Davis et al v. Four Seasons Hotel Limited
Filing
183
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT FOUR SEASONS HOTEL LIMITED'S MOTION FOR SUMMARY JUDGMENT, FILED JUNE 8, 2011 (DOC. 147). Signed by JUDGE HELEN GILLMOR on 10/20/2011. 147 ~ Defendant Four Seasons Hotel, Limit ed's Motion for Summary Judgment (Doc. 147) is GRANTED IN PART AND DENIED IN PART. Four Seasons' Motion for Summary Judgment on Count 1, for unfair methods of competition in violation of Hawaii Revised Statutes (H.R.S.) §§ 480-2(e ), 481B-14; Count 3, for breach of implied contract; and Count 4, for unjust enrichment, is GRANTED. Four Seasons' Motion for Summary Judgment on Count 5, for unpaid wages in violation of H.R.S. §§ 388-6, 10, 11, is DENIED. In the Cou rt's August 26, 2011 Order, the Court granted Plaintiffs' Motion for Summary Judgment on liability for Count 5. (ecs, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on 10/21/2011
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
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DARYL DEAN DAVIS; MARK APANA;
ELIZABETH VALDEZ KYNE; EARL
TANAKA; THOMAS PERRYMAN;
DEBORAH SCARFONE; on behalf of
themselves and all others
similarly situated,
Plaintiffs,
vs.
FOUR SEASONS HOTEL LIMITED,
dba FOUR SEASONS RESORT, MAUI
and FOUR SEASONS RESORT,
HUALALAI; MSD CAPITAL, INC.,
Civ. No. 08-00525 HG-BMK
Defendants.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT FOUR SEASONS
HOTEL LIMITED’S MOTION FOR SUMMARY JUDGMENT, FILED JUNE 8, 2011
(DOC. 147)
On September 3, 2010, Plaintiffs filed a five-count Second
Amended Class Action Complaint.
On September 30, 2010, the Court
dismissed Count 2, for intentional interference with a contractual
or advantageous relationship.
On June 8, 2011, Defendant filed a Motion for Summary Judgment
on Count 1, unfair methods of competition in violation of Hawaii
Revised Statutes (hereinafter “H.R.S.”) §§ 480-2(e), 481B-14; Count
3, breach of implied contract; Count 4, unjust enrichment; and
Count 5, unpaid wages in violation of H.R.S. §§ 388-6, 10, 11.
On
June 21, 2011, the Court granted Plaintiff’s Motion for Summary
Judgment as to liability for Count 5, for unpaid wages in violation
1
of H.R.S. §§ 388-6, 10, 11.
Defendant’s Motion for Summary Judgment on Counts 1, 3, and 4
is GRANTED.
DENIED.
Defendant’s Motion for Summary Judgment on Count 5 is
The only remaining issue for trial is the amount of
Plaintiff’s damages for Count 5.
PROCEDURAL HISTORY
On
November
21,
2008,
Plaintiffs
filed
a
Class
Action
Complaint. (Doc. 1).
On January 12, 2009, Plaintiffs filed an Amended Class Action
Complaint. (Doc. 13).
On January 30, 2009, Defendant Four Seasons Hotel, Limited
filed a Motion to Dismiss. (Doc. 32).
On March 24, 2009, a hearing was held on Defendant’s Motion to
Dismiss. (See Doc. 53).
The Court denied the Motion and ordered
the parties to meet and confer in order to frame an appropriate
question
to
the
Hawaii
Supreme
Court
regarding
Plaintiffs’
standing. (See Doc. 53).
On June 2, 2009, the Court certified the question to the
Hawaii Supreme Court regarding Plaintiffs’ standing to pursue their
unfair competition claim under H.R.S. § 480-2(e) for a violation of
H.R.S. § 481B-14. (Doc. 75).
On July 28, 2009, the Court directed the Clerk’s Office to
close the case administratively, while the matter was before the
2
Hawaii Supreme Court. (Doc. 88).
On March 29, 2010, the Hawaii Supreme Court issued a ruling on
the certified question.
Davis, et al., v. Four Seasons Hotel Ltd,
et al., 228 P.3d 303 (Haw. 2010).
The Hawaii Supreme Court ruled
that Plaintiffs have standing to pursue a claim unfair competition
claim under H.R.S. § 480-2(e) for a violation of H.R.S. § 481B-14
if they sufficiently allege the nature of the competition that
caused their injuries. Id.
On April 9, 2010, the Defendant filed a Motion to Reopen the
Case. (Doc. 93).
On the same day, the Defendant filed a Renewed
Motion to Dismiss Plaintiffs’ Complaint. (Doc. 94).
On April 19, 2010, Plaintiffs filed a Motion for Leave to File
Second Amended Complaint. (Doc. 98).
On the same day, Plaintiffs
filed a Statement of No Opposition to Defendant’s Motion to Reopen
Case. (Doc. 100).
On May 6, 2010, the Court granted Defendant’s Motion to Reopen
Case. (Doc. 102).
On August 31, 2010, the Court granted Plaintiffs’ Motion for
Leave to File Second Amended Complaint. (Doc. 121).
On September 3, 2010, Plaintiffs filed a Second Amended Class
Action Complaint. (Doc. 122).
On September 30, 2010, the Court issued an Order Granting In
Part And Denying In Part Defendant’s Renewed Motion to Dismiss.
(Doc. 125).
The Court applied the Motion to the Second Amended
3
Complaint. (See Doc. 125 at 5).
The Court dismissed Count 2, for
intentional
a
interference
with
contractual
or
advantageous
relationship, and allowed the remaining counts to proceed.
On November 3, 2010, Defendant filed an Answer to the Second
Amended Complaint. (Doc. 126).
On April 4, 2011, Plaintiffs filed a Motion for Partial
Summary Judgment on Count 5, as to Defendant’s liability for unpaid
wages in violation of H.R.S. §§ 388-6, 10, 11 (Doc. 132), and a
Memorandum in Support (Doc. 134).
On June 8, 2011, Defendant filed a Motion for Summary Judgment
(Doc. 147) and Memorandum in Support (Doc. 147-3).
Pursuant to
Local Rule 7.2(d), the Court elected to decide the Motion without
a hearing.
On June 21, 2011, a hearing was held on Plaintiffs’ Motion for
Partial Summary Judgment on liability for Count 5, for unpaid wages
in violation of H.R.S. §§ 388-6, 10, 11.
At the hearing, the Court
granted Plaintiffs’ Motion for Partial Summary Judgment as to
liability under Count 5, for unpaid wages, pursuant to H.R.S. §§
388-6, 10, 11.
On
June
27,
2011,
Plaintiffs
filed
an
Opposition
to
Defendant’s Motion for Summary Judgment. (Doc. 154).
On July 13, 2011, Defendant filed a Reply. (Doc. 166).
On August 26, 2011, the Court issued a written Order setting
forth the reasons forth the reasons for its June 21, 2011 oral
4
ruling granting Plaintiffs’ Motion for Partial Summary Judgment as
to Defendant’s liability for Count 5, for unpaid wages in violation
of H.R.S. §§ 388-6, 10, 11. (Doc. 171).
BACKGROUND
Plaintiffs are food and beverage servers who have worked at
the Four Seasons Resort, Maui (the “Maui resort”), and the Four
Seasons Resort, Hualalai (the “Hualalai resort”). (Second Amended
Complaint at ¶ 1 (Doc. 122); Defendant’s Answer at 3, ¶ 1 (Doc.
126)).
Defendant Four Seasons Hotel, Limited is responsible for
managing both resorts. (Defendant’s Answer at ¶ 3 (Doc. 126);
Plaintiffs’ Reply in Support of Motion for Partial Summary Judgment
at 16 (Doc. 144)).
Defendant MSD Capital, Inc. has an ownership
interest in the two resorts. (Second Amended Complaint at ¶ 4 (Doc.
122); Defendant’s Answer at ¶ 4 (Doc. 126)).
Defendant MSD
Capital, Inc. has not appeared, and there is no evidence that it
was ever served.
Plaintiffs claim that Four Seasons adds a “service charge” to
resort customers’ food and beverage bills, which ranges from 18 to
22 percent of the food and beverage bill total. (Plaintiffs’
Statement of Facts at ¶¶ 2-3 (Doc. 133)).
According to the
Complaint, a portion of the service charge is distributed to
services
employees,
and
Seasons. (Id. at ¶ 4).
another
portion
is
retained
by
Four
Four Seasons does not dispute that resort
5
customers are billed an 18 to 22 percent service charge, and that
it retains a portion that is not distributed to service employees.
(Defendant’s Statement of Facts at ¶¶ 1-4 (Doc. 140)).
Four
Seasons disputes that it is responsible for this practice. (Id.).
Four Seasons maintains that it does not “operate” the resorts on a
“day-to-day basis.” (Defendant’s Statement of Facts at ¶ 1 (Doc.
140)).
According to Four Seasons, the “day-to-day” operation of
the Maui resort is performed by 3900 WA Associates, LLC, and the
“day-to-day” operation of the Hualalai resort is performed by
Hualalai Investors, LLC. (Defendant’s Answer at ¶ 3 (Doc. 126)).
Plaintiffs’ claims for relief are all based on an allegation
that Four Seasons failed to disclose to customers, prior to the
filing of this lawsuit, that the service charges were not remitted
in full to the employees who serve the food and beverages. (Second
Amended Complaint at ¶¶ 8-9 (Doc. 122); Plaintiffs’ Statement of
Facts at ¶ 5 (Doc. 133)).
Plaintiffs maintain that customers are
misled into believing that the entire service charge is distributed
to the service employees, and that customers who would otherwise be
inclined to leave an additional gratuity do not do so. (Second
Amended Complaint at ¶ 9 (Doc. 122)).
STANDARD
Summary judgment is appropriate when there is no genuine issue
as to any material fact and the moving party is entitled to
6
judgment as a matter of law.
Fed. R. Civ. P. 56(c). To defeat
summary
be
judgment
there
must
sufficient
evidence
that
a
reasonable jury could return a verdict for the nonmoving party.
Nidds v. Schindler Elevator Corp., 113 F.3d 912, 916 (9th Cir.
1997).
The moving party has the initial burden of "identifying for
the court the portions of the materials on file that it believes
demonstrate the absence of any genuine issue of material fact."
T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d
626, 630 (9th Cir. 1987) (citing Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986)).
The moving party has no burden to negate or
disprove matters on which the opponent will have the burden of
proof at trial.
The moving party need not produce any evidence at
all on matters for which it does not have the burden of proof.
Celotex, 477 U.S. at 325.
The moving party must, however, show
that there is no genuine issue of material fact and that he or she
is entitled to judgment as a matter of law.
That burden is met by
pointing out to the district court that there is an absence of
evidence to support the non-moving party’s case. Id.
If the moving party meets its burden, then the opposing party
may not defeat a motion for summary judgment in the absence of
probative evidence tending to support its legal theory. Commodity
Futures Trading Comm'n v. Savage, 611 F.2d 270, 282 (9th Cir.
1979). The opposing party must present admissible evidence showing
7
that there is a genuine issue for trial. Fed. R. Civ. P. 56(e);
Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir.
1995).
“If
the
evidence
is
merely
colorable,
or
is
not
significantly probative, summary judgment may be granted.” Nidds,
113 F.3d at 916 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 249-50 (1986)).
The court views the facts in the light most favorable to the
non-moving party. State Farm Fire & Casualty Co. v. Martin, 872
F.2d 319, 320 (9th Cir. 1989).
Opposition evidence may consist of
declarations, admissions, evidence obtained through discovery, and
matters judicially noticed. Fed. R. Civ. P. 56(c); Celotex, 477
U.S. at 324.
The opposing party cannot, however, stand on its
pleadings or simply assert that it will be able to discredit the
movant's evidence at trial. Fed.R.Civ.P. 56(e); T.W. Elec. Serv.,
809 F.2d at 630. The opposing party cannot rest on mere allegations
or denials. Fed. R. Civ. P. 56(e); Gasaway v. Northwestern Mut.
Life Ins. Co., 26 F.3d 957, 959-60 (9th Cir. 1994). Nor can the
opposing party rest on conclusory statements. National Steel Corp.
v. Golden Eagle Ins. Co., 121 F.3d 496, 502 (9th Cir. 1997).
ANALYSIS
Four Seasons Moves for Summary Judgment on the remaining
claims in this action: Counts 1, 3, and 4.
Four Seasons argues
that the Plaintiffs lack evidence to support these claims.
In Count 1, Plaintiffs claim that Four Seasons’ failure to
8
disclose that service charges were not remitted in full to service
employees constitutes an unfair method of competition in violation
of Hawaii Revised Statutes (hereinafter “H.R.S.”) §§ 480-2(e),
481B-14.
In
constitutes
Count
3,
Plaintiffs
a
breach
of
an
implied
claim
that
contract.
the
In
practice
Count
4,
Plaintiffs claim that the practice constitutes unjust enrichment.
Four Seasons Was Plaintiffs’ Employer
As a threshold matter, Four Seasons argues that all of
Plaintiffs remaining claims fail because it was not the Plaintiffs’
“employer.”
H.R.S. § 388-1 defines “employ” as “to permit or
suffer to work.”
In their Answer to the Second Amended Complaint,
however, Four Seasons concedes that it is contractually responsible
for managing both the Maui and Hualalai resorts, and has the
authority to do so. (Defendant’s Answer at ¶ 3 (Doc. 126)).
There
is no genuine issue of fact that Four Seasons “permit[ed] or
suffer[ed]” Plaintiffs to work, as the term “employ” is defined
under H.R.S. § 388-1, and was therefore their “employer” under
H.R.S. § 388-1.
Count 1:
Unfair Method of Competition In Violation of H.R.S. §§
480-2(e), 481B-14
Plaintiffs claim that Four Seasons violated H.R.S. § 481B-14
by failing to disclose to customers that it was retaining a portion
of a mandatory “service charge.”
H.R.S. § 481B-14 provides:
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Any hotel or restaurant that applies a service charge for
the sale of food or beverage services shall distribute
the service charge directly to its employees as tip
income or clearly disclose to the purchaser of the
services that the service charge is being used to pay for
costs or expenses other than wages and tips of employees.
Plaintiffs argue that a violation of this statute constitutes an
unfair method of competition or unfair and deceptive act or
practice within the meaning of H.R.S. § 480-2(a), which provides:
Unfair methods of competition and unfair or deceptive
acts or practices in the conduct of any trade or commerce
are unlawful.
H.R.S. § 480-2(e) permits any person to “bring an action based on
unfair methods of competition declared unlawful by this section.”
A class action for such violation is permitted by H.R.S. § 480-13.
In Davis v. Four Seasons Hotel, Ltd., 228 P.3d 303, 305 (Haw.
2010), the Hawaii Supreme Court held that employees may bring a
claim under H.R.S. § 480-2(e) for a violation of H.R.S. § 481B-14.
In order to prevail on a claim pursuant to section § 480-2(e) based
on a violation of section 481B-14, however, employees must show
that
the
defendant’s
violation
had
a
negative
effect
on
competition, and that this negative effect caused the employee’s
injury. Id. at 438-39.
In their Opposition, Plaintiffs concede that they cannot prove
that Defendant’s violation of section 481B-14 had a negative effect
on competition. Four Seasons’ Motion for Summary Judgment on Count
1, for unfair methods of competition in violation of H.R.S. §§ 4802(e), 481B-14, is GRANTED.
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Count 3:
Breach of Implied Contract
Plaintiffs claim that Four Seasons’ failure to remit the total
proceeds of “service charges” to food and beverage employees
constitutes a breach of two implied contracts.
Plaintiffs claim
that Four Season breached an implied contract with Plaintiffs, and
also breached an implied contract with customers, to which the
Plaintiffs were third party beneficiaries.
An implied contract is present:
. . . where the intention of the parties is not
expressed, but an agreement in fact, creating an
obligation, is implied from their acts,, as in the case
where a person performs services for another, who accepts
the same, the services not being performed under such
circumstances as to show that they were intended to be
gratuitous, or where a person performs services for
another on request.
Kemp v. State of Hawaii Child Support Enforcement Agency, 141 P.3d
1014, 1038 (Haw. 2006) (internal citation omitted). The “essential
element of an implied contract” is a “mutual intent to form a
contract” that is implied from the “actions of the parties.” Id.
In
the
Court’s
September
30,
2010
Order
resolving
Four
Seasons’ Motion to Dismiss, the Court ruled that if the allegations
in the Second Amended Complaint are true, “it is plausible that a
jury could find that the employment relationship between Plaintiffs
and the Defendants created an implied obligation on the part of the
Defendants to comply with H.R.S. § 481B-14.” (Doc. 125 at 36).
Four Seasons has now moved for summary judgment on the ground that
Plaintiffs lack evidence to support this claim.
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Plaintiffs have
the burden of coming forward with evidence to support their claim.
Fed.R.Civ.P. 56(e); T.W. Elec. Serv., 809 F.2d at 630.
Plaintiffs
must present evidence that Four Seasons and the Plaintiffs acted in
a manner that implied a mutual intent to form a contract requiring
Four Seasons to distribute service charges in full to service
employees, or disclose otherwise to customers.
To establish an
implied contract between Four Seasons and customers, Plaintiffs
must point to evidence of actions taken by Four Seasons and
customers that would similarly imply a mutual intent to form a
contract.
Plaintiffs have pointed to no actions by Four Seasons and by
Plaintiffs
that,
together,
reflect
an
implied
contract
to
distribute service charges to service employees. Nor do Plaintiffs
point to any actions taken by Four Seasons and customers that would
reflect an implied contract to distribute service charges to
service employees.
In order to prevail on a breach of implied
contract claim, Plaintiffs have the burden of presenting evidence
that reflects that a “mutual intent to form a contract” was implied
from the actions of Plaintiffs and Four Seasons. Kemp v. State of
Hawaii Child Support Enforcement Agency, 141 P.3d 1014, 1038 (Haw.
2006) (internal citation omitted).
The “essential element of an
implied contract” is a “mutual intent to form a contract” that is
implied from the “actions of the parties.” Id. Plaintiffs have
provided evidence that prior to the filing of their lawsuit Four
12
Seasons
added
a
service
charge
to
food
and
banquet
bills.
Plaintiffs presented evidence that Four Seasons retained a portion
of the service charge, rather than distributing it in full to the
service employees.
Plaintiffs also have provided evidence that
Four Seasons failed to clearly disclose to customers that it was
retaining a portion of the service charge. (See e.g., Sample 2004
Banquet Contract, Exhibit 5 to Plaintiffs’ Statement of Facts (Doc.
133-6)).
But Plaintiffs have not provided any evidence of actions
taken by Four Seasons and by Plaintiffs from which an inference
could be drawn that they mutually intended to form a contract
requiring Four Seasons to remit the total service charge to the
employees.
Four Seasons’ Motion for Summary Judgment on Count 3, for
breach of implied contract, is GRANTED.
Count 4:
Unjust Enrichment
Plaintiffs claim that Four Seasons is liable for unjust
enrichment
for
not
remitting
the
total
proceeds
of
“service
charges” to food and beverage employees and failing to disclose it
to
customers.
To
recover
on
an
unjust
enrichment
claim,
a
plaintiff must prove: (1) the defendant received a benefit without
adequate legal basis; and (2) unjustly retained the benefit at the
expense of the plaintiff. Chapman v. Journal Concepts, Inc., 2008
WL 5381353, at *21 (D. Haw. 2008) (citing Small v. Badenhop, 701
13
P.2d 647, 654 (Haw. 1985); see also Durrette v. Aloha Plastic
Recycling, Inc., 100 P.3d 60, 61 (Haw. 2004) (unjust enrichment
occurs when the plaintiff confers a benefit on the defendant, and
the defendant unjustly retains the benefit).
Unjust enrichment is
a “broad and imprecise term.” Durrette, 100 P.3d at 72 (internal
citation
and
enrichment
quotation
claims,
marks
courts
omitted).
must
be
In
guided
by
reviewing
the
unjust
“underlying
conception of restitution, the prevention of injustice.” Id.
Four Seasons argues, first, that Plaintiffs’ unjust enrichment
claims fails because the Plaintiffs were well aware that Four
Seasons was retaining a portion of the service charge.
Plaintiffs
do not need to be ignorant of Four Seasons’ service charge practice
in order for it to be unjust.
violated no law.
Four Seasons also argues that they
Plaintiffs have presented evidence that Four
Seasons violated H.R.S. § 481B.
Finally, Four Seasons argues that to the extent Plaintiffs
have a viable claim based on H.R.S. § 481B-14, they already have a
viable legal remedy, making an unjust enrichment claim unavailable.
Hawaii courts observe the principle that equitable remedies, like
unjust enrichment, are only available when legal remedies are
inadequate. Porter v. Hu, 169 P.3d 994, 1006 (Haw. Ct. App. 2007).
Plaintiffs have an adequate remedy in the form of a claim for
unpaid wages pursuant to H.R.S. § 388-6.
Plaintiffs concede that
they already have an adequate legal remedy, but argue that their
14
unjust enrichment claim should be allowed to continue as an
alternative claim until the case is finally closed.
Plaintiffs
seek to preserve the claim, in the event that their wage claim is
overturned on appeal.
Plaintiffs’ have an adequate remedy in the form of a claim for
unpaid wages under H.R.S. § 388-6, which precludes the assertion of
an unjust enrichment claim seeking the same damages.
If an
appellate court rules that Plaintiffs’ wage claim is unavailable,
Plaintiffs
may
request
that
the
appellate
court
reconsideration of their unjust enrichment claim.
remand
for
Four Seasons’
Motion for Summary Judgment on Plaintiffs’ unjust enrichment claim
is GRANTED.
CONCLUSION
Defendant Four Seasons Hotel, Limited’s Motion for Summary
Judgment (Doc. 147) is GRANTED IN PART AND DENIED IN PART.
Four Seasons’ Motion for Summary Judgment on Count 1, for
unfair methods of competition in violation of Hawaii Revised
Statutes (“H.R.S.”) §§ 480-2(e), 481B-14; Count 3, for breach of
implied contract; and Count 4, for unjust enrichment, is GRANTED.
Four Seasons’ Motion for Summary Judgment on Count 5, for
unpaid wages in violation of H.R.S. §§ 388-6, 10, 11, is DENIED.
In the Court’s August 26, 2011 Order, the Court granted Plaintiffs’
15
Motion for Summary Judgment on liability for Count 5.
IT IS SO ORDERED.
DATED: October 20, 2011, Honolulu, Hawaii.
/S/ Helen Gillmor
Helen Gillmor
United States District Judge
DAVIS, et al. v. FOUR SEASONS HOTEL LIMITED, et al.; Civil No. 0800525 HG-BMK; ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT
FOUR SEASONS HOTEL, LIMITED’S MOTION FOR SUMMARY JUDGMENT, FILED
JUNE 8, 2011.
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