ALDRICH, J. —
Plaintiff Juan Solares seeks to represent a class of employees who are or were employed by Audio Visual Services Group, Inc., doing business as PSAV Presentation Services (PSAV), which provides audiovisual services to hotels within the Century Corridor Property Business Improvement District (Century Corridor PBID) adjacent to the Los Angeles International Airport (LAX). They allege that PSAV collects from customers a separately designated "service charge," "delivery charge," "facility charge," "gratuity," "administrative fee," or other such charge that "customers might reasonably believe ... were for the class member/employees' services." PSAV allegedly fails to pay the separately designated charges it collects to its employees in violation of the Hotel Service Charge Reform Ordinance (Ordinance) in the Los Angeles Municipal Code. (L.A. Ord. No. 178084, adding art. 4, ch. XVIII, § 184.00 et seq. to L.A. Mun. Code (LAMC).) The failure of PSAV to pay these service charges to its employees is the basis for Solares's unfair competition law claim (UCL). (Bus. & Prof. Code, § 17200 et seq.)
In Garcia v. Four Points Sheraton LAX (2010) 188 Cal.App.4th 364 [115 Cal.Rptr.3d 685] (Garcia), we upheld the Ordinance against a constitutional challenge by certain hotels in the Century Corridor PBID. As part of our constitutional analysis, we considered a vagueness challenge by the hotels to the provision of the Ordinance setting forth the hotel employers' responsibilities to pay service charges to hotel workers. (188 Cal.App.4th at pp. 386-389.) Garcia arose out of a class action brought by hotel banquet captains and servers, one of the specific classes of hotel workers who are entitled to be paid the service charge collected for their services as set forth in section 184.02 of the LAMC.
Here, we are presented with the issue of whether audiovisual workers are within the class of hotel workers entitled to be paid service charges pursuant to the Ordinance. The Ordinance was intended to benefit hotel workers who earn low hourly wages and traditionally relied on gratuities. These hotel workers saw a decrease in gratuities because hotel customers assumed the service charge would be paid to the service worker who actually performed the services. Thus, the Ordinance applies only to those hotel workers who would have received a gratuity for their services but for the imposition of a service charge that hotel customers believed was in lieu of a gratuity. Because the class action complaint does not allege that Solares and the class he seeks to represent are within the class of hotel workers who traditionally relied on gratuities, and no proposed amendment could cure this defect, the complaint fails to state a UCL claim based upon a violation of the Ordinance.
In 2006, the City enacted the Ordinance to increase the compensation of service workers at LAX-area hotels. The Ordinance requires hotels within the Century Corridor PBID, with 50 or more guest rooms, and no collective bargaining agreement, to pass along the entire service charge to the hotel workers who actually performed the services for which the charges are collected. (LAMC, § 184.00 et seq.)
As stated in the Ordinance, its purpose is to "improve the welfare of service workers at the LAX-area hotels by ensuring that they receive decent compensation for the work they perform." (LAMC, § 184.00.) The Los Angeles City Council recognized that hotels adjacent to LAX reap significant economic benefits, including the highest occupancy rate of all Los Angeles hotels because of the proximity to the airport. (Ibid.) These LAX-area hotels, however, failed to pay their workers a living wage, and because of the low hourly wages paid, service workers relied on gratuities. (Ibid.) Many service workers saw their income decline, and reported a significant reduction in the gratuities they received from customers, because LAX-area hotels instituted a practice of adding a mandatory service charge of "15% to 20% [to] the bill for banquets and other large group events." (Ibid.) Hotel customers assumed these service charges were paid to the workers performing the services, and therefore they reduced or eliminated gratuities they would otherwise have paid to service workers. (Ibid.) While some hotels paid a portion of the service charges to workers who actually performed the services, other hotels retained the entire service charge. (Ibid.)
To address this problem, the city council enacted the Ordinance. (LAMC, § 184.00.) The hotel employers' responsibilities are set forth in section 184.02 of the Ordinance.
Section 184.02 of the LAMC states in pertinent part: "Service Charges shall not be retained by the Hotel Employer but shall be paid in the entirety by the Hotel Employer to the Hotel Worker(s) performing services for the customers from whom the Service Charges are collected." (LAMC, § 184.02,
Solares was employed by PSAV as an audiovisual technician from approximately June 1999 to October 2009 and was assigned to work at the Hilton Los Angeles Airport Hotel. Solares provided services to hotel customers for which PSAV collected a separately designated charge.
Solares filed a class action complaint alleging PSAV provides services at LAX-area hotels within the Century Corridor PBID. PSAV is allegedly a hotel employer as defined under the Ordinance, collects a "service charge" on services it provides to hotel customers, and fails to pay the entire service charge to its employees who actually perform the services for which the service charges are collected.
PSAV filed a demurrer to the class action complaint. PSAV argued the Ordinance was intended to protect the wages of "traditionally tipped hotel workers" and, therefore, did not apply to its employees. Moreover, any violation of the Ordinance was barred by the applicable statute of limitations.
Solares conceded the demurrer to the first cause of action, alleging a violation of the Ordinance, as the claim was barred by the applicable statute of limitations. Solares opposed the demurrer to the UCL claim, principally arguing that the plain language of the Ordinance did not limit its reach only to those hotel workers who traditionally received gratuities for their services. Although not pled, Solares (through counsel) asserted the complaint could be amended to allege that audiovisual technicians receive a gratuity for each banquet event at a hotel.
Both parties submitted requests for judicial notice of legislative materials associated with drafting and enacting the Ordinance. The trial court took judicial notice of the legislative materials.
The trial court overruled the demurrer to the UCL claim, stating: "The Court agrees with plaintiff that an employee of [PSAV] may be a `hotel worker' within the meaning of the ordinance because plaintiff performed his work inside a hotel routinely and the hotel incorporated [PSAV's] bill (including the `service charge' element, so stated) into its master bill for meeting functions held at the hotel. For the same reason, [PSAV], may be a `hotel employer' within the meaning of the ordinance.
"The Court also agrees with plaintiff that a `service charge,' so described, comes within the reach of the ordinance as a `separately-designated amount ... collected by the Hotel Employer from customers that are for services by Hotel Workers,' whether or not it is `described in such a way that customers might reasonably believe that the amounts are for those services, including but not limited to those charges designated on receipts under the
"There may well be no equitable merit to plaintiff's case if this class of workers has historically served in positions where tips are rare or non-existent, but the City Council, for reasons good and sufficient to itself, has decided that hotels and hotel subcontractors who choose to `un-bundle' their bills with line items described as `Service Charges' and the like do so at their peril if they are located within the Gateway to LA (Century Corridor) Property Business Improvement District, have more than 50 guest rooms, and do not have a collective bargaining agreement."
The trial court certified its ruling on this issue as presenting a controlling issue of law suitable for early appellate review under Code of Civil Procedure section 166.1.
PSAV filed a petition for writ of mandate, asking this court to review the trial court's order. We issued an order to show cause.
In the present case, writ review is proper for both reasons. The petition raises a significant issue regarding the definition of "hotel worker" in the Ordinance. Additionally, resolution of the issue in favor of PSAV would result in a final disposition of this action.
PSAV and Solares urge two diametrically opposed constructions of the Ordinance. On the one hand, PSAV contends the city council intended the Ordinance to apply only to those hotel workers who perform banquet services, room service, and porterage services, for which they customarily receive a gratuity, focusing on the plain language of the Ordinance, including its "Purpose" in section 184.00 of the LAMC, and relying on Garcia, supra, 188 Cal.App.4th 364. Solares, on the other hand, contends the Ordinance applies to all hotel workers who perform a service for which the hotel employer imposes a service charge, focusing solely on the plain language of the definitions in the Ordinance, ignoring the codified purpose in the Ordinance, and relying on Garcia.
While both parties cite this court's opinion in Garcia, supra, 188 Cal.App.4th 364 to support their construction of the Ordinance, Garcia did not address the discrete issue presented here.
The Ordinance defines a "hotel worker" as any individual whose primary place of employment is a hotel, who is employed directly by the hotel or by a person who "has contracted with the Hotel Employer[
The specific examples of hotel workers listed in section 184.02 of the LAMC all provide services for which the payment of a gratuity constitutes part of their wages. Had the city council intended "hotel worker" to be used in its broadest sense, the listing of these examples in section 184.02 would have been unnecessary and surplusage. Thus, reading the Ordinance as a whole, the Ordinance applies only to those hotel workers who are similarly situated to the hotel workers that are specifically enumerated in the nonexhaustive list in the Ordinance, that is, hotel workers for which the payment of a gratuity constitutes part of their wages, and who would have been paid a gratuity by hotel customers but for the imposition of the service charge collected by the hotel for their services.
Solares contends that we should disregard the purpose of the Ordinance codified in section 184.00 of the LAMC, because it is merely a "preamble" and of no help in construing the Ordinance. We reject Solares's request.
Solares next urges that if this court considers the stated purpose of the Ordinance, the city council's intent in enacting the Ordinance was to ensure "decent compensation for service workers at LAX-area hotels," not just those hotel workers who rely on gratuities as part of their wages. To illustrate this point, Solares argues plumbers who subcontract with hotels and who provide services for which hotels collect a "plumbing service charge," are within the class of hotel workers covered by the Ordinance. But, as PSAV points out, Solares omits any allegation that plumbers were tipped employees who saw their gratuities diminish because of the imposition of a "plumbing service
The stated purpose of the Ordinance leaves no doubt the city council had a specific intent in mind, that is, to ensure that LAX-area hotel workers who relied on gratuities earned a living wage. (LAMC, § 184.00.) The practice of adding service charges to customers' bills had the effect of decreasing hotel workers' gratuities as customers were confused over whether the service charge actually was paid to the hotel worker performing the services. (Ibid.) As a result, hotel workers saw a decrease in their gratuities as customers either reduced or eliminated gratuities they would otherwise have paid because they assumed the service charge was paid to the worker. (Ibid.)
We read nothing in the stated purpose of the Ordinance to support Solares's argument that the city council intended to address all "service charges" that are separate line items on hotel bills.
Although not necessary to our construction of the Ordinance, the legislative history offers additional support that the city council intended to target a specific class of hotel workers. According to the Chief Legislative Analyst's report to the city council, the impetus of the Ordinance was a special meeting before the Los Angeles City Council Trade, Commerce, and Tourism Committee where workers employed by hotels in the Century Boulevard Corridor discussed the problems of low wages and the imposition of service charges for a group meal that were not necessarily paid to those workers who served the meal. (L.A. Chief Legis. Analyst, Rep. on City Options to Help LAX-Area Hotel Workers (Apr. 19, 2006) pp. 3-4.)
Before the Ordinance was sent to the Los Angeles City Council, several issues related to service charges were considered: (1) an ordinance that would have required hotels and restaurants to inform patrons that service charges are inclusive (or exclusive) of a gratuity paid to the restaurant or hotel service worker; (2) the legality of automatically adding a service charge or gratuity to a bill; and (3) the legality of not paying the service charge to employees performing the services, which is reasonably expected by hotel customers paying the charge. (L.A. City Council, Trade, Commerce, and Tourism Com. Rep. on arts. 2, 3 & 4 to ch. XVIII of the LAMC (Oct. 5, 2006) pp. 1-2.)
In analyzing the legality of legislation that would ensure hotel employers paid the service charge collected to hotel workers who actually performed the services, the Los Angeles City Attorney noted that testimony before the Los Angeles City Council Trade, Commerce, and Tourism Committee revealed,
While this excerpt of legislative history focused on a service charge imposed for banquet services, it confirms that the Ordinance was intended to address "service charges" on a hotel bill that hotel customers mistakenly concluded were gratuities and thus left no gratuity for the hotel workers who actually performed the service. The city council clearly intended to remedy this practice in enacting the Ordinance. The Ordinance requires hotel employers to pay service charges to hotel workers who would have received gratuities for performing these services, such as banquet servers, porters, and similarly situated hotel workers, and who rely on gratuities as part of their wages. Accordingly, Solares, and the class of audiovisual workers he seeks to represent, are not among the class of hotel workers the city council intended to protect when enacting the Ordinance.
The petition is granted. Let a peremptory writ of mandate issue directing respondent superior court to vacate its order of April 17, 2014, overruling
Kitching, Acting P. J., and Kussman, J.,