Difiore v. Am. Airlines Inc.

• Citation: 17 Wage & Hour Cas.2d (BNA) 1153,646 F.3d 81
• Decision Date: 20 May 2011
• Docket Number: 10–1264.,Nos. 10–1108,10–1167,s. 10–1108
• Parties: Don DiFIORE; Leon Bailey; Ritson Desrosiers; Marcelino Coleta; Tony Pasuy; Lawrence Allsop; Clarence Jeffreys; Floyd Woods; Andrea Connolly, and all others similarly situated, Plaintiffs, Appellees/Cross–Appellants,v.AMERICAN AIRLINES, INC., Defendant, Appellant/Cross–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

646 F.3d 81

161 Lab.Cas. P 35,910

17 Wage & Hour Cas.2d (BNA) 1153

Don DiFIORE; Leon Bailey; Ritson Desrosiers; Marcelino Coleta; Tony Pasuy; Lawrence Allsop; Clarence Jeffreys; Floyd Woods; Andrea Connolly, and all others similarly situated, Plaintiffs, Appellees/Cross–Appellants,

v.AMERICAN AIRLINES, INC., Defendant, Appellant/Cross–Appellee.

Nos. 10–1108

10–1167

10–1264.

United States Court of Appeals, First Circuit.

Heard Dec. 10, 2010.Decided May 20, 2011.

OPINION TEXT STARTS HEREWest CodenotesLimited on Preemption GroundsM.G.L.A. c. 149, § 152A Michael V. Powell with whom Locke Lord Bissell & Liddell LLP, Amy Cashore Mariani, Michael A. Fitzhugh, David J. Volkin and Fitzhugh & Mariani LLP were on brief for defendant, appellant/cross-appellee.Robert S. Span and Steinbrecher & Span LLP on brief for Air Transport Association of America, Inc., Amicus Curiae.Philip J. Gordon, President, Massachusetts Employment Lawyers Association c/o Gordon Law Group, LLP, Audrey R. Richardson, Greater Boston Legal Services, and Catherine K. Ruckelshaus, Nat'l Employment Law Project, on brief for Massachusetts Employment Lawyers Association (MELA), Greater Boston Legal Services (GBLS), and the National Employment Law Project (NELP), Amici Curiae.Shannon Liss–Riordan with whom Hillary Schwab and Lichten & Liss–Riordan, P.C. were on brief for plaintiff, appellees/cross-appellants.Scott L. Nelson and Allison M. Zieve, Public Citizen Litigation Group, on brief for Public Citizen, Inc., Amicus Curiae.Before BOUDIN, LIPEZ and HOWARD, Circuit Judges.BOUDIN, Circuit Judge.

In September 2005, American Airlines, Inc. (“American”) began charging passengers a fee of $2 for each bag checked with porters who provide curbside service (called “skycaps”) at Boston's Logan Airport. Arguing that passengers mistook the fee for a mandatory gratuity for the skycaps and stopped tipping, several porters brought suit against American; the present appeal is a product of that litigation. The facts and proceedings are as follows.

Some passengers at Logan carry their own luggage into the airport and some have it brought inside to the counter by skycaps, but a great many check their luggage onto flights at curbside; ordinarily, the skycap will take the luggage from the curb, write up the baggage tags, and place the luggage on a conveyer belt destined for the airline cargo facilities. Prior to 2005, American made skycap services available to its customers free of charge—beyond the plane fare—with the airline bearing the cost of skycap labor and other facilities involved in curbside check-in (conveyer belts, rent for space).

American once itself employed skycaps to provide these services to passengers but now, at least in Boston, relies primarily on contractors—most recently, a company called G2 Secure Staff, LLC (“G2”). Although all the American and G2 skycaps earned an hourly wage, their main source of income was tips. The customary gratuity at Logan Airport was about $1 per bag, and nearly all passengers tipped.

In early 2005, one of American's competitors began charging a curbside check-in fee in Seattle. American tested the idea there before expanding the practice to other cities across the country. Separate charges for services that had once been bundled together—for example, for in-flight meals or extra bags—were becoming common in airline operations during this period. Due to deregulation, airline fares had fallen on many major routes, airlines were suffering low profits or losses, and separate charges were one of the responses.

Like its competitors, American set the price for curbside check-in at $2 per bag, with an initial goal of merely offsetting the expense of providing skycap service. Revenues from the fee proved more than enough to recoup those costs, and American netted a substantial profit from the charge. In cities where American relied on contractors to provide skycap services, the airline and the contractor shared the proceeds from the new charge. At Logan, sixty percent went to the airline and forty percent to G2.

As for the skycaps, American knew that the new fee would lessen tip income from passengers at least temporarily; in fact, some hourly salaries for the G2 skycaps at Logan airport were raised to comply with minimum wage laws in light of reduced tips. The skycaps were required to collect the $2 fee in cash to be turned over to the airline at the end of the business day; they were not supposed to solicit tips, although some apparently did; but they were free, if the customer inquired, to say that the fee was not a gratuity.

When it instituted the fee at Logan in September 2005, American notified its customers of the new charge on its website as well as on three large, poster-size signs adjacent to the bag-check podiums outside the airport terminal. A typical sign, in its original format, read as follows:

Curbside

Check–In

U.S. Domestic Flights

$2 Per Bag

American Airlines

Within a week or two, skycaps had added notations to the official signs saying “gratuity not included” or words to this effect, and American then revised its standard posters to include this caveat—placed in considerably smaller lettering immediately below the fee itself. By October 14, 2005, American had ordered several hundred signs with this revised language for use across the country; the website, which referred only to the $2 per bag charge, was not altered. In Boston, four of the modified signs were posted at the skycap podiums and along the curbside.

The skycaps' tip income fell significantly once the new charge began. Some passengers likely thought that $2 per bag was enough to pay and chose not to tip, but others interpreted the $2 fee as a mandatory tip to the skycap rather than a charge paid to the airline. Confusion persisted despite modification of the signs: the curbside can be hectic at busy times; there were other unrelated signs; and some luggage was collected far from the signage, down the line of parked cars and taxis.

In December 2006, two skycaps at Logan, Don DiFiore and Leon Bailey, brought a putative class action against G2 and American in Massachusetts Superior Court, which the defendants removed to federal district court on the basis of diversity jurisdiction. The claims against G2 were dismissed in light of an arbitration agreement, and class certification was denied. Eight more skycap plaintiffs joined the suit against American,¹ and the complaint was twice amended.

By the time of the third amended complaint—now the operative pleading—the claims against American were these: that American's curbside check-in fee violated a Massachusetts statute governing tips, Mass. Gen. Laws ch. 149, § 152A (2008); that the airline's conduct created liability under state common law as tortious interference with advantageous relations, unlawful conversion, and unjust enrichment; and that the skycaps were entitled to restitution under principles of quantum meruit.

The tips law is the centerpiece of the appeal and its pertinent language provides that “[n]o employer or other person shall demand ... or accept from any ... service employee ... any payment or deduction from a tip or service charge given to such ... service employee ... by a patron.” Mass. Gen. Laws ch. 149, § 152A(b). The skycaps qualified as “service employees” for purposes of the statute. Id. § 152A(a). The term “service charge” is defined as

a fee charged by an employer to a patron in lieu of a tip to any ... service employee ... including any fee designated as a service charge, tip, gratuity, or a fee that a patron or other consumer would reasonably expect to be given to a ... service employee ... in lieu of, or in addition to, a tip.

Id. The gravamen of the tips law claim is that the $2 fee is a “service charge” under state law (and must therefore go to the skycaps) because customers “reasonably expect[ed]” it to be given to the skycaps.

American moved to dismiss the complaint, or alternatively for summary judgment, principally on the ground that the claims were barred by the express preemption clause of the Airline Deregulation Act: no state may “enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier.” 49 U.S.C. § 41713(b)(1) (2006). Judge Young denied the motion, DiFiore v. Am. Airlines, Inc., 483 F.Supp.2d 121, 128 (D.Mass.2007), but later granted summary judgment to American on the quantum meruit, conversion, and unjust enrichment counts—theories not pursued on appeal.

The claim for recovery under the tips law, Mass. Gen. Laws ch. 149, § 152A(f), and the tortious-interference claim were both tried to a jury in March and April 2008. The jury awarded each Logan skycap plaintiff $2 per bag checked at curbside by that skycap from September 2005 to the start of trial, “plus fees collected in March and April 2008” during the trial. The St. Louis skycap—not covered by the Massachusetts tips law and bringing only a tortious-interference claim under Missouri law—was awarded nothing and has not appealed.

For those Logan skycaps who claimed both tortious interference and a violation of the tips statute, the jury awarded identical damages on both theories. ² The district court construed state law as permitting the jury to award treble damages, see Mass. Gen. Laws Ann. ch. 149, § 150 (West 2004) (amended 2008); Wiedmann v. Bradford Grp., Inc., 444 Mass. 698, 831 N.E.2d 304, 313 (2005), but the jury declined to award anything on this account.

Thereafter the district court temporarily set aside the jury award but reinstated it after the state's highest court answered a certified question—not germane to the disputed issues on this appeal—involving the interpretation of the tips statute. DiFiore v. Am. Airlines, Inc., 454 Mass. 486, 910 N.E.2d 889, 891 (2009). Further post-trial motions led to another opinion rejecting the preemption claim, DiFiore v. Am. Airlines, Inc., 688 F.Supp.2d 15, 23–24 (D.Mass.2009),...