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Lu v. Hawaiian Gardens Casino

August 9, 2010

LOUIE HUNG KWEI LU, PLAINTIFF AND APPELLANT,
v.
HAWAIIAN GARDENS CASINO, INC., ET AL., DEFENDANTS AND RESPONDENTS.



Los Angeles County. Super. Ct. No. BC286164. Ct.App. 2/3 B194209 Judge: David L. Minning.

The opinion of the court was delivered by: Chin, J.

Review Granted XXX 170 Cal.App.4th 466

Labor Code*fn1 section 351 prohibits employers from taking any gratuity patrons leave for their employees, and declares that such gratuity is "the sole property of the employee or employees to whom it was paid, given, or left for." A number of Courts of Appeal have held that this prohibition, at least in the restaurant context, does not extend to employer-mandated tip pooling, whereby employees must pool and share their tips with other employees. (See Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, 1067 (Leighton); see also Etheridge v. Reins Internat. California, Inc. (2009) 172 Cal.App.4th 908, 921-922; Budrow v. Dave & Buster's of California, Inc. (2009) 171 Cal.App.4th 875, 878-884; Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143.)

In this case, a card dealer brought a class action against his casino employer based on its mandatory tip pooling policy. The casino's policy required dealers to contribute 15 to 20 percent of their tips to a tip pool to be shared among other designated employees who provided service to casino patrons. The dealer alleged that this policy constituted a conversion of his tips and violated, among other provisions, section 351.

As a threshold issue, the trial court concluded that section 351 does not provide a private cause of action for employees to recover any misappropriated tips from employers. The Court of Appeal agreed that section 351 does not itself contain a private right to sue. Less than two months later, another Court of Appeal expressly disagreed with the holding on section 351 of the appellate court below. (See Grodensky v. Artichoke Joe's Casino (2009) 171 Cal.App.4th 1399, review granted June 24, 2009, S172237.) We granted review to resolve the conflict on this narrow issue.

For reasons that follow, we conclude that section 351 does not contain a private right to sue.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Louie Hung Kwei Lu (plaintiff) was employed as a card dealer at defendant Hawaiian Gardens Casino, Inc. (the Casino), from 1997 to 2003. The Casino had a written tip pooling policy that required dealers to set aside 15 to 20 percent of the tips they received on each shift. The dealers kept the remaining 80 to 85 percent of the tips received; the Casino did not deduct these sums from the minimum hourly wages the dealers earned. The Casino deposited the pooled tips into a "tip pool bank account" and later distributed the money to designated employees who provided service to casino customers. These employees included chip service people, poker tournament coordinators, poker rotation coordinators, hosts, customer service representatives or "floormen," and concierges. The tip pool policy specifically prohibited employers, managers, and supervisors from receiving any money from the tip pool. Plaintiff brought a class action against the Casino and its general manager. His complaint alleged that the Casino's tip pooling policy amounted to a conversion of his tips, and violated the employee protections under sections 221 (prohibiting wage kickbacks by employer), 351 (prohibiting employer from taking, collecting, or receiving employees' gratuities), 450 (prohibiting employer from compelling employees to patronize employer), 1197 (prohibiting payment of less than minimum wage), and 2802 (indemnifying employee for necessary expenditures). The complaint also alleged that the Casino's conduct giving rise to each statutory violation constituted an unfair business practice under the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.).

The trial court granted the Casino's motion for judgment on the pleadings on the causes of action based on sections 351 and 450. It agreed with the Casino that neither section contained a private right to sue. The court also granted the Casino's successive motions for summary adjudication on the remaining causes of action. Plaintiff appealed.

The Court of Appeal held, "pursuant to the analysis in Leighton, that tip pooling in the casino industry is not prohibited by Labor Code section 351." However, it reversed the trial court's order granting summary adjudication of the UCL cause of action based on section 351. While section 351 itself contains no private right to sue, the Court of Appeal concluded this provision may nonetheless serve as a predicate for a UCL claim because plaintiff presented triable issues of fact as to whether section 351 prohibited certain employees who participated in the tip pool from doing so because they were "agents" of the Casino. In all other respects, the Court of Appeal affirmed the judgment.

We granted review limited to the sole issue of whether section 351 gives employees a private right of action.*fn2

DISCUSSION

A. General Principles

A violation of a state statute does not necessarily give rise to a private cause of action. (Vikco Ins. Services, Inc. v. Ohio Indemnity Co. (1999) 70 Cal.App.4th 55, 62 (Vikco).) Instead, whether a party has a right to sue depends on whether the Legislature has "manifested an intent to create such a private cause of action" under the statute. (Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287, 305 (Moradi-Shalal) [no legislative intent that Ins. Code, §§ 790.03 & 790.09 create private cause of action against insurer for bad faith refusal to settle claim]; Crusader Ins. Co. v. Scottsdale Ins. Co. (1997) 54 Cal.App.4th 121, 131, 135 (Crusader) [no legislative intent that Ins. Code, ยง 1763 gave admitted insurers private right ...


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