THOMPSON et al v. US AIRWAYS, INC. et al

Filing 64

MEMORANDUM AND/OR OPINION SETTING FORTH THE REASONS WHY COUNTS I AND II OF THE COMPLAINT ARE DISMISSED WITH PREJUDICE. AN APPROPRIATE ORDER FOLLOWS. SIGNED BY HONORABLE GENE E.K. PRATTER ON 7/15/11. 7/20/11 ENTERED AND COPIES E-MAILED.(rab, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
GERALD THOMPSON, et al.,
Plaintiffs,
v.
US AIRWAYS, INC., et al.,
Defendants.

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CIVIL ACTION

No. 09-cv-870

M E M O R A N D U M
PRATTER, J.

JULY 15, 2011

Plaintiffs here are a purported class of individuals who have worked as skycaps at
US Airways terminals in Pennsylvania. Skycaps are the aviation equivalent of the railroad
redcaps – that is, porters who assist passengers checking luggage at the entrance of the terminal.
The Plaintiffs in this case are or have been employed by Prime Flight Aviation Services (“Prime
Flight”), which is one of the two defendants in this case. US Airways is the other.
In 2005, US Airways began charging its passengers a $2 fee, collected by skycaps, for
each bag checked at curbside. The Plaintiffs claim that this fee has “dramatically” reduced the
amount of money that travelers give skycaps in tips. On February 3, 2009, Plaintiffs filed a fourcount Complaint against US Airways and Prime Flight, alleging that the Defendants’ conduct had
violated two state statutes, as well as principles of Pennsylvania common law.1 Specifically, the
Plaintiffs claim that skycaps’ income comes primarily from tips, and that because of the initiation
of the curbside baggage fee, many skycaps employed by Defendants have been making less than
minimum wage. In addition, the Plaintiffs assert that skycaps often were forced to work through
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The Plaintiffs initially filed their Complaint in the Philadelphia County Court of
Common Pleas. The Defendants removed the case to federal court on February 27, 2009.

meal breaks and that many did not receive overtime compensation.
In June of 2010, the Court dismissed Count III of the Complaint, which alleged tortious
interference with a contractual relationship, but held that Plaintiffs could proceed with Counts I
and II, asserting claims under the Pennsylvania Minimum Wage Act (“PMWA”),2 and Count IV,
alleging unjust enrichment. Thompson v. US Airways, Inc., 717 F. Supp. 2d 468 (E.D. Pa. 2010). The
Court nonetheless granted US Airways’ separate request that Plaintiffs be required to show cause
why Counts I and II should not be dismissed as released by the terms of a settlement agreement
in Mitchell v. US Airways, Inc. (D. Mass., No. 1:08-cv-10629) (“the Settlement Agreement”), a
case that was filed and resolved in the federal district court for the District of Massachusetts.
For the reasons discussed below, the Court finds that Counts I and II of the Complaint
present state law claims of the kind that were released by the Settlement Agreement in Mitchell,
and that the Plaintiffs have failed to demonstrate that they are entitled to collaterally attack that
Settlement Agreement in this Court. Thus, Counts I and II will be dismissed to the extent that
they are asserted by Plaintiffs who were members of the settlement class in Mitchell. However,
because the Defendants’ briefing does not make clear that all of the Plaintiffs in this case were
members of the Mitchell class, the Court will reserve judgment temporarily as to the question of
whether these two counts shall be dismissed in their entirety.

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Count I asserts that Plaintiffs and proposed class members were “tipped employees,” as
defined in 34 Pa. Code. § 231.1, and that the Defendants violated Section 4(a) of the PMWA, 43 P.S. §
333.104(a), by “paying [tipped] employees a wage that was less than the [minimum] wage in effect under
Section 4 of the Act, and by depriving [these] employees of tips to which they had a legal entitlement and
which should have otherwise been credited towards the employees’ hourly wages.”
Count II alleges that Defendants violated Section 4(c) of the PMWA, 43 P.S. §
333.104(c), by requiring Plaintiffs and proposed class members to work more than 40 hours per week
without overtime compensation, and by deducting 30 minutes for lunch breaks even when skycaps took a
shorter break or no break at all.

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JURISDICTION
The Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332.

FACTUAL AND PROCEDURAL BACKGROUND
The background of this particular case is set forth in Thompson, 717 F. Supp. 2d 468.
In the earlier case pursued in Massachusetts, Mitchell, representative plaintiff skycaps
sued US Airways and Prime Flight, alleging violations of 29 U.S.C. § 216(b), which is part of the
Fair Labor Standards Act (“FLSA”), and state law, including the Massachusetts Minimum Wage
Law.3 On September 24, 2009, United States District Judge Gertner granted the Mitchell
plaintiffs’ motion for the final approval of a settlement, which resolved all of those plaintiffs’
claims against Prime Flight and many of their claims against US Airways. The settlement class
in Mitchell included all persons employed by Prime Flight in a tipped skycap position at any time
from December 1, 2005 to December 31, 2008, including skycaps who employed by Prime Flight
at US Airways terminals in Philadelphia. The Settlement Agreement states in relevant part:

Limited Waiver & Release of Air Carriers. Upon the final approval by the Court of the
Settlement Agreement, all claims relating to unpaid wages, overtime, any violation of any state
minimum wage or tips statute (except to the extent any such claim may arise apart from the
existence of a joint employment or employment relationship), retaliatory discharge, and any
other claim, based in state or federal common law or statute, that requires the existence of an
employment, joint employment, or quasi-employment relationship will be dismissed with
prejudice as to U.S. Airways ... . For the avoidance of doubt, with respect to all state law claims,
this Release of Claims applies to all Skycaps who do not exercise their rights to opt out of the
Settlement Agreement, and, with respect to federal FLSA claims, this Release applies to all
Skycaps who submit claims to opt in and participate in the settlement.

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Mitchell did not involve any claims under the Pennsylvania Minimum Wage Act.

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US Airways now argues here that (1) the Plaintiffs in this Pennsylvania case were
members of the settlement class in Mitchell; and therefore (2) any Plaintiff who failed to opt out
of the Mitchell Settlement Agreement is now bound by its terms – and in particular, by its
explicit release of all claims relating to unpaid wages or overtime, or under “any state minimum
wage or tips statute.”4 To the extent that none of the Plaintiffs here opted out of the Settlement
Agreement, this language would apply to, and thus bar, their PMWA claims in this case.5
The Plaintiffs have responded by attacking the Settlement Agreement collaterally, arguing
that (1) the notice provided to class members in Mitchell was misleading, and thus violated their
right to due process; and (2) the representative plaintiffs in Mitchell lacked standing to bring
state-law claims on behalf of a nationwide class, and were therefore legally inadequate.
One question that neither of the parties seem to have addressed is whether at least some
of the Plaintiffs in this case might not have been members of the Mitchell settlement class, which
only included persons who were employed by Prime Flight as tipped skycaps during the period
from December 1, 2005 to December 31, 2008. The Complaint in this matter was filed in state
court on February 3, 2009, and removed to federal court on February 27, 2009. The Complaint
states that the Plaintiffs were bringing their class action “on behalf of themselves and all other
persons who are or have been employed as skycaps at Defendant US Airways, Inc. ... terminals
by Defendant Prime Flight Aviation ... within the relevant statutory period,” but it does not make
clear what “the relevant statutory period” might include.

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Prime Flight essentially echoes these arguments, which apply equally to claims asserted
against each of the two Defendants.
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At oral argument on this Motion to Show Cause, Plaintiffs’ acknowledged that none of
the Plaintiffs in this case opted out of the Mitchell Settlement Agreement.

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DISCUSSION
To the extent that the Plaintiffs in this case were members of the settlement class in
Mitchell, the Settlement Agreement in that case would, if valid, release their PMWA claims in
this case. Leaving aside question of class membership, which the Court will discuss at the end of
this memorandum, the only question that is in dispute is whether that Settlement Agreement is
enforceable. To consider that issue, the Court must consider the law governing collateral attacks
on class action settlement agreements, and then address the specific arguments regarding notice
and standing in Mitchell.
A.

Due Process and Collateral Attack

It is inherent in our constitutional scheme that class members must have been granted
certain due process protections if they are to be considered bound by a settlement agreement. In
general, however, “there has been a failure of due process only in those cases where it cannot be
said that the procedure adopted, fairly insures the protection of the interests of absent parties who
are to be bound by it.” Hansberry v. Lee, 311 U.S. 32, 42 (1940).
Where, as in Mitchell, a class is provided with opt-out rights, due process protections
have been afforded where there has been adequate representation by the class representatives,
notice of class proceedings, and an opportunity to be heard and participate in class proceedings.
In re Diet Drugs, 431 F.3d 141, 145 (3d Cir. 2005). To determine whether absent class members
were adequately represented, the Court should consider whether (1) the class had competent legal
counsel;6 and (2) whether the named plaintiffs adequately represented the class. In re Prudential
Ins. Co., 148 F.3d 283, 312-313 (3d Cir. 1998).
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The Plaintiffs do not argue that plaintiffs’ counsel in Mitchell were inadequate.

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The right to collaterally attack an already-certified class is accorded only those class
members who have not been granted all of the requisite due process protections. In re Diet
Drugs, 431 F.3d at 145. Practically speaking, this means “no collateral review [of a class action
settlement agreement] is available when class members have had a full and fair hearing and have
generally had their procedural rights protected during the approval of the settlement agreement,
and that collateral review is only available when class members are raising an issue that was not
properly considered by the District Court at an earlier stage in the litigation.” Id. at 146.
B.

Notice

The Plaintiffs argue that the notice provided to class members in Mitchell was misleading,
because it “contain[ed] false statements informing class members that the settlement [would] only
affect claims against Prime Flight and not the claims against ... air carriers,” and that the failure to
provide adequate notice renders the Settlement Agreement unenforceable. US Airways counters
that (1) the Plaintiffs’ brief quotes from a draft version of the notice, which differs materially from
the notice that was actually provided; (2) the notice that was provided was clear and accurate as to
whether the settlement would affect claims against air carriers; and (3) this Court need not even
address the adequacy of notice, because the Mitchell court heard and rejected objections to the
notice almost identical to the Plaintiffs’ objections here, thus now forestalling collateral attack.
The version of the Mitchell notice that appears to have been distributed to class members
in that case informed them that “even if you do not claim your share of the settlement proceeds, if
you do not opt out of the case, then you will be releasing all of your state law claims against Prime
Flight and state law claims against the air carrier for whom you provided services that require the
existence of an employment relationship.” Whether or not this notice was perfectly formulated, or
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might be subject to objections other than those actually presented by the Plaintiffs in this case, it
does make clear that settlement would release claims against both Prime Flight and air carriers.
In addition, the record shows that after the Mitchell court preliminarily approved the
Settlement Agreement and proposed notice, the Court held a Rule 23 fairness hearing, during
which it considered the very question of whether the notice adequately explained the Settlement
Agreement and the scope of the release of claims. The Court found that the notice was adequate.
This is reflected in the Mitchell court’s order granting the motion for settlement approval.7 In
light of the fact that the Plaintiffs’ objections to the notice in Mitchell were effectively raised and
litigated in that case, the adequacy of that notice cannot be challenged once again in this Court as
a means of invalidating the Settlement Agreement.
C.

Standing

The Plaintiffs’ standing argument is premised on the theory that because the plaintiffs in
Mitchell only asserted Massachusetts state law claims, and would have lacked standing to assert
claims under the laws of all 50 states, these plaintiffs were inadequate class representatives, and
the Mitchell court lacked jurisdiction to certify a settlement releasing claims under the laws of the
other 50 states. US Airways counters that (1) the Mitchell court heard and rejected this argument,
and (2) the Plaintiffs’ argument is, at any rate, substantively incorrect.
The record does indeed demonstrate that the Mitchell court considered and rejected the

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Judge Gertner’s Order of September 24, 2009, granting the motion for settlement
approval, states that “the objectors’ claim that the notice was confusing because it failed to explain the
release of claims against other air carriers which are subject to joint employer agreements is rejected.”
The objectors referenced in the Order were five class members represented by the same
set of attorneys who are representing the Plaintiffs in this case – and their argument regarding the clarity
of the notice was very similar to that which has been presented here.

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Plaintiffs’ standing argument during the Rule 23 fairness hearing before finding that the Mitchell
plaintiffs adequately represented the national class. This is reflected in the court’s order granting
the motion for settlement approval.8 As a result, this issue is not subject to collateral attack. In
this regard, this case is analogous to In re Diet Drugs, in which the Court of Appeals held that
plaintiffs were not entitled to collaterally attack a class settlement on the basis of their objections
to, inter alia, notice and adequacy of representation, because the district court that approved the
settlement agreement had specifically considered these objections. 431 F.3d 141.9
D.

Class Membership

As the Court has observed, the parties have not explicitly addressed the question of
whether some of the Plaintiffs in this case might not have been members of the settlement class in
Mitchell. Although the Court has determined that Counts I and II of the Complaint present state
law claims of the kind that were released by the Settlement Agreement in Mitchell, and that the
Plaintiffs have failed to demonstrate that they are entitled to collaterally attack that Settlement

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Judge Gertner’s Order of September 24, 2009, approving the motion for settlement
approval, states that “while the objectors claim that the named plaintiffs do not have standing to assert
claims on behalf of a nationwide class, the class-as-certified plainly represents the relevant states.”
The objectors’ arguments regarding standing were similar to those that the Plaintiffs
have presented here. It is not entirely clear what the September 24, 2009 Order means by “the relevant
states,” but even the narrowest reading of this language would include Pennsylvania as a “relevant state,”
given that one of the objectors in Mitchell, Anthony Walker, was a Pennsylvania skycap, and the basis of
the objectors’ challenge to settlement approval was that the class-as-certified could did not have standing
to resolve the objectors’ non-Massachusetts state law claims.
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In addition, the Court observes that it is not unusual for courts in the Third Circuit to
certify a nationwide class in cases that involve claims under the laws of many different states, see, e.g., In
Re: Warfarin Sodium, 391 F.3d 516, 528-531 (3d Cir. 2004), and that it is well-established that courts
that lack jurisdiction to hear certain claims may nevertheless release such claims as part of a judgment,
see Grimes v. Vitalink Communications, 17 F.3d 1553, 1563 (3d Cir. 1994) (noting that “federal courts
[may] enter[ ] judgments [to] release state claims that they would not have jurisdictional competency to
entertain in the first instance”).

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Agreement in this Court, the Plaintiffs shall be provided with a limited opportunity to show that
any of the Plaintiffs were not members of the Mitchell settlement class before the Court dismisses
Counts I and II in their entirety.

CONCLUSION
The Plaintiffs have failed to show that they are entitled to collaterally attack the Mitchell
Settlement Agreement, which releases their claims under the PMWA. As a result, Counts I and II
of the Complaint must be dismissed to the extent that they are being asserted by Plaintiffs who
were members of the settlement class in Mitchell. The Plaintiffs shall have an opportunity to
present argument as to why any individual Plaintiffs might not be members of the Mitchell
settlement class, and Defendants shall have an opportunity to respond.
An Order to this effect follows.

BY THE COURT:

S/Gene E.K. Pratter
GENE E.K. PRATTER
UNITED STATES DISTRICT JUDGE

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