Martel v. Employee Retirement System

── Martel v. Employee Retirement System ── Court: Hawaii Supreme Court Date: May 04, 2026 Category: General *** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER *** Electronically Filed Supreme Court SCWC-XX-XXXXXXX 04-MAY-2026 10:15 AM Dkt. 27 OP IN THE SUPREME COURT OF THE STATE OF HAWAIʻI ---o0o--- LINDA S. MARTELL, Petitioner/Plaintiff-Appellee, vs. EMPLOYEE RETIREMENT SYSTEM, STATE OF HAWAIʻI and BOARD OF TRUSTEES OF THE EMPLOYEE RETIREMENT SYSTEM, STATE OF HAWAIʻI, Respondents/Defendants-Appellants. SCWC-XX-XXXXXXX CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-XX-XXXXXXX AND CAAP-XX-XXXXXXX; CASE NO. 1CCV-XX-XXXXXXX) MAY 4, 2026 EDDINS, ACTING C.J., GINOZA, AND DEVENS, JJ., CIRCUIT JUDGE DeWEESE, IN PLACE OF McKENNA, ACTING C.J., RECUSED, AND CIRCUIT JUDGE COPELAND, ASSIGNED BY REASON OF VACANCY OPINION OF THE COURT BY EDDINS, J. I. An agency can change its rules. What it cannot do is change them without following the procedures the legislature requires. Much less enforce the change against someone who timely objects. *** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER *** That’s what happened here. For nearly a decade, the Employee Retirement System (ERS) credited Judge Linda Martell with retirement service for her work as a per diem judge. A 1990 Memorandum defined the eligibility criteria. In October 2017, ERS unilaterally rescinded that memorandum. It stripped years of Martell’s retirement credits. ERS held no hearing. It gave no notice. It followed no rulemaking procedure required by Hawaiʻi Revised Statutes (HRS) chapter 91. Martell challenged the ERS’ decision. The circuit court sided with her. The ICA reversed the circuit court. The circuit court got it right. We vacate the ICA’s decision. II. Statutes and a rule govern ERS membership. In this case, so did memoranda that operated as rules. Hawaiʻi’s Administrative Procedure Act, HRS chapter 91, imposes procedural constraints on how agencies adopt, amend, or repeal rules. This case turns on four questions. First, who are ERS members? All state employees, including per diem workers, are members unless specifically excluded. HRS § 88-42 (2012). The statute reflects a legislative presumption of inclusion. 2 *** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER *** HRS § 88-43 (2012) qualifies that presumption. The ERS Board may “deny membership to any class of part-time employees or persons engaged in temporary employment of three months or less[.]” Vail held that the statute gives ERS the power to deny per diem employees membership as a class of part-time workers. Vail v. Emps’ Ret. Sys. of State, 75 Haw. 42, 66, 856 P.2d 1227, 1240 (1993). Second, how does the ERS Board exercise its exclusion authority? Through a rule. Hawaiʻi Administrative Rules (HAR) § 6-21-14(5) excludes “[p]ersons in any position requiring less than one-half o[f] full-time employment.” But this rule says nothing about how to apply that threshold to per diem judges. That gap gave rise to the memoranda at the center of this dispute. Third, what is a rule and what happens when an agency adopts one? HRS § 91-1 defines a “rule” as “each agency statement of general or particular app