Wong v. Hawaiian Airlines, Inc. ( 2016 )

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Electronically Filed
Supreme Court
SCWC-13-0000703
30-MAR-2016
08:11 AM
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o---
GENE WONG,
Petitioner/Plaintiff-Appellant, Cross-Appellee,
vs.
HAWAIIAN AIRLINES, INC.,
Respondent/Defendant-Appellee, Cross-Appellant.
SCWC-13-0000703
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-13-0000703; CIV NO. 11-1-2459)
MARCH 30, 2016
RECKTENWALD, C.J., McKENNA, POLLACK, AND WILSON, JJ.,
AND NAKAYAMA J., CONCURRING AND DISSENTING
OPINION OF THE COURT BY POLLACK, J.
This case involves claims brought by a retired
employee against his former employer for allegedly providing
inaccurate information regarding the late enrollment penalty
that applies to Medicare Part B. The circuit court granted
summary judgment in favor of the employer concluding that the
retiree’s negligent and negligent misrepresentation claims were
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preempted by federal law, and the Intermediate Court of Appeals
affirmed the summary judgment on appeal. We conclude that the
record in this case does not support federal preemption of the
negligent and negligent misrepresentation claims.1
I. BACKGROUND
Gene Wong was employed as a pilot by Hawaiian
Airlines, Inc. (HAL) until he retired at the mandatory
retirement age of sixty in 1996. Upon retiring, Wong became
eligible to receive medical insurance paid for by HAL. HAL is
obligated to provide retired pilots with medical coverage
pursuant to a collective bargaining agreement between HAL and
the Airline Pilots Association (Pilots Agreement). The Pilots
Agreement contemplates coordination of the plan benefits
provided by HAL with Medicare benefits:2
The Company shall continue to provide the medical, dental,
drug and vision coverage in effect as of . . . the date of
. . . Normal Retirement under the Retirement Plan for
Pilots of Hawaiian Airlines, Inc. and such pilot’s spouse
until age sixty-five (65) at which time the Company shall
provide coverage, which when coordinated with Medicare
benefits, shall maintain the benefits to which the pilot
would have been entitled to had s/he not retired.
1
We also consider the circuit court’s granting of summary judgment
on Wong’s unfair or deceptive practice claim on grounds other than preemption
and the circuit court’s award of costs.
2
“Medicare is the federal health insurance program for people who
are 65 or older. . . . Part B covers certain doctors’ services, outpatient
care, medical supplies, and preventive services.” Medicare.gov, What is
Medicare?, https://www.medicare.gov/sign-up-change-plans/decide-how-to-get-
medicare/whats-medicare/what-is-medicare.html (last visited Oct. 26, 2015).
2
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When Wong became eligible for Medicare Part B in 2001,
he consulted with HAL’s Director of Employee Benefits and
Compensation about whether or not he should enroll in Medicare
Part B. Wong consulted with the benefits director regarding
Medicare in part because the Medicare documents he received
instructed him to contact his former employer’s human resources
department.3 Wong alleges that the employee benefits director
advised him that he did not need to enroll in Medicare Part B
because HAL would provide him with his primary medical insurance
and “he could switch without penalty later.”
Wong contacted HAL’s benefits director in 2010 when
his wife became eligible for Medicare Part B coverage; his email
to the director states the following:
If for some reason; I lose my medical, you mentioned that I
would be able to enroll into the Medicare program without
the penalty for both parts A & B since I was previously
covered under an equal or better program. The Social
Security is telling me that I should hold a letter that
states my existing coverage is equal or better than
Medicare and should I lose it, I can produce, that letter
to allow myself and spouse to enroll in their program
without the penalties . . . .
Wong also met with the director to discuss Medicare, at which
time he asked for her assistance in enrolling in Medicare Part
B. Wong requested that the benefits director write a letter for
him to assist him in signing up for Medicare Part B. Wong
3
Upon retiring, Wong received a summary of his retiree benefits
from HAL that provided a telephone number that retirees could call should
they have any questions regarding their benefits.
3
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received a letter from the director confirming that she provided
Wong with inaccurate information regarding Medicare:
This is to confirm that we provided you with some incorrect
information regarding Medicare when you turned 65. I’ve
completed forms for Medicare in the past that requested
cancelation data so that people could apply for Medicare at
a delayed point in time when their group coverage was
canceled. Since you will remain qualified for full
coverage under our HMSA plan for your lifetime, we told you
that if at some point in time your plan was canceled, we
would be able to provide you with the necessary information
in order to avoid the late enrollment penalty. I now know
that this was incorrect.
Please see if Social Security is able to waive the late
enrollment penalty because of the misinformation that you
were provided.
The employee benefits director wrote the letter with the
understanding that the letter would serve as proof for Wong to
avoid the late enrollment penalty in enrolling in Medicare.
Wong claims that, as a result of the misinformation he
received from the benefits director, he did not complete the
necessary forms to enroll in Medicare Part B coverage in 2001
through March of 2010.4 Wong brought claims of negligence,
negligent misrepresentation, and unfair or deceptive practice
(UDAP) against HAL in the Circuit Court of the First Circuit
(circuit court). Wong’s complaint alleged that HAL “had a
fiduciary, statutory, and common law duty” to provide Wong “with
reasonably accurate Medicare retirement information.” Wong also
4
Wong was not enrolled in Medicare Part B when he filed his
complaint on October 18, 2011. He later enrolled in Medicare on January 31,
2012. Wong indicated that beginning on July 1, 2012, his monthly Medicare
premium of $239.80 would be deducted from his Social Security check; this
premium included $99.90 for late filing surcharges for Medicare Part B.
4
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alleged that HAL had a duty to supply Wong with correct
information regarding whether he should choose to have HAL’s
medical plan or Medicare Part B as his primary health care
insurer. Wong contended that HAL’s conduct in providing him
incorrect information regarding Medicare Part B constituted an
unfair or deceptive trade practice pursuant to Chapter 480 of
the Hawaiʻi Revised Statutes (HRS), which financially injured
him. Wong asserted that he suffered over $286,846.72 in damages
as a result of the inaccurate information provided by HAL.5
HAL moved for summary judgment arguing, inter alia,
that Wong’s claims for negligence and negligent
misrepresentation failed because HAL did not owe Wong a duty of
care relating to information regarding Medicare.6 The circuit
court denied HAL’s motion for summary judgment in part because
the court found that there were genuine issues of material fact
as to whether HAL owed Wong a duty.7
HAL later filed a second motion for summary judgment
arguing that Wong’s negligence claims were preempted by federal
5
Wong specifically asserted the following: “(a) $286,846.72 based
on calculated incremental increases each year for Medicare Part B coverage;
(b) an additional adjustment for inflation and increases in the cost of
Medicare in an amount to be computed and proven at trial; and (c) interest at
the rate of ten percent (10%) from March 1, 2010.”
6
In arguing that HAL owed him a duty of care, Wong cited to an
HMSA brochure instructing that more information regarding the Medicare
coordination rules could be obtained by “contact[ing] your employer or the
Centers for Medicare & Medicaid Services.”
7
The Honorable Karl K. Sakamoto presided.
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law. HAL argued that Wong’s negligence claims were preempted by
the Railroad Labor Act (RLA) because any duty HAL owed to Wong
would be derived from HAL’s obligations to retired pilots under
the Pilots Agreement. In support of its motion, HAL maintained
that it was obligated to provide Wong with medical benefits to
be coordinated with Medicare under the Pilots Agreement. HAL
also maintained that any obligation to provide information about
health benefits would flow from its duty to provide such
benefits under the Pilots Agreement. With regard to Wong’s UDAP
claim, HAL argued that the claim failed because the alleged
conduct did not occur “in the conduct of any trade or commerce”
as required by HRS Chapter 480.
Wong maintained that his negligence and negligent
misrepresentation claims had no relation to the Pilots Agreement
and that “torts like this are independent of the contract.” In
response to HAL’s arguments regarding the UDAP claim, Wong
argued that HAL “was engaged in transportation business, and
part of that business was providing information to its
retirees.”
The court granted HAL’s second motion for summary
judgment, concluding that Wong’s negligence and negligent
misrepresentation claims were preempted by the RLA. The court
also ruled in favor of HAL on the UDAP claim because the alleged
unfair or deceptive act did not occur in “the conduct of any
6
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trade or commerce.” The circuit court’s June 6, 2013 Final
Judgment included an award of costs in the amount of $11,855.30
in favor of HAL.
Wong appealed the circuit court’s order granting HAL’s
second motion for summary judgment and the court’s Final
Judgment to the Intermediate Court of Appeals (ICA), Wong argued
that his negligence claims are independent of the Pilots
Agreement and “there is no need to interpret the contract in
this case” with regard to his claims. HAL responded that
“[w]hen negligence claims are premised on actions taken by an
employer pursuant to CBA[8]-imposed duties, resolution of
negligence claims often requires interpretation of the CBA to
evaluate the reasonableness of the employers actions.” HAL
asserted that “Wong cannot avoid the RLA’s mandatory arbitral
mechanism by omitting references to the Pilots Agreement in his
Complaint and by characterizing HAL’s actions solely by
reference to state-law torts.”
The ICA affirmed the circuit court’s granting of HAL’s
second motion for summary judgment. The ICA concluded that
Wong’s negligence claims were preempted by the RLA because HAL’s
duty to Wong arose from its duties under the Pilots Agreement.
In reaching this conclusion, the ICA’s analysis seems to assume
that HAL’s duty to Wong under the Pilots Agreement was to act
8
“CBA” refers to a collective bargaining agreement.
7
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with reasonable care to ensure that its representatives did not
provide him with misinformation about retirement benefits. The
ICA also concluded that it was not error for the circuit court
to dismiss Wong’s UDAP claim because HAL’s provision of medical
coverage information to Wong did not occur in a “business
context.” Additionally, the ICA affirmed the circuit court’s
grant of costs to HAL.
Wong filed an Application for Writ of Certiorari
requesting that this court review the ICA Judgment on Appeal.
Wong contends that the ICA erred in holding that his negligence
and negligent misrepresentation claims were preempted by the
RLA, in holding that his UDAP claim failed because the claim did
not occur in the conduct of trade or commerce, and in affirming
taxation of costs.
With regard to the RLA preemption determination,
Wong argues that he “alleged and proved facts supporting
his negligence and negligent misrepresentation claims
against” HAL. Wong maintains that these state law claims
are independent of the Pilots Agreement, do not involve
interpretation of the agreement, and therefore they are not
preempted by the RLA. Wong contends that HAL owed him a
“duty to act reasonably under the facts and circumstances
of this case.” He asserts that Hawaiʻi courts recognize the
tort of negligent misrepresentation as set forth in the
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Restatement Second of Torts “particularly where [the
defendant] undertook to misinform Plaintiff.”
Wong also contends that the ICA’s holding that
the alleged conduct did not occur in trade or commerce is
flawed and that the Court was clearly in error in granting
summary judgment upon his UDAP claim.
HAL maintains that the ICA did not err in affirming
the circuit court’s granting of summary judgment in favor of HAL
on Wong’s negligence claims. HAL argues that “any duty owed by
HAL to provide information to Wong about Medicare Part B
penalties and its interaction with the medical coverage provided
by HAL arose from and was intertwined with HAL’s CBA-obligation
to provide medical coverage to retired pilots.” HAL also argues
that “the ICA correctly recognized that Wong’s negligence-based
claims were not independent of the CBA, but rather, they did
arise from CBA-imposed duties to provide benefits to retired
pilots.”
HAL asserts that the ICA did not err in granting the
motion for summary judgment on Wong’s UDAP claim because “the
transaction upon which this claim is based did not occur ‘in the
conduct of any trade or commerce.’” HAL asserts that the ICA’s
ruling “is consistent with the decisions of many other courts
examining statutes similar to HRS § 480-2, which have held that
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‘[d]isputes arising out of the employer-employee relationship do
not meet the trade or commerce requirement.’”
II. STANDARD OF REVIEW
“An award of summary judgment is reviewed de novo
under the same standard applied by the circuit court.” Omerod
v. Heirs of Kaheananui, 116 Hawaiʻi 239, 254, 172 P.3d 983, 998
(2007) (quoting Taniguchi v. Ass’n of Apartment Owners of King
Manor, Inc., 114 Hawaiʻi 37, 46, 155 P.3d 1138, 1147 (2007)). In
considering a motion for summary judgment, the court “must view
all of the evidence and the inferences drawn therefrom in the
light most favorable to the party opposing the motion.” Id.
(quoting Taniguchi, 114 Hawaiʻi at 46, 155 P.3d at 1147).
Summary judgment is appropriate if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law. A
fact is material if proof of that fact would have the
effect of establishing or refuting one of the essential
elements of a cause of action or defense asserted by the
parties.
Id. (alteration omitted) (quoting Taniguchi, 114 Hawaiʻi at 46,
155 P.3d at 1147).
III. DISCUSSION
A.
Wong contends that his negligence and negligent
misrepresentation claims against HAL are not preempted by the
RLA. “The RLA . . . sets up a mandatory arbitral mechanism to
handle disputes ‘growing out of grievances or out of the
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interpretation or application of agreements concerning rates of
pay, rules, or working conditions.’” Hawaiian Airlines, Inc. v.
Norris, 512 U.S. 246 (1994) (quoting 45 U.S.C. § 153), aff’g
Norris v. Hawaiian Airlines, Inc., 74 Haw. 648, 847 P.2d 263
(1993), pursuant to 74 Haw. 235, 842 P.2d 634; see also 45
U.S.C. § 153(i) (2006). The United States Supreme Court
articulated the preemption standard that applies under the RLA
in Hawaiian Airlines, Inc. v. Norris: “that a state-law cause of
action is not pre-empted by the RLA if it involves rights and
obligations that exist independent of the [collective bargaining
agreement].” 512 U.S. at 260. Thus, “where the resolution of a
state-law claim depends on an interpretation of the [collective
bargaining agreement], the claim is pre-empted.” Id. at 261.
The Court observed, “however, that ‘purely factual questions’
about an employee’s conduct or an employer’s conduct and motives
do not ‘requir[e] a court to interpret any term of a collective-
bargaining agreement.’” Id. (quoting Lingle v. Norge Div. of
Magic Chef, Inc., 486 U.S. 399, 407 (1988)).
The issue in Norris was whether an aircraft mechanic
who claimed that he was discharged for refusing to certify the
safety of a plane that he considered unsafe could pursue
available state law remedies for wrongful discharge. Id. at
248. The aircraft mechanic in Norris initially challenged his
discharge under a collective bargaining agreement governing his
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employment; the agreement guaranteed that an employee may only
be discharged for just cause and may not be disciplined for
refusing to perform work in violation of safety laws. Id. at
250. After appealing his grievance to a step three grievance
hearing, the employer offered to reduce the mechanic’s
punishment to suspension without pay. Id. The mechanic did not
respond to the offer or further pursue his claim through the
grievance procedures, and he later filed suit against his
employer in Hawaiʻi state court alleging wrongful discharge under
Hawaiʻi law. Id.
The Norris Court held that the RLA did not preempt the
wrongful discharge claim. 512 U.S. at 248. Norris adopted the
preemption framework applied to the Labor Management Relations
Act (LMRA) in Lingle v. Norge Division of Magic Chef, Inc., 486
U.S. 399 (1988). The relevant question under Lingle, the Court
explained, is whether the state law claims are independent of
the collective bargaining agreement. Norris, 512 U.S. at 266.
The Court concluded that the aircraft mechanic’s state law
claims were not preempted by the RLA because “whether the
employer’s actions make out the elements of discharge under
Hawaii law--is a ‘purely factual question[n].’” Id. (alteration
in original) (quoting Lingle, 486 U.S. at 407).
Accordingly, under Norris, a state law claim is
preempted by the RLA if the resolution of the claim requires
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interpretation or application of a collective bargaining
agreement. This same standard was applied in United
Steelworkers of America v. Rawson, 495 U.S. 362 (1990).
Although the Rawson decision was not cited by the Court’s later
decision in Norris, it provides a useful illustration of the
application of LMRA preemption of a state claim that is simply
seeking to enforce a collective bargaining agreement. Rawson
involved wrongful death actions brought against a union by the
survivors of four miners who were killed in an underground fire.
495 U.S. at 364. The complaint included a negligence claim that
the miners’ deaths were caused by their union’s negligence.
The plaintiffs in Rawson specifically relied on the
collective bargaining agreement in setting forth their
negligence allegations. The complaint stated that the union
“undertook to act as accident prevention representative and
enforcer of an agreement negotiated between [sic] [the Union] on
behalf of the deceased minors” and “undertook to provide
representatives who inspected [the Sunshine Mine] and pretended
to enforce the contractual accident prevention clauses.” Id. at
364-65 (alterations in original). The United States Supreme
Court concluded that the negligence claim could not be described
as independent of the collective bargaining agreement because
the “only possible interpretation” of the pleadings was that the
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union assumed the relevant duty under a collective bargaining
agreement. Id. at 370-71.
The Rawson Court noted that a party may not evade the
requirements of the LMRA “by relabeling their contract claims as
claims for tortious breach of contract.” 495 U.S. at 369
(quoting Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 211
(1985)). Thus, the plaintiffs in Rawson could not bring state
negligence claims for the union’s actions that were undertaken
pursuant to the provisions of a collective bargaining agreement
where “the agreement determined the nature and scope of the
9
Union’s duty.” Id. at 371. The Court explained that the Union
9
HAL quotes from the following passage from the Rawson opinion in
which the Court contrasts the situation in Rawson with other possible
circumstances:
This is not a situation where the Union’s delegates are
accused of acting in a way that might violate the duty of
reasonable care owed to every person in society. There is
no allegation, for example, that members of the safety
committee negligently caused damage to the structure of the
mine, an act that could be unreasonable irrespective of who
committed it and could foreseeably cause injury to any
person who might possibly be in the vicinity.
Rawson, 495 U.S. at 371. The Rawson court determined that a duty
created by a collective bargaining agreement cannot exist “independent
of the collective bargaining agreement.” See Rawson, 495 U.S. at 369;
see also Stringer v. Nat’l Football League, 474 F. Supp. 2d 894, 908
(S.D. Ohio 2007) (“[T]he holding in Rawson was not dependent on a
finding that the duty allegedly violated was owed only to the miners as
opposed to ‘every person in society.’ Instead, the Court found that the
wrongful death claim was preempted because ‘[i]f the Union failed to
perform a duty in connection with inspection, it was a duty arising out
of the collective-bargaining agreement signed by the Union as the
bargaining agent for the miners.’” (second alteration in original)
(quoting Rawson, 495 U.S. at 371)); Betty v. Brooks & Perkins, 521
N.W.2d 518, 525 (Mich. 1994) (explaining that the duty in Rawson “was
owed only to union members by virtue of the terms of a collective
bargaining agreement” rather than to “every current and prospective
employee, regardless of union status”).
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assumed the duty in accordance to a collective bargaining
agreement and, thus, the miners could not enforce the collective
bargaining agreement through a state negligence claim:
If the Union failed to perform a duty in connection with
inspection, it was a duty arising out of the collective-
bargaining agreement signed by the Union as the bargaining
agent for the miners. Clearly, the enforcement of that
agreement and the remedies for its breach are matters
governed by federal law.
Id. Hence, the Rawson decision demonstrates that RLA preemption
applies where a plaintiff seeks to enforce a duty arising from a
collective bargaining agreement through a state law claim.
Under the Court’s preemption analysis, a state law
claim is preempted by the RLA if the resolution of the claim
requires interpretation or application of a collective
bargaining agreement. Norris, 512 U.S. at 260; Rawson, 495 U.S.
at 369. “The plaintiff’s claim is the touchstone for this
analysis; the need to interpret the [agreement] must inhere in
the nature of the plaintiff’s claim.” Ward v. Circus Circus
Casinos, Inc., 473 F.3d 994, 998 (9th Cir. 2007) (quoting Cramer
v. Consol. Freightways, Inc., 255 F.3d 683, 691 (9th Cir.
2001)). Accordingly, “[w]hen liability is governed by
independent state law, the mere fact that a collective
bargaining agreement will be consulted or referred in the course
of state-law litigation does not require the claim to be
extinguished.” E.g., Casumpang v. ILWU, 94 Hawaiʻi 330, 343,
n.14, 13 P.3d 1235, 1248, n.14 (2000) (citing Livadas v.
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Bradshaw, 512 U.S. 107, 122-26 (1994)). .Additionally, a defense
based on an agreement “is alone insufficient to require
preemption.” Ward, 473 F.3d at 998 (citing Caterpillar Inc. v.
Williams, 482 U.S. 386, 398-99 (1987)).
In this case, Wong has not relied on the Pilots
Agreement in making out his claims for negligence and negligent
misrepresentation. Wong’s complaint alleged that HAL “had a
fiduciary, statutory, and common law duty” to provide Wong “with
reasonably accurate Medicare retirement information.” Wong also
alleged that HAL had a duty to supply Wong with correct
information regarding whether he should choose to have HAL’s
medical plan or Medicare Part B as his primary health care
insurer. Wong did not rely on the Pilots Agreement when
discussing HAL’s duty in his submissions to the circuit court or
during the hearings on HAL’s motions for summary judgment.
Instead, in his memorandum in opposition to the first motion for
summary judgment, Wong cited to an HMSA brochure instructing
that more information regarding the Medicare coordination rules
could be obtained by “contact[ing] your employer or the Centers
for Medicare & Medicaid Services.” Wong also referenced the
Restatement, Second of Torts § 552, which imposes a duty on an
employer in the course of business for negligent
misrepresentation. Thus, there is nothing in the record to
indicate that Wong’s state law claims of negligence and
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negligent misrepresentation are dependent on the Pilots
Agreement.
In its analysis, the ICA assumed that “Hawaiian’s duty
to act with reasonable care to ensure that its representatives
do not provide misinformation about retirement benefits arose
from its duties” under the Pilots Agreement. The ICA does not
explain the origin for this conclusion, which is not found in
the circuit court’s findings. To the contrary, the circuit
court specifically found that there were genuine issues of
material fact as to whether HAL owed Wong a duty. Given that
there are questions of material fact as to whether HAL owed Wong
a duty, the record is insufficient for a reviewing court to make
a determination regarding the question of duty as a matter of
law.
More importantly, even assuming that HAL owed Wong a
duty of care under the Pilots Agreement, it would not foreclose
Wong from bringing his state law claims for negligence and
negligent misrepresentation that are independent of the
agreement. The United States Supreme Court has already rejected
the proposition that the RLA and LMRA enable private parties to
evade state law:
Of course, not every dispute concerning employment, or
tangentially involving a provision of a collective
bargaining agreement, is preempted by § 301 or other
provisions of the federal labor law . . . . Nor is there
any suggestion that Congress, in adopting § 301, wished to
give the substantive provisions of private agreements the
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force of federal law, ousting any inconsistent state
regulation . . . .
Norris, 512 U.S. at 260 (alterations in original) (quoting
Lueck, 471 U.S. 202, 211 (1985)). Indeed, the Court in Norris
did not accord any weight to the fact that the plaintiff in that
case had the option to seek redress for his discharge through
either the grievance procedures of a collective bargaining
agreement or in state court under state law claims. Norris, 512
U.S. at 250; see also Ward, 473 F.3d at 999 (“A state law claim
is not preempted simply because it may require consideration of
the same factual issues as a federal labor law.” (citing Lingle,
486 U.S. at 410)).
By extension, HAL’s argument that any duty HAL owed to
Wong would be “intertwined with Hawaiian’s duty to provide
medical coverage to its retired pilots” is not demonstrated in
the record before this court. HAL’s emphasis on the Pilots
Agreement’s contemplation that HAL’s medical coverage would be
“coordinated with Medicare benefits” is not dispositive of the
RLA preemption determination because, even if HAL owed Wong a
duty under the Pilots Agreement, Wong is not foreclosed from
bringing state law claims that are independent of the agreement.
Additionally, HAL suggests that, because it is obligated to
provide medical coverage under the Pilots Agreement, “any
information supplied by Hawaiian would be provided in connection
with its duty.” Thus, HAL seems to suggest that, by virtue of
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its contractual obligation to provide medical coverage, it is
insulated from all state law claims with regard to their
providing of “information” to retired pilots. However, such an
understanding of RLA preemption would give “private agreements
the force of federal law,” Norris, 512 U.S. at 260 (quoting
Lueck, 471 U.S. at 211), allowing circumvention of state law
through the collective bargaining process.
In summary, there is nothing in the record to
demonstrate that Wong’s negligence and negligent
misrepresentation claims are not independent of the Pilots
Agreement, and, thus, HAL has not sustained its burden to
establish that Wong’s negligence and negligent misrepresentation
claims are preempted by the RLA. See Casumpang, 94 Hawaiʻi at
340, 13 P.3d at 1245 (describing the defense’s burden to
establish preemption). Thus, the ICA and the circuit court
erred in finding that Wong’s negligence and negligent
misrepresentation claims are preempted by the RLA.10 In light of
10
The minority suggests that it is necessary for the court to first
determine Wong has a “viable” state claim before determining whether Wong’s
claim is preempted by the RLA. See minority at 5-6. Instead, under the
preemption analysis of the Supreme Court, a state law claim is preempted by
the RLA if the resolution of the claim requires interpretation or application
of a collective bargaining agreement. Norris, 512 U.S. at 260; Rawson, 495
U.S. at 369 (articulating the federal preemption analysis). As the minority
acknowledges, “Wong asserts only a common law right not to receive false
information negligently, which he claims is not based on the CBA . . . .”
Minority at 3. Therefore, the minority’s conclusion that “Wong’s claim is
preempted,” minority at 2, is erroneous.
The minority also concludes “as a matter of law that, state law
does not impose the duty of care on HAL that Wong asserts in this case.”
Minority at 6. As previously stated, the circuit court found genuine issues
(continued . . .)
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our ruling, we also vacate the circuit court’s award of costs in
favor of HAL and the ICA affirmance of the award.
B.
HRS § 480-2 (2008) declares that “[u]nfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are unlawful.” The purpose of
the prohibition on unfair methods of competition and unfair or
deceptive acts or practices is to “enjoin unfair and deceptive
practices by which consumers are defrauded and the economy of
the state are harmed.” H. Stand. Comm. Rep. No. 55, in 1965
House Journal, at 538; see also Cieri v. Leticia Query Realty,
Inc., 80 Hawaiʻi 54, 65, 905 P.2d 29, 40 (1995) (“[T]he
legislative history to §§ 480-2 and 480-13 makes clear that the
paramount purpose of both statutes is to prevent deceptive
practices by businesses that are injurious to other businesses
and consumers.” (emphasis omitted) (quoting Beerman v. Toro Mfg.
Corp., 1 Haw. App. 111, 118, 615 P.2d 749, 754 (1980)).
This court has held that “in order to fall within the
purview of HRS Chapter 480, a claim for alleged unfair and
deceptive acts or practices . . . must stem from a transaction
(continued . . .)
of material fact as to whether HAL owed Wong a duty. While the minority
references the Restatement (Second) of Torts § 552, the comments to this
section provides a possibly relevant explanation of this section.
Restatement (Second) of Torts § 552 cmt. d. (1977) (recognizing that a
defendant’s pecuniary interest normally lies in a consideration paid for the
transaction and that “[i]t may, however, be of a more indirect character”).
However, we do not address whether HAL owed a duty to Wong under state law.
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involving ‘conduct in any trade or commerce.’” Cieri, 80 Hawaiʻi
at 65, 905 P.2d at 40; see Haw. Cmty. Fed. Credit Union v. Keka,
94 Hawaiʻi 213, 227, 11 P.3d 1, 15 (2000) (construing Cieri).
Whether an act or practice occurs in the “conduct of any trade
or commerce” depends on whether or not the act or practice is
perpetrated in a “business context.” Cieri, 80 Hawaiʻi at 63,
905 P.2d at 40. The question of whether a transaction occurs
within a “business context” is determined “on a case-by-case
basis by an analysis of the transaction.”11 See Cieri, 80 Hawaiʻi
at 65, 905 P.2d at 40.
The Cieri court cited approvingly of Massachusetts
case law identifying six factors to aid courts in determining
whether a transaction took place in a “business context”:
(1) the nature of the transaction; (2) the character of the
parties involved; (3) the activities engaged in by the
parties; (4) whether similar transactions had been
undertaken in the past; (5) whether the transaction was
motivated by business or for personal reasons . . . ; and
(6) whether the participant played an active part in the
transaction.
Id. at 63, 905 P.2d at 38 (citing Begelfer v. Najarian, 409
N.E.2d 167, 176 (Mass. 1980)). It is noted that the Cieri
11
Evaluating the transaction on a case-by-case basis is consistent
with the broad language of HRS § 480-2. In adopting such a broad prohibition
on unfair and deceptive acts, the legislature recognized that it would be
impractical to enact laws fully defining the various practices it sought to
prohibit. H. Stand. Comm. Rep. No. 55, supra. “It is also practically
impossible to define unfair practices so that the definition will fit
business of every sort . . . . Whether competition is unfair or not
generally depends upon the surrounding circumstances of the particular case.
What is harmful under certain circumstances may be beneficial under different
circumstances.” Id. (quoting House Report No. 1142, 63d Congress, 2d Sess.,
September 4, 1914, at page 19).
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decision does not require consideration of any or all of these
factors, and it does not limit the court to a consideration of
only these six factors.
Wong alleged in his complaint that HAL’s conduct in
providing him incorrect information regarding Medicare Part B
constituted a deceptive trade practice. Wong further contended
that he “is a consumer within the meaning of HRS § 480-1, in
that he committed money in a personal investment.” He also
maintained, “The misrepresentation by Defendant was material to
Plaintiff’s decision to not choose Medicare Part B as opposed to
remaining with the Defendant’s current and existing Pilots’
group insurance plan with HMSA.” In light of the summary
judgment evidentiary record, and applying the criteria listed
above, the circuit court and the ICA did not err in concluding
that the alleged conduct did not occur in “the conduct of any
trade or commerce.”
IV. CONCLUSION
Accordingly, the ICA’s June 25, 2014 Judgment on
Appeal is vacated to the extent that it affirms the circuit
court’s granting of summary judgment in favor of HAL on Wong’s
negligence and negligent misrepresentation claims and the
granting of HAL’s motion for taxation of costs. The ICA’s
Judgment on Appeal is affirmed to the extent that it affirms the
circuit court’s granting of summary judgment in favor of HAL on
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Wong’s UDAP claim. Additionally, the circuit court’s April 10,
2013 “Order Granting Defendant Hawaiian Airlines, Inc.’s Motion
for Summary Judgment, Filed January 29, 2013” and the June 6,
2013 Final Judgment are vacated except with regard to the
granting of summary judgment in favor of HAL on Wong’s UDAP
claim. The case is remanded to the circuit court for further
proceedings consistent with this opinion.
R. Steven Geshell /s/ Mark E. Recktenwald
for petitioner
/s/ Sabrina S. McKenna
C. Michael Heihre and
Allison Mizuo Lee /s/ Richard W. Pollack
for respondent
/s/ Michael D. Wilson
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