GARCIA v. SHERATON LAX

f the foregoing: [¶] 1. Amounts collected for banquets or catered meetings shall be paid equally to the Hotel Workers who actually work the banquet or catered meeting; and [¶] 2. Amounts collected for room service shall be paid to the Hotel Workers who actually deliver food and beverage associated with the charge. [¶] 3. Amounts collected for porterage service shall be paid to the Hotel Workers who actually carry the baggage associated with the charge." (LAMC, § 184.02, subd. A. 1-3.)

Los Angeles Municipal Code section 184.02, subdivision B provides: "This section does not apply to any tip, gratuity, money, or part of any tip, gratuity, or money that has been paid or given to or left for a Hotel Worker by customers over and above the actual amount due for services rendered or for goods, food, drink, or articles sold or served to the customer."

(3) A "service charge" is defined in the Ordinance as "all separately-designated amounts collected by a Hotel Employer from customers that are for service by Hotel Workers, or are described in such a way that customers might reasonably believe that the amounts are for those services, including but not limited to those charges designated on receipts under the term `service charge,' `delivery charge,' or `porterage charge.'" (LAMC, § 184.01, subd. F.) The Ordinance also defines "hotel worker," "hotel employer," and "hotel," which are further explained in our constitutional analysis, post, at pages 388-389. (LAMC, § 184.01, subds. B-D.)

As stated in the Ordinance, its purpose is to "improve the welfare of service workers at the LAX-area hotels by ensuring that they receive decent compensation for the work they perform." (LAMC, § 184.00.) The Los Angeles City Council recognized that hotels adjacent to LAX reap significant economic benefits, including the highest occupancy rate of all Los Angeles hotels because of the proximity to the airport. (LAMC, § 184.00.) These LAX-area hotels, however, fail to pay their workers a living wage, and because of the low hourly wages, these workers rely on gratuities. (LAMC, § 184.00.) Many workers have seen their income decline, and have reported a reduction in the gratuities they receive from customers, because LAX-area hotels have instituted a practice of adding a mandatory service charge of "15% to 20% of the bill for banquets and other large group events." (LAMC, § 184.00.) Hotel patrons assume the service charges are paid to the workers performing the services, and therefore the patrons reduce or eliminate gratuities. (LAMC, § 184.00.) While some hotels pay a portion of the service charges to workers, other hotels retain the service charges. (LAMC, § 184.00.)

We granted in part and denied in part appellants' request for judicial notice, and their second request for judicial notice of documents pertaining to the "official acts of the City of Los Angeles." (See Evid. Code, § 452, subd. (c).)

Before the Ordinance was sent to the city council, several issues related to service charges were considered: (1) an ordinance that would have required hotels and restaurants to inform patrons that service charges are inclusive (or exclusive) of a gratuity; (2) the legality of adding a service charge or gratuity to a bill; and (3) the legality of not paying the service charge to employees, which is reasonably expected by customers paying the charge. (L.A. City Council, Trade, Commerce, and Tourism Com. Rep. on arts. 2, 3 4 to ch. XVIII of the LAMC.) The Ordinance addresses the third issue. (Com. Rep., at p. 2.)

D. The Labor Code Regulating Gratuities Does Not Conflict with the Ordinance

(4) The Labor Code mandates that all gratuities are employees' property. (§§ 350-356.) A "gratuity" is "any tip, gratuity, money, or part thereof that has been paid or given to or left for an employee by a patron of a business over and above the actual amount due the business for services rendered or for goods, food, drink, or articles sold or served to the patron. . . ." (§ 350, subd. (e), italics added.) A gratuity is not a service charge. A service charge is a separately designated amount collected by a hotel from patrons that is part of the amount due the hotel for services rendered, rather than something "over and above the actual amount due." (See LAMC, § 184.01, subd. F.) Thus, a service charge by definition is not a gratuity. The Legislature has made clear that amounts due for services (which include service charges) are not gratuities. This interpretation is confirmed by a recent amendment to the definition of gratuity carving out an exception for dancing services. (§ 350, subd. (e).)

Section 350, subdivision (e), includes a specific reference to dancers. "Any amounts paid directly by a patron to a dancer employed by an employer subject to Industrial Welfare Commission Order No. 5 or 10 shall be deemed a gratuity."

The hotels contend the Ordinance transforms a service charge into a gratuity because it is paid to the workers performing the services. Searle v. Wyndham Internat., Inc., supra, 102 Cal.App.4th 1327, 1334-1335 has rejected that argument. The hotels contend the Ordinance's treatment of service charges conflicts with the Labor Code because the statutory definition of gratuity excludes employers' property (service charges). (§ 350, subd. (e).) We reject the hotels' argument. (5) The definition of gratuity in section 350, subdivision (e) does not define employers' property rights; it establishes the meaning of "gratuity" as that term appears elsewhere in the statute. (See Cory v. Board of Administration (1997) 57 Cal.App.4th 1411, 1423-1424 [ 67 Cal.Rptr.2d 763].) Section 351 prohibits employers from collecting, taking, or receiving any gratuity or part thereof and declares: "Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for." (§ 351.) When read in this statutory context, a "gratuity" as that term is defined in the statute does not refer to employers' property rights. (See Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 567 [ 67 Cal.Rptr.3d 468, 169 P.3d 889] [when construing a statute, courts view the statute's words in context].) We do not read section 351 or any other provision in the Labor Code governing gratuities to address employers' property rights.

Our review of extrinsic materials also does not support the hotels' interpretation. (See Hoechst Celanese Corp. v. Franchise Tax Bd. (2001) 25 Cal.4th 508, 519 [ 106 Cal.Rptr.2d 548, 22 P.3d 324].) The legislative history does not suggest the Labor Code sections governing gratuities set property lines between an employer and employee; the line always has been drawn to define an employees' right to gratuities. ( Etheridge v. Reins Internal California, Inc., supra, 172 Cal.App.4th at pp. 916-918 (maj. opn. of Croskey, J.); id. at p. 930 (cone. dis. opn. of Klein, P. J.); see also Henning v. Industrial Welfare Com. (1988) 46 Cal.3d 1262, 1270-1275 [ 252 Cal.Rptr. 278, 762 P.2d 442]; Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 729-730 [ 166 Cal.Rptr. 331, 613 P.2d 579].) The most recent amendment to section 351 removed an exemption to ensure that in all circumstances employees are entitled to gratuities. (See Legis. Counsel's Dig., Assem. Bill No. 2509 (1999-2000 Reg. Sess.) as introduced Feb. 24, 2000, § 16, pp. 5, 24.) While the Legislature also has amended the definition of gratuity (§ 350, subd. (e)), we do not view this amendment as suggesting the Legislature recognizes that service charges are employers' property. There is nothing in the extrinsic materials to support this assertion. The Labor Code provisions governing gratuities do not address the ownership of service charges.

The 2000 amendment deleted this language from section 351: "This section shall not apply to any employment in which no charge is made to a patron for services rendered to the patron by an employee on behalf of his employer if both of the following conditions are met: (a) the employee is receiving a wage or salary not less than the higher of the state or federal minimum wage, regardless of whether such employee is subject to either such minimum wage law, and (b) the employee's wage or salary is guaranteed and paid in full irrespective of the amount of tips received by the employee." (Legis. Counsel's Dig., Assem. Bill No. 2509 (1999-2000 Reg. Sess.) as introduced Feb. 24, 2000, § 16, p. 24.)

We granted the hotels' request for judicial notice of Assembly Bill No. 2509 (1999-2000 Reg. Sess.). The Legislative Counsel's Digest states: "Existing law prohibits employers from receiving or deducting gratuities intended for employees from wages otherwise payable. Violation is a misdemeanor. Under existing law, this prohibition is not applicable to an employee that has a guaranteed wage or salary that is at least the higher of the federal or state minimum wage. [¶] This bill would delete the above exemption. . . ." (Legis. Counsel's Dig., Assem. Bill No. 2509 (1999-2000 Reg. Sess.) as introduced Feb. 24, 2000, § 16, p. 5.)

The Ordinance does not contradict the Labor Code. The Labor Code and the Ordinance address different subjects and attempt to prevent different harms. (§ 356; LAMC, § 184.00.) The Labor Code attempts to prevent fraud on the public in connection with the practice of tipping to ensure employees receive the tips left for them by the patron. (§ 356.) The Ordinance addresses certain hotels' business practices of pricing services based upon two components — a base price and a surcharge, designated as a "service charge." The service charge is not negotiable and is part of the amount the patron must pay for the services. The Ordinance does not prevent hotels from charging patrons for services, but it recognizes that the 15 percent to 20 percent service charge misleads the public into assuming that the service charge is being distributed to the worker performing the services. The Ordinance mandates that the service charge must be paid to the worker. Thus, the Ordinance does not prohibit what the Labor Code commands or command what it prohibits.

E. The Labor Code Does Not Impliedly Occupy the Field of Service Charges

(6) We find implied preemption only when the circumstances indicate a legislative intent to preempt based upon "indicia of intent." ( O'Connell v. City of Stockton, supra, 41 Cal.4th at p. 1068; Sherwin-Williams Co. v. City of Los Angeles, supra, 4 Cal.4th at p. 898.) We look for the following indicia of intent: "`"(1) the subject matter has been so fully and completely covered by general law as to clearly indicate that it has become exclusively a matter of state concern; (2) the subject matter has been partially covered by general law couched in such terms as to indicate clearly that a paramount state concern will not tolerate further or additional local action; or (3) the subject matter has been partially covered by general law, and the subject is of such a nature that the adverse effect of a local ordinance on the transient citizens of the state outweighs the possible benefit to the" locality.' [Citation.]" ( O'Connell, supra, at p. 1068, citing Sherwin-Williams, supra, at p. 898.)

The hotels concede there is no express legislative intent to fully occupy the field in sections 350 through 356.

As previously stated, we look at the whole purpose and legislative scheme to determine legislative intent to impliedly occupy an area of law. ( O'Connell v. City of Stockton, supra, 41 Cal.4th at p. 1068.) Absent a clear legislative intent, we will presume that a local regulation within an area over which the local government has traditionally exercised control, is not preempted. ( Id. at p. 1069.) We find none of the indicia of intent to overcome this presumption.

1. No Complete Coverage of the Disposition of Service Charges

The hotels contend the Legislature has completely covered the area of gratuities and service charges in sections 350 through 356 of the Labor Code. We disagree.

The Labor Code and the Ordinance address different subjects. (§§ 351, 356; LAMC, § 184.00.) The hotels' argument incorrectly assumes the definition of gratuity establishes an employers' absolute ownership of service charges. As we have previously stated, the definition of gratuity, when read in context, does not address employers' property rights. Neither the statute nor the legislative history of the Labor Code provisions regulating gratuities indicate the Legislature has considered the ownership of services charges, or has expressed an intent to prohibit local regulation of service charges.

The Legislature may have devoted a whole separate article to gratuities, as the hotels point out, but sections 350 to 356 do not even completely cover the subject of gratuities. As the tip-pooling cases illustrate, the Labor Code does not even address all employer conduct in connection with gratuities. (See Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, 1067 [ 268 Cal.Rptr. 647] ["While the language of the statute expressly prohibits various employer practices, there is no mention therein of employer-mandated tip pooling, or of any kind of tip pooling among employees."]; see also Etheridge v. Reins Internal California, Inc., supra, 172 Cal.App.4th at pp. 918-920 (maj. opn. of Croskey, J.).)

As noted, the legislative history the hotels rely on refers to employer-prohibited practices of using gratuities to meet wage obligations. ( Etheridge v. Reins Internat. California, Inc., supra, 172 Cal.App.4th at pp. 916-918 (maj. opn. of Croskey, J.); id. at p. 930 (cone. dis. opn. of Klein, P. J.); see also § 356.) We do not agree with the hotels that the legislative history reveals the Legislature's "conscious decision to allow employers to keep service charges." We cannot locate any citation to the legislators' consideration of service charges. On the record before us, we conclude the Legislature has not turned its attention to this issue. It is therefore not a matter that has become a state concern.

2. No Partial Coverage/Paramount State Concern

We reject the hotels' contention that the Legislature has even partially covered the service charge issue in such terms as to indicate a state concern. ( Sherwin-Williams Co. v. City of Los Angeles, supra, 4 Cal.4th at p. 905.) The Labor Code does not address service charges.

The paramount state concern in the Labor Code is in regulating gratuities and preventing fraud on the public in connection with the practice of tipping. (§§ 351, 356.) The Legislature, however, has not expressed a paramount concern to ensure that employers have absolute ownership of business revenue designated as a "service charge." Thus, there is no indication the Legislature considered the service charge issue a paramount state concern.

3. No Partial Coverage/Adverse Effect on the State

The hotels present no argument on the third indicia of intent, that is, whether the Ordinance has an adverse effect on the state. The Ordinance is a purely local concern and is aimed at ensuring decent compensation for hotel service workers in the Corridor. (See Searle v. Wyndham Internat., Inc., supra, 102 Cal.App.4th at p. 1334 [allocation of service charges is of no direct concern to hotel guests].) The City passed the Ordinance based upon findings related to hotels' service charge practices, and hotels' failure to pay decent compensation to service workers in Corridor hotels.

(7) The hotels have not overcome the presumption against preemption. ( Big Creek Lumber Co. v. County of Santa Cruz, supra, 38 Cal.4th at pp. 1149-1150.) The Labor Code regulating gratuities does not preempt the Ordinance.

II. The Ordinance Is Not Unconstitutional (8) The constitutionality of the Ordinance also is a question of law for our independent review. ( Samples v. Brown (2007) 146 Cal.App.4th 787, 799 [ 53 Cal.Rptr.3d 216].) "A facial challenge to the constitutional validity of a statute or ordinance considers only the text of the measure itself, not its application to the particular circumstances of an individual. [Citation.]" ( Tobe v. City of Santa Ana (1995) 9 Cal.4th 1069, 1084 [ 40 Cal.Rptr.2d 402, 892 P.2d 1145].) `""If feasible within bounds set by their words and purpose, statutes [ordinances] should be construed to preserve their constitutionality."'" ( Mason v. Office of Admin. Hearings (2001) 89 Cal.App.4th 1119, 1126-1127 [ 108 Cal.Rptr.2d 102], fn. omitted.)

We approach our constitutional analysis with the presumption that the City did not intend to violate either the state or federal Constitution, but to enact a valid ordinance within the scope of its constitutional powers. "`If a statute [ordinance] is susceptible of two constructions, one of which will render it constitutional and the other unconstitutional in whole or in part, or raise serious and doubtful constitutional questions, the court will adopt the construction which, without doing violence to the reasonable meaning of the language used, will render it valid in its entirety, or free from doubt as to its constitutionality, even though the other construction is equally reasonable. [Citations.] . . .'" ( People v. Superior Court (Romero) (1996) 13 Cal.4th 497, 509 [ 53 Cal.Rptr.2d 789, 917 P.2d 628], citing Miller v. Municipal Court (1943) 22 Cal.2d 818, 828 [ 142 P.2d 297].) The constitutional challenges presented here fail because there is a reasonable construction based upon the language in the Ordinance.

A. The Classifications in the Ordinance Are Rationally Based and Do Not Violate the Equal Protection Clause

(9) The equal protection clauses of the federal and state Constitutions guarantee to persons equal protection of the laws. ( U.S. Const., 14th Amend., § 1; Cal. Const., art. I, § 7; Britt v. City of Pomona (1990) 223 Cal.App.3d 265, 274 [ 272 Cal.Rptr. 724].) "A corporation is considered a `person' entitled to the constitutional guarantee of equal protection. [Citation.]" ( Walgreen Co. v. City and County of San Francisco (2010) 185 Cal.App.4th 424, 434 [ 110 Cal.Rptr.3d 498] ( Walgreen).) Equal protection analysis under the federal and state Constitutions is substantially similar. ( Manduley v. Superior Court (2002) 27 Cal.4th 537, 571 fn. 9 [117 Cal.Rptr.2d 168, 41 P.3d 3]; RUI One Corp. v. City of Berkeley (9th Cir. 2004) 371 F.3d 1137, 1154.)

The hotels contend the Ordinance violates the guarantees of equal protection because it (1) singles out hotels within the Corridor and does not apply to other LAX-area hotels; (2) does not cover hotels with less than 50 rooms; and (3) exempts unionized hotels within the Corridor.

As defined in the Ordinance, "`[h]otel' means a residential building located within the area designated by ordinance as the Gateway to LA (Century Corridor) Property Business Improvement District (Century Corridor PBID) that is designated or used for lodging and other related services for the public, and containing 50 or more guest rooms, or suites of rooms. `Hotel' also includes any contracted, leased, or sublet premises connected to or operated in conjunction with the building's purpose, or providing services at the building. If the Century Corridor PBID ceases to exist, the boundaries at the time of dissolution shall remain in effect for purposes of this article." (LAMC, § 184.01, subd. B.)

As a threshold matter, a meritorious equal protection claim requires a showing that the City has adopted a classification that affects two or more similarly situated groups in an unequal manner. ( Cooley v. Superior Court (2002) 29 Cal.4th 228, 253 [ 127 Cal.Rptr.2d 177, 57 P.3d 654]; Walgreen, supra, 185 Cal.App.4th at p. 434.) The hotels' equal protection challenge is predicated on the assumption that all LAX-area hotels are similarly situated. (10) The Ordinance is subject to rational basis review. ( People v. Hofsheier (2006) 37 Cal.4th 1185, 1200-1201 [ 39 Cal.Rptr.3d 821, 129 P.3d 29]; Warden v. State Bar (1999) 21 Cal.4th 628, 641 [ 88 Cal.Rptr.2d 283, 982 P.2d 154].) We agree with the hotels that the rational basis review is not a meaningless standard. Our review requires us to determine "if there is any reasonably conceivable state of facts that could provide a rational basis for the classification. [Citations.]" ( FCC v. Beach Communications, Inc. (1993) 508 U.S. 307, 313 [ 124 L.Ed.2d 211, 113 S.Ct. 2096]; see People v. Hofsheier, supra, at pp. 1200-1201; Las Lomas Land Co., LLC v. City of Los Angeles (2009) 177 Cal.App.4th 837, 858 [ 99 Cal.Rptr.3d 503].) In making this determination, we need not determine the actual motive of the City in passing the Ordinance or engage in factfinding with regard to the rationality of conceivable motives. ( FCC v. Beach Communications, Inc., supra, at p. 315.) We examine whether the rationale is plausible and the factual basis is reasonably conceivable, which requires consideration of the relation between the classification and the legislative object to be attained. ( People v. Hofsheier, supra, at p. 1201, citing Warden v. State Bar, supra, at pp. 644-645.) Walgreen, supra, 185 Cal.App.4th at pages 434-436, which the hotels rely on to make their equal protection challenge, applied the same standard.

The hotels have the burden to negate every conceivable basis that might support the legislative classification. ( FCC v. Beach Communications, Inc., supra, 508 U.S. at p. 315.) Proving the absence of a rational basis is not impossible but can be an exceedingly difficult task. The hotels have not met this burden.

1. Hotel Size Limitations and Geographic Limits Are Rational

The Ordinance drew the line at hotels with 50 or more guestrooms located in the business area designated as the Corridor. (LAMC, § 184.01, subd. B.) These distinctions are rationally related to a legislative purpose.

The hotels contend the line should have been drawn at all LAX-area hotels, especially since the purpose of the Ordinance is "to improve the welfare of service workers at the LAX-area hotels," not just at Corridor hotels. (LAMC, § 184.00.) We disagree.

The City's incremental approach to focus on the Corridor, a designated business district (LAMC, § 184.01, subd. B), does not violate equal protection. The incremental approach to treat businesses receiving municipal investments differently has been upheld as rationally based. In RUI One Corp. v. City of Berkeley, supra, 371 F.3d at page 1154, the Ninth Circuit rejected an equal protection challenge to a living wage ordinance that targeted only employers of a certain size operating on public trust land within Berkeley's marina. Among the Berkeley City Council's justifications in drawing the line at the marina was the economic investment in the area, which resulted in a financial benefit to marina businesses, "a reasonable portion of which should be used to provide employees with appropriate wages and benefits. . . ." ( Id. at p. 1145.) Thus, it was rational to treat marina businesses differently from their counterparts outside the marina. ( Id. at pp. 1155-1156.)

Relying on RUI One Corp. v. City of Berkeley, supra, 371 F.3d 1137, the district court in Fortuna Enterprises, L.P. v. City of Los Angeles (C.D.Cal. 2008) 673 F.Supp.2d 1000, rejected an equal protection challenge to the Los Angeles city ordinance that designated the Corridor as a business district, which required hotels with 50 or more employees to pay their employees a living wage. ( Id. at pp. 1001-1002, 1012-1014.) According to the Fortuna court, the Los Angeles City Council "acted rationally when it concluded that in exchange for the `significant and unique business benefits' that the hotels enjoy from their close proximity to the airport, and the significant capital contributions that the City plans to make . . . the hotels should be required to pay a living wage." ( Id. at p. 1014.)

Like RUI One Corp. and Fortuna, the hotels have failed to meet their burden to establish an equal protection violation. The Corridor already had been established as a designated business zone, which the City has designated and targeted for economic investment, and the City rationally could conclude this designation benefits Corridor hotels, obligating hotels to pay service workers a decent compensation. The hotels have failed to establish that this line drawing is not rationally related to legislative goals.

The size distinction in the Ordinance also is rationally based. The legislative purpose refers to the "ability" to support the local workforce by engaging in fair employment practices. (LAMC, § 184.00.) While the reference to "ability" is not further explained, the "ability to pay" follows from the legislative findings of high occupancy rates and the economic benefits hotels reap from the proximity to the airport. ( Ibid.) Corridor hotels have a larger revenue stream from high occupancy rates, provide services in which a service charge is collected, and are in a better economic position to absorb the impact of the Ordinance. (LAMC, § 184.00.) A similar size classification was determined to be rationally based in RUI One Corp. v. City of Berkeley, supra, 371 F.3d 1137, 1154 — 1155. Our inquiry ends when there is a reasonably conceivable state of facts that provides a rational basis for the challenged classification. ( FCC v. Beach Communications, Inc., supra, 508 U.S. at p. 313.)

The hotels ask us to follow Walgreen, supra, 185 Cal.App.4th 424, and to find no plausible reason for the geographic and size classifications, as the City's rationale for these classifications is as arbitrary as the rationales presented to justify the San Francisco ordinance. We disagree with the hotels' conclusion and find the City's rationale fully supported.

In Walgreen, the San Francisco ordinance banned the sale of tobacco products in pharmacies, but exempted from the ban "general grocery stores" and "big box stores," that qualified as a "pharmacy." ( Walgreen, supra, 185 Cal.App.4th at p. 429.) The San Francisco ordinance was based on the following principal finding: "`Through the sale of tobacco products, pharmacies convey tacit approval of the purchase and use of tobacco products. This approval sends a mixed message to consumers who generally patronize pharmacies for health care services. . . .'" ( Ibid.) Given the stated purpose, the Walgreen court could not find a plausible reason for the classification. "Here, there is no reasonably conceivable factual basis for finding that the purported implied message approving tobacco use is `stronger' at a Walgreens than it is at a supermarket containing a licensed pharmacy." ( Id. at p. 439.)

In their supplemental brief following oral argument, the hotels attempted to draw a parallel with Walgreen by solely focusing on the City's legislative purpose to avoid customer confusion. With that goal in mind, the hotels contend there is no plausible reason for the instant classifications. But the purpose of the Ordinance is much broader than preventing customer confusion. While the Ordinance refers to the reduction of gratuities based upon customer confusion, it also refers to low wages, a decline in workers' wages following hotels' service charge policies of imposing a 15 percent to 20 percent service charge, and high occupancy rates at LAX-area hotels. (LAMC, § 184.00.) Specifically, the Ordinance declares: "By way of this ordinance, the City seeks to improve the welfare of service workers at the LAX-area hotels by ensuring that they receive decent compensation for the work they perform." ( Ibid.) Thus, this is much more than a consumer-confusion ordinance. Based upon this stated purpose, the City has offered plausible reasons for the geographic and size distinctions in the Ordinance which sets this case apart from Walgreen.

2. Union Waiver Provision Is Rational

The hotels contend there is no rational basis to exempt workers covered under a collective bargaining agreement. (LAMC, § 184.05.) But, the distinction between hotels with collective bargaining agreements and those without has been found to be a rational one. Workers covered by collective bargaining agreements may have greater bargaining power, and therefore, have a better ability to negotiate compensation than those workers that are not represented. (See Viceroy Gold Corp. v. Aubry (9th Cir. 1996) 75 F.3d 482, 490-491 [upholding provision containing union/nonunion distinction under rational basis test based upon greater power of workers covered by collective bargaining agreement to ensure safe working conditions].) The purpose of the Ordinance is to improve the welfare of service workers by ensuring they receive decent compensation. The union exemption is rationally related to that legislative goal.

B. The Ordinance Does Not Violate Due Process and Is Not Void for Vagueness

(11) Contrary to the hotels' contention, the provisions in the Ordinance relating to their responsibility to pay service charges, and the definitions of a "hotel employer" and "hotel worker" do not violate due process. Under the due process clauses of the Fourteenth Amendment of the federal Constitution or article I, section 7 of the California Constitution, "due process of law is violated by `a statute which either forbids or requires the doing of an act in terms so vague that [persons] of common intelligence must necessarily guess at its meaning and differ as to its application.' [Citations.]" ( Britt v. City of Pomona, supra, 223 Cal.App.3d at p. 278; see also Fisher v. City of Berkeley, supra, 37 Cal.3d at p. 702.)

Our due process analysis is guided by two principles. A statute will pass constitutional muster, "`if it (1) gives fair notice of the practice to be avoided, and (2) provides reasonably adequate standards to guide enforcement. [Citations.]' [Citation.]" ( Britt v. City of Pomona, supra, 223 Cal.App.3d at p. 278.) In applying these two principles, we respect "`the strong presumption that legislative enactments "must be upheld unless their unconstitutionality clearly, positively, and unmistakably appears. [Citations.] A statute should be sufficiently certain so that a person may know what is prohibited thereby and what may be done without violating its provisions, but it cannot be held void for uncertainty if any reasonable and practical construction can be given to its language."' [Citation.]" ( Tobe v. City of Santa Ana, supra, 9 Cal.4th at p. 1107.) Moreover, because the Ordinance regulates business behavior, constitutional requirements are more relaxed than they are for statutes that are penal in nature. ( Teichert Construction v. California Occupational Safety Health Appeals Bd. (2006) 140 Cal.App.4th 883, 890 [ 44 Cal.Rptr.3d 833].)

1. Hotels' Responsibility to Pay Service Charges to Hotel Workers Is Clear

Enforcement measures include a private right of action for aggrieved employees, restitution, penalties for a willful violation, and attorney fees if the hotel worker is the prevailing party. (LAMC, § 184.04, subds. A.1-3, B.) The Ordinance specifically states that "no criminal penalties shall attach for violation of this article." (LAMC, § 184.04, subd. C.)

The hotels contend the Ordinance is vague as to their obligation to pay service charges to hotel workers. The Ordinance directs "[t]he amounts shall be paid to Hotel Worker(s) equitably and according to the services that are or appear to be related to the description of the amounts given by the hotel to the customers," and specifically directs payment to the workers who actually work the banquet, actually deliver the food for room service, and actually carry the baggage. (LAMC, § 184.02, subd. A. 1-3.)

The hotels attack the Ordinance as vague because (1) it is unclear who "actually" performs the services; (2) the "equitable allocation" of service charges to workers is uncertain; and (3) the phrase "appear to be related to services" requires them to read their customers' minds. These concerns are primarily ones of interpretation. As our Supreme Court has explained, "the mere fact that a new statute [ordinance] requires interpretation does not make it unconstitutionally vague." ( People v. Hazelton (1996) 14 Cal.4th 101, 109 [ 58 Cal.Rptr.2d 443, 926 P.2d 423], fn. omitted.) There is a reasonable construction of hotels' responsibilities, which is all that is required for this due process challenge.

The hotels contend that determining who "actually works" the banquet, for example, is vague because this might include servers and captains, along with cooks and those employees who provide behind-the-scenes banquet services. This is an interpretation question, not a constitutional challenge. The plain language of the Ordinance resolves any ambiguity. Given the purpose of the Ordinance, and the definition of service worker, those who actually work the banquet are those employees that patrons (1) would reasonably believe performed the services, and (2) had previously received gratuities for these services. (LAMC, §§ 184.00, 184.01, subd. F.)

The plain language in the Ordinance also clearly states who is entitled to be paid the service charges for room service deliveries or for baggage services. (LAMC, § 184.02, subd. A.2-3.)

The equitable or fair allocation of service charges is clear; it is left to the discretion of each employer. (LAMC, § 184.02 A. 1-3.)

The Ordinance also clearly states for constitutional purposes what service charges must be paid and to whom. The Ordinance states the amount paid to the worker depends upon "the services that are or appear to be related to the description of the amounts given by the hotel to the customers." (LAMC, § 184.02, subd. A.) If a bill separately describes "room service charge," it would "appear" the hotel service worker who delivered the food is entitled to the entire service charge. (LAMC, §§ 184.01, subd. F, 184.02.) This is set out specifically in the Ordinance. (LAMC, § 184.02, subd. A.2.) When the bill or receipt does not specifically refer to room service, banquets, or porterage services (LAMC, § 184.02, subd. A. 1-3), the service charge is paid to the worker who appeared to perform the described services. This aids hotels in their equitable allocation of service charges, ensuring the employee who performs the services receives the payment.

The city used different language to describe a hotel employer's responsibility to pay service charges to services workers (LAMC, § 184.02, subd. A), and to define a "service charge" (LAMC, § 184.01, subd. F), but these provisions when read together do not result in a vague Ordinance. The definition of "service charges," includes situations in which there is no designation on a receipt or bill that a separately designated charge is a "service charge" and instead describes the charges as a "delivery charge," or "porterage charge." (LAMC, § 184.01, subd. F.) These types of charges, which a customer would reasonably associate with service are all "service charges," which trigger the hotels' responsibilities to pay the service charges to the worker who carried the baggage or delivered food to the patron. (LAMC, § 184.02, subd. A.)

2. The Definitions of "Hotel Employer" and "Hotel Worker" Are Clear

The hotels also contend the definitions of "hotel employer" and "hotel worker" are circular. They point to the definition of a "hotel employer," which includes "a Person who provides services at the Hotel," and the definition of a "hotel worker," which includes any individual who "performs a service for which the Hotel Employer imposes a Service Charge." (LAMC, § 184.01, subds. C, D.) To make this argument, the hotels omit key portions of these definitions. When read in context, there is a reasonable construction of "hotel employer" and "hotel worker" that is not circular and not constitutionally infirm.

"Hotel Employer" is defined as: "a Person who owns, controls, and/or operates a Hotel, or a Person who owns, controls, and/or operates any contracted, leased, or sublet premises connected to or operated in conjunction with the Hotel's purpose, or a Person who provides services at the Hotel." (LAMC, § 184.01, subd. C.)

"`Hotel Worker' means any individual (1) whose primary place of employment is at a Hotel, (2) who is employed directly by the Hotel Employer or by a Person who has contracted with the Hotel Employer to provide services at the Hotel, and (3) who performs a service for which the Hotel Employer imposes a Service Charge. `Hotel Worker' does not include a managerial, supervisory, or confidential employee." (LAMC, § 184.01, subd. D.)

(13) The definition of a hotel worker is a three-part definition that is conjunctive, not disjunctive. A hotel worker is any individual whose primary place of employment is a hotel, who is employed directly by the hotel or by a person who "has contracted with the Hotel Employer to provide services," and who performs services for which the hotel employer provides services. (LAMC, § 184.01, subd. D.) The second condition in the definition of a "hotel worker," is the one contemplated in the third alternative definition of a hotel employer, that is, "a Person . . . who performs a service [to a hotel]." (LAMC, § 184.01, subd. D.) For example, an outside caterer provides services to a hotel (a hotel employer) and employs hotel workers to perform services by serving the food the caterer prepares for the catered meeting at the hotel. Moreover, a hotel employer "provides" services, such as room service, while a hotel worker "performs" the room service by delivering the food or drinks. The plain meaning of these terms differs. (See Webster's 3d New Internat. Diet. (1981) pp. 1678, 1827.) We are bound to give the Ordinance before us a commonsense construction in accordance with the plain and ordinary meaning of its words. ( Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103 [ 56 Cal.Rptr.3d 880, 155 P.3d 284].)

The definitions of a "hotel employer" and "hotel worker" are not "hopelessly circular" like the transient tax ordinances at issue in Britt v. City of Pomona, supra, 223 Cal.App.3d at pages 278-279 and City of San Bernardino Hotel/Motel Assn. v. City of San Bernardino (1997) 59 Cal.App.4th 237, 249-250 [ 69 Cal.Rptr.2d 97]. In City of Pomona, the definition of a transient provided no guidance because "a `transient' is one who occupies a `hotel,' while a `hotel' is a structure which is occupied or intended to be occupied by `transients.'" ( Britt v. City of Pomona, supra, at p. 279.) In City of San Bernardino, the definition of "hotel" used a 30-day limit on occupancy, while the definition of "transient" used a 90-day limit on occupancy. ( City of San Bernardino, supra, at p. 249.) The Ordinance contains neither of these defects and is not void for vagueness.

C. The Ordinance Is Not an Unconstitutional Taking (14) The hotels also challenge the Ordinance as a regulatory taking under the Fifth Amendment to the United States Constitution and article I, section 19 of the California Constitution. The takings clause forbids the taking of private property for public use without just compensation. "The purpose of forbidding uncompensated takings of private property for public use is `to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.' [Citation.]" ( Connolly v. Pension Benefit Guaranty Corp. (1986) 475 U.S. 211, 227 [ 89 L.Ed.2d 166, 106 S.Ct. 1018].)

The federal Constitution states: "[N]or shall private property be taken for public use, without just compensation." ( U.S. Const., 5th Amend.) Our state Constitution provides that "[p]rivate property may be taken or damaged for public use only when just compensation . . . has first been paid to, or into [the] court for, the owner." (Cal. Const., art. I, § 19, subd. (a).)

(15) (While this is not a "classic" takings challenge, under certain circumstances, an economic regulation may result in a taking. ( Kavanau v. Santa Monica Rent Control Bd. (1997) 16 Cal.4th 761, 773-774 [ 66 Cal.Rptr.2d 672, 941 P.2d 851].) Whether an economic regulation constitutes a taking depends upon several factors. As our Supreme Court in Kavanau explained: "When a regulation does not result in a physical invasion and does not deprive the property owner of all economic use of the property, a reviewing court must evaluate the regulation in light of the `factors' the high court discussed in Penn Central [Transp. Co. v. New York City (1978) 438 U.S. 104 [ 57 L.Ed.2d 631, 98 S.Ct. 2646]] and subsequent cases. Penn Central emphasized three [significant] factors in particular: (1) `[t]he economic impact of the regulation on the claimant'; (2) `the extent to which the regulation has interfered with distinct investment-backed expectations'; and (3) `the character of the governmental action.' [Citations.]" ( Kavanau, supra, at p. 775.) While the Kavanau court distilled additional factors, the court cautioned that these factors should not be applied as a checklist but applied appropriately to the facts of each case. ( Id. at pp. 775-776.)

Under the Penn Central factors, we fail to see how the Ordinance is a regulatory taking. No assets have been appropriated for government use. The Ordinance reallocates hotels' revenue derived from service charges to pay compensation. It is not retroactive; hotels will prospectively pay service charges as part of the obligation to compensate workers, and hotels will pay service charges only to those workers who perform services for which hotels impose a service charge. This does not amount to an unconstitutional taking under the Penn Central factors. (Cf. Eastern Enterprises v. Apfel (1998) 524 U.S. 498, 529-537 [ 141 L.Ed.2d 451, 118 S.Ct. 2131] (plur. opn., O'Connor, J.) [retroactive, economic regulation that disproportionately divests a company of $50 to $100 million many years after the company believed its liabilities had been settled amounts to a taking].)

(16) Our takings analysis depends, in part, on the recognition that hotels' obligation under the Ordinance does not operate upon or alter an identified property interest. We caution, however, that the language of the Ordinance should not be read to operate upon or alter a charge for a service that is provided by the hotel, such as, for example, a charge for laundry and drycleaning services, babysitting services, spa and health-related services, and the like. Thus, for purposes of our takings analysis, the Ordinance is properly interpreted not to affect a hotel's disposition of charges collected by it as a legitimate price of the provision of its services. Rather, the Ordinance is designed to address the "service charges" above and beyond the hotel's recoverable costs in providing the services. A "service charge" under the Ordinance might better be described in common parlance as "a charge imposed in lieu of gratuities." Accordingly, our interpretation of the Ordinance does not constitute an unconstitutional taking.

DISPOSITION

The judgments in Chavez v. Renaissance Montura Hotel Los Angeles (B210716); Chavez v. Marriott LAX (B210719); Garcia v. Four Points Sheraton LAX (B210720); Lozano v. Hilton Los Angeles Airport (B210726); and Waner v. Radisson Hotel LAX (B210730) are reversed with directions to overrule the demurrers. Appellants are entitled to costs on appeal.

Klein, P. J., and Croskey, J., concurred.