Henkel v. Highgate Hotels, L.P.

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CHELSEA HENKEL, on behalf of herself and other similarly situated, Plaintiffs, v. HIGHGATE HOTELS, L.P. and COVE HAVEN, INC., Defendants.

CIVIL No. 3:15-CV-01435

United States District Court, M.D. Pennsylvania

September 30, 2024

MEMORANDUM

JENNIFER P. WILSON UNITED STATES DISTRICT JUDGE

Before the court are two motions-a renewed motion for judgment as a matter of law, Doc. 328, and a motion to decertify class actions, Doc. 330-filed by Defendants Highgate Hotels, L.P. and Cove Haven, Inc. (collectively “Defendants”). These motions follow nearly a decade of litigation and a five-day jury trial resulting in a verdict in favor of Plaintiff Chelsea Henkel (“Henkel”) on behalf of herself and the classes of servers and housekeepers. The court finds that Plaintiffs failed to prove their unjust enrichment claim as a matter of law, and will enter judgment in favor of Defendants. For the reasons that follow, the court will grant the motion for judgment as a matter of law and deny as moot the motion to decertify the class actions.

Factual Background and Procedural History

Henkel initiated this action via a collective and class action complaint on July 23, 2015, against Defendants Highgate Hotels, LP (“Highgate”) and Cove Haven, Inc. (“Cove Haven”). (Doc. 1.) Between the initiation of this action and the filing of summary judgment motions, Henkel amended her complaint four times. (Docs. 12 47, 49, 110.) The fourth amended complaint, which was filed on November 14, 2018, set forth eight claims against Defendants: unpaid minimum wages in violation of the Fair Labor Standards Act (“FLSA”) (Count 1); unpaid overtime wages in violation of the FLSA (Count 2); unpaid minimum wages in violation of the Pennsylvania Minimum Wage Act (“MWA”) (Count 3); unpaid overtime wages in violation of the MWA (Count 4); breach of contract to an express third-party beneficiary (Count 5); breach of contract to an intended third-party beneficiary (Count 6); unjust enrichment (Count 7); and conversion (Count 8). (Doc. 110.)

Following additional extension requests by the parties, Henkel moved to certify class and collection actions of servers, as well as a class of housekeeper attendants on June 11 and 14, 2019, respectively. (Docs. 126, 135.) Defendants moved for partial summary judgment on June 14, 2019. (Doc. 139.)

This case was reassigned to the undersigned on November 15, 2019. Thereafter, the parties informally requested that the court stay any decision on the motions to certify and for partial summary judgment as the parties were engaged in settlement negotiations. In late September 2020, the parties reported to the court that a settlement could not be reached. Having been so notified, the court ruled on the pending motions. The court granted Defendants' motion for partial summary judgment in part. (Docs. 178-179.) The court granted judgment in Defendants' favor on Henkel's claims for violations of the FLSA and MWA claims for unpaid minimum wages (Counts 1 and 3), breach of contract to an express third-party beneficiary (Count 5), breach of contract to an intended third-party beneficiary (Count 6), and conversion (Count 8). (Docs. 178-179.) The court denied the motion as to Henkel's unjust enrichment claim (Count 7).^[1] (Docs. 178-179.)

After requesting supplemental briefing, the court granted Henkel's motions for class certification under Rule 23, but denied the motion for conditional collective certification under the FLSA and MWA.^[2] (Docs. 192, 193, 232.) For the unjust enrichment claim, the court certified two classes, one for servers employed at any of Defendants' resorts between October 1, 2012, and January 31, 2016, and one for housekeepers employed at any of Defendants' resorts between October 1, 2012, and January 31, 2016. (See Doc. 192.)

This case was scheduled for trial on several dates, but required continuances due to court scheduling conflicts and the parties filing additional motions that required additional briefing and rulings prior to trial. Those additional rulings are summarized as follows. On August 16, 2022, the court granted Plaintiffs' motion to file a fifth amended complaint to clarify that Plaintiffs were seeking prejudgment interest. (Doc. 233.) On September 30, 2022, the court granted Defendants' motion to dismiss the opt-in Plaintiffs' claims under the FLSA and MWA, and denied Plaintiffs' motion to sever the class claims from Henkel's individual claims for trial. (Doc. 245.) Following these rulings, the court again scheduled the trial for June 2023. (Doc. 247.)

Leading up to trial, the parties filed multiple motions in limine, which the court ruled on prior to trial. (Doc. 296.) Defendants also moved to partially strike Plaintiffs' jury demand and to preclude the testimony of one of Plaintiffs' witnesses, both of which the court denied. (Docs. 297, 301.)

Trial in this case commenced on June 21, 2023. The claims that remained at the start of the trial included Henkel's individual claims for unpaid overtime under the FLSA and MWA and Plaintiffs' class claim of unjust enrichment. At the conclusion of Plaintiffs' case-in-chief, the parties made several motions. Both parties moved for judgment as a matter of law as to all claims under Federal Rule of Civil Procedure 50(a).^[3] The court denied Plaintiffs' motion in full and denied Defendants' motion as to the unjust enrichment claim. (See Doc. 311.) However, the court granted Defendants' motion with respect to Henkel's FLSA and MWA unpaid overtime claims and ordered that judgment would be entered in Defendants' favor on those claims when the court entered a final judgment in this case. (Id.) Lastly, the court deferred ruling on Defendants' motion to decertify the classes, which was also docketed, see Doc. 309, until after the verdict but prior to entering final judgment. (Id.)

The jury returned a verdict on June 27, 2023, in Plaintiffs' favor on the unjust enrichment claim and awarded damages in the amount of $1,295,547.00. (Doc. 313.) Thereafter, the court set a briefing schedule for post-trial motions. Defendants timely filed their renewed motion for judgment as a matter of law and renewed motion to decertify the class actions on October 19, 2023, along with briefs in support of each motion. (Docs. 328-331.) Plaintiffs filed briefs in opposition to both motions on December 4, 2023, and reply briefs were filed on December 18, 2023. (Docs. 338-343.) Thus, Defendants' motions are ripe for review.

Standard of Review

Federal Rule of Civil Procedure 50(b) provides: “If the court does not grant a motion for judgment as a matter of law made under Rule 50(a), the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion.” In ruling on a motion under Rule 50(b), the court may “allow judgment on the verdict,” “order a new trial,” or “direct the entry of judgment as a matter of law.” FED. R. CIV. P. 50(b)(1)-(3).

A court should “sparingly” enter judgment as a matter of law and, “only if, viewing the evidence in the light most favorable to the nonmovant and giving it the advantage of every fair and reasonable inference, there is insufficient evidence from which a jury reasonably could find liability.” Marra v. Phila. Housing Auth., 497 F.3d 286, 300 (3d Cir. 2007) (quoting CGB Occupational Therapy, Inc. v. RHA Health Servs. Inc., 357 F.3d 375, 383 (3d Cir. 2004); Moyer v. United Dominion Indus., Inc., 473 F.3d 532, 545 n.8 (3d Cir. 2007)). The court must “refrain from weighing the evidence, determining the credibility of witnesses, or substituting our own version of the facts for that of the jury.” Id. (citing Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993)).

Discussion

In their motion, Defendants argue that the court applied an incorrect standard for the first element of the unjust enrichment claim throughout the pendency of this case. (Doc. 329, pp. 11-16; Doc. 343, pp. 5-7.)^[4] Then, Defendants assert that insufficient evidence was presented as to each element of the unjust enrichment claim. (Doc. 329, pp. 11-25; Doc. 343, pp. 5-14.) They further submit that the unjust enrichment claim is time-barred based on cross-jurisdictional tolling. (Doc. 329, pp. 25-27; Doc. 343, p. 14.) The court will address each argument in turn.

A. There was insufficient evidence for the jury to reasonably determine that a benefit was conferred on Defendants by Plaintiffs.

In the court's November 25, 2020 summary judgment opinion, the court applied the test laid out in Thompson v. U.S. Airways, Inc., 717 F.Supp.2d 468, 480 (E.D. Pa. 2010) for Plaintiffs' unjust enrichment claim. The court stated:

In Pennsylvania, a plaintiff must prove that: “(1) benefits have been conferred on one party by another; (2) the recipient has appreciated the benefits; and (3) the recipient has accepted and retained the benefits under such circumstances that it would be inequitable or unjust for the recipient to retain the benefits without payment of value.”

(Doc. 178, pp. 22-23 (quoting Thompson, 717 F.Supp at 480) (emphasis added)). In applying this test, particularly with regard to the aspect of the first element emphasized above, the court acknowledged that there were important differences between Thompson and this matter, but stated that Defendants failed to provide “any pertinent caselaw in support of their argument that Plaintiffs' unjust enrichment claim [could not] proceed because it was the third-party guests who provided the benefit (gratuity payment) to Defendants.” (Id. at 24.) The court ultimately concluded that summary judgment was inappropriate for this claim as there were factual disputes regarding the third element. (Id. at 26.) The court did not find in favor of either par...