Wadsworth et al v. KSL Grand Wailea Resort, Inc.
Filing
163
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT 143 . Signed by JUDGE ALAN C KAY on 12/2/11. (eps) -- the Court grants summary judgment only for Defendants' liability with respect to service charges imposed on food and beverages purchased via room service 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 the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
NAN WADSWORTH, MARK APANA,
ELIZABETH VALDEZ KYNE, BERT
VILLON and STEPHEN WEST, on
behalf of themselves and all
others similarly situated,
)
)
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
KSL GRANT WAILEA RESORT, INC.; )
CNL RESORT LODGING TENANT CORP.;)
CNL GRAND WAILEA RESORT, L.P.; )
MSR RESORT LODGING TENANT, LLC; )
HILTON HOTELS CORPORATION;
)
WALDORF-ASTORIA MANAGEMENT, LLC;)
and BRE/WAILEA LLC dba GRAND
)
WAILEA RESORT HOTEL & SPA,
)
)
Defendants.
)
)
Civ. No. 08-00527 ACK-RLP
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR
PARTIAL SUMMARY JUDGMENT
FACTUAL BACKGROUND1/
Plaintiffs Nan Wadsworth, Elizabeth Valdez Kyne, Bert
Villon, and Stephen West (“Plaintiffs”), brought suit on behalf
of a similarly situated class against a number of different
entities that have owned and operated the Grand Wailea Resort
Hotel & Spa (“Grand Wailea Resort” or “Hotel”) in Maui during the
1/
The facts as recited in this Order are for the purpose of
disposing of the current motion and are not to be construed as
findings of fact that the parties may rely on in future
proceedings in this case.
applicable statute of limitations period.
¶¶ 4-6.
Second Am. Compl.
Defendants include MSR Resort Lodging Tenant, LLC, KSL
Grand Wailea Resort, Inc., Hilton Hotels Corp. (“Hilton”),
Waldorf=Astoria Management LLC (“Waldorf=Astoria”), CNL Grand
Wailea Resort, LP, and CNL Lodging Tenant Corp.2/
Id. ¶¶ 6–8.
Plaintiffs have all worked as food and beverage servers for
Defendants.
Id. ¶ 3.
Plaintiffs’ Second Amended Complaint alleges that the
Grand Wailea Resort provides food and beverage services
throughout the Hotel, including in its banquet department, its
restaurants, and through room service.
Id. ¶ 5.
Plaintiffs
allege that Defendants have added a preset service charge to
customers’ bills for food and beverage served at the Hotel, but
that Defendants have not remitted the total proceeds of the
service charge as tip income to the employees who serve the food
and beverages.
Id. ¶¶ 9–10.
Instead, Plaintiffs allege that the
Defendants have had a policy and practice of retaining for
themselves a portion of these service charges (or using it to pay
managers or other non-tipped employees who do not serve food and
beverages), without disclosing to the Hotel’s customers that the
2/
Plaintiffs also brought suit against Grand Wailea Resort’s
operator at the time the Second Amended Complaint was filed,
BRE/Wailea, LLC (“BRE/Wailea”). Second Am. Compl. ¶ 6. The
parties subsequently stipulated to the dismissal of all claims
against BRE/Wailea, which this Court approved and ordered on
April 28, 2009. Doc. No. 67.
2
services charges are not remitted in full to the employees who
serve the food and beverages.3/
Id. ¶¶ 11–12.
Plaintiffs’ Second Amended Complaint asserts five
counts.
As a result of the Court’s ruling on a previous motion
to dismiss, the following counts remain:
Count II, in which
Plaintiffs allege that Defendants’ conduct constitutes unlawful
intentional interference with contractual and/or advantageous
relations; Count III, to the extent Plaintiffs allege that
Defendants’ conduct constitutes a breach of an implied contract
between Defendants and Defendants’ customers, of which Plaintiffs
are third party beneficiaries; Count IV, in which Plaintiffs
allege that Defendants have been unjustly enriched at Plaintiffs’
expense under state common law; and Count V, in which Plaintiffs
allege that as a result of Defendants’ conduct, they have been
deprived of income that constitutes wages, which is actionable
under H.R.S. §§ 388–6, 388–10, and 388–11.
in the instant motion.
Count V is at issue
Plaintiffs move for summary judgment on
Count V as to Defendants’ liability for unpaid wages, but not as
to the amount of resulting damages.
PROCEDURAL BACKGROUND
3/
The Collective Bargaining Agreement (“CBA”) between the
Hotel and its employees provided that, on all special functions,
bargaining unit employees shall receive 93% of the guaranteed
service charge less employment taxes. Defs.’ Response to Pls.’
CSF Ex. A. There does not appear to be a dispute that Defendants
kept 7% of service charges they imposed.
3
On November 24, 2008, Plaintiffs filed a Class Action
Complaint.
Doc. No. 1.
On January 29, 2009, Plaintiffs filed an
Amended Class Action Complaint.
Doc. No. 19.
There were a
number of similar cases filed in this Court, and on January 23,
2009, Plaintiffs moved to consolidate or alternatively for
assignment of all the related cases to one judge pursuant to
Local Rule 40.2.4/
Doc. No. 16.
On April 8, 2009, this Court
adopted the Magistrate Judge’s Findings and Recommendation that
the similar cases not be consolidated.
2009 WL 975769 (Doc. No.
56).5/
On July 9, 2009, the Court stayed this case in light of
Judge Gillmor’s certification to the Hawaii Supreme Court of a
4/
There are at least seven other similar cases that food and
beverage service employees have filed against their employers in
this District Court between November 21, 2008, and May 13, 2010.
These actions are: Davis v. Four Seasons Hotel, Ltd.,
Civ. No. 08-00525 HG-BMK (D. Haw. Nov. 21, 2008) (hereafter
“Davis I”); Apana v. Fairmont Hotels & Resorts (U.S.) Inc., Civ.
No. 08-00528 JMS-LEK (D. Haw. Nov. 24, 2008); Villon v. Marriott
Hotel Servs., Inc., Civ. No. 08-00529 LEK-RLP (D. Haw. Nov. 24,
2008); Kyne v. Ritz-Carlton Hotel Co., L.L.C., Civ. No. 08-00530
ACK-RLP (D. Haw. Nov. 24, 2008); Lara v. Renaissance Hotel
Operating Co., Civ. No. 08-00560 LEK-RLP (D. Haw. Dec. 10, 2008);
Rodriguez v. Starwood Hotels & Resorts Worldwide, Inc., 09-00016
LEK-RLP (D. Haw. Jan. 9, 2009); and Flynn v. Fairmont Hotels &
Resorts, Inc., Civ. No. 10-00285 DAE-LEK (D. Haw. May 13, 2010).
5/
In that Findings and Recommendation, the Magistrate Judge
found that reassignment to the same district judge was not
warranted, but that the cases should be reassigned to one
magistrate judge for more efficient case management. See Doc.
No. 37.
4
question of law that was also important to the instant case.6/
See Doc. No. 71.
The Hawaii Supreme Court answered the certified
question on March 29, 2010.
See Davis v. Four Seasons Hotel
Ltd., 228 P.3d 303 (Haw. 2010) (hereafter “Davis II”).
Accordingly, on April 16, 2010, Plaintiffs filed a motion to lift
the stay and a motion to file a second amended complaint.
Nos. 73 & 74.
22, 2010.
Doc.
The Magistrate Judge granted both motions on June
Doc. No. 89.
Plaintiffs filed their Second Amended
Complaint on June 28, 2010.
Doc. No. 93.
On July 20, 2010, Defendants filed a Motion to Dismiss
Second Amended Complaint.
Doc. No. 95.
On December 10, 2010,
the Court granted the motion with respect to Count I, Plaintiffs’
unfair methods of competition claim, without prejudice and Count
III, in so far as it alleged a breach of an implied contract
between Plaintiffs and Defendants.
2010 WL 5146521 (Doc. No.
118).
6/
Judge Gillmor certified the following question:
Where plaintiff banquet server employees allege that
their employer violated the notice provision of H.R.S.
§ 481B–14 by not clearly disclosing to purchasers that
a portion of a service charge was used to pay expenses
other than wages and tips of employees, and where the
plaintiff banquet server employees do not plead the
existence of competition or an effect thereon, do the
plaintiff banquet server employees have standing under
H.R.S. § 480–2(e) to bring a claim for damages against
their employer?
See Davis I, Civ. No. 08–00525 HG–LEK, Doc. No. 75.
5
On March 25, 2011, Plaintiffs filed a Motion to Certify
Class.
Doc. No. 126.
On April 1, 2011, Defendants filed a
Suggestion of Bankruptcy for MSR Golf Course LLC, et al., which
acted to stay proceedings against all Defendants except Hilton
and Waldorf=Astoria.7/
Doc. No. 128.
On July 18, 2011, the
Court adopted the Magistrate Judge’s Findings and Recommendation
that the class be certified as “all non-managerial food and
beverage employees who, from January 31, 2006 to the present,
have worked at banquets, functions, other events, and small
parties, where a service charge was imposed and where a part of
that service charge was kept by the Defendants or management
without adequate disclosure to customers” as to the non-debtor
Defendants Hilton and Waldorf=Astoria (together “Defendants”).8/
Doc. Nos. 149 & 150.
On June 1, 2011, Plaintiffs filed the instant Motion
for Partial Summary Judgment (“Plaintiffs’ Motion for Summary
Judgment”).
Doc. No. 143.
The Motion was accompanied by a
7/
Defendants CNL Grand Wailea Resort, LP, CNL Resort Lodging
Tenant Corp., and KSL Grand Wailea Resort, Inc. are each a
subsidiary or affiliate of MSR Resort Golf Course LLC. See Doc.
No. 128.
8/
Plaintiffs requested that the class be defined as “all
non-managerial food and beverage service employees who, since
November 24, 2002 have worked at banquets, functions, other
events, and small parties, where a service charge was imposed and
where a part of that service charge was kept by the Defendants or
management without adequate disclosure to customers.” Doc. No.
126. Hilton and Waldorf=Astoria, however, did not manage the
Hotel prior to January 31, 2006. See Doc. No. 149.
6
supporting memorandum (“Pls.’ MSJ Mem.”) and a concise statement
of facts (“Pls.’ CSF”).
Doc. Nos. 144 & 145.
On October 24,
2011, Defendants filed an opposition (“Defs.’ Opp’n”) and a
response to Plaintiffs’ CSF (“Defs.’ Response to Pls.’ CSF”).
Doc. Nos. 155 & 156.
In their opposition, Defendants requested
the Court stay proceedings pending the Hawaii Supreme Court’s
resolution of a question of law certified to it by Judge
Kobayashi in a similar case.
Defs.’ Opp’n at 9-10.
filed a reply on October 31, 2011 (“Pls.’ Reply”).
Plaintiffs
Doc. No. 157.
On June 1, 2011, Defendants filed a Motion to Dismiss
Count V of the Second Amended Class Action Complaint or to
Certify the Question to the Hawaii Supreme Court (“Defendants’
Motion to Dismiss”).
Doc. No. 146.
The Motion was accompanied
by a supporting memorandum (“Defs.’ MTD Mem.”).
Doc. No. 146.
Plaintiffs filed an opposition on October 24, 2011 (“Pls.’
Opp’n”).
Doc. No. 154.
reply (“Defs.’ Reply”).
On October 31, 2011, Defendants filed a
Doc. No. 158.
On November 14, 2011, the Court held a hearing on
Defendants’ request to stay proceedings, Plaintiffs’ Motion for
Partial Summary Judgment, and Defendants’ Motion to Dismiss.
The
Court has addressed Defendants’ request to stay proceedings and
Motion to Dismiss in a separate order.
In that order, the Court
denied Defendants’ Motion to Dismiss Count V and granted the
Defendants’ request to stay proceedings as modified.
7
In light of
this stay, the instant order will go into effect after the stay
is dissolved.
Plaintiffs seek summary judgment on Count V, in which
Plaintiffs allege that as a result of Defendants’ conduct, they
have been deprived of income that constitutes wages, which is
actionable under H.R.S. §§ 388–6, 388–10, and 388–11.
STANDARD
The purpose of summary judgment is to identify and
dispose of factually unsupported claims and defenses.
See
Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).
Summary
judgment is therefore appropriate if “the movant shows that there
is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
“A party asserting that a fact cannot be or is genuinely disputed
must support the assertion,” and can do so in either of two ways:
by “citing to particular parts of materials in the record,
including depositions, documents, electronically stored
information, affidavits or declarations, stipulations (including
those made for purposes of the motion only), admissions,
interrogatory answers, or other materials”; or by “showing that
the materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.”
56(c)(1).
8
Fed. R. Civ. P.
“A fact is ‘material’ when, under the governing
substantive law, it could affect the outcome of the case.
A
‘genuine issue’ of material fact arises if ‘the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party.’”
Thrifty Oil Co. v. Bank of Am. Nat’l Trust & Sav.
Ass’n, 322 F.3d 1039, 1046 (9th Cir. 2003) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).9/
Conversely,
where the evidence could not lead a rational trier of fact to
find for the nonmoving party, no genuine issue exists for trial.
See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986) (citing First Nat’l Bank v. Cities Serv. Co., 391
U.S. 253, 289 (1968)).
The moving party has the burden of persuading the court
as to the absence of a genuine issue of material fact.
Celotex,
477 U.S. at 323; Miller v. Glenn Miller Prods., 454 F.3d 975, 987
(9th Cir. 2006).
The moving party may do so with affirmative
evidence or by “‘showing’—that is, pointing out to the district
court—that there is an absence of evidence to support the
nonmoving party’s case.”
Celotex, 477 U.S. at 325.10/
Once the
9/
Disputes as to immaterial facts do “not preclude summary
judgment.” Lynn v. Sheet Metal Workers’ Int’l Ass’n, 804 F.2d
1472, 1483 (9th Cir. 1986).
10/
When the moving party would bear the burden of proof at
trial, that party must satisfy its burden with respect to the
motion for summary judgment by coming forward with affirmative
evidence that would entitle it to a directed verdict if the
evidence were to go uncontroverted at trial. See Miller, 454
9
moving party satisfies its burden, the nonmoving party cannot
simply rest on the pleadings or argue that any disagreement or
“metaphysical doubt” about a material issue of fact precludes
summary judgment.
See Celotex, 477 U.S. at 324; Matsushita
Elec., 475 U.S. at 586; Cal. Architectural Bldg. Prods., Inc. v.
Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987).11/
The nonmoving party must instead set forth “significant probative
evidence” in support of its position.
T.W. Elec. Serv., Inc. v.
Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir. 1987)
(quoting First Nat’l, 391 U.S. at 290).
Summary judgment will
thus be granted against a party who fails to demonstrate facts
sufficient to establish an element essential to his case when
that party will ultimately bear the burden of proof at trial.
F.3d at 987 (quoting C.A.R. Transp. Brokerage Co. v. Darden
Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000)). When the
nonmoving party would bear the burden of proof at trial, the
party moving for summary judgment may satisfy its burden with
respect to the motion for summary judgment by pointing out to the
court an absence of evidence from the nonmoving party. See id.
(citing Celotex, 477 U.S. at 325).
11/
Nor will uncorroborated allegations and “self-serving
testimony” create a genuine issue of material fact. Villiarimo
v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002);
see also T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n,
809 F.2d 626, 630 (9th Cir. 1987); Johnson v. Wash. Metro. Area
Transit Auth., 883 F.2d 125, 128 (D.C. Cir. 1989) (“The removal
of a factual question from the jury is most likely when a
plaintiff’s claim is supported solely by the plaintiff’s own
self-serving testimony, unsupported by corroborating evidence,
and undermined either by other credible evidence, physical
impossibility or other persuasive evidence that the plaintiff has
deliberately committed perjury.”), cited in Villiarimo, 281 F.3d
at 1061.
10
See Celotex, 477 U.S. at 322.
When evaluating a motion for summary judgment, the
court must construe all evidence and reasonable inferences drawn
therefrom in the light most favorable to the nonmoving party.
See T.W. Elec. Serv., 809 F.2d at 630–31.12/
Accordingly, if
“reasonable minds could differ as to the import of the evidence,”
summary judgment will be denied.
Anderson, 477 U.S. at 250–51.
DISCUSSION
In Count V, Plaintiffs assert that as a result of
Defendants’ unlawful failure to remit the entire proceeds of food
and beverage service charges to the food and beverage servers,
Defendants are liable to Plaintiffs under Chapter 388.
Am. Compl. Count V.
Second
In its order denying Defendants’ Motion to
Dismiss Count V, the Court held that Count V states a plausible
claim, i.e., an employee may recover under H.R.S. §§ 388-6, 38810, and 388-11, for the failure of a hotel to distribute service
charges to employees when the hotel did not disclose that the
service charges were being used to pay for costs or expenses
other than wages and tips of employees, as required by H.R.S.
§ 481B-14.
I.
Statutory Requirements
12/
At the summary judgment stage, the court may not make
credibility assessments or weigh conflicting evidence. See
Anderson, 477 U.S. at 249; Bator v. Hawaii, 39 F.3d 1021, 1026
(9th Cir. 1994).
11
H.R.S. § 481B-14 require that:
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.
H.R.S. § 388-6 states that:
“No employer may deduct,
retain, or otherwise require to be paid, any part or portion of
any compensation earned by any employee except where required by
federal or state statute or by court process or when such
deductions or retentions are authorized in writing by the
employee.”13/
Section 388-11 provides an employee or class of
employees with a cause of action to recover unpaid wages.
Pursuant to § 388-10(a), an employer who fails to pay wages in
violation of any provision of Chapter 388 without equitable
13/
Defendants asserted in their reply supporting their Motion
to Dismiss that because Plaintiffs’ union agreed that the Hotel
could keep seven percent of the banquet service charges, there is
an authorization in writing that prevents Plaintiffs’ recovery.
Defs.’ Reply at 6 n.1. Defendants do not clearly raise this
argument in their Opposition, but do state that the CBA provides
that bargaining unit employees “shall receive 93% of the
guaranteed service charge less employment taxes.” Defs.’ Opp’n
at 4. This Court has already determined that “if under state law
a waiver of rights is permissible, ‘the CBA must include clear
and unmistakable language waiving the covered employee’s state
right for a court to even consider whether it could be given
effect.’” 2010 WL 5146521, at *14 (Doc. No. 118) (quoting Valles
v. Ivy Hill Corp., 410 F.3d 1071, 1076 (9th Cir. 2005)). The
language from the CBA is not a clear and unmistakable waiver of
Plaintiffs’ state law right to receive all earned compensation as
set forth in § 388-6.
12
justification is liable to the employee for double damages.
Plaintiffs assert that Defendants withheld compensation they
earned in violation of § 388-6 by failing to distribute the full
amount of service charges that Defendants imposed without making
the disclosure required by § 481B-14.
For Plaintiffs to succeed on their claim that
Defendants are liable for unpaid wages under Chapter 388 based on
a violation of § 481B-14, Plaintiffs must present sufficient
evidence to establish that Defendants: “(1) employed Plaintiffs
as food and beverage servers; (2) retained portions of food and
beverage service charges while employing Plaintiffs; and (3)
failed to clearly disclose to customers that the service charges
would not be remitted in full to Plaintiffs.”
Davis I, 2011 WL
3841075, at *11; see H.R.S. §§ 388-1, 388-6, 388-10, 388-11, and
481B-14.
The employer bears the burden to establish an equitable
justification for retaining a portion of food and beverage
service charges.
See Arimizu v. Fin. Sec. Ins. Co., 679 P.2d
627, 631-32 (Haw. App. 1984).
Plaintiffs have agreed that any
liability with respect to Hilton and Waldorf=Astoria would begin
on January 31, 2006, the date they began operating the Hotel.
See Pls.’ MSJ Mem. at 5 n.3.
II.
Application
A.
Equitable Justification
At the hearing, Defendants asserted that the CBA
13
provided Defendants with an equitable justification for retaining
a portion of the service charges.
Defendants assert that to
comply with § 481B-14, it would have had to violate the CBA,
which would in turn violate federal labor law.
4.
Defs.’ Opp’n at
The CBA provides that bargaining unit employees “shall
receive 93% of the guaranteed service charge less employment
taxes.”
Defs.’ Response to Pls.’ CSF Ex. A, Letter of
Understanding, at § 6.
Defendants’ premise is erroneous; it
could have complied with both the CBA and § 481B-14 by paying
employees 93% of the service charge and making the requisite
disclosure.
Thus, Defendants have not meet their burden to
establish equitable justification for violating § 388-6.
B.
Employment
In their CSF, Plaintiffs assert that “[f]rom January
31, 2006, to the present, Defendants have employed the
Plaintiffs, who provide food and beverage services to the hotel’s
customers.”
Pls.’ CSF ¶ 3.
Defendants dispute this statement in
part, asserting that “‘Plaintiffs’ may include employees who no
longer are employed by Hilton.”
¶ 3.
Defs.’ Response to Pls.’ CSF
Pursuant to Local Rule 56.1(g), “material facts set forth
in the moving party’s concise statement will be deemed admitted
unless controverted by a separate concise statement of the
opposing party.”
Thus, the fact Defendants employed Plaintiffs
as food and beverage servers at some time since 2006 is deemed
admitted.
The relevant dates each plaintiff was employed will go
14
to damages, not liability, and thus Plaintiffs have sufficiently
established the first element of their claim.
C.
Distribution of Service Charges
Defendants assert that they pay 93% of the banquet
service charges to their employees pursuant to the CBA, but have
not disputed that they do not pay the entire service charges to
employees.
See Pls.’ CSF ¶ 5; Defs.’ Response to Pls.’ CSF ¶ 5;
Defs.’ Opp’n at 4-5.
Thus, Plaintiffs have also established the
second element of their claim.
D.
Clear Disclosure
With respect to the third element, Plaintiffs assert
that “Defendants’ own documents confirm that they regularly
retained a portion of the service charges added to customers’
food and beverage bills without disclosing this policy to
customers.”
Pls.’ MSJ Mem. at 3.
Defendants aver that they do
make the requisite disclosures in some instances.
at 4-5; Defs.’ Response to Pls.’ CSF ¶¶ 6, 11.
Defs.’ Opp’n
Specifically,
Defendants assert that Hilton’s banquet sales contracts,
convention contracts, and 2010 banquet event orders contain the
required disclosure.
Defs.’ Opp’n at 4; Defs.’ Response to Pls.’
CSF ¶¶ 6, 11; see Defs.’ Response to Pls.’ CSF Exs. C-D, G.
Plaintiffs reply that Defendants’ purported disclosures do not
preclude summary judgment because the “disclosures are not clear
in any sense of the word.”
Pls.’ Reply at 1.
Plaintiffs contend
that the disclosures are buried in “multi-page boilerplate
15
agreements that are drafted long before the cost of the event is
determined.”
Id.
“Clarity and conspicuousness is a question of law.”
See Rubio v. Capital One Bank, 613 F.3d 1195, 1200 (9th Cir.
2010) (considering as a matter of law whether, under the Truth in
Lending Act, a disclosure of annual percentage rates in a credit
card solicitation was clear and conspicuous); Barrer v. Chase
Bank USA, N.A., 566 F.3d 883, 892 (9th Cir. 2009) (“‘[w]e decide
conspicuousness as a matter of law’”) (quoting In re Basset, 285
F.3d 882, 885 (9th Cir. 2002)); Wallis v. Princess Cruises, Inc.,
306 F.3d 827, 835 (9th Cir. 2002) (determining that whether a
passenger ticket provided reasonable notice of contractual terms
contained in fine print on the ticket is a question of law).
If an employer retains a portion of a service charge,
§ 481B-14 requires the employer to “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.”
The provision does not provide any further guidance
on what constitutes a “clear disclosure.”
Because the different events involving food or beverage
services contain different documents, the Court will discuss
banquet events, conventions, room service, and weddings
separately.
1.
Banquet Events
16
In provision 7 of 18 provisions, of the 2006 and 2007
banquet contracts, Hilton states “[a] 21% service charge will be
assessed to all of your bills from the Resort to offset
administrative expenses for supervisory, sales and other banquet
personnel.”
2.
Defs.’ Response to Pls.’ CSF Exs. C, at 2, and D at
Defendants contend that this disclaimer appears on the
banquet contracts from 2006 until the present.
Defs.’ Opp’n at
5.
Plaintiffs do not object to the language of the
disclosure; instead, Plaintiffs argue that the disclosure is not
clear because it is “buried” in a boilerplate agreement and does
not appear on other documents given to a purchaser of banquet
event services.
Plaintiffs assert that the cost of the event is
determined when a customer reviews menus to select the items to
be served and an event order is generated based on those
selections, and that neither the menu nor the event order
contains a disclosure.14/
Pls.’ Reply at 2.
14/
Plaintiffs allege
The Court notes that Defendants also contend that the 2010
banquet event orders contain the requisite disclosure.
Defendants submitted a 2010 banquet event order, dated June 2,
2010, that states: “All Food and Beverage is subject a 22%
Service Charge and a 4.166% Hawaii State and Local Tax. This
service charge is not a gratuity and is the property of the hotel
to cover discretionary costs of the Event. Your contract
contains the terms and agreements governing your function and
sets forth your obligations to the Grand Wailea Resort Hotel &
Spa for banquet food and beverage revenue.” Defs.’ Response to
Pls.’ CSF Ex. G. It is unnecessary to consider this disclosure
because the Court concludes Defendants’ disclosure in the banquet
contracts is adequate, but the Court nonetheless notes this
17
that after the event, the customer is presented with a check
identifying the actual cost of the event and the amount assessed
for service charges, and no disclosure is made on the checks
regarding how the service charge is distributed.
Id.
The Court disagrees that a disclosure must be made in
other banquet event documents in addition to contracts, such as
the menu, event order form, and check.
Through the disclosure in
the contract, a purchaser knows ahead of time that a service
charge will be imposed and that it is not distributed in its
entirety to serving employees as tips or wages.
The purchaser is
not misled and can plan accordingly to leave a tip or gratuity,
in addition to paying the service charge.
The Court also rejects Plaintiffs’ argument regarding
the location of the disclosure in the contract.
The disclosure
appears as a separate provision on one page of the five page
event contract.
The provision is the same font size as the other
provisions and is not in any way disguised, such as on the back
of the contracts or buried in a footnote.
This is sufficient to
comply with § 481B-14.
Accordingly, Plaintiffs have failed to establish
Defendants’ liability with respect to service charges imposed on
food and beverage purchases for banquet events.
2.
Conventions
disclosure is sufficient to satisfy Defendants’ obligations.
18
Hilton’s 2008 convention contract, which is used for a
group that books rooms and food and beverage services, contains
the following disclaimer: “SERVICE CHARGE: 21% of the food and
beverage total, plus any applicable state or local tax, will be
added to your account as a service charge.
This service charge
is not a gratuity and is thus property of the hotel to cover
discretionary costs of the Event.
Pls.’ CSF Ex. E, at 8.
Id. at 5-6; Defs.’ Response to
This statement appears under the heading
“Banquet Services” and is on page 8 of the 16 page contract.
Defs.’ Response to Pls.’ CSF Ex. E.
See
A 2010 contract for a
meeting in which rooms and food were booked contains the same
disclaimer on page 1 of 3.
Id. Ex. F.
Defendants contend this
disclosure appears in the contracts from 2006 forward.
Opp’n at 5.
Defs.’
Plaintiffs’ do not object to the language of the
disclosure, but again assert that the disclosure is buried in a
“boilerplate agreement” and does not appear on other documents
given to a customer in connection with conventions.
As with the banquet contracts, it is unnecessary the
disclosure appear on every document given to a purchaser in
connection with convention events.
disclosure is adequate.
The visibility of the
The disclosure appears as a separate
provision, and is the same font size as the other provisions.
Plaintiffs have therefore failed to establish
Defendants’ liability for service charges imposed on food and
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beverage purchases at conventions.
3.
Room Service
Defendants do not dispute that they have not provided
the requisite disclosures to customers on room service menus and
room service checks.
Compare Pls.’ CSF ¶¶ 6, 9-10, with Defs.’
Response to Pls.’ CSF ¶¶ 6, 9-10.
Plaintiffs have submitted
sample room service checks ranging from November 2008 until March
2011.
The room service checks impose a service charge and
contain no disclosure regarding the distribution of the service
charge.
Pls.’ CSF Ex. 5.
Included!”
Id.
In fact, the checks state “Gratuity
Thus, Plaintiffs have sufficiently established
Defendants’ liability with respect to service charges imposed on
food and beverages purchased via room service.
4.
Weddings
Plaintiffs attached banquet checks from weddings to
their CSF, but did not make any allegations regarding wedding
events in the CSF.
Plaintiffs submitted wedding contracts from
March 2007 and February 2009, with their Reply.
4.
Pls.’ Reply Ex.
The contracts stated that a service charge would be assessed
on food and beverage purchases, but did not contain a disclosure
regarding its distribution.
Id.
From the hearing, it appears
the wedding contracts did not originally contain the requisite
disclosure, but that Defendants added a disclosure at some point.
Defendants assert that they did not submit any documents to rebut
20
their liability for service charges imposed on food and beverage
purchases at wedding events because Plaintiffs did not make
allegations regarding weddings in their CSF.
Without allegations concerning wedding events in their
CSF, Plaintiffs have failed to establish Defendants’ liability
for such events.
See L.R. 56.1(a) (“A motion for summary
judgment shall be accompanied by a supporting memorandum and a
separate concise statement detailing each material fact as to
which the moving party contends that there are no genuine issues
to be tried that are essential for the court’s determination of
the summary judgment motion.”)
CONCLUSION
For the foregoing reasons the Court GRANTS IN PART and
DENIES IN PART Plaintiffs’ Motion for Partial Summary Judgment.
Specifically, the Court grants summary judgment only
for Defendants’ liability with respect to service charges imposed
on food and beverages purchased via room service.
The Court has ordered a stay of all proceedings pending
a decision by the Hawaii Supreme Court on the question of law
certified to it by Judge Kobayashi in Villon v. Marriot Hotel
Services, Inc., CV-08-00529 LEK-RLP, Doc. No. 130 (Oct. 12,
2011), and Rodriguez v. Starwood Hotels & Resorts Worldwide,
Inc., CV-09-00016 LEK-RLP, Doc. No. 139 (Oct. 12, 2011).
The
closing is administrative only and thus has no effect on the
21
procedural or substantive rights of any party or any limitations
period.
Any party may move to reopen the case after the Hawaii
Supreme Court rules, and the parties shall promptly inform this
court in writing of the disposition in Judge Kobayashi’s case, at
which time the stay will be automatically dissolved if not
earlier.
The instant order will go into effect after the stay is
dissolved.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, December 2, 2011.
________________________________
Alan C. Kay
Sr. United States District Judge
Wadsworth v. KSL Grand Wailea Resort, Inc., Civ. No. 08-00527 ACK-RLP: Order
Granting in Part and Denying in Part Plaintiffs’ Motion for Partial Summary
Judgment.
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