Rodriguez v. Mauna Kea Resort LLC. ICA s.d.o., filed 12/12/2024 [ada], 155 Haw. 223. Application for Writ of Certiorari, filed 03/10/2025. S.Ct. Order Accepting Application for Writ of Certiorari, filed 05/05/2025 [ada].

Hawaii Supreme Court·Decided August 25, 2025·No. SCWC-21-0000687·Published

Opinion

Electronically Filed

Supreme Court

SCWC-XX-XXXXXXX

25-AUG-2025

08:21 AM

Dkt. 26 OP

IN THE SUPREME COURT OF THE STATE OF HAWAIʻI ---o0o---

RENELDO RODRIGUEZ, individually and on behalf of all others similarly situated, Petitioner/Plaintiff-Appellee,

vs.

MAUNA KEA RESORT LLC; HAWAII PRINCE HOTEL WAIKIKI LLC;

PRINCE RESORTS HAWAII, INC., Respondents/Defendants-Appellants.

SCWC-XX-XXXXXXX

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-XX-XXXXXXX; CASE NO. 1CC161002191)

AUGUST 25, 2025

RECKTENWALD, C.J., MCKENNA, EDDINS, GINOZA, and DEVENS, JJ.

OPINION OF THE COURT BY EDDINS, J.

Hotels and restaurants that apply a service charge for food or beverage services must “distribute the service charge directly to its employees as tip income” or “clearly disclose” to consumers that the service charge is being used to cover

“costs or expenses other than wages and tips of employees.” Hawaiʻi Revised Statutes (HRS) § 481B-14 (Supp. 2015).

HRS § 481B-14 serves a dual purpose. It lessens consumer confusion and protects tip-earning employees.

Food and beverage server Reneldo Rodriguez sued Mauna Kea Resort LLC, Hawaii Prince Hotel Waikiki LLC, and Prince Resorts Hawaii, Inc. (collectively, Mauna Kea). He alleges Mauna Kea applied service charges but neither (1) distributed the entirety of those service charges as gratuities to servers, nor (2) clearly disclosed to consumers that it would not distribute the entirety of those service charges to servers. That violates HRS § 481B-14 and defeats its purposes, Rodriguez says.

Rodriguez points to Mauna Kea’s pre-2017 disclosures that read: “[W]e allocate a portion of the service fee to our employees as tips or wages[.]” Those disclosures are no good, he maintains.

The circuit court agreed with Rodriguez. The Intermediate Court of Appeals (ICA) did not.

Over the years, this court has addressed when a disclosure is required. See, e.g., Davis v. Four Seasons Hotel Ltd., 122 Hawaiʻi 423, 228 P.3d 303 (2010) (Davis I); Villon v. Marriott Hotel Servs., Inc., 130 Hawaiʻi 130, 306 P.3d 175 (2013); Gurrobat v. HTH Corp., 133 Hawaiʻi 1, 323 P.3d 792 (2014); and

Kawakami v. Kahala Hotel Invs., LLC, 134 Hawaiʻi 352, 341 P.3d 558 (2014) (Kawakami I).

But in each of those cases, a hotel or restaurant made no disclosure at all. For the first time, we are asked to rule on the sufficiency of a disclosure.

We hold that the ICA erred in concluding that Mauna Kea’s 2010-2016 disclosures did not violate HRS § 481B-14.

We also hold that the ICA erred by finding that Mauna Kea met its “burden of establishing that its service charge disclosures were sufficient[.]” It ruled that Mauna Kea’s motion for summary judgment should have been granted for that reason. But the ICA offered no reasoning as to whether Mauna Kea “clearly disclosed” to consumers that the service charge was not a tip.

Last, we advance the legislative intent. When some, but not all, of a service charge goes directly to employees as tips, the employer must inform consumers the amount or percentage of the service charge that is paid to food and beverage servers.

I.

In December 2016, Rodriguez brought a class action suit against Mauna Kea on behalf of “over 100 servers, porters, bartenders and other employees” (collectively, Rodriguez). He filed an amended complaint in January 2017. From 2010-2016, Mauna Kea had failed to adequately disclose to customers that

part of the service charge would not be distributed to the employees, Rodriguez alleged. And Mauna Kea, he added, had retained that part.

The Mauna Kea banquet contract disclosure from 2010-2016, for example, read in part: “[W]e allocate a portion of the service fee to our employees as tips or wages and a portion of the service fee to pay for costs or expenses other than wages and tips of employees.”

Rodriguez claimed that Mauna Kea’s disclosures violated HRS § 481B-14(a):

(a) Any:

(1) Hotel or restaurant that applies a service charge for the sale of food or beverage services; or

(2) Hotel that applies a service charge for porterage 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.

HRS § 481B-14(a) (emphasis added).

Mauna Kea updated its disclosures later in 2017 to specify what percentage went to employees and clarify that the service charge was not a tip or gratuity. Looking again at Mauna Kea’s banquet contract disclosure, the 2017 update reads:

All food and beverage functions are subject to a mandatory 22% surcharge, which consists of [a] 16% gratuity that is pooled and distributed to those food and beverage staff servicing you and your function, and the remaining 6% is retained by Hotel to cover non-itemized costs of the event (and not distributed as a tip or gratuity to the Hotel’s employees). The Banquet Service Charge is subject to State

Tax, which is subject to change without notice. The mandatory surcharge will be posted to your Master Account.

Mauna Kea and Rodriguez filed dueling motions for summary judgment (MSJ) in the Circuit Court of the First Circuit.

Because Mauna Kea tracked HRS § 481B-14’s language and told customers that a portion of the service charge was used to pay for “costs or expenses other than the wages or tips of employees,” Mauna Kea insisted its 2010-2016 disclosures were fine.

Rodriguez countered. Mauna Kea’s disclosures were not only deficient, but were “misleading and actually outright false.” They tricked customers into believing that the service charge they paid would go to the servers as tip income.

Rodriguez prevailed. The circuit court granted Rodriguez’s MSJ and denied Mauna Kea’s MSJ. Mauna Kea had failed to “specify the portion of the service charge that was distributed to employees[,]” the court ruled.

The ICA disagreed. Per the plain language of the statute and its legislative history, the ICA held that “the circuit court wrongly interpreted HRS § 481B-14 to require service charge disclosures to specify the actual amount distributed to employees.” It felt this requirement went “beyond the scope of the statutory language.” The ICA ruled that the circuit court should have granted Mauna Kea’s MSJ. It vacated the court’s judgment and remanded the case.

Rodriguez appealed. We accepted cert.

II.

A. HRS § 481B-14’s plain text and legislative history show that disclosures must clearly signal to customers whether a service charge is a tip

HRS § 481B-14 directs a hotel or restaurant to (1)

“distribute the service charge directly to its employees as tip income” or (2) “clearly disclose” to the consumers “that the service charge is being used to pay for costs or expenses other than wages and tips of employees.”

Statutory interpretation begins with the law’s words.

Alpha, Inc. v. Bd. of Water Supply, 154 Hawaiʻi 486, 490–91, 555 P.3d 173, 177–78 (2024). HRS § 481B-14’s plain text contemplates a binary choice. Rodriguez and Mauna Kea agree on that. The restaurant or hotel may give all service charge money to the employees as tips. Or they can clearly disclose.

The legislature’s inclusion of “clearly” has meaning. It can’t be read out of the statute. Courts “give force to and preserve all words of the statute.” State v. Chang, 144 Hawaiʻi 535, 548, 445 P.3d 116, 129 (2019) (citations omitted). When a term is not statutorily defined, “we may resort to legal or other well accepted dictionaries as one way to determine the ordinary meaning[.]” State v. Tran, 154 Hawaiʻi 211, 221, 549 P.3d 296, 306 (2024) (cleaned up).

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Rodriguez v. Mauna Kea Resort LLC. ICA s.d.o., filed 12/12/2024 [ada], 155 Haw. 223. Application for Writ of Certiorari, filed 03/10/2025. S.Ct. Order Accepting Application for Writ of Certiorari, filed 05/05/2025 [ada]., (haw 2025).

Rodriguez v. Mauna Kea Resort LLC. ICA s.d.o., filed 12/12/2024 [ada], 155 Haw. 223. Application for Writ of Certiorari, filed 03/10/2025. S.Ct. Order Accepting Application for Writ of Certiorari, filed 05/05/2025 [ada]. (Rodriguez v. Mauna Kea Resort LLC. ICA s.d.o., filed 12/12/2024 [ada], 155 Haw. 223. Application for Writ of Certiorari, filed 03/10/2025. S.Ct. Order Accepting Application for Writ of Certiorari, filed 05/05/2025 [ada].) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Davis v. Four Seasons Hotel Ltd.
228 P.3d 303 (Hawaii Supreme Court, 2010)
Villon v. Marriott Hotel Services, Inc.
306 P.3d 175 (Hawaii Supreme Court, 2013)
Coon v. City and County of Honolulu
47 P.3d 348 (Hawaii Supreme Court, 2002)
Gurrobat v. HTH Corporation.
323 P.3d 792 (Hawaii Supreme Court, 2014)
Kawakami v. Kahala Hotel Investors, LLC.
341 P.3d 558 (Hawaii Supreme Court, 2014)
State v. Chang
445 P.3d 116 (Hawaii Supreme Court, 2019)