Pennsylvania Unjust Enrichment Requires a Plaintiff-Conferred Benefit—Guest-Paid “Gratuity Fees” Cannot Be Recast as Employee Benefits

I. Introduction

This appeal arose from a putative wage-and-fee dispute involving “gratuity fees” charged to guests at resorts operated by Highgate Hotels, LP and Cove Haven Inc. The named plaintiff, Chelsea Henkel, sued on behalf of herself and similarly situated employees (including servers and housekeepers), alleging that the resorts failed to share gratuity-fee proceeds with the workers who provided guest services.

The litigation posture was procedurally complex: the District Court (M.D. Pa.) certified classes, granted summary judgment against Henkel on one contract theory (intended third-party beneficiary), allowed an unjust enrichment claim to proceed to trial (denying summary judgment), the jury returned a verdict for Henkel, and then the court granted defendants’ renewed motion for judgment as a matter of law (JMOL) on unjust enrichment. The parties cross-appealed. The Third Circuit affirmed and dismissed defendants’ conditional cross-appeal as moot.

The key appellate issues were:

• Intended third-party beneficiary: whether employees could enforce guest-resort contracts as intended beneficiaries entitled to gratuity-fee distribution.
• Unjust enrichment: whether employees could recover gratuity-fee funds under Pennsylvania unjust enrichment where guests—not employees—paid the fees.
• Reconsideration / law-of-the-case: whether the District Court permissibly corrected an earlier (summary-judgment) articulation of unjust enrichment when granting JMOL.

II. Summary of the Opinion

A. Intended third-party beneficiary (summary judgment affirmed)

The Third Circuit held that summary judgment was properly entered against Henkel on her claim for breach of contract to an intended third-party beneficiary. The panel emphasized that Pennsylvania law requires that recognizing third-party beneficiary rights be “appropriate to effectuate the intention of the parties,” and that Henkel failed to produce evidence of guests’ intentions regarding any promised distribution of a “gratuity fee” to employees. The deficiency was compounded by Henkel’s failure to identify the specific guest contracts purportedly creating those rights.

B. Unjust enrichment (JMOL affirmed)

The court affirmed the District Court’s renewed JMOL for defendants on unjust enrichment. Under Pennsylvania law, unjust enrichment requires a benefit “conferred on defendant by plaintiff.” Because the gratuity fee was paid by guests, not by the employees, the record could not support that element as Henkel framed the “benefit” at issue (i.e., the money).

C. Reconsideration of prior denial of summary judgment

The Third Circuit rejected the argument that the District Court’s earlier denial of summary judgment barred later correction. It reiterated that courts may reconsider earlier interlocutory rulings and are not rigidly bound by law-of-the-case principles—especially to correct clear error—so long as the court explains its reasoning and takes steps to prevent prejudice from reliance on the earlier ruling. The panel found no prejudice here because the earlier summary-judgment reasoning affected only whether a trial should occur, not how Henkel tried the case to the jury.

III. Analysis

A. Precedents Cited

1. Guy v. Liederbach, 459 A.2d 744 (Pa. 1983)

Guy supplied the controlling Pennsylvania standard for intended third-party beneficiaries: recognition of a beneficiary’s rights must be “appropriate to effectuate the intention of the parties.” The Third Circuit treated the case as demanding evidence of the contracting parties’ intent—here, evidence about what guests understood and intended when paying or agreeing to the “gratuity fee.” Employee testimony about internal resort practices could not substitute for proof of guest intent.

2. Road-Con, Inc. v. City of Philadelphia, 120 F.4th 346 (3d Cir. 2024)

Road-Con was cited for the Third Circuit’s de novo standard of review of summary judgment and the Rule 56 requirement that there be “no genuine dispute as to any material fact” for the movant to win. The citation underscores that the panel’s affirmance on the third-party-beneficiary theory was not deference-driven; it was a merits conclusion that Henkel lacked evidence on a necessary element (intent).

3. Shafer Elec. & Constr. v. Mantia, 96 A.3d 989 (Pa. 2014)

Shafer was the opinion’s most consequential citation. The Third Circuit treated Shafer as “unambiguous” that unjust enrichment requires the plaintiff to have conferred the benefit on the defendant. That requirement was dispositive because Henkel defined the “benefit” as the gratuity-fee money, which guests (third parties) paid.

4. Mark Hershey Farms, Inc. v. Robinson, 171 A.3d 810 (Pa. Super. Ct. 2017)

Mark Hershey Farms reinforced the same three-element unjust-enrichment framework. The Third Circuit’s use of both Shafer and Mark Hershey Farms signaled that the “conferred by plaintiff” element is not a federal gloss but a consistent Pennsylvania articulation.

5. McKenna v. City of Philadelphia, 649 F.3d 171 (3d Cir. 2011)

McKenna provided the standard for reviewing JMOL: de novo review while viewing evidence in the light most favorable to the verdict winner. Even under that plaintiff-friendly lens, the panel concluded no reasonable jury could find that employees conferred the identified benefit (the gratuity-fee money).

6. Thompson v. U.S. Airways, Inc., 717 F. Supp. 2d 468 (E.D. Pa. 2010)

Thompson played an unusual role: it was cited as the District Court’s earlier, “imprecise” source for describing the first unjust-enrichment element as requiring only that “benefits have been conferred on one party by another.” The Third Circuit accepted the District Court’s later correction that this phrasing lacked support where Pennsylvania law requires the benefit be conferred by the plaintiff specifically.

The opinion thus functions as a caution against overreliance on generalized formulations of unjust enrichment that omit the plaintiff-as-conferor requirement under Pennsylvania law.

7. Roberts v. Ferman, 826 F.3d 117 (3d Cir. 2016) and Schultz v. Onan Corp., 737 F.2d 339 (3d Cir. 1984)

These cases supplied the Third Circuit’s framework for reconsidering earlier rulings notwithstanding law-of-the-case concerns. Roberts listed circumstances permitting reconsideration (new evidence, supervening law, or clear error/manifest injustice), and Schultz emphasized that law-of-the-case is not a “barrier to correction of judicial error.” This supported the legitimacy of the District Court’s shift from its summary-judgment view to its JMOL ruling.

8. Williams v. Runyon, 130 F.3d 568 (3d Cir. 1997) and In re Energy Future Holdings Corp., 904 F.3d 298 (3d Cir. 2018)

Williams was invoked to require the court to explain its reasoning when reconsidering a prior ruling; the panel found that requirement satisfied. Energy Future Holdings supplied the related fairness principle: courts should take steps to ensure parties are not prejudiced by reliance on earlier rulings. The Third Circuit found no actionable prejudice because the earlier ruling affected only the existence of a trial, not trial strategy or proof presentation in a way that would warrant reversal.

B. Legal Reasoning

1. Intended third-party beneficiary: intent evidence is indispensable

The panel’s reasoning was straightforward and evidentiary: even assuming guests paid a “gratuity fee,” Henkel needed proof that the guest-resort agreements were intended to benefit employees in a legally enforceable way—i.e., that guests (and the resorts) intended employees to receive some portion of the fee. The court found Henkel’s cited evidence (employee testimony about resort practices) did not establish what guests knew or intended, and that some evidence suggested guests did not even see the fee at booking. Without identified contracts or guest-intent proof, recognizing third-party beneficiary rights would not be “appropriate to effectuate the intention of the parties” under Guy v. Liederbach.

2. Unjust enrichment: pleading/defining the “benefit” can be dispositive

The unjust enrichment holding turned on how Henkel defined the “benefit” allegedly retained: “the gratuity fee, money paid by the resort guests.” Once framed that way, Shafer Elec. & Constr. v. Mantia foreclosed recovery because the first element requires that the benefit be conferred on defendants by the plaintiff. The court treated the record as “devoid” of evidence that employees conferred the gratuity-fee money on the resorts; the guests did.

The decision underscores a practical litigation lesson: in quasi-contract claims, the identification of the “benefit” is not semantic. If the benefit is defined as a third party’s payment, Pennsylvania law may defeat the claim at element one.

3. Reconsideration and law-of-the-case: interlocutory rulings are revisable

The panel validated the District Court’s authority to correct an earlier legal misstatement at the JMOL stage. It emphasized (i) the permissive nature of law-of-the-case for interlocutory rulings, (ii) the acceptability of revisiting earlier denials of summary judgment to correct clear legal error, and (iii) the need to avoid prejudice based on reliance. The court found these conditions met: the District Court explained its correction on the record, and Henkel was not unfairly prejudiced in how she tried the unjust enrichment claim.

C. Impact

1. Pennsylvania unjust enrichment: reinforces a strict “plaintiff-conferred” requirement

Although “NOT PRECEDENTIAL,” the opinion is a strong signal of how the Third Circuit reads Pennsylvania unjust enrichment doctrine when the claimed benefit is a payment: the plaintiff must be the source of the benefit. Employees seeking gratuity-fee proceeds may face dismissal or JMOL if the benefit is characterized as guest-paid money rather than something conferred directly by employees.

2. Employee gratuity-fee litigation: steers claims toward contract/statute rather than quasi-contract

The ruling makes quasi-contract recovery harder where payments come from customers/guests and the plaintiff is an employee. Future plaintiffs may attempt to reframe the “benefit” (e.g., services) or pivot toward statutory wage claims, clear contractual promises, or consumer-facing representations that more directly establish enforceable entitlement.

3. Third-party beneficiary claims: requires customer-side proof and contract identification

The affirmance on intended third-party beneficiary illustrates that employee testimony about internal expectations will not establish guest intent. Plaintiffs will likely need (i) identifiable guest contracts (reservation terms, invoices, disclosures) and (ii) evidence that guests understood the fee as a gratuity for staff—potentially through uniform disclosures, marketing language, or standardized checkout documents.

4. Procedure: comfort for trial courts correcting legal error post-trial

The opinion also supports district courts’ willingness to correct earlier legal misstatements at JMOL, provided they explain the change and manage reliance prejudice. It is a reminder that a denial of summary judgment is not a guarantee that a legally insufficient theory will survive after the evidentiary record is fully developed at trial.

IV. Complex Concepts Simplified

• Intended third-party beneficiary: A non-party can enforce a contract only if the contracting parties intended to give that person enforceable rights. It is not enough that the person would benefit as a practical matter; intent is the touchstone (Guy v. Liederbach).
• Unjust enrichment: A restitution claim used when there is no enforceable contract covering the dispute, requiring (in Pennsylvania) that the plaintiff conferred a benefit on the defendant, the defendant appreciated it, and keeping it without payment would be inequitable (Shafer Elec. & Constr. v. Mantia).
• Summary judgment: A pretrial decision that ends a claim when no genuine factual dispute exists and the law favors one side.
• Judgment as a matter of law (JMOL): A post-evidence (often post-verdict) ruling that the evidence cannot legally support the jury’s verdict, so the judge enters judgment for the other side.
• Law-of-the-case doctrine: A practice of adhering to earlier rulings in the same case; it is flexible for interlocutory rulings and does not prevent correction of clear error (Roberts v. Ferman; Schultz v. Onan Corp.).
• Conditional cross-appeal (mootness): A party may cross-appeal only if needed depending on the outcome of the main appeal; if the main appeal fails, the conditional cross-appeal becomes irrelevant and is dismissed as moot.

V. Conclusion

Henkel v. Highgate Hotels provides a clear, if nonprecedential, articulation of two practical constraints in Pennsylvania employment-and-fee disputes. First, employees asserting intended third-party beneficiary rights must produce evidence of the contracting parties’ intent—here, guest intent tied to identifiable guest contracts. Second, Pennsylvania unjust enrichment—when framed around guest-paid fees—fails at the threshold if the plaintiff did not confer the payment-benefit on the defendant. Procedurally, the opinion also affirms that district courts may correct earlier misstatements of law at JMOL without violating law-of-the-case principles, so long as they explain the change and avoid reliance prejudice.