Boyd v. Hawaii State Ethics Commission.

***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
Electronically Filed
Supreme Court
SCWC-14-0000352
19-JUL-2016
08:38 AM
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o---
WILLIAM ERIC BOYD,
Petitioner/Appellant/Appellee/Cross-Appellant,
vs.
HAWAII STATE ETHICS COMMISSION, STATE OF HAWAIʻI,
Respondent/Appellee/Appellant/Cross-Appellee.
SCWC-14-0000352
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-14-0000352; CIV. NO. 13-1-115)
JULY 19, 2016.
RECKTENWALD, C.J., McKENNA, POLLACK, AND WILSON, JJ., AND
CIRCUIT COURT JUDGE CHANG, IN PLACE OF NAKAYAMA, J., RECUSED
OPINION OF THE COURT BY POLLACK, J.
This case addresses whether the Hawaiʻi State Ethics
Commission (Commission) had authority to adjudicate proceedings
against a charter school employee for conduct that occurred in
2006 and 2007 involving alleged conflict of interest violations
of the code of ethics contained in Chapter 84 of the Hawaiʻi
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
Revised Statutes (HRS). We conclude that HRS § 84-14 (1993),
prescribing a code of conduct related to conflicts of interests
for State employees, and HRS Chapter 302B (Supp. 2006 & 2007)
(repealed 2012), encompassing comprehensive provisions that
provided for charter schools to establish conflict of interest
policies and procedures, resulted in conflicting statutory
regimes for charter school employees as to standards of conduct
involving conflicts of interests. In light of the inconsistency
between these State laws, we hold that, in accordance with
HRS § 302B-9(a) (Supp. 2006 & 2007) (repealed 2012), charter
school employees were exempt from HRS § 84-14 at the relevant
time period in this case. Accordingly, the Commission did not
have the authority to adjudicate proceedings against William
Boyd, a charter school employee, for alleged violations of
HRS § 84-14 that occurred in 2006 and 2007. We therefore vacate
the judgments of the Intermediate Court of Appeals (ICA) and the
Circuit Court of the Third Circuit (circuit court) and the order
of the Commission that sustained the violations against Boyd,
and we remand the case to the Commission with instructions to
dismiss the case.
I. BACKGROUND
At the time of the alleged ethics violations in this
case, Connections New Century Public Charter School
2
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
(Connections) was governed by HRS Chapter 302B, which set forth
comprehensive legislation authorizing flexibility and
independent authority to charter schools in implementing
alternative frameworks with respect to personnel management and
the day-to-day functioning of a charter school.1 See HRS § 302B-
1 (Supp. 2006 & 2007) (repealed 2012). Charter schools, such as
Connections, operated independently and separately from public
schools under Chapter 302B but were linked to the State
Department of Education and Board of Education primarily for
administrative purposes. See, e.g., HRS § 302B-8 (Supp. 2006 &
2007) (repealed 2012) (stating the charter school administrative
office shall be attached to the Department of Education “for
administrative purposes only”); HRS § 302B-15 (Supp. 2006 &
2007) (repealed 2012) (setting forth the responsibilities of the
Department of Education with respect to charter schools and
special education services at charter schools).
Connections’ Local School Board, comprised mainly of
community representatives, served as Connections’ centralized
governing authority responsible for the administration of the
school. See HRS § 302B-7(a), (c) (Supp. 2006 & 2007) (repealed
2012). The Local School Board was in charge of financial
1
HRS Chapter 302B was repealed in 2012 and replaced with HRS
Chapter 302D.
3
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
oversight and decision-making regarding State general funds and
federal funds allocated to the school as well as the hiring and
firing of charter school employees. See id. According to
Connections’ Principal John Thatcher, the Local School Board
essentially directed him as to how he should manage the school.
A. Connections’ Internal Policies and Procedures
During the pertinent time period in this case,
Connections, with the assistance of its hired auditors,
developed and followed its own internal checks-and-balances
procedures with respect to procuring school supplies, materials,
and other equipment. The purchasing procedure incorporated the
use of a purchase order form that Connections’ administrators
had developed. The purchase order form required the following
information: (1) the name and title of the individual making the
request (requestor); (2) the name, address, and telephone number
of the individual or entity from whom the materials could be
purchased (vendor); (3) the school materials desired, including
the quantity and pricing; and (4) the name(s) and title(s) of
the individual(s) approving the request.
Any employee of Connections could make a request by
listing the vendor’s information on the purchasing form and then
submitting the form to an authorized school official for
approval. The approval process included reviewing the
4
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
information on the form, checking the school’s inventory to
ensure that the school did not have the requested materials, and
checking with vendors to find the best prices for the requested
materials. Principal Thatcher was required to approve all
purchase requests. When Principal Thatcher was not available to
give his approval, William Boyd or Sandra Kelley, as
administrative officials at Connections, were authorized to
preliminarily approve purchase orders in order to enable
expedited purchases, but all preliminary approvals were subject
to final approval by Principal Thatcher. If the purchase
involved Title 1 funds, the purchase also required review and
approval by the Title 1 Coordinator.2 Additionally, Principal
Thatcher explained that the Local School Board, through its
finance committee, could review his final approval of the
purchase order requests.
As an employee of Connections, Boyd was also
authorized to submit purchase order requests. On several
occasions during the 2006-2007 school year, Boyd prepared,
signed as requestor, or preliminarily approved various purchase
order forms for requested school materials. With respect to a
2
“Title 1 funds” refer to “federal monies provided to schools with
a high level of poverty, and such funds may be used to supplement the
school’s instructional program.”
5
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
handful of forms, Boyd listed his wife, Erika Boyd (Mrs. Boyd),
as the requestor and/or the vendor. On two of the forms,
Principal Thatcher approved the purchase order by signing his
name under the heading “Approved.” On all the other forms, Boyd
preliminarily approved the request, usually at the direction of
Principal Thatcher, and then Principal Thatcher later reviewed
and authorized the order by initialing the form. For some of
the purchase order forms in which Mrs. Boyd was listed as the
vendor, a Connections’ teacher was the requestor, and Boyd
preliminarily approved the order. The school materials listed
on the forms at issue were sold to Connections through Mrs. Boyd
and fulfilled by an Amway distributorship co-owned by Boyd and
his wife (Amway Business).3
When asked whether it was a concern that Mrs. Boyd was
a requestor and Boyd was preliminarily signing off on purchase
order forms, Principal Thatcher explained that this situation
was quite rare and that it would have been a concern if it had
been a common practice. Principal Thatcher stated that the
original charter school statute required that the Board of
Education audit Connections every year, which it failed to do.
Thus, beginning in 2006, Connections hired its own auditors, who
3
Mrs. Boyd used any accumulated points or bonus checks that the
Amway Business earned to purchase school supplies for Connections.
6
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
conducted audits and made recommendations to refine the school’s
checks-and-balances procedures, including the school’s purchase
order procedures.
Principal Thatcher explained that he sought to instill
in Connections’ employees that the school needed to get
everything at the lowest cost possible. He related that Boyd
did a lot of research on the availability of items and vendors
and stated that Boyd was very diligent about following the
practice of purchasing necessary items at the lowest price
possible. Boyd in large part secured his position as
Administrative Assistant at Connections because he always
followed Principal Thatcher’s directions and methods. Principal
Thatcher insisted that he could have approved the purchases of
the school materials from other vendors, rather than from Mrs.
Boyd, and that it was his prerogative to make that decision if
the prices had been cheaper.
In 2007, before the start of the school semester,
Connections learned of a sudden price increase for its high
school lunch services, and it had approximately three weeks to
enter into a temporary replacement food services contract.
Connections sought vendors, but Principal Thatcher explained
that it was difficult to find affordable vendors on short
notice. Consequently, Connections contracted with Boyd
7
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
Enterprises, a sole proprietorship co-owned by Boyd and his
wife, to provide school lunches as Mrs. Boyd had the only
competing bid with the Department of Education that would save
Connections money.4
As part of the procedure for obtaining payment for the
school lunches, Boyd Enterprises was required to submit a duly
signed and certified Food Service Certificate, or invoice,
reflecting the number of school lunches provided and the total
amount owed. Principal Thatcher approved payment for the Food
Service Certificates, and in his absence, Kelley would do so.
Boyd apparently did not have authority to approve the Food
Service Certificates and did not participate in the approval
procedures as a school official.
From January 25, 2007 to June 21, 2007, Boyd, as the
Food Services Manager for Boyd Enterprises, submitted eleven
Food Service Certificates to Connections and certified that the
number of school lunches stated on the certificates represented
the actual number of lunches provided. Kelley signed all the
Food Service Certificates, and Principal Thatcher approved each
of the payments to Boyd Enterprises. Principal Thatcher
indicated that, at the time Connections had contracted with Mrs.
4
The high school lunches provided by Boyd Enterprises were sold
for $3.00 each.
8
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
Boyd, it was not a concern that Connections was paying Boyd
Enterprises in which Boyd was the Food Services Manager. He
explained that “we did not see it as a problem” but, after a
year or so, in 2008, the hired “auditors advised [Connections]
that it would be better if [Boyd] was not involved with the food
service program at all, and [Connections] followed the advice of
the auditors.”
B. Commission Proceedings
On October 20, 2010, the Commission formally issued a
charge against Boyd based on twenty-six counts of violating
HRS § 84-14(a) and (d) (1993), involving the purchase of school
supplies and lunch services that had occurred approximately
three years earlier. Boyd filed an answer to the Commission’s
charge and requested a formal, contested, open hearing. Nearly
seventeen months later, on April 18, 2012, the Commission issued
its further statement of alleged violation that charged Boyd
with nine counts of violating HRS § 84-14(a),5 for requesting and
approving the purchase of school materials from Amway Business,
5
HRS § 84-14(a) provides, in relevant part, “No employee shall
take any official action directly affecting: (1) A business or other
undertaking in which the employee has a substantial financial interest; or
(2) A private undertaking in which the employee is engaged as legal
counselor, advisor, consultant, representative, or other agency capacity.”
9
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
and eleven counts of violating HRS § 84-14(d),6 for assisting
Boyd Enterprises in transactions to provide lunches to
Connections.
Boyd filed an answer to the charge and further
statement of alleged violation. He also filed a motion to
dismiss based on the Commission’s lack of jurisdiction,
maintaining that he was not an employee of the State subject to
the code of ethics contained in HRS Chapter 84.7 Boyd
additionally contended that he was exempt from Chapter 84
because the legislature intended that local school boards
develop and adopt their own ethics code. Boyd argued that he
was accountable for his actions to Connections’ Local School
6
HRS § 84-14(d) states in pertinent part:
No legislator or employee shall assist any person or
business or act in a representative capacity for a fee or
other compensation to secure passage of a bill or to obtain
a contract, claim, or other transaction or proposal in
which the legislator or employee has participated or will
participate as a legislator or employee, nor shall the
legislator or employee assist any person or business or act
in a representative capacity for a fee or other
compensation on such bill, contract, claim, or other
transaction or proposal before the legislature or agency of
which the legislator or employee is an employee or
legislator.
HRS § 84-14(d).
7
Attached to Boyd’s motion to dismiss were the following documents
in which Connections was identified as Boyd’s employer: (1) U.S. Department
of Justice Immigration and Naturalization Service Employment Eligibility
Verification Form; (2) Internal Revenue Service Form W-4 (Employee’s
Withholding Allowance Certificate); and (3) State of Hawaiʻi Tax Form HW-4
(Employee’s Withholding Allowance and Status Certificate).
10
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
Board, an autonomous entity under Chapter 302B, and not to the
Commission under Chapter 84.
Principal Thatcher submitted a signed, sworn
declaration to the Commission, which quoted the portion of
Connections’ Detailed Implementation Plan that stated as
follows:
The employment, appointment, promotion, transfer, demotion,
discharge, and job descriptions of all officers and
employees of or under the jurisdiction of the New Century
Charter School shall be determined by the New Century
Charter School and applicable personnel laws and collective
bargaining agreements.
Except as previously stated, the Board of Education or the
Superintendent of Education shall not have the power to
supervise or control the New Century Charter School in the
exercise of its functions, duties and powers.
This portion of the Detailed Implementation Plan described the
powers, duties, and responsibilities of Connections and its
Local School Board. Additionally, the Detailed Implementation
Plan indicated that the Director of Operations of the Local
School Board had direct authority over operations and business
services, fiscal management and personnel services, and
purchasing and audit services. The Commission in response to
the motion to dismiss filed a motion for determination that Boyd
was subject to the Commission’s jurisdiction. The Commission
deferred its decision as to whether Boyd was subject to its
jurisdiction until the date of the contested case hearing.
11
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
At the beginning of the contested case hearing, the
Commission granted the motion for determination and denied
Boyd’s motion to dismiss due to lack of jurisdiction, orally
ruling that Boyd was an employee of the State subject to the
code of ethics contained in Chapter 84 and to the Commission’s
jurisdiction. During the hearing, in addition to the
circumstances recounted above, Boyd testified that he did not
receive any notification, training, or written information from
the Commission that the code of ethics applied to him. Boyd
also stated that he had done everything within his power to save
Connections money. No evidence was presented that Amway
Business or Boyd Enterprises overcharged Connections or that the
school materials and lunches supplied to Connections were not
provided at the best available price.
Following the hearing, the Commission rendered factual
findings, which included the following: (1) Connections was a
public charter school created pursuant to statute; (2)
Connections utilized a purchasing procedure that incorporated
the use of a purchase order form it had developed; (3) as part
of the purchasing procedure, several administrators were
required to review the request, and Principal Thatcher retained
final approval authority; and (4) Boyd, an Administrative
Assistant at Connections, initially approved several purchase
12
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
orders, which were subject to final approval by Principal
Thatcher. The Commission also found that Principal Thatcher and
Kelley had the sole authority to approve payments for the Food
Service Certificates, which reflected the number of school
lunches provided, and that Principal Thatcher approved payments
to Boyd Enterprises for all the Food Service Certificates
submitted.
The Commission determined that the code of ethics
applied to all State employees, except judges and justices,8 and
that Connections was a State agency as defined in HRS § 84-3
(1993).9 The Commission thus concluded that, as an employee of
Connections, a State agency, Boyd was an “employee” as defined
in HRS § 84-3 and was therefore subject to the provisions set
8
HRS § 84-2 provides
This chapter shall apply to every nominated, appointed, or
elected officer, employee, and candidate to elected office
of the State and for election to the constitutional
convention, but excluding justices and judges; provided
that in the case of elected delegates and employees of the
constitutional convention, this chapter shall apply only to
the enforcement and administration of the code of ethics
adopted by the constitutional convention.
HRS § 84-2 (1993).
9
HRS § 84-3 defines “State agency” as including “the State, the
legislature and its committees, all executive departments, boards,
commissions, committees, bureaus, offices, the University of Hawaiʻi, and all
independent commissions and other establishments of the state government but
excluding the courts.”
13
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
forth in Chapter 84.10 Consequently, in its February 8, 2013
“Findings of Fact, Conclusions of Law, and Decision and Order”
(Decision and Order), the Commission concluded that Boyd had
committed nine violations of HRS § 84-14(a) (Counts 1-9) and
eleven violations of HRS § 84-14(d) (Counts 10-20). The
Commission imposed an administrative fine of $500 for each
violation, the maximum amount for each violation, totaling a
fine of $10,000.
C. Appellate Proceedings
Boyd appealed the Commission’s Decision and Order to
the circuit court,11 contending, inter alia, that the Commission
lacked statutory jurisdiction over him because he was not a
State employee bound by the code of ethics in HRS Chapter 84 and
because the Local School Board was exempt from Chapter 84. Boyd
further maintained that the legislature intended that local
school boards develop, adopt, and enforce a separate ethics code
from Chapter 84, and therefore Boyd was accountable to
Connections’ Local School Board, not the Commission. Boyd
10
HRS § 84-3 defines “employee” as “any nominated, appointed, or
elected officer or employee of the State, including members of boards,
commissions, and committees, and employees under contract to the State or of
the constitutional convention, but excluding legislators, delegates to the
constitutional convention, justices and judges.”
11
The Honorable Greg K. Nakamura presided.
14
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
argued that it would be absurd if Connections’ employees were
subject to two separate standards of ethical conduct.
In its “Decision and Order Affirming in Part and
Reversing in Part Hawaiʻi State Ethics Commission’s Findings of
Fact, Conclusions of Law, and Decision and Order” (circuit court
Order), the circuit court found that Boyd was a member of a
collective bargaining unit, as defined under HRS Chapter 89,
such that his employer was the State. Consequently, the circuit
court concluded that Boyd was an “employee” under HRS § 84-3 and
thus was subject to the code of ethics in Chapter 84. The
circuit court affirmed the Commission’s determination that Boyd
had violated HRS § 84-14(a) (Counts 1-9) but reversed the ruling
that Boyd had violated HRS § 84-14(d) (Counts 10-20) as the
Commission had failed to make a finding that Boyd received money
specifically in exchange for the act of signing the Food Service
Certificates on behalf of Boyd Enterprises. Accordingly, the
circuit court reduced the administrative fines to $4,500 and
entered Final Judgment.
The Commission appealed the circuit court Order and
Final Judgment, maintaining that the court erred in reversing
its ruling that Boyd had violated HRS § 84-14(d) because the
Commission had concluded that Boyd received compensation for
signing the Food Service Certificates. Boyd cross-appealed,
15
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
contending, inter alia, that the Commission lacked statutory
jurisdiction over him because he was not a State employee but
rather was an employee of Connections’ Local School Board. Boyd
also argued that the Commission lacked authority over him
because during the time of the alleged offenses, charter school
employees were governed by HRS Chapter 302B. Boyd further
observed that, pursuant to HRS § 302B-7(d)12 and (e)13 (Supp. 2006
& 2007) (repealed 2012), Local School Boards were exempt from
HRS Chapter 103D (Procurement Code), Chapter 91 (Administrative
Procedures Act), and Chapter 92 (Public Meeting Law).
Additionally, Boyd suggested that a subsequent amendment to
HRS § 302B-7(f) indicated that Connections’ Local School Board
was exempt from HRS Chapter 84 and that the legislature intended
12
HRS § 302B-7(d) provided
Local school boards shall be exempt from chapter 103D, but
shall develop internal policies and procedures for the
procurement of goods, services, and construction,
consistent with the goals of public accountability and
public procurement practices. Charter schools are
encouraged to use the provisions of chapter 103D wherever
possible; provided that the use of one or more provisions
of chapter 103D shall not constitute a waiver of the
exemption from chapter 103D and shall not subject the
charter school to any other provision of chapter 103D.
HRS § 302B-7(d).
13
HRS § 302B-7(e) stated in relevant part that “[c]harter schools
and their local school boards shall be exempt from the requirements of
chapters 91 and 92.”
16
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
that local school boards develop, adopt, and enforce a separate
ethics code.
The ICA, in a published opinion, ruled that the
Commission had jurisdiction to bring charges against Boyd
because he was a State employee and was not exempt from the code
of ethics by HRS Chapter 302B. The ICA concluded that Boyd was
an employee of the State required to adhere to the code of
ethics because (1) he admitted that he was an employee of the
Local School Board, which was an “arm of the State,” (2) he
participated in many of the available benefits of being a State
employee, and (3) he self-identified as a State employee on
several benefit enrollment forms. The ICA further ruled that
Boyd’s exemption argument was not supported by canons of
statutory construction, and thus was without merit, because the
“contrast between the procedural statutes and the Code of Ethics
leads to an inference that the latter was not intended to be
included within the list of exempted statutes.” Additionally,
the ICA concluded that the circuit court erred in reversing in
part the Commission’s Decision and Order as it pertained to
Boyd’s HRS § 84-14(d) violations because the record adequately
supported that Connections’ payments to Mrs. Boyd for the lunch
services constituted compensation to Boyd, for which Boyd was
culpable. Accordingly, the ICA affirmed in part and reversed in
17
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
part the circuit court’s Order and remanded the case to the
circuit court to enter final judgment affirming the Commission’s
Decision and Order.
II. STANDARD OF REVIEW
Statutory interpretation is a question of law
reviewable de novo. Estate of Roxas v. Marcos, 121 Hawaiʻi 59,
66, 214 P.3d 598, 605 (2009) (quoting Capua v. Weyerhaeuser Co.,
117 Hawaiʻi 439, 443, 184 P.3d 191, 196 (2008)). Statutory
construction is guided by the following rules:
First, the fundamental starting point for statutory
interpretation is the language of the statute itself.
Second, where the statutory language is plain and
unambiguous, our sole duty is to give effect to its plain
and obvious meaning. Third, implicit in the task of
statutory construction is our foremost obligation to
ascertain and give effect to the intention of the
legislature, which is to be obtained primarily from the
language contained in the statute itself. Fourth, when
there is doubt, doubleness of meaning, or indistinctiveness
or uncertainty of an expression used in a statute, an
ambiguity exists. And fifth, in construing an ambiguous
statute, the meaning of the ambiguous words may be sought
by examining the context, with which the ambiguous words,
phrases, and sentences may be compared, in order to
ascertain their true meaning.
Id. (quoting Carlisle v. One (1) Boat, 119 Hawaiʻi 245, 256, 195
P.3d 1177, 1188 (2008)).
III. DISCUSSION
Boyd contends that, based on HRS § 302B-9 (Supp. 2006
& 2007) (repealed 2012),14 he was exempt from the code of ethics
14
HRS § 302B-9(a) provided in relevant part,
(continued. . .)
18
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
in HRS Chapter 84. Boyd argues that because charter schools and
their local school boards had autonomy and responsibility over
the internal policies and procedures relating to personnel
management and use of public funds, it would have been
inconsistent and duplicative to have subjected charter schools
and their employees to Chapter 84. In essence, Boyd asserts
that because Chapter 84 was in conflict with HRS Chapter 302B,
Chapter 302B superseded Chapter 84, rendering Boyd exempt from
the code of ethics within that Chapter. Boyd also argues that
the subsequent 2011 amendment to HRS § 302B-7(f) reflects that
the legislature recognized an actual conflict between Chapter 84
and Chapter 302B and amended Chapter 302B in an attempt to
remove the conflict, which was consistent with the legislature’s
(. . .continued)
Charter schools shall be exempt from chapters 91 and 92 and
all other state laws in conflict with this chapter, except
those regarding:
(1) Collective bargaining under chapter 89 . . .
(2) Discriminatory practices under section 378-2;
and
(3) Health and safety requirements.
HRS § 302B-9(a).
19
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
actions regarding other State laws conflicting with Chapter
302B.15
The Commission responds that because Boyd had a State
constitutional mandate to adhere to the code of ethics pursuant
to Article XIV of the Hawaiʻi Constitution,16 Boyd could not have
opted out of the code of ethics, and Connections’ Local School
Board could not have exempted him from his constitutionally
mandated ethical obligations.17 Additionally, the Commission
contends that Boyd was not statutorily exempt from the code of
ethics.18
15
In his application for writ of certiorari, Boyd also presents the
following questions: (1) whether ethics code violations require proof of
intent; (2) whether the ICA “overturned” Tangen v. State Ethics Commission,
57 Hawaiʻi 87, 550 P.2d 1275 (1976) without basis; and (3) whether the
Commission violated Boyd’s due process right to a timely hearing.
16
Article XIV of the Hawaiʻi Constitution provides that “the
legislature . . . shall adopt a code of ethics which shall apply to appointed
and elected officers and employees of the State or the political subdivision,
respectively, including members of the boards, commissions and other bodies.”
Haw. Const. art. XIV.
17
The Commission’s contention that Boyd could not have “opted out”
of compliance with the code of ethics because of Article XIV of the Hawaiʻi
Constitution is inapt. Boyd’s charges were based upon a purported violation
of the code of ethics from which Boyd contends that he had been statutorily
exempted.
18
The Commission further maintains that Boyd waived his argument
that he was exempt from Chapter 84 because he did not initially raise this
issue in his application for writ of certiorari. As stated, Boyd contended
both to the circuit court and the ICA that, as a charter school employee, he
was statutorily exempt from the code of ethics in Chapter 84. Additionally,
both parties addressed this issue in their supplemental briefs to this court,
and therefore the issue was adequately raised by Boyd to this court.
20
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
We turn first to the code of ethics, adopted by the
legislature and codified in HRS Chapter 84. The Chapter sets
forth specific standards of conduct as to gifts, reporting of
gifts, confidential information, fair treatment, conflicts of
interests, contracts, requirements of disclosure, and post-
employment restrictions. See HRS §§ 84-11 to -18 (1993). An
ethics commission, established by Chapter 84, administers the
code of ethics and enforces the provisions prescribed in the
Chapter so as to promote public confidence in public servants.
See HRS Chapter 84, Preamble (1993). The conflict of interest
provision at issue in this case, prescribed in HRS § 84-14,
restricts a State employee from taking any official action
affecting a business in which the employee has a substantial
financial interest or is engaged in an official capacity.
HRS § 84-14(a) (1993).19 It also prohibits an employee from
representing or assisting a business for compensation on a
contract or transaction before the agency where the employee
works. See HRS § 84-14(d) (1993).20
The legislature enacted HRS Chapter 302B in 2006,
which governed the establishment and administration of charter
19
See supra note 5.
20
See supra note 6.
21
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
schools, the powers and duties of local school boards, charter
schools’ exemptions from State laws, and certain charter school
employees’ rights and benefits. Under this comprehensive
legislation, which was later repealed in 2012 and replaced with
HRS Chapter 302D, charter schools were empowered with “the
flexibility and independent authority to implement alternative
frameworks with regard to . . . personnel management.”
HRS § 302B-1 (Supp. 2006 & 2007) (repealed 2012). A local
school board served as the autonomous, governing entity of the
charter school with “the independent authority to determine the
organization and management of the school . . . and compliance
with applicable federal and state laws.” Id.
The State legislature’s adoption of this comprehensive
legislation relating to the governance of charter schools in
HRS § 302B (Supp. 2006) (repealed 2012) indicated that charter
schools were neither standard public schools nor private
schools. See HRS § 302A (Supp. 2006) (relating to public
schools); HRS § 302C (Supp. 2006) (relating to private schools).
Rather, charter schools, while supported in part by State
general funds and linked to the Department of Education
primarily for administrative purposes, had discretion and
autonomy to operate independently and separately from the
Department of Education and Board of Education. See, e.g.,
22
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
HRS §§ 302B-3, -8, -12, -15, -16 (Supp. 2006 & 2007) (repealed
2012).
For example, in order to establish a charter school, a
detailed implementation plan describing “[a] governance
structure for the charter school that incorporate[d] a conflict
of interest policy” was required to be submitted to the Board of
Education. See HRS §§ 302B-5(d)(6), -6(d)(6) (Supp. 2006 &
2007) (repealed 2012). The detailed implementation plan was
also required to contain a framework for assessing the
accountability of faculty and staff, both individually and
collectively, that was “at least equivalent to the average
system of accountability” in State public schools. HRS §§ 302B-
5(d)(1), -5(d)(5), -6(d)(1), -6(d)(5). A necessary component of
the implementation plan was to provide for program audits and
annual financial audits. HRS §§ 302B-5(d)(5)(A), -5(d)(5)(D),
-6(d)(5)(A), -6(d)(5)(D). This detailed implementation plan
served as the basis for a “performance contract” between the
Board of Education and the charter school and presented a plan
for holding the charter school accountable for its operations,
finances, and management. See HRS § 302B-1.21 Thus, under
21
A “detailed implementation plan” was defined as “the document
that details the charter school’s purpose, focus, operations, organization,
finances, and accountability, and becomes the basis for a performance
contract between the board and the charter school.” HRS § 302B-1.
23
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
HRS §§ 302B-5(d) and 302B-6(d), charter schools and their local
school boards were required to establish a framework of
accountability that incorporated a conflict of interest policy
and provided for annual financial audits.
Once established as a charter school under Chapter
302B, a charter school was mandated to conduct a comprehensive
self-evaluation that was submitted to the charter school review
panel at the end of the school year. HRS § 302B-14(a) (Supp.
2006 & 2007) (repealed 2012).22 The self-evaluation process
required an evaluation of the school’s organizational viability,
which necessitated a showing that the charter school operates in
“accordance with office guidelines and procedures, is
financially sound and fiscally responsible in its use of public
funds, maintains accurate and comprehensive financial records,
operates in accordance with generally accepted accounting
practices, and maintains a sound financial plan.” HRS § 302B-1.
The autonomy and independence accorded to charter
schools was further reflected in HRS § 302B-9(a), which
specifically exempted charter schools from Chapter 91 and
22
HRS § 302B-14(a) provides, in relevant part, that “[e]very
charter school shall conduct annual self-evaluations that shall be submitted
to the board within sixty working days after the completion of the school
year. The self-evaluation process shall include but not be limited to: . . .
(6) [a]n evaluation of the school’s organizational viability.”
24
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
Chapter 92, pertaining to the procedures of State agencies. See
HRS § 302B-9(a). HRS § 302B-9(b) also provided that charter
schools were exempt from the procurement code in HRS Chapter
103D but were mandated to develop their own internal policies
and procedures “consistent with the goals of public
accountability and public procurement practices.” HRS § 302B-
9(b). In addition to these exemptions from specific HRS
chapters, charter schools were exempt from all other State laws
in conflict with Chapter 302B. HRS § 302B-9(a).
Thus, HRS Chapter 302B set forth a statutory scheme
that empowered a charter school to delineate and implement a
framework of accountability that established internal conflict
of interest policies and procedures. In developing and
enforcing this framework of accountability, the applicable
statutory provisions permitted a charter school to hire its own
auditors to review the school’s policies and procedures and to
recommend improvements to personnel management and the use of
fiscal resources. With mandated yearly self-evaluations
required by Chapter 302B, a charter school was responsible for
assessing its administrative operations and financial
accountability. Thus, the legislature enacted a statutory
scheme in which charter schools were accorded discretion,
autonomy, and independence over matters relating to the required
25
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
establishment of standards of conduct for charter school
employees. These standards of conduct included conflict of
interest standards.
Generally, a state law conflicts with another state
law where the statutory provisions are “explicitly contrary to,
or inconsistent with,” each other. See In re Haw. Gov’t Emps.
Ass’n, 116 Hawaiʻi 73, 102-03, 170 P.3d 324, 353-54 (2007).
Here, HRS § 84-14 prescribed standards of conduct as to
conflicts of interests that employees were required to adhere
to, whereas HRS §§ 302B-5(d)(6) and 302B-6(d)(6) required
charter schools to submit a detailed implementation plan
containing a conflict of interest policy and assessment plan
providing for faculty and staff accountability and annual
financial audits. HRS § 302B-14(a) further mandated that
charter schools conduct yearly self-evaluations in order to
ensure compliance with State and federal laws. Charter schools
were thus obligated to develop, implement, and revise their own
internal and independent conflict of interest policies and
procedures for charter school employees.
During the relevant time period, HRS Chapter 302B,
which was adopted in 2006 and later repealed in 2012, did not
require charter schools to adopt the specific standards of
conduct prescribed in HRS § 84-14. That is, the internal
26
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
policies and procedures relating to conflicts of interests that
charter schools established and implemented could have been
identical, more expansive, or less restrictive than the conflict
of interest provision prescribed in HRS § 84-14. Additionally,
Chapter 302B required charter schools to review their policies
and procedures with respect to responsibility for the use of
public funds, which would include conflict of interest standards
per the requirements of the school’s detailed implementation
plan. Further, during the relevant time period, Chapter 302B
did not require that the internal policies and procedures of
charter schools relating to conflicts of interests be consistent
with the code of ethics.23
In contrast, HRS § 84-14 required that an individual
employee conform to specific statutory conflict of interest
standards. Concurrently, Chapter 302B provided that charter
schools develop and establish conflict of interest standards to
govern charter school employees. If both HRS § 84-14 and
23
Under the current statutory scheme governing charter schools,
charter school employees are expressly subject to the code of ethics and not
exempt from HRS § 84-14. In 2011, the legislature amended HRS Chapter 302B
to provide that “[c]harter schools and their local school boards shall
develop internal policies and procedures consistent with ethical standards of
conduct, pursuant to chapter 84.” HRS § 302B-7(f) (Supp. 2011) (repealed
2012). In 2012, the legislature repealed HRS Chapter 302B and enacted
Chapter 302D. Under HRS § 302D-12(i), “[a]ll charter school employees and
members of governing boards shall be subject to chapter 84.” HRS § 302D-
12(i) (Supp. 2012).
27
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
Chapter 302B applied to a charter school employee during the
relevant time period, then that employee would have been subject
to two separate conflict of interest standards. Thus, that same
employee could have been subject to punishment under one set of
standards, but not the other, for the same conduct.24
Consequently, HRS § 84-14 was inconsistent with the
provisions of HRS §§ 302B-5(d)(6) and 302B-6(d)(6) as to
conflict of interest standards. Because HRS § 84-14 conflicted
with these subsections of Chapter 302B at the time of the
alleged violations, Boyd was exempt from HRS § 84-14, pursuant
24
Although unnecessary to our holding, the circumstances in this
case reflect the inconsistency resulting from the application of the relevant
statutory provisions. In 2006 and 2007, Connections, in accordance with the
requirements of its Detailed Implementation Plan, developed and implemented
conflict of interest policy and procedures, and it evaluated on a yearly
basis whether the school was financially sound and fiscally responsible in
its use of public funds. See HRS §§ 302B-1, -5(d)(6), -6(d)(6), -7(c), -
14(a). Connections’ administrative framework required documentation and
multiple levels of review by school officials for transactions involving the
use of school funds. These policies and procedures indicate that Connections
established an organizational structure designed to avoid financial
mismanagement, provide transparency, and maximize the effective use of school
funds.
Boyd followed Connections’ conflict of interest policy by
including the requisite information on the purchase order forms and Food
Service Certificates and by ensuring the proper documentation was submitted
to the appropriate school officials. All approvals were obtained prior to
purchasing the requested materials, which included reviewing whether the
school materials and lunches were obtained at the lowest possible price.
Yet, despite acting in accordance with Connections’ internal conflict of
interest policy and procedures, Boyd was charged and found in violation of
twenty counts of HRS § 84-14, the conflict of interest provision contained in
the code of ethics. He was fined $500 for each violation, totaling a fine of
$10,000. Boyd was thus subject to punishment under HRS § 84-14 for the same
conduct that was in compliance with Connections’ conflict of interest policy,
which was adopted in accordance with HRS §§ 302B-5(d)(6) or 302B-6(d)(6).
28
***FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER***
to HRS § 302-9(a). Thus, we conclude that the Commission lacked
authority to adjudicate proceedings against Boyd for alleged
violations of HRS § 84-14 that occurred in 2006 and 2007.
Accordingly, the circuit court erred in its partial affirmance
of the Commission’s Decision and Order, and the ICA erred in
affirming in part and reversing in part the circuit court’s
Order and remanding the case to the circuit court to enter final
judgment affirming the Commission’s Decision and Order.
IV. CONCLUSION
For the reasons discussed, we vacate the ICA’s
Judgment on Appeal, the circuit court’s Order and Final
Judgment, and the Commission’s Decision and Order, and we remand
the case to the Commission with instructions to dismiss the
case.25
Ted H. S. Hong /s/ Mark E. Recktenwald
for petitioner
/s/ Sabrina S. McKenna
Kimberly Tsumoto Guidry /s/ Richard W. Pollack
For respondent
/s/ Michael D. Wilson
/s/ Gary W.B. Chang
25
Boyd also raised the question of whether charter school employees
are employees of the State. In light of our disposition, it is unnecessary
to resolve this question, and, accordingly, the ICA ruling as to this issue
is also vacated. Additionally, we do not reach other issues raised by Boyd.
29