brien v. Welty, 818 F.3d 920, 932 (9th Cir. 2016). 17 If this
showing is made, the burden shifts to the government to “show by
a preponderance of the evidence” that it would have taken the
same action “even in the absence of the protected conduct.” See
Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274,
287 (1977).
KAHEA’s opposition to development on Mauna Kea falls
squarely within the heartland of the First Amendment’s
protections.
We also agree with KAHEA that the prospect of an
administrative subpoena seeking extensive banking records is an
17 O’Brien concerns a First Amendment retaliation action under 42 U.S.C.
§ 1983, not a motion to quash an administrative subpoena on constitutional
grounds. Both parties agree that O’Brien states the constitutional standard
that controls the analysis of KAHEA’s First Amendment claim.
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adverse action that would chill a person of ordinary firmness
from exercising First Amendment rights. 18
But KAHEA’s First Amendment retaliation claim nonetheless
fails because KAHEA has not shown that retaliatory animus was a
substantial or motivating factor in the Subpoena’s issuance.
We recognize that, in some cases, the government’s
explanation for an action may be so at odds with controlling law
that it is, itself, evidence of pretext and retaliatory animus.
But that is not the case here. The State AG’s investigation is
premised on the notion that KAHEA’s financial support for direct
action opposing development on Mauna Kea may disqualify it from
501(c)(3) status. Nothing about this premise contradicts or
runs counter to First Amendment principles.
The federal tax exemption for charitable organizations is
effectively a taxpayer-funded subsidy for organizations that
serve some public benefit. As the Supreme Court explained in
18 The State AG’s argument that the Subpoena would not “chill a person of
reasonable firmness” relies on the distinguishable Laird v. Tatum, 408 U.S. 1(1972), case. There, the Supreme Court considered whether the Army’s
surveillance of public meetings and publications that were thought to have
some connection to civil disorder infringed on the constitutional rights of
those surveilled. The Supreme Court concluded that no “chilling effect”
arose from “knowledge that a governmental agency was engaged in certain
activities or from the individual’s concomitant fear that, armed with the
fruits of those activities, the agency might in the future take some other
and additionl [sic] action detrimental to that individual.” Id. at 11.
Significantly, the Court in Laird distinguished the exercise of government
power at issue in that case from those that were “compulsory” in nature. Id.Administrative subpoenas like the one the State AG issued First Hawaiian Bank
are “compulsory” in nature because they leverage state power to compel the
production of documents or testimony.
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Bob Jones Univ. v. United States, 461 U.S. 574 (1983):
When the Government grants exemptions or allows deductions
all taxpayers are affected; the very fact of the exemption
or deduction for the donor means that other taxpayers can
be said to be indirect and vicarious “donors.” Charitable
exemptions are justified on the basis that the exempt
entity confers a public benefit . . . .
Id. at 591. One corollary of the “public benefit principle” is
that to qualify for the exemption, an organization must have a
charitable purpose “‘consistent with local laws and public
policy’.” Id. (quoting Perin v. Carey, 65 U.S. 465, 501
(1861)). See also id. at 592 (“[T]o warrant exemption under
§ 501(c)(3), an institution . . . must demonstrably serve and be
in harmony with the public interest.”).
The State AG’s characterization of its investigation as
probing whether KAHEA has “an illegal purpose” is thus
misleading because its use of the word “illegal” suggests as a
necessary premise some unlawfulness on KAHEA’s part. To the
contrary, KAHEA’s advocacy could be totally legal and still
jeopardize its eligibility for 501(c)(3) status.
The State AG has represented that it is not investigating
whether KAHEA has done anything illegal; it is investigating
whether KAHEA serves a public benefit such that all U.S.
taxpayers – a group that may include supporters of development
on Mauna Kea – ought to be KAHEA’s “vicarious donors.” KAHEA
could have an “illegal purpose” without having done anything
illegal. As such – and given IRS Revenue Ruling 75-384 and the
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record here – the notion that KAHEA’s support for “direct
action” on Mauna Kea might impact its eligibility for §
501(c)(3) status is not so unsound that it betrays retaliatory
animus. 19
KAHEA’s arguments concerning its adversarial relationship
with the State AG are slightly more persuasive: KAHEA’s anti-TMT
advocacy and opposition to the State AG’s client in appeals
before this court show that the State AG may have had a motive
for targeting KAHEA. But that is very different from showing
that retaliatory animus – rather than legitimate nonretaliatory
reasons – motivated the Subpoena’s issuance.
The strongest “evidence” linking the Subpoena to the
retaliatory intent KAHEA alleges is the Subpoena’s overbreadth.
Many of the eighteen categories of requested records the
Subpoena initially sought have no apparent connection to the
Attorney General’s investigation. The “delta” between what
would be reasonable given the investigation’s stated aims and
what was actually sought by the Subpoena may hint that
19 Though Revenue Ruling 75-384 is more than forty years old, the IRS
continues to rely on it in private letter rulings. For example, in 2019, the
IRS cited Revenue Ruling 75-384 in a private letter ruling concerning an
organization formed to aid financially disadvantaged patients affected by the
costs of THC and CBD (cannabidiol) treatment. The organization assisted
these patients “by providing financial support to cover costs of living and
other expenses . . . . ” I.R.S. P.L.R. 201917008 (Apr. 26, 2019). The IRS
concluded that because cannabis was illegal under federal law, and because
the organization was formed to provide financial assistance to cannabis
users, the organization had an “illegal purpose” and could not be recognized
as exempt under Section 501(c)(3) of the Internal Revenue Code. Id.
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retaliatory animus animated the Subpoena’s issuance. But
overbroad subpoenas are unremarkable. And while the
unreasonableness of the Subpoena may “tend to” show that
retaliation motivated the Subpoena, it is not dispositive on
this point.
While KAHEA’s briefing provides some fodder for speculation
about the Attorney General’s motives in issuing the Subpoena,
KAHEA has not demonstrated that retaliation was a substantial or
motivating factor behind the Subpoena. The Subpoena is
justified on nonretaliatory grounds. See supra section II(A).
And the State AG’s stated rationale for investigating KAHEA is
consistent with the Attorney General’s obligation to “represent
the public interest in the protection of charitable
assets . . . .” See HRS § 28-5.2(a). Given these facts and the
record before us, KAHEA has not shown that retaliatory animus
was a substantial or motivating factor in the Subpoena’s
issuance. KAHEA’s First Amendment retaliation claim thus
fails. 20
3. KAHEA has not preserved any arguments under article I,
section 4 of the Hawai‘i Constitution
Article I, section 4 of the Hawai‘i Constitution reads: “No
law shall be enacted respecting an establishment of religion, or
20Like the Supreme Court in Laird, we reach this conclusion without
intimating any “view with respect to the propriety or desirability, from a
policy standpoint, of the challenged activities of the [State AG].” See 408
U.S. at 15.
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prohibiting the free exercise thereof, or abridging the freedom
of speech or of the press or the right of the people peaceably
to assemble and to petition the government for a redress of
grievances.”
This court generously interprets the civil rights bestowed
by the Hawaiʻi Constitution. We have held that article I,
section 4 provides free speech rights “at least as expansive as
those provided by the United States Constitution.” State v.
Russo, 141 Hawai‘i 181, 190, 407 P.3d 137, 146 (2017) (emphasis
added). See also id. (recognizing that the Hawai‘i Constitution
affords “greater free speech protection than its federal
counterpart”) (quoting Crosby v. State Dep’t of Budget & Fin.,
76 Hawai‘i 332, 339 n.9, 876 P.2d 1300, 1307 n.9 (1994)); Oahu
Publ’ns Inc. v. Ahn, 133 Hawai‘i 482, 494, 331 P.3d 460, 472
(2014).
Though KAHEA’s opening brief recognizes that article I,
section 4 provides free speech rights “at least as expansive as
those provided by the United States Constitution,” KAHEA has not
advanced any precise arguments concerning it or its donors’
article I, section 4 rights. The State AG, in turn, did not
address article I, section 4 at all in its answering brief.
Likewise, though KAHEA name checked article I, section 4 at the
February 7, 2020 hearing before the circuit court, it did not
make any discrete legal arguments concerning article I, section
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4 before the circuit court.
Hence, KAHEA has not made any discernible arguments under
article I, section 4. Any arguments it could have made under
this provision are waived. See Kahoʻohanohano, 117 Hawaiʻi at
297 n.37, 178 P.3d at 573 n.37.
III. CONCLUSION
The circuit court’s February 26, 2020 order granting in
part and denying in part KAHEA’s motion to quash the Subpoena is
reversed with respect to Subpoena request numbers five and
eight. It is affirmed in all other respects. The case is
remanded to the circuit court for proceedings consistent with
this opinion.
Richard Naiwieha Wurdeman /s/ Mark E. Recktenwald
for petitioner
/s/ Paula A. Nakayama
David D. Day,
(Lawrence L. Tong on the briefs) /s/ Sabrina S. McKenna
for respondent
/s/ Michael D. Wilson
Lance D. Collins,
(Bianca Isaki on the briefs) /s/ Todd W. Eddins
for Amicus Curiae
Anonymous Donors to KAHEA: The
Hawaiian-Environmental Alliance
Jongwook Kim,
for Amicus Curiae
ACLU of Hawai‘i Foundation
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