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Yarpah v. Bowden Hospitality Newton, LLC

Superior Court of Massachusetts, Suffolk, Business Litigation Session

May 18, 2017

Roland Yarpah and All Others Similarly Situated
v.
Bowden Hospitality Newton, LLC dba Crowne Plaza Hotel et al No. 137154

          Filed May 22, 2017

          MEMORANDUM AND ORDER ON INTERNATIONAL HOTELS GROUP RESOURCES, INC.'S MOTION TO DISMISS and PLAINTIFF'S MOTION TO AMEND HIS COMPLAINT TO ADD NEW DEFENDANTS

          Kenneth W. Salinger, Justice of the Superior Court.

         Roland Yarpah worked for several years at the Crowne Plaza Hotel in Newton, Massachusetts. He claims that the Hotel violated the Massachusetts Tips Act (G.L.c. 149, § 152A) by levying an eight percent " administrative charge" for functions where food or alcohol are served, not telling customers that this charge is not a tip paid to servers, and nonetheless keeping monies collected for this charge instead of paying them to wait staff and service bartenders. Yarpah sued Bowden Hospitality Newton, LLC, which owns and operates the Hotel. He has also sued Intercontinental Hotels Group Resources, Inc. (IHGR).

         IHGR has moved to dismiss the claims against it with prejudice on the ground that the facts alleged do not plausibly suggest that IHGR charged, received, or had any control over the disputed charge. IHGR also showed that it has no contractual relationship with Bowden, and that Holiday Hospitality Franchising, LLC (" HHFL") is the entity that gave Bowden license to do business as a Crowne Plaza Hotel.

         Yarpah then moved to amend the complaint to delete IHGR as a defendant and instead sue HHFL and its parent Six Continent Hotels, Inc. (" SCH"); both of these entities assert that Yarpah has no standing to sue them. Yarpah also seeks to add as a defendant Ward Childs, who manages the hotel for Bowden.

         The Court will allow the motion to dismiss the claims against IHGR with prejudice because Yarpah made clear at oral argument that he does not oppose that request. It will also permit Yarpah to add Childs as a defendant, without opposition.

         The Court will deny the request to add HHFL and SCH as defendants, however. Neither of them had any control over or received any revenue from the administrative charges. As a result they owe no duty under the Tips Act, and Yarpah lacks standing to sue them. It would therefore be futile to amend the complaint to add them as defendants. See generally Johnston v. Box, 453 Mass. 569, 583, 903 N.E.2d 1115 (2009) (" Courts are not required to grant motions to amend prior [pleadings] where 'the proposed amendment . . . is futile' " (quoting All Seasons Servs., Inc. v. Commissioner of Health & Hosps. of Boston, 416 Mass. 269, 272, 620 N.E.2d 778 (1993)); Thermo Electron Corp. v. Waste Mgmt. Holdings, Inc., 63 Mass.App.Ct. 195, 203, 825 N.E.2d 545 (2005) (affirming denial of motion for leave to assert counterclaim that would have been futile).

         1. Legal Background

         HHFL and SCH assert that Yarpah lacks standing to sue them. Whether a plaintiff has standing raises an " issue of subject matter jurisdiction." Indeck Maine Energy, LLC v. Commissioner of Energy Resources, 454 Mass. 511, 516, 911 N.E.2d 149 (2009). A plaintiff has standing to sue a particular defendant if that defendant owed a legal duty to the plaintiff, breached that duty, and plaintiff suffered some injury as a result. See Sullivan v. Chief Justice for Admin. & Mgmt. of the Trial Court, 448 Mass. 15, 22-23, 858 N.E.2d 699 (2007). " It is not enough that the plaintiffs be injured by some act or omission of the defendant; the defendant must additionally have violated some duty owed to the plaintiffs." School Comm. of Hudson v. Board of Educ., 448 Mass. 565, 579, 863 N.E.2d 22 (2007), quoting Penal Inst. Comm'r for Suffolk County v. Commissioner of Corr., 382 Mass. 527, 532, 416 N.E.2d 958 (1981).

         1.1. The Tips Act

         Imposes a legal duty on any entity or person that requires customers to pay a tip for service performed by wait staff, service employees, or service bartenders, [1] or that requires customers to pay a service charge in lieu of such a tip. Specifically, the entity that collects such a tip or service charge must pay it over to the wait staff and service employees or bartenders in proportion to the service they provided, and may not retain the tip or service charge or distribute it in any other manner. See G.L.c. 149, § 152A. An entity charging for service performed by such personnel may only impose an administrative fee in addition to or instead of a service charge if it informs the customer in writing that the fee does not represent a tip or service charge. Otherwise, the fee must be treated as a service charge and distributed to the wait staff, service employees, and service bartenders. Id., § 152A(d); see also Bednark v. Catania Hospitality Group, Inc., 78 Mass.App.Ct. 806, 942 N.E.2d 1007 (2011).

         Entities that neither collect nor retain any part of a tip or service charge have no duty to employees under the Tips Act. For example, if one company employs wait staff to provide food and beverage service at certain events, and a different entity assesses a service charge on the customers paying for those events, the employer has no duty under the Tips Act because it did not submit any invoice to the customers, collect any payment from the customers, retain the service charge, or fail to pay the service charge revenues to the wait staff and service employees. See Cooney v. Compass Grp. Foodservice, 69 Mass.App.Ct. 632, 640-41, 870 N.E.2d 668 (2007).

         1.2. Challenging Standing

         A motion by an existing defendant to dismiss an action under Mass.R.Civ.P. 12(b)(1) for lack of standing (or other purported lack of subject matter jurisdiction) may do so based solely on the facts alleged in the ...


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