JASON KAWAKAMI, Individually and on behalf of all others similarly situated, Petitioner/Plaintiff-Appellant/Cross-Appellee
KAHALA HOTEL INVESTORS, LLC, dba KAHALA HOTEL AND RESORT Respondent/Defendant-Appellee/Cross-Appellant.
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-11-0000594; CIVIL NO. 08-1-2496)
J. Bickerton, John F. Perkin, Brandee J.K. Faria, Bridget G.
Morgan, Kristina M. Hanson for petitioners
J. Minkin, Lisa W. Cataldo for respondent
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON,
class action concerning Hawaii's hotel and restaurant
service charge law returns to us for the second time. See
Kawakami v. Kahala Hotel Inv'rs, LLC, 134
Hawai'i 352, 341 P.3d 558 (2014). Its return presents us
once again with the task of interpreting Hawai'i Revised
Statutes (HRS) § 481B-14 (2000). For the reasons explained
below, we vacate the Intermediate Court of Appeals'
affirmance of the circuit court's grant of judgment as a
matter of law (JMOL) and reinstate the circuit court's
earlier grant of partial summary judgment to plaintiff Jason
Kawakami as to the defendant Kahala Hotel and Resort's
liability under HRS § 481B-14. We also reinstate the
jury's special verdict in favor of Kawakami on legal
causation and the amount of damages in the trial on damages
that followed the grant of partial summary judgment. We
remand to the circuit court for determination of additional
damages and fees under Hawaii's statute governing unfair
or deceptive acts or practices. HRS Chapter 480.
Kawakami (Kawakami) held his wedding reception at the Kahala
Hotel and Resort (the hotel) in July 2007. The hotel
collected a 19% service charge on the purchase of food and
beverages for his reception, but the hotel failed to
distribute 100% of the funds from the service charge directly
to its service employees as tip income. Instead, the hotel
retained 15% of those funds as what it termed "the
management share," then reclassified those funds and
used them to pay for the banquet employees'
"wages." The "event agreement," a
contract used by the hotel for large group events, contained
no disclosure that a portion of the service charge would be
diverted to the hotel, rather than directly distributed to
the banquet employees as tip income. A section of the event
agreement, titled "Service Charge and Tax," stated
only that "[a]11 food and beverage prices are subject to
a 19% service charge." No other disclosure was made to
Kawakami that a portion of the service charge would not be
directly distributed to the banquet employees as tips.
filed a lawsuit on behalf of himself and other customers who
paid a service charge to the hotel in connection with the
purchase of food or beverages. He claimed the hotel's
conduct was an unfair or deceptive act or practice (UDAP)
under HRS § 481B-14 and HRS § 480-2. Kawakami moved
for summary judgment "on liability" because the
undisputed facts established that the hotel violated HRS
§ 481B-14 and HRS § 480-2. The circuit court
granted summary judgment as to liability only, not remedies
or damages, ruling that under HRS § 481B-14 the hotel
had "a duty to disclose" to Kawakami that a portion
of the service charge would become the property of the hotel
rather than paid to its employees as tip
income. A jury trial to determine damages
followed. The jury found that the hotel was the legal cause
of injury to the plaintiff class and awarded $269, 114.73 to
the class, corresponding to the amount of the combined
service charges retained by the hotel as "the management
little more than a month after the verdict, the hotel renewed
its prior motions for JMOL, which had been denied by the
circuit court. This time the circuit court granted the motion
for JMOL on the theory there had been insufficient evidence
the plaintiffs suffered injury as a result of the hotel's
violation of HRS § 481B-14. The circuit court stated
that it was "struggling to understand how the
Management's Share . . . constitutes financial or
economic loss or harm to Plaintiffs." The court focused
on the apparent lack of an economic loss to the plaintiffs
relating to the hotel's failure to distribute the funds
from the service charge in the manner required by the
statute. That failure, the court stated, "did not cause
Plaintiffs to pay any additional sums over and above their
contractual obligation to pay the service charge or any other
additional compensation." Yet, the court observed, the
"jury awarded as damages to Plaintiffs a sum that
appears to be equal to the amount of the Management's
Share of the service charge."
appeal the ICA vacated the circuit court's order granting
Kawakami's motion for summary judgment and held instead
that summary judgment should have been granted in favor of
the hotel. The ICA reasoned that because the hotel ultimately
distributed the management share of the service charge as
wages, its actions were in compliance with the language of
HRS § 481B-14 and no disclosure to Kawakami was
required. Kawakami I, mem. op. at 4-5.
certiorari in Kawakami I, we rejected the ICA's
reasoning. Instead, we recognized "the well-settled duty
of hotels and restaurants" under the statute "to
either distribute the entirety of the service charge directly
to non-management banquet employees who served the consumers
as 'tip income,' or to disclose its practice of
withholding the service charge[.]" Kawakami I,
134 Hawai'i at 357, 341 P.3d at 563; id.
(characterizing this statutory duty as assisting "a
well-informed consumer" in choosing whether to leave a
tip for the employees as a reward for their service). We held
that under HRS § 481B-14,
a hotel or restaurant that applies a service charge for food
or beverage services must either distribute the service
charge directly as tip income to the non-management employees
who provided the food or beverage services, or disclose to
its customers that the service charges are not being
distributed as tip income.
Kawakami I, 134 Hawai'i at 354, 341 P.3d at 560.
Accordingly, we vacated the ICA's judgment on appeal and
remanded to the ICA. We directed the ICA to address on remand
Kawakami's argument that the circuit court erred when it
granted JMOL to the hotel on the theory that Kawakami
suffered no injury as a result of the hotel's actions.
Id. at 360, 341 P.3d at 566.
remand from our decision in Kawakami I, the ICA
affirmed the circuit court's grant of JMOL to the hotel
because, in the ICA's view, Kawakami "failed to
establish that he was injured, financially or
otherwise, as a result of Kahala Hotel's
deceptive trade practices[.]" Kawakami II, mem.
op. at 1. The ICA acknowledged that a plaintiff alleging an
unfair or deceptive act or practice need not show strictly
"economic loss" in order to satisfy the consumer
"injury" requirement of HRS § 480-13(b).
Kawakami II, mem. op. at 3. The ICA nonetheless
concluded that Kawakami failed to establish that he was
injured even by the "less stringent standard" of
non-economic injury. Id. With respect to
Kawakami's alternative claim of a contract-based injury,
the ICA rejected that claim largely on the grounds that
"the required disclosure under HRS § 481B-14 need
not take the form of a written provision in an event
contract, nor must it necessarily occur before
parties enter into the contract," and therefore there
was no breach of contract. Kawakami II, mem. op. at
5. See also id., mem. op. at 4 (stating that
"benefit-of-the-bargain damages are only available when
there has been a breach of contract."). As a result, the
ICA affirmed the circuit court's grant of JMOL.
certiorari, Kawakami argues that the ICA erred by holding
that no contract-based or UDAP-based injury occurred. He also
argues that the ICA erred in affirming the circuit
court's order denying plaintiffs' motion in limine
no. 1, which sought to preclude the admission of certain
Standards of Review
Motions for Judgment as a Matter of Law
is well settled that a trial court's rulings on motions
for judgment as a matter of law are reviewed de
novo. When we review the granting of a motion for
judgment as a matter of law, we apply the same standard as
the trial court. A motion for judgment as a matter of law may
be granted only when after disregarding conflicting evidence
. . . and indulging every legitimate inference which may be
drawn from the evidence in the non-moving party's favor,
it can be said that there is no evidence to support a jury
verdict in his or her favor." Miyamoto v. Lum,
104 Hawai'i 1, 6-7, 84 P.3d 509, 514-15 (2004) (internal
citations and braces omitted).
Motions in Limine
"the granting or denying of a motion in limine is within
the trial court's inherent power to exclude or admit
evidence, we review the court's ruling for the abuse of
discretion standard." State v. Kealoha, 95
Hawai'i 365, 379, 22 P.3d 1012, 1026 (App. 2000)(internal
citations omitted). However, when the trial court's order
granting a motion in limine is an evidentiary decision based
upon relevance, the standard of review is the right/wrong
standard. Ass'n of Apt. Owners of Wailea Elua v.
Wailea Resort Co., Ltd., 100 Hawai'i 97, 110, 58
P.3d 608, 621 (2002).
courts review questions of statutory interpretation de novo.
Bhakta v. Cty. of Maui, 109 Hawai'i 198, 208,
124 P.3d 943, 953 (2005). "When construing a statute,
our foremost obligation is to ascertain and give effect to
the intention of the legislature, which is to be obtained
primarily from the language contained in the statute
itself." Id. (internal citations omitted).
consider first the issue of Kawakami's contract-based
damages, then the issue of Kawakami's UDAP-based damages,
and finally the issue whether Kawakami's motion in ...