Villon et al v. Mariott Hotel Services, Inc.
Filing
125
ORDER ADMINISTRATIVELY TERMINATING, WITHOUT PREJUDICE, 92 PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND 103 DEFENDANT'S MOTION TO DISMISS AMENDED CLASS ACTION COMPLAINT FILED JUNE 28, 2010: "...the Court HEREBY ADMINISTRATIVELY TE RMINATES, WITHOUT PREJUDICE, Plaintiffs' Motion for Partial Summary Judgment, filed April 29, 2011, and Defendant's Motion to Dismiss Amended Class Action Complaint Filed June 28, 2010 [Doc #60], filed May 18, 2011, in light of this Courts decision to certify the central question in thiscase to the Hawai'i Supreme Court. After the Hawai'i Supreme Court responds to the certified question(s), the parties may re-file Defendant's Motion and Plaintiffs' Motion, and their respective memoranda supporting or opposing those motions, by filing a one-page notice. The Court will thereafter issue a schedule for limited briefing to address the Hawai'i Supreme Court's response to the certified question(s). IT IS SO ORDERED." Signed by District JUDGE LESLIE E. KOBAYASHI on September 8, 2011. (bbb, )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
BERT VILLON and MARK APANA,
)
)
Plaintiffs,
)
)
vs.
)
)
MARRIOTT HOTEL SERVICES,
)
INC., DBA WAILEA MARRIOTT
)
RESORT,
)
)
)
Defendant.
_____________________________ )
CIVIL NO. 08-00529 LEK-RLP
ORDER ADMINISTRATIVELY TERMINATING, WITHOUT PREJUDICE,
PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND
DEFENDANT’S MOTION TO DISMISS AMENDED
CLASS ACTION COMPLAINT FILED JUNE 28, 2010 [DOC #60]
Before the Court are: the Motion for Partial Summary
Judgment (“Plaintiffs’ Motion”) filed by Plaintiffs Bert Villon
and Mark Apana, on behalf of themselves and all others similarly
situated (collectively “Plaintiffs”) on April 29, 2011; and the
Motion to Dismiss Amended Class Action Complaint Filed
June 28, 2010 [Doc #60] (“Defendant’s Motion”) filed by Defendant
Marriott Hotel Services, Inc., doing business as Wailea Marriott
Resort (“Defendant”) on May 18, 2011.
hearing on July 11, 2011.
These matters came on for
Appearing on behalf of Plaintiffs were
Harold Lichten, Esq., Lori Aquino, Esq., and, by telephone,
Shannon Liss-Riordan, Esq.
Richard Rand, Esq.
Appearing on behalf of Defendant was
After careful consideration of the motions,
supporting and opposing memoranda, and the arguments of counsel,
the Court HEREBY ADMINISTRATIVELY TERMINATES, WITHOUT PREJUDICE,
Plaintiffs’ Motion and Defendant’s Motion because this Court will
certify the central question in this case to the Hawai`i Supreme
Court.
BACKGROUND
Plaintiffs have each worked, within the period from
July 30, 2004 to the present, as food and beverage servers for
the Wailea Marriott Resort (“the Resort”),1 which is owned and/or
operated by Defendant.
Plaintiffs filed their Class Action
Complaint (“Complaint”) on November 24, 2008.
The Complaint
alleged that the Resort imposes a service charge on the sale of
food and beverages at its banquets and other events, but the
Resort does not distribute the total proceeds of these service
charges to its food and beverage servers.
Further, the Resort
does not disclose this fact to its customers.
Plaintiffs argue
that this is a violation of Haw. Rev. Stat. § 481B-14, and is
actionable under § 481B-4 and Haw. Rev. Stat. §§ 480-2 and
1
This Court issued its Order Granting Plaintiffs’ Motion
for Class Certification on May 31, 2011. [Dkt. no. 105.] The
Court defined the certified class as follows:
all non-managerial food and beverage service
employees who, from July 30, 2004 to the present,
have worked at banquets, functions, events, and
small parties, or provided room service, where a
service charge was imposed and where a part of
that service charge was kept by the Defendant or
management without adequate disclosure to
customers[.]
[Id. at 41.]
2
480-13, as well as under state wage statutes, Haw. Rev. Stat.
§§ 388-6, 388-10, and 388-11, and Hawai`i common law.
I.
Procedural Background
On June 2, 2009, in a related case, Davis, et al. v.
Four Seasons Hotel Ltd., et al., CV 08-00525 HG-LEK, then Chief
United States District Judge Helen Gillmor certified the
following question to the Hawai`i Supreme Court:
Where plaintiff banquet server employees allege
that their employer violated the notice provisions
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?
[Davis, Certified Question to the Hawaii Supreme Court from the
United States Dist. Ct. for the Dist. of Hawaii in Civil No.
08-00525 HG-LEK, filed 6/2/09 (dkt. no. 75), at 6.]
The certified question was also applicable to the
instant case and, therefore, the late Senior United States
District Judge Samuel P. King issued an order staying the instant
case pending a decision by the Hawaii`i Supreme Court answering
[Minute Order, filed 7/17/09
the certified question in Davis.
(dkt. no. 43).]
The Hawai`i Supreme Court issued its opinion on
March 29, 2010.
It answered the certified question as follows:
3
“Employees are ‘any persons’ within the meaning of HRS §§ 480-1
and 480-2(e) and are within the category of plaintiffs who have
standing to bring a claim under HRS § 480-2(e) for a violation of
HRS § 481B-14.”
Davis v. Four Seasons Hotel Ltd., 122 Hawai`i
423, 446, 228 P.3d 303, 326 (2010) (“Davis Opinion”).
The
supreme court, however, also held that, “based on the allegations
contained in Employees’ Amended Complaint, Employees have not
sufficiently alleged the ‘nature of the competition’ to bring a
claim for damages against Four Seasons under HRS §§ 480-2(e) and
480-13(a) for a violation of HRS § 481B-14.”
Id., 228 P.3d at
326.
On June 22, 2010, this Court issued an order granting
Plaintiffs’ motion to lift the stay and Plaintiffs’ motion to
amend their Complaint.
[Dkt. no. 58.]
Plaintiffs filed their
Amended Class Action Complaint (“Amended Complaint”) on
June 28, 2010.
[Dkt. no. 60.]
The Amended Complaint alleges that the Resort charges a
preset service charge to customers’ bills for food and beverages
provided at Resort “banquets, events, meetings and in other
instances[.]”
[Id. at ¶ 6.]
The Resort allegedly has a policy
and practice of either retaining a portion of the service charge
for itself or using that portion to pay managers and other nontipped employees.
The Amended Complaint alleges the following
claims: Count I - violation of Hawai`i Revised Statutes
4
§§ 481B-14, 481B-4, and 480-2; Count II - intentional
interference with contractual and/or advantageous relations;
Count III - breach of implied contract; Count IV - unjust
enrichment; Count V - violation of Hawai`i Revised Statutes
§§ 388-6, 388-10, and 388-11.
II.
Plaintiffs’ Motion and Defendant’s Motion
Only the parties’ arguments regarding Count V (“unpaid
wages claim”), are relevant for purposes of the instant Order.
Plaintiffs’ Motion exclusively addresses Count V, but Defendant’s
Motion addresses all of the claims in the Amended Complaint.
The
Court will only address the parties’ respective positions on the
issues related to Count V.
On April 29, 2011, Plaintiffs filed Plaintiffs’ Motion,
[dkt. no. 92,] their memorandum in support thereof, [dkt. no.
94,] and their concise statement of facts (“Plaintiffs’ CSOF”)
[dkt. no. 93].
On June 20, 2011, Defendant filed its memorandum
in opposition to Plaintiffs’ Motion (“Defendant’s Memorandum in
Opposition”), [dkt. no. 108,] and its response to Plaintiffs’
CSOF [dkt. no. 107].
Plaintiffs filed their reply in support of
Plaintiffs’ Motion (“Plaintiffs’ Reply”) on June 27, 2011.
no. 110.]
[Dkt.
On August 31, 2011, Plaintiffs filed a Notice of
Supplemental Authority.
[Dkt. no. 124.]
The arguments in Defendant’s Motion, [dkt. no. 103],
and Plaintiffs’ opposition to Defendant’s Motion (“Plaintiffs’
5
Memorandum in Opposition”), [filed 6/20/11 (dkt. no. 106),]
primarily reiterate the arguments they raised in conjunction with
Plaintiffs’ Motion.
Defendant filed its reply in support of
Defendant’s Motion (“Defendant’s Reply”) on June 27, 2011.
[Dkt.
no. 111.]
A.
Plaintiffs’ Position
Plaintiffs seek summary judgment as to Count V because
“Defendant withheld wages in violation of H.R.S. § 388-6 when it
failed to distribute the entirety of service charges collected
from customers to food and beverage servers and failed to clearly
disclose this fact to customers as required by H.R.S. § 481B-14.”
[Pltfs.’ Motion at 2.]
Plaintiffs allege that, although the Resort distributes
a portion of its service charges to its food and beverage service
employees (also “Plaintiffs”), the Resort retains a substantial
portion of the service charge for itself.
[Mem. in Supp. of
Pltfs.’ Motion at 4 (citing Pltfs.’ CSOF at ¶¶ 2-3).]
Plaintiffs
also allege that, prior to the filing of this action, the Resort
did not make the required disclosure that it was not paying the
entire amount of the service charge to Plaintiffs.
(citing Pltfs.’ CSOF at ¶¶ 5-8).]
[Id. at 4-5
The Resort was therefore
required under § 481B-14 to distribute the entire amount of the
service charges to Plaintiffs as tip income.
6
Plaintiffs assert that a violation of Haw. Rev. Stat.
§ 481B-14 is actionable under Haw. Rev. Stat. § 388-6, which
prohibits employers from withholding wages from employees,
because, pursuant to Haw. Rev. Stat. § 388-1, wages include tips
and gratuities for purposes of § 388-6.
Plaintiffs therefore
argue that the tip income defined in § 481B-14 constitutes wages
under Chapter 388 and, where the employer fails to pay this tip
income, the employees may recover the unpaid tip income pursuant
to § 388-6.
[Id. at 6-8.]
Plaintiffs assert that a food and beverage service
employee’s claim for unpaid wages based on a violation of
§ 481B-14 is “well recognized.”
[Id. at 8-9 (citing Four Seasons
Order at 38; Grand Wailea Order at 29; Starwood Order at
34-35).2]
In addition, on August 26, 2011, Judge Gillmor issued
an order granting summary judgment on the unpaid wages claim to
2
Plaintiffs’ citation to the “Four Seasons Order” refers
to: Davis, et al. v. Four Seasons Hotel Ltd., et al., CV 08-00525
HG-BMK, Order Granting in Part and Denying in Part Defendants’
Renewed Motion to Dismiss Plaintiffs’ Complaint (Doc. 94), filed
9/30/10 (dkt. no. 125) (“Davis Dismissal Order”), which is also
available at 2010 WL 3946428. Plaintiffs’ citation to the “Grand
Wailea Order” refers to: Wadsworth, et al. v. KSL Grand Wailea
Resort, Inc., et al., CV 08-00527 ACK-LEK, Order Granting in Part
and Denying in Part Defendants’ Motion to Dismiss, filed 12/10/10
(dkt. no. 118) (“Wadsworth Dismissal Order”), which is also
available at 2010 WL 5146521. Plaintiffs’ citation to the
“Starwood Order” refers to: Rodriguez, et al. v. Starwood Hotels
& Resorts Worldwide, Inc., CV 09-00016 DAE-BMK, Order: (1)
Granting in Part and Denying in Part Defendant’s Motion to
Dismiss; (2) Dismissing Counts I and II of the Complaint Without
Prejudice, filed 12/29/10 (dkt. no. 93) (“Rodriguez Dismissal
Order”).
7
the plaintiffs in Davis v. Four Seasons, CV 08-00525 HG-BMK (dkt.
no. 171),3 (“Davis Summary Judgment Order”).
[Pltfs.’ Notice of
Suppl. Authority, filed 8/31/11 (dkt. no. 124).]
Plaintiffs also note that a state court has granted
summary judgment on a claim that is nearly identical to
Plaintiffs’ unpaid wages claim.
In Gurrobat v. HTH Corp., et
al., Civil No. 08-1-2528-12 (KKS), the State of Hawai`i First
Circuit Court (“the state court”) ruled that, because the
employer failed to make the required disclosure when retaining a
portion of the service charge, the employer was required to pay
the entire service charge to its service employees as tip income,
and the failure to make that payment violated § 388-6.
[Mem. in
Supp. of Pltfs.’ Motion at 10 (citing Gurrobat transcript at
12-13, 16).4]
Plaintiffs contend that all four of these
decisions adopted a “harmonious reading of § 481B-14 and § 388-6”
which is consistent with § 481B-14’s legislative history.
[Id.
(citation omitted).]
3
The Davis Summary Judgment Order is also available at 2011
WL 3841075.
4
Plaintiffs’ citation to the Gurrobat transcript refers to
the excerpts of the transcript of the state court’s
November 17, 2010 hearing on, inter alia, the Gurrobat
plaintiff’s Motion for Partial Summary Judgment as to Defendant’s
Violation of HRS Chapter 388 (“Gurrobat Transcript”). The
Gurrobat Transcript and the state court’s order granting that
motion, which incorporates the analysis set forth during the
hearing, are attached to the Memorandum in Support of Plaintiffs’
Motion as Exhibit 4.
8
Defendant’s position relies primarily upon the
legislative history of § 481B-14, but Plaintiffs argue that this
Court should not consider the legislative history because the
language of § 481B-14 and § 388-6 is unambiguous.
Plaintiffs
contend that all of the courts to address the issue have
recognized that the language of those statutes is plain and
unambiguous.
[Pltfs.’ Reply at 4-6 (some citations omitted)
(citing Davis Dismissal Order, 2010 WL 3946428, at *15; Rodriguez
Dismissal Order at 54-55).]
Even if the Court considers the
legislative history of § 481B-14, Plaintiffs argue that it
supports their reading of the statute.
They note that the title
of House Bill 2123 (“H.B. 2123”), the 2000 bill that resulted in
the enactment of § 481B-14, was always “RELATING TO WAGES AND
TIPS OF EMPLOYEES.”
16, at 21).]
[Id. at 9 (quoting 2000 Haw. Sess. Laws Act
Plaintiffs contend that this alone contradicts
Defendant’s argument that § 481B-14 and § 388-6 should not be
read in pari materia.
[Id.]
Further, prohibiting employees from
enforcing § 481B-14 through § 388-6 would render superfluous the
amendment in the final version of the bill - included after the
bill’s revision to address Haw. Rev. Stat. Chapter 481B instead
of Haw. Rev. Stat. Chapters 387 and 388 - stating that, where a
payment is made because of a lack of disclosure, the payment is
“tip income”.
[Id. at 10-11 (citations omitted).]
Plaintiffs
also emphasize that, in enacting § 481B-14, the Twentieth
9
Legislature, 2000, State of Hawai`i (“the Legislature”), could
have made it an exclusive remedy, but the Legislature chose not
to do so.
[Id. at 11 (citing Gurrobat Trans. at 12-13).]
Further, they assert that nothing in the Hawai`i Supreme Court’s
discussion in the Davis Opinion about § 481B-14’s legislative
history contradicts Plaintiffs’ position, in spite of the
substantive changes between Act 16 and the original H.B. 2123.
[Id. at 11-12.]
In fact, the Hawai`i Supreme Court in the Davis
Opinion noted that, in H.B. 2123, the Legislature was concerned
with the negative impact on both employees and consumers.
[Id.
at 12 (quoting Davis, 228 P.3d at 314).]
B.
Defendant’s Position
Defendant’s position is that Plaintiffs’ claim under §
388-6 fails because §§ 480-2 and 480-13 are the exclusive
remedies for violations of § 481B-14.
2.]
[Def.’s Mem. in Opp. at
Defendant argues that the legislative history of § 481B-14
does not support Plaintiffs’ position that they can enforce
§ 481B-14 through § 388-6.
Defendant includes a detailed
discussion of § 481B-14’s legislative history, emphasizing that
H.B. 21235 originally proposed amendments to Chapters 387 and
388.
Defendant argues that Plaintiffs’ reliance on the title of
H.B. 2123 is misplaced.
According to legislative drafting rules,
5
H.B. 2123 is attached to Defendants’ Memorandum in
Opposition as Exhibit A to the Declaration of Richard M. Rand
(“Rand Opposition Declaration”).
10
a bill has one title and it should not be amended.
Thus, there
is no significance to the fact that the title of H.B. 2123
remained the same after the bill’s amendment.
[Def.’s Reply at
3-4 (citing Hawaii Legislative Drafting Manual).6]
Defendant also contends that Plaintiffs’ reliance on
the Legislature’s failure to identify §§ 480-2 and 480-13 as the
exclusive enforcement mechanism for § 481B-14 is similarly
misplaced.
It should be assumed that, by placing the new
provision in Chapter 481B, the Legislature knew that the
provision would be enforced in the same manner as other consumer
protection provisions.
Defendant emphasizes that the other
provisions of Chapters 480 and 481B do not contain an exclusivity
clause.
In Defendant’s view, Plaintiffs’ position assumes that
the Legislature believed that, because § 481B-14 uses the term
“tip income”, courts would allow plaintiffs to enforce it through
§ 388-6, even though the Legislature expressly chose not to amend
§ 388-6.
This assumption is unsound because § 481B-14 uses the
new term “tip income” instead of the term used in § 388-1,
“tips”.
Defendant argues that the use of another term indicates
that the Legislature intended that the service charges would not
be considered “tips” when employers distributed them to servers.
[Id. at 7.]
6
The drafting manual is attached to Defendant’s Reply as
Exhibit A to the Declaration of Richard M. Rand (“Rand Reply
Declaration”).
11
Defendant also argues that, although the Hawai`i
Supreme Court’s decision in Davis did not decide whether
employees can bring a § 388-6 action to enforce § 481B-14, the
opinion “gives significant insight” into how the supreme court
would decide the issue.
[Def.’s Mem. in Opp. at 11.]
Defendant
argues that nothing in the Davis Opinion indicates that the
supreme court believed that, in enacting § 481B-14, the
Legislature was authorizing a § 388-6 cause of action based on an
alleged violation of § 481B-14.
[Id. at 14.]
Defendant therefore urges the Court to reject
Plaintiffs’ attempt to use a law addressing the payment of wages
to enforce a consumer protection law.
Defendant argues that no
judge in this district has embraced Plaintiffs’ position, and the
only court to do so - the state court in Gurrobat - rendered its
decision based on a misreading of the legislative history and
intent.
[Id. at 14-15.7]
Defendant also urges the Court to
disregard Gurrobat because, since “the Hawaii Supreme Court in
Davis did not decide the question, it is highly unusual for a
state court circuit judge to then decide the question in the
affirmative.”
[Id. at 15.]
Defendant acknowledges that statutory construction
starts with the examination of the plain meaning of the statute.
7
Defendant filed its Memorandum in Opposition prior to
Judge Gillmor’s oral ruling on the plaintiffs’ motion for partial
summary judgment on the unpaid wages claim in Davis.
12
[Id.]
Defendant, however, argues that Plaintiffs cannot ignore
the fact that the Legislature rejected proposed amendments to
Chapter 388 that would have expressly defined “tips” to include
compulsory service charges.
[Id. at 16.]
Defendant argues that nothing in § 481B-14’s
legislative history suggests that the Legislature intended to
allow employees to avoid the requirements for Chapter 480 actions
by filing a § 388-6 action.
Defendant characterizes Plaintiffs’
Motion as “an attempt to end run Davis,” [id. at 18,] based on
Plaintiffs’ improper assumption that “they need not prove their
underlying claim under H.R.S. § 481B-14 in order to assert a
claim under H.R.S. § 388-6.”
[Id. at 17.]
Defendant emphasizes
that proof of an employer’s failure to make the proper disclosure
alone does not prove a §§ 480-2 and 480-13 claim based on
§ 481B-14, and Defendant argues that an insufficient § 481B-14
claim should not be sufficient to establish a claim under a
different statute.
Further, the Court is not required to read
§ 481B-14 and § 388-6 together because they address two unrelated
and distinct areas of the law.
[Id. at 22-23.]
Defendant contends that prior rulings in this district
that similar unpaid wages claims survive a motion to dismiss do
not constitute rulings that Plaintiffs can use § 388-6 to enforce
§ 481B-14 if there is no underlying violation of § 481B-14.
at 23-24.]
[Id.
None of the judges ruling on motions to dismiss in
13
those cases either discussed the legislative history of § 481B-14
or noted that the Hawai`i Supreme Court reserved ruling on this
issue in the Davis Opinion.
[Id. at 25.]
Defendant acknowledges
Judge Gillmor’s summary judgment ruling in Davis, but
nevertheless argues that the correct ruling is that Plaintiffs’
unpaid wages claim fails.
[Def.’s Reply at 3 n.1 (discussing
Judge Gillmor’s oral ruling at the June 21, 2011 hearing).8]
Finally, Defendant argues that the Gurrobat court’s
recognition of an employee’s unpaid wages claim based on a
violation of § 481B-14 is not persuasive because the ruling in
Gurrobat is premised upon an inaccurate reading of the
legislative intent behind § 481B-14.
Defendant contends that
Gurrobat conflicts with State v. Mata, 71 Haw. 319, 330, 789 P.2d
1122, 1128 (1990), and ignores the requirement in the Davis
Opinion that employees who proceed under § 481B-14 have to prove
an unfair methods of competition claim.
26-27.]
[Def.’s Mem. in Opp. at
Defendant argues that creating the unpaid wages claim
which Plaintiffs present in the instant case would be unnecessary
and unwise.
Defendant asserts that, if this Court has any
concerns about whether this claim does or should exist under
Hawai`i law, this Court should certify the question, which the
8
Judge Gillmor issued the Davis Summary Judgment Order
after the filing of Defendant’s Reply.
14
Hawai`i Supreme Court expressly reserved ruling on in the Davis
Opinion.
[Id. at 28.]
STANDARD
“This court may certify a question to the Hawaii
Supreme Court when it concerns ‘law of Hawaii that is
determinative of the cause and . . . there is no clear
controlling precedent in the Hawaii judicial decisions . . . .”
Saiki v. LaSalle Bank Nat’l Ass’n as Tr. for Structured Asset
Inv. Loan Trust Series 2003-BC2, Civil No. 10-00085 JMS/LEK, 2011
WL 601139, at *6 (D. Hawai`i Feb. 10, 2011) (quoting Haw. R. App.
P. 13(a)).
The court, however, should not certify questions when
the answer is reasonably clear and the court can, using its best
judgment, predict how the Hawai`i Supreme Court would decide the
issue.
See id. (citing Helfand v. Gerson, 105 F.3d 530, 537 (9th
Cir. 1997); Pai`Ohana v. United States, 875 F. Supp. 680, 700 (D.
Haw. 1995)).
In prior cases where this district court has certified
questions to the Hawai`i Supreme Court, the court has noted that:
1) there was no Hawai`i law interpreting the Hawai`i statute at
issue; 2) there was no uniformity among decisions of other states
interpreting similar statutes; and 3) it was prudent to allow the
Hawai`i Supreme Court to address the significant issue of first
impression.
See, e.g., BlueEarth Biofuels, LLC v. Hawaiian Elec.
Co., et al., Civ. No. 09-00181 DAE-KSC, Certified Questions to
15
the Hawaii Supreme Court, filed 11/2/09 (dkt. no. 191), at 11-12
(citing Smith v. Cutter Biological, Inc., 911 F.2d 374, 375 (9th
Cir. 1990) (“We do not think it is appropriate to substitute our
judgment on the interpretation of a Hawaii statute for the
judgment of the Hawaii Supreme Court.”)).
DISCUSSION
Count V of the Amended Complaint, the unpaid wages
claim, is based on the alleged violation of Haw. Rev. Stat.
§ 481B-14, which states:
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 allege that the Resort did not clearly disclose to its
customers that it was withholding some of the food and beverage
service charges from the food and beverage servers.
The Resort
was therefore required to distribute the entire amount of the
service charges collected to the food and beverage servers as tip
income.
Plaintiffs contend that, as a result of the Resort’s
failure to do so, they “have been deprived of income which
constitutes wages, which is actionable under Hawaii Revised
Statutes Section 388-6, 10, and 11.”
9-10.]
16
[Amended Complaint at pgs.
Haw. Rev. Stat. § 388-6, entitled “Withholding of
wages”, states, in pertinent part: “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 . . . .”
Haw. Rev. Stat. § 388-10(a) states, in pertinent part:
“Any employer who fails to pay wages in accordance with this
chapter without equitable justification shall be liable to the
employee, in addition to the wages legally proven to be due, for
a sum equal to the amount of unpaid wages and interest . . . .”
Haw. Rev. Stat. § 388-11 further enumerates the remedies
available to the employee.
Plaintiffs contend that the Resort’s violation of
§ 481B-14 is actionable under §§ 388-6, 388-10, and 388-11
because § 481B-14 requires that, where the Resort must distribute
service charges as tip income, the service charges constitute
wages for purposes of Chapter 388.
Haw. Rev. Stat. § 388-1
expressly states “for the purposes of section 388-6, ‘wages’
shall include tips or gratuities of any kind.”
Defendant
contends that it is clear from the legislative history of
§ 481B-14 that Plaintiffs’ unpaid wages claim fails as a matter
of law.
Plaintiffs respond that it is unnecessary to look at the
17
legislative history of § 481B-14 because courts only resort to
legislative history to resolve ambiguities in a statute’s plain
language, and the relevant statutes in the instant case are
unambiguous.
Plaintiffs urge the Court to follow the lead of the
other judges in this district and the state court in Gurrobat and
find that the statutes at issue are unambiguous and that
Plaintiffs have an actionable unpaid wages claim.
See, e.g.,
Davis Summary Judgment Order, 2011 WL 3841075, at *7 (“Sections
388-6 and 481B-14 are not ambiguous.
The meaning of these
statutes, when read in conjunction in accordance with H.R.S.
§ 1-16, is quite clear.
As the District Judge stated in [the
Rodriguez Dismissal Order at 55], ‘Based on the plain language of
the statutes, Plaintiffs’ allegations suffice to state a cause of
action under § 388-6.’”).
I.
Applicable Law
This district court has diversity jurisdiction over the
instant case pursuant to the Class Action Fairness Act.
Complaint at ¶ 2 (citing 28 U.S.C. § 1332(d)(2)).]
[Amended
The Ninth
Circuit has recognized that:
In determining the law of the state for purposes
of diversity, a federal court is bound by the
decisions of the highest state court. Harvey’s
Wagon Wheel, Inc. v. Van Blitter, 959 F.2d 153,
154 (9th Cir. 1992). If the state’s highest court
has not decided an issue, it is the responsibility
of the federal courts sitting in diversity to
predict “how the state high court would resolve
it.” Air–Sea Forwarders, Inc. v. Air Asia Co.,
Ltd., 880 F.2d 176, 186 (9th Cir. 1989) (internal
18
quotation marks omitted). There are times,
however, when diversity cases in federal courts
“‘present significant issues . . . with important
public policy ramifications.’” Munson v. Del
Taco, Inc., 522 F.3d 997, 1003 (9th Cir. 2008)
(quoting Kremen v. Cohen, 325 F.3d 1035, 1037 (9th
Cir. 2003)). In such circumstances, it may be
appropriate, when permitted under state law, to
certify those questions to the state court as a
matter of “‘deference to the state court on
significant state law matters.’” Id. (quoting
Kremen, 325 F.3d at 1037).
Albano v. Shea Homes Ltd. P’ship, 634 F.3d 524, 530 (9th Cir.
2011) (alteration in Albano).
The only Hawai`i Supreme Court case addressing
§ 481B-14 is the Davis Opinion.
The Davis Opinion did not
address the issue whether § 481B-14 is enforceable through
§§ 388-6, 388-10, and 388-11.
122 Hawai`i 423, 428 n.12, 228
P.3d 303, 308 n.12 (“Employees also contend that Employees can
enforce HRS § 481B–14 through HRS §§§ 388–6, 10 and 11.
However,
this argument will not be addressed because it is beyond the
scope of the certified question.”).
Insofar as there is no
Hawai`i Supreme Court case law addressing this issue, this Court
must determine if it can predict how the Hawai`i Supreme Court
would resolve this issue.
The Hawai`i Supreme Court follows these rules of
statutory interpretation:
First, the fundamental starting point for
statutory interpretation is the language of
the statute itself. Second, where the
statutory language is plain and unambiguous,
our sole duty is to give effect to its plain
19
and obvious meaning. Third, implicit in the
task of statutory construction is our
foremost obligation to ascertain and give
effect to the intention of the legislature,
which is to be obtained primarily from the
language contained in the statute itself.
Fourth, when there is doubt, doubleness of
meaning, or indistinctiveness or uncertainty
of an expression used in a statute, an
ambiguity exists.
Peterson v. Hawaii Elec. Light Co., Inc., 85
Hawai`i 322, 327-28, 944 P.2d 1265, 1270-71
(1997), superseded on other grounds by HRS
§ 269-15.5 (Supp. 1999) (block quotation format,
brackets, citations, and quotation marks omitted).
In the event of ambiguity in a statute, “the
meaning of the ambiguous words may be sought by
examining the context, with which the ambiguous
words, phrases, and sentences may be compared, in
order to ascertain their true meaning.” Id.
(quoting HRS § 1-15(1) (1993)). Moreover, the
courts may resort to extrinsic aids in determining
legislative intent, such as legislative history,
or the reason and spirit of the law. See HRS
§ 1-15(2) (1993).
State v. Bayly, 118 Hawai`i 1, 6-7, 185 P.3d 186, 191-92 (2008);
accord Castle Family LLC v. The Kailuan Inc., No. 29118, 2010 WL
2059221, at *1 (Hawai`i Ct. App. May 25, 2010) (citing Sierra
Club v. Dep’t of Transp. of State of Hawaii, 120 Hawai`i 181,
197, 202 P.3d 1226, 1242, reconsideration denied, 2009 WL 1567327
(2009); Bhakta v. County of Maui, 109 Hawai`i 198, 208, 124 P.3d
943, 953 (2005); Hawaii Home Infusion Assocs. v. Befitel, 114
Hawai`i 87, 91, 157 P.3d 526, 530 (2007)) (similar recitation of
the principles of statutory interpretation).
20
II.
Other Decisions in Similar Cases
Plaintiffs urge the Court to reject Defendant’s
argument that their unpaid wages claim fails as a matter of law,
in accord with the prior decisions of other district judges in
this district and the state court in Gurrobat.
United States District Judge David Alan Ezra has ruled
that: “Based on the plain language of the statutes, Plaintiffs’
allegations suffice to state a cause of action under § 388-6.”
[Rodriguez Dismissal Order at 55 (citation omitted).]
Senior United States District Judge Alan C. Kay has
ruled that
because for purposes of H.R.S. § 388, the
statutory definition of wages includes tips, and
because pursuant to H.R.S. § 481B–14 a service
charge received by the employers without notice to
the customers is deemed a tip, . . . . the
employees have a claim against the employer for
compensation that has been withheld.
Wadsworth Dismissal Order, 2010 WL 5146521, at *12.
Judge Gillmor has ruled, in denying a motion to dismiss
the unpaid wages claim, that: “Based on the language of the
relevant statutes, Plaintiffs (sic) allegations are sufficient to
state a plausible claim for unpaid wages under H.R.S. § 388-6.”
Davis Dismissal Order, 2010 WL 3946428, at *15.
Judge Gillmor
reaffirmed this ruling in granting summary judgment to the
plaintiffs on the unpaid wages claim.
Davis Summary Judgment
Order, 2011 WL 3841075, at *8 (“In short, Chapter 380 of the
21
Hawaii Revised Statutes provides employees with a cause of action
for the withholding of wages, including tip income.
H.R.S.
§ 481B-14 requires hotels and restaurants to pay service charges
to employees as tip income if they do not disclose their contrary
practice to customers.”).
The state court in Gurrobat granted summary judgment in
favor of the plaintiff because it ruled that, for a number of
reasons, § 388-6 and § 481B-14 can be read together.
[Gurrobat
Trans. at 13-16.]
First, the orders issued by other district judges in
this district are not binding on this Court.
See, e.g., Hart v.
Massanari, 266 F.3d 1155, 1174 (9th Cir. 2001) (holding that the
binding authority rule could “just as easily operate so that the
first district judge to decide an issue within a district, or
even within a circuit, would bind all similarly situated district
judges, but it does not”); City of Fresno v. United States, 709
F. Supp. 2d 888, 909 (E.D. Cal. 2010) (“District court opinions
are relevant for their persuasive authority but they do not bind
other district courts within the same district.” (citation
omitted)).
This Court may consider them for their persuasive
value, but, for the reasons set forth infra, this Court
respectfully disagrees with those orders.
Further, the Court does not consider the state court’s
ruling in Gurrobat to be indicative of how the Hawai`i Supreme
22
Court would rule on this issue.
The Gurrobat proceedings have
concluded, but, as of the date of this Order, no judgment has
been entered and no notice of appeal has been filed.
Hawai`i
State Judiciary’s Public Access to Court Information, at:
http://hoohiki2.courts.state.hi.us/jud/Hoohiki/main.htm,
1CC08–1–002528.
Further, this Court is not persuaded by the
reasoning in Gurrobat because this Court believes that the state
court’s ruling was based in part on a faulty analysis of the
legislative intent behind § 481B-14 and § 388-6.
This Court will
therefore conduct its own analysis of whether the statutes in
question are ambiguous and, if so, what § 481B-14’s legislative
history indicates was the Legislature’s intent.
III. Whether the Statutes are Ambiguous
Section § 481B-14 states that, where a hotel or
restaurant fails to make the required disclosure, it must
distribute the entire service charge “directly to its employees
as tip income”.
(Emphasis added.)
The term “tip income” does
not appear anywhere else in the Hawai`i Revised Statutes.
Under Chapter 388, the term “wages” generally refers to
compensation for labor or services rendered by an
employee, whether the amount is determined on a
time, task, piece, commission, or other basis of
calculation. It shall include the reasonable
cost, as determined by the director under chapter
387, to the employer of furnishing an employee
with board, lodging, or other facilities if such
board, lodging, or other facilities are
customarily furnished by the employer to the
23
employer’s employees but shall not include tips or
gratuities of any kind . . . .
Haw. Rev. Stat. § 388-1 (emphasis added).
The exception to this
rule is that “for the purposes of section 388-6, ‘wages’ shall
include tips or gratuities of any kind.”
The term “tip” or
“tips” does not appear anywhere else in Chapter 388.
First, in this Court’s view, the mere use of the term
“tip income” in § 481B-14 does not plainly signal that Chapter
388’s enforcement mechanisms apply.
“tips . . . of any kind”.
Section 388-1 refers to
In drafting § 481B-14, the Legislature
could have simply stated that, where the hotel or restaurant
failed to make the required disclosure, it must distribute the
entire service charge as tips.
The Legislature, however, chose
not to do so.
In attempting to construe § 481B-14 together with
Chapter 388, as Plaintiffs argue the Court should, this Court
assumes from the Legislature’s use of the two different terms
“tip income” and “tips” that the terms have different meanings.
In Casumpang v. ILWU Local 142, the Hawai`i Supreme Court stated:
In examining chapter 388, we note that HRS
§ 388-4 states: “Where an employee dies leaving
any wages, vacation, or sick leave pay due to the
employee, the employer shall . . . pay the wages,
vacation, or sick leave pay [to the surviving
spouse or adult child].” (Emphases added.)
“Vacation” and “sick leave” pay are mentioned
separately elsewhere in the chapter, and “wages”
alone is mentioned throughout the remaining
provisions. Therefore, in construing HRS § 388-3
in the context of the entire statute and HRS
24
§ 388-4 in particular, it appears that the
legislature intended “wages” to be distinct from
“vacation pay.” Moreover, there is nothing to
indicate that the legislature intended to include
“vacation pay” under “wages,” and thereby
supersede the common law.
108 Hawai`i 411, 421, 121 P.3d 391, 401 (2005) (alterations and
emphases in Casumpang).
The Court acknowledges that the
distinction between “tip income” and “tips” is not as clear as
the distinction between “wages” and “vacation pay” because the
term “tip income” is not used elsewhere in either Chapter 481B or
Chapter 388 and construing “tip income” as “tips” would not
result in implicitly superseding a well-established common law
rule.9
At the very least, however, Casumpang indicates to this
Court that the possible distinction between “tip income” and
“tips” indicates an ambiguity in the statutes.
Further, if the Legislature intended for “tip income”
in § 481B-14 to mean the same thing as “tips” in § 388-6, it
could have defined “tip income” with reference to § 388-6.
9
It is
The Court, however, notes that an interpretation of “tip
income” that would render a hotel’s service charge a “tip” would
be contrary to Haw. Admin. R. § 12-20-1, which states, in
pertinent part: “‘Tip’ means a sum of money determined solely by
a customer and given in recognition of service performed by an
employee who retains it as a gift or gratuity. . . . Compulsory
or negotiated service charges . . . are not counted as tips.”
(Emphasis added.) Section 12-20-1 was effective October 2, 1981,
and has not been amended since. Thus, it was in effect at the
time the Legislature enacted § 481B-14. “[T]he legislature is
presumed to know the law when enacting statutes[.]” Tamashiro v.
Dep’t of Human Servs., 112 Hawai`i 388, 427, 146 P.3d 103, 142
(2006) (some alterations in original) (citation and quotation
marks omitted).
25
telling that the Legislature did not do so.
See Kaanapali
Hillside Homeowners’ Ass’n ex rel. Bd. of Dirs. v. Doran, 114
Hawai`i 361, 372, 162 P.3d 1277, 1288 (2007) (“had the
legislature intended that the definition of a ‘planned community
association’ be the same for both statutes, the legislature could
have defined the phrase in HRS § 607-14 by reference to the
definition in chapter 421J.
The legislature did not.”).
This
Court must also consider the fact that to assume “tip income” and
“tips” mean the same thing would render the word “income”
superfluous.
The Hawai`i Supreme Court has stated:
It is a cardinal rule of statutory construction
that courts are bound, if rational and
practicable, to give effect to all parts of a
statute, and that no clause, sentence, or word
shall be construed as superfluous, void, or
insignificant if a construction can be
legitimately found which will give force to and
preserve all the words of the statute.
Hawaii Gov’t Emps. Ass’n, AFSCME Local 152, AFL-CIO v. Lingle,
124 Hawai`i 197, 208 n.16, 239 P.3d 1, 12 n.16 (2010) (quoting
Camara v. Agsalud, 67 Haw. 212, 215–16, 685 P.2d 794, 797
(1984)).
If the Legislature did intend, as the use of the
different terms suggests, that “tip income” is distinguishable
from “tips”, it is not readily apparent what that distinction is.
This is, however, support for Defendant’s position that the
statutes are ambiguous, requiring an examination of the
Legislature’s intent as evidenced in the legislative history.
26
This Court also notes that the exception to the general
rule that tips are not considered wages only applies to § 388-6.
Haw. Rev. Stat. § 388-1.
It does not apply to § 388-10, which
sets forth the penalties for the “fail[ure] to pay wages in
accordance with” Chapter 388, and it does not apply to § 388-11,
which provides for an “[a]ction by an employee to recover unpaid
wages”.
Thus, even assuming arguendo that a service charge
required to be paid to an employee under § 481B-14 was part of
“wages” under § 388-6, there is an ambiguity as to whether the
employee has a cause of action under § 388-10 and § 388-11
because the service charge would not be part of “wages” under
those enforcement statutes.
Finally, the Court notes that, although titled
“Withholding of wages”, § 388-6 prohibits employers from, inter
alia, retaining “any part or portion of any compensation earned
by any employee . . . .”
(Emphasis added.)
Section 388-1 states
that “wages” include tips and that “‘[w]ages’ means compensation
for labor or services rendered by an employee[.]”
Section 388-1
does not refer to “compensation earned”, a term that is not used
anywhere in Chapter 388 except for § 388-6.
This Court cannot
assume that the word “earned” is meaningless.
Assuming that the
term “earned” has its ordinary meaning,10 a service charge, or
10
Black’s Law Dictionary defines “earn” as “1. To acquire
by labor, service, or performance. 2. To do something that
(continued...)
27
portion thereof, which an employer must pay its employee under
§ 481B-14 because the employer failed to make the required
disclosure, would not be “earned” by the employee.
The operation
of the statute, not anything that the employee did, triggered the
payment.
Moreover, where the employer makes the required
disclosure, the employer may legally retain the entire service
charge and the employee would not be entitled to any portion of
the service charge as payment for his services rendered.
In this
Court’s view, a payment required by § 481B-14 is in the nature of
a penalty to the hotel or restaurant for failure to make the
required disclosure, not compensation that the employee earns by
reason of his labor or services.
Thus, although the term “tip income” in § 481B-14 is
similar to the reference in § 388-1 to “tips . . . of any kind”,
for the reasons stated above, this Court respectfully disagrees
with the prior orders in this district and with the state court’s
ruling in Gurrobat.
This Court is therefore inclined to conclude
that there is “doubt, . . . indistinctiveness or uncertainty of
an expression used in a statute”, namely the term “tip income” in
10
(...continued)
entitles one to a reward or result, whether it is received or
not.” Black’s Law Dictionary 584 (9th ed. 2009). The Hawai`i
Supreme Court has recognized that it “may resort to legal or
other well accepted dictionaries as one way to determine the
ordinary meaning of certain terms not statutorily defined.”
Rapozo v. Better Hearing of Hawaii, LLC, 119 Hawai‘i 483, 493,
199 P.3d 72, 82 (2008) (citation and quotation marks omitted).
28
§ 481B-14.
See State v. Bayly, 118 Hawai`i 1, 6, 185 P.3d 186,
191 (2008) (citation and block quote format omitted).
relevant statutes in this case are ambiguous.
Thus, the
Further, because
the Court cannot determine the true meaning of the term “tip
income” merely by examining the context in which it appears, the
Court must resort to extrinsic aids, in particular the
legislative history of § 481B-14, to determine the Legislature’s
intent.
See id. at 7, 185 P.3d at 192 (citing HRS § 1-15(2)
(1993)).
IV.
Legislative History of § 481B-14
In 2000, the Legislature passed H.B. 2123, which
enacted § 481B-14.
2000 Haw. Sess. Laws Act 16, § 2 at 22.
The
original version of H.B. 2123, entitled “A BILL FOR AN ACT
RELATING TO WAGES AND TIPS OF EMPLOYEES”, would have amended Haw.
Rev. Stat. § 387-1 to add a definition of “Tips” and would have
amended § 388-6.
It proposed, in pertinent part:
SECTION 2. Section 387-1, Hawaii Revised
Statutes, is amended as follows:
1. By adding a new definition to be
appropriately inserted and to read:
““Tips” means gratuities in the form of money
paid by a customer or added to a customer’s charge
either voluntarily or as a service charge by the
employer.”
. . . .
SECTION 4. Section 388-1, Hawaii Revised
Statutes, is amended by amending the definition of
“wages” to read as follows:
““Wages” means compensation for labor or
services rendered by an employee, whether the
amount is determined on a time, task, piece,
commission, or other basis of calculation. . . .
29
but shall not include tips or gratuities of any
kind[, provided that for the purposes of section
388-6, “wages” shall include tips or gratuities of
any kind].”
SECTION 5. Section 388-6, Hawaii Revised
Statutes, is amended to read as follows:
Ҥ388-6 Withholding of wages[.]; tips. No
employer may deduct, retain, or otherwise require
to be paid, any part or portion of any
compensation or tip earned by, or ascribed on a
customer’s bill or charge as a tip or gratuity to,
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:
. . . .
SECTION 6. Statutory material to be repealed
is bracketed. New statutory material is
underscored.
H.B. 2123, 20th Leg., Reg. Sess. (2000).
On February 4, 2000, the House of Representatives
Committee on Labor and Public Employment (“House Labor
Committee”) held a hearing on H.B. 2123.
The International
Longshore and Warehouse Union, Local 142 (“ILWU”) and the Hawai`i
Department of Labor and Industrial Relations (“DLIR”) gave
testimony against the bill, [Rand Opp. Decl., Exh. D (Testimony
on Behalf of ILWU Local 142), Exh. C (DLIR testimony),] and the
House Labor Committee cited this testimony as part of its reasons
for converting H.B. 2123 from a wage and hour bill into a
consumer protection bill.
H. Stand. Comm. Rep. No. 479-00, in
2000 House Journal, at 1155-56.
The ILWU stated that: defining service charges as tips
could be confusing and lead to unwanted tax consequences for
30
employees and employers; the word “tips” was well-understood and
did not need definition, particularly because § 388-1 already
distinguished “tips” and “wages”; the current law already
protected employees from the withholding of tips for illegal
reasons; and the bill would create problems in the collection of
union dues.
[Rand Opp. Decl., Exh. D.]
The DLIR stated that: under Haw. Admin. R. § 12-20-1, a
compulsory or negotiated service charge was expressly excluded
from the definition of a “tip”;11 and the definition of tips in
§ 12-20-1 was consistent with the United States Department of
Labor’s definition in the administration of the federal Fair
Labor Standards Act, which is the counterpart of Haw. Rev. Stat.
Chapter 387, and differing definitions would create confusion for
employers and employees.
The DLIR was also concerned that
including service charges within tips would be detrimental to
employers, who could neither count the service charges toward
their minimum wage requirements nor take any tip credit.
[Rand
Opp. Decl., Exh. C.]
The House Labor Committee ultimately decided to abandon
the amendments to the wage and hour laws in favor of a new
section in the consumer protection laws.
No. 479-00.
H. Stand. Comm. Rep.
The House Labor Committee stated:
11
As noted supra note 9, the version of Haw. Admin. R.
§ 12-20-1 in existence in 2000 still exists today.
31
Based on the concerns raised and after much
discussion, your Committee concluded that the
problem lies with consumers who may not leave tips
for the service employees, mistakenly thinking
that the service charges they paid were tips so
they did not leave additional tips for the service
employees.
Therefore, your Committee has amended the
bill by deleting its contents and inserting a new
section regarding unfair and deceptive business
practices. . . .
Id., in 2000 House Journal, at 1155.
The Court assumes that,
when the House Labor Committee amended H.B. 2123 to place the new
provision within Hawai`i consumer protection laws, instead of
within the wage and hour laws, the Legislature was aware that the
consumer protection laws have their own enforcement mechanism,
Haw. Rev. Stat. § 480-13.
Tamashiro v. Dep’t of Human Servs.,
112 Hawai`i 388, 427, 146 P.3d 103, 142 (2006) (“[T]he
legislature is presumed to know the law when enacting
statutes[.]” (some alterations in original) (citation and
quotation marks omitted)); see also Davis v. Four Seasons Hotel
Ltd., 122 Hawai`i 423, 440, 228 P.3d 303, 320 (2010) (“the
legislature chose to place HRS § 481B-14 within Hawaii’s consumer
protection statutes and provided that it be enforced through HRS
§ 480-13”).
The House Labor Committee’s amended version of H.B.
2123 stated, inter alia:
SECTION 2. Section 481B, Hawaii Revised
Statutes, is amended by adding a new section to be
appropriately designated and to read as follows:
32
Ҥ481BService charge. Any hotel or
restaurant applying a service charge for the sale
of food or beverage services shall distribute the
service charge to its employees or else clearly
disclose to the purchaser of such services that
the service charge is being used to pay for costs
or expenses other than wages and tips of
employees.”
SECTION 3. New statutory material is
underscored.
H.B. 2123, H.D. 1, 20th Leg., Reg. Sess. (2000).12
After the bill’s conversion, the House Committee on
Finance (“House Finance Committee”) noted that the purpose of the
bill was
to prevent unfair and deceptive business practices
by requiring hotels or restaurants that apply a
service charge for the sale of food or beverage,
to disclose to the purchaser that the service
charge is being used to pay for costs or expenses
other than wages and tips of employees, if the
employer does not distribute the service charge to
its employees.
H. Stand. Comm. Rep. No. 854-00, in 2000 House Journal, at 1298.
The House Finance Committee made revisions to H.B. 2123
H.D. 1, which it called “technical, nonsubstantive amendments for
purposes of clarity and style.”
Id.
The House Finance
Committee’s version of H.B. 2123 stated, inter alia:
SECTION 2. Section 481B, Hawaii Revised
Statutes, is amended by adding a new section to be
appropriately designated and to read as follows:
Service charge. Any hotel or
Ҥ481Brestaurant that applies a service charge for the
sale of food or beverage services shall distribute
12
H.B. 2123, H.D. 1 is attached to Plaintiffs’ Reply as
Exhibit 3, pages 3-4. [Dkt. no. 110-3.]
33
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.”
SECTION 3. New statutory material is
underscored.
H.B. 2123, H.D. 2, 20th Leg., Reg. Sess. (2000) (double underline
emphases added).13
The title of the bill remained the same
throughout all drafts.
The Senate Committee on Commerce and Consumer
Protection (“Senate Commerce Committee”) next reviewed H.B. 2123,
H.D. 2, and noted that the purpose of the bill was “to enhance
consumer protection with respect to service charges imposed by
hotels and restaurants on the sale of food and beverages.”
S. Stand. Comm. Rep. No. 3077, in 2000 Senate Journal at 1286.
The Senate Commerce Committee noted that the general
understanding was that hotels and restaurants apply service
charges in lieu of voluntary tips.
Thus, most customers do not
tip for those services because they assume that the service
charges are distributed to the service employees.
Hotels and
restaurants, however, do not always distribute the service
charges to the service employees; sometimes the establishment
uses them for administrative costs.
Id.
The Senate Commerce
Committee stated:
13
H.B. 2123, H.D. 2 is attached to Plaintiffs’ Reply as
Exhibit 2. [Dkt. no. 110-2.]
34
This measure is intended to prevent consumers
from being mislead about the application of moneys
they pay as service charges by requiring under the
Unfair Deceptive Practices Act that a hotel or
restaurant distribute moneys paid by customers as
service charges directly to its employees as tip
income, or disclose to the consumer that the
service charge is being used to pay for the
employer’s costs or expenses, other than wages and
tips.
Id. at 1287.
amendments.
V.
H.B. 2123, H.D. 2 passed without any further
2000 Haw. Sess. Laws Act 16, § 2 at 22.
ANALYSIS OF LEGISLATIVE HISTORY
Defendant has argued that § 481B-14 and § 388-6 cannot
be read in pari materia.
Haw. Rev. Stat. § 1-16 states: “Laws in
pari materia, or upon the same subject matter, shall be construed
with reference to each other.
What is clear in one statute may
be called in aid to explain what is doubtful in another.”
This
Court initially presumes that § 481B-14 and § 388-6 cannot be
read in pari materia because they deal with completely different
subjects, consumer protection through the prevention of unfair
competition and unfair or deceptive practices, as opposed to the
payment of employees’ wages and other compensation, and each
chapter has its own enforcement mechanisms.
Thus, the mere fact
that § 481B-14 and § 388-6 use similar terms, “tip income” and
“tips”, does not mean that one statute controls as to the other.
The Hawai`i Supreme Court rejected a similar argument in State v.
Mata:
35
HRS § 291–4(a)(1) provides that the offense
is committed when: “The person operates or assumes
actual physical control of the operation of any
vehicle while under the influence of intoxicating
liquor[.]”
Appellant has argued that we should import
into that section the definition appearing in HRS
§ 281–1 as follows:
“Under the influence of liquor” means
that the person concerned has consumed
intoxicating liquor sufficient to impair at
the particular time under inquiry the
person’s normal mental faculties or ability
to care for oneself and guard against
casualty, or sufficient to substantially
impair at the time under inquiry that
clearness of intellect and control of oneself
which the person would otherwise normally
possess.
HRS Chapter 281 regulates the sale of liquor
and liquor establishments. HRS Chapter 291
regulates traffic violations. The chapters serve
different purposes and are not in pari materia.
The definition in HRS § 281–1 does not control the
meaning of the term “under the influence of
intoxicating liquor” as used in HRS § 291–4(a)(1).
71 Haw. 319, 330, 789 P.2d 1122, 1128 (1990) (alteration in
Mata).
The Court therefore is not inclined to read § 481B-14 and
§ 388-6 together absent clear indication that the Legislature
intended them to be read together.
Plaintiffs argue that the two statutes must be read in
pari materia based in part on the fact that the title of H.B.
2123 was always “RELATING TO WAGES AND TIPS OF EMPLOYEES.”
[Pltfs.’ Reply at 9 (quoting 2000 Haw. Sess. Laws Act 16, at
21).]
Plaintiffs contend that this alone contradicts Defendant’s
argument that § 481B-14 and § 388-6 should not be read in pari
materia.
[Id.]
The state court in Gurrobat also noted H.B.
36
2123’s title in concluding that the two statutes are in pari
materia for purposes of Haw. Rev. Stat. § 1-16 and Albert v.
Dietz, 283 F. Supp. 854, 856 (D. Hawai`i 1968) (“It is solidly
established under the Hawaii law that statutes having reference
to the same subject matter are in pari materia and are to be
construed with reference to each other.” (footnote omitted)).
The court in Gurrobat stated:
388-6 relates to withholding of wages.
Likewise, HRS 481B-14 was originally introduced as
Act 16 (House Bill 2123) during the 2000
Legislative Session and is entitled, “Relating to
Wages and Tips of Employees.”
Accordingly, the Court believes 388-6 and
481B-14 can be read together.
[Gurrobat Trans. at 13-14.]
As Defendant points out, according to legislative
drafting rules, a bill has one title and it should not be
amended.
Thus, there is no significance to the fact that the
title of H.B. 2123 remained the same after the House Labor
Committee abandoned the amendments to Chapters 387 and 388 in
favor of a new provision in Chapter 481B.
[Def.’s Reply at 3-4
(citing Hawaii Legislative Drafting Manual).]
Further, the
Hawai`i Supreme Court stated in the Davis Opinion that it did not
believe the title of H.B. 2123 was dispositive in determining who
could enforce § 481B-14.
Employees argue that “[t]he title to the Act is
pivotal in dismantling Defendants’ claim that the
law was not meant to benefit employees because the
Hawaii Constitution provides at Article III,
37
Section 14 that: ‘No law shall be passed except by
bill. Each law shall embrace but one subject,
which shall be expressed in its title.’” However,
although we believe the title is instructive in
that it appears to reflect the legislature’s
concern that employees may not always be receiving
the service charges imposed by their employers, we
do not believe it is dispositive of the issue of
whether the legislature intended to afford
Employees standing to sue for HRS § 481B-14
violations.
Davis v. Four Seasons Hotel Ltd., 122 Hawai`i 423, 433 n.17, 228
P.3d 303, 313 n.17 (2010).
Similarly, in light of the
Legislature’s general rule that bill titles are not amended, this
Court predicts that the Hawai`i Supreme Court would hold that the
title of H.B. 2123 is not dispositive of the issue whether the
Legislature intended to allow employees to enforce § 481B-14
through Chapter 388.
Plaintiffs also argue that prohibiting employees from
using § 388-6 to bring claims based on § 481B-14 violations would
render superfluous the amendment in H.B. 2123 H.D. 2 - included
after the bill’s conversion to address Chapter 481B - stating
that, where a payment is made because of a lack of disclosure,
the payment is “tip income”.
omitted).]
[Pltfs.’ Reply at 10-11 (citations
Plaintiffs essentially contend that the term “tip
income” is a reference to Chapter 388 and evidence of the
Legislature’s implicit authorization of the use of Chapter 388’s
remedies.
38
Plaintiffs’ argument is inconsistent with the
legislative history.
Nothing in H.B. 2123 H.D. 1 or the
accompanying committee report can be construed as an implicit
adoption of the remedies in Chapter 388.
If the addition of the
“tip income” language in H.D. 2 was an implicit adoption of the
remedies in Chapter 388, it would have been a significant
substantive change from H.D. 1.
That is inconsistent with the
House Finance Committee’s characterization of its revisions made
in H.B. 2123 H.D. 2 as “technical, nonsubstantive amendments for
purposes of clarity and style.”
H. Stand. Comm. Rep. No. 854-00,
in 2000 House Journal, at 1298.
Moreover, when the Legislature
changed H.B. 2123 to add a new section in Chapter 481B instead of
revising, inter alia, § 388-6, the Legislature was aware that,
under Haw. Rev. Stat. § 481B-4, violations of Chapter 481B were
enforceable under Haw. Rev. Stat. § 480-2.14
Hawai`i at 427, 146 P.3d at 142 (2006).
See Tamashiro, 112
The Court is therefore
inclined to find that the legislative history of § 481B-14 does
not support Plaintiffs’ position that the use of the term “tip
14
Haw. Rev. Stat. § 481B-4 states: “Any person who violates
this chapter shall be deemed to have engaged in an unfair method
of competition and unfair or deceptive act or practice in the
conduct of any trade or commerce within the meaning of section
480-2.” Haw. Rev. Stat. § 480-2(a) states that: “Unfair methods
of competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are unlawful.” Section 480-2(e)
states: “Any person may bring an action based on unfair methods
of competition declared unlawful by this section.” The specific
remedies available in such action are set forth in Haw. Rev.
Stat. § 480-13.
39
income” in that section allows § 481B-14 and § 388-6 to be read
together.
This Court also notes that, as part of its analysis of
the plaintiff’s motion for partial summary judgment, the state
court in Gurrobat reasoned, “because 481B-14 was originally
drafted as an amendment to HRS 388-6, and is read in pari materia
with 481B-14, the Court finds that there is similar legislative
intent behind 388-6, in that it was intended to protect service
employees and not managerial employees.”
15.]
[Gurrobat Trans. at
The Court disagrees with this analysis.
In this Court’s
view, it is impossible to ignore the fact that the original
version of H.B. 2123 included proposed amendments to Chapters 387
and 388 that expressly included compulsory service charges in the
definition of tips, but the Legislature adopted the House Labor
Committee’s decision to abandon those proposed amendments and to
leave Chapters 387 and 388 unaltered, addressing the issue solely
in a new provision of Chapter 481B.
That decision cannot support
a finding that § 481B-14 and § 388-6 have the same legislative
intent.
Although this Court acknowledges the state court in
Gurrobat made that comment in the context of the issue whether
managerial employees were also entitled to share in service
charges distributed to employees pursuant to § 481B-14, this
Court believes that the state court’s analysis was erroneous and
40
this diminishes the persuasive value of the state court’s
decision as a whole.
Finally, this Court notes that, in granting summary
judgment on the unpaid wages claim to the Davis plaintiffs,
Judge Gillmor stated:
Although it is unnecessary to consider the
legislative history of section 481B-14 insofar as
its meaning, in relation to the wage protections
provided by section 388-6, is unambiguous, the
Hawaii Supreme Court’s ruling in Davis reveals
that the statute’s legislative history supports
the right of employees to sue for violations of
section 481B-14. In Davis, the Hawaii Supreme
Court reviewed the legislative history of section
481B-14 at length and concluded: “[T]he
legislative history of HRS § 481B-14 does not
reflect an intent to preclude enforcement by
employees.” 228 P.3d at 312. Summarizing its
review of the legislative history, the court
stated:
In sum, the legislative history . . .
indicates that the legislature was concerned
that when a hotel or restaurant withholds a
service charge without disclosing to
consumers that it is doing so, both employees
and consumers can be negatively impacted.
The legislature chose to address that concern
by requiring disclosure and by authorizing
enforcement of that requirement under HRS
chapter 480. There is no clear indication in
the legislative history that the legislature
intended to limit enforcement to consumers,
businesses, or competitors and to preclude
enforcement by employees.
Id. at 314 (emphasis added). The legislative
history of section 481B-14 reflects a desire to
prevent service workers from being deprived of tip
income. Id. To the extent that the legislative
history of section 481B-14 is relevant to the
question of whether employees may sue for unpaid
wages under section 388-6 based on violations of
section 481B-14, that legislative history, as
interpreted by the Hawaii Supreme Court in Davis,
41
provides support for the idea that employees may
do so.
Davis Summary Judgment Order, 2011 WL 3841075, at *7-8
(alterations and emphasis in Davis Summary Judgment Order).
This
Court agrees that the Hawai`i Supreme Court in the Davis Opinion
stated that legislative history of § 481B-14 supports the
proposition that the Legislature intended employees to be able to
enforce § 481B-14.
The Hawai`i Supreme Court, however, made
these statements while considering whether employees had standing
to enforce of § 481B-14 through § 480-2(e) and § 480-13.
The
portions of the legislative history cited in the Davis Opinion
address whether employees are entitled to enforce § 481B-14
through Chapter 480; they do not speak to the issues whether
Chapter 480 is an effective enforcement mechanism or whether
there are multiple mechanisms for employees to enforce § 481B-14.
As previously noted, the Hawai`i Supreme Court expressly stated
that it was not addressing the issue whether employees could
enforce § 481B-14 through §§ 388-6, 388-10, and 388-11.
Davis,
122 Hawai`i at 428 n.12, 228 P.3d at 308 n.12.
For all of these reasons, this Court is inclined to
find that the legislative history of § 481B-14, when viewed in
the light of well-established principles of statutory
interpretation, indicates that the Legislature did not intend for
§ 481B-14 to be enforced through § 388-6.
42
VI.
Lack of a Remedy
Plaintiffs contend that, unless the Court interprets
§ 481B-14 to allow employees to enforce violations through
§ 388-6, the law would not have the effect that the Legislature
intended.
[Mem. in Supp. of Pltfs.’ Motion at 11.]
The
Legislature, however, did provide an enforcement mechanism for
§ 481B-14, § 480-2 and § 480-13.
Davis v. Four Seasons Hotel
Ltd., 122 Hawai`i 423, 440, 228 P.3d 303, 320 (2010) (“the
legislature chose to place HRS § 481B-14 within Hawaii’s consumer
protection statutes and provided that it be enforced through HRS
§ 480-13”).
The Court recognizes that the Chapter 480 claim is
difficult to prove under facts similar those in the instant case.
Judge Ezra recognized that:
[T]he Davis decision clarified that: (1) the Davis
plaintiffs qualified as “persons who may bring a
claim under H.R.S. § 480-2(e); (2) the Davis
plaintiffs had standing to bring a private claim
for unfair competition under H.R.S. §§ 481B-14 and
480-2 provided that they satisfied the
requirements of H.R.S. § 480-13; (3) the essential
elements of a claim under § 480-13 are: (a) a
violation of Chapter 480; (b) that causes an
“injury” to plaintiffs’ business or property; and
(c) damages; (4) to satisfy the second element
under § 480-13, a plaintiff must allege injury in
fact and the “nature of the competition”; and (5)
the “nature of the competition” allegation
requires a showing that a plaintiff’s injury
“necessarily stems from the negative effect on
competition caused by the violation,” see Davis,
228 P.3d at 320, as opposed to “some procompetitive or neutral effect of the defendant’s
antitrust violation.” Id. at 325
[Rodriguez Dismissal Order at 43-44 (footnote omitted).]
43
Judge Ezra granted the Rodriguez defendant’s motion to dismiss
the Chapter 480 claim without prejudice for failure to state a
claim upon which relief could be granted.15
[Id. at 50.]
Even if, however, the Chapter 480 claim is virtually
impossible to prove in this case and Plaintiffs are left without
a remedy to address the alleged violations of § 481B-14, it is
not this Court’s place to create a remedy that the Legislature
did not provide for.
A federal court sitting in diversity cannot
create new state law causes of action.
See, e.g., Woods v.
Interstate Realty Co., 337 U.S. 535, 538 (1949) (“a right which
local law creates but which it does not supply with a remedy is
no right at all for purposes of enforcement in a federal court in
a diversity case”); Guy v. Travenol Labs., Inc., 812 F.2d 911,
917 (4th Cir. 1987), abrogated on other grounds, as stated in
Leach v. N. Telecom, Inc., 141 F.R.D. 420, 426 n.1 (E.D.N.C.
1991); Bouchet v. Nat’l Urban League, Inc., 730 F.2d 799, 807
(D.C. Cir. 1984); Wolk v. Saks Fifth Ave., Inc., 728 F.2d 221,
223 (3d Cir. 1984); Garland v. Herrin, 724 F.2d 16, 20 (2d Cir.
1983); Tarr v. Manchester Ins. Corp., 544 F.2d 14, 15 (1st Cir.
1976); accord Orkin v. Taylor, 487 F.3d 734, 741 (9th Cir. 2007)
15
Judge Ezra noted that Judge Kay reached the same result
in the Wadsworth Dismissal Order, and Judge Ezra respectfully
disagreed with the Davis Dismissal Order, in which Judge Gillmor
reached a different result. [Rodriguez Dismissal Order at 50 n.7
(discussing Davis Dismissal Order, 2010 WL 3946428, at *13;
Wadsworth Dismissal Order, 2010 WL 5146521, at *26).]
44
(“If the state’s highest appellate court has not decided the
question presented, then we must predict how the state’s highest
court would decide the question.
In doing so, we take state law
as it exists without speculating as to future changes in the
law.” (citations omitted)).
This rule applies even where the
enforcement mechanism within the chapter that the statute in
question is a part of is arguably ineffective to enforce the
statute in question.
Where the Legislature was silent as to any
other available enforcement mechanisms for the statute in
question, this Court cannot create new state law by inferring
that the statute can be enforced through a statute in another,
unrelated chapter.
This Court is sympathetic to Plaintiffs’ position.
There is an unjust and gaping hole in this statute: if Defendant
ultimately prevails on Plaintiffs’ Chapter 480 claim and
Plaintiffs cannot enforce the alleged § 481B-14 violation through
any other means, arguably no one will enforce the violation.
Even though the Resort’s customers were mislead where the Resort
failed to give the required disclosures and failed to distribute
the full service charges to the Resort’s food and beverage
service employees, the customers did not suffer an injury as a
result of the violation of § 481B-14.
Unfortunately, it is not
this Court’s place to sit as the Legislature does and to try to
create a new enforcement mechanism to replace or supplement an
45
old one, no matter how inadequate and unfair the original
statutory scheme may be.
For all of the foregoing reasons, this Court is
inclined to find that Plaintiffs’ unpaid wages claim, which seeks
to enforce violations of § 481B-14 through §§ 388-6, 388-10, and
388-11, fails as a matter of law and does not state a claim upon
which relief can be granted.
VII. Certifying Questions
Although this Court has set forth the analysis of how
it would rule on the question whether employees can enforce
alleged violations of § 481B-14 through §§ 388-6, 388-10, and
388-11, the Court recognizes that reasonable minds can differ on
this issue, as evidenced by the differing rulings in this
district court and in the state court.
This Court cannot
conclude that it is reasonably clear which analysis the Hawai`i
Supreme Court would adopt.
Thus, the Court finds that there is
no clear controlling precedent on this issue from the Hawai`i
Supreme Court, and this Court cannot predict how the Hawai`i
Supreme Court would rule on this issue.
See Saiki v. LaSalle
Bank Nat’l Ass’n as Tr. for Structured Asset Inv. Loan Trust
Series 2003-BC2, Civil No. 10-00085 JMS/LEK, 2011 WL 601139, at
*6 (D. Hawai`i Feb. 10, 2011).
The Court acknowledges that certification at this stage
of the case is not ideal in light of the age of the case and the
46
fact that it has already been stayed once pending the answer to
the certified question in Davis.
The question for certification,
however, is an issue of first impression concerning the
interpretation of a Hawai`i statute, and it is of great
importance to employers and food and beverage service employees
in the hotel and restaurant industries in Hawai`i, as evidenced
by the number of similar cases that have been filed in this
district court and the state courts.
The issue should therefore
be decided by the Hawai`i Supreme Court.
The Court also notes
that, even if this Court declined to certify the question to the
Hawai`i Supreme Court and this case proceeded to an eventual
judgment, there would likely be an appeal to the Ninth Circuit.
The Ninth Circuit could be faced with conflicting rulings in this
case and Davis, Wadsworth, Rodriguez, and potentially others.
It
is a realistic possibility that the Ninth Circuit may, during the
pendency of the appeals, decide to certify the same question to
the Hawai`i Supreme Court which this Court is now considering.
In this Court’s view, certification now, while not ideal, would
be more efficient and less prejudicial than certification on
appeal.
The Court therefore CONCLUDES that it is appropriate to
certify to the Hawai`i Supreme Court the question whether food
and beverage service employees can enforce alleged violations of
§ 481B-14 through §§ 388-6, 388-10, and 388-11.
47
The Court will issue an order allowing the parties to
comment upon the precise language of this question to be
certified and whether the Court should certify any other
questions, such as what statute of limitations applies if there
is a cause of action to enforce § 481B-14 through §§ 388-6,
388-10, and 388-11.
CONCLUSION
On the basis of the foregoing, the Court HEREBY
ADMINISTRATIVELY TERMINATES, WITHOUT PREJUDICE, Plaintiffs’
Motion for Partial Summary Judgment, filed April 29, 2011, and
Defendant’s Motion to Dismiss Amended Class Action Complaint
Filed June 28, 2010 [Doc #60], filed May 18, 2011, in light of
this Court’s decision to certify the central question in this
case to the Hawai`i Supreme Court.
After the Hawai`i Supreme
Court responds to the certified question(s), the parties may
re-file Defendant’s Motion and Plaintiffs’ Motion, and their
respective memoranda supporting or opposing those motions, by
filing a one-page notice.
The Court will thereafter issue a
48
schedule for limited briefing to address the Hawai`i Supreme
Court’s response to the certified question(s).
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, September 8, 2011.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
BERT VILLON AND MARK APANA V. MARRIOTT HOTEL SERVICES, INC., ETC;
CIVIL NO. 08-00529 LEK-RLP; ORDER ADMINISTRATIVELY TERMINATING,
WITHOUT PREJUDICE, PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND
DEFENDANT’S MOTION TO DISMISS AMENDED CLASS ACTION COMPLAINT
FILED JUNE 28, 2010 [DOC #60]
49
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