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Oral Argument Before the Hawaii Supreme Court

No. SCWC-11-0000594, Thursday, August 21, 2014, 8:45 a.m.

JASON KAWAKAMI, individually and on behalf of all others similarly situated, Petitioner/Plaintiff-Appellant/Cross-Appellee, vs. KAHALA HOTEL INVESTORS, LLC, dba KAHALA HOTEL AND RESORT, Respondent/Defendant-Appellee/Cross-Appellant.

The above-captioned case was set for argument on the merits at:

Supreme Court Courtroom
Ali`iolani Hale, 2nd Floor
417 South King Street
Honolulu, HI 96813

Attorneys for Petitioner:

John Francis Perkin, Brandee J.K. Faria, and Michelle L. Premeaux

Attorneys for Respondent:

David J. Minkin, Lisa Cataldo, and Dayna H. Kamimura-Ching

NOTE: Order accepting Application for Writ of Certiorari, filed 06/17/14.

COURT: MER, C.J.; PAN, SSM, RWP, & MDW, JJ.

[ Listen to the entire audio recording in mp3 format ]

Brief Description:

At issue in the Application for Writ of Certiorari submitted by Petitioner/Plaintiff-Appellant/Cross-Appellee Jason Kawakami (“Kawakami”), individually and on behalf of all other similarly situated, is Hawai#i Revised Statutes (“HRS”) § 481B-14, titled “Hotel or restaurant service charge; disposition.”

Kahala Hotel Investors, LLC dba the Kahala Hotel & Resort (“Kahala”) levies a 20% service charge for banquet events at the hotel in connection with the purchase of food or beverages. The service charges are captured into one fund. Pursuant to a Collective Bargaining Agreement (“CBA”) between Kahala Hotel and United Here! Local 5, the union representing Kahala Hotel employees, 85% of the service charges are distributed to the employees as tip income. The remaining 15% is distributed to the banquet employees as wages.

In the lower court proceedings for the instant case, the Circuit Court of the First Circuit (“circuit court”) determined that because Kahala does not distribute 100% of the collected service charges as tips, but uses a percentage of them to pay wages, Kahala is required by HRS § 481B-14 to provide a disclosure to customers. The Intermediate Court of Appeals (“ICA”) disagreed. In its March 25, 2014 Memorandum Opinion, the ICA held that under this court’s interpretation of “tip income” in Villon v. Marriott Hotel Services, Inc., 130 Hawai`i 130, 306 P.3d 175 (2013), Kahala was in compliance with HRS § 481B-14 because it had distributed the entirety of its collected service charges to its employees as “wages and tips.” The ICA thus concluded that no disclosure was required.

Kawakami presents the following question on certiorari:

Whether the ICA gravely erred when it held that a hotel that fails to: (1) distribute 100% of the service charge collected directly to its employees as tip income, and (2) fails to disclose to customers that it is retaining portions of the service charge is nevertheless complying with HRS § 481B-14 if the hotel is “reclassifying” this money and making an accounting adjustment crediting the retained service charge against its preexisting wage and salary obligations.