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The Honolulu Advertiser
Posted on: Thursday, December 4, 2008

Kahala Hotel sued over fee for food, beverage service

By Andrew Gomes
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

A man has sued the Kahala Hotel over a food and beverage service charge that he suspects wasn't given entirely as a tip to employees.

ADVERTISER LIBRARY PHOTO | 2001

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A Hawai'i resident has filed what is believed to be the first lawsuit on behalf of consumers targeting a relatively new state law involving disclosure of hotel or restaurant food and beverage service charges.

The suit, by Jason Kawakami, was filed against The Kahala Hotel and Resort, and seeks to obtain damages for anyone who paid a food and beverage service charge at the luxury hotel since March 2006.

A representative of the hotel could not be reached yesterday for comment.

The suit was filed yesterday afternoon by Kawakami through Honolulu law firm Perkin & Faria, and centers on a law passed in 2000 that requires clear disclosure to consumers if hotels or restaurants apply a food and beverage service charge that isn't entirely distributed as tip income to employees.

According to the law, not making such a disclosure constitutes unfair competition, and is deceptive to consumers.

Kawakami, an auto body shop worker, held a wedding reception at the Kahala Hotel last year, and paid a $4,811 service charge that represented 19 percent of the food and beverage bill, according to the suit.

Brandee Faria, an attorney representing Kawakami, said Kawakami initially assumed that the service employees received all of the service charge because there was no disclosure stating otherwise. Later, he suspected service employees didn't get all of the service charge, Faria said, adding that the law firm investigated further and filed the suit based on the results.

Faria said it's unclear how much of the service charge the hotel may have kept for other purposes, and that the suit attempts to obtain that information, prove the allegation and win restitution and damages on behalf of consumers.

"It doesn't matter if they retain $1 or 1 percent, it's a per se violation of the statute," she said.

The lawsuit also seeks to enjoin the Kahala Hotel from the alleged violation of the law.

Faria said she believes other Hawai'i hotels and restaurants charging food and beverage service charges of 15 percent to 23 percent are retaining part of those fees without proper disclosure, and that the law firm is investigating other cases that could lead to more lawsuits.

The state law, Hawaii Revised Statutes Section 481B-14, doesn't apply only to catered events, but also applies to restaurant bills where a gratuity is automatically included. If service workers don't receive all of the gratuity and consumers aren't advised of that policy, then the law is being broken, Faria said.

Steve Levins, executive director of the state Office of Consumer Protection, said the law isn't widely known and he's not aware of any lawsuits having been filed before on behalf of consumers over the issue.

Kawakami's lawsuit is seeking class-action status to represent hundreds if not thousands of customers of the Kahala Hotel since March 1, 2006, which is when a group of investors that bought the hotel in 2005 changed management of the property.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.