Tuesday, March 30, 2010

Anti-trust Statutes Plain and Unambiguous, but HSC still Examines Legislative History

Davies v. Four Seasons Hotels (HSCA March 29, 2010)

Background. Plaintiffs were employees at Four Seasons Hotels on Maui and Big Island. They brought a class action in federal court alleging violations of State anti-trust laws. The complaint alleged that the hotel added a service fee for food and drink bills. The hotel does not have all of that fee to the servers as tip income. It either keeps it or distributes it to other employees. The hotel also does not disclose that to customers who, according to Plaintiffs, are misled into thinking that the fee covers the tip. The hotel brought a motion to dismiss on the grounds that the Plaintiffs failed to adequately plead the effect of the alleged claims. The federal district court submitted a certified question to the HSC: whether the Plaintiffs had standing when they did not plead the existence of competition or its effect.

The HRS 481B Claim . . . Plaintiffs allege that the Four Seasons violated HRS § 481B-14, which states:

Any hotel or restaurant that applies a service charge for the sale of food or beverage services shall distribute the service charge directly to its employees as tip income or clearly disclose to the purchaser of services that the service charge is being used to pay for costs or expenses other than wages and tips of employees.

HRS § 481B-14. Any entity in violation of HRS § 481B-14 "shall be deemed to have engaged in an unfair method of competition and unfair or deceptive act or practice[.]" HRS § 480-2(a).

"Any Person" has Standing for Unfair Method of Competition. The HSC rejected Four Seasons' argument that Plaintiffs had no standing. Consumers, the Attorney General, or the director of consumer protection are the only ones that can bring an unfair or deceptive act or practice. HRS § 480-2(d). However, an unfair method of competition claim can be brought by "[a]ny person." HRS § 480-2(e). A "person" includes "individuals, corporations, firms, trusts, partnerships, limited partnerships, limited liability partnerships, limited liability limited partnerships, limited liability companies, and incorporated or unincorporated associations[.]" HRS § 480-1. "Where the language of the statute is plain and unambiguous, our only duty is to give effect to its plain and obvious meaning." Cieri v. Leticia Query Realty, Inc., 80 Hawai'i 54, 67, 905 P.2d 29, 42 (1995).

The HSC held that the plain and unambiguous language of the statute includes "individuals," that is, persons like the employees. Standing, therefore, is not limited to consumers, businesses, or competitors. The HSC also reviewed the legislative history of the statute and federal interpretations of its anti-trust statutes and concluded that there is nothing inconsistent with its holding.

Additional Requirements with the HRS 481B Claim. Actions enforcing anti-trust statutes must satisfy HRS § 480-13. Flores v. Rawlings Co., LLC, 117 Hawai'i 153, 162, 177 P.3d 341, 350 (2008). "Any person who is injured in the person's business or property by reason of anything . . . declared unlawful by" HRS chapter 480 can sue for damages and injunctive relief. HRS § 480-13. The three elements that must be established are (1) violation of HRS chapter 480, (2) which causes injury to the person's business or property; and (3) proof of damages. Hawai'i Medical Ass'n v. Hawai'i Medical Services Ass'n, 113 Hawai'i 77, 114, 148 P.3d 1179, 1216 (2006). And while the plaintiff need not be a competitor, "the nature of the competition [must be] sufficiently alleged in the complaint." Id. at 113, 148 P.3d at 1215.

Plaintiffs Pleaded Injury to Business or Property . . . The HSC held that Plaintiffs adequately pleaded an injury to their business or property. It is sufficient to "allege that injury occurred to personal property through a payment of money wrongfully induced" or through the diminishment of finances as a result of the unfair method of competition. Id. at 114, 148 P.3d at 1216. Here, according to the HSC, the "business" was the work of banquet servers and the "property" was the lost tip income. That was enough.

. . . but Failed to Plead the Nature of the Competition. The HSC, however, held that Plaintiffs did not adequately plead the "nature of the competition." According to the HSC, Plaintiffs were required to allege how Four Seasons' conduct negatively affected competition. In doing so, the HSC rejected Plaintiffs' argument that HRS § 481B-14 "deems" a violation of HRS chapter 480. Simply put, the HSC held that "although Employees allege that they have suffered an injury resulting from Four Seasons' violation of § 481B-14, which is deemed to be an unfair method of competition by § 481B-4, Employees are additionally required to allege the 'nature of the competition.'" They did not and so the complaint fails.

Justice Acoba's Dissent. Justice Acoba took issue with the interpretation of the word "deem." Any person who violates HRS chapter 481B "shall be deemed to have engaged in an unfair method of competition and unfair or deceptive" trade practice. HRS § 481B-4. Justice Acoba wrote that because the statute was clear and unambiguous, "courts must give effect to the law according to its plain and obvious meaning." County of Hawai'i v. C & J Coupe Family Ltd. P'ship, 119 Hawai'i 352, 362, 198 P.3d 615, 625 (2008). The word "deem" is not defined. The ordinary meaning of the word means established. That means that a violation of HRS § 481B-4 is in and of itself both an unfair or deceptive trade practice or an unfair method of competition.

According to Justice Acoba, the majority's requirement to plead further allegations or proof of anti-trust violations in addition to the HRS § 481B violation renders the term "deem" superfluous. That construction departs from the canon of construction that "court are bound, if rational and practicable, to give effect to all parts of a statute, and that no clause, sentence, or word shall be construed as superfluous, void, or insignificant if a construction can be legitimately found which will give force to and preserve all the words of the statute." Camara v. Agsalud, 67 Haw. 212, 215-16, 685 P.2d 794, 797 (1984). In sum, Justice Acoba believed that Plaintiffs adequately pleaded their claims and that a motion to dismiss should be denied.

Is There a Place for Legislative History Among Plainly Written Statutes? The majority made it clear that the plain and unambiguous language of the statute required additional allegations. However, the majority also looked to legislative history and federal cases for support. Why?

Justice Acoba was quick to point out that once the language is plan and unambiguous, that is the end of the matter. Legislative history should only be resorted to when the statute is unclear. See T-Mobile USA, Inc. v. County of Hawaii Planning Comm'n, 106 Hawai'i 343, 352, 104 P.3d 930, 939 (2005) ("courts turn to legislative history as an interpretive tool only where a statute is unclear and ambiguous."). Does that render the majority's analysis that the legislative history is in support of the plain reading dicta? What would happen if there was no support from the legislative history? Would it in any detract from the plain language? Probably not. But does this signify a partial departure from the rules of statutory interpretation about plain language? Probably not. The majority acknowledged that it looked to legislative history "even if the language of [the statute] is considered to be unclear and ambiguous[.]" But it's not, right? Didn't the majority just declare that it was not? So why did the majority do it? Has legislative history crept back into the plain-language analysis? It's too early to tell.

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