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Wong v. Hawaiian Airlines, Inc.

Supreme Court of Hawaii

March 30, 2016

GENE WONG, Petitioner/Plaintiff-Appellant, Cross-Appellee,
HAWAIIAN AIRLINES, INC., Respondent/Defendant-Appellee, Cross-Appellant.


          R. Steven Geshell for petitioner

          C. Michael Heihre and Allison Mizuo Lee for respondent



          POLLACK, J.

         This case involves claims brought by a retired employee against his former employer for allegedly providing inaccurate information regarding the late enrollment penalty that applies to Medicare Part B. The circuit court granted summary judgment in favor of the employer concluding that the retiree's negligent and negligent misrepresentation claims were preempted by federal law, and the Intermediate Court of Appeals affirmed the summary judgment on appeal. We conclude that the record in this case does not support federal preemption of the negligent and negligent misrepresentation claims.[1]

         I. BACKGROUND

         Gene Wong was employed as a pilot by Hawaiian Airlines, Inc. (HAL) until he retired at the mandatory retirement age of sixty in 1996. Upon retiring, Wong became eligible to receive medical insurance paid for by HAL. HAL is obligated to provide retired pilots with medical coverage pursuant to a collective bargaining agreement between HAL and the Airline Pilots Association (Pilots Agreement). The Pilots Agreement contemplates coordination of the plan benefits provided by HAL with Medicare benefits:[2]

The Company shall continue to provide the medical, dental, drug and vision coverage in effect as of . . . the date of . . . Normal Retirement under the Retirement Plan for Pilots of Hawaiian Airlines, Inc. and such pilot's spouse until age sixty-five (65) at which time the Company shall provide coverage, which when coordinated with Medicare benefits, shall maintain the benefits to which the pilot would have been entitled to had s/he not retired.

         When Wong became eligible for Medicare Part B in 2001, he consulted with HAL's Director of Employee Benefits and Compensation about whether or not he should enroll in Medicare Part B. Wong consulted with the benefits director regarding Medicare in part because the Medicare documents he received instructed him to contact his former employer's human resources department.[3] Wong alleges that the employee benefits director advised him that he did not need to enroll in Medicare Part B because HAL would provide him with his primary medical insurance and "he could switch without penalty later."

         Wong contacted HAL's benefits director in 2010 when his wife became eligible for Medicare Part B coverage; his email to the director states the following:

If for some reason; I lose my medical, you mentioned that I would be able to enroll into the Medicare program without the penalty for both parts A & B since I was previously covered under an equal or better program. The Social Security is telling me that I should hold a letter that states my existing coverage is equal or better than Medicare and should I lose it, I can produce, that letter to allow myself and spouse to enroll in their program without the penalties ....

         Wong also met with the director to discuss Medicare, at which time he asked for her assistance in enrolling in Medicare Part B. Wong requested that the benefits director write a letter for him to assist him in signing up for Medicare Part B. Wong received a letter from the director confirming that she provided Wong with inaccurate information regarding Medicare:

This is to confirm that we provided you with some incorrect information regarding Medicare when you turned 65. I've completed forms for Medicare in the past that requested cancelation data so that people could apply for Medicare at a delayed point in time when their group coverage was canceled. Since you will remain qualified for full coverage under our HMSA plan for your lifetime, we told you that if at some point in time your plan was canceled, we would be able to provide you with the necessary information in order to avoid the late enrollment penalty. I now know that this was incorrect.
Please see if Social Security is able to waive the late enrollment penalty because of the misinformation that you were provided.

         The employee benefits director wrote the letter with the understanding that the letter would serve as proof for Wong to avoid the late enrollment penalty in enrolling in Medicare.

         Wong claims that, as a result of the misinformation he received from the benefits director, he did not complete the necessary forms to enroll in Medicare Part B coverage in 2001 through March of 2010.[4] Wong brought claims of negligence, negligent misrepresentation, and unfair or deceptive practice (UDAP) against HAL in the Circuit Court of the First Circuit (circuit court). Wong's complaint alleged that HAL "had a fiduciary, statutory, and common law duty" to provide Wong "with reasonably accurate Medicare retirement information." Wong also alleged that HAL had a duty to supply Wong with correct information regarding whether he should choose to have HAL's medical plan or Medicare Part B as his primary health care insurer. Wong contended that HAL's conduct in providing him incorrect information regarding Medicare Part B constituted an unfair or deceptive trade practice pursuant to Chapter 480 of the Hawai'i Revised Statutes (HRS), which financially injured him. Wong asserted that he suffered over $286, 846.72 in damages as a result of the inaccurate information provided by HAL.[5]

         HAL moved for summary judgment arguing, inter alia, that Wong's claims for negligence and negligent misrepresentation failed because HAL did not owe Wong a duty of care relating to information regarding Medicare.[6] The circuit court denied HAL's motion for summary judgment in part because the court found that there were genuine issues of material fact as to whether HAL owed Wong a duty.[7]

         HAL later filed a second motion for summary judgment arguing that Wong's negligence claims were preempted by federal law. HAL argued that Wong's negligence claims were preempted by the Railroad Labor Act (RLA) because any duty HAL owed to Wong would be derived from HAL's obligations to retired pilots under the Pilots Agreement. In support of its motion, HAL maintained that it was obligated to provide Wong with medical benefits to be coordinated with Medicare under the Pilots Agreement. HAL also maintained that any obligation to provide information about health benefits would flow from its duty to provide such benefits under the Pilots Agreement. With regard to Wong's UDAP claim, HAL argued that the claim failed because the alleged conduct did not occur "in the conduct of any trade or commerce" as required by HRS Chapter 480.

         Wong maintained that his negligence and negligent misrepresentation claims had no relation to the Pilots Agreement and that "torts like this are independent of the contract." In response to HAL's arguments regarding the UDAP claim, Wong argued that HAL "was engaged in transportation business, and part of that business was providing information to its retirees."

         The court granted HAL's second motion for summary judgment, concluding that Wong's negligence and negligent misrepresentation claims were preempted by the RLA. The court also ruled in favor of HAL on the UDAP claim because the alleged unfair or deceptive act did not occur in "the conduct of any trade or commerce." The circuit court's June 6, 2013 Final Judgment included an award of costs in the amount of $11, 855.30 in favor of HAL.

         Wong appealed the circuit court's order granting HAL's second motion for summary judgment and the court's Final Judgment to the Intermediate Court of Appeals (ICA), Wong argued that his negligence claims are independent of the Pilots Agreement and "there is no need to interpret the contract in this case" with regard to his claims. HAL responded that "[w]hen negligence claims are premised on actions taken by an employer pursuant to CBA[8]-imposed duties, resolution of negligence claims often requires interpretation of the CBA to evaluate the reasonableness of the employers actions." HAL asserted that "Wong cannot avoid the RLA's mandatory arbitral ...

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