Villon v. Marriott Hotel Services, Inc.Â

*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

Electronically Filed
Supreme Court
SCCQ-11-0000747
15-JUL-2013
08:14 AM

IN THE SUPREME COURT OF THE STATE OF HAWAI#I

---o0o---
________________________________________________________________

BERT VILLON and MARK APANA, Plaintiffs,

vs.

MARRIOTT HOTEL SERVICES, INC.,
dba WAILEA MARRIOTT RESORT, Defendant.

----------------------------------------------------------------

RENELDO RODRIGUEZ and JOHNSON BASLER, on behalf of
themselves and all others similarly situated, Plaintiffs,

vs.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,
dba WESTIN MAUI RESORT & SPA, Defendant.
________________________________________________________________

SCCQ-11-0000747

CERTIFIED QUESTION FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAI#I
(CIV. NOS. 08-00529 LEK-RLP and 09-00016 LEK-RLP)

JULY 15, 2013

RECKTENWALD, C.J., NAKAYAMA, AND MCKENNA, JJ.,
WITH ACOBA, J., CONCURRING AND DISSENTING SEPARATELY,
WITH WHOM CIRCUIT JUDGE CHAN, IN PLACE OF DUFFY, J., RECUSED,
JOINS
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

OPINION OF THE COURT BY MCKENNA, J.

I. Introduction

The United States District Court for the District of Hawaii1

(“District Court”) certified the following question2 to this

court:
May food or beverage service employees of a hotel or
restaurant bring a claim against their employer based on an
alleged violation of Haw. Rev. Stat. § 481B-14 by invoking
Haw. Rev. Stat. §§ 388-6, 388-10, and 388-11 and without
invoking Haw. Rev. Stat. §§ 480-2 or 480-13?

The instant certified question picks up where our opinion on a

related certified question in Davis v. Four Seasons Hotel, Ltd.,

122 Hawai‘i 423, 428 n.12, 228 P.3d 303, 308 n.12 (2010) left

off: “Employees also contend that Employees can enforce HRS §

481B-14 through HRS §§ 388-6, 10, and 11. However, this argument

will not be addressed because it is beyond the scope of the

1
The Honorable Leslie E. Kobayashi, United States District Judge,
presided.

2
The District Court had also certified the following two questions to
this court:
2. If food or beverage service employees of a hotel or
restaurant are entitled to enforce Haw. Rev. Stat. [§] 481B-
14 through Haw. Rev. Stat. §§ 388-6, 388-10, and 388-11,
what statute of limitations applies?
3. May food and beverage service employees of a hotel or
restaurant bring a claim under Haw. Rev. Stat. § 480-2(e)
for an alleged violation of Haw. Rev. Stat. § 481B-14, where
those employees have alleged that their employer’s conduct
has caused them injury that resulted from an unfair method
of competition?
This court issued an Order on Certified Question, ordering, “without
conclusively determining whether this court will answer question #1,” (the
instant question) that only that question is amenable to answer pursuant to
Hawai‘i Rules of Appellate Procedure Rule 13 (2011), as it “concerns the law
of Hawai‘i that is determinative of the plaintiffs’ cause and that there is no
clear controlling precedent in the Hawai‘i judicial decisions.” Therefore,
questions 2 and 3 are not before this court.

2
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

certified question.” The parties fully briefed their positions,

and we also granted leave to file amicus briefs to Four Seasons

Hotel, Ltd. (“Four Seasons amicus”) and Raymond Gurrobat, Loretta

Chong, Marti Smith, Jonalen Kelekoma, and Darren Miyasato

(“Gurrobat amici”). The amici curiae have also fully briefed

this court.

We now answer the certified question in the affirmative and

hold that when a hotel or restaurant applying a service charge

for the sale of food or beverage services allegedly violates HRS

§ 481B-14 (2008) (1) by not distributing the full service charge

directly to its employees as “tip income” (in other words, as

“wages and tips of employees”), and (2) by failing to disclose

this practice to the purchaser of the services, the employees may

bring an action under HRS §§ 388-6 (1993), -10 (1993 & Supp.

1999), and -11 (1993 & Supp. 1999) to enforce the employees’

rights and seek remedies.

II. Background

The factual background relevant to a certified question

proceeding “is based primarily upon the information certified to

this court by the district court, as well as the allegations

contained within [the plaintiffs’ complaint].” Davis, 122

Hawai‘i at 425, 228 P.3d at 305 (citing TMJ Hawaii, Inc. v.

Nippon Trust Bank, 113 Hawai‘i 373, 374, 153 P.3d 444, 445

3
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

(2007)(relying upon the information certified to the court by the

district court and the facts set forth in the plaintiff’s amended

complaint).

In its Certified Questions to the Hawai‘i Supreme Court from

the United States District Court for the District of Hawai‘i in

Civ. No. 08-00529 LEK-RLP and Civ. No. 09-0016 LEK-RLP

(“Certified Questions”), the District Court stated that Bert

Villon and Mark Apana’s (“Villon Plaintiffs”) Amended Class

Action Complaint and Reneldo Rodriguez, Johnson Basler, on behalf

of themselves and all others similarly situated’s (“Rodriguez

Plaintiffs”) Second Amended Complaint were before it pursuant to

diversity jurisdiction in accordance with the Class Action

Fairness Act. In the Villon Plaintiffs’ Amended Class Action

Complaint, they alleged the following facts:
6. For banquets, events, meetings and in other instances,
the defendant [Marriott Hotel Services, Inc., dba Wailea
Marriott Resort (“Marriott” or “Marriott Defendant”)] adds a
preset service charge to customers’ bills for food and
beverage provided at the hotel.
7. However, the defendant does not remit the total proceeds
of the service charge as tip income to the employees who
serve the food and beverages.
8. Instead, the defendant has a policy and practice of
retaining for itself a portion of these service charges (or
using it to pay managers or other non-tipped employees who
do not serve food and beverages).
9. The defendant does not disclose to the hotel’s customers
that the service charges are not remitted in full to the
employees who serve the food and beverages.
10. For this reason, customers are misled into believing
that the entire service charge imposed by defendant is being
distributed to the employees who served them food or
beverage when, in fact, a smaller percentage is being
remitted to the servers. As a result, customers who would
otherwise be inclined to leave an additional gratuity for
such servers frequently do not do so because they

4
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

erroneously believe that the servers are receiving the
entire service charge imposed by the hotel.

Marriott does not dispute that Plaintiffs did not receive 100% of

service charges and that this fact was not disclosed to

consumers.

It appears that, at the time the District Court filed its

Certified Questions, the Rodriguez Plaintiffs had filed a Third

Amended Complaint, which alleged the following facts, similar to

those alleged in the Villon Plaintiffs’ Amended Class Action

Complaint:
6. For banquets, events, meetings, and in its restaurant
and in other instances, the defendant [Starwood Hotels &
Resorts Worldwide, Inc., dba Westin Maui Resort & Spa
(“Starwood” or “Starwood Defendant”)] adds a preset service
charge of approximately 20% to customers’ bills for food and
beverage provided at the hotel.
7. However, the defendant does not remit the total proceeds
of the service charge as tip income to the employees who
serve the food and beverages.
8. Instead, the defendant has a policy and practice of
retaining for itself a portion of these service charges (or
using it to pay managers or other non-tipped employees who
do not serve food and beverages).
9. The defendant does not adequately disclose to the hotel
and restaurant’s customers that the service charges are not
remitted in full to the employees who serve the food and
beverages.
10. For this reason, customers are misled into believing
that the entire service charge imposed by defendant is being
distributed to the employees who served them food or
beverage when, in fact, a smaller percentage is being
remitted to the servers. As a result, customers who would
otherwise be inclined to leave an additional gratuity for
such servers frequently do not do so because they
erroneously believe that the servers are receiving the
entire service charge imposed by the hotel, or they believe
that in light of the 20% service charge that no other
gratuity should be paid.
. . . .
13. The defendant’s failure to remit the entire service
charge to its employees as tip income or to disclose to its
customers that the service charges [sic] is not remitted in
full to its employees as tip income has resulted in the
plaintiffs’ loss of tip income. Plaintiffs have lost tip

5
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

income both by not receiving the total proceeds of service
charges that are legally their tip income, as well as by not
receiving tip income that customers would otherwise likely
leave if they were not led to believe that the wait staff
was already receiving a generous gratuity (i.e.[,] the
service charge on the bills).

Starwood does not dispute that Plaintiffs did not receive 100% of

the service charges and that this fact was not disclosed to

consumers.

Both the Villon Plaintiffs’ Amended Class Action Complaint

and the Rodriguez Plaintiffs’ Third Amended Complaint allege the

following as Count V:
As a result of the defendant’s unlawful failure to remit the
entire proceeds of food and beverage service charges to the
food and beverage servers, the plaintiffs have been deprived
of income which constitutes wages, which is actionable under
Hawaii Revised Statutes Section[s] 388-6, 10, and 11.
Pursuant to those statutes, the plaintiffs hereby bring a
claim of unpaid wages, including liquidated damages,
interest, and attorneys’ fees.

Procedurally, the certified questions arose upon the entry

of the following orders in the District Court: (1) Order

Administratively Terminating, Without Prejudice, Plaintiffs’

Motion for Summary Judgment and Defendant’s Motion to Dismiss

Amended Class Action Complaint, Filed June 28, 2010, filed

September 8, 2010, in Civil No. 08-00529 LEK-RLP (Villon & Apana

v. Marriott Hotel Services, Inc., DBA Wailea Marriott Hotel); and

(2) Order Granting Defendant’s Motion to Certify Questions of

Hawai‘i State Law to the Hawai‘i Supreme Court and

Administratively Terminating, Without Prejudice, Plaintiffs’

Motion for Class Certification, Plaintiffs’ Motion for Partial

6
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

Summary Judgment, and Defendant’s Motion for Summary Judgment,

filed September 8, 2010, in Civil No. 09-00016 LEK-RLP (Rodriguez

& Basler v. Starwood Hotels & Resorts Worldwide, Inc., DBA Westin

Maui Resort & Spa).

III. Standard of Review

A question of law presented by a certified question is

reviewable de novo under the right/wrong standard of review.

Francis v. Lee Enters., 89 Hawai‘i 234, 236, 971 P.2d 707, 709

(1999)(citation omitted).

IV. Discussion

A. Plain Language

Plaintiffs argue that the language of the relevant statutes,

Hawai‘i Revised Statutes (“HRS”) §§ 481B-14, 388-1 (1993), 388-6,

388-10, and 388-11, is plain and unambiguous. “[T]he fundamental

starting point for statutory interpretation is the language of

the statute itself. . . . And where the statutory language is

plain and unambiguous, our sole duty is to give effect to its

plain and obvious meaning.” Richardson v. City & County of

Honolulu, 76 Hawai‘i 46, 63, 868 P.2d 1193, 1210 (1994)(citation

omitted). The plain language of HRS § 481B-14 supports the

Plaintiffs’ contention that undisclosed and unpaid service

charges are “tips,” “wages,” and “compensation.” HRS § 481B-14

provides:

7
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

Hotel or restaurant service charge; disposition. 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 the services that the service
charge is being used to pay for costs or expenses other than
wages and tips of employees.

First, the statute provides that hotels and restaurants “shall

distribute the service charge directly to its employees as tip

income.” (Emphasis added). In the alternative, HRS § 481B-14

permits hotels and restaurants to use service charges to “pay for

costs or expenses other than wages and tips of employees,”

provided that hotels and restaurants “clearly disclose to the

purchaser of the services” that this is being done. (Emphasis

added). Thus, 100% of the service charge is considered to be

“wages and tips of employees.” Therefore, when a hotel or

restaurant distributes less than 100% of a service charge

directly to its employees without disclosing this fact to the

purchaser, the portion withheld constitutes “tip income,”

synonymously phrased within HRS § 481B-14 as “wages and tips of

employees.”

The plain language of Chapter 388 also supports the

Plaintiffs’ contention that HRS §481B-14 is enforceable through

HRS §§ 388-6, -10, and -11. Moreover, the provisions of Chapter

388 regarding withholding wages appear to apply, as HRS § 388-1

defines “wages” as follows:
compensation for labor or services rendered by an employee,
whether the amount is determined on a time, task, piece,

8
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

commission, or other basis of calculation. It shall include
the reasonable cost, as determined by the director under
chapter 387, to the employer of furnishing an employee with
board, lodging, or other facilities if such board, lodging,
or other facilities are customarily furnished by the
employer to the employer’s employee but shall not include
tips or gratuities of any kind, provided that for the
purposes of section 388-6, “wages” shall include tips or
gratuities of any kind.

(Emphasis added). Thus, for the purpose of enforcement under HRS

§ 388-6 in the instant proceeding, “wages” includes service

charges as “tips or gratuities of any kind,”3 because HRS § 481B-

14 defines service charges as “tip income” and “wages and tips of

employees.” HRS § 388-6 is entitled “Withholding of wages,” and

prohibits an employer from “retain[ing] . . . any part or portion

of any compensation earned by the employee except where required

by federal or state statute or by court process or when such . .

. retentions are authorized in writing by the employee. . . .”

Service charges must be “compensation earned” by the employee,

because they are levied upon the consumer based upon “labor or

3
The parties point out that this court has already addressed whether a
certain type of service charge (hotel porterage fees) could constitute
“gratuities of any kind” in Heatherly v. Hilton Hawaiian Village Joint
Venture, 78 Hawai‘i 351, 893 P.2d 779 (1995). In Heatherly, plaintiffs (hotel
bellhops) challenged the circuit court’s grant of summary judgment in favor of
the hotel on the issue of whether porterage fees counted towards the
employer’s tip credit in determining the bellhops’ minimum wage. 78 Hawai‘i
at 352, 893 P.2d at 780. Heatherly, however, is not helpful in determining
whether service charges under HRS § 481B-14 are “gratuities of any kind” for
two reasons. First, the Heatherly case predates the enactment of HRS § 481B-
14 and is thus not helpful in interpreting that statute. Second, the
Heatherly case held only, “The trade meaning of ‘gratuities of any kind’ is
clearly a ‘fact’ that is material to whether the Hotels are entitled to
summary judgment,” and remanded the case to the circuit court for a
determination of whether “porterage fees are a kind of gratuity or wages
within the meaning of HRS chapter 387.” 78 Hawai‘i at 355, 359, 893 P.2d at
783, 787.

9
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

services rendered by an employee,” usually in lieu of a

traditional tip. HRS § 388-1.

Under HRS § 388-10, a violation of HRS § 388-6 subjects the

employer to a civil penalty of twice the unpaid wages, plus

interest:
Any employer who fails to pay wages in accordance with this
chapter without equitable justification shall be liable to
the employee, in addition to the wages legally proven to be
due, for a sum equal to the amount of unpaid wages and
interest at a rate of six per cent per year from the date
that the wages were due.

HRS § 388-11(a) gives employees standing to recover unpaid

wages, and HRS § 388-11(c) further provides for an award of costs

and attorneys’ fees to prevailing employees:
(a) Action by an employee to recover unpaid wages may be
maintained in any court of competent jurisdiction by any one
or more employees for and in behalf of oneself or
themselves, or the employee or employees may designate an
agent or representative to maintain the action.
. . . .
(c) The court in any action brought under this section
shall, in addition to any judgment awarded to the plaintiff
or plaintiffs, allow interest of six per cent per year from
the date the wages were due, costs of action, including
costs of fees of any nature, and reasonable attorney’s fees,
to be paid by the defendant. . . .

It is true that HRS § 387-1 (1993) defines “wages” to

exclude “tips or gratuities” of any kind, but that is solely for

the purpose of calculating the “tip credit” under HRS § 387-2

(1993 & Supp. 2005), not for the purposes of allowing employers

10
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

to withhold “service charges,” “wages and tips of employees,” and

“tip income,” from employees under HRS § 388-6.4

Hawai‘i Administrative Rules (“HAR”) Rule § 12-20-1 is the

Department of Labor and Industrial Relations (“DLIR”) regulation

implementing HRS § 387-1. It defines “tip” to exclude

“[c]ompulsory or negotiated service charges,” again, for the

purpose of calculating the “tip credit” under HRS § 387-2, as

follows:
“Tip” means a sum of money determined solely by a customer
and given in recognition of service performed by an employee
who retains it as a gift or gratuity. It may be paid in
cash, bank check, or other negotiable instrument payable at
par as well as amounts transferred by employer to employee
by direction of the credit customer who designates amounts
to be added to the customer’s bill as tips. Compulsory or
negotiated service charges and special gifts in forms other
than described above are not counted as tips.

HAR § 12-20-1 is over 30 years old; it became effective on

October 2, 1981, nearly 20 years before HRS § 481B-14 was

enacted. As such, it does not reflect the change HRS § 481B-14

4
HRS § 387-1 defines “wage” to mean, with emphasis added, the following:
legal tender of the United States or checks on banks
convertible into cash on demand at full face value thereof
and in addition thereto the reasonable cost as determined by
the department, to the employer of furnishing an employee
with board, lodging, or other facilities if such board,
lodging, or other facilities are customarily furnished by
such employer to the employer’s employees. Except for the
purposes of the last sentence of section 387-2, “wage” shall
not include tips or gratuities of any kind.
In turn, the last sentence of HRS § 387-2 (a statutory section setting forth
Hawai‘i’s “tip credit”) states:
The hourly wage of a tipped employee may be deemed to be
increased on account of tips if the employee is paid not
less than 25 cents below the applicable minimum wage by the
employee’s employer and the combined amount the employee
receives from the employee’s employer and in tips is at
least 50 cents more than the applicable minimum wage.

11
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

made to the definition of wages. Moreover, the plain language of

HRS § 481B-14 expressly equates 100% of a “service charge” with

“tip income” and “wages and tips of employees.” To the extent

HRS § 481B-14 has redefined service charges, HAR 12-20-1’s

exclusion of service charges under its definition of “tips” is

“not entitled to deference if the interpretation is plainly

erroneous and inconsistent with both the letter and intent of the

statutory mandate.” Haole v. State, 111 Hawai‘i 144, 150, 140

P.3d 377, 383 (2006)(citations omitted). Further, the DLIR has

never defined “gratuities of any kind,” which is a category broad

enough to encompass service charges. Therefore, the DLIR’s

regulations do not serve as a helpful aid in understanding HRS §

481B-14.

Marriott argues that the undisclosed amount of a service

charge is not compensation earned but a “liquidated penalty,”

which “bears no relation to actual damages, if any, incurred by

the employees.” However, this argument speaks more to the remedy

(HRS § 388-10, entitled “Penalties”) rather than the right; an

undisclosed and unpaid portion of a service charge is still a

withheld tip or wage, actionable under Chapter 388. In sum, the

plain language of HRS § 481B-14 and Chapter 388 indicates that a

service charge is “compensation earned” as “tip income” or “wages

12
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

and tips of employees.” Therefore, an alleged violation of HRS §

481B-14 is enforceable through Chapter 388.

B. Legislative History of HRS § 481B-14

Although resort to legislative history is not necessary

when the plain language of a statute is clear, the legislative

history of HRS § 481B-14 has been put at issue in these

proceedings, and an examination of that history reveals that

enforcement of HRS § 481B-14 through Chapter 388 was not an

“absurd result” that the legislature could not have intended.

See Survivors of Medeiros v. Maui Land & Pineapple Co., 66 Haw.

290, 297, 660 P.2d 1316, 1321 (1983)(observing that the plain

language rule does not preclude this court from examining the

legislative history to “adequately discern the underlying policy

which the legislature seeks to promulgate and . . . to determine

if a literal construction would produce an absurd or unjust

result, inconsistent with the policies of the statute”).

HRS § 481B-14 was enacted by Act 16 of the 2000 Legislative

Session. 2000 Haw. Sess. Laws Act 16, at 21-22. The

legislature’s stated purpose in enacting the statute was as

follows:
SECTION 1. The legislature finds that Hawaii’s hotel and
restaurant employees may not be receiving tips or gratuities
during the course of their employment from patrons because
patrons believe their tips or gratuities are being included
in the service charge and being passed on to the employees.
The purpose of this Act is to require hotels and
restaurants that apply a service charge for food or beverage

13
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

services, not distributed to employees as tip income, to
advise customers that the service charge is being used to
pay for costs or expenses other than wages and tips of
employees.

Id. The legislature’s express findings evince a twofold concern:

first, that patrons may not know that service charges may be

“used to pay for costs or expenses other than wages and tips of

employees”; and second, that employees “may not be receiving tips

or gratuities” from these service charges. Id. This dual focus

reflects the legislative evolution of H.B. 2123, the bill that

eventually became Act 16.

When it was first introduced in the House, H.B. 2123, which

was entitled “A BILL FOR AN ACT RELATING TO WAGES AND TIPS OF

EMPLOYEES,” sought only to “protect employees who receive or may

receive tips or gratuities during the course of their employment

from having these amounts withheld or credited to their

employers.” H.B. 2123, 20th Leg., Reg. Sess. (2000). H.B. 2123

proposed to amend the definition of “tips” in HRS § 387-1 to mean

“gratuities in the form of money paid by a customer or added to a

customer’s charge either voluntarily or as a service charge by

the employer.” Id. The bill also proposed deleting the tip

credit in HRS § 387-2. Id. It also proposed clarifying HRS §

388-1’s definition of “wages” to exclude tips for all purposes.

Id. Lastly, H.B. 2123 proposed to amend HRS § 388-6 so that

14
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

employers would be prohibited from withholding tips and service

charges in addition to wages. Id.

H.B. 2123 was first heard by the House Committee on Labor

and Employment. Although the Marriott and Starwood Defendants

and the Four Seasons amicus focus on DLIR Director Lorraine

Akiba’s testimony that H.B. 2123 would create confusion between

federal and state law, she actually testified that only a portion

of the bill (the deletion of the tip credit) would create an

inconsistency between federal and state tip credit provisions.

Akiba also testified that including service charges in the

definition of tips would conflict with HAR § 12-20-1. As

explained, supra, HRS § 481B-14 trumps HAR § 12-20-1.

The ILWU’s position was that tips belong to employees. For

that reason only, they opposed the inclusion of service charges

as “tips,” because they were aware of the hotels and restaurants’

practice of keeping a portion of the service charges and did not

want that portion attributed to employees for withholding and

income tax purposes. The Marriott and Starwood Defendants view

the ILWU’s testimony as supporting their argument that service

charges should not be treated as tips, but a closer examination

reveals that the ILWU did not want employees taxed on portions of

service charges that employers kept. The ILWU also made the

15
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

contradictory point that “tips” should be considered “wages”

because union dues are based on wages.

The House Committee on Labor and Employment was swayed

mostly by the testimony concerning confusion over the changes to

the tip credit statute. Rather than persist in its attempts to

change that provision, it changed its focus and concluded “that

the problem lies with consumers who may not leave tips for the

service employees, mistakenly thinking that the service charge

they paid were tips so they did not leave additional tips for the

service employees.” H. Stand. Comm. Rep. 479-00, in 2000 House

Journal, at 1155. Thus, H.B. 2123’s original focus on employees

was expanded to include concern for uninformed consumers. The

House Committee on Labor and Employment then deleted the contents

of the original H.B. 2123 and inserted the following, as H.B.

2123 H.D. 1:
A BILL FOR AN ACT RELATING TO WAGES AND TIPS OF EMPLOYEES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that Hawaii’s hotel
and restaurant employees may not be receiving tips or
gratuities during the course of their employment from
patrons because patrons believe their tips or gratuities are
being included in the service charge and being passed on to
the employees.
The purpose of this Act is to advise customers that
the service charge is being used to pay for costs or
expenses other than wages and tips of employees.
SECTION 2. Section 481B, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately
designated and to read as follows:
Ҥ481B- Service charge. Any hotel or restaurant
applying a service charge for the sale of food or beverage
services shall distribute the service charge to its
employees or else clearly disclose to the purchaser of such

16
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

services that the service charge is being used to pay for
costs or expenses other than wages and tips of employees.”
SECTION 3. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.

H.B. 2123, H.D. 1, 20th Leg., Reg. Sess. (2000). The bill went

to its second and last House referral, the House Finance

Committee, for hearing. Only Anthony Rutledge and other members

of Local 5 submitted testimony, and each of them argued that

service charges belong wholly to the employee; alternatively, if

a portion of the service charge is retained by the employer, the

employer must disclose that fact to consumers, who often

mistakenly assume that the entire service charge goes to

employees.

The House Finance Committee drafted a brief Standing

Committee Report indicating that the purpose of the bill was to

“prevent unfair and deceptive business practices by requiring

hotels or restaurants that apply a service charge for the sale of

food or beverage, to disclose to the purchaser that the service

charge is being used to pay for costs or expenses other than

wages and tips or employees, if the employer does not distribute

the service charge to its employees.” H. Stand. Comm. Rep. No.

854-00, in 2000 House Journal, at 1298.

The House Finance Committee went on to make what it called

“technical, nonsubstantive amendments for purposes of clarity and

style” to the bill, id., and drafted H.B. 2123 H.D. 2, which read

17
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

as follows, with the changes between H.B. 2123 H.D. 1 and H.D. 2

indicated in Ramseyer format:
A BILL FOR AN ACT RELATING TO WAGES AND TIPS OF EMPLOYEES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that Hawaii’s hotel
and restaurant employees may not be receiving tips or
gratuities during the course of their employment from
patrons because patrons believe their tips or gratuities are
being included in the service charge and being passed on to
the employees.
The purpose of this Act is to require hotels and
restaurants that apply a service charge for food or beverage
services, not distributed to employees as tip income, to
advise customers that the service charge is being used for
pay for costs or expenses other than wages and tips of
employees.
SECTION 2. Section 481B, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately
designated and to read as follows:
Ҥ481B- . Service charge. 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 [else] clearly
disclose to the purchaser of the services that [such] the
service charge is being used to pay for costs or expenses
other than wages and tips of employees.”
SECTION 3. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its
approval.

H.B. 2123, H.D. 2, 20th Leg., Reg. Sess. (2000). The legislature

considered the addition of the phrase “as tip income” to be

“technical [and] nonsubstantive,” probably because, as discussed

supra, the phrase appears merely to serve as the equivalent to

“wages and tips of employees.” The phrase “as tip income” does

not, as Marriott argues, render HRS § 481B-14 ambiguous.

H.B. 2123 H.D.2 passed Third Reading in the House and was

transmitted to the Senate, which referred the bill to the Senate

Committee on Commerce and Consumer Protection. 2000 Senate

18
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

Journal, at 301. Local 5 testimony again emphasized that

consumers mistakenly assume the entire service charge is paid to

employees. DLIR Director Akiba testified in support of the bill,

pointing out, “[I]n reference to the term ‘tip income’ on page 1,

line 17, the department would consider the distribution of

service charges as ‘wages’, and not as ‘tips’ for tip credit

purposes under Chapter 387, HRS, Hawaii Wage and Hour Law, and

§12-20-1, Hawaii Administrative Rules.”

The Senate Committee on Commerce and Consumer Protection’s

Committee Report reflected a truly dual purpose (employee wage

protection and consumer protection) for H.B. 2123 H.D. 2 towards

the end of its path through the legislature as follows:
The purpose of this measure is to enhance consumer
protection with respect to service charges imposed by hotels
and restaurants on the sale of food and beverages.
. . . .
Your Committee finds that it is generally understood
that service charges applied to the sale of food and
beverages by hotels and restaurants are levied in lieu of a
voluntary gratuity, and are distributed to the employees
providing the service. Therefore, most consumers do not tip
for services over and above the amounts they pay as a
service charge.
Your Committee further finds that, contrary to the
above understanding, moneys collected as service charges are
not always distributed to the employees as gratuities and
are sometimes used to pay the employer’s administrative
costs. Therefore, the employee does not receive the money
intended as a gratuity by the customer, and the customer is
misled into believing that the employee has been rewarded
for providing good service.
This measure is intended to prevent consumers from
being misled about the application of moneys they pay as
service charges by requiring under the Unfair and Deceptive
Practices Act that a hotel or restaurant distribute moneys
paid by customers as service charges directly to its
employees as tip income, or disclose to the consumer that
the service charge is being used to pay for the employer’s
costs or expenses, other than wages and tips. . . .

19
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

S. Stand. Comm. Rep. No. 3077, in 2000 Senate Journal, at 1286-

87. The bill passed Second Reading. 2000 Senate Journal, at

390. H.B. 2123 H.D.2 passed Third Reading, 2000 Senate Journal,

at 410, and was later signed into law as Act 16. 2000 Haw. Sess.

Laws Act 16, at 21-22.

Throughout H.B. 2123’s journey through the legislature, the

concern for employees was never abandoned, even when H.B. 2123

was gutted and replaced between H.B. 2123 and H.B. 2123 H.D.1.

We have previously recognized that “the legislative history of

H.B. 2123 indicates that the legislature was concerned that when

a hotel or restaurant withholds a service charge without

disclosing to consumers that it is doing so, both employees and

consumers can be negatively impacted.” Davis, 122 Hawai‘i at

434, 228 P.3d at 314 (emphasis added). The dual focus can also

be viewed as a cause-and-effect relationship: the cause (non-

disclosure to consumers) has an effect (employees receiving a

smaller gratuity than the customer intended). The legislature

sought to prevent or mitigate the effect by removing the cause.

Due to the legislature’s continued focus on employees’

receiving wages and tips, enforcement of a violation of HRS §

481B-14 through Chapter 388 would not be an absurd result that

the legislature could not have intended, as the Plaintiffs argue.

20
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

C. Reading HRS § 481B-14 and Chapter 388 in Pari Materia

Alternatively, HRS § 481B-14 and Chapter 388 can be read in

pari materia. “Laws in pari materia, or upon the same subject

matter, shall be construed with reference to each other. What is

clear is one statute may be called in aid to explain what is

doubtful in another.” HRS § 1-16 (2009). The subject matter of

Chapter 388 is “Payment of Wages and Other Compensation.” The

subject matter of HRS § 388-6 is “Withholding of wages,” the

subject matter of HRS § 388-10 is “Penalties,” and the subject

matter of HRS § 388-11 is “Employees[’] remedies.” Although the

title of HRS § 481B-14 is “Hotel or restaurant service charge;

disposition,” the text of the statute concerns the subject matter

“tip income” and “wages and tips of employees.” Further, the

subject matter of HRS § 481B-14, as it was advancing through the

legislature as H.B. 2123, was reflected in its title, “RELATING

TO WAGES AND TIPS OF EMPLOYEES.”

The title of the bill during the legislative process is, as

the Gurrobat amici argue, “constitutionally significant,” because

according to the Hawai‘i Constitution, Article 3, Section 14,

“Each law shall embrace but one subject, which shall be expressed

in its title.” Legislative compliance with this section of the

Hawai‘i Constitution is “mandatory and a violation thereof would

render an enactment nugatory.” Schwab v. Ariyoshi, 58 Haw. 25,

21
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

31, 564 P.2d 135, 139 (1977). As the Gurrobat amici argue,

however, this court should strive to avoid invalidating statutes

as unconstitutional whenever a constitutional reading is

possible. Further, “[E]very enactment of the legislature is

presumptively constitutional,” and “to nullify it on the grounds

that it was enacted in violation of the subject-title

requirements of the State Constitution, the infraction should be

plain, clear, manifest, and unmistakable.” 58 Haw. at 31, 564

P.2d at 139. An infraction rising to this level is one in which

“the title tend[s] to mislead or deceive the people or the [law-

making body] as to the purpose or effect of the legislation, or

to conceal or obscure the same[.]” Territory v. Dondero, 21 Haw.

19, 25 (Haw. Terr. 1912).

As discussed supra, Section IV.B, the title of H.B. 2123,

“RELATING TO WAGES AND TIPS OF EMPLOYEES,” reflected the

legislature’s concern for employee compensation, even as the

focus of the bill was expanded to provide for prevention of

withholding of service charges through consumer disclosure.

Thus, under Schwab and Dondero, the title of H.B. 2123 was

sufficient to embrace the subject of the bill as it evolved in

the legislature; it was not misleading, deceptive, or obscure in

connection to the subject matter of H.B. 2123 in its final

iteration.

22
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

The Marriott and Starwood Defendants downplay the

significance of the title. Marriott argues that the title of H.B.

2123 could not change during the legislative process but “does

refer to both consumers and employees” in any event. This

argument goes more toward whether the statute was validly enacted

(and no party argues that it was not), rather than whether the

title of H.B. 2123 assists us in reading HRS § 481B-14 and

Chapter 388 in pari materia.

Starwood argues that the title of H.B. 2123 “is but a

remnant of the original bill” and not “evidence that [HRS § 481B-

14] may be enforced through Chapter 388.” Schwab makes clear,

however, that the title of a bill cannot be considered just a

“remnant” of the legislative process; as bills evolve, the title

must continue to embrace the subject of the bill, or the bill is

nugatory under the Hawai‘i Constitution. Therefore, the

legislature could not have validly deleted H.B. 2123’s original

contents without the replacement content continuing to bear some

relation to the title.

Starwood also quotes Poe v. Haw. Labor Rels. Bd., 97 Hawai‘i

528, 540, 40 P.3d 930, 942 (2002) for the proposition that “the

title, policy declarations, and purpose sections of a statute are

‘not substantive law,’ [and] cannot ‘limit or expand the express

terms of the operative statutory provisions.’” This quotation is

23
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

not found in Poe. Rather, Poe held, “[P]olicy declarations in

statutes, while useful in gleaning the purpose of the statute,

are not, of themselves a substantive part of the law which can

limit or expand upon the operative terms of the operative

statutory provisions.” 97 Hawai‘i at 540, 40 P.3d at 942. Poe

did not discuss titles of bills, and is therefore not applicable

on that point.

The Marriott and Starwood Defendants also argue that Davis

already held that the title of H.B. 2123 is “not dispositive.”

Davis made that point only as to whether the title of H.B. 2123

was dispositive on the issue of employee standing under Chapter

480. The full quote states: “[A]lthough we believe the title is

instructive in that it appears to reflect the legislature’s

concern that employees may not always be receiving the service

charges imposed by their employers, we do not believe it is

dispositive of the issue of whether the legislature intended to

afford Employees standing to sue for HRS § 481B-14 violations.”

122 Hawai‘i at 433 n.17, 228 P.3d at 313 n.17. Moreover, this

quotation supports the Plaintiffs’ point that the subject matter

of HRS § 481B-14 is wages and tips of employees, in that this

court has already considered the title of H.B. 2123 “to reflect

the legislature’s concern that employees may not always be

24
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

receiving the service charges imposed by their employers.” Id.

(emphasis added).

Lastly, both the Marriott and Starwood Defendants argue

that, under State v. Mata, 71 Haw. 319, 782 P.2d 1122 (1990), HRS

§ 481B-14 and Chapter 388 cannot be read in pari materia. Mata,

however, is distinguishable. In that case, a defendant argued

that the definition of “under the influence” found in the chapter

regulating the sale of liquor and liquor establishments should be

imported into the statutory offense of driving under the

influence of alcohol under HRS § 291-4. 71 Haw. at 330, 789 P.2d

at 1128. We disagreed, holding, “HRS Chapter 281 regulates the

sale of liquor and liquor establishments. HRS Chapter 291

regulates traffic violations. The chapters serve different

purposes and are not in pari materia.” Id. In the instant

proceedings, however, HRS § 481B-14 and Chapter 388 are in pari

materia, because both deal with the same subject matter: “tip

income” and “wages and tips of employees” in HRS § 481B-14 and

“Payment of Wages and Other Compensation” in Chapter 388.

Because HRS § 481B-14 can be read in pari materia with

Chapter 388, there exists a relationship among these statutory

provisions supporting Plaintiffs’ contention that HRS § 481B-14

violations can be enforced through Chapter 388.

25
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

D. Exclusivity of Remedies

In spite of the plain language, legislative history, and in

pari materia reading, the Marriott and Starwood Defendants insist

that the exclusive remedy for a violation of HRS § 481B-14 lies

within the consumer protection chapters (HRS Chapters 480 and

481B). They cite Davis for the following proposition: “[T]he

legislative history of H.B. 2123 indicates that the legislature

was concerned that when a hotel or restaurant withholds a service

charge without disclosing to consumers that it is doing so, both

employees and consumers can be negatively impacted. The

legislature chose to address that concern by requiring disclosure

and by authorizing enforcement of that requirement under HRS

chapter 480.” 122 Hawai‘i at 434, 228 P.3d at 314 (emphasis

added). However, Davis left unanswered the question of whether

violations of HRS § 481B-14 are also enforceable through Chapter

388. See 122 Hawai‘i at 428 n.12, 228 P.3d at 308 n.12.

(“Employees also contend that Employees can enforce HRS § 481B-14

through HRS §§ 388-6, 10, and 11. However, this argument will

not be addressed because it is beyond the scope of the certified

question.”)

The plain language of Chapters 480 and 481B does not

indicate that remedies therein are exclusive. The legislature

knows how to craft an exclusivity provision. See, e.g., HRS §

26
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

103D-704 (2012)(“Exclusivity of remedies. The procedures and

remedies provided for in this part, and the rules adopted by the

policy board, shall be the exclusive means available for persons

aggrieved in connection with the solicitation or award of a

contract, a suspension or debarment proceeding, or in connection

with a contract controversy, to resolve their claims or

differences. . . .”). No such exclusivity provision appears in

the relevant enforcement statutes in the consumer protection

area. HRS § 481B-4 (2008) provides, “Remedies. Any person who

violates this chapter shall be deemed to have engaged in an

unfair method of competition and unfair or deceptive act or

practice in the conduct of any trade or commerce within the

meaning of section 480-2.” HRS § 480-2(e) (2008), in turn,

allows “[a]ny person [to] bring an action based on unfair methods

of competition declared unlawful by this section.” Contrary to

the Marriott and Starwood Defendants and Four Seasons amicus’

argument, nothing in these statutes states that Chapter 480

remedies are exclusive.

The Marriott and Starwood Defendants also argue that the

legislature’s decision to shift H.B. 2123’s focus from a bill

proposing amendments to Chapters 387 and 388 to a bill proposing

to add a new section within Chapter 481B indicates the

legislature’s intent that the remedy under the consumer

27
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

protection chapters be exclusive. However, nothing in the

legislative history of H.B. 2123 limits or even discusses

remedies. Further, the Marriott and Starwood Defendants have

provided no case law or other authority holding that the mere

placement of a law within one chapter of the HRS implies the

exclusion of remedies found in other chapters.

On the other hand, the Gurrobat amici have cited Zator v.

State Farm Mut. Auto Ins. Co., 69 Haw. 594, 597, 752 P.2d 1073,

1075 (1988) for the proposition that this court “cannot presume

that the legislature intended a discriminatory and illogical

policy” that a statute located in one chapter of the HRS should

not apply to a statute located in another chapter of the HRS.

In that case, on a question certified to us by the United States

Court of Appeals for the Ninth Circuit, we applied the tolling

provision from the chapter on statutes of limitations (Chapter

657) to the no-fault limitations period set forth in the chapter

governing motor vehicle accident reparations (then Chapter 294).

69 Haw. at 595, 597, 752 P.2d at 1074, 1075. This was because

HRS § 294-36 was “silent as to whether it is tolled if the person

entitled to bring the suit is rendered insane on account of the

accident,” but the “general tolling provisions for statutes of

limitations set forth in HRS § 657-13 provides for tolling of the

28
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

statute in cases of insanity.” 69 Hawai‘i at 597, 752 P.2d at

1075.

We considered there to be an ambiguity in the law, which we

resolved by construing the two statutes in pari materia,

ascertaining legislative intent, and looking to the policies

behind the statutes. Id. We concluded that the legislature

could not have intended “a discriminatory and illogical policy”

of allowing the tolling of the general statute of limitations for

insane plaintiffs but disallowing the tolling of the no-fault

statute of limitations. Id. We also favorably cited another

case, Hun v. Center Properties, 63 Haw. 273, 626 P.2d 182 (1982),

in which we held that HRS § 657-13 tolled the wrongful death

statute of limitations found in another chapter (Chapter 663)

because “the two-year statute of limitations period merely

affects the remedy and not the right of action.” Similarly in

this case, allowing enforcement under Chapter 388 affects the

remedy, not the right set forth in HRS § 481B-14.

It bears noting that the Plaintiffs argue that HRS § 480-

13(d) (2008) provides that the remedies in Chapter 480 are

“cumulative.” That statutory sub-section reads in whole,

however, “The remedies provided in this section are cumulative

and may be brought in one action.” (Emphasis added). “This

section” refers to HRS § 480-13(d), not statutes outside of that

29
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

section, and is of no help to Plaintiffs. Further, the

Plaintiffs have cited E. Star Inc., S.A. v. Union Bldg. Materials

Corp., 6 Haw. App. 125, 142, 712 P.2d 1148, 1159 (1985) to

support their argument that Chapter 480 remedies are cumulative,

but that case held only that Chapter 480 remedies “do not

supersede common law fraud claims based on deception in the

course of trade and commerce,” which are remedies very different

from those under Chapter 388. Although Chapter 480’s remedies

are not expressly “cumulative,” and although case law has yet to

establish that they include Chapter 388 remedies, the bottom line

is that Chapter 480 remedies are not “exclusive” either;

therefore, nothing in the statutory plain language or legislative

history of HRS § 481B-14 precludes enforcement of HRS § 481B-14

violations through Chapter 388.

V. Conclusion

For the foregoing reasons, we answer the certified question

in the affirmative. When a hotel or restaurant applying a

service charge for the sale of food or beverage services

allegedly violates HRS § 481B-14 by (1) not distributing the full

service charge directly to its employees as “tip income” (in

other words, as “wages and tips of employees”), and by (2)

failing to disclose this practice to the purchaser of the

services, the employees may bring an action under HRS §§ 388-6,

30
 *** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***

-10, and -11 to enforce the employees’ rights and seek remedies.

Ashley Ikeda & Lori K. Aquino /s/ Mark E. Recktenwald
Weinberg, Roger & Rosenfeld
Harold Lichten & Shannon /s/ Paula A. Nakayama
Liss-Riordan, pro hac vice
(Lichten & Liss-Riordan, P.C.) /s/ Sabrina S. McKenna
for plaintiffs

Barry W. Marr & Richard M. Rand
Marr Jones & Wang
for defendant
Marriott Hotel Services, dba
Wailea Marriott Resort

Paul Alston, Anna Elento-Sneed,
& Maren Calvert
Alston Hunt Floyd & Ing
for defendant
Starwood Hotels & Resorts Worldwide
dba Westin Maui Resort & Spa

31