THE ESTATE OF MARK TOKUYAMA V. CITY AND COUNTY OF HONOLULU

On January 29, 1981, Mark Tokuyama had gone swimming at Makapu'u Beach with several friends. He was unaware that there was a severe rip current at the beach that day. No warning signs or flags were posted. While swimming near the shore area in front of the lifeguard stand, he was suddenly picked up by the undertow and taken out to sea. He struggled against the current for some twenty minutes before succumbing to fatigue, inhaling water and going unconscious.

While he was struggling, the two lifeguards on duty were inattentive to their duties. One lifeguard went on break, and while Mark was struggling for his life, the other lifeguard had his back turned to the water talking to a girl. Only after other beachgoers notified the lifeguard was a rescue attempt made. By then, it was too late. Mark died on the way to the hospital.

The City and County of Honolulu claimed it was all Mark's fault for going swimming and denied that the lifeguard was inattentive. The City declined to make any settlement offer, and this case was taken to trial, leaving the ultimate decision to a jury.

At the time, this verdict was the highest ever awarded for a drowning case in the State of Hawaii.

The following newspaper article describes the result:

SHAWN POTTER V. HAWAII NEWSPAPER AGENCY

When the Hawaii Supreme Court decided our client's case, Potter v. Hawaii Newspaper Agency, 89 Hawaii 411 (1999), it was a landmark decision in both workers' compensation law and tort law. Prior to that decision, it was unclear whether an injured independent contractor could choose between receiving workers' compensation benefits or sue his employer under tort law.

The Hawaii Newspaper Agency (HNA) had enlisted Shawn Potter's services as an independent contractor newspaper dealer. When Shawn was seriously injured, HNA claimed that he was an employee of HNA and entitled to only workers' compensation benefits, thereby prohibiting a tort suit against HNA. The difference in benefits to Shawn's family was huge.

The Hawaii Supreme Court held in our favor and decided that Shawn could either sue HNA under tort law or accept workers' compensation benefits. The choice was his and not HNA's. Following this decision, Shawn's tort suit was settled by HNA for an undisclosed amount.

The facts of Shawn's accident were:

On November 21, 1992, at approximately 10:20PM, Potter was operating a moped on Winam Avenue, in the City and County of Honolulu, when he was struck by an automobile that ran a stop sign at the Herbert Street intersection. He was fourteen years old at the time of the accident. As a result of the accident, Potter suffered severe head injuries, a ruptured spleen, and a fractured femur. Upon his discharge from the Rehabilitation Hospital of the Pacific in May 1993, Potter was confined to a wheelchair and required assistance with activities of daily living. Potter has claimed that he incurred medical expenses exceeding $307,000.00.

The moped Potter was riding when the accident occurred belonged to one of the HNA's district managers. When Potter was loaned the moped to use when making his deliveries, he was also permitted to take it home and use it at other times as well.  Potter was not old enough to operate the moped legally, and he possessed no license to drive it. In order to become a dealer for the HNA, Potter and his parents had executed a "Statement of Intention," which recited that Potter would "operate [his] own retail distribution and delivery business as an independent contractor."

As "independent contractors," HNA's newspaper dealers did not receive any employee benefits. The dealers did not receive an hourly wage, but, rather, purchased newspapers at whole from the HNA, which they resold to their customers at a profit. The HNA did not take responsibility for withholding income tax or Social Security payments on the dealers' behalf.

It is apparent from the record that the "Newspaper Dealers' Agreement" was offered to prospective newspaper carriers on a take-it-or-leave-it basis. The disparity of bargaining power was made more acute by the paucity of employment opportunities available to young people. Moreover, pursuant to the terms of the agreement, the HNA sought to avoid liability for employee benefits, state and federal payroll taxes, and vicarious liability for any damages that might result from the news carriers' delivery of its newspapers. The agreement offered no reciprocal benefits to the carriers. By the express terms of its own agreement, the HNA hired "independent contractors."

The Hawaii Supreme Court held as follows:

We are not providing a mechanism whereby any worker, who has consistently been labeled and treated by his employer as an "employee" and afforded the full panoply of protections and benefits that customarily accompany that status, may "opt out" of the workers' compensation statutes. Rather, we are merely restricting the prerogative of employers to "have their cake and eat it too." When an employer expressly contracts with a worker as an "independent contractor," the employer will be bound by his election. If such a worker is injured on the job, the individual may then choose to (1) seek relief in tort or (2) attempt to show that the independent contractor agreement was a sham and that the worker is, therefore, entitled to workers' compensation benefits.

g: Case Template.Potter v. HNA