421 P.3d 1277 (Hawaii 2018), SCWC-11-0000594, Kawakami v. Kahala Hotel Investors, LLC
|Citation:||421 P.3d 1277, 142 Hawaii 507|
|Opinion Judge:||WILSON, J|
|Party Name:||Jason KAWAKAMI, Individually and on behalf of all others similarly situated, Petitioner/Plaintiff-Appellant/Cross-Appellee v. KAHALA HOTEL INVESTORS, LLC, dba Kahala Hotel and Resort, Respondent/Defendant-Appellee/Cross-Appellant.|
|Attorney:||James J. Bickerton, John F. Perkin, Brandee J.K. Faria, Bridget G. Morgan, Honolulu, Kristina M. Hanson, for petitioners David J. Minkin, Lisa W. Cataldo, Honolulu, for respondent|
|Judge Panel:||RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.|
|Case Date:||June 29, 2018|
|Court:||Supreme Court of Hawai'i|
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CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-11-0000594; CIVIL NO. 08-1-2496)
James J. Bickerton, John F. Perkin, Brandee J.K. Faria, Bridget G. Morgan, Honolulu, Kristina M. Hanson, for petitioners
David J. Minkin, Lisa W. Cataldo, Honolulu, for respondent
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
[142 Hawaii 511] This class action concerning Hawaiis hotel and restaurant service charge law returns to us for the second time. See Kawakami v. Kahala Hotel Invrs, LLC, 134 Hawaii 352, 341 P.3d 558 (2014). Its return presents us once again with the task of interpreting Hawaii Revised Statutes (HRS) § 481B-14 (2000).1 For the reasons explained below, we vacate the Intermediate Court of Appeals affirmance of the circuit courts grant of judgment as a matter of law (JMOL) and reinstate the circuit courts earlier grant of partial summary judgment to plaintiff Jason Kawakami as to the defendant Kahala Hotel and Resorts liability under HRS § 481B-14. We also reinstate the jurys special verdict in favor of Kawakami on legal causation and the amount of damages in the trial on damages that followed the grant of partial summary judgment. We remand to the circuit court for determination of additional damages and fees under Hawaiis statute governing unfair or deceptive acts or practices. HRS Chapter 480.
Jason Kawakami (Kawakami)2 held his wedding reception at the Kahala Hotel and Resort (the hotel) in July 2007.3 The hotel collected a 19% service charge on the purchase of food and beverages for his reception, but the hotel failed to distribute 100% of the funds from the service charge directly to its service employees as tip income. Instead, the hotel retained 15% of those funds as what it termed "the management share," then reclassified those funds and used them to pay for the banquet employees "wages." The "event agreement," a contract used by the hotel for large group events, contained no disclosure that a portion of the service charge would be diverted to the hotel, rather than directly distributed to the banquet employees as tip income. A section of the event agreement, titled "Service Charge and Tax," stated only that "[a]ll food and beverage prices are subject to a 19% service charge." No other disclosure was made to Kawakami that a portion of the service charge would not
[142 Hawaii 512] be directly distributed to the banquet employees as tips.
Kawakami filed a lawsuit on behalf of himself and other customers who paid a service charge to the hotel in connection with the purchase of food or beverages. He claimed the hotels conduct was an unfair or deceptive act or practice (UDAP) under HRS § 481B-14 and HRS § 480-2. Kawakami moved for summary judgment "on liability" because the undisputed facts established that the hotel violated HRS § 481B-14 and HRS § 480-2. The circuit court granted summary judgment as to liability only, not remedies or damages, ruling that under HRS § 481B-14 the hotel had "a duty to disclose" to Kawakami that a portion of the service charge would become the property of the hotel rather than paid to its employees as tip income.4 A jury trial to determine damages followed. The jury found that the hotel was the legal cause of injury to the plaintiff class and awarded $269,114.73 to the class, corresponding to the amount of the combined service charges retained by the hotel as "the management share."
A little more than a month after the verdict, the hotel renewed its prior motions for JMOL, which had been denied by the circuit court. This time the circuit court granted the motion for JMOL on the theory there had been insufficient evidence the plaintiffs suffered injury as a result of the hotels violation of HRS § 481B-14. The circuit court stated that it was "struggling to understand how the Managements Share ... constitutes financial or economic loss or harm to Plaintiffs." The court focused on the apparent lack of an economic loss to the plaintiffs relating to the hotels failure to distribute the funds from the service charge in the manner required by the statute. That failure, the court stated, "did not cause Plaintiffs to pay any additional sums over and above their contractual obligation to pay the service charge or any other additional compensation." Yet, the court observed, the "jury awarded as damages to Plaintiffs a sum that appears to be equal to the amount of the Managements Share of the service charge."
On appeal the ICA vacated the circuit courts order granting Kawakamis motion for summary judgment and held instead that summary judgment should have been granted in favor of the hotel. The ICA reasoned that because the hotel ultimately distributed the management share of the service charge as wages, its actions were in compliance with the language of HRS § 481B-14 and no disclosure to Kawakami was required. Kawakami I, mem. op. at 4-5.
On certiorari in Kawakami I, we rejected the ICAs reasoning. Instead, we recognized "the well-settled duty of hotels and restaurants" under the statute "to either distribute the entirety of the service charge directly to non-management banquet employees who served the consumers as tip income, or to disclose its practice of withholding the service charge[.]" Kawakami I, 134 Hawaii at 357, 341 P.3d at 563; id. (characterizing this statutory duty as assisting "a well-informed consumer" in choosing whether to leave a tip for the employees as a reward for their service). We held that under HRS § 481B-14, a hotel or restaurant that applies a service charge for food or beverage services must either distribute the service charge directly as tip income to the non-management employees who provided the food or beverage services, or disclose to its customers that the service charges are not being distributed as tip income.
Kawakami I, 134 Hawaii at 354, 341 P.3d at 560. Accordingly, we vacated the ICAs judgment on appeal and remanded to the ICA. We directed the ICA to address on remand Kawakamis argument that the circuit court erred when it granted JMOL to the hotel on the theory that Kawakami suffered no injury as a result of the hotels actions. Id. at 360, 341 P.3d at 566.
On remand from our decision in Kawakami I, the ICA affirmed the circuit courts grant of JMOL to the hotel because, in the ICAs view, Kawakami "failed to establish that he was injured, financially or otherwise, as a result of Kahala Hotels deceptive trade practices[.]" Kawakami II, mem. op. at 1. The ICA acknowledged that a plaintiff alleging an unfair or deceptive act or practice need not
[142 Hawaii 513] show strictly "economic loss" in order to satisfy the consumer "injury" requirement of HRS § 480-13(b). Kawakami II, mem. op. at 3. The ICA nonetheless concluded that Kawakami failed to establish that he was injured even by the "less stringent standard" of non-economic injury. Id. With respect to Kawakamis alternative claim of a contract-based injury, the ICA rejected that claim largely on the grounds that "the required disclosure under HRS § 481B-14 need not take the form of a written provision in an event contract, nor must it necessarily occur before parties enter into the contract," and therefore there was no breach of contract. Kawakami II, mem. op. at 5. See also id., mem. op. at 4 (stating that "benefit-of-the-bargain damages are only available when there has been a breach of contract."). As a result, the ICA affirmed the circuit courts grant of JMOL.
On certiorari, Kawakami argues that the ICA erred by holding that no contract-based or UDAP-based injury occurred. He also argues that the ICA erred in affirming the circuit courts order denying plaintiffs motion in limine no. 1, which sought to preclude the admission of certain evidence.
II. Standards of Review
A. Motions for Judgment as a Matter of Law
"It is well settled that a trial courts rulings on motions for judgment as a matter of law are reviewed de novo . When we review the granting of a motion for judgment as a matter of law, we apply the same standard as the trial court. A motion for judgment as a matter of law may be granted only when after disregarding conflicting evidence ... and indulging every legitimate inference which may be drawn from the evidence in the non-moving partys favor, it can be said that...
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