United States District Court, E.D. Pennsylvania
NANCY LIVI, on behalf of herself and all others similarly situated, Plaintiff,
HYATT HOTELS CORP., et al., Defendants.
B. BRODY, JUDGE
Nancy Livi (“Livi”) brings suit on behalf of
herself and a proposed class of banquet servers against four
defendants: Defendant Hyatt Hotels Corporation
(“HHC”), Defendant Hyatt Corporation d/b/a Hyatt
at the Bellevue (“Hyatt Corporation”),
Defendant Bellevue, Inc. and Defendant Bellevue Associates
(all four defendants collectively referred to as
“Hyatt”) for violations of the Pennsylvania
Minimum Wage Act, 43 Pa. Stat. § 333.101, et
seq. (“PMWA”), violations of
Pennsylvania's Wage Payment and Collection Law, 43 Pa.
Stat. § 260.1, et seq. (“WPCL”),
and for Unjust Enrichment. Livi also brings suit on behalf of
herself and a proposed sub-class of banquet servers against
Hyatt for violation of the Philadelphia Administrative Code,
§ 9-614. Defendants move for summary judgment on all
remaining counts of the Complaint. For the reasons set
forth below, I will grant Defendants' motion for summary
judgment in its entirety.
a resident of Philadelphia, Pennsylvania and was employed as
a Banquet Server at the Hyatt at the Bellevue, a hotel in
Philadelphia, Pennsylvania, from 1986 to on or about October
29, 2014. Pl.'s Statement of Undisputed Material Facts in
Opp'n to Defs.' Mot. for Summ. J. ¶ 8, ECF No.
45-1 (“Pl.'s Statement”); Defs.' Factual
Statement in Support of its Mot. for Summ. J. 1, ECF No. 53
Corporation manages the Hyatt at the Bellevue. Pl.'s
Statement ¶ 4; Defs.' Statement 1. Hyatt Corporation
is a Delaware corporation and a subsidiary of HHC, which is
also a Delaware corporation. Pl.'s Statement ¶¶
1-2; Defs.' Statement 1; Defs.' Affidavit
¶¶ 7-8. Both HHC and Hyatt Corporation have a
principal place of business in Illinois. Defs.' Affidavit
¶¶ 7-8. Although the exact relationship of
Bellevue, Inc. and Bellevue Associates (“Bellevue
Defendants”) to HHC and Hyatt Corporation is unclear,
both entities are incorporated in Pennsylvania and have a
principal place of business in Pennsylvania. Pl.'s
Statement ¶ 5; Defs.' Statement 1; Defs.'
Affidavit ¶ 13.
Hyatt at the Bellevue holds banquets, wedding receptions,
meetings, parties and similar events (“Banquet
Events”) for customers and employs servers
(“Banquet Servers”) who work at these events.
Pl.'s Statement ¶ 6; Defs.' Statement 1. There
are nine spaces at the Hyatt at the Bellevue where Banquet
Events can be held, including XIX, which is a restaurant that
is sometimes used as a Banquet Event space. Pl.'s
Statement ¶ 7; Defs.' Statement 1.
Servers are responsible for serving food and beverages to
guests at their tables at plated-service events and staffing
the food stations at buffet-style events. Pl.'s Statement
¶ 13; Defs.' Statement 1. Banquet Servers greet
guests, discuss menu offerings with guests, provide
recommendations to guests when asked, clean and set tables,
and engage in general banquet preparation and related tasks.
Id. Banquet Servers do not have a sales role and do
not sell or solicit Banquet Events. Pl.'s Statement
¶ 14; Defs.' Statement 1. Bartenders are also
considered Banquet Servers because their roles are
interchangeable. Pl.'s Statement ¶ 13; Defs.'
Statement 1. Banquet Servers typically do not receive tips
from guests at Banquet Events. Pl.'s Statement ¶ 22;
Defs.' Statement 1. Hyatt enforces a policy prohibiting
the presence of tip trays or jars for the collection of tips
during events at the Hyatt at the Bellevue and has a policy
discouraging Banquet Servers from receiving tips from banquet
guests. Pl.'s Statement ¶ 23; Defs.' Statement
Banquet Event Contracts
enter into written contracts for Banquet Events at the Hyatt
at the Bellevue in advance. Defs.' Statement ¶ B(1);
Pl.'s Sur-Reply in Further Opp'n To Defs.' Mot.
for Summ. J. 4, ECF No. 62 (“Pl.'s
Sur-Reply”). These contracts are based on a common
template supplied by HHC. Pl.'s Statement ¶ 25;
Defs.' Statement 1. Each contract sets forth the
equipment, room rental, food and beverage subtotals for the
event, applicable taxes, and generally requires that all
charges be paid at least seventy-two hours in advance.
Defs.' Statement ¶ B(1); Pl.'s Sur-Reply 4. Each
contract for a Banquet Event contains a service charge
provision. Pl.'s Statement ¶ 26; Defs.'
Statement 1. The service charge is added to the cost of food
and beverage and sometimes to the cost of room rental as
well. Id.; Pl.'s Statement, Ex. H, Gold Dep.
75:23-76:7, ECF No. 45-10. Between 2011 and 2012,
Hyatt increased the service charge from 20% to 21% of such
costs. Pl.'s Statement ¶ 28; Defs.' Statement 1;
Gold Dep. 76:16-77:2.
retains a portion of the service charge collected on food and
beverage costs and remits 15% of the cost of food and
beverage for each Banquet Event to Banquet Servers and other
banquet staff. Pl.'s Statement ¶¶ 30-31;
Defs.' Statement 1. The 15% payment is distributed by
Hyatt equally among each Banquet Server/bartender and banquet
captain working at each Banquet Event. Pl.'s
Statement ¶ 30; Defs.' Statement 1. Hyatt retains
the entirety of the service charge collected from customers
on room rental and does not distribute a portion of the
service charge collected for room rental to Banquet Servers.
Pl.'s Statement ¶ 33; Defs.' Statement 1. Prior
to 2015, these banquet contracts did not provide a breakdown
of the distribution of the service charge. Pl.'s
Statement ¶ 39; Defs.' Statement 1, Gold Dep.
paid Livi for her work as a Banquet Server through a
combination of hourly wages and distributions from the
service charges that Hyatt collected on Banquet Events.
Defs.' Statement ¶ A(1); Pl.'s Sur-Reply 4. From
September 29, 2012, to the date of her separation, Livi's
hourly rate ranged from $11.24 to $11.57 per hour. Defs.'
Statement ¶ A(2); Pl.'s Sur-Reply 4. Throughout the
course of Livi's employment, service charge distributions
constituted more than 50% of Livi's total compensation.
Defs.' Statement ¶ A(3); Pl.'s Sur-Reply 4. In
2013, Livi earned approximately $57, 000 in total
compensation, with distributions from service charges
constituting approximately $37, 500 of this total
compensation. Defs.' Statement ¶ A(4); Pl.'s
sometimes worked more than forty hours in a work week
(“overtime hours”), and was authorized to do so,
but was not paid “time-and-a-half” (a wage of 1.5
times her regular hourly wage) for overtime hours worked.
Pl.'s Statement ¶¶ 15, 16, 18; Defs.'
Statement 1. During the course of Livi's employment, no
calculations were performed to determine whether Banquet
Servers were exempt from the overtime requirements of the
PMWA. Pl.'s Statement ¶ 20; Defs.' Statement 2;
Pl.'s Statement, Ex. A, HHC's Answers to Pl.'s
First Set of Interrogs. 11, ECF No. 45-3.
Additional Facts Relevant to Jurisdiction
Corporation is the entity responsible for hiring, supervising
and paying the wages of the proposed class and proposed
sub-class of Banquet Servers. Defs.' Affidavit
¶¶ 9-11.The Bellevue Defendants do not exercise
any control over the employment practices of Hyatt
Corporation. Defs. Affidavit' ¶ 15. There are over
100 members of the proposed class and subclass, of which
greater than two-thirds are citizens of Pennsylvania.
Defs.' Affidavit ¶¶ 3-6. The amount in
controversy is at least $7, 626, 152. Defs.' Affidavit
¶ 30. During the three-year period preceding the filing
of the Complaint, a class action has not been filed against
any of the Defendants asserting the same or similar factual
allegations on behalf of the same or other persons.
Defs.' Affidavit ¶ 31.
Complaint was originally filed in this Court pursuant to
“federal question” jurisdiction, 28 U.S.C. §
1331, because Livi asserted a claim under the Fair Labor
Standards Act, 29 U.S.C. § 201, et seq.
(“FLSA”). The parties later stipulated to
dismissal of Livi's FLSA claim. Defendants then filed an
affidavit attesting to certain facts relevant to this
Court's jurisdiction over the remaining state law claims
provides federal courts with jurisdiction over civil class
actions if the ‘matter in controversy exceeds the sum
or value of $5, 000, 000, ' the aggregate number of
proposed class members is 100 or more, and any class member
is a citizen of a state different from any defendant.”
Vodenichar v. Halcón Energy Props., Inc., 733
F.3d 497, 503 (3d Cir. 2013) (citing 28 U.S.C. §
1332(d)(2), (d)(2)(A), (d)(5)(B)). CAFA operates as an
expansion of diversity jurisdiction and “authorizes
federal jurisdiction over class actions even in the absence
of complete diversity between the parties, except where the
‘controversy is uniquely' connected to the state in
which the action was originally filed.” Id.
(citing Kaufman v. Allstate New Jersey Ins. Co., 561
F.3d 144, 149 & n.4 (3d Cir. 2009)); Farina v. Nokia
Inc., 625 F.3d 97, 110 (3d Cir. 2010). CAFA also
includes two mandatory exceptions to federal subject matter
jurisdiction, known as the “local controversy”
and “home state” exceptions. 28 U.S.C. §
1332(d)(4)(A)-(B); Vodenichar, 733 F.3d at 503. This
Court has jurisdiction over the remaining state law claims
under CAFA because the threshold requirements for CAFA
jurisdiction have been met and the local controversy and home
state exceptions do not apply.
threshold requirements for CAFA jurisdiction are met. The
requirement that the matter in controversy exceeds the sum or
value of $5, 000, 000 is met because the amount in
controversy is at least $7, 626, 152. The requirement that
the aggregate number of proposed class members is 100 or more
is met because the aggregate number of proposed class members
exceeds 100 members. Finally, the requirement that any class
member is a citizen of a state different from any defendant
is met because Livi is a Pennsylvania citizen and thus from a
different state than Hyatt Corporation and HHC (“Hyatt
Defendants”), which are citizens of Delaware and
Illinois. The only outstanding issue is whether
either of the two mandatory exceptions, the local controversy
exception and the home state exception, is applicable.
Local Controversy Exception
local controversy exception requires courts to decline to
exercise jurisdiction over class actions that otherwise meet
CAFA's jurisdictional requirements where all of the
following elements are met:
(1) greater than two-thirds of the putative class are
citizens of the state in which the action was originally
filed; (2) at least one defendant is a citizen of the state
in which the action was originally filed (the “local
defendant”); (3) the local defendant's conduct
forms a significant basis for the claims asserted; (4)
plaintiffs are seeking significant relief from the local
defendant; (5) the principal injuries occurred in the state
in which the action was originally filed; and (6) no other
class action asserting the same or similar allegations
against any of the defendants had been filed in the preceding
Vodenichar, 733 F.3d 497, 506-07 (summarizing 28
U.S.C. § 1332(d)(4)(A)).
seems obvious that the first, second, fourth, fifth and sixth
elements of this exception are met. The third element, that
the local defendant's conduct forms a significant
basis for the claims asserted, requires further analysis.
Therefore, it must next be determined, pursuant to the third
element, whether either of the Bellevue Defendants'
conduct forms a “significant basis for the claims
the “significant basis” provision, “[t]he
focus is on the conduct in which the local defendant
allegedly engaged and the alleged number of people impacted
by it.” Vodenichar, 733 F.3d at 507 n.8. This
provision also requires comparing the local defendant's
alleged conduct to the conduct of all of the defendants.
Kaufman, 561 F.3d at 156. “If the local
defendant's alleged conduct is a significant part of the
alleged conduct of all the Defendants, then the significant
basis provision is satisfied.” Id.
Furthermore, the local defendant's purported conduct
“must be an important ground for the asserted
claims in view of the alleged conduct of all the
Defendants.” Id. at 157 (emphasis in
alleges in the Complaint that the Defendants violate the
PMWA, the WPCL, the Philadelphia Administrative Code, and are
unjustly enriched by purportedly not paying the Banquet
Servers a proper overtime wage and by not distributing the
entirety of the collected service charges to the Banquet
Servers. Hyatt Corporation is the entity that hires,
supervises and pays the Banquet Servers, and therefore is the
defendant that allegedly does not pay the proper overtime
wage to the Banquet Servers and does not distribute the
entirety of the collected service charges to the Banquet
Servers. Thus, the entity whose alleged conduct forms the
basis of the asserted claims is Hyatt Corporation, an
out-of-state defendant. The Bellevue Defendants, the
Pennsylvania corporations, are therefore not the entities
responsible for hiring, supervising and paying the Banquet
Servers, and their actions are thus not a significant part of
the alleged conduct of all Defendants nor an important ground
for the asserted claims. Therefore, because an element of the
local controversy exception fails, the local controversy
exception has not been met.
Home State Exception
the home state exception, a district court must decline to
exercise jurisdiction over a class action that otherwise
meets the CAFA jurisdictional requirements, if two-thirds or
more members of all proposed plaintiff classes and the
“primary defendants” are citizens of the State in
which the action was originally filed. 28 U.S.C. §
first part of this exception is met here because, as
described above, over two-thirds of the members of all
proposed plaintiff classes are Pennsylvania residents, and
therefore citizens of the state in which the action was
originally filed. The applicability of this exception hinges
on a determination of which entity or entities are the
primary defendants. The home state exception only applies if
all of the primary defendants are citizens of the
state in which the action was filed, and therefore a
determination that a non-local defendant is a primary
defendant renders the home state exception inapplicable.
Vodenichar, 733 F.3d at 506. Thus, if one
or both of the Bellevue Defendants are the only primary
defendants, then the requirements of this exception have been
met and the Court must decline jurisdiction. If however,
either of the Hyatt Defendants, the out-of-state defendants,
is a primary defendant, then the requirements of the home
state exception have not been met, and the Court may accept
jurisdiction under CAFA.
Third Circuit has stated that:
courts tasked with determining whether a defendant is a
“primary defendant” under CAFA should assume
liability will be found and determine whether the defendant
is the “real target” of the plaintiffs'
accusations. In doing so, they should also determine if the
plaintiffs seek to hold the defendant responsible for its own
actions, as opposed to seeking to have it pay for the actions
of others. Also, courts should ask whether, given the claims
asserted against the defendant, it has potential exposure to
a significant portion of the class and would sustain a
substantial loss as compared to other defendants if found
Id. at 505-06.
to Vodenichar, a court must consider “whether
the defendant: (1) is the ‘real target' of the
plaintiff's allegations; (2) has potential exposure to a
significant portion of the class; and (3) would sustain a
substantial loss as compared to other defendants if found
liable.” Torres v. CleanNet, U.S.A., Inc., No.
14-2818, 2014 WL 5591037, at *5 (E.D. Pa. Nov. 4, 2014)
(citing Vodenichar, 733 F.3d at 505-06). As to the
first factor, the “real target” is the defendants
that plaintiffs allege are the real wrongdoers, as opposed to
defendants who may have to pay because of the actions of
others. Id. Regarding the second and third factors,
“the Third Circuit has explained that a district court
should ‘focus on the number of class members
purportedly impacted by defendant's alleged actions and
the amount the defendant may lose if found liable' in
determining whether a defendant has potential exposure to a
significant portion of the class and would sustain a
substantial loss.” Id. In doing so, the court
must assume liability will be established.
Vodenichar, 733 F.3d 497 at 505. As noted above,
because the home state exception only applies if all
of the primary defendants are citizens of the state in which
the action was filed, a determination that a non-local
defendant is a primary defendant renders the home state
exception inapplicable. Id. at 506.
Hyatt Corporation is clearly a “primary defendant,
” and therefore the home state exception is
inapplicable. Applying the first factor, Hyatt Corporation is
the “real target” of Livi's allegations
because, as described above, it is the entity whose alleged
conduct forms the bases of the allegations in the Complaint,
and is therefore directly liable to the proposed class and
sub-class of Banquet Servers. Applying the second and third
factors, Hyatt Corporation has potential exposure to the
entire class, as the entity responsible for hiring,
supervising, and paying all of the members of the proposed
class and sub-class of Banquet Servers. Hyatt Corporation
would also sustain the greatest loss if found liable, as the
entity responsible for the hiring, supervising and paying of
all of the members of the proposed class and sub-class of
Banquet Servers and as the entity directly responsible for
actions underlying the claims in the Complaint. Because Hyatt
Corporation is a non-local defendant and a primary defendant,
the home state exception does not apply. The Court therefore
has jurisdiction to decide Hyatt's motion for summary
judgment is granted “if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A fact is “material” if it “might
affect the outcome of the suit under the governing law . . .
.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). A factual dispute is “genuine”
if the evidence would permit a reasonable jury to return a
verdict for the nonmoving party. Id. In ruling on a
motion for summary judgment, the court must draw all
inferences from the facts in the light most favorable to the
nonmoving party. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986).
moving party “always bears the initial responsibility
of informing the district court of the basis for its
motion.” Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986). After the moving party has met its initial
burden, the nonmoving party must then “make a showing
sufficient to establish the existence of [every] element
essential to that party's case, and on which that party
will bear the burden of proof at trial.” Id.
at 322. Both parties must support their factual positions by:
“(A) citing to particular parts of materials in the
record . . .; or (B) showing that the materials cited do not
establish the absence or presence of a genuine dispute, or
that an adverse party cannot produce admissible evidence to
support the fact.” Fed.R.Civ.P. 56(c)(1). The materials
in the record that parties may rely on include
“depositions, documents, electronically stored
information, affidavits or declarations, stipulations
(including those made for purposes of the motion only),
admissions, interrogatory answers, or other materials.”
Fed.R.Civ.P. 56(c)(1)(A). In opposing a motion for summary
judgment, the nonmoving party may not “rely merely upon
bare assertions, conclusory allegations or suspicions.”
Fireman's Ins. Co. of Newark, N.J. v. DuFresne,
676 F.2d 965, 969 (3d Cir. 1982).
essence, the inquiry at summary judgment is “whether
the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.”
Anderson, 477 U.S. at 251-52.
counts of the Complaint remain before the
(1) Count II: Violation of the PMWA for failure to pay Livi
and the proposed class a rate of 1.5 times their regular
hourly wage for overtime hours worked;
(2) Count III: Violation of the PMWA for the retention of a
portion of the service charges ...