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Audio Visual Services Group, Inc. v. Superior Court (Juan Solares)

California Court of Appeals, Second District, Third Division

January 21, 2015


ORIGINAL PROCEEDINGS in mandate Los Angeles County Super. Ct. No. BC522943. William F. Highberger, Judge.

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[Copyrighted Material Omitted]

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Schiffer & Buus and Eric M. Schiffer for Petitioner.

No appearance for Respondent.

Hadsell Stormer Richardson & Renick, Randy Renick, Cornelia Dai; Davis, Cowell & Bowe, Elizabeth Ann Lawrence and Paul L. More for Real Party in Interest.

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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 audio-visual 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 Los Angeles Municipal Code.

Here, we are presented with the issue of whether audio-visual 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.

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Accordingly, we grant PSAV’s petition for writ of mandate and direct the trial court to reverse its order, which overruled PSAV’s demurrer to the UCL cause of action.


1. 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 Los Angeles Municipal Code 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,

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subd. A.)[1] Service charges may not be paid to “supervisory or managerial employees, ” and must be paid to “Hotel Worker(s) equitably and according to the services that are or appear to be related to the description of the amounts given by the hotel to the customers.” (Ibid.) Service charges collected for banquets or catered meetings “shall be paid equally to the Hotel Workers who actually work the banquet or catered meeting”; service charges collected for room service “shall be paid to the Hotel Workers who actually deliver food and beverage associated with the charge”; and service charges collected for porterage services “shall be paid to the Hotel Workers who actually carry the baggage associated with the charge.” (LAMC, § 184.02, subd. A. 1-3.) This section does not apply to gratuities and tips left by customers for a hotel worker who actually performed the services.[2] (LAMC, § 184.02, subd. B.)

2. Proceedings

a. Class Action Complaint

Solares was employed by PSAV as an audio-visual 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 ...

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