Villon et al v. Mariott Hotel Services, Inc.

Filing 182

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT re: 92 . Signed by JUDGE LESLIE E. KOBAYASHI on 10/31/2013. Excerpt of Conclusion: ~ "Plaintiffs' Motion is GRANTED as to Defendant's liability for Count V for the period July 30, 2004 to January 2009. Plaintiffs' Motion is DENIED as to Defendant's liability for Count V for the period January 2009 to October 2010 for banquets, and for the period January 2009 to the present for room service." (afc) 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). All participants are registered to receive electronic notifications.

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.
____________________________

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CIVIL NO. 08-00529 LEK-RLP

ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT
On April 29, 2011, Plaintiffs Bert Villon and
Mark Apana, on behalf of themselves and all others similarly
situated (collectively “Plaintiffs”) filed their Motion for
Partial Summary Judgment (“Motion”).

[Dkt. no. 92.]

Defendant

Marriott Hotel Services, Inc., doing business as Wailea Marriott
Resort (“Defendant”), filed its memorandum in opposition on June
20, 2011, and Plaintiffs filed their reply on June 27, 2011.
[Dkt. nos. 108, 111.]

This Court held a hearing on the Motion on

July 11, 2011, but later administratively terminated the Motion
without prejudice to the re-filing of the Motion after the
Hawai`i Supreme Court answered this Court’s certified questions.
[Order, filed 9/8/11 (dkt. no. 125).1]

The Hawai`i Supreme Court

accepted one of the certified questions, and filed an opinion
1

The 9/8/11 order is also available at 2011 WL 4047373.

answering the question on July 15, 2013 (“the Opinion”).

130

Hawai`i 130, 306 P.3d 175 (2013).
On August 1, 2013, Plaintiffs filed a request that this
Court construed as their notice of the re-filing of the Motion,
[dkt. no. 171,] and this Court ordered further briefing to
address the Opinion’s effect on the Motion.

Plaintiffs filed

their Supplemental Memorandum on August 22, 2013.
179.]

[Dkt. no.

Defendant filed its response to Plaintiffs’ Supplemental

Memorandum (“Defendant’s Supplemental Memorandum”) on
September 11, 2013, and Plaintiff filed a reply to Defendant’s
Supplemental Memorandum (“Plaintiffs’ Supplemental Reply”) on
September 23, 2013.

[Dkt. nos. 180, 181.]

The Court finds that

this matter is suitable for disposition without a further
hearing.

After careful consideration of the Motion, supporting

and opposing memoranda, and the relevant legal authority,
Plaintiffs’ Motion is HEREBY GRANTED IN PART AND DENIED IN PART
for the reasons set forth below.

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BACKGROUND
Plaintiffs have worked as food and beverage servers at
the Wailea Marriott Resort (“the Resort”) during the applicable
statute of limitations period.2

Plaintiffs allege that, during

this time period, Defendant imposed a service charge on food and
beverages served at the Resort, including in the banquet
department, restaurants, and room service, but Defendant failed
to pay the entire charge to Plaintiffs as tip income.

[Amended

Class Action Complaint (“Amended Complaint”), filed 6/28/10 (dkt.
no. 60), at ¶¶ 3-5.]

Instead, Defendant either retained a

portion of the service charges for itself or used a portion of
the charges to pay its managers and other employees who did not
serve food and beverages and did not receive tips.
not disclose this practice to Resort customers.

Defendant did

Plaintiffs

contend that this caused customers to believe that Defendant was
paying the entire service charge to Plaintiffs.

Plaintiffs also

2

On May 31, 2011, this Court issued its Order Granting
Plaintiffs’ Motion for Class Certification. 2011 WL 2160483.
This Court certified the following class:
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 *18.
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contend that, if Defendant had disclosed this, the customers
would have been inclined to leave additional gratuities for their
servers.

[Id. at ¶¶ 8-10.]
Count I alleges that Defendant’s actions violated Haw.

Rev. Stat. § 481B-14 and constituted an unfair method of
competition or an unfair and deceptive act or practice pursuant
to Haw. Rev. Stat. § 480-2.

Count II alleges intentional

interference with contractual and/or advantageous relations;
Count III alleges breach of implied contract; and Count IV
alleges unjust enrichment.

Count V alleges that Defendant’s

failure to pay the entire service charge to Plaintiffs deprived
them of income which constituted wages.

Count V therefore seeks

unpaid wages and other relief pursuant to Haw. Rev. Stat. §§ 3886, 388-10, and 388-11.
In the instant Motion, Plaintiffs seek summary judgment
as to Defendant’s liability for Count V.

They state that, after

this Court grants summary judgment as to liability, they will
file another motion for summary judgment to determine the damages
for Count V.
This Court certified the following question: “May food
or beverage service employees of a hotel or restaurant bring a
claim against their employer based on an alleged violation of
Haw. Rev. Stat. § 481B–14 by invoking Haw. Rev. Stat. §§ 388–6,
388–10, and 388–11 and without invoking Haw. Rev. Stat. §§ 480–2

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or 480–13?”

Villon v. Marriott Hotel Servs., Inc., 130 Hawai`i

130, 132, 306 P.3d 175, 177 (2013).

The Hawai`i Supreme Court

responded:
We now answer the certified question in the
affirmative and hold that when a hotel or
restaurant applying a service charge for the sale
of food or beverage services allegedly violates
[Haw. Rev. Stat.] § 481B–14 (2008) (1) by not
distributing the full service charge directly to
its employees as “tip income” (in other words, as
“wages and tips of employees”), and (2) by failing
to disclose this practice to the purchaser of the
services, the employees may bring an action under
[Haw. Rev. Stat.] §§ 388–6 (1993), –10 (1993 &
Supp. 1999), and –11 (1993 & Supp. 1999) to
enforce the employees’ rights and seek remedies.
Id. at 132-33, 306 P.3d at 177-78.
DISCUSSION
Plaintiffs argue that, in light of the Opinion’s
resolution of the legal issue presented in the instant Motion,
they are entitled to summary judgment as to Defendant’s liability
for Count V “for the statutory period up until October 2010[3]
due to Defendant’s failure to provide clear disclosure regarding
its banquets service charges in its banquet contracts.”
Suppl. Mem. at 10.]

[Pltfs.’

Defendant responds that Plaintiffs’ “claim

is extinguished as of January 2009 when disclosures were included
in the [Banquet Event Orders (‘BEOs’)].”

[Def.’s Suppl. Mem. at

5.]

3

Plaintiffs recognize that, in October 2010, Defendant
began including a disclosure in its banquet contracts. [Pltfs.’
Suppl. Mem. at 8.]
5

First, this Court agrees with Plaintiff that, “for the
period in this case prior to January 2009, there is no dispute
that Defendant violated § 481B-14 by retaining a portion of
service charges while failing to clearly disclose to customers
that it was doing so.”

[Pltfs.’ Suppl. Mem. at 8.]

Haw. Rev.

Stat. § 481B-14 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.
The withholding of a service charge without providing the
required disclosure to the customer constitutes the withholding
of “tip income,” which is prohibited by Haw. Rev. Stat. § 388-6.4
It is undisputed that Defendant imposes a service charge on food
and beverage service and, during the period in question,
Defendant did not distribute the full service charge to its
employees as tip income.

In its response to Plaintiffs’ Concise

Statement of Facts in Support of Motion for Partial Summary
Judgment (“Plaintiffs’ CSOF”), [filed 4/29/11 (dkt. no. 93),]
Defendant did not identify any evidence that would create a
genuine issue of material fact as to the question of whether,

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Section 388-6 allows for the withholding of wages “where
required by federal or state statute or by court process or when
such deductions or retentions are authorized in writing by the
employee[.]” Neither of these exceptions are relevant to the
issues presented in the instant Motion.
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prior to January 2009, Defendant provided notice to its banquet
customers or to its room service customers that it was not
remitting the full service charge to its food and beverage
servers.

[Def.’s Response to Pltfs.’ CSOF (“Def.’s CSOF”), filed

6/20/11 (dkt. no. 107).]

Thus, in light of this failure and the

Hawai`i Supreme Court’s holding in the Opinion, Plaintiffs are
entitled to summary judgment as to Defendant’s liability for
Count V from July 30, 2004 to January 2009.

See Fed. R. Civ. P.

56(a) (stating that a party is entitled to summary judgment “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”).
Plaintiffs acknowledge that, from January 2009 until
October 2010, Defendant attempted to provide some forms of notice
that a portion of the service charge was not paid as wages and
tips to employees.

In October 2010, Defendant began including a

disclosure in their banquet contracts, in addition to the
disclosures previously added to the BEOs and the banquet menus.
Plaintiffs argue that they are entitled to summary judgment as to
Defendant’s liability for Count V from January 2009 to October
2010 because the disclosures that Defendant provided during that
period, which did not include disclosures in the banquet
contracts, were not sufficient to comply with § 481B-14.
Defendant presented evidence that: before January 2009, it began

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including a disclosure in its on-line menus; as of April 2009, it
began including a disclosure in its BEOs; and, as of May 2009, it
made disclosures for room service.

[Def.’s CSOF, Decl. of

Richard M. Rand (“Rand Decl.”), Exh. A (trans. excerpts of
4/20/11 Depo. of Chris Smarcan) (“Smarcan Depo.”) at 34-35, Exh.
3, 5; Rand Decl., Exh. B (trans. excerpts of 4/20/11 depo. of
Sarah Nill) (“Nill Depo.”) at 7, Exh. 12).5]
This Court notes that Plaintiffs’ Supplemental
Memorandum does not present any further argument about
Defendant’s service charge practices for room service.

This

Court therefore assumes that Plaintiffs’ position remains the
same as in their Motion - that they are entitled to summary
judgment on Count V as to service charges imposed on room service
orders from January 2009 to the present because the room service
bills still do not include the disclosure.
Motion at 11-12.]

[Mem. in Supp. of

As of the May 2009 revision to the room

service menu, every page contains the following: “All Room
Service orders are subject to a $4.00 Delivery and 20% Service
Charge . . . .

A portion of the 20% service charge added to the

food and beverage check is allocated to pay for various costs and
expenses.

A minimum of 16% is allocated toward wages and tips

5

Chris Smarcan and Sarah “Sally” Nill were Defendants’ Fed.
R. Civ. P. 30(b)(6) witnesses. Exhibit 3 to the Smarcan
Deposition is a redacted BEO for April 20, 2009. Exhibit 5 is
the Resort’s event menu. Exhibit 12 to the Nill Deposition is
the Resort’s room service menu, revised May 2009.
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for employees.”

[Nill Depo., Exh. 12.]

As to service charges imposed at Resort banquets
between January 2009 and October 2010, Plaintiffs argue that only
disclosures in the banquet contracts would satisfy the
requirements of § 481B-14.

Plaintiffs urge this Court to rule

that the disclosures provided in the BEOs and the banquet menus
alone did not comply with the requirements of § 481B-14.

The

sample BEO for April 20, 2009 that Defendant presented states, in
pertinent part:
In addition to appropriate state and local taxes,
a Service Charge of 22% will be applied to the
cost for food and beverage service. A portion of
the Service Charge is being used to pay for costs
or expenses, other than wage and tips for
employees; a minimum of 17% is allocated toward
wage and tips for employees. . . .
[Smarcan Depo., Exh. 3.]
disclosure.

The banquet menu contains the same

[Id., Exh. 5.]

Plaintiffs apparently do not argue that the content of
the disclosures Defendant provided was insufficient; they contend
that Defendant was still in violation of § 481B-14 and § 388-6
from January 2009 to October 2010 for banquets and from January
2009 to present for room service because of the timing of the
disclosures.

Plaintiffs contend that the banquet contract

governs the customers’ agreements with Defendant, and therefore
Defendant must include the disclosure in the banquet contract to
comply with § 481B-14.

The disclosures in the BEOs and the
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menus, standing alone, are insufficient.

For room service,

Plaintiffs argue that Defendant must include the disclosure in
both the menu and the bill; the disclosure in the menu alone is
insufficient.

According to Plaintiffs, Senior United States

District Judge Helen Gillmor in Davis, et al. v. Four Seasons
Hotel Ltd., et al., CV 08-00525 HG-BMK, and Senior United States
District Judge Alan C. Kay in Wadsworth v. KSL Grand Wailea
Resort, Inc., Civ. No. 08-00527 ACK-RLP, 2011 WL 6030074 (D.
Hawai`i Dec. 2, 2011), reached the same conclusion.

Plaintiffs

rely on the following statements that Judge Gillmor made during
the hearing on the plaintiff’s motion for summary judgment in
Davis:
The question is really, What did the
legislature intend to do? And I think it is clear
that the legislature intended that consumers be
notified as to what was going to happen to the
service charge. And to the extent that it is on a
bill after the fact or relying on word of mouth,
the word of mouth argument does not work for me.
We’ve got different percentages being used at
different times. And the idea that something
having to do with something the legislature has
spent so much time on being taken care of by
knowledge in the industry, when in fact it would
be imperfect knowledge with respect to the various
manners in which the different hotels and even the
same hotels handle this question at different
times.
So, I think that the contract going into it,
entering into the relationship is where this kind
of information must start. So -- and there's no
representation in this motion that it was in the
contract, only that it was in the bill.
[CV 08-00525, 6/21/11 Hrg. Trans., filed 6/28/11 (dkt. no. 155),
10

at 21.]
Plaintiffs also rely on the following language from
Judge Kay’s order granting in part and denying in part the
plaintiff’s motion for partial summary judgment in Wadsworth:
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.
2011 WL 6030074, at *6.
This Court notes that the decisions of other district
judges in this district are not binding on this Court.

See

Camreta v. Greene, 131 S. Ct. 2020, 2033 n.7 (2011) (“‘A decision
of a federal district court judge is not binding precedent in
either a different judicial district, the same judicial district,
or even upon the same judge in a different case.’” (quoting 18 J.
Moore et al., Moore’s Federal Practice § 134.02[1][d], p. 134–26
(3d ed. 2011)).

Although this Court considers Judge Gillmor’s

and Judge Kay’s rulings persuasive, the factual premise behind
each of those rulings is easily distinguishable from the facts at
issue in the instant Motion.
Plaintiffs themselves state that, in Davis, Judge
Gillmor “rejected the defendant’s argument that it had satisfied

11

its burden under § 481B-14 by providing disclosures on its
banquet bills and through word-of-mouth with clients, holding
that the contract governed.”

[Pltfs.’ Suppl. Mem. at 8.]

The

disclosures in the instant case are far more than word-of-mouth
descriptions of the service charge practice.

Further, in the

instant case, once Defendant began providing disclosures,
Defendant provided them in documents that the customers reviewed
prior to the rendition of service, arguably giving customers
meaningful opportunities to decide, inter alia, to provide
additional gratuities to the servers or to take their business
elsewhere.

In Davis, the disclosure was provided in the banquet

bill, which did not provide a meaningful opportunity to make such
a decision.

Nor did Wadsworth present the issue currently before

this Court - whether a defendant must provide the disclosure in a
banquet contract where it has provided the disclosure in the menu
and the order form.

Thus, neither the analysis in Davis nor the

analysis in Wadsworth compel a conclusion that Defendant violated
§ 481B-14 and § 388-6 from January 2009 to October 2010.
Having reviewed the current record in the light most
favorable to Defendant, see Cameron v. Craig, 713 F.3d 1012, 1018
(9th Cir. 2013), this Court finds that there are genuine issues
of material fact as to the adequacy of Defendant’s banquet
disclosures, provided from January 2009 to October 2010, and as
to the adequacy of Defendant’s room service disclosures, provided

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from January 2009 to the present, regarding its decision not to
remit the full service charge to its employees as wages and tips.
This Court therefore concludes that Plaintiff is not entitled to
summary judgment as to Defendant’s liability for Count V during
those periods.
CONCLUSION
On the basis of the foregoing, Plaintiffs’ Motion for
Partial Summary Judgment, filed April 29, 2011, is HEREBY GRANTED
IN PART AND DENIED IN PART.

Plaintiffs’ Motion is GRANTED as to

Defendant’s liability for Count V for the period July 30, 2004 to
January 2009.

Plaintiffs’ Motion is DENIED as to Defendant’s

liability for Count V for the period January 2009 to October 2010
for banquets, and for the period January 2009 to the present for
room service.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, October 31, 2013.

/S/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge

BERT VILLON, ET AL. VS. MARRIOTT HOTEL SERVICES, INC., DBA WAILEA
MARRIOTT RESORT; CIVIL NO. 08-00529 LEK-RLP; ORDER GRANTING IN
PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY
JUDGMENT

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