Arakaki v. Apoliona , 423 F.3d 954 ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
EARL F. ARAKAKI; EVELYN C. 
ARAKAKI; EDWARD U. BUGARIN;
SANDRA P. BURGESS; PATRICIA A.
CARROLL; ROBERT M. CHAPMAN;
MICHAEL Y. GARCIA; TOBY M.
KRAVET; JAMES I. KUROIWA;
FRANCES M. NICHOLS; DONNA
MALIA SCAFF; JACK H. SCAFF;
ALLEN TESHIMA; THURSTON TWIGG-
SMITH,
Plaintiffs-Appellants,
ANTHONY SANG, SR., State Council
of Hawaiian Homestead No. 04-15306
Associations (SCHHA); STATE
D.C. No.

COUNCIL OF HAWAIIAN HOMESTEAD
ASSOCIATIONS, CV-02-00139-SOM/
Intervenors-Appellees, KSC
v. OPINION
LINDA C. LINGLE, in her official
capacity as Governor of the State
of Hawaii; HAUNANI APOLIONA,
Chairman, and in her official
capacity as trustee of the Office of
Hawaiian Affairs; ROWENA AKANA,
in his official capacity as trustee
of the Office of Hawaiian Affairs;
DONALD CATALUNA, in his official
capacity as trustee of the Office of
Hawaiian Affairs; LINDA DELA
CRUZ, in her official capacity as

11853
11854 ARAKAKI v. LINGLE
trustee of the Office of Hawaiian 
Affairs; CLAYTON HEE, in his
official capacity as trustee of the
Office of HawaiianVa Affairs;
COLETTE Y. MACHADO, in her
official capacity as trustee of the
Office of Hawaiian; CHARLES OTA,
in his official capacity as trustee
of the Office of Hawaiian Affairs;
OSWALD K. STENDER, in his official
capacity as trustee of the Office of
Hawaiian Affairs; JOHN D.
WAIHEE, IV, in his official
capacity as trustee of the Office of
Hawaiian Affairs; UNITED
STATES OF AMERICA; JOHN DOES, 1
through 10; GEORGINA KAWAMURA, 
in her official capacity as Director
of the Department of Budget and
Finance; RUSS SAITO, in her
official capacity as Comptroller
and Director of the Department of
Accounting and General Services;
PETER YOUNG, in his official
capacity as Chairman of the Board
of Land and Natural Resources;
SANDRA LEE KUNIMOTO, in her
official capacity as Director of the
Department of Argiculture; TED
LIU, in his official capacity as
Director of the Department of
Business, Economic Development
and Tourism; RODNEY HARAGA, in

ARAKAKI v. LINGLE 11855
his official capacity as Director of 
the Department of Transportation;
QUENTIN KAWANANAKOA, member
of the Hawaiian Homes 
Commission,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Hawaii
Susan Oki Mollway, District Judge, Presiding
Argued and Submitted
November 1, 2004—Honolulu, Hawaii
Filed August 31, 2005
Before: Melvin Brunetti, Susan P. Graber, and Jay S. Bybee,
Circuit Judges.
Opinion by Judge Bybee
ARAKAKI v. LINGLE 11859
COUNSEL
H. William Burgess, Honolulu, Hawaii, for the plaintiffs-
appellants.
Sherry P. Broder, Honolulu, Hawaii; Girard D. Lau, Charleen
M. Aina, Office of the Attorney General of Hawaii, Honolulu,
Hawaii; Jon M. Van Dyke, William S. Richardson School of
Law, Honolulu, Hawaii; Aaron P. Avila, U.S. Department of
Justice, Washington, D.C.; Thomas A. Helper, Office of the
U.S. Attorney, Honolulu, Hawaii, for the defendants-
appellees.
Walter R. Schoettle, Honolulu, Hawaii; Robert Klein, Hono-
lulu, Hawaii; Philip W. Miyoshi, McCorriston Miller Mukai
MacKinnon LLP, Honolulu, Hawaii, for the intervenors-
appellees.
Le’a Malia Kanehe, Native Hawaiian LegalCorp., Honolulu,
Hawaii, for the amici curiae.
OPINION
BYBEE, Circuit Judge:
In this case we are called on, yet again, to hear a challenge
to state programs restricting benefits to “native Hawaiians” or
“Hawaiians.” See, e.g., Carroll v. Nakatani, 342 F.3d 934 (9th
Cir. 2003); Arakaki v. Hawaii, 314 F.3d 1091 (9th Cir. 2002);
11860 ARAKAKI v. LINGLE
Han v. U.S. Dep’t of Justice, 45 F.3d 333 (9th Cir. 1995) (per
curiam); Price v. Akaka, 3 F.3d 1220 (9th Cir. 1993); Price
v. Hawaii, 764 F.2d 623 (9th Cir. 1985); Hoohuli v. Ariyoshi,
741 F.2d 1169 (9th Cir. 1984); Keaukaha-Panaewa Cmty.
Ass’n v. Hawaiian Homes Comm’n, 588 F.2d 1216 (9th Cir.
1978); see also Rice v. Cayetano, 528 U.S. 495 (2000).
Plaintiffs in this case are citizens of the State of Hawaii
who allege that various state programs preferentially treat per-
sons of Hawaiian ancestry, in violation of the Fifth and Four-
teenth Amendments, 42 U.S.C. § 1983, and the terms of a
public land trust. Plaintiffs brought suit against the Depart-
ment of Hawaiian Home Lands (“DHHL”), the Hawaiian
Homes Commission (“HHC”), the Office of Hawaiian Affairs
(“OHA”), various state officers, and the United States. Plain-
tiffs claim standing to sue as taxpayers and as beneficiaries of
the public land trust. In a series of orders, the district court
held that Plaintiffs lacked standing to raise certain claims and
that Plaintiffs’ remaining claims raised a nonjusticiable politi-
cal question, and dismissed the entire lawsuit. Arakaki v.
Lingle, 305 F. Supp. 2d 1161 (D. Haw. 2004) (“Arakaki VI”);
Arakaki v. Lingle, 299 F. Supp. 2d 1129 (D. Haw. 2003)
(“Arakaki V”); Arakaki v. Lingle, 299 F. Supp. 2d 1114 (D.
Haw. 2003) (“Arakaki IV”); Arakaki v. Cayetano, 299 F.
Supp. 2d 1107 (D. Haw. 2002) (“Arakaki III”); Arakaki v.
Cayetano, 299 F. Supp. 2d 1090 (D. Haw. 2002) (“Arakaki
II”); Arakaki v. Cayetano, 198 F. Supp. 2d 1165 (D. Haw.
2002) (“Arakaki I”). The district court also issued three
unpublished orders, dated December 16, 2003, January 26,
2004, and May 5, 2004, which this opinion will address.
We affirm in part and reverse in part. We hold that Plain-
tiffs lack standing to sue the federal government and that the
district court therefore correctly dismissed all claims to which
the United States is a named party or an indispensable party.
We affirm the district court in finding that Plaintiffs have
demonstrated standing as state taxpayers to challenge those
state programs that are funded by state tax revenue and for
ARAKAKI v. LINGLE 11861
which the United States is not an indispensable party. Plain-
tiffs therefore have standing to bring a suit claiming that the
OHA programs that are funded by state tax revenue violate
the Equal Protection Clause of the Fourteenth Amendment.
However, we reverse the district court’s dismissal of that
claim on political question grounds and hold that a challenge
to the appropriation of tax revenue to the OHA does not raise
a nonjusticiable political question. We therefore affirm in
part, reverse in part, and remand.
I. BACKGROUND
A. Historical Context
After the arrival of Captain Cook in 1778, the western
world became increasingly interested in the commercial
potential of the Hawaiian Islands. The nineteenth century saw
a steady rise in American and European involvement in the
islands’ political and economic affairs. As the resistance of
the native Hawaiian government mounted, American com-
mercial interests eventually succeeded, with the complicity of
the U.S. military, in overthrowing the Hawaiian monarchy
and establishing a provisional government under the title of
the Republic of Hawaii. See Rice, 528 U.S. at 500-05.
In 1898, President McKinley signed a Joint Resolution to
annex the Hawaiian Islands as a territory of the United States.
30 Stat. 750. This resolution, commonly referred to as the
Newlands Resolution, provided that the Republic of Hawaii
ceded all public lands to the United States and that revenues
from the lands were to be “used solely for the benefit of the
inhabitants of the Hawaiian Islands for educational and other
public purposes.” Id. Two years later, the Hawaiian Organic
Act established the Territory of Hawaii and put the ceded
lands in the control of the Territory of Hawaii “until otherwise
provided for by Congress.” Act of Apr. 30, 1900, ch. 339,
§ 91, 31 Stat. 159.
11862 ARAKAKI v. LINGLE
B. The Public Land Trust and the Hawaiian Homes
Commission Act
Shortly after the establishment of the Territory, Congress
“became concerned with the condition of the native Hawaiian
people.” Rice, 528 U.S. at 507. Declaring its intent to
“[e]stablish[ ] a permanent land base for the beneficial use of
native Hawaiians,” Congress enacted the Hawaiian Homes
Commission Act, 1920. Act of July 9, 1921, ch. 42,
§ 101(b)(1), 42 Stat. 108 (“HHCA”). The HHCA set aside
200,000 acres of lands previously ceded to the United States
for the creation of loans and leases to benefit native Hawai-
ians. These lands were to be leased exclusively, including by
transfer, to native Hawaiians for a term of 99 years at a nomi-
nal rate of one dollar per year. Id. § 208(1), (2) & (5). The
HHCA defines “native Hawaiian” as “any descendant of not
less than one-half part of the blood of the races inhabiting the
Hawaiian Islands previous to 1778.” Id. § 201(7).
In 1959, Hawaii became the 50th State in the union. Under
the Hawaii Statehood Admission Act, Congress required
Hawaii to incorporate the HHCA into its state Constitution,
with the United States retaining authority to approve any
changes to the eligibility requirements for the HHCA leases.
Act of March 18, 1959, Pub. L. No. 86-3, § 4, 73 Stat. 5
(“Admission Act”). See HAW. CONST. art. XII, §§ 1-3. In
return, the United States granted Hawaii title to all public
lands within the state, save a small portion reserved for use of
the Federal Government. Id. § 5(b)-(d), 73 Stat. 5. The
Admission Act further declared that the lands, “together with
the proceeds from the sale or other disposition of any such
lands and the income therefrom, shall be held by [the State]
as a public trust for the support of the public schools, . . . the
conditions of native Hawaiians” and other purposes. Id. § 5(f),
73 Stat. 6. The land granted to Hawaii included the 200,000
acres previously set aside under the HHCA and an additional
1.2 million acres.
ARAKAKI v. LINGLE 11863
The Hawaii Constitution expressly adopted the HHCA and
declared that “the spirit of the Hawaiian Homes Commission
Act looking to the continuance of the Hawaiian homes proj-
ects for the further rehabilitation of the Hawaiian race shall be
faithfully carried out.” HAW. CONST. art. XII, § 2. Because the
HHCA’s purposes include support of public education, the
Constitution also provides that lands granted to Hawaii under
the Admission Act will be held in “public trust for native
Hawaiians and the general public.” Id. § 4; see Arakaki v.
Hawaii, 314 F.3d 1091, 1093 (9th Cir. 2002).
The HHCA established a Department of Hawaiian Home
Lands (“DHHL”), to be headed by an executive board known
as the Hawaiian Homes Commission (“HHC”). Act of July 9,
1921, ch. 42, § 202(a), 42 Stat. 108. By statute Hawaii created
both the Department of Hawaiian Home Lands and the
Hawaiian Homes Commission. Together, DHHL/HHC
administer the 200,000 acres set aside by the HHCA, and
DHHL/HHC’s beneficiaries are limited to “native Hawai-
ians,” as defined in the Act. The DHHL is funded in substan-
tial part by state revenue; although the record is not clear on
this point, this revenue likely derives from both tax and non-
tax sources.
C. The Office of Hawaiian Affairs
In 1978, Hawaii amended its Constitution to establish the
Office of Hawaiian Affairs to “ ‘provide Hawaiians the right
to determine the priorities which will effectuate the better-
ment of their condition and welfare and promote the protec-
tion and preservation of the Hawaiian race, and . . . [to] unite
Hawaiians as a people.’ ” Rice, 528 U.S. at 508 (quoting 1
Proceedings of the Constitutional Convention of Hawaii of
1978, Committee of the Whole Rep. No. 13, p. 1018 (1980)).
OHA holds title to all property “held in trust for native
Hawaiians and Hawaiians,” except for the 200,000 acres
administered by DHHL/HHC; OHA thus controls the 1.2 mil-
lion acres ceded by the United States in the Admission Act.
11864 ARAKAKI v. LINGLE
The term “native Hawaiians” has the same blood quantum
requirement as under the HHCA; by contrast, the term “Ha-
waiians” is broader and simply refers to any persons
descended from inhabitants of the Hawaiian Islands prior to
1778. HAW. REV. STAT. § 10-2. OHA’s statutory purposes
include “[a]ssessing the policies and practices of other agen-
cies impacting on native Hawaiians and Hawaiians,” “con-
ducting advocacy efforts for native Hawaiians and
Hawaiians,” “[a]pplying for, receiving, and disbursing, grants
and donations from all sources for native Hawaiian and
Hawaiian programs and services,” and “[s]erving as a recepta-
cle for reparations.” HAW. REV. STAT. § 10-3(4)-(6).
OHA administers funds received from two principal
sources. First, OHA receives a 20 percent share of any reve-
nue generated by the 1.2 million acres of lands held in public
trust. HAW. REV. STAT. § 10-13.5 (1993). Second, OHA
receives revenue from the state general fund, which derives
from tax revenue and other, non-tax, sources.
D. The Proceedings
The Plaintiffs (some of whom qualify as “Hawaiians”)
allege that they are citizens of Hawaii, taxpayers of the state
of Hawaii and of the United States, and beneficiaries of a pub-
lic land trust created in 1898. The Complaint alleges three
causes of action. First, Plaintiffs allege that the various pro-
grams of the OHA and DHHL/HHC violate the Equal Protec-
tion Clause of the Fourteenth Amendment and the equal
protection component of the Due Process Clause of the Fifth
Amendment. Second, they make these same allegations under
42 U.S.C. § 1983. Third, they claim that the administration of
the OHA and the DHHL/HHC constitutes a breach of the pub-
lic land trust.
The district court dismissed Plaintiffs’ claims on grounds of
standing and political question. With respect to the DHHL/
HHC, the court ruled that the United States was an indispens-
ARAKAKI v. LINGLE 11865
able party to the lease eligibility requirements, but that Plain-
tiffs had no standing to sue the United States. Arakaki IV, 299
F. Supp. 2d at 1120-25. Because “any challenge to the lessee
requirements of the Hawaiian Home Lands lease program set
up by the HHCA, a state law, necessarily involves a challenge
to the Admission Act,” all claims against the DHHL/HHC
were dismissed. Id. at 1126, 1127.
The district court took a slightly different route with respect
to OHA. The court dismissed the breach of trust claim on the
ground that Plaintiffs had not pleaded a breach of trust claim
that is cognizable under the common law of trusts. Arakaki II,
299 F. Supp. 2d at 1103. Finding that Plaintiffs had state tax-
payer standing to sue OHA, the court declined to dismiss
OHA because, unlike DHHL/HHC, “[n]othing in the Admis-
sion Act requires the creation of OHA or governs OHA’s
actions.” Arakaki IV, 299 F. Supp. 2d at 1127. The court lim-
ited the Plaintiffs’ taxpayer challenge, however, to OHA pro-
grams funded from taxes, as opposed to programs funded
from other sources. Arakaki II, 299 F. Supp. 2d at 1100-01;
Arakaki IV, 299 F. Supp. 2d at 1122-24. In a subsequent deci-
sion, however, the district court dismissed all claims against
OHA on the ground that they were barred by the political
question doctrine. The court observed that, although Congress
has plenary authority to recognize Indian tribal status, it has
given Hawaiians some, but not all, of the privileges that go
with formal tribal status. Because resolving Plaintiffs’ equal
protection claims would require the court to determine Hawai-
ians’ political status in order to determine the appropriate
level of scrutiny, the court declined to decide Hawaiians’ cur-
rent political status “in recognition of the continuing debate in
Congress” and the principle that “this is a political issue that
should be first decided by another branch of government.”
Arakaki VI, 305 F. Supp. 2d at 1173.
Plaintiffs appeal the dismissal of all their claims.
11866 ARAKAKI v. LINGLE
II. STANDARD OF REVIEW
Standing is a legal issue subject to de novo review. Bruce
v. United States, 759 F.2d 755, 758 (9th Cir. 1985). In ruling
on a FED. R. CIV. P. 12(b)(6) motion to dismiss for lack of
standing, we must construe the complaint in favor of the com-
plaining party. Hong Kong Supermarket v. Kizer, 830 F.2d
1078, 1080-81 (9th Cir. 1987). As the district court noted,
whether dismissal on political question grounds is jurisdic-
tional or prudential in nature, and thus whether it is properly
classified under Rule 12(b)(1) or 12(b)(6), is unclear. Com-
pare Schlesinger v. Reservists Comm. to Stop the War, 418
U.S. 208, 215 (1974) (presence of a political question, like
absence of standing, deprives court of jurisdiction), with
Goldwater v. Carter, 444 U.S. 996, 1000 (1979) (“the
political-question doctrine rests in part on prudential concerns
calling for mutual respect among the three branches of Gov-
ernment”). Either way, we review the district court’s dis-
missal de novo. See, e.g., Decker v. Advantage Fund, Ltd.,
362 F.3d 593, 595-96 (9th Cir. 2004) (dismissal under Rule
12(b)(6) reviewed de novo); Luong v. Circuit City Stores,
Inc., 368 F.3d 1109, 1111 n.2 (9th Cir. 2004) (dismissal for
lack of subject matter jurisdiction, pursuant to Rule 12(b)(1),
reviewed de novo).
III. PLAINTIFFS’ STANDING TO CHALLENGE
THE DHHL/HHC LEASES
Plaintiffs claim standing to challenge the DHHL/HHC
leases as land trust beneficiaries, and as state taxpayers. We
find that neither theory confers standing to challenge the lease
requirements or the appropriation of state revenue in support
thereof. The district properly dismissed all claims against the
DHHL/HHC and the United States.
A. Plaintiffs’ Standing as Land Trust Beneficiaries
Plaintiffs challenge the public lands trust administered by
DHHL/HHC because it prefers native Hawaiians in the lease
ARAKAKI v. LINGLE 11867
eligibility criteria for the 200,000 acres set aside in the HHCA
and incorporated into the Hawaii Constitution through the
Admission Act. The Plaintiffs argue that as members of the
class of “native Hawaiians and general public,” HAW. CONST.
art. XII, § 4, they are trust beneficiaries, and may sue the
trustee when the trustee’s actions violate the law. See
RESTATEMENT (SECOND) OF TRUSTS §§ 166, 214. Plaintiffs
allege that the trustees—including DHHL/HHC and the
United States—have enforced the provisions of the trust in
violation of the Fifth and Fourteenth Amendments.
1. The United States as Trustee
Plaintiffs argue that the trust obligations of the United
States arise through two acts, the Newlands Resolution and
the Admission Act. Plaintiffs claim the trust was first estab-
lished in 1898 by the Newlands Resolution with the United
States as trustee. Congress, according to Plaintiffs, then vio-
lated its duties as trustee by discriminating on the basis of
race when it enacted the HHCA in 1921 and again in the
Admission Act when it required Hawaii to incorporate the
HHCA into its Constitution. Alternatively, Plaintiffs argue
that the United States became a trustee as a result of the
Admission Act.1
The history of the land trust does not support either of
Plaintiffs’ theories. The United States is not currently a trustee
of the lands in question by virtue of either the Newlands Res-
olution or the Admission Act. The Newlands Resolution
recited that the Government of the Republic of Hawaii ceded
1
The district court concluded that Plaintiffs had waived the Newlands
Resolution theory, and addressed only the Admission Act theory. Arakaki
II, 299 F. Supp. 2d at 1101. Plaintiffs deny the waiver. However, this court
can affirm the district court’s dismissal on any ground supported by the
record, even if the district court did not rely on the ground. See, e.g., Livid
Holdings Ltd. v. Salomon Smith Barney, Inc., 403 F.3d 1050, 1058 (9th
Cir. 2005). In the interest of being thorough, we therefore address both
theories.
11868 ARAKAKI v. LINGLE
“the absolute fee and ownership of all public Government, or
Crown lands.” Newlands Resolution, 30 Stat. 750 (1898). It
further provided that existing U.S. laws regarding public lands
would not apply to Hawaiian lands, but that Congress “shall
enact special laws for their management and disposition: Pro-
vided, That all revenue from or proceeds of the same . . . shall
be used solely for the benefit of the inhabitants of the Hawai-
ian Islands for educational and other public purposes.” Id.
Although this passage did not specifically use the word
“trust,” the Attorney General of the United States subse-
quently interpreted it “to subject the public lands in Hawaii to
a special trust.” Hawaii — Public Lands, 22 Op. Att’y Gen.
574, 576 (1899).
Assuming, arguendo, that the Attorney General was right
to construe the Newlands Resolution as establishing a trust,
and assuming further that the United States became a trustee,
the United States’ status as trustee was expressly subject to
future revision. The Resolution specifically provides that “the
United States shall enact special laws for [the] management
and disposition” of public lands. The Attorney General con-
strued this provision as “vest[ing] in Congress the exclusive
right, by special enactment, to provide for the disposition of
public lands in Hawaii.” Id. The Newlands Resolution thus
contemplated that Congress would enact subsequent rules to
govern the ceded lands.
[1] Congress enacted such rules in the HHCA and the
Admission Act. Any trust obligation the United States
assumed in the Newlands Resolution for the lands at issue
here was extinguished by Congress when it created the
DHHL/HHC in the HHCA and granted it control of defined
“available lands.” Act of July 9, 1921, ch. 42, §§ 202, 204,
and 207; see id. § 204(a) (“Upon the passage of this Act, all
available lands shall immediately assume the status of Hawai-
ian home lands and be under the control of the department to
be used and disposed of in accordance with the provisions of
this Act.”). Any lingering doubt over the United States’ role
ARAKAKI v. LINGLE 11869
as trustee was eliminated entirely in the Admission Act when
the United States “grant[ed] to the State of Hawaii, effective
upon its admission in the Union, the United States’ title to all
the public lands and other public property, and to all lands
defined as ‘available lands’ by section 203 of the Hawaiian
Homes Commission Act . . . title which is held by the United
States immediately prior to its admission into the Union.”
Pub. L. No. 86-3, § 5(b), 73 Stat. 4.
[2] Our discussion here also resolves Plaintiffs’ claim that
the Admission Act established the United States’ obligations
as a trustee. The Admission Act unambiguously requires that
land be held in public trust, but by the State of Hawaii, not the
United States. Nothing in the Admission Act suggests that the
United States would serve as a co-trustee with the State. Nor
does the fact that the United States must consent to changes
in the qualifications of lessees under the trust make the United
States a co-trustee. See Pub. L. No. 86-3, § 4, 73 Stat. 4. Con-
gress might have made the United States a co-trustee; instead
it reserved to the United States the right to bring suit for
breach of trust, id. § 5(f), a provision at odds with the sugges-
tion that the United States remains a trustee. We conclude, as
we noted in Keaukaha-Panaewa Cmty. Ass’n v. Hawaiian
Homes Comm’n, 588 F.2d 1216, 1224 n.7 (9th Cir. 1978), that
“[t]he United States has only a somewhat tangential supervi-
sory role of the Admission Act, rather than the role of trust-
ee.”
2. The United States as an Indispensable Party
Although the United States cannot be sued on Plaintiffs’
trust beneficiary theory, Plaintiffs nevertheless argue that they
may at least sue the state defendants on the same theory.
Plaintiffs point to several cases in which we have held that
native Hawaiians, as trust beneficiaries, could bring suit under
42 U.S.C. § 1983 against the State to enforce the terms of the
trust. E.g., Price v. Akaka, 928 F.2d 824 (9th Cir. 1990);
Keaukaha-Panaewa Cmty. Ass’n v. Hawaiian Homes
11870 ARAKAKI v. LINGLE
Comm’n, 739 F.2d 1467 (9th Cir. 1984); see also Price v.
Akaka, 3 F.3d 1220, 1223-25 (9th Cir. 1993). Those cases
involved claims that the state was improperly administering
the trust and sought to enforce the trust’s terms.
We believe that this argument is disposed of easily. Those
cases differ from the present challenge in a fundamental way:
although those previous § 1983 cases have involved suits to
enforce the express terms of the trust, this suit, by contrast,
asks the court to prohibit the enforcement of a trust provision.
That is, Plaintiffs now raise a § 1983 claim that is unique in
that it does not seek to enforce the substantive terms of the
trust, but instead challenges at least one of those terms as con-
stitutionally unenforceable.
[3] We have recently held that in any challenge to the
enforceability of the lease eligibility requirements, the United
States is an indispensable party. In Carroll v. Nakatani, 342
F.3d 934 (9th Cir. 2003), a non-native Hawaiian citizen chal-
lenged the homestead lease program administered by DHHL/
HHC. The plaintiff sued the relevant state actors, but failed to
sue the United States. We held that Section 4 of the Admis-
sions Act “expressly reserves to the United States that no
changes in the qualifications of the lessees may be made with-
out its consent.” Carroll, 342 F.3d at 944. We reasoned that
because the qualifications for the DHHL/HHC leases cannot
be modified without the United States’ approval, the United
States is an indispensable party to any lawsuit challenging the
DHHL/HHC leases, and the Plaintiff’s failure to sue the
United States meant that his injury was not redressable. Id. at
944.
[4] Here, unlike in Carroll, Plaintiffs properly named the
United States as a party. Carroll’s logic nonetheless applies.
Plaintiffs lack standing to sue the United States, but the
United States is an indispensable party to any challenge to the
lease eligibility requirements. Plaintiffs therefore cannot
maintain their challenge to the lease eligibility requirements
ARAKAKI v. LINGLE 11871
against the State. Accordingly, the district court properly dis-
missed the Plaintiffs’ trust beneficiary claim against the state
defendants.
B. Plaintiff’s Standing As State Taxpayers
Plaintiffs also challenge the DHHL/HHC lease eligibility
programs in their capacity as state taxpayers. The question is
whether our decision in Carroll bars Plaintiffs’ equal protec-
tion challenge in their capacity as taxpayers, just as it barred
Plaintiffs’ suit in their capacity as trust beneficiaries. In par-
ticular, we must decide whether Plaintiffs have standing to
challenge Hawaii’s spending of tax revenues on the lease pro-
gram.2 This is a more complicated question.
The standing doctrine, like other Article III doctrines con-
cerning justiciability, ensures that a plaintiff’s claims arise in
a “concrete factual context” appropriate to judicial resolution.
Valley Forge Christian Coll. v. Ams. United For Separation
of Church & State, Inc., 454 U.S. 464, 472 (1982). Standing
ensures that, no matter the academic merits of the claim, the
suit has been brought by a proper party. The “ ‘irreducible
constitutional minimum of standing’ ” requires that a plaintiff
allege that he has suffered concrete injury, that there is a
causal connection between his injury and the conduct com-
2
Plaintiffs do not limit their challenge to the expenditure of state tax
revenues; instead, they challenge all state spending on the lease program,
whether funded by taxes, bonds, the proceeds of a settlement, or other
non-tax revenues. The district court held that, if Plaintiffs could bring their
equal protection claims against DHHL/HHC based on their taxpayer status
at all, they could challenge only those avenues of state funding that actu-
ally derived from taxes, rather than from other sources. Because we con-
clude, like the district court, that Carroll precludes Plaintiffs’ challenge to
Hawaii’s spending on the lease program regardless of the source of the
state’s funds, we need not decide here whether the district court correctly
limited the scope of Plaintiff’s state taxpayer challenges. We limit our dis-
cussion to Plaintiffs’ challenge to Hawaii’s spending of tax revenues on
the lease program and address the general question regarding the scope of
standing as a state taxpayer in Part IV.A.3, infra.
11872 ARAKAKI v. LINGLE
plained of, and that the injury will likely be redressed by a
favorable decision. United States v. Hays, 515 U.S. 737, 742-
43 (1995) (quoting Lujan v. Defenders of Wildlife, 504 U.S.
555, 560-61 (1992)).
Plaintiffs have alleged that Hawaii has supported the lease
program through tax revenues, a point that Hawaii does not
dispute. Arakaki II, 299 F. Supp. 2d at 1098. Hawaii’s taxing
and spending in support of the lease program is not mandated
by the Admission Act or any other federal law. The Admis-
sion Act requires Hawaii to adopt the HHCA and forbids
Hawaii to change the lease eligibility requirement without the
consent of the United States; but neither the Admission Act
nor the HHCA, as incorporated by the Hawaii Constitution,
mandates the expenditure of state funds, much less the expen-
diture of state tax revenues. Pub. L. No. 86-3, § 4, 73 Stat. 4.
Section 5(f) of the Admission Act does provide that proceeds
from the sale or other disposition of the lands shall be paid
into the trust for the identified purposes, but nothing suggests,
much less requires, that the State of Hawaii expend tax reve-
nues to support the lease program. Any tax revenues Hawaii
has appropriated to DHHL/HHC, then, resulted from deci-
sions by the Hawaii Legislature.
Plaintiffs’ taxpayer-based claims might be construed as a
limited challenge to the lease program: Plaintiffs challenge
the lease program to the extent that Hawaii has—independent
of any federal obligation, including the Admission Act—
engaged in taxing and spending in support of the DHHL/HHC
program. Under this theory, unlike their trust beneficiary the-
ory, Plaintiffs would not challenge the lease eligibility
requirements directly, nor would they implicate any substan-
tial rights belonging to the United States. Thus, Plaintiffs
might argue, even if they cannot seek to enjoin the native
Hawaiians-only rule directly, they can seek to enjoin further
state funding of a provision that allegedly violates the Equal
Protection Clause. Plaintiffs’ remedy, presumably, would be
ARAKAKI v. LINGLE 11873
an injunction against spending state tax revenues, but not an
order directing changes in the lease criteria.
[5] Plaintiffs’ theory, though game, ultimately fails under
Carroll. The only ground Plaintiffs have alleged for enjoining
the state from spending is that the spending is for purposes
prohibited by the Equal Protection Clause. Any remedy that
Plaintiffs seek—for example, an injunction against expendi-
ture of tax revenues for the lease program—demands that the
district court decide whether the lease eligibility criteria are
constitutional. The lease criteria are found in the HHCA
which is adopted by Article XII of the Hawaii Constitution.
We held in Carroll, however, that “Article XII of the Hawai-
ian Constitution cannot be declared unconstitutional without
holding [Section 4] of the Admissions Act unconstitutional.”
Carroll, 342 F.3d at 944. Our decision in Carroll effectively
holds that any challenge to Article XII is a challenge to Sec-
tion 4 of the Admission Act, and no challenge to the Admis-
sion Act may proceed without the presence of the United
States as a defendant.
[6] As state taxpayers, Plaintiffs have no basis for suing the
United States. They claim no status that would distinguish
them from any number of other persons who also do not qual-
ify for the Hawaiian Home Lands leases. The Court has “re-
peatedly refused to recognize a generalized grievance against
allegedly illegal government conduct as sufficient for stand-
ing.” Hays, 515 U.S. 743. Moreover, “[t]he rule against gen-
eralized grievances applies with as much force in the equal
protection context as in any other.” Id.; see Allen v. Wright,
468 U.S. 737, 751 (1984). Federal taxpayer standing which,
notably, Plaintiffs do not assert, is simply one instance of the
assertion of a generalized grievance. See Frothingham v. Mel-
lon, 262 U.S. 447, 487-88 (1923) (“The administration of any
statute, likely to produce additional taxation to be imposed
upon a vast number of taxpayers, the extent of whose several
liability is indefinite and constantly changing, is essentially a
matter of public and not of individual concern.”).
11874 ARAKAKI v. LINGLE
[7] We hold that Plaintiffs cannot avoid the implications of
Carroll by limiting their claims to state spending in support
of the lease program and then alleging their state taxpayer sta-
tus. Even if Plaintiffs have standing as state taxpayers—a sub-
ject we address in earnest in Part IV —that status cannot
supply standing against the United States. See, e.g., Froth-
ingham, 262 U.S. at 486-87 (citing Crampton v. Zabriskie,
101 U.S. 601, 609 (1880)); W. Mining Council v. Watt, 643
F.2d 618, 631 (9th Cir. 1981). Accordingly, we conclude that
Plaintiffs lack standing to sue the United States, and that the
United States remains an indispensable party to any challenge
to the DHHL/HHC lease eligibility criteria. We affirm the dis-
trict court’s dismissal of all claims against the United States
and DHHL/HHC.
IV. PLAINTIFFS’ STANDING TO CHALLENGE
OHA’S PROGRAMS
As with DHHL/HHC, Plaintiffs allege two theories of
standing to challenge OHA: they challenge the appropriation
of state tax revenue based on their status as state taxpayers,
and they challenge the appropriation of trust revenue to OHA
based on their alleged status as trust beneficiaries. Relying in
large measure on our decision in Hoohuli v. Ariyoshi, 741
F.2d 1169 (9th Cir. 1984), the district court held that Plaintiffs
had standing to sue OHA as state taxpayers. Arakaki II, 299
F. Supp. 2d at 1094-98. The court further held, however, that
Plaintiffs lacked standing to challenge state funding of OHA
that did not originate in taxes, specifically, any revenue that
OHA received from lease rentals, settlements, or state bonds.
Id. at 1100-01. With respect to the trust revenue claim, the
district court dismissed the breach of trust claim on the
ground that Plaintiffs had not pleaded a trust claim that was
cognizable under the common law of trusts. Id. at 1103.
OHA contends that the district court erred because our
prior decision in Hoohuli has been effectively overruled by
ASARCO Inc. v. Kadish, 490 U.S. 605 (1989), and because
ARAKAKI v. LINGLE 11875
the United States is an indispensable party under Carroll.
Plaintiffs allege that the district court erred by restricting the
scope of their challenge to OHA programs directly funded by
taxes.
We address each of these contentions in turn. We conclude
that Hoohuli remains valid law in this circuit and that the
United States is not an indispensable party to the suit chal-
lenging the appropriation of state tax revenue. Accordingly,
Plaintiffs have standing as state taxpayers to challenge the
appropriation of state revenue to OHA. We agree with the dis-
trict court, however, that Plaintiffs’ state taxpayer standing
limits their claims to revenue that derives directly from taxes.
Finally, we conclude, as we did in the prior section, that
Plaintiffs cannot prevail on their trust beneficiary theory of
standing because the United States remains an indispensable
party to a suit challenging the trust, and Plaintiffs have no
standing to sue the United States.
A. Plaintiffs’ State Taxpayer Standing
1. The Vitality of Hoohuli
[8] In Hoohuli, residents of Hawaii and a taxpayers’ group
brought suit under 42 U.S.C. § 1983 for damages and injunc-
tive relief to challenge programs administered by OHA to the
extent those programs favored “Hawaiians.” 741 F.2d at
1172. We held that at least some of the individual plaintiffs
had standing to seek to enjoin the “appropriating, transferring,
and spending” of taxpayers’ money from the state treasury’s
general fund. Id. at 1180. The plaintiffs had alleged that they
had “ ‘been burdened with the necessity to provide more taxes
to support [the class of “Hawaiians”]’ ” and that this was suf-
ficient to sustain a “ ‘good-faith pocketbook action’ set forth
in Doremus [v. Board of Education, 342 U.S. 429, 434
(1952)].” Id.
11876 ARAKAKI v. LINGLE
Conceding that Hoohuli controls this case unless there is an
intervening change in the law, OHA argues that the Supreme
Court’s decision in ASARCO has effectively overruled Hoo-
huli. See Price v. Akaka, 3 F.3d 1220, 1224 (9th Cir. 1993)
(addressing an analogous argument that an intervening
Supreme Court decision overruled our precedent). In
ASARCO, Arizona taxpayers brought suit in Arizona state
court to enjoin a state law governing mineral leases on state
lands. The taxpayer plaintiffs alleged that the state lands had
been granted to Arizona by the United States when it acquired
statehood and that the statute violated the terms Congress
specified for the disposal of lands granted by the U.S. to Ari-
zona. Reviewing a judgment of the Arizona Supreme Court,
the U.S. Supreme Court considered “whether, under federal
standards, the case was nonjusticiable at its outset because the
original plaintiffs lacked standing to sue.” 490 U.S. at 612.
Four members of the Court3 held that if the plaintiffs had
brought the suit in federal court, they would not have had
standing by virtue of their status as state taxpayers. They
noted that “[a]s an ordinary matter, suits premised on federal
taxpayer status are not cognizable in the federal courts,” but
that “the same conclusion may not hold for municipal taxpay-
ers.” Id. at 613 (Kennedy, J.). They observed that it has “lik-
ened state taxpayers to federal taxpayers, and thus we have
refused to confer standing upon a state taxpayer absent a
showing of ‘direct injury,’ pecuniary or otherwise.” Id. at
613-14 (quoting Doremus, 342 U.S. at 434). Ultimately the
Court concluded that, although the plaintiffs (respondents in
the Supreme Court) would not have had standing to com-
mence suit in federal court, the petitioner-defendants had
standing to seek review in the Supreme Court of a judgment
3
Although we have occasionally referred to that portion of Justice Ken-
nedy’s opinion, Part II.B.1, as a plurality, see, e.g., Graham v. Federal
Emergency Mgmt. Agency, 149 F.3d 997, 1003 (9th Cir. 1998), that is not
strictly correct. Because Justice Brennan wrote an opinion concurring in
the judgment on behalf of four justices, and Justice O’Connor did not par-
ticipate in the decision, Part II.B.1 of Justice Kennedy’s opinion is for an
equally divided Court.
ARAKAKI v. LINGLE 11877
from Arizona courts that are not themselves bound by federal
standing rules. Id. at 617-19. Four justices argued that the
question of the standing of the state taxpayers was “ ‘irrele-
vant’ when the petitioners were defendants below, and the
plurality’s discussion was therefore ‘unnecessary.’ ” Id. at
633-34 (Brennan, J., concurring in part and concurring in the
judgment).
Whether Justice Kennedy’s opinion is dictum or not, that
portion of his opinion on state taxpayer standing is not the
opinion of the Supreme Court. See, e.g., Marks v. United
States, 430 U.S. 188, 193 (1977); see also Townsend v. Qua-
sim, 328 F.3d 511, 519 n.3 (9th Cir. 2003) (citing Smith v.
Univ. of Wash., Law Sch., 233 F.3d 1188, 1199 (9th Cir.
2000)). It may carry persuasive value to a court that has not
previously ruled on state taxpayer standing, but an opinion
from an evenly divided Court is not a precedentially binding
intervening opinion of the Court. We therefore may not hold
our prior opinion in Hoohuli overruled by an opinion of four
Justices, even if we thought it persuasive, without obtaining
en banc review.
The state defendants point to our statement in Bell v. City
of Kellogg that “[t]he same constitutional standing principles
apply to those suing in federal court as state taxpayers” as evi-
dence that we have embraced Justice Kennedy’s view. 922
F.2d 1418, 1423 (9th Cir. 1991) (citing ASARCO, 490 U.S. at
612). We explained in Cammack v. Waihee that in Bell “we
implied some sympathy toward Justice Kennedy’s views.
However, we also made clear that Hoohuli remained the con-
trolling circuit precedent. Bell should not be interpreted as
altering the law of this circuit on state taxpayer standing.” 932
F.2d 765, 770 n.9 (9th Cir. 1991) (citations omitted).
[9] Notwithstanding our statement in Cammack, the state
defendants bravely argue that after ASARCO, Hoohuli’s state
taxpayer standing principle is limited to Establishment Clause
cases. See, e.g., PLANS v. Sacramento City Unified Sch. Dist.,
11878 ARAKAKI v. LINGLE
319 F.3d 504 (9th Cir. 2003); Doe v. Madison Sch. Dist. No.
321, 177 F.3d 789 (9th Cir. 1999) (en banc); Cammack, 932
F.2d 765. There is no principled basis for this argument in our
cases. First, for the reasons we have explained, Hoohuli
remains good law and is very much on point here. Second,
neither ASARCO nor Hoohuli involved Establishment Clause
claims; neither case says anything about the Establishment
Clause. OHA has not explained why ASARCO effectively
overrules Hoohuli except in Establishment Clause cases.
Third, the state parties point to Cammack, in which we found
state and municipal taxpayer standing in Hawaii residents
who claimed that Hawaii’s Good Friday holiday violated the
Establishment Clause. Nothing in Cammack purports to limit
state taxpayer standing to Establishment Clause cases. Much
to the contrary, Cammack described Hoohuli as “the leading
case on this issue in the circuit,” 932 F.2d at 769, denied that
ASARCO affected Hoohuli, id. at 770 n.9, and distinguished
any contrary implication in Bell, id. It is difficult to conceive
of a clearer affirmation of Hoohuli’s status in this circuit. See
also Doe, 177 F.3d at 794 (en banc) (citing Hoohuli favor-
ably). Our decision in Hoohuli remains the law of the circuit
until our court, sitting en banc, overrules it, or until the
Supreme Court, in a majority opinion, plainly undermines its
principles.
2. The United States as an Indispensable Party
OHA argues that even if Plaintiffs have taxpayer standing,
under Carroll the United States is also an indispensable party
to any equal protection challenge to its programs. The district
court rejected the argument on the ground that DHHL/HHC
and OHA have distinct origins. In contrast to DHHL/HHC,
“[n]othing in the Admission Act requires the creation of OHA
or governs OHA’s actions.” Arakaki IV, 299 F. Supp. 2d at
1127.
[10] The district court is correct with respect to OHA’s
expenditure of tax revenue. OHA was created nearly twenty
ARAKAKI v. LINGLE 11879
years after Hawaii’s admission to the union. In 1978, Hawaii
amended its Constitution to add Sections 5 and 6—creating
OHA and defining its duties—to Article XII. See HAW.
CONST. art. XII, §§ 5-6. The Constitution does not provide for
OHA’s funding, which is provided by statute. See, e.g., HAW.
REV. STAT. §§ 10-3(1) (“A pro rata portion of all funds
derived from the public land trust shall be funded in an
amount to be determined by the legislature.”), 10-13.5
(“Twenty per cent of all funds derived from the public land
trust . . . shall be expended by [OHA] . . . .”). Unlike the lease
eligibility requirement imposed by the HHCA and adminis-
tered by DHHL/HHC, the United States has no right to con-
sent or withhold consent to the creation of OHA or its
administration of programs for native Hawaiians or Hawai-
ians. Because Plaintiffs can prevail against OHA “without
holding [Section 4] of the Admissions Act unconstitutional,”
nothing “requires the participation of . . . the United States.”
Carroll, 342 F.3d at 944. We decline to extend Carroll to
claims against OHA concerning tax revenue.
3. Limiting Plaintiffs’ State Taxpayer Claims
Plaintiffs contend that the district court erred when it
denied Plaintiffs’ right to “seek invalidation of . . . OHA in
toto.” Arakaki IV, 299 F. Supp. 2d at 1122. Although the par-
ties have stipulated that the legislature has appropriated
monies from the General Fund to OHA, the district court held
that “to the extent . . . OHA programs rely on funds other than
tax money, Plaintiffs do not have state taxpayer standing to
challenge those programs,” id. at 1123-24, including home
land lease revenues, payments of settlements, and bond reve-
nues. Arakaki II, 299 F. Supp. 2d at 1100-01.
The issue Plaintiffs raise is this: Does a taxpayer have
standing to challenge government spending if the funds actu-
ally challenged did not accrue as a result of taxes? While we
think that to state the question is nearly to answer it, the par-
ties have not located any case directly on point. The answer,
11880 ARAKAKI v. LINGLE
nevertheless, is implicit in the Supreme Court’s limited recog-
nition of taxpayer standing.
As we have discussed, in order to satisfy the case or contro-
versy provision of Article III, a federal plaintiff must demon-
strate an injury in fact, a causal relationship between the
injury and the conduct complained of, and that the injury can
be redressed. Lujan, 504 U.S. at 560. The whole theory of tax-
payer standing is that if the suit is successful, the court will
enjoin the spending which will relieve the plaintiff’s tax bur-
den. The Court has hesitated to recognize federal taxpayer
standing because any effect on federal spending may only
remotely affect the parties’ tax bill. As the Court wrote in
Frothingham v. Mellon, a federal taxpayer’s “interest in the
moneys of the Treasury . . . is shared with millions of others
. . . and the effect upon future taxation, of any payment out
of the funds, is so remote, fluctuating and uncertain, that no
basis is afforded for [judicial review].” 262 U.S. at 487. If the
“remote[ness]” and “uncertain[ty]” of the remedy was so
great that the taxpayers did not have Article III standing, it
only stands to reason that the taxpayer would lack standing if
the “effect upon future taxation” was nil because taxes were
not involved at all. See Flast v. Cohen, 392 U.S. 83, 92 (1968)
(“the petitioner in Frothingham was denied standing not
because she was a taxpayer but because her tax bill was not
large enough:”); LAURENCE H. TRIBE, AMERICAN CONSTITU-
TIONAL LAW 421 (3d ed. 2000) (“[A]n individual may have a
sufficient interest, in his or her capacity as a taxpayer, to chal-
lenge spending programs of the taxing government, on the
theory—or, more candidly, the fiction—that a successful suit
against such a program can result in some decrease in the liti-
gant’s taxes.”).
[11] In Flast, 392 U.S. at 102, the Court emphasized that
“a taxpayer will be a proper party to allege the unconstitution-
ality only of exercises of congressional power under the tax-
ing and spending clause of Art. I, § 8, of the Constitution. It
will not be sufficient to allege an incidental expenditure of tax
ARAKAKI v. LINGLE 11881
funds in the administration of an essentially regulatory stat-
ute.” Id. at 102. A taxpayer must demonstrate “a measurable
appropriation or disbursement of . . . funds occasioned solely
by the activities complained of.” Doremus, 342 U.S. at 434.
In a series of cases, the Court rejected taxpayer standing in
circumstances in which no tax expenditures were involved,
even though the challenged program, if found unconstitu-
tional, might have saved the public fisc. In Valley Forge Col-
lege, for example, the plaintiffs complained of a transfer of
surplus government property to a religiously affiliated col-
lege. The Court held that the plaintiffs lacked standing as fed-
eral taxpayers: “the property transfer about which [plaintiffs]
complain was not an exercise of authority conferred by the
Taxing and Spending Clause . . . [but] an evident exercise of
Congress’ power under the Property Clause . . . . Respondents
do not dispute this conclusion, and it is decisive of any claim
of taxpayer standing.” 454 U.S. at 480 (citations omitted). See
also Schlesinger, 418 U.S. at 228; United States v. Richard-
son, 418 U.S. 166, 174-75 (1974).
[12] Our cases follow this principle consistently. In Doe,
we held that taxpayers lacked standing to challenge the prac-
tice of sponsoring prayers at high school graduation because
“Doe identifie[d] no tax dollars that defendants spent solely
on the graduation prayer, which is the only activity that she
challenges.” 177 F.3d at 794. The fact that the school district
expended funds for graduation generally was irrelevant to the
standing inquiry. Similarly, in Cammack, we held that Hawaii
taxpayers had standing to challenge a Hawaii statute making
Good Friday a state holiday. We specifically found that the
complaint sufficiently alleged that “state and municipal tax
revenues fund the paid holiday for government employees”
and that the “actual expenditure of tax dollars” stated “the
necessary injury.” 932 F.2d at 771, 772; see also Cantrell v.
City of Long Beach, 241 F.3d 674, 683 (9th Cir. 2001) (“To
establish standing in a state or municipal taxpayer suit under
Article III, a plaintiff must allege a direct injury caused by the
expenditure of tax dollars.”).
11882 ARAKAKI v. LINGLE
If we permitted Plaintiffs to challenge OHA’s programs
across the board, irrespective of the origin of the funding, it
would greatly expand the effect of their taxpayer standing to
programs that they would not otherwise have standing to chal-
lenge. Given the care with which the Supreme Court has
looked at taxpayer injury and redressability, we cannot go so
far. See, e.g., Allen, 468 U.S. at 751-53; see also Lujan, 504
U.S. at 560.
Plaintiffs object to the district court’s disallowing its stand-
ing to challenge three sources of OHA funding: (1) funds
received from the Hawaiian home lands trust, (2) funds
received through a settlement of prior claims, and (3) bonds
issued to secure the settlement. By law twenty percent of “all
funds derived from the public land trust” are dedicated to the
use of OHA. HAW. REV. STAT. § 10-13.5. The funds OHA
receives from the trust, which are apparently largely rents, are
first paid into Hawaii’s General Fund and then paid to OHA.
See Arakaki II, 299 F. Supp. 2d at 1100. The district court
found that this was simply an “administrative ‘pass-through’ ”
and concluded that because these are dedicated funds, the fact
that the funds pass through the General Fund is irrelevant. We
agree with the district court that Plaintiffs, as taxpayers, may
not challenge the expenditure of such non-tax revenues.
Plaintiffs’ challenge to funds paid in settlement is more
complicated. In 1993, the legislature appropriated more than
$135 million to OHA’s trust fund to settle past claims. The
district court questioned whether, as taxpayers, Plaintiffs
could challenge the settlement since it would “nullify[ ] a set-
tlement reached years earlier” and “would be tantamount to
having the court review the wisdom, at any time, of every leg-
islative decision, regardless of when made, to settle a case
rather than to litigate it.” Id. at 1100 & n.10. The district
court’s concerns are well-stated, but we do not need to go so
far as to hold that taxpayers may never challenge a
legislature-ordained settlement.
ARAKAKI v. LINGLE 11883
The provenance of the settlement at issue here is quite
unusual. As we have pointed out, when Hawaii created the
OHA, it allocated to OHA twenty percent of “all funds
derived” from the public land trust. HAW. REV. STAT. § 10-
13.5. The statute, however, did not define the term “funds,”
and it was not clear what OHA was entitled to receive. In
1983, OHA’s trustees filed suit against various state officials,
claiming that OHA had not received its twenty percent share
of “funds,” specifically settlements concerning lands in the
public trust. On appeal, the Hawaii Supreme Court ruled that
the term “funds” was so ambiguous that the court could not
resolve the intra-government dispute, and it declined judg-
ment because of the state’s political question doctrine. Trust-
ees of Office of Hawaiian Affairs v. Yamasaki, 174-75, 737 P.
2d 446, 458 (Haw. 1987). In response, the Hawaii Legislature
amended Section 10-13.5, substituting the word “revenue” for
“funds.” Act 304, § 7, HAW. SESS. LAWS 947, 951 (1990). In
1993, the legislature appropriated $136.5 million to OHA in
settlement of OHA’s claims from 1980 through 1991. Id. § 8,
HAW. SESS. LAWS at 951; Act 35, § 3, HAW. SESS. LAWS 41
(1993).4 Whatever the revenue origins of the $136.5 million
allocated in 1993, the legislature paid these funds as compen-
sation for revenues that OHA did not receive between 1980-
91 that were generated by the public land trust. Since the orig-
inal revenues were not tax-based, Plaintiffs lack standing to
challenge these expenditures.
[13] For similar reasons, Plaintiffs cannot challenge the
bonds issued by the state to fund these settlements. Whether
some tax monies are used to service or repay the bonds, the
bonds fund a settlement of land revenues owed to OHA. We
affirm the district court’s ruling that Plaintiffs may not chal-
4
In Office of Hawaiian Affairs v. State, 31 P.3d 901 (Haw. 2001), the
Hawaii Supreme Court ruled that the 1990 amendments to Section 10-13.5
conflicted with federal law. Under Hawaii law, Section 10-13.5 was
reverted to its pre-amendment language. Thus, the current version of Sec-
tion 10-13.5 again reads “funds.”
11884 ARAKAKI v. LINGLE
lenge these funds paid in settlement and financed through
general bonds.
B. Plaintiffs’ Trust Beneficiary Standing
[14] Plaintiffs allege, as an independent basis for standing,
that as trust beneficiaries they may sue OHA because OHA
receives trust revenues. Although the United States is not an
indispensable party to a challenge to the appropriation of tax
revenue, see Part IV.A.2, supra, this is not true with respect
to OHA’s receipt of trust revenue. We have previously held
that the expenditure of trust revenue is governed by the
Admission Act. Price v. Akaka, 928 F.2d 824, 827 (9th Cir.
1990). Any challenge to the expenditure of trust revenue
brought by alleged trust beneficiaries must challenge the sub-
stantive terms of the trust, which are found in the Admission
Act. For the reasons we explained in Part III.A.2, supra, the
United States is an indispensable party to any challenge to the
Admission Act. Accordingly, although the United States is
not an indispensable party with respect to challenges to
OHA’s expenditure of tax revenue, it remains indispensable
with respect to challenges to the expenditure of trust revenue.
[15] Plaintiffs’ attempt to challenge OHA’s expenditure of
trust revenue thus suffers from the same fatal flaw as its chal-
lenge to the DHHL/HHC lease eligibility requirements. The
United States is an indispensable party to the challenge to the
expenditure of trust revenue, and yet Plaintiffs cannot estab-
lish standing to sue the United States either as taxpayers or as
trust beneficiaries. See Parts III.A.2 and III.B., supra. Plain-
tiffs therefore cannot proceed with that claim. We do not
reach the issue whether Plaintiffs’ breach of trust claim is oth-
erwise cognizable under the common law of trusts, which was
the basis of the district court’s dismissal of the breach of trust
claim against OHA. Rather, we affirm the dismissal on the
alternative ground that Plaintiffs cannot demonstrate standing
to sue an indispensable party.
ARAKAKI v. LINGLE 11885
V. POLITICAL QUESTION
The remaining question is whether Plaintiffs’ surviving
cause of action — namely, that the appropriation of state tax
revenue to OHA violates the Equal Protection Clause of the
Fourteenth Amendment — presents a nonjusticiable political
question. The district court reasoned that in order to rule on
Plaintiffs’ equal protection claims, the court would have to
determine what level of scrutiny to apply. Compare Grutter
v. Bollinger, 539 U.S. 306, 328-33 (2003) (applying strict
scrutiny to uphold race-conscious admissions policy at state
university law school), and Gratz v. Bollinger, 539 U.S. 244,
270-75 (2003) (striking down race-conscious undergraduate
admissions policy at state university under strict scrutiny),
with Morton v. Mancari, 417 U.S. 535 (1974) (applying ratio-
nal basis, rather than strict scrutiny, to employment preference
that benefitted members of Indian tribe because it furthered
Indian self-government), and Alaska Chapter, Associated
Gen. Contractors of Am., Inc. v. Pierce, 694 F.2d 1162 (9th
Cir. 1982) (applying rational basis test to native Alaskans
based on the federal government’s “special obligation” to
Indians). The district court reasoned that although Congress
has plenary authority over Indian affairs, it “has not yet
clearly recognized Hawaiians as being equivalent to Indians
or Indian tribes for purposes of the [Mancari] analysis.”
Arakaki VI, 305 F. Supp. 2d at 1172. Noting that “Congress
has begun to include Hawaiians as beneficiaries in bills pro-
viding services to Native Americans” and had pending before
it the “Akaka Bill” that would “equate Hawaiians to Indians
and/or Indian tribes,” the court observed that “Congress is still
speaking on the issue.” Id. at 1173. The district court con-
cluded that Congress “should make the decision as to whether
Hawaiians should be treated as Indians for purposes of the
[Mancari] analysis” and, “in recognition of the continuing
debate,” the court would “defer[ ] to Congress.” Id. at 1173,
1174. We hold that these claims do not raise a nonjusticiable
political question. We therefore reverse the district court’s
dismissal on political question grounds, and remand.
11886 ARAKAKI v. LINGLE
Chief Justice Marshall explained in Marbury that
“[q]uestions, in their nature political, or which are, by the
constitution and laws, submitted to the executive, can never
be made in this court.” Marbury v. Madison, 5 U.S. (1
Cranch) 137, 170 (1803). The Court announced the modern
formulation of the political question doctrine in Baker v.
Carr:
Prominent on the surface of any case held to involve
a political question is found [1] a textually demon-
strable constitutional commitment of the issue to a
coordinate political department; or [2] a lack of judi-
cially discoverable and manageable standards for
resolving it; or [3] the impossibility of deciding
without an initial policy determination of a kind
clearly for nonjudicial discretion; or [4] the impossi-
bility of a court’s undertaking independent resolution
without expressing lack of the respect due coordinate
branches of government; or [5] an unusual need for
unquestioning adherence to a political decision
already made; or [6] the potentiality of embarrass-
ment from multifarious pronouncements by various
departments on one question.
369 U.S. 186, 217 (1962); see Alperin v. Vatican Bank, 410
F.3d 532, 537-40 (9th Cir. 2005); EEOC v. Peabody W. Coal
Co., 400 F.3d 774, 784 (9th Cir. 2005); Kahawaiolaa v. Nor-
ton, 386 F.3d 1271, 1275 (9th Cir. 2004), cert. denied, 125
S. Ct. 2902 (2005).
[16] We have recently addressed the political question doc-
trine in the context of a challenge to the executive’s failure to
recognize Hawaiians as federal Indian tribes in Kahawaiolaa,
386 F.3d 1271. In that case, native Hawaiians alleged that the
Department of Interior had violated the equal protection com-
ponent of the Fifth Amendment in regulations limiting recog-
nition of new tribes to “ ‘those American Indian groups
indigenous to the continental United States’ ”—which meant
ARAKAKI v. LINGLE 11887
that “native Hawaiians are excluded from eligibility to peti-
tion for tribal recognition under the regulations.” Id. at 1274
(quoting 25 C.F.R. § 83.3(a)). The district court dismissed the
suit against the Department of Interior, in part because matters
of tribal recognition raise nonjusticiable political questions.
We disagreed with the district court on this point. We noted
that “[i]f the question before us were whether a remedy would
lie against Congress to compel tribal recognition, the answer
would be readily apparent. . . . a suit that sought to direct
Congress to federally recognize an Indian tribe would be non-
justiciable as a political question.” Id. at 1275-76. We found,
however, that the plaintiffs did not seek tribal recognition;
rather, they wanted the Department of Interior to allow them
to apply for recognition “under the same regulatory criteria
applied to indigenous peoples in other states.” Id. at 1276. We
concluded that the plaintiffs’ suit was not barred by the politi-
cal question doctrine.
In order to stay our hand in this case, we must determine
that the resolution of Plaintiffs’ equal protection claims
against OHA would interfere with the constitutional duties of
one of the political branches, whether that duty has been exer-
cised or not. The district court and the state defendants locate
that “textually demonstrable constitutional commitment of the
issue” in Article I, Section 8, Clause 3 of the U.S. Constitu-
tion: “The Congress shall have Power . . . To regulate Com-
merce . . . with the Indian Tribes.” The Court has observed
that “Congress possesses plenary power over Indian affairs,
including the power to modify or eliminate tribal rights.”
South Dakota v. Yankton Sioux Tribe, 522 U.S. 329, 343
(1998). Thus, the “questions whether, to what extent, and for
what time [Indians] shall be recognized and dealt with as
dependent tribes requiring the guardianship and protection of
the United States are to be determined by Congress, and not
by the courts.” United States v. Sandoval, 231 U.S. 28, 46
(1913).
Here, no party seeks to compel Congress to recognize the
tribal status of Hawaiians. Instead, OHA argues that if Con-
11888 ARAKAKI v. LINGLE
gress has treated Hawaiians as a tribe, then under the author-
ity of Mancari, OHA would have to demonstrate only a
rational connection between its Hawaiian preferences and its
programs. Plaintiffs argue that Congress’ failure, so far, to
recognize Hawaiians’ tribal status does not prevent the courts
from deciding whether OHA’s Hawaiian-preference violates
the Equal Protection Clause of the Fourteenth Amendment.
Effectively, the district court found that it could not rule on
the equal protection claim until it could determine the appro-
priate level of scrutiny, and it could not determine the level
of scrutiny until Congress decided to grant or not to grant
tribal status to Hawaiians.
[17] Nothing in the claims Plaintiffs have asserted or the
remedy they seek invites the district court to exercise powers
reserved to Congress or to the President. The district court has
not been asked to declare tribal status where Congress has
declined. Instead, it is asked to interpret the implications of
past congressional action or inaction for equal protection anal-
ysis. Indeed, courts are frequently called upon to “scrutiniz[e]
Indian legislation to determine whether it violates . . . equal
protection.” Del. Tribal Bus. Comm. v. Weeks, 430 U.S. 73,
84 (1977). The fact that Congress enjoys “plenary power . . .
in matters of Indian affairs ‘does not mean that all federal leg-
islation concerning Indians is . . . immune from judicial scru-
tiny.’ ” Id. at 83-84 (quoting Brief of the Secretary of the
Interior). In general, “the political question doctrine does not
bar adjudication of a facial constitutional challenge even
though Congress has plenary authority, and the executive has
broad delegation, over Indian affairs.” Kahawaiolaa, 386 F.3d
at 1276.
In the exercise of its power to regulate commerce with Indi-
ans and recognize their sovereign status, Congress might be
able to alter the relative burdens of proof and persuasion
shouldered by Plaintiffs and OHA in this case.5 But Congress
5
We couch this in the conditional because the Court in Rice suggested
that it remains “a matter of some dispute . . . whether Congress may treat
ARAKAKI v. LINGLE 11889
has no obligation to exercise its Article I, Section 8, Clause
3 powers in any particular way. That it has, so far, declined
to do so does not excuse the district court from hearing the
case. Congress does not have a constitutionally committed
power to set the level of scrutiny for those claiming native
American status; it has the constitutionally committed author-
ity to regulate affairs with native Americans, and the courts
then determine which level of scrutiny is warranted by Con-
gress’ action or inaction. See, e.g., Three Affiliated Tribes of
Fort Berthold Reservation v. Wold Eng’g, 476 U.S. 877, 882
(1986); United States v. Antelope, 430 U.S. 641, 645-46
(1977); Mancari, 417 U.S. at 553 n.24.
Moreover, we note that even if Congress had treated
Hawaiians or native Hawaiians as a tribe, the district court
would still have to determine whether OHA’s classification
was based on race or on tribal status. As we observed in
Kahawaiolaa:
As Rice illustrates, an “Indian tribe” may be clas-
sified as a “racial group” in particular instances . . . .
We reject the notion that distinctions based on Indian
or tribal status can never be racial classifications
subject to strict scrutiny. . . . Government discrimi-
nation against Indians based on race or national ori-
gin and not on membership or non-membership in
tribal groups can be race discrimination subject to
strict scrutiny.
386 F.3d at 1279 (citing Adarand Constructors v. Pena, 515
U.S. 200, 227 (1995)). This, too, is a determination properly
left to the courts. Id.
the native Hawaiians as it does the Indian tribes.” 528 U.S. at 518. Like
the Court, “[w]e can stay far off that difficult terrain” in this appeal. Id.
at 519.
11890 ARAKAKI v. LINGLE
[18] The questions on which Plaintiffs have standing
squarely and exclusively raise a Fourteenth Amendment
claim. The courts must therefore determine the proper level of
scrutiny. We do not require further action by Congress to
inform that determination. To deny the federal courts their
authority to adjudicate an equal protection claim simply
because Congress expressed its intent with less than complete
lucidity is to expand the political question doctrine beyond its
historical limits. In doing so, it would restrict judicial author-
ity in unprecedented ways; such an expansive interpretation
subverts the very separation of powers that the political ques-
tion doctrine is designed to protect. Although the Supreme
Court was able to postpone consideration of those equal pro-
tection questions of “considerable moment and difficulty,”
Rice, 528 U.S. at 518-19, we do not have that luxury. We
therefore remand to the district court the issue whether the
expenditure of state tax revenue on OHA programs violates
the Equal Protection Clause of the Fourteenth Amendment.
VI. PLAINTIFFS’ REMAINING MISCELLANEOUS
ARGUMENTS
Plaintiffs make several additional arguments on appeal,
none of which is meritorious. Plaintiffs contend that the dis-
trict court erred in striking its Counter Motion for Summary
Judgment of December 15, 2003. The district court cited mul-
tiple grounds in its December 16, 2003 unpublished Order for
striking the motion, including: the motion was not a true
counter motion because it raised numerous issues not raised
in the motion which it purportedly countered; it was untimely;
and the motion was not filed in the proper round of summary
judgment rounds, as scheduled by the district court in a previ-
ous order.
[19] We review for abuse of discretion challenges to pre-
trial management. Navellier v. Sletten, 262 F.3d 923, 941 (9th
Cir. 2001). “The district court is given broad discretion in
supervising the pretrial phase of litigation.” Johnson v. Mam-
ARAKAKI v. LINGLE 11891
moth Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992)
(citation and internal quotation marks omitted). Plaintiffs have
not demonstrated that the district court’s management of the
summary judgment phase of this trial constituted an abuse of
discretion. The district court’s December 16, 2003 Order is
affirmed. Similarly, we are unpersuaded by Plaintiffs’ conten-
tion that the district court’s pretrial management warrants the
reassignment of this case to another judge and their request is
denied.
[20] Plaintiffs also appeal the district court’s May 5, 2004
unpublished Order awarding roughly $5300 in costs to select
defendants on the ground that imposing such costs will have
a “chilling effect” on civil rights litigation. We review an
award of costs for abuse of discretion. Evanow v. M/V Nep-
tune, 163 F.3d 1108, 1113 (9th Cir. 1998). Plaintiffs have not
demonstrated that the award of such modest costs, divided
among multiple plaintiffs, constitutes an abuse of discretion.
The district court’s May 5, 2004 Order is affirmed.
[21] Finally, Plaintiffs seek reversal of the district court’s
January 26, 2004 unpublished Order denying Plaintiffs’
motion to compel discovery. A district court’s discovery rul-
ings are reviewed for an abuse of discretion. United States v.
Fisher, 137 F.3d 1158, 1165 (9th Cir. 1998). Again, we find
no abuse of discretion, and the order is affirmed.
VII. CONCLUSION
The district court’s orders are variously affirmed or
reversed as follows.
Arakaki I, 198 F. Supp. 2d 1165 (D. Haw. 2002), is
affirmed in part and reversed in part. We affirm the court’s
holding that Plaintiffs have standing to challenge the appro-
priation of state tax revenue to OHA. We reverse the holding
that Plantiffs have standing as taxpayers to challenge the
appropriation of tax revenue to DHHL/HHC. We affirm the
11892 ARAKAKI v. LINGLE
denial of standing to challenge the settlement of past claims
against OHA. We affirm the denial of standing to challenge
the issuance of bonds and the denial of standing to challenge
all other spending that does not originate in tax revenue. The
remaining issues addressed in that order are not on appeal.
Arakaki II, 299 F. Supp. 2d 1090 (D. Haw. 2002), is
affirmed in part and reversed in part. We affirm Plaintiffs’
standing to challenge the appropriation of state tax revenue to
the OHA. We reverse the grant of standing to challenge the
appropriation of tax revenue to DHHL/HHC. We affirm the
denial of standing to sue as trust beneficiaries. We affirm the
denial of the motion to dismiss the tax revenue claim against
OHA under the political question doctrine. We reverse the
denial of the motion to dismiss the tax revenue claim against
DHHL/HHC. The remaining issues in that order are not on
appeal.
Arakaki III, 299 F. Supp. 2d 1107 (D. Haw. 2002), is
affirmed on different grounds. Arakaki IV, 299 F. Supp. 2d
1114 (D. Haw. 2003), and Arakaki V, 299 F. Supp. 2d 1129
(D. Haw. 2003), are affirmed. Arakaki VI, 305 F. Supp. 2d
1161 (D. Haw. 2004), is reversed. All remaining orders in this
case are affirmed.
The parties shall bear their own costs on appeal.
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED.