Davis v. Four Seasons Hotel Ltd.

LAUFUE§ARY

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IN THE SUPREME COURT OF THE STATE OF HAWAIT

~--oOo---

DARYL DEAN DAVIS, MARK APANA, ELIZABETH VALDEZ KYNE, EARL TANAKA,

THOMAS PERRYMAN, and DEBORAH SCARFONE, on behalf of themselves

and all others similarly situated,

Plaintiffs/Appellants,

vs.

f"‘*~;;

FoUR sEAsoNs HoTEL LIMITED, dba o

FOUR SEASONS RESORT, MAUI and ': gm

FOUR SEASONS RESORT, w §§ v

HUALALAI, and MSD CAPITAL, INC., “-; W3

Defendants/Appellees. j';: :j

No. 29362 ;;; ‘£

CERTIFIED QUESTION FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF HAWAYI

(Case 1:O8-cv-OO525-HG-LEK)

MARCH 29, 2010

MOON, C.J., NAKAYAMA, DUFFY, AND RECKTENWALD, JJ.;

WITH ACOBA, J., DISSENTING

OPINION BY RECKTENWALD J.

Plaintiffs-Appellants (collectively “Employees”) have

been or currently are employed as banquet servers at the

Defendants-Appellees Four Seasons Resort, Maui or Four Seasons

Resort, Hualalai on the island of HawaiH. Employees filed a

class action complaint against Defendants-Appellees1 (hereinafter

collectively referred to as “Four Seasons”) in the United States

District Court for the District of Hawafi (district court), and

1 Defendant-Appellee Four Seasons Resorts Limited operates the Four

Seasons Resort, Maui and Four Seasons Resort, Hualalai, which are both owned

by Defendant-Appellee MSD Capital.

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subsequently filed an Amended Complaint. Employees claimed,

inter alia, that Four Seasons violated HawaFi Revised Statutes

(HRS) § 48lB-142 by retaining a portion of a mandatory “service

charge” collected at banquets and other events and by failing to

notify customers that it was doing so.

Four Seasons moved to dismiss the Amended Complaint,

arguing, inter alia, that Employees do not have standing to

assert their claims for monetary damages under HRS §§ 480~2(e)

and 480-l3, quoted inL;a, because they are not businesses, f

competitors, or consumers, and because they failed to adequately

plead the effect of Four Seasons' alleged actions on competition

and therefore did not sufficiently allege antitrust injury.

On June 2, 2009, the district court3 certified the

following question pursuant to HawaFi Rules of Appellate

Procedure (HRAP) Rule 134:

2 HRS § 48lB-l4 (2008) prOVideS:

Hotel or restaurant service charge; disposition. Any

hotel or restaurant that applies a service charge for

the sale of food or beverage services shall distribute

the service charge directly to its employees as tip

income or clearly disclose to the purchaser of the

services that the service charge is being used to pay

for costs or expenses other than wages and tips of

emp1oyees.

3 The Honorable Helen Gillmor, United States District Judge,

presided.

4 HRAP Rule 13(a) states in pertinent part as follows:

when a federal district or appellate court certifies

to the Hawafi Supreme Court that there is involved in

any proceeding before it a question concerning the law

of HawaFi that is determinative of the cause and that

there is no clear controlling precedent in the HawaFi

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where plaintiff banquet server employees allege that

their employer violated the notice provision of H.R.S.

§ 48lB~l4 by not clearly disclosing to purchasers that

a portion of a service charge was used to pay expenses

other than wages and tips of employees, and where the

plaintiff banquet server employees do not plead the

existence of competition or an effect thereon, do the

plaintiff banquet server employees have standing under

H.R.S. § 480-2(e) to bring a claim for damages against

their employer?

This court entered an order accepting this certified

question on June l2, 2009.

For the reasons set forth herein, we answer the

certified question as follows:

Employees are “any persons” within the meaning of HRS

§§ 480-1 and 480-2(e), quoted ig§;a, and are within the category

of plaintiffs who have standing to bring a claim under HRS § 480-

2(e) for a violation of HRS § 48lB-l4.

However, based on the allegations contained in

Employees' Amended Complaint, Employees have not sufficiently

alleged the “nature of the competition” to bring a claim for

damages against Four Seasons under HRS §§ 480-2(e) and 480-13(a)

for a violation of HRS § 48lB-14.

I. BACKGROUND

This factual background is based primarily upon the

information certified to this court by the district court, as

well as the allegations contained within Employees' Amended

judicial decisions, the HawaFi Supreme Court may

answer the certified question by written opinion.

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Complaint. See TMJ Hawaii, Inc., v. Nippon Trust Bank, 113

HawaFi 373, 374, 153 P.3d 444, 445 (2007) (in answering a

certified question, this court relied upon the information

certified to the court by the district court and the facts set

forth in the plaintiff’s amended complaint).

Employees have all worked as food and beverage servers

for Four Seasons. Daryl Dean Davis, Mark Apana, Elizabeth Valdez

Kyne, Earl Tanaka, and Thomas Perryman have worked at the Four

Seasons Resort, Maui, and Deborah Scarfone has worked at the Four

Seasons Resort, Hualalai on the Big Island.

The Amended Complaint, which sought money damages,

alleged in relevant partW

4. For banquets, events, meetings and in

other instances, the defendants add a preset service

charge to customers’ bills for food and beverage

provided at the hotels.

5. However, the defendants do not remit the

total proceeds of the service charge as tip income to

the employees who serve the food and beverages.

6. Instead, the defendants have a policy and

practice of retaining for themselves a portion of

these service charges (or using it to pay managers or

other non-tipped employees who do not serve food and

beverages).

7. The defendants do not disclose to the

hotel's customers that the service charges are not

remitted in full to the employees who serve the food

and beverages.

8. For this reason, customers are misled into

believing that the entire service charge imposed by

the defendants is being distributed to the employees

who served them food or beverage when, in fact, a

smaller percentage is being remitted to the servers.

As a result, customers who would otherwise be inclined

5 Employees' Amended Complaint also included Counts II - V, in which

Employees' alleged that Four Seasons' conduct constituted intentional

interference with contractual relations and/or advantageous relations, breach

of implied contract, unjust enrichment, and unpaid wages pursuant to HRS §§

388-6, 10 and 11.

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to leave an additional gratuity for such servers

frequently do not do so because they erroneously

believe that the servers are receiving the entire

service charge imposed by the defendants.

_ c0uNT 1

(Hawaii Revised Statutes, Sections 48lB-14, 481B-4,

and 430-2 5 )

The action of the defendants as set forth above

are in violation of Hawaii Revised Statutes Section

481B-14. Pursuant to Section 481B-4, such violation

constitutes an unfair method of competition or unfair

and deceptive act or practice within the meaning of

Section 480-2. Section 480~2(e) permits an action

based on such unfair methods of competition to be

brought in the appropriate court, and a class action

for such violation is permitted and authorized by

6 HRS § 480-2 (2008) provides:

Unfair competition, practices, declared unlawful. (a)

Unfair methods of competition and unfair or deceptive

acts or practices in the conduct of any trade or

commerce are unlawful.

(b) In construing this section, the courts and

the office of consumer protection shall give due

consideration to the rules, regulations, and decisions

of the Federal Trade Commission and the federal courts

interpreting section 5(a)(l) of the Federal Trade

Commission Act (15 U.S.C. 45(a)(l)), as`from time to

time amended.

(c) No showing that the proceeding or suit

would be in the public interest (as these terms are

interpreted under section 5(b) of the Federal Trade

Commission Act) is necessary in any action brought

under this section.

(d) No person other than a consumer, the

attorney general or the director of the office of

consumer protection may bring an action based upon

unfair or deceptive acts or practices declared

unlawful by this section.

(e) Any person may bring an action based on

unfair methods of competition declared unlawful by

this section.

HRS § 481B-4 (2008) provides:

Remedies. Any person who violates this chapter shall

be deemed to have engaged in an unfair method of

competition and unfair or deceptive act or practice in

the conduct of any trade or commerce within the`

meaning of section 480-2.

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Section 480-13[7] and Rule 23 of the Federal Rules of

Civil Procedure.

On January 30, 2009, Four Seasons moved to dismiss the

Amended Complaint, arguing, inter alia, that Employees lacked

standing under HRS § 480-2(e) to bring a claim for unfair methods

of competition because they are not businesses, competitors, or

consumers. Four Seasons also asserted that Employees failed to

properly plead the nature of the competition.

The district court held a hearing on the motion to

dismiss on March 24, 2009. Following oral argument, Judge

Gillmor denied Four Seasons' motion to dismiss with leave to

renew the motion following receipt of a ruling by this court with

respect to the issue of standing of the Employees to bring the

action. An order certifying the question was entered on June 2,

7 HRS § 480-13 (2008) provides:

Suits by persons injured; amount of recovery,

injunctions. (a) Except as provided in subsections (b)

and (c), any person who is injured in the person's

business or property by reason of anything forbidden

or declared unlawful by this chapter:

(1) May sue for damages sustained by the person,

and, if the judgment is for the plaintiff, the

plaintiff shall be awarded a sum not less than $1,000

or threefold damages by the plaintiff sustained,

whichever sum is the greater, and reasonable

attorney's fees together with the costs of suit;

provided that indirect purchasers injured by an

illegal overcharge shall recover only compensatory

damages, and reasonable attorney's fees together with

the costs of suit in actions not brought under section

430-14(c); and *‘

(2) May bring proceedings to enjoin the unlawful

practices, and if the decree is for the plaintiff, the

plaintiff shall be awarded reasonable attorney's fees

together with the costs of suit.

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2009, and transmitted to this court the next day.

In addition to the briefs of both parties, several

amici curiae also filed amicus briefs in this case as follows:

(1) Gustavo Rossetto (hereinafter “Amicus Curiae Rossetto”); (2)

Fairmont Hotels and Resorts (U.S.), Inc., Oaktree Capital

Management, LP, Kuilima Resort Company, Turtle Bay Resort

Company, Turtle Bay Resort Hotel, LLC, TBR Property LLC, and

iBenchmark Hospitality, Inc.} (3) Starwood Hotels & Resorts

Worldwide, Inc.; and (4) HTH Corporation, Pacific Beach Hotel,

and Pagoda Hotel.

II. DISCUSSION

A. Introduction

1. App1icable Statutes

The Amended Complaint alleges that Four Seasons engaged

in unfair methods of competition in violation of HRS § 48lB-14 by

withholding a portion of the service charge imposed on the sale

of food and beverages at Four Seasons' resorts without advising

customers that it was doing so. In their Opening Brief,f

Employees argue that this conduct “leads customers to believe

that the waitstaff are receiving a tip of 1B~22% of the food and

beverage bill and deters customers from leaving any additional`

gratuity .”

HRS § 481B-14 provides that:

Any hotel or restaurant that applies a service charge

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for the sale of food or beverage services shall

distribute the service charge directly to its

employees as tip income or clearly disclose to the

purchaser of the services that the service charge is

being used to pay for costs or expenses other than

wages and tips of employees,

Pursuant to HRS § 481B-4, any person who violates

chapter 481B, including § 481B-14, “shall be deemed to have

engaged in an unfair method of competition and unfair or

deceptive act or practice in the conduct of any trade or commerce

within the meaning of section 480-2.” HRS § 480-2(a), which is

virtually identical to section 5(a)(1) of the Federal Trade

Commission Act (FTCA), 15 U.S.C. § 45(a)(1),B declares that any

“[u]nfair methods of competition and unfair or deceptive acts or

practices in the conduct of any trade or commerce are unlawful.”

Only consumers, the attorney general, or the director

of the office of consumer protection are authorized to bring an

action based on unfair or deceptive acts or practices. HRS §

480-2(d). Actions based on unfair methods of competition, on the

other hand, are not so 1imited.' Instead, HRS § 480-2(e) provides

that “|alny person may bring an action based on unfair methods of

3 Section 5(a)(1) of the FTCA provides that “[u]nfair methods of

competition in or affecting commerce, and unfair or deceptive acts or

practices in or affecting commerce, are hereby declared unlawful.” 15 U.S.C. §

45(a)(1). HRS § 480-2 “differs from section 5 of the FTCA in one essential

aspect - enforcement.” Hawafi Med. Ass'n v. HawaFi Med. Serv. Ass’n, 113

Hawai‘i 77, 109, 148 P.3d 1179, 1211 (2006) . HRS § 480-2(€) provides a private

right of action with regard to unfair methods of competition claims, iQé,

while the Federal Trade Commission (FTC) has sole authority to enforce the

FTCA, §gg Robert's Hawafi Sch. Bus, Inc. v. Laupahoehoe Transp. Co., Inc., 91

Hawaii 224, 249, 982 P.2d 853, 878 (1999), superseded by statute, 2002 Haw.

Sess. Laws Act 229, § 2 at 916-l7, as recognized in HawaFi Med. Ass'n, 113

HawaFi at 107, 148 P.3d at 1209; Star Markets, Ltd. v. Texaco, Inc., 945 F.

supp. 1344, 1346 (D. Hawaii 1996).

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competition declared unlawful by this section.” (emphasis

added).9 Furthermore, HRS § 480-13(a), which is similar to

section 4 of the Clayton Act, 15 U.S.C. § 15(a),m provides that

“any person who is injured in the person's business or property

by reason of anything forbidden or declared unlawful by [chapter

480]: (1) [m]ay sue for damages . . . ; and (2) [m]ay bring

proceedings to enjoin the unlawful practices[.]”

2. The Parties’ Arguments

Employees allege that they have standing based on the

plain meaning of the relevant statutes, the legislative history

of HRS §§ 481B-14 and 480-2(e), and relevant Hawafi and federal

9 The availability of a private right of action for unfair methods

of competition in Hawaii has changed over the last several years. In Ai v.

Frank Huff Agency, Ltd., 61 Haw. 607, 612, 607 P.2d 1304, 1308-09 (1980),

overruled by Robert's Hawafi Sch. Bus, Inc. v. Laupahoehoe Transp. Co., Inc.,

91 Hawaii 224, 982 P.2d 853 (1999), and Island Tobacco Co., Ltd. v. R.J.

Re@olds Tobacco CO., 63 Haw. 289, 300-Ol, 627 P.2d 260, 268-69 (1981),

overruled by Robert's Hawafi, this court held that HRS § 480~2 afforded

plaintiffs a private right of action for unfair methods of competition. In

Robert's Hawafi, this court overruled §§ and Island Tobacco to the extent

that they held there existed such a private right and instead held that “there

is no private claim for relief under HRS § 480-13 for unfair methods of

competition in violation of HRS § 480-2.” 91 HawaiH at 252, 982 P.2d at 88l.

Thereafter, in 2002, the legislature amended HRS § 480-2 to add subsection (e)

which makes clear there is such a private right. 2002 Haw. Sess. Laws Act

229, § 2 at 916-17. In Hawafi Med. Ass’n v. Hawafi Med. Services Ass’n, 113

Hawai‘i '77, 107, 148 P.3d 1179, 1209 (2006), this court held that "[w]e do not

believe the amendment ‘overruled’ Robert's HawaiH_. . . but instead simply

provided a new right that did not previously exist.”

m Section 4 of the Clayton Act, 15 U.S.C. § 15(a), provides:

(a) Amount of recovery; prejudgment interest

Except as provided in subsection (b) of this section,

any person who shall be injured in his business or

property by reason of anything forbidden in the

antitrust laws may sue therefor . . . , and shall

recover threefold the damages by him sustained, and

the cost of the suit, including a reasonable

attorney's fee.

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law. Specifically, Employees argue that the plain meaning of

“any person” as found in HRS § 480-2(e), and as defined by HRS §

480-1, does not limit standing to businesses, competitors or

consumers, and that even if this court determines that the phrase

“any person” is ambiguous, the legislative history of HRS § 480-

2(e) demonstrates that “[e]ach one of the plaintiffs here

qualifies as ‘any person' under the law.”“ Furthermore,

Employees argue that the legislative history of HRS § 481B-14

“reflects a specific legislative intent to protect plaintiff food

and beverage servers.” Additionally, Employees argue that based

on the plain meaning of HRS §§ 480B-14 and 481B~4, “a violationi

of § 481 B-14 is ‘deemed' by the language of the statute to be an

unfair method of competition . . . and no further proof that such

a violation is an [unfair method of competition] is required.”

Finally, Employees argue that “[t]o the extent it is applicable,

federal antitrust law supports the conferral of standing on

plaintiffs.””

Four Seasons counters that Employees “lack standing to

n Employees also argue that a limited interpretation of “any person”

so as to exclude Employees “risks violation the equal protection clause of the

Hawaii Constitution (Artic1e I, Section 5) because it requires the court to

deny the protection of Chapter 480 to employees, who may be [unfair methods of

competition] victims similarly situated to other ‘persons' receiving

protection under the statute, without a reasonable basis.” Because we

conclude that Employees fall within the definition of “any person,” we do not

need to address this argument,

n Employees also contend that Employees can enforce HRS § 481B-14

through HRS §§§ 388-6, 10 and 11. However, this argument will not be

addressed because it is beyond the scope of the certified question.

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bring their damages claims under HRS § 481B-14 as that statute is

currently written and based on the allegations (or lack thereof)

in [their] amended Complaint.” Specifically, Four Seasons argues

that the legislative history of HRS § 48i8-14 shows that it is

not a wage and hour law intended to protect employees or create a

labor standard,” but is instead “a consumer protection law

designed to prevent businesses from engaging in unfair and/or

anticompetitive behavior.” Furthermore, Four Seasons argues that

the broad “any person” language of HRS § 480-2(e) “should not be

interpreted literally” and should instead be limited to

businesses, competitors, or consumers“ based on the legislative

history of HRS § 480-2(e) and this court’s holding in HawaiH_

Medical Association v. HawaFi Medica1 Services Association, 113

HaWaFi 77, lO5, 148 P.3d 1179, 1212 (2006) (hereinafter “HMA”),

as well as federal courts' interpretations of section 4 of the

3 Four Seasons also argues that if_HRS § 481B-14 “was intended to

create a wage claim for employees, it is strikingly - if not

unconstitutionally - vague. Among other things, it does not specify which

employees should be paid the service charge as tip income[,]” and “allows the

employer to pick any employee to receive the monies in any amount.”

This argument, however, does not relate to the issue of whether or

not employees have standing under HRS § 480-2(e) to bring a claim for damages

for a violation of HRS § 481B-14, but instead relates the merits of such a

claim. Accordingly, we do not address it here.

“ At some points in its Answering Brief, Four Seasons also includes

references to “other market participants,” arguing that HRS § 480-2(e) is

limited to businesses, competitors, consumers or “other market participants,”

At oral argument, counsel for Four Seasons argued that “businesses” may be

broadly interpreted under this court’s holding in §§§ to include groups such

as trade associations which are market participants, but did not further

explain what other entities may be considered to be “market participants,” see

MP3: Oral Argument, Hawaii Supreme Court, at 39:37 - 40:O1 (Jan. 21, 2010),

available at

http://www.courts.state.hi.us/courts/oral_arguments/archive/oasc29862.html,

other than indicating that employees are not, id. at 57:l5 - 57:23.

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Clayton Act. Additionally, Four Seasons argues that both Hawaii

and federal case law require that Employees plead the nature of

the competition, and that this requirement must be satisfied even

ifia plaintiff alleges a per se violation of Hawafi antitrust

law.

As discussed below, Employees clearly qualify as “any

person” within the plain meaning of HRS §§ 480-1 and 480-2(e),

and the legislative history of HRS § 480-2(e) is consistent with

this interpretation. Contrary to Four Seasons' assertions,

standing to sue under HRS §§ 480-2(e) and 480-13(a) is not

limited so as to preclude Employees from bringing suit.

Moreover, both the plain language and legislative history of HRS

§ 481B-14 support the conclusion that Employees can bring claims

for violations of HRS § 481B-14, as long as all other

requirements of §§ 480-2(e) and 480-13(a) are met.

Additionally, Employees have sufficiently alleged a

direct injury in fact to their “business or property” within the

meaning of HRS § 480-13(a). However, Employees have failed to

allege the “nature of the competition” in their Amended

Complaint, which is required in order to bring a claim for

damages based on Four Seasons' alleged unfair methods of

competition.

B. Employees are “persons” within the meaning of HRS §§ 480-1

and 480-2(e), and have standing to bring a claim under HRS §

480-2(e) for a violation of HRS § 481B-14

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1. Employees are “persons” for purposes of HRS §§ 480-1

and 480-2(e)

HRS § 480-2(e) provides that “any person” can sue for

unfair methods of competition, while HRS § 480-1 defines “person”

to include “individuals, corporations, firms, trusts,

partnerships, limited partnerships, limited liability

partnerships, limited liability limited partnerships, limited

liability companies, and incorporated or unincorporated

associations, . . . .” Therefore, under the plain language of

HRS §§ 480-1 and 480-2(e), Employees constitute “any person”

within the meaning of § 480-1 because they are “individuals.”

Since the language of §§ 480-1 and 480-2(e) is plain, clear, and

unambiguous, the statute should be applied as written. §§§y

§ygy, State v. Yamada, 99 Haw. 542, 553, 57 P.3d 467, 478 (2002)

(“[i]nasmuch as the statute's language is plain, clear, and

unambiguous, our inquiry regarding its interpretation should be

at an end”); Cieri v. Leticia Query Realty, Inc., 80 Haw. 54, 67,

905 P.2d 29, 42 (1995) (“[w]here the language of the statute is

plain and unambiguous, our only duty is to give effect to its

plain and obvious meaning”) (citation omitted).

However, even if the language of HRS §§ 480-2(e) and

480-1 is considered to be unclear or ambiguous and the

legislative history of HRS § 480-2(e) is therefore examined, it

confirms that “any person” is not limited to consumers,

businesses, or competitors, and can in fact extend to Employees.

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HRS § 480-2(e) was enacted in 2002 in response to Roberts HawaiH

School Bus, Inc. v. Laupahoehoe TransDortation Co., Inc., 91

HawaFi 224, 252, 982 P:2d 853, 881 (1999), superseded by

statute, 2002 Haw. Sess. Laws Act 229, § 2 at 916-17, §§

recognized in EMA, 113 HawaFi at 107, 148 P.3d at 1209, in which

this court held that “there is no private claim for relief under

HRS § 480-13 for unfair methods of competition in violation of

HRS § 480-2.”$ §§§ H. Stand. Comm. Rep. No. 1118, in 2002 House

Journal, at 1665 (noting that HRS § 480-2 was amended in response

to a “1999 Supreme Court interpretation of section 480-2”).

The “any person” language initially proposed for HRS

§ 480-2(e) never changed from the time the bill was first

introduced as S.B. 1320 until it was signed into law as Act 229.

Compare S.B. 1320, 21st Leg., Reg. Sess. (2002) wiph 2002 Haw.

Sess. Laws Act 229, § 2 at 916-17. Most of the committee reports

suggest that the “any person” language is to be construed broadly

so as to encompass plaintiffs like Employees who are neither

consumers, businesses nor competitors. §§§ S. Stand. Comm. Rep.

No. 448, in 2001 Senate Journal, at 1116-17 (“The purpose of

[S.B. l320] is to allow a private citizen to bring an action

based on unfair methods of competition.”) (emphasis added); S.

Stand. Comm. Rep. No. 931, in 2001 Senate Journal, at 1295 (“The

purpose of [S.B. l320] is to amend the antitrust and unfair

competition law to allow any person to bring a lawsuit for

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enforcement . . .”) (emphasis added); H. Stand. Comm. Rep. No.

1118, in 2002 House Journal, at 1665 (“The purpose of this bill

is to permit private actions for unfair methods of competition.”)

(emphasis added). This interpretation is also consistent with

the Senate floor discussion of S.B. No. 1320.”

Four Seasons argues that standing under HRS § 480-2(e)

is limited to businesses, competitors or consumers, so as not to

include Employees, based on this court’s statement in HMA that

“[b]y its plain terms, HRS § 480-2(e) authorizes any person,

i.e., businesses and individual consumers, to bring an action

grounded upon unfair methods of competition[,]” 113 Hawafi at

110, 148 P.3d at 1212 (emphasis in original), which is a

reference to a report of the House Consumer Protection & Commerce

and Judiciary & Hawaiian Affairs committees, indicating that

“[t]his bill amends the law to clearly give businesses and

consumers the right to enforce the law . . . [,]” H. Stand. Comm.

Rep. No. 1118, in 2002 House Journal, at 1665 (emphasis added).

This argument must be rejected, however, because when viewed in

context, the reference to “businesses and individual consumers”

in the committee report does not appear to have been an exclusive

5 In support of the bill, Senator Matsunaga stated that the bill

“amends the antitrust and unfair competition law to allow any person to bring

a lawsuit for enforcement.” 2002 Senate Journal, at 626 (statement of Sen.

Matsunaga) (emphasis added). Senator Hogue, who opposed the bill, expressed

similar views about its scope in a subsequent debates “This bill, if enacted,

would open the floodgates and allow anybody to file such a suit, no matter how

frivolous.” 2002 Senate Journal, at 724 (statement of Sen. Hogue) (emphasis

added).

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definition of who may bring suit.“ Similarly, when viewed in

context, the foregoing passage in §MA appears to have been

intended to explain that persons or entities in addition to

competitors may bring an action under HRS § 480-2(e) as long as

they meet the additional standing requirements discussed below,

in part II.C. §§§ §MA, 113 HaWaFi at 110, 148 P.3d at 1212 (“To

require that the plaintiffs in this case be competitors of HMSA

would contravene the plain language of subsection (e) and the

intent of the legislature in amending the subject statute.”).

Additionally, a broad interpretation of “any person” is

consistent with the principle that, as a remedial statute,

chapter 480 must be construed liberally. Cieri v. Leticia Query

Realty, Inc., 80 HaWafi 54, 68, 905 P.2d 29, 43 (1995) (HRS

chapter 480 is a remedial statute, which is ‘to be construed

liberally in order to accomplish the purpose for which [it was]

“ The committee report states that:

Your Committees find that only the Attorney General

may bring an action to enforce the antitrust, or

unfair methods of competition law. This restriction

was the result of a 1999 Supreme Court interpretation

of section 480-2, Hawaii Revised Statutes. However,

the Attorney General does not have the resources to

investigate and litigate all price-fixing claims, This

bill amends the law to clearly give businesses and

consumers the right to enforce the law if the Attorney

General declines to commence an action based on the

claim.

H. Stand. Comm. Rep. No. l118, in 2002 House Journal, at 1665.

Thus, the report was focusing on the question of whether persons

other than the Attorney General should be able to bring suit, rather than

providing an exclusive list of which persons would be able to bring suit if

the statute was amended.

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enacted . . . .'”) (citation omitted).

Four Seasons also argues that federal judicial

interpretations of the phrase “any person” in similar federal

antitrust statutes also limit standing to businesses, consumers,

or competitors. For example, Four Seasons relies on vinci v.

Waste Management, Inc., 80 P.3d 1372 (1996), for the proposition

that the Ninth Circuit has limited standing to “only certain

plaintiffs[.]” Four Seasons further notes that HRS § 480~3

states that “[t]his chapter shall be construed in accordance with

judicial interpretations of similar federal antitrust statutes,

A review of federal case law interpreting the phrase'

“any person” in section 4 of the Clayton Act, 15 U.S.C. § 15(a),‘

which is analogous to HRS § 480-l3(a), demonstrates that “any

person” is ppg so limited. Instead, the Supreme Court has

observed that “[t]he statute does not confine its protection to

consumers, or to purchasers, or to competitors, or to

sellers. . . . The Act is comprehensive in its terms and

coverage, protecting all who are made victims of the forbidden

practices by whomever they may be perpetrated.” Blue Shield of

Virginia v. McCready, 457 U.S. 465, 472-485 (1982) (citation

omitted) (plaintiff, who was an individual receiving health care

coverage under a health plan purchased by her employer from the

defendant (Blue Shield), had antitrust standing to sue under

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section 4 of the Clayton Act for Blue Shield's alleged failure to

reimburse her for costs of treatment); see also Novell, Inc. v.

Microsoft Corp., 505 F.3d 302, 311-15 (4th Cir. 2007) (plaintiff

was a software developer and had antitrust standing to sue a

defendant manufacturer of computer operating system software even

though the plaintiff was not a consumer or competitor and did not

operate in the same market as the defendant); American Ad Mgmt.,

Inc., v. General Telephone Co. of California, 190 F.3d 1051, 1057

(9th Cir. 1999) (holding that authorized sellers of advertising

space, who purchased advertising space in the defendant’s Yellow

Pages telephone directory and then sold the space to customers,

had antitrust standing even though not consumers or competitors);

EiChorn V. AT&T Corp., 248 F.3d 13l, 141-42 (3d Cir. 2001) 0

(former employees of a subsidiary corporation who challenged a

no-hire agreement of the parent corporation, alleging that the

agreement was a conspiracy to restrain competition in the

relevant labor market, had federal antitrust standing because the

agreement precluded them from seeking re-employment from at least

three divisions of the parent corporation within the competitive

market).

The Ninth Circuit’s holding in y;ppi is not

inconsistent with this analysis. In yippi, the plaintiff was a

former employee of a waste removal corporation who brought an

action against his former employer, alleging that he was

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discharged for refusing to cooperate in the employer’s anti-

competitive scheme to drive a joint venturer out of business and

engage in predatory price-fixing. 80 F.3d at 1373-74. Four

Seasons relies on a passage from the Ninth Circuit’s opinion

which stated that “[a] plaintiff who is neither a competitor nor

a consumer in the relevant market does not suffer ‘antitrust

injury.'” Id. at 1376 (citation omitted). However, the court’s

subsequent discussion indicates that although “antitrust standing

is generally limited to customers and competitors,” employees can

be afforded standing in certain circumstances. ldg (emphasis

added).

The court in yingi focused on the narrow issue of when

a terminated employee has antitrust standing to challenge the

loss of his or her job as an antitrust violation. For example}

the court recognized that former employees who were “essential

participants” in an anti-competitive scheme and whose termination

is a “necessary means” to accomplish the scheme can obtain

antitrust standing. ldy The court held that the plaintiff in

vinci did not fall within this category of former employees

because he did not “allege any facts which suggest that he was

essential to the alleged antitrust scheme or that his termination

was necessary to accomplish the scheme.” lpg at 1376-77; ppg

Ostrofe v. H.S. Crocker Co., Inc., 740 F.2d 739, 745-46 (9th Cir.

1984) (former employee who had alleged that he had been

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discharged after refusing to engage in the employer’s scheme to

fix prices in violation of federal antitrust law had antitrust

standing because he was “an essential participant in the scheme

to eliminate competition” in the industry and “his discharge was

a necessary means to achieve the [employer's] illegal end”);

Ashmore v. Northeast Petroleum Div. of Cargill, Inc., 843 F.

Supp. 759, 765-72 (D. Me. 1994) (former employees had federali

antitrust standing to sue for alleged price discrimination by

their employer since they were integral to the employer’s anti-

competitive scheme in that they either had to take an active role

in implementing the scheme or face discharge).

yipgi, therefore, does not stand for the proposition

that the Ninth Circuit has limited antitrust standing to only

businesses, competitors, or consumers, to the exclusion of

employees or other individuals. 80 F.3d at 1376-77; see also

American Ad Mgmt., 190 F.3d at 1057 (rejecting the defendant’s

claim that standing is limited to consumers and competitors, and

recognizing that “[t]he Supreme Court has never imposed"a

‘consumer or competitor' test but has instead held the antitrust

laws are not so limited”). Instead, Vinci indicates that

antitrust standing may extend beyond businesses, competitors, or

consumers and provides a specific framework for analyzing the

distinct issue of antitrust standing for a terminated employee.

In sum, based upon the plain language of the statute,

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Employees are “individuals” within the meaning of HRS § 480-1 and

therefore qualify as “persons” under HRS §§ 480-2(e) and 480-

13(a). Additionally, the legislative history of HRS § 480-2(e)

does not evince a clear intent by the legislature to preclude

employees from filing an unfair methods of competition claim, but

rather indicates that the language is intended to be interpreted

broadly. Finally, the federal case law would not require a

contrary result, Therefore, Employees have standing to sue under

HRS §§ 480-2(e) and 480-13(a) if they meet the additional

requirements discussed below;

2. The plain language and the legislative history of HRS

§ 481B-14 establish that Employees have standing to

bring a claim under HRS § 480-2(e) for a violation of

HRS § 481B-14

Four Seasons argues that Employees lack standing to

bring an unfair methods of competition claim for violation of HRS

§ 481B-14 because it “is a consumer protection law designed to

prevent businesses from engaging in unfair and/or anticompetitive

behavior.” In making this argument, Four Seasons relies on the

legislative history of HRS § 481B-14. Employees respond that the

legislative history demonstrates that “one of the problems the

statute is intended to remedy is that ‘employees may not be

receiving tips or gratuities’ that customers intend to be

distributed to the employees.” Employees further contend that

“nothing in the committee reports demonstrates a legislative

intent to deny employees the ability to seek redress for

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violation of § 481B-14.”

As a threshold matter, we observe that the plain

language of HRS § 481B-14 is inconsistent with Four Seasons'

argument that Employees cannot obtain standing to sue for a

violation of HRS § 481B-14. HRS § 48lB-14 provides that any

hotel or restaurant that applies a service charge “shall

distribute the service charge directly to its employees” or

“clearly disclose to the purchaser” that it is withholding some

of the service charge. HRS § 481B-4 provides that “[a]ny person

who violates [chapter 481B] shall be deemed to have engaged in an

unfair method of competition and unfair or deceptive act or

practice . . . .” Nothing in either provision purports to

_preclude employees from seeking to enforce those provisions

pursuant to HRS § 480-2(e). Since we have concluded that

employees are “persons” who may bring an action under HRS § 480-

2(e), see section II.B.1, supra, the plain language of these

provisions is inconsistent with Four Seasons' position. See

Cieri, 80 Haw. at 67, 905 P.2d at 42 (“[w]here the language of

the statute is plain and unambiguous, our only duty is to give

effect to its plain and obvious meaning”) (citation omitted). In

any event, as we discuss below, the legislative history of HRS §

481B-14 does not reflect an intent to preclude enforcement by

employees.

In April of 2000, the legislature passed House Bill No.

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2123 (H.B. No. 2123, H.D. 2), which was signed into law as Act

16, and codified within chapter 481B entitled “Unfair and

Deceptive Practices” as HRS § 481B-14. Section 1 of Act 16

states that “[t]he legislature finds that Hawaii’s hotel and

restaurant employees may not be receiving tips or gratuities

during the course of their employment from patrons because

patrons believe their tips or gratuities are being included in

the service charge and being passed on to the employees.” 2000

Haw. Sess. Laws Act 16, § 1 at 21-22. lt also states that:

The purpose of this Act is to require hotels and

restaurants that apply a service charge for food or

beverage services, not distributed to employees as tip

income, to advise customers that the service charge is

being used to pay for costs or expenses other than

wages and tips of employees.

2000 Haw. Sess. Laws Act 16, § 1 at 22.

The legislative history of HRS § 481B-14 includes three

forms of the bill (original, House Draft 1 (H.D.1) and House

Draft 2 (H.D.2)), three committee reports, and Act 16 as signed

into law by the Governor. H.B. 2123, H.D.1, H.D.2, 20th Leg.,

Reg. Sess. (2000); 2000 Haw. Sess. Laws Act 16, § 1 at 21-22. At

all times, including when signed into law as Act 16, the bill was

entitled “Relating to wages and Tips of Employees.”" Id.

" Employees argue that “[t]he title to the Act is pivotal in

dismantling Defendants’ claim that the law was not meant to benefit employees

because the Hawaii Constitution provides at Article III, Section 14 that: ‘No

law shall be passed except by bill, Each law shall embrace but one subject,

which shall be expressed in its title.'” However, although we believe the

title is instructive in that it appears to reflect the legislature's concern

that employees may not always be receiving the service charges imposed by

their employers, we do not believe it is dispositive of the issue of whether

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Initially introduced as HB 2123, the bill would have,

inter alia, added a definition for “tips” in HRS § 387-1 that

would include any service charges imposed by the employer, and

amended HRS § 388-6 to prohibit employers from withholding tips

from employees. §§§ H.B. 2123, 20th Leg., Reg. Sess. (2000).

According to the report of the House Committee on Labor & Public

'Employment, which was the first committee to consider the bill,

it was originally intended to “strengthen Hawaii’s wage and hour

law to protect employees who receive or may receive tips or

gratuities from having these amounts withheld or credited to

their employers.” H. Stand. Comm. Rep. No. 479-00, in 2000 House

Journal, at 1155.

The Hotel Employees and Restaurant Employees, Local 5,

union testified in support of the proposed bill. lgy The

Department of Labor and Industrial Relations [DLIR] and the ILWU

Local 142, however, expressed concerns.“ Based on those

the legislature intended to afford Employees standing to sue for HRS § 481B-

14 violations.

m Specifically, the Committee Report notes that:

The [DLIR] expressed concerns that the bill, as

drafted, would delete the tip credit in its entirety

thereby disallowing employers from taking any offset

from the employees’ wages. DLIR testified that since

the current rules concerning tips and gratuities are

in line with federal regulations, changing the

definitions would cause a lot of confusion for both

_ employers and employees.

H. Stand. Comm. Rep. No. 479-00, in 2000 House Journal, at 1155. The ILwU

Local 142 also expressed concerns that “changing the definition of tips would

cause much confusion[.]” Id.

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concerns, the House Committee on Labor and Public Employment

“amended the bill by deleting its contents and inserting a new

section regarding unfair and deceptive business practices.” ;Qy

Thus, H.D.1 reflects the Committee's decision to amend Chapter

481B (Unfair and Deceptive Trade Practices) rather than Chapter

387 (wage and Hour Law). The new section, which eventually

became § 481B-14, would “require[] that any hotel or restaurant

applying a service charge to distribute it to the employees or

clearly state that the service charge is being used to pay for

` costs or expenses other than wages for employees.” Id.

H.D.1 was then considered by the House Committee on

Finance, which made only “technical, nonsubstantive amendments”

to the bill, which, as amended, became H.D.2. _gg H. Stand.

Comm. Rep. No. 854-00, in 2000 House Journal, at 1298. The

Committee's report, dated March 3, 2000, indicated that the

bill's purpose “is to prevent unfair and deceptive business

practices.” lgy

The bill was subsequently considered by the Senate

Committee on Commerce and Consumer Protection, which recommended

adoption of the bill without further amendment. The Committee's

April 3, 2000 report indicates that “[t]he purpose of this

measure is to enhance consumer protection," and further noted

that:

Your Committee finds that it is generally understood

that service charges applied to the sale of food and

beverages by hotels and restaurants are levied in lieu

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of a voluntary gratuity, and are distributed to the

employees providing the service. Therefore, most

consumers do not tip for services over and above the

amounts they pay as a service charge.

Your Committee further finds that, contrary to the

above understanding, moneys collected as service

charges are not always distributed to the employees as

gratuities and are sometimes used to pay the

employer’s administrative costs. Therefore, the

employee does not receive the money intended as a

gratuity by the customer, and the customer is misled

into believing that the employee has been rewarded for

providing good service.

S. Stand. Comm. Rep. No. 3077, in 2000 Senate Journal, at 1286-87

(emphasis added).

The report went on to state that “[t]his measure is

intended to prevent consumers from being misled about the

application of moneys they pay as service charges . . . .” ldy

In sum, the legislative history of H.B. No. 2123

indicates that the legislature was concerned that when a hotel or

restaurant withholds a service charge without disclosing to

consumers that it is doing so, both employees and consumers can

be negatively impacted. The legislature chose to address that

concern by requiring disclosure and by authorizing enforcement of

that requirement under HRS chapter 480. There is no clear

indication in the legislative history that the legislature

intended to limit enforcement to consumers, businesses, or

competitors and to preclude enforcement by employees. Therefore,

the legislative history of HRS § 481B-14 is consistent with the

conclusion that Employees have standing to sue as “persons” under

HRS § 480-2(e) for a violation of HRS § 481B-14 if they meet the

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additional requirements discussed below.

C. Employees have not sufficiently alleged the “nature of the

competition,” which is required to bring a claim for unfair

methods of competition under HRS §§ 480-2(e) and 480-13(a)

In order to state a cause of action pursuant to HRS

§ 480-2(e) and recover money damages, Employees must first

satisfy the requirements of HRS § 480-13. Flores v. Rawlings

Co., LLC, 117 HaWafi 153, 162, 177 P.3d 341, 350 (2008) (“In

order for [the defendant's] failure to register [as a collection

agency as required by HRS § 443B-3] to be actionable by private

litigants lpursuant to HRS § 480-2], the threshold requirements-

of HRS § 480-13 must be satisfied.”). HRS § 480-13(a) provides

that, with limited exceptions, “any person who is injured in the

person's business or property by reason of anything forbidden or

declared unlawful by [chapter 480]: (1) [m]ay sue for damages

; and (2) [m]ay bring proceedings to enjoin the unlawful

practices[.]”

,When analyzing whether or not Employees have

sufficiently alleged an injury to their “business or property,”

this court views Employees' Amended Complaint “in a light most

favorable to [Employees] in order to determine whether the

allegations contained therein could warrant relief . . . .” lp

re Estate of Rogers, 103 Hawafi 275, 280, 81 P.3d 1190, 1195

(2003); see HawaFi Rules of Civil Procedure Rule 12(b)(6).

In HMA, this court considered what a plaintiff must

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allege in order to bring an action for unfair methods of

competition under HRS § 480-2(e). Specifically, this court

addressed, inter alia, whether the Hawaii Medical Association

(HMA) sufficiently alleged injury to itself under HRS § 480-13(a)

as a result of the Hawafi Medical Services Association's (HMSA)

alleged unfair methods of competition. §MA, 113 HawaFi at 107-

115, 148 P.3d at 1209-1217. HMA alleged that HMSA deprived over

1,600 HMA physicians of reimbursement for services provided by

HMA physicians to HMSA plan members. ldy at 83-84, 148 P.3d at

1185-86. These HMA physicians had become “participating

physician[s]” in HMSA's network by entering into a “Participating

Physician Agreement” (called a “PAR agreement”) with HMSA “to

provide medically necessary healthcare services to HMSA’s plan

members in exchange for HMSA’s payments at specified rates.” Id.

at 81, 148 P.3d at 1183.

HMA, on its own behalf and on behalf of participating

physicians in HMSA's network, brought suit against HMSA for

violation of HRS § 480-2, and tortious interference with

prospective economic advantage.” ;Qp at 81, 148 P.3d at 1183.

HMA alleged that HMSA engaged in “an unfair and deceptive scheme

to avoid making timely and complete payments owed to its

” Individual physicians also sued HMSA on similar grounds and the

cases were consolidated on appeal. §Mg, 113 Hawafi at 81, 148 P.3d at 1183.

However, because this court’s discussion regarding the requirements to sue

under HRS §§ 480-2 and 480-13 arose in the context of the HMA suit, we focus

here solely on the issues pertaining to that suit.

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physician members” after the HMA physicians had rendered medical

care to HMSA members pursuant to their PAR agreements. ldy at

84, 148 P.3d at 1186. HMA alleged that this “wrongful conduct

(1) constituted unfair methods of competition and (2) delayed,

impeded, denied or reduced reimbursement owed to HMA’s physician

members. HMA further alleged that HMSA’s wrongful conduct

resulted in direct and substantial harm to HMA and its members.”

lQy at 81, 148 P.3d at 1183.

HMSA filed a motion for judgment on the pleadings,

arguing that HMA's claims should be dismissed because HMA, inter

alia, lacked standing to bring suit on its own behalf. ;gp at

85, 148 P.3d at 1187. Moreover, in its reply to HMA’s opposition

to the motion, HMSA argued that HMA's claim under HRS chapter 480

failed because HMA had not pled any direct injury to its

“business or property.” lgp at 86, 148 P.3d at 1188. The

circuit court granted HMSA’s motion for judgment on the pleadings

and HMA appealed. ldp at 87, 148 P.3d at 1189.

On appeal, this court considered whether HMA

sufficiently alleged injury to itself with respect to its post-

June 28, 2002” unfair methods of competition claims under HRS §

480-2. Id. at 107-15, 148 P.3d at 1209-17. This Court

” HRS § 480-2(e) became effective on June 28, 2002, In §MA, this

court held that § 2(e) cannot be applied retroactively because “[n]either the

language of the statute itself nor the legislative history of the amendment

give any expressed indication that the amendment should be applied

retroaCtiVely.” l, 113 Hawai‘i at 107, 148 P.3d at 1209.

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acknowledged the three elements essential to recovery under HRS §

480-13: (1) a violation of HRS chapter 480; (2) which causes an

injury to the plaintiff’s business or property; and (3) proof of

the amount of damages.” ldy at 114, 148 P.3d at 1216 (citing

Ai, 61 Haw. at 617, 607 P.2d at 1311); see also Roberts HawaiH

School Bus, Inc. v. Laupahoehoe Transportation Co., Inc., 91

Hawai‘i 224, 254 n.30, 982 P.2d 853, 883 n.30 (1999), superseded

by statute, 2002 Haw. Sess. Laws Act 229, § 2 at 916-17, pp

recognized in §MA, 113 Hawafi at 107, 148 P.3d at 1209 (“[w]hile

proof of a violation of chapter 480 is an essential element of an

action under HRS § 480-13, the mere existence of a violation is

not sufficient ipso facto to support the action; forbidden acts

cannot be relevant unless they cause [some] private damage.”)

(citation omitted).

This court, according to the majority opinion, first

determined that HMA need not be a “competitor[]” of or “in

competition” with HMSA in order to have standing under HRS § 480-

13(a).” Id. at 110, 148 P.3d at 1212. This court also

m A fourth element--“a showing that the action is in the public

interest or that the defendant is a merchant”--used to be required, but was

eliminated by the 1987 amendment to HRS §§ 480-2 and -13. §§§ §MA, 113

Hawai‘i at 114 n.31, 148 P.3d at 1216 n.31 (citing S. Conf. Comm. Rep. No.

105, in 1987 Senate Journal, at 872). 7

” The majority opinion further stated that “notwithstanding

our holding that the plaintiffs need not be ‘competitors' of, or ‘in

competition' with, HMSA, the question remains whether the nature of the

competition must be sufficiently alleged. Contrary to the dissent, we conclude

that it does . . . .” ;gg at 111, 148 P.3d at 1213. Justice Acoba and

Justice Nakayama, who concurred in the result, nevertheless characterized the

majority's holding as requiring that plaintiffs be in competition with

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determined that a plaintiff “may bring claims of unfair methods

of competition based on conduct that would also support claims of

unfair or deceptive acts or practices.” Id. at 111, 148 P.3d at

1213. In doing so, however, “the nature of the competition |must

bel sufficiently alleged in the complaint.” Id. at 113, 148 P.3d

at 1215 (emphasis added). This court recognized that otherwise,

“the distinction between claims of unfair or deceptive acts or

practices and claims of unfair methods of competition that are

based upon such acts or practices would be lost where both claims

are based on unfair and deceptive acts or practices.” lgg at

111-12, 148 P.3d at 1213-14 (emphasis in original). This court

held that HMA sufficiently alleged an unfair methods of

competition claim based on conduct that would also support a

claim of unfair or deceptive acts or practices” because it

defendants and dissented on those grounds. Id. at 1197 148 P.3d at 1221

(Acoba, J. and Nakayama, J., dissenting) (“it is unnecessary to allege, as the

majority indicates, that HMSA and all the plaintiffs are in competition with

each other for the same ‘customers.’”). However, the dissent agreed that

something more than an unfair or deceptive act or practice must be alleged in

order to bring a claim for unfair methods of competition. Id. (“In my view it

is sufficient that ‘unfair methods of competition' adversely impact the

plaintiffs and allegations in that respect are made, beyond any allegations off

unfair and deceptive acts or practices.”).

” This court specifically stated that

HMSA facilitates access to the dispensing of medical

services, and the plaintiffs provide medical services

directly. Thus, in our view, HMSA and the plaintiffs

share the same goal or mission, i.e., ensuring that

medical services are accessible to their “customers.”

Their success in meeting the common goal-and, in turn,

ensuring the profitability of their respective

businesses-is dependent upon their ability to

effectively provide medical services to their

customers, i.e., the patients. However, if HMSA

engages in acts or practices that impede or interfere

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sufficiently alleged the nature of the competition in its

Complaint.” Id. at 112-13, 148 P.3d at 1214-15.

As to the injury in fact requirement, this court

with physicians' ability to provide effective

healthcare services to their patients and/or create

incentives for patients to look elsewhere for medical

services-that is, to other participating physicians

who may be reluctant to challenge HMSA or to non-

participating physicians-such acts or practices can,

if proven, constitute unfair methods of competition,

notwithstanding the fact that the same conduct could

also support a claim of unfair or deceptive acts or

practices.

HMA, 113 HaWaFi at 112-13, 148 P.3d at 1214-15.

“ This court held that HMA sufficiently alleged the “nature of the

competition” by, for example, alleging in its complaint that:

11. . . . [HMSA's] conduct has adversely imnacted, and

continues to adversely impact, members of |HMSA's|

plans by, among other things: (a) imposing financial

hardships on, and in some cases threatening the

continued viability of, the medical practices run by

[the plaintiffs]; (b) threatening the continuity of

care provided to patients by [the plaintiffs], as

required by sound medical judgment; (c) requiring [the

plaintiffs] to expend considerable resources seeking

reimbursement that could otherwise be available to

provide enhanced healthcare services to [HMSA's] plan

members; (d) making it more costly and difficult for

[the plaintiffs] to maintain and enhance the

availability and quality of care that all patients

receive; and (e) increasing the costs of rendering

healthcare services in Hawaii as a result of the

additional costs incurred and considerable effort

expended by HMA members in seeking reimbursement from

HMSA for services rendered.

26. HMSA dominates the enrollee market in Hawaii with

over 65% of Hawaii’s population enrolled in one of

HMSA's plans. In this regard, HMSA is the largest

provider of fee-for-service insurance in the State

with more than 90% of the market and is the second

largest HMO provider in the State. Similarly, HMSA

dominates the physician market, with approximately 90%

of Hawaii’s physicians participating in HMSA's

networks.

27. It is through such market dominance that HMSA is

able to dictate the terms and amount of reimbursement

HMA physicians will receive.

HMA, 113 Hawafi at 112, 148 P.3d at 1214 (emphasis and brackets in original).

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concluded that HMA established that it had been injured in its

“business or property” by alleging a “diminishment of financial

resources” as a result of HMSA's actions. lQl at 114, 148 P.3d

at 1216. This court quoted Ai v. Frank Huff Agency, Ltd., 61

Haw. 607, 607 P.2d 1304 (1980), for the proposition that “it is

unnecessary for plaintiffs to allege commercial or competitive

injury[;] it is sufficient that plaintiffs allege that injury

occurred to personal property through a payment of money

wrongfully induced.”” lQl at 114, 148 P.3d at 1216 (quoting Al,

61 Haw. at 614, 607 P.2d at 1310) (internal quotation and

bracketed text omitted; brackets in original). Therefore, this

court held that “HMA need only allege that, by reason of an

antitrust violation, it has been injured in its ‘business or

property '” lQl HMA clearly alleged a direct injury to its

business where “HMA was required to divert substantial resources

and time to deal with its members’ problems created by HMSA's

conduct - resources that otherwise would go to support its

principal mission in service of its members.” Id. (internal

” gl’s suggestion that allegations of “competitive injury” are

unnecessary might seem inconsistent with the requirement in §§§ that a

plaintiff allege the “nature of the competition” in order to plead an unfair

methods of competition claim under HRS § 480-2(e). However, when this passage

from ll is viewed in the context of the facts the case, it is apparent that

this court was explaining that injury to “business or property” means that a

private plaintiff does not need to allege that he or she suffered an injury to

his or her business property or in a business activity, but rather can allege

that he or she suffered an injury to personal property. Al, 61 Haw. at 614,

607 P.2d at 1310. Moreover, ll involved alleged unfair or deceptive acts or

practices, not unfair methods of competition, lgl at 611, 607 P.2d at 1308,

and therefore this court did not address the requirements to properly plead an

unfair methods of competition claim.

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quotation marks omitted).`

As discussed below, although Employees have

sufficiently alleged a direct injury in fact to their “business

or property,” Employees did not sufficiently allege the “nature

of the competition” as required by §MA.

1. Employees have alleged an injury in fact to their

“business or property”

Employees sufficiently alleged an injury to their

“business or property” within the meaning of HRS § 480-l3(a).

HRS § 480-13(a)'s requirement of alleging an injury to business

or property incorporates the fundamental standing requirement

that a plaintiff must allege an injury in fact, but narrows it so

that a plaintiff must specifically allege an injury in fact to

his or her “business or property.” Employees argue that Four

Seasons' alleged violation of § 481B-14 directly injures them in

both their “business,” which is working as banquet servers, and

their “property,” in the form of “loss of tip income.”

The phrase “injury to business or property” found in

HRS § 480-13(a) is not defined in that section or elsewhere in

the chapter. However, as discussed above, this court has

established that the requirement is satisfied, for example, if

“plaintiffs allege that injury occurred to personal property

through a payment of money wrongfully induced,” HMA, 113 HawaFi

at 114, 148 P.3d at 1216 (quoting Al, 61 Haw. at 614, 607 P.2d at

1310), or through the diminishment of financial resources as a

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result of a defendantfs unfair methods of competition or unfair

or deceptive acts or practices, ldl Therefore, because Employees

have alleged that their tip income has been reduced due to Four

Seasons' allegedly unlawful conduct, they have alleged an injury

to their “business or property.”

2. Employees failed to allege the “nature of the

competition”

As noted above, Employees allege in their Amended

Complaint that Four Seasons failed to distribute the entirety of

its service charge to its employees and to clearly disclose to

the purchaser of the services that employees were not receiving

the entire service charge as tip income, and further allege that

such conduct constitutes a violation of HRS § 481B-14. Pursuant

to HRS § 481B-4, such a violation would constitute both an unfair

method of competition ppg an unfair or deceptive act or practice

under HRS § 480-2(a). However, Employees cannot pursue a claim

for unfair or deceptive acts or practices because such a claim

can only be brought by consumers, the attorney general or the

director of the office of consumer protection. §§§ HRS § 480-

2(d). Therefore, as was the case in pMA, in order to pursue a

claim under § 480-2(e) for the unfair methods of competition of

Four Seasons, Employees must allege the “nature of the

competition.”“ HMA, 113 Hawafi at 111, 148 P.3d at 1213.

” The dissent suggests that the present case is distinguishable from

HMA because HMA involved an unfair methods of competition claim based on

conduct that would also support an unfair or deceptive acts or practices

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Employees allege that they have been directly injured

by not receiving a portion of the service charge retained by Four

Seasons, or by not receiving the tips hotel patrons might have

otherwise left if they had known how the service charge was

allocated. Even when viewed in a light most favorable to

Employees, the Amended Complaint clearly does not contain any

allegations concerning the nature of the competition. However,

Employees are required to allege how Four Seasons' conduct will

negatively affect competition in order to recover on an unfair

methods of competition claim.”

claim, and that the requirement in ppg that the plaintiffs allege the nature

of the competition was “to preserve the distinction” between the two claims.

Dissenting opinion at 15. The dissent therefore argues that because HRS §

481B-4 deems a violation of chapter 481 to be both an unfair method of

competition and an unfair or deceptive act or practice under HRS § 480-2, the

need for distinction between the two claims as articulated in ppg is not

present in the instant case. Dissenting opinion at 16-18.

However, this court in ppg did not indicate that a plaintiff

alleging an unfair method of competition under HRS § 480-2(e) must plead the

nature of the competition merely so there is a distinction between claims of

unfair or deceptive acts or practices and claims of unfair methods of

competition. while recognizing that such distinction is necessary, this court

further indicated that “the existence of the competition is what distinguishes

a claim of unfair or deceptive acts or practices from a claim of unfair

methods of competition.” ppg, 113 Hawafi at 112, 148 P.3d at 12l4. In other

words, this court indicated that the pleading requirement is based on the

differences in the nature of the underlying causes of action. Therefore,

HMA’s holding is equally applicable to the instant case.

” Thus, we respectfully disagree with the dissent’s suggestion that

the Amended Complaint sufficiently alleged the nature of the competition.

Dissenting opinion at 36-38. In ppg, after recognizing that the standard of

review for a motion to dismiss or motion for judgment on the pleadings

requires this court to accept the allegations in the complaint as true and

construe the allegations in the light most favorable to the plaintiff, we held

that this standard does not relieve plaintiffs from the requirement of

pleading the nature of the competition in the complaint itself. ppg ppg, 113

Hawafi at 113, 148 P.3d at 1215 (“In sum, we hold that any person may bring a

claim of unfair methods of competition based upon conduct that could also

support a claim of unfair or deceptive acts or practices as long as the nature

of the competition is sufficiently alleged in the complaint”) (emphasis

added). In ppg, we concluded that HMA sufficiently alleged the nature of the

competition because the complaint itself contained specific references to the

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Amicus Curiae Rossetto suggests that this court’s

opinion in Island Tobacco Co., Ltd¢, v. R.J. Reynolds Tobacco

Qpl, 63 Haw. 289, 627 P.2d 260 (1981), “recognized that there

need be no ‘injury to competition' in order for [an unfair method

of competition] claim to lie under HRS § 480-2.” For support,

Amicus Curiae Rossetto cites to the following passage from that

C&S€Z

[w]e view § 480-2 as being designed to aid

“competitors,” as much as to protect “competition.”

And unlike the Federal Trade Commission Act, the

policy of the Hawaii law, as expressed in HRS § 480-

13, is to foster private suits grounded on unfair or

deceptive trade practices, even where the unlawful

acts to [sic] not culminate in injury to

“competition.”

Island Tobacco, 63 Haw. at 301, 627 P.2d at 269 (emphasis added).

This passage, however, does not support Amicus Curiae

Rossetto’s argument. Rather, this language was limited to claims

of unfair or deceptive trade practices, rather than unfair

methods of competition, and was used to explain that an act can

constitute an unfair or deceptive practice if it injures a

competitor, even if it does not injure competition itself. lgl

This analysis does not extend to claims involving unfair methods

of competition.

Employees argue that “since § 481B-4 ‘deems' a

violation of [§ 481B-14] to be an ‘unfair method of competition'

anti-competitive effect HMSA’s alleged actions would have on the marketplace

for healthcare services in HawaFi and that HMA’s injury directly resulted

from these unfair methods of competition. See supra, section II-C and notes 23

and 24.

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under § 480-2, this Court should not require further proof that

such a violation is in fact an [unfair method of competition].”

Citing to this court’s previous holding in gl, Amicus Curiae

Rossetto similarly contends that the legislature, “by ‘deeming' a

violation of Section 481B-14, through the operation of Section

481B-4, to be a per se [unfair method of competition] has found

the necessary element of ‘competition' by its legislative

action.” For the following reasons, these arguments confuse the

requirements necessary to bring an unfair methods of competition

claim under HRS § 480-2(e).

The requirement that the plaintiff allege the “nature

of the competition” in an unfair methods of competition claim is

distinct from the requirement that a defendant’s conduct

constitute an unfair method of competition. The latter

requirement stems from HRS § 480-2(a), which provides that unfair

methods of competition are declared to be unlawful. ee Robert's

HawaFi, 91 HawaFi at 255, 982 P.2d at 884 (“Generally speaking,

competitive conduct is unfair when it offends established public

policy and when the practice is immoral, unethical, oppressive,

unscrupulous or substantially injurious to consumers.”) (internal

quotations omitted; citation omitted); Cieri, 80 HawaFi at 61,

905 P.2d at 36 (“It is impossible to frame definitions which

embrace all unfair practices, . . . whether competition is

unfair or not generally depends upon the surrounding

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circumstances of the particular case.”) (citation omitted).

In contrast, the requirement that a plaintiff allege

that he or she was harmed as a result of actions of the defendant

that negatively affect competition is derived from HRS § 480-

13(a)‘s language that “any person who is injured in the person's

business or property by reason of anything forbidden or declared

unlawful by this chapter . . . [m]ay sue for damages . . . ;”

(emphasis added).

In Robert's HawaFi, this court discussed the elements

that must be established to bring a claim under HRS § 480-13(a).

91 HawaFi at 254 n.31, 982 P.2d at 883 n.31. we held that “the

elements of (1) resulting injury to business or property and (2)

damages” are “two distinct elements” of HRS § 480-13(a), and went

on to note that:

Indeed, federal case law has interpreted the “injury

to business or property” language of section 4 of the

Clayton Act as a causation requirement, requiring a

showing of “antitrust injury.” “Plaintiffs must prove

. [an] injury of the type the antitrust laws were

intended to prevent[, one] . . . that flows from that

which makes defendants' acts unlawful. The injury

should reflect the anticompetitive effect either of

the violation or of anticompetitive acts made possible

by the violation. It should, in short, be the ‘type of

loss’ that the claimed violations . . . would be

likely to cause.”

Also known as the “fact of damage” requirement, the

antitrust plaintiff need not prove with particularity

the full scope of profits that might have been earned.

Instead, it requires a showing, with some

particularity, of actual damage caused by

anticompetitive conduct that the antitrust laws were

intended to prevent.

Id. (internal citations omitted; ellipses and brackets in

original); see also HMA, 113 Hawafi at 114 n.30, 148 P.3d at

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1216 n.30 (citing Robert's HawaFi, 91 Hawafi at 254 n.31, 982

P.2d at 883 n.31).

HRS § 481B-4 declares that “[a]ny person who violates

this chapter shall be deemed to have engaged in an unfair method

of competition and unfair or deceptive act or practice in the

conduct of any trade or commerce within the meaning of section

480-2.” Amicus Curiae Rossetto contends that Employees do not

need to allege the “nature of the competition” because Employees'

claim is based upon a statutory violation deemed by HRS § 481B-4

to be “per se” an unfair method of competition, rather than a

claim based on an unfair or deceptive act or practice that is

also being alleged to be an unfair method of competition, as was

the case in ppg, However, although the deeming language of HRS §

481B-4 eliminates the requirement that a plaintiff prove that a

defendant’s conduct that violates chapter 481B (including HRS §

481B-14) constitutes an unfair method of competition, it does not

purport to modify the causation requirement of HRS § 480-13.

Moreover, even if this court were to determine that the

language of HRS § 481B-4 is ambiguous, the legislative history of

HRS § 481B-4 does not reflect an intent to eliminate the

causation requirement of HRS § 480-13(a). The current deeming

language of HRS § 481B-4 (“deemed to have engaged in an unfair

method of competition and unfair or deceptive act or practice in

the conduct of any trade or commerce within the meaning of

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section 480-2") was added in 1996 pursuant to Act 59. 1996 Haw.

Sess. Laws Act 59, § 4 at 83. Prior to the enactment of got 59,

HRS chapter 481B contained a variety of different enforcement

provisions which were replaced by HRS § 481B-4. See e. ., id.

(replacing the provision in HRS § 481B-4 which provided that

violators could be “fined not more than $500 for each violation

or imprisoned not more than one year or both” with the present

deeming language).

The Senate Judiciary Committee report indicates that:

The purpose of the bill is to provide a

consistent penalty for certain specific unfair and

deceptive acts or practices of regulated industries

under chapter 480, . . . governing monopolies and

restraint of trade.

Your Committee finds that this bill is intended

to delete duplicative or unnecessary penalty

provisions and by deeming the violations to constitute

unfair and deceptive business practices under section

480-2 [.]

S. Stand. Comm. Rep. No. 2103, in 1996 Senate Journal, at 1016-

l7.

The report of the House Consumer Protection & Commerce

and Judiciary committees similarly provides that “[t]he purpose

of this bill is to provide consistency in the consumer protection

statutes by amending certain provisions so that they uniformly

relate to the unfair or deceptive acts or practices statute” and

that the “bill is designed to remove duplicative or unnecessary

recitation of penalty provisions in favor of a simple reference

to the unfair or deceptive acts or practices statute.” H. Stand.

Comm. Rep. No. 1459-96, in 1996 House Journal, at 1610.

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while the committee reports reflect a desire for

consistency in enforcement, they do not indicate that the

legislature intended to modify the causation requirements which

are generally applicable to unfair methods of competition claims

under HRS § 480-13(a).

The dissent argues that because the legislative history

indicates that HRS § 481B-14 was intended to prevent harm to

employees, it can therefore be inferred that the legislature did

not intend to require that a plaintiff plead the nature of the

competition in order to bring an unfair methods of competition

claim under HRS § 480-2(e). Dissenting opinion at 30-32.:

However, as we discuss above in section ll-B-2, the legislative

history of HRS § 481B-14 indicates that both employees ppg

consumers may be negatively impacted when a hotel or restaurant

withholds a service charge without disclosing to consumers that

it is doing so. Moreover, the legislature chose to place HRS §

481B-14 within Hawaii’s consumer protection statutes and provided

that it be enforced through HRS § 480-l3. Therefore, while the

legislative history of HRS § 481B-14 recognizes that employees

are negatively impacted when a hotel or restaurant does not

properly distribute the service charge, neither this recognition

nor anything else in the legislative history of HRS §§§ 481B-14,

481B-4, or 480-2(e) indicate that the legislature intended to

eliminate the causation requirements of HRS § 480-13 for unfair

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methods of competition claims brought under HRS § 480-2(e).

This analysis is consistent with gl, which involved

debt collection practices alleged to be unfair or deceptive acts

or practices in violation of Chapter 443 and a “deeming”

provision similar to HRS § 480B-4. 61 Haw. at 608-l0, 607 P.2d at

1307-08. That provision provided that: “[a] violation of this

part by a collection agency shall constitute unfair methods of

competition and unfair or deceptive acts or practices in the

conduct of any trade or commerce for the purpose of section 480-

2.” gl, 61 Haw. at 610 n.5, 607 P.2d at 1308 n.5 (citing HRS §

443-47). This court discussed the relationship between that

provision and HRS § 480-2, recognizing that:

the legislature . . . did not leave to the judiciary

the unfettered discretion to independently determine

in every case brought under [§] 480-2 whether a

defendant’s conduct had been “unfair or deceptive”

within the comprehension of the statute. The

legislature instead found it desirable to predetermine

that violations of HRS Chapter 443 would constitute

per se “unfair or deceptive acts or practices” for the

purposes of § 480-2.

lpg at 616, 607 P.2d at 1311 (emphasis added).

Applying gl's reasoning here, by “deeming” a violation

of § 481B-14 to be an unfair method of competition, the

legislature “predetermine[d]” that violations of HRS Chapter 481B

would constitute per se unfair methods of competition for the

purposes of § 480-2, and therefore a plaintiff with standing need

not prove that conduct which violates HRS § 481B constitutes an

unfair method of competition. See id. However, by so doing, the

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legislature did ppp determine that an injury suffered by “any

person” as a result of a violation of chapter 481B necessarily

stems from the negative effect on competition caused by the

violation. In other words, the legislature was not making a

determination that any person injured as a result of a violation

of Chapter 481B automatically has standing to sue pursuant to HRS

§ 480-2 and 480-13. Instead, a private person must separately

allege the nature of the competition in accordance with this

court’s holding in ppg.

At the time gp was decided, HRS § 480-13 required the

plaintiff to show that the suit would be in the public interest

or that the defendant is a merchant. This requirement was

eliminated by the 1987 amendment to HRS §§ 480-2 and -13. ppg

ppg, 113 HawaFi at 114 n.31, 148 P.3d at 1216 n.31 (citing S.

Conf. Comm. Rep. No. 105, in 1987 Senate Journal, at 872). In

gl, this court held that “[s]ince plaintiffs herein have supplied

allegations adequate to show that such a per se violation of [§]

480-2 has occurred, we accordingly find that the public interest

has been sufficiently made out to confer standing to plaintiffs

under § 480-13.” lpg at 617, 607 P.2d at 1311. The dissent

argues that this public interest requirement “is directly

analogous to the . . . requirement that [Employees] plead the

‘nature of [the] competition' inasmuch as both are aimed at

addressing the anti-competitive effects of such conduct[,]” and

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therefore this court’s holding in gp indicates that in cases of

per se violations of HRS § 480-2, a plaintiff need not allege the

nature of the competition in order to assert an unfair methods of

competition claim. Dissenting opinion at 23. Amicus Curiae

'Rossetto similarly asserts that gp indicates that when there is a

per se violation of HawaFi’s antitrust or consumer protection

laws, the plaintiff does not need to allege the nature of the

competition in order to bring an unfair methods of competition

claim under HRS § 480-2(e).

However, this argument misconstrues gp. As discussed

above, gp merely emphasized that when the legislature “deems” a

practice to be a per se unfair method of competition or unfair or

deceptive act or practice within the meaning of HRS § 480-2, a

plaintiff with standing to sue does not need to prove that the

defendant’s action actually constituted either an unfair method

of competition or unfair or deceptive act or practice, and does

not need to make any additional showing that the suit was in the

public interest. lpg at 616, 607 P.2d at 1311. Moreover, the

now-repealed public interest requirement was not “directly

analogous” to the nature of the competition, as the dissent

suggests. Although this court in gp indicated the public

interest requirement can be satisfied when “the unfair method

employed threatens the existence of present or potential

competition[,]” we also indicated that the requirement can be

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satisfied in circumstances where there is no such threat,

including when “the unfair method is being employed under

circumstances which involve flagrant oppression of the weak by

the strong.” gp, 61 Haw. at 614-15, 607 P.2d at 1310 (citing ppg

v. Klesner, 280 U.S. 19, 28 (1929) (explaining that the purpose

of the public interest requirement is to ensure that a suit

brought by the FTC under the FTCA is truly in the interest of the

public as a whole, not merely private individuals); see Ailetcher

v. Beneficial Finance Co., 2 Haw. App. 301, 306, 632 P.2d 1071,

1076 (1981) (finding the public interest requirement was

satisfied in an unfair or deceptive practices case because, even

though “the action of the [defendant finance company was not]

such as to constitute an unfair method of competition, a

restraint of trade or a monopolization of an area of commerce[,]”

there was “flagrant oppression of the weak by the strong”),

abrogated on other grounds by Hac v. Univ. of Hawaii, 102 Hawaii

92, 105-06, 73 P.3d 46, 59-60 (2003); T.w. Electrical Serv., Inc.

v. Pacific Electrical Contractors Assoc., 809 F.2d 626, 636 (9th

oir. 1987) (“Under Hawafi law, an unfair act is committed, and

the public interest requirement is met, whenever the unfair

method is being employed under circumstances which involved

flagrant oppression of the weak by the strong.”). Therefore,

contrary to the dissent’s and Amicus Curiae Rossetto’s

assertions, this court’s holding in gp does not stand for the

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proposition that where a statute deems an action to be a per se

violation of HawaFi's antitrust or consumer protection laws, the

plaintiff is relieved of alleging the nature of the competition

in order to have standing to sue under HRS § 480-2(e).

Amicus Curiae Rossetto also cites to Flores v. Rawlings

Co., LLC, 117 HaWafi 153, 177 P.3d 341 (2008), for the

proposition that Employees do not need to allege the nature of

competition because HRS § 481B-4 “deems” a violation of HRS §

481B-14 to be an unfair method of competition. However, Flores

does not support this argument.

The plaintiffs in Flores were members of HMSA's benefit

plans and brought an action against a company (Rawlings) that had

contracted with HMSA to provide subrogation and “claims recovery

services.” lpg at 155-57, 177 P.3d at 343-45. The plaintiffs

alleged that they were injured by Rawlings’ failure to register

as a debt collection agency as required by HRS § 443B-3(a)

(1993), which, pursuant to HRS § 443B-20, would constitute an

unfair or deceptive act or practice within the meaning of HRS §

480-2.” ppg Simi1ar to HRS § 481B-4, HRS § 443B-20 (1993)

provides that “[a] violation of this chapter by a collection

" HRS § 443B-3(a) (1993) provides:

No collection agency shall collect or attempt to

collect any money or any other forms of indebtedness

alleged to be due and owing from any person who

resides or does business in this State without first

registering under this chapter.

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agency shall constitute unfair methods of competition and unfair

or deceptive acts or practices in the conduct of any trade or

commerce for the purpose of section 480-2.” lpg at 162, 177 P.3d

at 350. Because the plaintiffs alleged that Rawlings' actions

constituted unfair or deceptive acts or practices rather than

unfair methods of competition, HRS § 480-13(b) was applicable,

requiring plaintiffs to show that they were “consumers” who were

“injured” within the meaning of § 480-13(b) and HRS § 480-1.”

lpg This court held that the plaintiffs were “consumers” without

having to prove that they “purchased” something from the

defendant. lpg at 162-66, 177 P.3d at 350-54,

This court recognized that “[b]y deeming violations of

HRS chapter 443B an unfair or deceptive act or practice for the

purposes of HRS § 480-2, it is evident that the legislature

wished to have chapter 443B be enforceable in the same manner as

other unfair trade practices under chapter 480[,]” i.e.,

enforceable by individual consumers under HRS § 480-2(d). lpg at

164, 177 P.3d at 352. If private enforcement was limited to

those who purchased from a collection agency, then as a practical

matter consumers would not be able to enforce the statute and

enforcement “would be left entirely in the hands of the state[,]”

” HRS § 480-1 (1993) defines “consumer” as: “a natural person who,

primarily for personal, family, or household purposes, purchases, attempts to

purchase, or is solicited to purchase goods or services or who commits money,

property, or services in a personal investment.” Flores, 117 Hawai‘i at 162-

63, 177 P.3d at 350-51.

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because consumers do not typically purchase goods or services

from collection agencies. Id. This would be “an inconsistent,

if not absurd, result that the legislature would not have

intended.” Id. Therefore, this court held that:

Rather, in the context of consumer debt, the

determination of whether the individual seeking suit

is a “consumer” should rest on whether the underlying

transaction which gave rise to the obligation was for

a good or service that is “primarily for personal,

family, or household purposes,” HRS § 480-1. This

reading is supported by the definition of “debt” in

HRS § 443B-1, as well as the fact that the statutory

structure of HRS chapter 480 does not require that one

be a “consumer” of the defendant’s goods or services, ,

but merely a “consumer.”

lpg at 164, 177 P.3d at 352 (emphasis in original).

Although this court held that the plaintiffs had

established standing as consumers, we further concluded that the

plaintiffs failed to demonstrate that they were injured as a

result of Rawlings” conduct because, although Rawlings had failed

to register as required by HRS § 443B-3, the underlying debt was

nevertheless valid. lpg at 169, 177 P.3d at 357. we observed

that “Rawlings’s conduct in violation of HRS § 443B-3, while

injurious to the state’s interest in regulation of collection

agencies, did not directly harm Plaintiffs.” lpg at 171, 177

P.3d at 359.

This court’s analysis in Flores addressed alleged

unfair or deceptive acts or practices in the area of consumer

debt collection and did not extend to cases involving alleged

unfair methods of competition. Unlike the present case, this

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court in Flores was construing HRS § 480-13(b), which provides

the cause of action for unfair or deceptive acts or practices.

Thus, Flores cannot be construed to mean that unfair methods of

competition claims may be brought under HRS § 480-2(e) and § 480-

13(a) without any reference to the effect on competition simply

because HRS § 481B-4 “deems” a violation of § 481B-14 to be an

unfair method of competition.” In any event, even though Flores

involved a deeming provision similar to that here, this court

acknowledged that the requirements imposed by HRS § 480-13 were

nonetheless applicable, ppg Flores, 117 HawaFi at 162, 177 P.3d

at 350 (“In order for Rawlings's failure to register to be

actionable by private litigants, the threshold requirements of

HRS § 480-13 must be satisfied.”).

Therefore, although Employees allege that they have

suffered an injury resulting from Four Seasons' violation of §

481B-14, which is deemed to be an unfair method of competition.by

§ 481B-4, Employees are additionally required to allege the

“nature of the competition.” HMA, 113 Hawafi at 113, 148 P.3d

w Amicus Curiae Rossetto additionally cites to Fuller v. Pacific

Medical Collections, Inc., 78 Hawafi 213, 891 P.2d 300 (App. 1995), in which

the Intermediate Court of Appeals held that although the Director of the

Department of Commerce and Consumer Affairs was designated to enforce HRS

chapter 443, a consumer could maintain an action under HRS § 480-2(d) for an

unfair or deceptive act or practice claim because HRS § 443B-20 provided that

violations of chapter 443 constitute unfair or deceptive acts or practices.

lpg at 218, 891 P.2d at 305. However, because Fuller involved only claims of

unfair or deceptive acts or practices pursuant to HRS § 480-2(d), it does not

address the distinct issue of whether Employees must allege the nature of the

competition in order to maintain an unfair methods of competition claim under

HRS § 480-2(e) .

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at 1215. Employees have made no such allegation, and therefore

have not satisfied the requirements to pursue a claim under HRS §

480-2(e).”

we note that this result is consistent with the

principles of causation that have been developed in the federal

antitrust context. In both Robert's HawaFi and ppg, this court

recognized that “federal case law has interpreted the ‘injury to

Vbusiness or property' language of section 4 of the Clayton Act as

a causation requirement, requiring a showing of ‘antitrust

injury.'” Robert's HawaiI, 91 HawaFi at 254 n.31, 982 P.2d at

s

“ without expressing an opinion regarding its sufficiency, we note

that in their Reply Brief, Employees described how they would characterize the

“nature of the competition” if they were required to allege itc

[E]ven if there were some requirement that the unfair

method of competition be asserted, the remedy would

not be dismissal, but at worst, to allow the

plaintiffs to allege such “unfair method”. Indeed, it

is obvious that if one hotel obeys the laws and remits

the entire service charge to the employees serving at

the banquet and another hotel/competitor skims the

service charge and keeps 4-5% for itself without-

disclosure, the hotel acting unlawfully can undercut

its stated price for the banquet knowing that it will

be receiving improper gains from the misleading

description of its service charge. This is clearly a

form of unfair competition.

Amicus Curiae Rossetto similarly states that:

In this case, hotels and restaurants that do not

inform customers that they are keeping the imposed

service charge and not paying it to employees gain a

clear competitive advantage because they have deceived

their patrons. They are able to “reduce” the published

cost of their food and beverages in order to entice

patronage away from their honest competitors who

either pay out the service charge to employees or

frankly inform patrons that management is keeping all

or a part of the service charge (thereby telling

patrons that they will still have to tip employees).

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883 n.31; l, 113 Hawai‘i at 114 n.30, 148 P.3d at 1216 n.30

(quoting Robert's HawaFi, 91 Hawafi at 254 n.31, 932 P.2d at 333

n.31). In Robert's Hawafi, this court further noted that the

antitrust injury “should reflect the anticompetitive effect

either of the violation or of anticompetitive acts made possible

by the violation.” 91 HawaFi at 254 n.31, 982 P.2d at 883 n.31

(quoting Brunswick Corp. v. Pueblo Bowl-o-Mat, 429 U.S. 477, 489

(1977)).

when examining HRS § 480-2, this court has recognized

that “[t]he genesis of HawaFi’s consumer protection statute is

in federal antitrust law,” with a shared “concern for the

preservation of unrestrained economic competition and free

trade.” Cieri v. Leticia Query Realty, Inc., 80 Haw. 54, 59, 905

P.2d 29, 34 (1995). HRS § 480-2(a), which declares that unfair

methods of competition and unfair or deceptive acts or practices

are unlawful, is “a virtual counterpart of [§] 5(a)(1) of the

Federal Trade Commission Act [FTCA].” Island Tobacco, 63 Haw. at

300, 627 P.2d at 268. HRS § 480-2(b) declares that “[i]n

construing this section, the courts and the office of consumer

protection shall give due consideration to the rules,

regulations, and decisions of the Federal Trade Commission [FTC]

and the federal courts interpreting section 5(a)(1) of the [FTCA]

.” However, section 480-2 “differs from section 5 of the

FTCA in one essential aspect - enforcement, Section 5 of the

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FTCA contains no private remedy, rather enforcement of its

provisions is vested in the [FTC].” ppg, 113 Hawafi at 109, 148

P.3d at 1211 (quoting Star Markets, Ltd. v. Texaco, Inc., 945 F.

Supp. 1344, 1346 (D. Haw. 1996) and citing Robert's Hawari, 91

Hawai‘i at 249, 982 P.2d at 878) (internal parenthetical and

quotation marks omitted). Therefore, federal interpretations of

the FTCA, although helpful in determining whether a defendant’s

actions constitute an unfair or deceptive act or practice or an

unfair method of competition, are of limited relevance in

interpreting the standing requirements applicable to the private

right of action provided by HRS § 480-2(e).”

HRS § 480-13(a) tracks the language of section 4 of the

Clayton Act, which provides in relevant part:

Any person who shall be injured in his business or

property by reason of anything forbidden in the

antitrust laws may sue therefor...., and shall recover

threefold the damages by him sustained, and the cost

of suit, including a reasonable attorney's fee.

15 U.S.C. § 15(a) (emphasis added).

Additionally, HRS § 480-3 provides that “[chapter 480]

shall be construed in accordance with judicial interpretations of

” when interpreting HRS § 480-2(e), Amicus Curiae Rossetto urges

this court to only consider federal interpretations of section 5(a)(1) of the

FTCA pursuant to HRS § 480-2(b), and not interpretations of section 4 of the

Clayton Act. Specifically, Amicus Curie Rossetto argues that section 5(a)(1)

of the FTCA has been interpreted in FTC v. Sperry & Hutchinson Co., 405 U.S.

233 (1972), to empower the FTC to define unfair practices to include practices

without anti-competitive effects. However, this argument is misplaced,

because as discussed above, interpretations of section 5(a)(1) of the FTCA are

of limited relevance in analyzing standing requirements for HRS § 480-2(e)

since the FTCA does not have a comparable private right of action. ppg supra,

note 8.

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similar federal antitrust statutes.” Pursuant to this

instruction, this court has indicated that it is appropriate to

look to “the guidance of similar federal antitrust statutes as

permitted in HRS § 480-3.” Robert's HawaFi, 91 HawaFi at 251,

982 P.2d at 880.”

The Supreme Court first articulated the concept of

“antitrust injury” in Brunswick. 429 U.S. at 489. Several

bowling centers brought suit, challenging the acquisition of

several of their competitors by Brunswick Corporation as creating

” Four Seasons argues that because § 480-13(a) is similar to section

4 of the Clayton Act, this court should examine relevant federal judicial

interpretations of that statute pursuant to HRS § 480-3, citing, for example,

to Associated General Contractors of California v. California State Council of

Cappenters, 459 U.S. 519 (1983) (hereinafter “gpp”). In gpQ, the Supreme

Court discussed the concept of standing under section 4 of the Clayton Act to

sue for violations of federal antitrust law, and noted that standing in the

antitrust context is more limited than the broad “any person” language of the

statute would suggest. lpg at 534-35.

The Supreme Court identified a number of factors to assist courts

in determining whether a plaintiff has established federal antitrust standing.

The first factor, which was described by the Court in gpg as the “nature of

the plaintiff’s alleged injury[,]” and which considered whether the injury is

the “type that Congress sought to redress,” gpp, 459 U.S. at 538 (citation

omitted), has since been referred to as “antitrust injury,” meaning an “injury

of the type the antitrust laws were intended to prevent and that flows from

that which makes defendants' acts unlawful[,]” see, e.g., Atlantic Richfield

Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990); Eichorn v. AT&T Corp., 248

F.3d 131, 140 (3d Cir. 2001). The other factors identified by the Court in

gpp are: the “directness or indirectness of the asserted injury,” the

“speculative measure of harm,” the “risk of duplicate recoveries” or “danger

of complex apportionment of damages” and “the existence of more direct victims

of the alleged [violation].” gpp, 459 U.S. at 538-545; see also Atlantic

Richfield, 495 U.S. at 334; American Ad Mgmt., Inc. v. Gen. Tel. Co., 190 F.3d

1051, 1054 (9th Cir. 1999).

other than recognizing that federal courts have consistently

applied the concept of antitrust injury when determining if a plaintiff has

federal antitrust standing, this court has not expressly applied the gpg

analysis to unfair methods of competition claims arising under HRS chapter

4e0. Robert's HawaFi, 91 HawaiH at 254 n.31, 932 P.2d at 833 n.31; ppg, 113

Hawaii at 114 n.30, 148 P.3d at 1216 n.30. Since we have decided, based on

our analysis of HRS § 480-13(a) and Hawafi caselaw, that Employees must

allege the nature of the competition, we do not need to consider the

applicability of the gpg approach in order to answer the certified question.

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a monopoly in violation of section 7 of the Clayton Act; 15

U.S.C. § 18,“ and seeking treble damages under section 4 of the

Clayton Act for profits they would have received had the acquired

centers gone out of business. 429 U.S. at 480-81. The

plaintiffs “attempted to show that had [the defendant] allowed

the defaulting centers to close, [the plaintiffs’] profits would

have increased.” lpg at 481. The Court noted that plaintiffs

were not complaining that Brunswick’s actions had reduced

competition, but rather preserved it and therefore deprived

plaintiffs of increased concentration. lpg at 488. Accordingly,

the Court found that the plaintiffs’ injury was not of “‘the type

that the statute was intended to forestall.’” lpg at 487-88

(citation omitted).

The Court examined the underlying purpose of section 7,

noting that although “[e]very merger . . . has the potential for

producing economic readjustments that adversely affect some

persons . . . Congress has not condemned mergers on that account;

it has condemned them only when they may produce anticompetitive

effects.” lpg at 487 (emphasis added). Therefore, the Court

held that in order to recover treble damages under section 4 of

the Clayton Act based on section 7 violations, “[p]laintiffs must

prove antitrust injury, which . . . should reflect the

“ Section 7 of the Clayton got proscribes mergers whose effect “may

be substantially to lessen competition, or tend to create a monopoly.”

Brunswick, 429 U.S. at 485.

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anticompetitive effect either of the violation or of

anticompetitive acts made possible by the violation.” lpg at

489.

Additionally, the Supreme Court has clearly established

that even where a plaintiff alleges a per se violation of the

antitrust laws, the plaintiff must still allege and prove

antitrust injury by alleging the nature of the competition in

order to ensure that the injury results from a competition-

reducing aspect of the defendant’s behavior. For example, in

Atlantic Richfield Co. v. USA Petroleum Co.,” 495 U.S. 328, 341

(1990), the Court “reject[ed] respondent's suggestion that no

antitrust injury need be shown where a per se violation is

involved.” “The antitrust injury requirement ensures that a

plaintiff can recover only if the loss stems from a competition-

reducing aspect or effect of the defendant’s behavior. The need

for this showing is at least as great under the per se

rule . . .” lpg at 344 (emphasis in original); see also plpp

HollV Entm’t, Inc. v. Tektronix, Inc., 343 F.3d 1000, 1008 (9th

” lt is important to note that Atlantic Richfield involved a

judicially recognized per se antitrust violation, whereas the per se violation

of Hawafi antitrust law in this case is established by HRS § 481B-4.

However, this distinction has no bearing on the underlying analysis for the

antitrust injury requirement in the circumstances here, where we have

concluded that the legislature did not intend to modify the causation

requirements imposed by HRS § 480-13. Thus, it makes no difference whether

the courts or the legislature have “deemed” certain action to be anti-

competitive, because the purpose of the antitrust injury requirement is to

ensure that the plaintiff’s alleged injury stems from this anti-competitive

aspect, rather than some pro-competitive or neutral effect of the defendant’s

antitrust violation. -

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Cir. 2003) (“lf the injury flows from aspects of the defendant’s

conduct that are beneficial or neutral to competition, there is

no antitrust injury, even if the defendant’s conduct is illegal

per se.”) (citation omitted); Pace Elec., Inc. v. Canon Computer

Sys., 213 F.3d 118, 123-24 (3d. Cir. 2000) (in order to show

standing for a per se antitrust violation, the plaintiff need noty

allege that its injury actually “produced an anticompetitive

result,” but instead must allege that its injury “resulted from

the anticompetitive aspect of the challenged conduct”).

The Ninth Circuit reviewed the purpose of requiring

plaintiffs to allege loss stemming from an anticompetitive effect

of the defendant’s actions in Glen Holly. Two manufacturers of

film editing equipment entered into an agreement to jointly

market certain products, with the agreement also prohibiting one

of the manufacturers from selling the products to certain

customers, such as the plaintiff. lpg at 1005-06. The plaintiff

alleged that this joint venture caused the plaintiff to lose its

customers and was “purposefully anti-competitive” in violation of

sections 1 and 2 of the Sherman Act and California antitrust law

because it created a monopoly and destroyed competition in the

relevant market, lpg at 1006-07. The court recognized that

“[t]he central purpose of the antitrust laws, state and federal,

is to preserve competition. lt is competition . . . that these

statutes recognize as vital to the public interest.” d. at 1010

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(quoting Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979l

988 (9th Cir. 2000)) (emphasis added). The court then held that

the plaintiff sufficiently alleged that the defendants' agreement

to “unlawful[ly] remove[] a competitive product from the market”

was the type of conduct the antitrust laws were designed to

prevent and that plaintiff’s “allegation of ‘loss stems from a

competition-reducing aspect or effect of |defendants’|

behavior,'” thus satisfying the antitrust injury requirement.

lpg at 1014 (citation omitted; emphasis added).

This court has similarly recognized that Hawaii’s

consumer protection laws are also intended to preserve

competition. For instance, in Qpppp, which involved claims that

the vendors and broker involved in the sale of a residence

engaged in unfair or deceptive practices in violation of HRS

§ 480-2 when they failed to disclose a plumbing problem, this

court discussed the underlying purpose of HawaFi antitrust and

consumer protection laws:

The genesis of Hawafi's consumer protection statute

is in federal antitrust law. Although the federal

arsenal of antitrust laws is comprised of several

differently worded statutes of varying scope that have

generated volumes of case law, all of the acts have a

common focus on trade commerce and business, and all

share a concern for the preservation of unrestrained

economic competition and free trade.

80 HawaFi at 59; 905 P.2d at 34 (emphasis added).

“Embodied in HawaiH’s virtually word-for-word adoption

of the prohibitions contained in the Sherman, Clayton, and FTC

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acts is the federal antitrust laws' focus on commerce, the

economy, and competition.” lpg at 60, 905 P.2d at 35. This

court also recognized that HRS § 480-13 similarly reflects this

focus on preserving competition. lpg at 61, 905 P.2d at 36.

Thus, Hawaii’s requirement that a plaintiff allege the

“nature of the competition” in his or her complaint in order to

maintain an action for unfair methods of competition pursuant to

HRS § 480-2(e), ppg, 113 HawaFi at 113, 148 P.3d at 1215, is

consistent with the federal requirement that a plaintiff allege

that his or her injury “reflect[s] the anticompetitive effect

either of the violation or of the anticompetitive acts made

possible by the violation,” in order to have standing pursuant to

section 4 of the Clayton Act. Brunswick, 429 U.S. at 489.

Furthermore, this requirement reflects the underlying purpose of

both the federal and HawaFi antitrust laws, which is to preserve

unrestrained competition.

III. CONCLUSION

For the foregoing reasons, this court answers the

certified question as follows:

Employees are “any persons” within the meaning of HRS

§§ 480-1 and 480-2(e) and are within the category of plaintiffs

who have standing to bring a claim under HRS § 480-2(e) for a

violation of HRS § 481B-14.

However, based on the allegations contained in

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Employees' Amended Complaint, Employees have not sufficiently

alleged the “nature of the competition” to bring a claim for

damages against Four Seasons under HRS §§ 480-2(e) and 480-13(a)

for a violation of HRS § 481B-14.

Ashley K. lkeda (weinberg,

Roger & Rosenfeld);

Harold L. Lichten and

Shannon Liss-Riordan,

pro hac vice (Pyle, Rome,

Lichten, Ehrenberg &

Liss-Riordan) for

plaintiffs-appellants

wayne S. Yoshigai and

Nathan B. Hong (Torkildson,

Katz, Moore, Hetherington &

Harris); Paul E. wagner,

pro hac vice (Shea Stokes

Roberts & wagner) for

defendants-appellees

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