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Wadsworth v. KSL Grand Wailea Resort, Inc.

United States District Court, D. Hawaii

November 12, 2014

NAN WADSWORTH, MARK APANA, ELIZABETH VALDEZ KYNE, BERT VILLON, and STEPHEN WEST, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
KSL GRAND WAILEA RESORT, INC.; CNL RESORT LODGING TENANT CORP.; CNL GRAND WAILEA RESORT, LP; MSR RESORT LODGING TENANT, LLC; HILTON HOTELS CORPORATION; WALDORF-ASTORIA MANAGEMENT LLC; and BRE/WAILEA LLC; dba GRAND WAILEA RESORT HOTEL & SPA, Defendants

For Nan Wadsworth, on behalf of themselves and all others similarly situated, Mark Apana, on behalf of themselves and all others similarly situated, Elizabeth Valdez Kyne, on behalf of themselves and all others similarly situated, Bert Villon, on behalf of themselves and all others similarly situated, Stephen West, on behalf of themselves and all others similarly situated, Plaintiffs: Ashley K Ikeda, Lori K. Aquino, Stephanie L. Marn, LEAD ATTORNEYS, Weinberg Roger & Rosenfeld, Honolulu, HI USA; David A. Rosenfeld, LEAD ATTORNEY, Weinberg Roger & Rosenfeld, Alameda, CA USA; Harold L. Lichten, Shannon Liss-Riordan, LEAD ATTORNEYS, PRO HAC VICE, Lichten & Liss-Riordan P.C., Boston, MA USA.

For Ksl Grand Wailea Resort, Inc., Cnl Resort Lodging Tenant Corp., Cnl Grand Wailea Resort, LP, Msr Resort Lodging Tenant, Llc, Defendants: Ana S. Salper, LEAD ATTORNEY, Baker & Hostetler LLP, New York, N.Y. USA; Barry W. Marr, Richard M. Rand, LEAD ATTORNEYS, Marr Jones & Wang LLLP, Honolulu, HI USA; Michael Kun, LEAD ATTORNEY, PRO HAC VICE, Epstein Becker & Green PC, Los Angeles, CA USA.

For Hilton Hotels Corporation, Waldorf-Astoria Management Llc, Defendants: Angela C. Agrusa, LEAD ATTORNEY, PRO HAC VICE, Liner LLP, Los Angeles, CA USA; Barry W. Marr, Richard M. Rand, LEAD ATTORNEYS, Marr Jones & Wang LLLP, Honolulu, HI USA; Michael Kun, LEAD ATTORNEY, PRO HAC VICE, Epstein Becker & Green PC, Los Angeles, CA USA.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' RENEWED MOTION FOR SUMMARY JUDGMENT, DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT, AND DEFENDANTS' COUNTER-MOTION FOR SUMMARY JUDGMENT

Alan C. Kay, Senior United States District Judge.

For the following reasons, the Court hereby GRANTS IN PART AND DENIES IN PART the motions as follows:

The Court GRANTS Defendants' Motion for Partial Summary Judgment as to Counts II, III, and IV of the Second Amended Complaint.

The Court GRANTS Plaintiffs' Renewed Motion for Summary Judgment and DENIES Defendants' Motion for Partial Summary Judgment and Counter-Motion for Summary Judgment and concludes that Plaintiffs have established Defendants' liability as to Count V for (1) long-form conventions from January 31, 2006 to May of 2007; (2) short-form conventions from January 31, 2006 until December 31, 2008; (3) weddings from January 31, 2006 to January 2009; and (4) in-room dining from January 31, 2006 to January 2012. The Court GRANTS Defendants' Motion for Partial Summary Judgment and Counter-Motion for Summary Judgment and DENIES Plaintiffs' Motion for Summary Judgment as to the portion of Count V premised upon banquets.

Finally, the Court DENIES Defendants' Counter-Motion as to equitable justification.

FACTUAL BACKGROUND

Plaintiffs Nan Wadsworth, Elizabeth Valdez Kyne, Bert Villon, and Stephen West (" Plaintiffs") brought suit on behalf of a similarly situated class against a number of different entities that have owned and operated the Grand Wailea Resort Hotel & Spa (" Grand Wailea Resort" or " Hotel") in Maui during the applicable statute of limitations period. (Second Am. Compl. ¶ ¶ 4-6.) Defendants include MSR Resort Lodging Tenant, LLC, KSL Grand Wailea Resort, Inc., Hilton Hotels Corp. (" Hilton"), Waldorf-Astoria Management LLC (" Waldorf-Astoria"), CNL Grand Wailea Resort, LP, and CNL Lodging Tenant Corp.[1] (Id. ¶ ¶ 6-8.) Plaintiffs have all worked as food and beverage servers for Defendants. (Id. ¶ 3.)

Plaintiffs' Second Amended Complaint alleges that the Grand Wailea Resort provides food and beverage services throughout the Hotel, including in its banquet department, its restaurants, and through room service. (Id. ¶ 5.) Plaintiffs allege that Defendants have added a preset service charge to customers' bills for food and beverage served at the Hotel, but that Defendants have not remitted the total proceeds of the service charge as tip income to the employees who serve the food and beverages. (Id. ¶ ¶ 9-10.) Instead, Plaintiffs allege that the Defendants have 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 service charges are not remitted in full to the employees who serve the food and beverages. (Id. ¶ ¶ 11-12.)

Plaintiffs' Second Amended Complaint asserts five counts. As a result of the Court's ruling on a previous motion to dismiss, the following counts remain: Count II, in which Plaintiffs allege that Defendants' conduct constitutes unlawful intentional interference with contractual and/or advantageous relations; Count III, in which Plaintiffs allege that Defendants' conduct constitutes a breach of an implied contract between Defendants and Defendants' customers, of which Plaintiffs are third party beneficiaries[2]; Count IV, in which Plaintiffs allege that Defendants have been unjustly enriched at Plaintiffs' expense under state common law; and Count V, in which Plaintiffs allege that as a result of Defendants' conduct, they have been deprived of income that constitutes wages, which is actionable under Haw. Rev. Stat. § § 388-6, 388-10, and 388-11.

PROCEDURAL BACKGROUND

On November 24, 2008, Plaintiffs filed a Class Action Complaint. (Doc. No. 1.) On January 29, 2009, Plaintiffs filed an Amended Class Action Complaint.[3] (Doc. No. 19.) 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.[4] (See Doc. No. 71.) The Hawaii Supreme Court answered the certified question on March 29, 2010. See Davis v. Four Seasons Hotel Ltd., 122 Haw. 423, 228 P.3d 303 (Haw. 2010). Accordingly, on April 19, 2010, Plaintiffs filed a motion to lift the stay and a motion to file a second amended complaint. (Doc. Nos. 73 & 74.) The Magistrate Judge granted both motions on June 22, 2010. (Doc. No. 89.) Plaintiffs filed their Second Amended Complaint on June 28, 2010. (Doc. No. 93.)

On July 20, 2010, Defendants filed a Motion to Dismiss Second Amended Complaint. (Doc. No. 95.) On December 10, 2010, the Court granted the motion with respect to Count I, Plaintiffs' unfair methods of competition claim, without prejudice, and Count III, in so far as it alleged a breach of an implied contract between Plaintiffs and Defendants. 818 F.Supp.2d 1240, 2010 WL 5146521 (Doc. No. 118).

On March 25, 2011, Plaintiffs filed a Motion to Certify Class.[5] (Doc. No. 126.) On June 27, 2011, Magistrate Judge Puglisi issued his Findings and Recommendations to Grant in Part and Deny in Part Plaintiff's Motion for Class Certification. (Doc. No. 149.) Neither party objected to the Magistrate Judge's Findings and Recommendation, and on July 18, 2011, the Court adopted it, certifying the class as " all non-managerial food and beverage employees who, from January 31, 2006 to the present, have worked at banquets, functions, other events, and small parties, where a service charge was imposed and where a part of that service charge was kept by the Defendants or management without adequate disclosure to customers" as to the non-debtor Defendants Hilton and Waldorf-Astoria (together " Defendants").[6] (Doc. Nos. 149 & 150.)

On June 1, 2011, Plaintiffs filed a Motion for Partial Summary Judgment (" Plaintiffs' Motion for Summary Judgment") (Doc. No. 143, ) and Defendants filed a Motion to Dismiss Count V of the Second Amended Class Action Complaint or to Certify the Question to the Hawaii Supreme Court (Doc. No. 146.) On December 2, 2011, the Court issued its Order Granting in Part and Denying in Part Plaintiffs' Motion for Partial Summary Judgment, in which the Court granted summary judgment as to Defendants' liability with respect to service charges imposed on food and beverages purchased via room service. See 2011 WL 6030074 (" 12/2/11 Order"). Defendants did not seek reconsideration or file an appeal of the 12/2/11 Order.

Also on December 2, 2011, the Court issued its Order Denying Defendants' Motion to Dismiss Count V, Granting Defendants' Request to Stay Proceedings as Modified, and Administratively Closing this Case, in which the Court, inter alia, stayed all proceedings in the instant case pending a decision by the Hawaii Supreme Court on a question of law certified to it by Judge Kobayashi.[7]

On August 1, 2013, Plaintiffs notified the Court of the Hawaii Supreme Court's decision and, pursuant to Plaintiffs' request, the Court lifted the stay and reopened the case. (Doc. Nos. 168, 169.) On July 2, 2014, Defendants filed a Motion to Vacate Order on Motion for Partial Summary Judgment. (Doc. No. 193.) On the same day, Defendants filed a Motion to Decertify the Class. (Doc. No. 192.) On September 26, 2014, the Court denied both of Defendants' motions.[8] (Doc. Nos. 218 & 219).

On July 28, 2014, Plaintiffs filed their Renewed Motion for Summary Judgment, along with a concise statement of facts and a number of exhibits. (Doc. Nos. 199 & 200.) On the same day, Defendants filed their Motion for Partial Summary Judgment, also supported by a concise statement of facts and numerous exhibits. (Doc. Nos. 201 & 202.) On October 10, 2014, Defendants filed their Counter-Motion for Summary Judgment, along with their responses to Plaintiffs' concise statement of facts.[9] (Doc. Nos 223 & 225.) On the same day, Plaintiffs filed their memorandum in opposition to Defendants' Motion for Partial Summary Judgment, as well as their responses of Defendants' concise statement of facts. (Doc. Nos. 228 & 229.) The parties filed their respective replies on October 20, 2014. (Doc. Nos. 231 & 232.) The hearing on the motions was held on November 3, 2014.[10]

STANDARD OF REVIEW

Summary judgment is appropriate when a " movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The central issue is " whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If that burden has been met, the nonmoving party must then come forward and establish the specific material facts in dispute to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The Court must draw all reasonable inferences in favor of the nonmoving party. Id. at 587.

In supporting a factual position, a party must " cit[e] to particular parts of materials in the record . . . or show[] that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1). The nonmoving party " must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 585. " [T]he requirement is that there be no genuine issue of material fact . . . . Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 247-48 (emphasis in original). Also, " [t]he mere existence of a scintilla of evidence in support of the non-moving party's position is not sufficient[]" to defeat summary judgment. Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995). Likewise, the nonmoving party " cannot defeat summary judgment with allegations in the complaint, or with unsupported conjecture or conclusory statements." Hernandez v. Spacelabs Med. Inc., 343 F.3d 1107, 1112 (9th Cir. 2003).

DISCUSSION

In their Motion, Plaintiffs seek summary judgment as to Defendants' liability as to Count V of the Second Amended Complaint. Defendants, in their Motion and Counter-Motion, seek summary judgment as to all claims. The Court addresses each in turn.

I. Count V

In Count V, Plaintiffs assert that, as a result of Defendants' failure to remit the entire proceeds of food and beverage service charges to the food and beverage servers without adequate disclosure in violation of Haw. Rev. Stat. ยง 481B-14, Defendants are liable to Plaintiffs under Chapter 388 of the ...


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