A federal appeals court has overturned a ruling that awarded more than $333,000 to nine Logan International Airport skycaps who claimed they were cheated out of tips when American Airlines started charging curbside baggage fees.
The 1st U.S. Circuit Court of Appeals said in its ruling that the lower federal court's decision based on Massachusetts law was pre-empted by federal law regulating airlines. It also said that soon after institution of the fee, American Airlines clearly indicated with signs that the $2 fee started in 2005 was not a tip.
"This is a crushing decision for the skycaps who came so far to win this lawsuit," said their attorney, Shannon Liss-Riordan.
The skycaps, most of whom worked for a contractor, said in their lawsuit that many passengers thought the fee was a tip, and their income fell dramatically, even though they were given a raise to compensate for the loss in income. American kept 60 percent of the fee, and the contractor got 40 percent.
The skycaps had argued that state law regulated their labor relationship as "service workers" with American.
The appeals court, however, ruled for American because the fee is part of airline pricing, which is regulated by the federal government, not the states.
American Airlines said in its appeal that state law didn't apply because of the Airline Deregulation Act of 1978, which says 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."
The appeals court wrote in its decision released Friday that "American's conduct in arranging for transportation of bags at curbside into the airline terminal en route to the loading facilities is itself part of the `service' referred to in the federal statute."
Liss-Riordan took issue with that interpretation. "I can't imagine Congress meant that to mean it was OK for American Airlines to steal tips," she said.
Soon after the $2 baggage fee took effect, American Airlines posted signs that made clear that the fee was not a "gratuity," the court also noted.
"Whether or not some passengers ignored the sign, property theft was not involved," the court wrote.
Fort Worth, Texas-based American Airlines, whose parent company is AMR Corp., called the decision "self-explanatory" and said it was pleased with the outcome.
The lawsuit was granted national class-action status in February 2010, and Liss-Riordan is hoping to pursue the case based on that ruling. She said the appeals court decision was based on statutory law, and she plans to pursue the national case under common law.
She said class certification means that hundreds of American Airlines skycaps at airports around the country could be eligible for what amounts to millions of dollars in damages.
"We believe the national case will be allowed to go forward," she said.