DiFIORE v. American Airlines, Inc., Civil Action No. 07-10070-WGY.

• Decision Date: 23 December 2009
• Docket Number: Civil Action No. 07-10070-WGY.
• Citation: 688 F. Supp.2d 15
• Parties: Don DiFIORE, Leon Bailey, James E. Brooks, Ritson Desrosiers, Marcelino Coleta, Tony Pasuy, Laurence Allsop, Clarence Jeffreys, Floyd Woods, Andrea Connolly, Plaintiffs, v. AMERICAN AIRLINES, INC., Defendant.
• Court: U.S. District Court — District of Massachusetts

688 F.Supp.2d 15

Don DiFIORE, Leon Bailey, James E. Brooks, Ritson Desrosiers, Marcelino Coleta, Tony Pasuy, Laurence Allsop, Clarence Jeffreys, Floyd Woods, Andrea Connolly, Plaintiffs, v. AMERICAN AIRLINES, INC., Defendant.

Civil Action No. 07-10070-WGY.

United States District Court, D. Massachusetts.

December 23, 2009.

Hillary A. Schwab, Shannon E. Liss-Riordan, Lichten & Liss-Riordan, P.C., Boston, MA, for Plaintiffs.

Amy Cashore Mariani, Fitzhugh & Mariani LLP, Michael A. Fitzhugh, Barbara L. Horan, David J. Volkin, Sonia L. Skinner, Fitzhugh, Parker & Alvaro LLP, Boston, MA, K. Helen Yu, American Airlines, Fort Worth, TX, for Defendant.

MEMORANDUM AND ORDER

YOUNG, District Judge.

In the fall of 2005, American Airlines, Inc. ("American") instituted a fee of $2 per bag for curbside check-in service. Traditionally, customers utilizing such services tipped skycaps who helped them handle their bags. American charged the new fee in such a way ($2 per bag, in cash only, given directly to skycaps) that made customers think they were still tipping skycaps; the revenue, however, was either retained by American or split between American and the skycaps' employers. A number of skycaps (the "Skycaps") brought this action claiming that the way in which American charged the baggage handling fee amounted to diverting tip revenue to an employer in violation of the Massachusetts Tips Law, Massachusetts General Laws chapter 149, section 152A ("Tips Law").

American moved to dismiss on the ground that the Tips Law is preempted by the Airline Deregulation Act of 1978, Pub.L. No. 95-504, 92 Stat. 1705 (codified as amended at 49 U.S.C. § 40101 et seq. (2009)) ("ADA"). This Court held that the action was not preempted. DiFiore v. American Airlines, Inc., 483 F.Supp.2d 121 (D.Mass.2007). After an eleven-day trial, the jury found for the Skycaps and awarded damages. The Court, fearing that it had misdefined the Tips Law in the jury charge, certified a controlling question of state law to the Massachusetts Supreme Judicial Court. That Court confirmed the accuracy of the charge and emphasized the important state policies behind the Tips Law, DiFiore v. American Airlines, Inc., 454 Mass. 486, 497, 910 N.E.2d 889 (2009).

In the meantime, the Supreme Court decided Rowe v. New Hampshire Motor Transp. Ass'n, 552 U.S. 364, 128 S.Ct. 989, 169 L.Ed.2d 933 (2008),¹ a decision which led two of my colleagues to dismiss on preemption grounds actions similar to this one, but brought by skycaps against other airlines, Travers v. JetBlue Airways Corp., No. 08-10730, 2009 WL 2242391 (D.Mass. Jul. 23, 2009) (O'Toole, J.); Brown v. United Air Lines, Inc., 656 F.Supp.2d 244 (D.Mass.2009) (Gertner, J.); Mitchell v. U.S. Airways, Inc., No. 08-10629 (D.Mass. Sept. 22, 2009) (Gertner, J.) (order granting partial motion to dismiss). During the same interval, the Massachusetts legislature, emphasizing the social policies behind the Tips Law, amended the statute to require treble damages for its violation. "An Act Further Regulating Employee Compensation," 2008 Mass. Acts. ch. 80. Armed with these developments, the parties gird for the next round.

American requests relief from judgment pursuant to Federal Rule of Civil Procedure 60(b) and moves for reconsideration of its motion to dismiss. American once again raises issues of express and implied preemption. The Court will only reconsider the question of express preemption. No arguable change in the law has occurred as to the question of implied preemption.

The Skycaps, in turn, move to amend the judgment to treble the damages awarded by the jury based on the newly enacted amendment to Massachusetts General Laws chapter 149, section 150. They also request that the Court amend the judgment to include the $2 fees collected in March and April 2008 which were awarded by the jury but not calculated at the time and the fees collected from April 8, 2008 through June 15, 2008.

I. ANALYSIS

A. Background²

Skycaps who work at airports have traditionally received most of their compensation from tips given to them by airline passengers. In the fall of 2005, however, American began assessing a $2 per bag service charge on passengers. The fee had to be paid directly to skycaps in cash only. American has retained these fees or split them with the skycaps' actual employer. Passengers continue to believe that they are tipping the skycaps when they pay the $2 fee. Of those who are aware that a gratuity is not included, few voluntarily tip in addition to paying the charge. American subsequently placed signs at the curbside check-in terminal saying that a gratuity is not included in the $2 fee, but the signs were wholly inadequate to inform the busy airline traveler. The compensation that the Skycaps receive has fallen dramatically.

The Skycaps claimed that American's actions violated the Tips Law and sought disgorgement of the $2 fees. Am. Compl. Doc. No. 8 at ¶ 3, Count 1. They claimed that the way in which the fee was charged, namely $2 collected in cash by skycaps at curbside without adequate explanation that this was not a tip, amounted to diverting tip revenue from employees. The matter proceeded to trial and on April 7, 2008, the jury returned a verdict in favor of the Skycaps. The jury awarded damages equal to the sum of all $2 fees collected by the Skycaps from the time the charge was implemented until the day of the verdict. DiFiore v. American Airlines, Inc., No. 07-10070, Jury Verdict, 2008 WL 1814309 (Apr. 7, 2008) Doc. No. 145. The jury calculated damages until March 1, 2008 only, because more recent data were not yet available. Id. American claimed that it could be responsible only for 60% of these damages, because 40% was retained by contractors like G-2 who directly employed certain Skycaps. The Court rejected this argument. The jury did not find that American had acted outrageously or with reckless disregard of the Skycaps' rights and, as a result, did not award the treble damages available under Massachusetts General Laws chapter 149, section 150.

B. Preemption

1. Framework for Analysis

District courts have "substantial discretion" in ruling on motions for reconsideration. Serrano-Perez v. FMC Corp., 985 F.2d 625, 628 (1st Cir.1993). To prevail, the moving party must either present previously unavailable evidence or show that a manifest error of law was committed. Palmer v. Champion Mortgage, 465 F.3d 24, 30 (1st Cir.2006).

When reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court must decide whether the plaintiffs have stated a claim upon which relief can be granted. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002). The court will accept all allegations of fact in the complaint, with all reasonable inferences drawn in favor of the plaintiffs. Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993). Nevertheless, the plaintiffs' factual allegations must be more than speculative, and "require more than labels and conclusions." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

Following the jury verdict, the Skycaps' claim is based solely on the Tips Law. Thus, should the Court decide that the Tips Law is preempted by the ADA, the Skycaps will have no viable claim and American's motion to dismiss will be granted.

2. ADA Preemption of Employment Law

A question of preemption is a question of Congressional intent. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992). Preemption analysis starts with a presumption against preemption. New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). The presumption against preemption is heightened in areas of traditional state law regulation. Id. at 655, 115 S.Ct. 1671. Thus, state laws concerning matters traditionally regulated by states are preempted only if Congress's intent to suppress state powers is clear and manifest. City of Columbus v. Ours Garage and Wrecker Service, Inc., 536 U.S. 424, 438, 122 S.Ct. 2226, 153 L.Ed.2d 430 (2002).

To establish Congress's preemptive intent, the primary focus must be on "plain wording." Sprietsma v. Mercury Marine, 537 U.S. 51, 62, 123 S.Ct. 518, 154 L.Ed.2d 466 (2002). The structure and purpose of the statute as a whole should also be taken into account. Medtronic, Inc. v. Lohr, 518 U.S. 470, 486, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). Such purpose is revealed "through the reviewing court's reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers and the law." Id.

The ADA provides that 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) (2009). The primary purpose of the ADA—as the name of the statute indicates—was to deregulate the airline industry. Congress intended to ensure "efficiency, innovation, and low prices" through "maximum reliance on competitive market forces." Morales, 504 U.S. at 378, 112 S.Ct. 2031. Congress wanted to change the then-existing situation under which the airline industry had been subject to the extensive economic regulation by the Civil Aeronautics Board, which had to approve all airline management decisions regarding routes and prices before they could be implemented. H.R.Rep. No. 95-1211 at 2 (1978), reprinted in 1978 U.S.C.C.A.N. at 3737. The preemption provision was included to "ensure that the States would not undo federal deregulation with regulation of their own." Morales, 504 U.S. at 378, 112 S.Ct. 2031. The enactment history indicates a further intent not to harm employees through the deregulation. Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 680, 107 S.Ct. 1476, 94 L.Ed.2d 661 (1987) ("Congress sought to ensure that the...