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The U.S. Court of Appeals for the 1st Circuit has reversed a jury award to nine Boston skycaps, holding that the federal Airline Deregulation Act pre-empts a Massachusetts tips law, as applied to airline curbside baggage handlers. The 1st Circuit’s May 20 unanimous ruling in DiFiore v. American Airlines Inc. reversed a District of Massachusetts ruling that awarded $333,464 to the skycaps plus $310,752 for attorney fees based on the jury verdict. The original jury verdict was $325,000. The skycaps claimed American Airlines’ $2 per bag curbside check-in fee at Logan Airport violated Massachusetts’ tips statute. The district court took multiple procedural steps to grapple with the question of whether American Airlines could be held liable for any tips violation involving skycaps who technically worked for a subcontractor. These steps included a second trial and the federal court’s referral of the liability question to the Supreme Judicial Court of Massachusetts. In the 1st Circuit opinion, Judge Michael Boudin noted that the 1978 Airline Deregulation Act specifically pre-empted state laws “relating to rates, routes, or services.” Judges Jeffrey Howard and Kermit Lipez joined the opinion. Boudin wrote that a 1994 recodification of transportation law stressed that the pre-emption covers all state laws “related to a price, route, or service.” Although they involved different regulatory questions than does the DiFiore case, Boudin wrote that three Supreme Court cases “have addressed and applied the statutory provision in question.” The cases are Morales v. Transworld Airlines Inc. (1992), which involved deceptive advertising; American Airlines, Inc. v. Wolens (1995), which concerned alleged consumer abuse; and Rowe v. New Hampshire Motor Transport Ass’n (2008), which was about health protection. Boudin noted that numerous circuit court cases confirm the panel’s view that the Supreme Court would be unlikely “to free airlines from most conventional common law claims for tort, from prevailing wage laws, and ordinary taxes applicable to other businesses.” But he concluded that “the dividing line” that determines when state law should be pre-empted turns on the statutory language “related to a price, route, or service.” “Importantly, the tips law does more than simply regulate the employment relationship between the skycaps and the airline; unlike the cited circuit cases, the tips law has a direct connection to air carrier prices and services and can fairly be said to regulate both,” Boudin wrote. “As to the latter, American’s conduct in arranging for transportation of bags at curbside into the airline terminal en route to the loading facilities is itself a part of the ‘service’ referred to in the federal statute, and the airline’s ‘price’ includes charges for such ancillary services as well as the flight itself.” Michael Vance Powell, a Dallas partner at Locke Lord Bissell & Liddell, who argued for American at the 1st Circuit did not respond to requests for comment. American’s lead trial counsel, Amy Cashore Mariani of Boston’s Fitzhugh & Mariani referred questions to the company. American spokesman Tim Smith said the airline “is pleased by the Court’s decision, adding “We wish to thank the Court for the time and effort it took in examining this case.” The skycaps’ lawyer, Shannon Liss-Riordan of Boston’s Lichten & Liss-Riordan, said she and her co-counsel are very disappointed, and the skycaps are crushed. “We find it hard to believe that when Congress enacted the [Airline] Deregulation Act,…it intended to pre-empt this kind of case,” Liss-Riordan said. But since the 1st Circuit ruling specifically focused on the statutory tips law claim rather than the common law claims, Liss-Riordan said she believes there’s an opening to retry the common law claims without the tips law claims. Liss-Riordan also said she doesn’t believe the 1st Circuit’s ruling pre-empts a February 2010 ruling by Judge William Young of the District of Massachusetts, which certified a national class for the claims of tortious interference with contractual or advantageous relationship and unjust enrichment. “We don’t believe that national class is pre-empted,” she said. The 1st Circuit ruling is “troubling,” said Philip Gordon, president of the Massachusetts Employment Lawyers Association and managing partner of Boston-based Gordon Law Group, an employment law firm boutique. Gordon filed an amicus brief on behalf of the Massachusetts Employment Lawyers, Greater Boston Legal Services and the National Employment Law Project. “The Massachusetts legislature and states around the U.S. put laws together to protect employees wages, and here is a statute, the tips law, that was put in place by the legislature to protect employees who were being paid tips by customers,” Gordon said. The amicus brief authored by Gordon focused on a different question — the district court’s refusal to triple the jury’s damages award. The amici referred to a 2008 Massachusetts state law change that requires mandatory triple damages for Massachusetts wage law violations. They argued that the change required the court to triple the damages in this case. Sheri Qualters can be contacted at [email protected].

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