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Marti Smith, et al v. Kawailoa Development Llp Doing Business As Grand Hyatt Kauai Resort and Spa

October 19, 2011

MARTI SMITH, ET AL., ) PLAINTIFFS,
v.
KAWAILOA DEVELOPMENT LLP DOING BUSINESS AS GRAND HYATT KAUAI RESORT AND SPA, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Barry M. Kurren United States Magistrate Judge

FINDINGS AND RECOMMENDATION THAT PLAINTIFFS' MOTION FOR AN ORDER OF REMAND BE GRANTED IN PART AND DENIED IN PART

Before the Court is Plaintiffs Marti Smith and Jonalen Kelekoma's ("Plaintiffs") Motion For an Order of Remand. The Court heard this Motion on August 30, 2011. After careful consideration of the Motion, the supporting and opposing memoranda, and the arguments of counsel, the Court finds and recommends that Plaintiffs' Motion be GRANTED IN PART and DENIED IN PART.

BACKGROUND

According to the First Amended Complaint ("Complaint"), Plaintiffs Smith and Kelekoma are employed at the Grand Hyatt Kauai Resort & Spa ("Hotel") on Kauai, Hawaii. Defendant Kawailoa Development, LLP ("Kawailoa") "has owned and operated the [Hotel] at all relevant times." Defendant Hyatt Hotel Corporation ("Hyatt") "operates and manages the [Hotel]" as well. Kawailoa "was and is the employer or former employer of each of the members of the proposed class."*fn1

Plaintiffs Smith, Kelekoma, and the proposed class members worked at banquets and other food service events at the Hotel, where the Hotel charged customers a service charge that was calculated as a percentage of the total cost of food and beverage. According to the Complaint, "Defendants failed to distribute all of the service charge to the non-managerial employees who provided the service of the food and beverage to the customers." The Hotel retained a portion of the service charge and "Defendants failed to clearly disclose to customers that a portion of the service charge was not distributed to the employees and was in fact retained by the Hotel." Plaintiffs assert that Defendants' conduct violated Hawaii state law -- specifically, Haw. Rev. Stat. §§ 388-6, 481B-14, and chapter 480. Plaintiffs pray for damages, declaratory judgment, and an injunction.

On April 25, 2011, Plaintiffs filed their original Complaint in the First Circuit Court of the State of Hawaii. They filed their First Amended Complaint on May 24, 2011. On May 31, 2011, Defendants removed this action to federal court. Plaintiffs filed the present Motion to Remand on June 29, 2011. Defendants jointly oppose this Motion.

DISCUSSION

I. Whether This Case Should Be Remanded Plaintiffs argue that this case should be remanded because this Court lacks jurisdiction under the Class Action Fairness Act ("CAFA"). In response, Defendants contend that this Court does not lack jurisdiction under CAFA and that Plaintiffs' state law claims are preempted by the Labor Management Relations Act ("LMRA"). The Court addresses CAFA and LMRA in turn.

A. Jurisdiction Under CAFA "A plaintiff whose putative class action has been removed can obtain a remand to state court under any of three exceptions to the district court's subject matter jurisdiction under CAFA." Coleman v. Estes Express Lines, Inc., 631 F.3d 1010, 1013 (9th Cir. 2011) (citing 28 U.S.C. § 1332(d)(3), (d)(4)(A), & (d)(4)(B)).

The local controversy exception, upon which Plaintiffs rely, provides that a federal district court "shall decline to exercise [removal] jurisdiction . . . over a class action in which--"

(I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed;

(II) at least 1 defendant is a defendant-- (aa) from whom significant relief is sought by members of the plaintiff class; (bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and (cc) who is a citizen of the State in which the action was originally filed; and

(III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed[.]

28 U.S.C. ยง 1332(d)(4)(A)(i); see also Coleman, 631 F.3d at 1013. "A plaintiff seeking remand has the burden of showing that the local controversy ...


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