Have you ever been sitting in a hotel room, staring at a room service bill, trying to determine whether the “service charge” added to your bill is the tip? And let’s not even get started with deciphering the cryptic hieroglyphics known as the cable bill.
But what if your employer hoisted a sign informing customers there would be a two-dollar charge for your services? Would that payment be your tip? Would posting that sign get somebody sued? Of course, it would. This is the case of the week.
Air a la carte
Our story begins in Sept. 2005, when American Airlines began charging a $2.00 fee for passengers to check a bag at curbside.
Before this policy began, curbside check-in was free, but customers tipped the skycaps—usually a dollar per bag—for curbside service. Until American went and messed up things, most skycaps earned most of their earnings from tips.
As the airline industry faced significant financial problems, airlines began charging for many services that had been free. This a la carte fee system affected everything from headphones to handbags.
Want to watch the in-flight movie? No problem. That’s free. Want to hear it? Two dollars for headphones, please. Want to eat? Pay up.
Pay2Pee, the world’s first aircraft pay toilet, can’t be far away.
At the moment, we can add curbside check-in to our non-complimentary airline a la carte menu.
American—and its subcontractor actually employing the skycaps—made out like Tijuana bandits. The charge was designed to defray the cost of curbside service in a dark and dreary economy, but it actually became a profitable business venture for all…except the skycaps themselves.
Many passengers thought American’s $2.00 fee was the tip. Others felt $2.00 per bag was enough to pay for curbside service. The end result was the same: the skycaps lost a significant amount of their income as tips plummeted.
Two skycaps at Boston Logan International Airport sued American and the contractor, seeking class certification and arguing that American’s curbside fee violated Massachusetts’ statute governing tips, Mass. Gen. Laws, ch. 49, § 152A (2008), constituted tortious interference with an advantageous relationship, unlawful conversion, and unjust enrichment under Massachusetts law, and that the skycaps were entitled to restitution under the legal theory of quantum meruit.
The skycaps’ employer was dismissed due to an arbitration agreement, and American removed the case from in a Massachusetts commonwealth court to federal court.
The skycaps argued Massachusetts law prohibited American from charging the curbside baggage fee because the fee qualified as a “service charge” under the commonwealth law because it was a fee that a consumer “would reasonably expect to be given to” the skycap.
American countered that the skycap’s suit was preempted by the federal Airline Deregulation Act of 1978. When a federal law “preempts” a state law on an issue, the federal statute has sole jurisdiction, and the state statute is preempted and nullified for purposes of that dispute.
The District Court held for American on several grounds, but held for the skycaps on the preemption argument. Thus, the claims under the Massachusetts tips law and for tortious interference were tried to a jury.
It turned out the jury was a bunch of big tippers. The jury found for the skycaps in April 2008 and awarded damages in the amount of $2.00 to each skycap for every bag handled between Sept. 2005 and the verdict.
Thus, the jury awarded the nine prevailing plaintiff skycaps approximately $333,000 in damages plus interest and attorney fees. One plaintiff skycap from the St. Louis airport did not get to share in the bounty because—as a citizen of Missouri—he was not covered by the Massachusetts tip law.
But, our story is not over. Cheap tippers can rejoice. American appealed, and the First U.S. Circuit Court of Appeals handed down a decision bound to make Parisian tourists do a happy dance.
The First Circuit reversed the district court and ruled for American in DiFiore v. American Airlines, Inc., holding that the Massachusetts tip statute was, in fact, preempted by the federal Airline Deregulation Act.
Although the appellate court conceded there was conflicting case law, it relied on three U.S. Supreme Court cases, Morales v. Trans World Airlines, Inc., American Airlines, Inc. v. Wolens, and Rowe v. New Hampshire Motor Transport Ass’n, in holding that the federal law preempted the Massachusetts tip statute vis-à-vis the skycaps’ tips.
The court held the commonwealth’s law was preempted when applied to Ameircan because it was “related to a price, route, or service,” noting that “related to” and “service” were statutorily broad terms.
The First Circuit rejected the skycaps’ argument that the tips law’s connection to airline price, route, or service” was so “tenuous, remote, or peripheral” as to not trigger preemption under Morales or Rowe.
“This, to borrow an apt airplane image, is walking into a rotating propeller: the advertising and service arrangements are just what Congress did not want states regulating, whether at high cost or at low. When the Supreme Court invoked the rubric ("tenuous, remote, or peripheral"), it used as examples limitations on gambling, prostitution, or smoking in public places--state regulation comparatively remote to the transportation function.”
So, next time you go to the airport, please remember that—because a federal court has ruled that curbside check-in is not like betting on ponies, retaining the services of a hooker, or smoking a joint at baggage claim—these guys aren’t protected by the Massachusetts tip statute.
Even if you pay an airline curbside baggage fee, please, folks, tip your skycap.
David Horrigan is a Washington, DC, attorney, analyst at The 451 Group, editorial director at courtweek.com, and former staff reporter and assistant editor at The National Law Journal. His articles have appeared also in Law Technology News, The American Lawyer, The New York Law Journal, Corporate Counsel, Texas Lawyer, Florida Lawyer, and Daily Business Review. E-Mail: email@example.com