Soule v. Hilton Worldwide, Inc.

1 F.Supp.3d 1084

Kathleen SOULE, individually and on behalf of all others similarly situated, Plaintiffs,

v.HILTON WORLDWIDE, INC. and Doe, Defendants 1–50, Defendant.

Civ. No. 13–00652 ACK–RLP.

United States District Court, D. Hawai‘i.

Signed Feb. 26, 2014.

Brandee J. Faria, John F. Perkin, Michelle Lee Premeaux, Perkin & Faria, James J. Bickerton, Bickerton Lee Dang & Sullivan, Honolulu, HI, Hassan A. Zavareei, Tycko & Zavareei LLP, Washington, DC, for Plaintiffs.

Angela C. Agrusa, Liner LLP, Randall J. Sunshine, Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor, Los Angeles, CA, Margery S. Bronster, Rex Y. Fujichaku, Bronster Hoshibata, Attorneys at Law, A Law Corporation, Honolulu, HI, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS AND DENYING PLAINTIFF'S MOTION TO STRIKE

PROCEDURAL BACKGROUND

ALAN C. KAY, Senior District Judge.

On November 5, 2013, Plaintiff Kathleen Soule (“Plaintiff” or “Soule”) filed a First Amended Complaint (“FAC”) on behalf of herself and all others similarly situated against Hilton Worldwide, Inc. and Doe Defendants 1–50 (“Defendant” or “Hilton”) in the Circuit Court of the First Circuit, State of Hawaii. Notice of Removal at ¶ 2, ECF No. 1. Hilton removed to this Court on November 27, 2013. Notice of Removal, ECF No 1.

Plaintiff's FAC pleads two claims arising out of alleged wrongs suffered by consumers who reserved Hilton hotel accommodations through Hilton.com and other third-party websites: (1) violation of Hawaii Revised Statutes § 480 et sect.¹; and (2) unjust enrichment. FAC at 14, ¶¶ 75–90.

Hilton filed the instant Motion to Dismiss (“Motion” or “Def.'s Mot.”) on December 4, 2013, pursuant to Federal Rules of Civil Procedure 8, 9(b) and 12(b)(6). ECF No. 9. On January 28, 2014, Plaintiff filed an Opposition to Defendant's Motion (“Pl.'s Opp.”). ECF No. 22. Also on January 28, 2014, Plaintiff filed a motion to strike the declaration of Kathryn O'Leary and Exhibit 1 attached thereto, which were filed in support of Defendant's Motion. ECF No. 23. The Court issued a minute order stating that “Plaintiff's Motion to Strike will be considered at the hearing for the underlying Motion to Dismiss” and “Defendant's opposition to Plaintiff's motion to strike should be filed by the due date for its reply to the underlying Motion to Dismiss.” ECF No. 25. On February 4, 2014, Defendant filed its Reply. ECF No. 26. Also on February 4, 2014, Defendant filed an opposition to Plaintiff's Motion to Strike. ECF No. 27.

This Court held a hearing regarding Defendant's Motion on February 18, 2014.

FACTUAL BACKGROUND²

A. Hilton's Resort Fee

Hilton owns and operates 3,900 hotels around the world, including eight in Hawaii. FAC at 8–9, ¶¶ 31–32. At some of its Hawaiian hotels, Hilton charges a mandatory “resort fee” in addition to the disclosed room rate. Id. at 9, ¶¶ 33–34. Hilton purports to charge this fee for “amenities,” which may include local and toll-free phone calls, high-speed internet, wireless internet connections, access to movies and games, and audio tours. Id. ¶ 35 & Ex. A at 2.

The proposed class is defined as: “All consumers who, within the applicable statute of limitations preceding the filing of this action to the date of class certification, were charged one or more resort fees at a Hilton property in the state of Hawaii (the ‘Class').” Id. at 5, ¶ 19. Plaintiff and all class members were charged the resort fee after booking a hotel through Hilton's website, Hilton.com, or other websites. Id. at 9, ¶ 36. Hilton uses a uniform system of disclosures and procedures for reservations at every one of its Hawaiian properties. Id. ¶ 37. On Hilton's and third-party websites, consumers enter either manually or through a drop-down box their destination and requested lodging dates. Id. ¶ 38. Consumers are then directed to a booking page which displays room options and prices. Id. After bookinga hotel room, Hilton typically sends consumers a confirmation email breaking down the “Rate Per Night” to give a “Total for Stay.” Id. ¶ 39 & Ex. A.

On January 31, 2013, Soule made a reservation through Hilton.com for a two-night stay at the Hilton Hawaiian Village Waikiki Beach Resort (“Waikiki Resort”). FAC at 9, ¶ 40. Hilton quoted her a rate of $237.15 per night, plus taxes of $66.21, for a total of $540.51. Id. at 10, ¶ 41. After booking the room through Hilton's website,³ Soule saw the following in a confirmation email from Hilton ⁴:

Rate Information:

Rate Type:

ANY WEEKEND ANYWHERE

Rate per night:

237.15 USD

Total for Stay per Room:

Rate

474.30 USD

Taxes

66.21 USD

Total

540.51 USD

Total for Stay:

540.51 USD

Includes estimated taxes and service charges. (Gratuities not included.)

Tax:

• There is a 4.71% per room per night tax and a 9.25% per room per night secondary tax.

Resort Charges:

• Daily Resort Charge of $25.00 plus tax per room, per night will be added to the room rate and includes: Local, Toll–Free and Credit Card calls (no access fee); High Speed Internet access/WIFI access; PlayStation 3 with Unlimited Movies and Games; Hawaiian Cultural Activities and Resort Audio Tour.

Additional Charges:

• Valet parking: $33.00/night Self parking: 27.00/night

. . .

Rate Rules and Cancellation Policy:

. . .

• Your reservation is non-refundable, non-cancelable and non-changeable.

• Your credit card will be charged immediately for the total amount shown for the entire stay as reserved.

Id. Ex. A at 2.

Soule booked the room using Hilton's “Any Weekend Anywhere” sale rate. Id. Per the Any Weekend Anywhere “Rate Rules and Cancellation Policy,” Hilton charged Soule's credit card $540.41 immediately after she booked the Waikiki Resort room online. Id. As indicated above in the confirmation email, the Rate Rules and Cancellation Policy also stated that Plaintiff's reservation was “non-cancelable.” Id. When Soule checked out of the hotel, Hilton imposed a resort fee of $25.00 per night in addition to the amount she already had paid to Hilton for the reservation. Id. at 10, ¶ 45.

B. FTC Warning Letter⁵

On November 26, 2012, the Federal Trade Commission (“FTC”) sent a “Warning Letter” to 22 hotel operators warning that their online reservation sites may violate the law by providing a misleading estimate of what consumers can expect to pay for their hotel rooms. FAC Ex. B. The Warning Letter notes consumer complaints about mandatory resort fees. Id. at 1. Specifically, “consumers complained that they did not know that they would be required to pay resort fees in addition to the quoted hotel room rate” and only learned of the fees after they arrived at the hotel. Id. After reviewing a number of online hotel reservation sites, the Warning Letter states that some hotels do not adequately inform consumers about the existence of resort fees. Id. The FTC concludes that these practices may violate the law by misrepresenting the price consumers can expect to pay and, accordingly, online hotel reservation sites should include in the quoted total price any mandatory resort fees. Id. at 2.

STANDARD

A. Rule 12(b)(6)

Federal Rule of Civil Procedure (“Rule”) 12(b)(6) authorizes the Court to dismiss a complaint that fails “to state a claim upon which relief can be granted.” Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The Court may dismiss a complaint either because it lacks a cognizable legal theory or because it lacks sufficient factual allegations to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't., 901 F.2d 696, 699 (9th Cir.1988).

In resolving a Rule 12(b)(6) motion, the court must construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded factual allegations as true. Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 783 (9th Cir.2012). The complaint must contain sufficient factual matter accepted as true to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “The plausibility standard ... asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ ” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 556–57, 127 S.Ct. 1955). However, in considering a motion to dismiss, “the court is not deciding whether a claimant will ultimately prevail but rather whether the claimant is entitled to offer evidence to support the claims asserted.” Tedder v. Deutsche Bank Nat. Trust Co., 863 F.Supp.2d 1020, 1030 (D.Haw.2012) (citing Twombly, 550 U.S. at 563 n. 8, 127 S.Ct. 1955).

Should a claim be dismissed, the court should grant leave to amend “even if no request to amend the pleading was made, unless it determines that the pleading could not be cured by the allegation of other facts.” OSU Student Alliance v. Ray, 699 F.3d 1053, 1079 (9th Cir.2012).

B. Applicability of Rule 9(b)

Hilton argues that Plaintiff's claims are subject to Rule 9(b)'s heightened pleading requirement. Def.'s Mot. at 8. Rule 9(b) imposes a heightened pleading standard on a party alleging fraud and requires the party to “state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). “Averments of fraud must be accompanied by the ‘who, what, when, where and how’ of the misconduct charged.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir.2009). Rule 9(b) “demands that, when averments of fraud are made, the circumstances constituting the alleged fraud be specific enough to give defendants notice of the particular misconduct so that they can defend against the charge and not just deny that they have done...