Appeals Court Finds Skycaps Claims For Misappropriated Tips Preempted by Federal Law

Posted on June 3, 2011 by Noel Tripp

As we previously discussed, the airline industry, like the hospitality industry, has been assailed with lawsuits alleging that tips from customers intended for certain employees—in this case, baggage handlers, a/k/a skycaps—have been misappropriated by the employer, in violation of state statutes and common law. In the airline industry, conflicting authority has emerged even within the same federal judicial district as to whether such claims are preempted by federal law. Compare Brown v. United Air Lines, Inc., 656 F. Supp. 2d 244, 249-51 (D. Mass. 2009)(preempted) with DiFiore v. Am. Airlines, Inc., 688 F. Supp. 2d 15 (D. Mass. 2009)(not preempted). Recently, the Court of Appeals for the First Circuit reversed the lower court’s DiFiore decision and vacated the jury’s award to Plaintiffs.based federal on preemption DiFiore v. Am. Airlines, Inc., 2011 U.S. App. LEXIS 10306 (1st Cir. Mass. May 20, 2011).

The central issue in these cases is whether the Airline Deregulation Act, 1978 legislation designed to ensure that the federal de-regulation of the airline industry did not result in a body of inconsistent state regulations governing air carriers, preempts state statutes and common law theories relating to the tips through its language preempting all state laws “related to a price, route, or service.” Id. at 11, citing 49 U.S.C. § 401713. Observing that this preemption provision is “broad but vague,” and citing three Supreme Court cases providing general guidance regarding construction of the Act, the court concluded that while the Supreme Court would be unlikely to utilize the preemption clause to free airlines from many, if not most common law and wage law claims, the Massachusetts tip statute at issue in the court’s view had a direct connection to both price and service – the baggage handling at issue itself constituting a service – and thus fell within the preemption clause. 

Jackson Lewis Partner Roger Briton, a leading expert on all aspects of employment law within the aviation industry, observes “The DiFiori decision opens the door a bit further to allowing employers in the aviation industry to fight wage/hour claims based on ADA preemption. While most wage claims are remote from issues ‘related to a price, route or service’, this potential defense should be considered in all cases.” 

Litigation over gratuities and tip practices continues to assail all industries where the practice is prevalent, including hospitality, aviation and car washes. Employers must ensure they understand all applicable federal and state requirements related to gratuities.

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Federal Court Holds Federal Aviation Law Does Not Preempt Skycaps' Claims For Gratuities Under Pennsylvania Law

Posted on July 16, 2010 by Noel Tripp

 

While a significant percentage of employees’ claims for gratuities emanates from the food service and hospitality industries, other industries, including Aviation, are not immune. Baggage handlers in Massachusetts, New York and Pennsylvania all have asserted claims challenging industry tip practices, alternatively alleging that the amounts paid by customers for curbside check-in are gratuities (which allegedly have been misappropriated by the employer) or that they are service charges which discourage the payment of additional gratuities (thereby decreasing their compensation below the minimum wage). In a recent decision, a federal court ruled that the Federal Airline Deregulation Act does not preempt the plaintiffs’ Pennsylvania state law claims for service charges allegedly misappropriated by their employer. Thompson v. US Airways, Inc., 2010 U.S. Dist. LEXIS 59088 (E.D. Pa. June 15, 2010).

In Thompson, the plaintiff skycaps alleged that the airline’s 2005 imposition of a mandatory $2 fee per bag (paid to the airline) caused a sharp decrease in tip income, causing their income to dip below the minimum wage and serving as a functional misappropriation of tips. Id. at * 4. As a threshold legal matter, the airline argued that the plaintiffs’ claims for wages under state law would have a "forbidden significant effect" on airline prices, and thus were preempted by the federal law (which was designed to ensure that states did not undermine federal airline deregulation through state regulation). Analyzing three different decisions on the issue with different reasoning from federal courts in Massachusetts, Judge Gene Pratter denied the airline’s motion to dismiss and determined that a verdict in favor of the plaintiffs would simply result in a modification of baggage handling practices, and would have only a tangential, remote impact on price, if any. 

While the court’s decision did not address the merits of the Thompson skycaps’ claims, the litigation reminds .all employers of tipped employees of the need to ensure legal compliance and transparency in regard to gratuity practices.

 

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