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Marti Smith and Jonalen Kelekoma v. Kawailoa Development Llp Dba Grand Hyatt

December 22, 2011

MARTI SMITH AND JONALEN KELEKOMA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
KAWAILOA DEVELOPMENT LLP DBA GRAND HYATT KAUAI RESORT & SPA; HYATT HOTEL CORPORATION; AND DOE DEFENDANTS, DEFENDANTS.



The opinion of the court was delivered by: J. Michael Seabright United States District Judge

ORDER ADOPTING MAGISTRATE JUDGE BARRY M. KURREN'S OCTOBER 19, 2011 FINDINGS AND RECOMMENDATION THAT PLAINTIFFS' MOTION FOR AN ORDER OF REMAND BE GRANTED IN PART AND DENIED IN PART

I. INTRODUCTION

On April 25, 2011, Plaintiffs Marti Smith and Jonalen Kelekoma ("Plaintiffs") filed this class action in the First Circuit Court of the State of Hawaii against Defendants Kawailoa Development LLP dba Grand Hyatt Kauai Resort & Spa ("Kawailoa"), and Hyatt Hotel Corporation ("Hyatt"), (collectively, "Defendants"). Plaintiffs, employed by Kawailoa as food servers and/or waitresses at the Grand Hyatt Kauai Resort & Spa (the "Hotel"), assert that Defendants violated Hawaii Revised Statues ("HRS") §§ 388-6, 480-2, and 481B-14 when they charged customers a service charge and failed to distribute to Plaintiffs the full amounts collected.

On May 31, 2011, Defendants removed the action, asserting that this court has original jurisdiction pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2) ("CAFA"). Defendants also filed a Motion to Dismiss, arguing, among other things, that Plaintiffs' action was preempted by Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185 (the "LMRA" or "Section 301"). In response, Plaintiffs filed a Motion to Remand, arguing that CAFA does not provide the court jurisdiction. On October 19, 2011, United States Magistrate Judge Barry M. Kurren entered his Findings and Recommendation that Plaintiffs' Motion for an Order of Remand Be Granted in Part and Denied in Part (the "October 19 F&R"). The October 19 F&R found that remand is appropriate because CAFA does not provide the court jurisdiction and the LMRA does not preempt Plaintiffs' claims.*fn1

Currently before the court is Defendants' Objection to the October 19 F&R.*fn2 As explained below, the court ADOPTS the October 19 F&R.

II. STANDARD OF REVIEW

When a party objects to a magistrate judge's findings or recommendations, the district court must review de novo those portions to which the objections are made and "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673 (1980); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) ("[T]he district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise.").

Under a de novo standard, this court reviews "the matter anew, the same as if it had not been heard before, and as if no decision previously had been rendered." Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006); United States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988). The district court need not hold a de novo hearing; however, it is the court's obligation to arrive at its own independent conclusion about those portions of the magistrate judge's findings or recommendation to which a party objects. United States v. Remsing, 874 F.2d 614, 616 (9th Cir. 1989).

III. ANALYSIS

Defendants argue that the October 19 F&R erred in its determinations that the court does not have jurisdiction pursuant to CAFA and that Plaintiffs' claims are not preempted by the LMRA. Based upon a de novo review, the court agrees with the October 19 F&R's determinations.

A. CAFA

Plaintiffs brought this class action*fn3 in Hawaii state court asserting state law claims based on Defendants' allegedly unlawful withholding of service charges from their employees. Defendants removed this action under CAFA, and Plaintiffs argue that this removal was improper under CAFA's local controversy exception to removal.

CAFA's local controversy exception 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 ...


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