In re KAHEA

150 Hawai‘i 43

497 P.3d 58

IN RE Investigation of: KAHEA

(Department of the Attorney General, State of Hawai‘i, AG Subpoena No. 2019-158)

SCAP-20-0000110

Supreme Court of Hawai‘i.

SEPTEMBER 21, 2021

Richard Naiwieha Wurdeman for petitioner

David D. Day, (Lawrence L. Tong, Honolulu, on the briefs) for respondent

Lance D. Collins, (Bianca Isaki on the briefs) for Amicus Curiae Anonymous Donors to KAHEA: The Hawai‘ian-Environmental Alliance Jongwook Kim, for Amicus Curiae ACLU of Hawai‘i Foundation

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.

The arrests and charges followed a lengthy legal and political battle over Mauna Kea's future. KAHEA: The Hawai‘ian Environmental Alliance, is an outspoken anti-TMT partisan in that scrap. One way KAHEA opposed development on Mauna Kea was through its Aloha ‘Aina Support Fund. According to KAHEA's website, the Aloha ‘Aina 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 Hawai‘ian 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 ‘Aina 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 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 ‘Aina 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 Hawai‘i 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 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 ‘Aina 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 Hawai‘i 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 Hawai‘i 376, 363 P.3d 224 (2015) ; Matter of Conservation Dist. Use Application HA-3568, 143 Hawai‘i 379, 431 P.3d 752 (2018).

B. The Subpoena

On November 14, 2019, the Attorney General served First Hawai‘ian 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 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 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 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 ‘Aina 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 protest organization...