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Justices Won't Review Ruling Federal Law Blocks Skycaps' Challenge to Airlines' Fees

Tuesday, April 8, 2014

By Kevin P. McGowan  

April 7 --Denying a petition by skycaps for United Airlines Inc. and US Airways Inc., the U.S. Supreme Court April 7 declined to review an appeals court ruling that the Airline Deregulation Act preempts the skycaps' Massachusetts common law claims challenging the airlines' imposition of a $2 curbside baggage-handling fee that allegedly sharply reduced passengers' tips to skycaps.

The justices left intact a U.S. Court of Appeals for the First Circuit decision that the Airline Deregulation Act preempts the skycaps' claims of unjust enrichment and tortious interference with advantageous relations. The federal airline statute provides a state “may not 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.”

In seeking Supreme Court review, the skycaps asked the justices to resolve whether a common law claim, as opposed to a state statute or regulation, is a “provision having the force and effect of law” within the meaning of the Airline Deregulation Act.

Federal circuit courts are “intractably divided” on the meaning of “service” within the federal law's preemption provision, which shouldn't be interpreted to include curbside check-in by skycaps who depend upon passengers' tips for their livelihoods, the skycaps said.

The First Circuit's ruling that the skycaps can't pursue common law claims regarding airline curbside fees that reduced their tips because most passengers mistakenly assumed skycaps pocketed the $2 fees can't be squared with Supreme Court precedent regarding federal preemption, the skycaps said.

In separate briefs opposing review, United and US Airways said Supreme Court review is unwarranted because every federal circuit court to address the issue correctly has ruled the Airline Deregulation Act preempts state common law claims related to airline prices and services.

By arguing that common law claims somehow are excluded from the Airline Deregulation Act's broad preemption clause, the skycaps “wholly ignore” the legislative history and policy underlying the federal statute, United Airlines said.

Are Common Law Claims Covered?

In their petition for review, the United and US Airways skycaps said their case raises important questions on whether the Airline Deregulation Act's preemption provision “extends beyond state positive regulation” to bar claims based on “common law duties” and whether the federal act's reference to “service” includes “services that are separate from the point-to-point provision of transportation” and that are not mentioned in a passenger's air carriage contract.

The First Circuit in 2011 had denied American Airlines skycaps' challenge under the Massachusetts Tip Act to the $2 curbside package fee, citing the Airline Deregulation Act's preemption of state statutes that affect airline prices and services (DiFiore v. Am. Airlines, Inc., 646 F.3d 81, 17 WH Cases2d 1153 (1st Cir. 2011); 101 DLR A-1, 5/25/11). The Supreme Court subsequently denied review in DiFiore (228 DLR AA-2, 11/28/11).

The skycaps, who filed a nationwide suit challenging United's and US Airways' imposition of curbside baggage fees, alleged common law claims of unjust enrichment and tortious interference, contending the airlines were drastically reducing the skycaps' compensation by charging passengers for curbside check-in and leading passengers to believe they should no longer tip the skycaps.


United Airlines and US Airways skycaps urged the court to review whether the Airline Deregulation Act preempts their common law claims challenging the airlines' imposition of a $2 curbside baggage-handling fee that led many passengers to stop tipping skycaps.  

Calling it a matter of first impression for the circuit, the First Circuit in July 2013 ruled the Airline Deregulation Act's preemption clause covers state common law claims because they are provisions “having the force of law” within the federal statute's meaning. The First Circuit cited DiFiore in holding curbside check-in is part of the “service” covered by the Airline Deregulation Act so common law claims affecting such service are preempted.

The skycaps had suggested the Supreme Court defer deciding whether to grant their petition until it decided Northwest Inc. v. Ginsberg, No. 12-462, in which the justices were considering whether the Airline Deregulation Act preempts an airline customer's covenant of good faith and fair dealing claim against Northwest Airlines for terminating his elite frequent flyer status. The court then could grant review or vacate and order the First Circuit to reconsider based on whatever the court decided in Ginsberg, the skycaps said.

On April 2, the Supreme Court unanimously ruled in Ginsberg the Airline Deregulation Act preempted the erstwhile frequent flyer's state common law claim to the extent it sought to enlarge the airline's obligations under the contact to which the parties had voluntarily agreed ( 2014 BL 89767 (2014)).

The court in Ginsberg said state common law claims are subject to Airline Deregulation Act preemption because they have the “force and effect of law” similar to state statutes and regulations.

Alleged Split on 'Service.'

Supreme Court review also is warranted because federal appeals courts are split on the meaning of “service” under the Airline Deregulation Act's preemption clause, the skycaps said.

In contrast to the First Circuit, the Ninth Circuit has ruled the federal law's reference to service refers only to “the prices, schedules, origins and destinations” of “point-to-point transportation” provided by the regulated airlines, the skycaps said. The Third Circuit has ruled the federal law's preemption clause was only meant to bar states' “public utility-style regulation” of covered airlines, the skycaps said.

But the Fifth Circuit and four other federal appeals courts have adopted a more expansive definition of “service” to include those items “appurtenant and necessarily included” in the contract between the passenger and the airline, the skycaps said.

The First Circuit's decisions in DiFiore and the instant case widen the circuit split by adopting a definition of service that is even broader than the Fifth Circuit's approach and sweeps in baggage fees for curbside check-in that have no relation to a passenger's contract with the airline, the skycaps said.

The Supreme Court should grant review to “address the disagreement between the circuits over the definitions of 'prices' and 'services' in the [Airline Deregulation Act] and resolve whether activities such as pay-per-bag curbside baggage handling are 'services' ” within the meaning of the federal law, the skycaps said.

The First Circuit decision should be reviewed and reversed because it misreads the scope of the Airline Deregulation Act's preemption clause and because the result can't be reconciled with prior Supreme Court rulings that comparable federal statutes don't preempt common law claims, the skycaps said.

Shannon Liss-Riordan of Lichten & Liss-Riordan in Boston was counsel of record for the skycaps.

No Circuit Split, Airlines Say

In its brief opposing review, United Airlines said contrary to the skycaps' argument, the federal circuit courts do not disagree about the scope of the Airline Deregulation Act's preemption clause.

“The courts of appeals have held uniformly, and correctly, that the [Airline Deregulation Act] preempts state common-law requirements that relate to airline price or service,” United said. “And no court has ever doubted the self-evident proposition that a state rule like the one at issue in this case--which governs the nature of the fee imposed by an airline for the movement of luggage onto an airplane--does relate to airline price and service.”

The petitioners are asking the Supreme Court to “break new ground” to the extent they argue the Airline Deregulation Act's preemption clause should be construed not to apply to common law claims affecting an airline pricing or service decision, United said.

In a separate brief opposing review, US Airways said the alleged circuit conflict over how to define “service” under the Airline Deregulation Act is irrelevant because “curbside baggage-check fees would be deemed a 'service' under any circuit's definition.”

In any event, the Supreme Court decision in Rowe v. New Hampshire Motor Transport Association, 552 U.S. 364 (2008), supersedes any federal circuit disagreement on the meaning of “service” under the Airline Deregulation Act, US Airways said.

In Rowe, the court ruled the Federal Aviation Administration Authorization Act's preemption provision, which is similar to that under the Airline Deregulation Act, reaches all state laws that have a “significant impact” related to Congress's “deregulatory and preemption-related objectives,” US Airways said.

That certainly includes matters such as airlines' decisions on curbside check-in fees, which is an “element of bargained-for labor in the passenger relationship that is a subject of competition between the airlines,” US Airways said.

Charles A. Rothfeld of Mayer Brown in Washington was counsel of record for United Airlines. Jonathan D. Hacker of O'Melveny & Myers in Washington was counsel of record for US Airways.

 

To contact the reporter on this story: Kevin P. McGowan in Washington at kmcgowan@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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