Davis v. Four Seasons Hotel Ltd.

Decision Date29 March 2010
Docket NumberNo. 29862.,29862.
Citation228 P.3d 303
PartiesDaryl Dean DAVIS, Mark Apana, Elizabeth Valdez Kyne, Earl Tanaka, Thomas Perryman, and Deborah Scarfone, on behalf of themselves and all others similarly situated, Plaintiffs/Appellants, v. FOUR SEASONS HOTEL LIMITED, dba Four Seasons Resort, Maui and Four Seasons Resort, Hualalai, and MSD Capital, Inc., Defendants/Appellees.
CourtHawaii Supreme Court

Ashley K. Ikeda (Weinberg, Roger & Rosenfeld), Honolulu; Harold L. Lichten and Shannon Liss-Riordan, pro hac vice (Pyle, Rome, Lichten, Ehrenberg & Liss-Riordan), for plaintiffs-appellants.

Wayne S. Yoshigai and Nathan B. Hong (Torkildson, Katz, Moore, Hetherington & Harris), Honolulu; Paul E. Wagner, pro hac vice (Shea Stokes Roberts & Wagner), for defendants-appellees.

MOON, C.J., NAKAYAMA, DUFFY, and RECKTENWALD, JJ.; with ACOBA, J., dissenting.

Opinion by RECKTENWALD, J.

Plaintiffs-Appellants (collectively "Employees") have been or currently are employed as banquet servers at the Defendants-Appellees Four Seasons Resort, Maui or Four Seasons Resort, Hualalai on the island of Hawai`i. Employees filed a class action complaint against Defendants-Appellees1 (hereinafter collectively referred to as "Four Seasons") in the United States District Court for the District of Hawai`i (district court), and subsequently filed an Amended Complaint. Employees claimed, inter alia, that Four Seasons violated Hawai`i Revised Statutes (HRS) § 481B-142 by retaining a portion of a mandatory "service charge" collected at banquets and other events and by failing to notify customers that it was doing so.

Four Seasons moved to dismiss the Amended Complaint, arguing, inter alia, that Employees do not have standing to assert their claims for monetary damages under HRS §§ 480-2(e) and 480-13, quoted infra, because they are not businesses, competitors, or consumers, and because they failed to adequately plead the effect of Four Seasons' alleged actions on competition and therefore did not sufficiently allege antitrust injury.

On June 2, 2009, the district court3 certified the following question pursuant to Hawai`i Rules of Appellate Procedure (HRAP) Rule 134:

Where plaintiff banquet server employees allege that their employer violated the notice provision of H.R.S. § 481B-14 by not clearly disclosing to purchasers that a portion of a service charge was used to pay expenses other than wages and tips of employees, and where the plaintiff banquet server employees do not plead the existence of competition or an effect thereon, do the plaintiff banquet server employees have standing under H.R.S. § 480-2(e) to bring a claim for damages against their employer?

This court entered an order accepting this certified question on June 12, 2009.

For the reasons set forth herein, we answer the certified question as follows:

Employees are "any persons" within the meaning of HRS §§ 480-1 and 480-2(e), quoted infra, 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.

However, 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.

I. BACKGROUND

This factual background is based primarily upon the information certified to this court by the district court, as well as the allegations contained within Employees' Amended Complaint. See TMJ Hawaii, Inc. v. Nippon Trust Bank, 113 Hawai`i 373, 374, 153 P.3d 444, 445 (2007) (in answering a certified question, this court relied upon the information certified to the court by the district court and the facts set forth in the plaintiff's amended complaint).

Employees have all worked as food and beverage servers for Four Seasons. Daryl Dean Davis, Mark Apana, Elizabeth Valdez Kyne, Earl Tanaka, and Thomas Perryman have worked at the Four Seasons Resort, Maui, and Deborah Scarfone has worked at the Four Seasons Resort, Hualalai on the Big Island.

The Amended Complaint, which sought money damages, alleged in relevant part5:

4. For banquets, events, meetings and in other instances, the defendants add a preset service charge to customers' bills for food and beverage provided at the hotels.
5. However, the defendants do not remit the total proceeds of the service charge as tip income to the employees who serve the food and beverages.
6. Instead, the defendants have a policy and practice of retaining for themselves a portion of these service charges (or using it to pay managers or other non-tipped employees who do not serve food and beverages).
7. The defendants do not disclose to the hotel's customers that the service charges are not remitted in full to the employees who serve the food and beverages.
8. For this reason, customers are misled into believing that the entire service charge imposed by the defendants is being distributed to the employees who served them food or beverage when, in fact, a smaller percentage is being remitted to the servers. As a result, customers who would otherwise be inclined to leave an additional gratuity for such servers frequently do not do so because they erroneously believe that the servers are receiving the entire service charge imposed by the defendants.
...
COUNT I
(Hawaii Revised Statutes, Sections 481B-14, 481B-4, and 480-2)6
The action of the defendants as set forth above are in violation of Hawaii Revised Statutes Section 481B-14. Pursuant to Section 481B-4, such violation constitutes an unfair method of competition or unfair and deceptive act or practice within the meaning of Section 480-2. Section 480-2(e) permits an action based on such unfair methods of competition to be brought in the appropriate court, and a class action for such violation is permitted and authorized by Section 480-137 and Rule 23 of the Federal Rules of Civil Procedure.

On January 30, 2009, Four Seasons moved to dismiss the Amended Complaint, arguing, inter alia, that Employees lacked standing under HRS § 480-2(e) to bring a claim for unfair methods of competition because they are not businesses, competitors, or consumers. Four Seasons also asserted that Employees failed to properly plead the nature of the competition.

The district court held a hearing on the motion to dismiss on March 24, 2009. Following oral argument, Judge Gillmor denied Four Seasons' motion to dismiss with leave to renew the motion following receipt of a ruling by this court with respect to the issue of standing of the Employees to bring the action. An order certifying the question was entered on June 2, 2009, and transmitted to this court the next day.

In addition to the briefs of both parties, several amici curiae also filed amicus briefs in this case as follows: (1) Gustavo Rossetto (hereinafter "Amicus Curiae Rossetto"); (2) Fairmont Hotels and Resorts (U.S.), Inc., Oaktree Capital Management, LP, Kuilima Resort Company, Turtle Bay Resort Company, Turtle Bay Resort Hotel, LLC, TBR Property LLC, and Benchmark Hospitality, Inc.; (3) Starwood Hotels & Resorts Worldwide, Inc.; and (4) HTH Corporation, Pacific Beach Hotel, and Pagoda Hotel.

II. DISCUSSION
A. Introduction
1. Applicable Statutes

The Amended Complaint alleges that Four Seasons engaged in unfair methods of competition in violation of HRS § 481B-14 by withholding a portion of the service charge imposed on the sale of food and beverages at Four Seasons' resorts without advising customers that it was doing so. In their Opening Brief, Employees argue that this conduct "leads customers to believe that the waitstaff are receiving a tip of 18-22% of the food and beverage bill and deters customers from leaving any additional gratuity...."

HRS § 481B-14 provides that:

Any hotel or restaurant that applies a service charge for the sale of food or beverage services shall distribute the service charge directly to its employees as tip income or clearly disclose to the purchaser of the services that the service charge is being used to pay for costs or expenses other than wages and tips of employees.

Pursuant to HRS § 481B-4, any person who violates chapter 481B, including § 481B-14, "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." HRS § 480-2(a), which is virtually identical to section 5(a)(1) of the Federal Trade Commission Act (FTCA), 15 U.S.C. § 45(a)(1),8 declares that any "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful."

Only consumers, the attorney general, or the director of the office of consumer protection are authorized to bring an action based on unfair or deceptive acts or practices. HRS § 480-2(d). Actions based on unfair methods of competition, on the other hand, are not so limited. Instead, HRS § 480-2(e) provides that "any person may bring an action based on unfair methods of competition declared unlawful by this section." (emphasis added).9 Furthermore, HRS § 480-13(a), which is similar to section 4 of the Clayton Act, 15 U.S.C. § 15(a),10 provides that "any person who is injured in the person's business or property by reason of anything forbidden or declared unlawful by chapter 480: (1) may sue for damages...; and (2) may bring proceedings to enjoin the unlawful practices."

2. The Parties' Arguments

Employees allege that they have standing based on the plain meaning of the relevant statutes, the legislative history of HRS §§ 481B-14 and 480-2(e), and relevant Hawai`i and federal law. Specifically, Employees argue that the plain meaning of "any person" as found in HRS § 480-2(e), and as defined by HRS § 480-1, does not limit standing to businesses, competitors or consumers, and that even if this court determines that the phrase "any person" is ambiguous, the...

To continue reading

Request your trial
120 cases
  • O'Grady v. Merch. Exch. Prods., Inc., A148513
    • United States
    • California Court of Appeals Court of Appeals
    • October 31, 2019
    ...expenses other than wages and tips of employees." (Hawaii Rev. Stat. § 481B-14, construed in Davis v. Four Seasons Hotel Ltd . (2010) 122 Hawai'i 423, 228 P.3d 303.)6 This may reflect the malleable nature of what constitutes a service charge. In this connection we note that the full definit......
  • Wadsworth v. KSL Grant Wailea Resort, Inc.
    • United States
    • U.S. District Court — District of Hawaii
    • December 10, 2010
    ...case.3 See Doc. No. 71. The Hawai'i Supreme Court answered the certified question on March 29, 2010, in Davis v. Four Seasons Hotel Ltd., 122 Hawai'i 423, 228 P.3d 303 (2010). Accordingly, on April 16, 2010, Plaintiffs filed a motion to lift the stay and a motion to file a second amended co......
  • Jass v. Cherryroad Techs., Inc.
    • United States
    • U.S. District Court — District of Hawaii
    • July 13, 2020
    ...U.S. 443, 466, 41 S.Ct. 172, 65 L.Ed. 349 (1921) ), superseded by statute on other grounds as stated in Davis v. Four Seasons Hotel Ltd. , 122 Hawai'i 423, 228 P.3d 303, 308 n.9 (2010). "Civil conspiracy does not alone constitute a claim for relief." Robert's , 982 P.2d at 889 n.44. "A plai......
  • Jass v. Cherryroad Techs., Inc.
    • United States
    • U.S. District Court — District of Hawaii
    • March 27, 2020
    ...(citations and internal quotation marks omitted), superseded by statute on other grounds as noted in Davis v. Four Seasons Hotel Ltd. , 122 Hawai'i 423, 228 P.3d 303, 308 n.9 (2010).10 1. Joint Employer for Purposes of the HWPA"It is now well-settled that an individual can have more than on......
  • Request a trial to view additional results
2 books & journal articles
  • Hawaii. Practice Text
    • United States
    • ABA Antitrust Library State Antitrust Practice and Statutes (FIFTH). Volume I
    • December 9, 2014
    ...(1984). 320. Courbat v. Dahana Ranch, Inc., 141 P.3d 427, 435 (Haw. 2006). 321. 148 P.3d 1179, 1215 (Haw. 2006). 322. Id. at 1212-15. 323. 228 P.3d 303, 309-14 (Haw. 2010). 324. HAW. REV. STAT. § 481B-14 (“Any hotel or restaurant that applies a service charge for the sale of food or beverag......
  • Expanded Standing Under the Louisiana Unfair Trade Practices Act and Possible Employee Actions Under the Act
    • United States
    • Louisiana Law Review No. 72-2, February 2012
    • October 1, 2012
    ...1035 (C.D. Cal. 2006); Smith v. 2001 S. Dixie Hwy, Inc., 872 So. 2d 992 (Fla. Dist. Ct. App. 4th 2004); Davis v. Four Seasons Hotel Ltd., 228 P.3d 303 (Haw. 2010). 123. Davis , 228 P.3d at 312–14 (Banquet server employees brought class action against hotel employers for improper retention o......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT