IN DISMISSING FRAUD CLAIM AGAINST IPI
A mere expectation that one would get share of tips—without a statement or action by Imperial Pacific to support that expectation—does not constitute fraud, according to a federal court judge.
In dismissing the claims of a former VIP services host at the Imperial Pacific Resort and Casino, U.S. District Court for the NMI Chief Judge Ramona V. Manglona said the party that alleges fraud must “state with particularity the circumstances constituting” the fraud.
“[Accusations] of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged,” said Manglona, who cited precedent in her written order last Thursday.
In it, the judge explained the reasons behind her order that dismissed former Imperial Pacific VIP services host Shirlene Loh’s fraud claim and two other claims against Imperial Pacific International (CNMI) LLC.
Manglona said a plaintiff must “set forth more than the neutral facts necessary to identify the transaction” and explain “what is false or misleading about a statement, and why it is false.”
Loh is suing IPI for allegedly not paying her minimum wage and overtime wages and refusing to give her customers’ tips.
Loh is claiming for violations of the Fair Labor Standards Act and Minimum Wage Hour Act, and conversion and fraud.
Loh is demanding that IPI be made to pay her the minimum wage and overtime pay. She also wants her share of tips.
IPI, through counsel Kelley M. Butcher, moved the court to dismiss Loh’s wage claim and claim for fraud.
In support of her fraud claim, Loh alleges that “tips were given by IPI customers to IPI for the specific purpose of rewarding VIP hosts for good service, with the direction that IPI pay these tips to the VIP hosts.”
Loh said IPI “refused to pay these tips to the VIP hosts, specifically her, and instead converted these tips to its own use.”
Loh said Yuki Xia, an IPI employee who supervised and managed the VIP hosts, “converted these tips to the use of IPI, failing, and refusing to pay her legitimate and rightful share of the tips.”
IPI asserts that these allegations about not passing along tips are not particular enough about the time, place, and circumstances to support a claim of fraud.
In her opposition, Loh matches the who, what, when, where, and how to statements in the complaint: “who” is Yuki Xia, “what” is customers’ tips, “when” is the whole period of employment in which tips were confiscated, etc.
But Manglona said this exercise misses the mark.
In her written order, Manglona said the “what” that must be specifically identified is the misrepresentation.
To avoid dismissal, Manglona said, the complaint “must state the time, place, and specific content of the false representation as well as the identities of the parties to the misrepresentation.”
“What did IPI’s representative say to Loh that led her to believe she would get a share of the tips? When did the representative say it? What action did Loh take in reliance on that false statement?” the judge said.
To all these questions, Manglona noted, Loh’s complaint gives no answer.
Manglona said because the complaint fails to specify a false statement regarding tips and fail to identify what action Loh took in reliance of that statement, the fraud component of her cause of action is inadequately pled as required by the Federal Rules of Civil Procedure.
Loh is allowed to file an amended complaint to plead fraud by Feb. 28.
In the same order, Manglona dismissed as untimely Loh’s claims for violation of the Commonwealth’s Minimum Wage and Hour Act.
The judge said because amendment would be futile, they are dismissed with prejudice. That means Loh cannot re-file the two claims.
At the hearing last Feb. 14 on IPI’s motion to dismiss, Loh, through counsel William Fitzgerald, conceded that her Commonwealth Minimum Wage and Court Act claims are untimely.
Manglona did not dismiss Loh’s other two Minimum Wage Hour Act violation claims that are on the federal basis.
Loh is a citizen of Singapore. She currently resides there. She worked for IPI from Oct. 15, 2015 to August 2016.