Thursday, January 22, 2015
Court of Appeal Tosses Putative Class Action by Hotel Workers
Panel Says L.A. Ordinance Applies Only to Employees Who Rely on Tips
By KENNETH OFGANG, Staff Writer
A City of Los Angeles ordinance requiring hotels near Los Angeles International Airport to pass along service charges to employees only applies to workers who would normally expect to receive a gratuity for the service, the Court of Appeal for this district ruled yesterday.
Div. Three granted a writ of mandate to Audio Visual Services Group, Inc., which does business as PSAV Presentation Services. The company provides audio-visual services to various hotels within the Century Corridor Property Business Improvement District adjacent to LAX.
Former employee Juan Solares brought a putative class-action complaint alleging that the company violated the Hotel Service Charge Reform Ordinance by not passing along to audio-visual technicians the “service charge” that the company collected each time it provided services at hotels within the BID. Those violations constituted unfair business practices under the state Unfair Competition Law, the plaintiff alleged.
Los Angeles Superior Court Judge William Highberger overruled the company’s demurrer, concluding that the company was a “hotel employer” and that the service charge was covered by the ordinance because it was collected by the employer “for services by Hotel Workers,” as those terms are used in the ordinance.
But Justice Richard Aldrich, writing for the Court of Appeal, focused on another part of the ordinance, which applies the pass-along requirement to a charge that is for a specific service and is “described in such a way that customers might reasonably believe that the amounts are for those services.”
The enactment of the ordinance, Aldrich explained, was a response to workers’ complaints that hotels were increasingly imposing charges that customers thought were being used to pay employees, resulting in a fall-off in tips.
“When read as a whole, the Ordinance applies to a specific class of hotel workers who rely on gratuities as part of their wages,” the justice wrote. “Therefore, the ‘hotel workers’ covered by the Ordinance are those hotel workers who would have received a gratuity paid by customers over and above the actual amount due for services but for the imposition of a service charge that hotel customers believed was in lieu of a gratuity.”
Aldrich rejected the plaintiff’s contention that the ordinance was intended to ensure “decent compensation for service workers at LAX-area hotels,” regardless of whether they work for tips. The argument is plainly inconsistent with both the legislative language and legislative history, he said.
Specific Complaints Cited
He cited specific complaints, in testimony before the City Council’s Trade, Commerce and Tourism Committee while it was considering the ordinance, that the hotels were charging service fees, such as a 20 percent fee added to banquet charges, and that patrons were assuming that the fees were in lieu of a gratuity and thus leaving no gratuity.
Aldrich rejected the defendant’s contention that the ordinance should be interpreted even more narrowly, and applied only to food and porterage services. But he agreed that the plaintiff had not shown, and could not show, that audio-visual technicians traditionally received gratuities and that the demurrer should have been sustained without leave to amend.
Eric M. Schiffer of Schiffer & Buus represented PSAV on appeal. Randy Renick and Cornelia Dai of Hadsell Stormer Richardson & Renick, along with Elizabeth Ann Lawrence and Paul L. More of Davis, Cowell & Bowe, represented the plaintiff.
The case is Audio Visual Services Group, Inc. v. Superior Court (Solares), B256266.
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