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Gerald Thompson, et al v. Us Airways

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


July 15, 2011

GERALD THOMPSON, ET AL. ,
PLAINTIFFS,
v.
US AIRWAYS, INC., ET AL. , DEFENDANTS.

The opinion of the court was delivered by: P Ratter, J.

MEMORANDUM

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 four-count 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. *fn1 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 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"), *fn2 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.

J URISDICTION

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

F ACTUAL AND P ROCEDURAL B ACKGROUND

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. *fn3 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.

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." *fn4 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. *fn5

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.

D ISCUSSION

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; *fn6 and (2) whether the named plaintiffs adequately represented the class. In re Prudential Ins. Co. , 148 F.3d 283, 312-313 (3d Cir. 1998).

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 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. *fn7 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 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. *fn8 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. *fn9

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 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.

C ONCLUSION

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:

GENE E.K. PRATTER U NITED S TATES DISTRICT J UDGE


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