Kyne v. Ritz–Carlton Hotel Co.

• Decision Date: 02 December 2011
• Docket Number: Civ. No. 08–00530 ACK–RLP.
• Citation: 835 F.Supp.2d 914
• Parties: Elizabeth Valdez KYNE, Chad Kruzic, and Adam Borowiec, on behalf of themselves and all others similarly situated, Plaintiffs, v. The RITZ–CARLTON HOTEL COMPANY, L.L.C., dba The Ritz–Carlton, Kapalua, Defendant.
• Court: U.S. District Court — District of Hawaii

835 F.Supp.2d 914

Elizabeth Valdez KYNE, Chad Kruzic, and Adam Borowiec, on behalf of themselves and all others similarly situated, Plaintiffs,

v.The RITZ–CARLTON HOTEL COMPANY, L.L.C., dba The Ritz–Carlton, Kapalua, Defendant.

Civ. No. 08–00530 ACK–RLP.

United States District Court, D. Hawaii‘i.

Dec. 2, 2011.

Ashley K. Ikeda, Lori K. Aquino, Weinberg Roger & Rosenfeld, Honolulu, HI, David A. Rosenfeld, Weinberg Roger & Rosenfeld, Alameda, CA, Harold L. Lichten, Hillary Schwab, Shannon Liss–Riordan, Lichten & Liss–Riordan, P.C., Boston, MA, for Plaintiffs.

Barry W. Marr, Richard M. Rand, Marr Jones & Wang LLLP, Honolulu, HI, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS, GRANTING DEFENDANT'S REQUEST TO STAY PROCEEDINGS AS MODIFIED, AND ADMINISTRATIVELY CLOSING THIS CASE

ALAN C. KAY, Senior District Judge.

FACTUAL BACKGROUND¹

Plaintiffs Elizabeth Valdez Kyne, Chad Kruzic, and Adam Borowiec (“Plaintiffs”), brought suit on behalf of a similarly situated class against the Ritz–Carlton Hotel Company, L.L.C., d/b/a the Ritz–Carlton, Kapalua (“Defendant” or “Hotel”). Am. Compl. ¶¶ 3–6. Plaintiffs have all worked as food and beverage servers for at the Ritz–Carlton, Kapalua, in Maui, Hawaii. Id. ¶ 3.

Plaintiffs' Amended Complaint alleges that the Ritz–Carlton provides food and beverage services throughout the Hotel, including in its banquet department, its restaurants, and through room service. Id. ¶ 5. Plaintiffs allege that Defendant has added a preset service charge to customers' bills for food and beverage served at the Hotel, but that Defendant has not remitted the total proceeds of the service charge as tip income to the employees who serve the food and beverages. Id. ¶¶ 6–9. Instead, Plaintiffs allege that Defendant has had a policy and practice of retaining for themselves a portion of these service charges (or using it to pay managers or other non-tipped employees who do not serve food and beverages), without disclosing to the Hotel's customers that the services charges are not remitted in full to the employees who serve the food and beverages.²Id. ¶¶ 8–9. Plaintiffs assert that therefore customers are misled into believing the entire service charge is distributed to the employees that serve them, and as a result, customers who would otherwise leave an additional gratuity do not do so. Id. ¶ 10.

Plaintiffs' Amended Complaint asserts five counts. In Count I, Plaintiffs allege that Defendant's conduct violates Hawaii Revised Statutes (“H.R.S.”) § 481B–14, and that pursuant to § 481B–4, such violation constitutes an unfair method of competition or unfair and deceptive act or practice within the meaning of H.R.S. § 480–2. In Count II, Plaintiffs allege that Defendant's conduct constitutes unlawful intentional interference with contractual and/or advantageous relations. In Count III, Plaintiffs allege that Defendant's conduct constitutes a breach of two implied contracts. In Count IV, Plaintiffs allege that Defendant has been unjustly enriched at Plaintiffs' expense under state common law. In Count V, Plaintiffs allege that as a result of Defendant's conduct, they have been deprived of income that constitutes wages, which is actionable under H.R.S. §§ 388–6, 388–10, and 388–11.

PROCEDURAL BACKGROUND

On November 24, 2008, Plaintiffs filed a Class Action Complaint. Doc. No. 1. There were a number of similar cases filed in this Court, and on February 11, 2009, Plaintiffs moved to consolidate or alternatively for assignment of all the related cases to one judge pursuant to Local Rule 40.2.³ Doc. No. 25. On April 8, 2009, this Court adopted the Magistrate Judge's Findings and Recommendation that the similar cases not be consolidated. 2009 WL 975753 (Doc. No. 31).⁴

On July 9, 2009, the Court stayed this case in light of Judge Gillmor's certification to the Hawaii Supreme Court of a question of law that was also important to the instant case.⁵See Doc. No. 42. The Hawaii Supreme Court answered the certified question on March 29, 2010. See Davis v. Four Seasons Hotel Ltd., 122 Hawai'i 423, 228 P.3d 303 (2010) (hereafter “ Davis II ”). Accordingly, on April 19, 2010, Plaintiffs filed a motion to lift the stay and a motion to file an amended complaint. Doc. Nos. 44 & 45. The Magistrate Judge granted both motions on June 22, 2010. Doc. No. 54. Plaintiffs filed their Amended Complaint on June 28, 2010. Doc. No. 56.

Meanwhile, on May 11, 2011, Plaintiffs filed a Motion to Certify Class. Doc. No. 76. On July 18, 2011, the Court adopted the Magistrate Judge's Findings and Recommendation that the Court grant Plaintiffs' motion and certify the class as “all non-managerial food and beverage service employees who, since November 24, 2002, have worked at banquets, functions, small parties, room service, and other events at the Ritz–Carlton, Kapalua, where a service charge was imposed and where a part of that service charge was kept by the Defendant without adequate disclosure to customers.” Doc. No. 91; 2011 WL 2940444 (Doc. No. 93).

On May 11, 2011, Defendant filed a Motion to Dismiss Plaintiffs' Amended Class Action Complaint (“Defendant's Motion to Dismiss”). Doc. No. 81. The Motion was accompanied by a supporting memorandum (“Def.'s MTD Mem.”). Id. Plaintiffs filed an opposition on October 26, 2011 (“Pls.' Opp'n”). Doc. No. 100. On November 2, 2011, Defendant filed a reply (“Def.'s Reply”). Doc. No. 104.

Plaintiffs filed a Motion for Partial Summary Judgment on May 11, 2011 (“Plaintiffs' Motion for Summary Judgment”). Doc. No. 78. The Motion was accompanied by a supporting memorandum (“Pls.' MSJ Mem.”) and a concise statement of facts (“Pls.' CSF”). Doc. Nos. 79 & 80. On October 26, 2011, Defendant filed an opposition (“Def.'s Opp'n”) and a response to Plaintiffs' CSF (“Def.'s Response to Pls.' CSF”). Doc. Nos. 101 & 102. Plaintiffs filed a reply on November 2, 2011 (“Pls.' Reply”). Doc. No. 103.

On November 9, 2011, Defendant filed a supplement to its Motion to Dismiss, attaching a copy of the Hawaii Supreme Court's order on the question certified to it by Judge Kobayashi in Villon v. Marriot Hotel Services, Inc., CV–08–00529 LEK–RLP, Doc. No. 130 (Oct. 12, 2011), and Rodriguez v. Starwood Hotels & Resorts Worldwide, Inc., CV–09–00016 LEK–RLP, Doc. No. 139 (Oct. 12, 2011). Doc. No. 105 Ex. A.

On November 16, 2011, the Court held a hearing on Defendant's request to stay proceedings, Plaintiffs' Motion for Partial Summary Judgment, and Defendant's Motion to Dismiss.⁶ The Court will address Plaintiffs' motion in a separate order.

STANDARD

Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”) permits dismissal of a complaint that fails “to state a claim upon which relief can be granted.” Under Rule 12(b)(6), review is generally limited to the contents of the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001); Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir.1996). Courts may also “consider certain materials-documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion to dismiss into a motion for summary judgment.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir.2003). Documents whose contents are alleged in a complaint and whose authenticity is not questioned by any party may also be considered in ruling on a Rule 12(b)(6) motion to dismiss. See Branch v. Tunnell, 14 F.3d 449, 453–54 (9th Cir.1994), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir.2002). If a court converts a motion to dismiss into a motion for summary judgment, the court must give the parties notice and a reasonable opportunity to supplement the record. Bank Melli Iran v. Pahlavi, 58 F.3d 1406, 1408 (9th Cir.1995).

On a Rule 12(b)(6) motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. Fed'n of African Am. Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir.1996). However, conclusory allegations of law, unwarranted deductions of fact, and unreasonable inferences are insufficient to defeat a motion to dismiss. See Sprewell, 266 F.3d at 988;Nat'l Assoc. for the Advancement of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043, 1049 (9th Cir.2000); In re Syntex Corp. Sec. Litig., 95 F.3d 922, 926 (9th Cir.1996). Moreover, the court need not accept as true allegations that contradict matters properly subject to judicial notice or allegations contradicting the exhibits attached to the complaint. Sprewell, 266 F.3d at 988.

In summary, to survive a Rule 12(b)(6) motion to dismiss, “[f]actual allegations must be enough to raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations and quotations omitted). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations ... a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. (internal citations and quotations omitted). Dismissal is appropriate under Rule 12(b)(6) if the facts alleged do not state a claim that is “plausible on its face.” Id. at 570, 127 S.Ct. 1955. “Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009) (citation omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-...