Carrasquillo-Ortiz v. American Airlines, Inc.

• Court: Court of Appeals for the First Circuit
• Decided: January 22, 2016
• Docket: 15-1424P
• Status: Published

Opinion

United States Court of Appeals For the First Circuit

No. 15-1424

ELIZABETH CARRASQUILLO-ORTIZ; CARMEN GUZMÁN-VÁZQUEZ; DANIEL OUVIÑA; VÍCTOR RIVERA; MATILDE RODRÍGUEZ-NOA; BRENDA ENID VÁZQUEZ-DÍAZ; FRED VOLTAGGIO-DE JESÚS,

Plaintiffs, Appellants,

v.

AMERICAN AIRLINES, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

[Hon. Gustavo A. Gelpí, Jr., U.S. District Judge]

Before Thompson, Hawkins,* and Barron, Circuit Judges.

Alfredo Fernández-Martínez, with whom Delgado & Fernández, LLC, was on brief, for appellants. Juan Enjamio, with whom Hunton & Williams LLP was on brief, for appellee.

January 22, 2016

* Of the Ninth Circuit, sitting by designation. BARRON, Circuit Judge. Article 3 of Puerto Rico's Law

No. 80 ("Law 80") requires companies that operate in Puerto Rico

to pay a statutory severance, called a "mesada," to their employees

in Puerto Rico who are terminated as part of a downsizing or

restructuring. The mesada must be paid only if those employees

were terminated even though less senior employees within their job

category remain. For a company with only one office, that

calculation is fairly straightforward. But for a company with

several offices, it can be more complex. The statute provides

that for such a company, an employee's seniority must be computed

in relation to the seniority of "all the employees of the company,

that is to say, taking into consideration all of its offices," if

the company regularly transfers employees among its offices and

the offices operate in a "highly integrated manner." P.R. Laws

Ann. tit. 29, § 185c(b).

The dispute at hand concerns the proper application of

this aspect of Article 3 to American Airlines, Inc. ("American"),

the defendant here and a company with a lone office in Puerto Rico

and many offices worldwide. In particular, we must decide how to

treat employee transfers American made to, from, and among its

offices outside Puerto Rico. Should those transfers be counted in

determining whether American regularly transfers employees among

its offices and thus in determining whether American must compute

- 2 - the seniority of terminated employees in American's Puerto Rico

office in relation to employees in American's offices worldwide?

The answer to that question is determinative of the

appeal brought by the plaintiffs. They are seven former American

employees who worked in American's sole Puerto Rico office. The

plaintiffs concede that they were the least senior employees in

the Puerto Rico office when American closed it down and let them

go. Thus, the plaintiffs could be entitled to a mesada only if

their seniority had to be computed in relation to American's

offices generally, a computation that would be required only if

American's transfers of employees outside Puerto Rico count under

Article 3.

The District Court ruled in favor of American on the

basis of the Puerto Rico Supreme Court's recent construction of

Article 3 in Reyes Sánchez v. Eaton Elec., 189 P.R. Dec. 586

(2013). The District Court read the Puerto Rico Supreme Court to

have construed Article 3 to count only those transfers that occur

in Puerto Rico and to count none that are made to or from an office

outside of it. Because we read that precedent as less definitive

on the particular issue confronted here than the District Court

deemed it to be, and because there is no other precedent from

Puerto Rico courts that sheds relevant light, we certify the

question of the proper interpretation of Article 3 to the Puerto

- 3 - Rico Supreme Court, as the rules of that court permit us to do.

See P.R. Laws Ann. tit. 32, app. III, Rule 53.1(f).

I.

Law 80 requires companies to pay a mesada to employees

who are terminated without "just cause." Otero-Burgos v. Inter

American Univ., 558 F.3d 1, 7 (1st Cir. 2009). The statute

provides six examples of just cause, including three that relate

to company restructuring or downsizing. See P.R. Laws Ann. tit.

29, § 185b(d), (e), (f). If an employer terminates employees for

one of those three reasons, however, the employer must give

preference to those employees with greater seniority over those

with less seniority within the same occupational classification.

Id. § 185c. If the employer terminates a more senior employee and

retains a less senior employee within the same occupational

classification, the employer must pay the terminated employee a

mesada. Id. §§ 185a, 185c.

Article 3 of Law 80 further establishes limits on the

extent of the seniority analyses that must be performed by

companies that "have several offices." Id. § 185c(a). In the

case of companies "whose usual and regular practice is not to

transfer employees from one office . . . to another, and that said

units operate in a relatively independent manner with regard to

personnel aspects," seniority is to be computed only with respect

to the specific office where layoffs are occurring. Id. By

- 4 - contrast, if the company's "regular and usual practice is to

transfer its employees from one unit to another, and that the

various units operate in a relatively integrated manner with regard

to personnel aspects, seniority shall be computed on the basis of

all the employees of the company, that is to say, taking into

consideration all of its offices." Id. § 185c(b). Thus, the

statute makes the transfer analysis a necessary predicate for a

determination of how the company must "compute[]" seniority.

Here, the parties agree that American terminated the

plaintiffs as a result of a company downsizing or restructuring

that fit within one of the three subsections that trigger the

application of Article 3. The parties further agree that after

the termination of the plaintiffs, no employees in the plaintiffs'

occupational classification –- less senior or otherwise --

remained in American's lone Puerto Rico office, which is based in

San Juan. Finally, the parties agree that employees in the

plaintiffs' occupational classification did remain employed in at

least some of American's other offices worldwide.

The key dispute between the parties thus concerns how

Article 3 applies to an employer with one office in Puerto Rico

and multiple offices outside Puerto Rico.1 Specifically, because

1 The parties also dispute whether American has a "regular and usual practice" of transferring employees across its international offices. Because that dispute only becomes relevant upon the answer to the question we are certifying to the Puerto

- 5 - American has just one office in Puerto Rico, we must decide whether

the statute's predicate transfer analysis can be satisfied by

transfers that are made to or from an office outside of Puerto

Rico. If the transfer analysis cannot be satisfied that way, the

plaintiffs' claim cannot succeed.

II.

On its face, the text of Article 3 certainly could be

read to accord with the plaintiffs' position. Article 3 makes no

distinction between offices in Puerto Rico and those outside of

Puerto Rico. Article 3 instead simply refers to the transferring

of employees "from one office, factory, branch or plant to

another," without defining any of those terms. Id. § 185c(a).

Thus, plaintiffs contend that all of a company's transfers,

including transfers to or from an office outside of Puerto Rico,

count for the purpose of determining whether the company has a

"regular and usual practice" of transferring its employees within

the meaning of Article 3.

But the Puerto Rico Supreme Court appears to have read

a significant limitation into the facially broad language of

Article 3. In Reyes Sánchez, 189 P.R. Dec. at 608 (certified

translation at 24), the Court held: "Article 3 . . . does not

require an analysis of movement of personnel between the company's

Rico Supreme Court, we need not address it here.

- 6 - establishments on an international level. This analysis is limited

to determining the frequency of transfers of employees between the

company's establishments in the jurisdiction of Puerto Rico."2

Read literally, then, Reyes Sánchez appears to have held

that transfers to or from offices outside of Puerto Rico are to be

disregarded in considering whether a company has a "regular and

usual practice" of transferring employees across offices. And, on

that understanding of Reyes Sánchez, a company with just one office

in Puerto Rico, like American, can never have a "regular and usual

practice" of transferring employees for the purposes of Article 3.

And so, such a company is never subject to the seniority

requirements of subparagraph (b).

The plaintiffs' primary argument against affirmance is

that Reyes Sánchez arose in a factual context different from the

one we confront here and that the Court's holding was implicitly

limited to that context. Specifically, the plaintiffs note -- and

the appellees appear to accept -- that the employer in Reyes

Sánchez, Eaton Electrical de Puerto Rico, Inc., operated in Puerto

Rico only as a subsidiary of a larger, multinational corporation,

the Eaton Corporation. For that reason, the plaintiffs contend

that the only kinds of transfers to or from an office outside of

2For the purposes of our analysis in this case, we relied on the certified translation of Reyes Sánchez provided to us by the parties. We have appended a copy of the certified translation to this opinion.

- 7 - Puerto Rico that were at issue in Reyes Sánchez were transfers

from one corporate entity to another. Since American is a single

corporate entity, under which all of its offices worldwide operate,

plaintiffs contend that a transfer from American's San Juan office

to one of its offices in another jurisdiction would be a transfer

between two offices within the same corporate entity. And so, the

plaintiffs contend, Reyes Sánchez simply does not address how the

statutory analysis applies to such a company.

Moreover, the plaintiffs contend, there is good reason

to treat a company that operates in Puerto Rico only through a

local subsidiary differently from one that operates as a single,

global corporate entity with offices in Puerto Rico. The

plaintiffs argue that because the latter type of company has

directly availed itself of the laws of Puerto Rico, employee

protections like those in Article 3 should apply without limitation

on such a company. By contrast, a company that operates in Puerto

Rico only through a local subsidiary has not availed itself of the

laws of Puerto Rico, and thus only that subsidiary should be

subjected to the restrictions imposed by Article 3.

But Reyes Sánchez did use seemingly broad language in

announcing its holding. The Court focused its holding on the

"international" nature of the transfers there at issue, which had

been made from "Eaton's plant in Haina, Dominican Republic to

Eaton's plant[s]" in Puerto Rico. Reyes Sánchez, 189 P.R. Dec. at

- 8 - 609 n.21 (certified translation at 25 n.21) The Court also

emphasized that Article 3's analysis was "limited to . . .

transfers of employees between the company's establishments in the

jurisdiction of Puerto Rico," Id. at 608 (certified translation at

24) without any mention of the apparent fact that the transfers

spanned two corporate entities.3

Moreover, the Court nowhere acknowledged, much less

relied on, the apparent fact that Eaton Electrical de Puerto Rico,

Inc., operated as a subsidiary of Eaton Corporation. Instead, the

court referred to Eaton Electrical de Puerto Rico, Inc., as "Eaton"

and never mentioned Eaton Corporation. Id. at 608 (certified

translation at 24). And then, when describing the international

transfers at issue in that case, the Court referred to "Eaton's

plant in Haina, Dominican Republic" using the same language it

used to refer to "Eaton's plant in Las Piedras" (a city in Puerto

Rico). Id. at 607 n.20, 609 n.21 (certified translation at 22

n.20, 25 n.21). Finally, when the Court applied its holding to

the facts before it, the Court stated that "movement of personnel

or transfers from Eaton's plants in other jurisdictions is not

3 We note that it is not clear from the record whether the plaintiffs' contentions about the corporate relationship between Eaton Electrical de Puerto Rico, Inc. and Eaton Corporation were accurate as of the time of the Reyes Sánchez decision. But those contentions are not challenged by American, nor expressly contradicted by Reyes Sánchez itself, which did not address the corporate status of the defendant in that case.

- 9 - considered a transfer for purposes of establishing the frequency

of transfers between the company's establishments in Puerto Rico."

Id. at 609 (certified translation at 24-25) (emphasis added).

Thus, the Court at no point indicated that it even knew, let alone

considered, the fact that the Eaton plants in other jurisdictions

may have been operated by a different corporate entity than those

in Puerto Rico.

And the Reyes Sánchez Court's description of the

legislative history of Article 3 is inconsistent with the

plaintiffs' preferred reading of this precedent. The Court

described Article 3 as "establish[ing] certain additional elements

that companies that have more than one establishment in Puerto

Rico must comply with." Id. at 602 (certified translation at 16)

(emphasis added). The Court then noted that, prior to the

enactment of subsections (a) and (b), the interpretation of the

Puerto Rico Department of Labor and Human Resources was that "when

a company that had several establishments reduced personnel, the

order of retention based on seniority had to be established based

on all of the employees of the different establishments of the

company in Puerto Rico." Id. (emphasis added). Finally, the Court

described the two subsections within Article 3 as having been

enacted "to limit the circumstances under which an employee of an

employe[r] that has several establishments in Puerto Rico is

affected by reductions of personnel in establishments of the

- 10 - company with which the employee has had no relationship

whatsoever." Id. at 603 (certified translation at 17-18) (emphasis

added).

Thus, Reyes Sánchez describes the two subparagraphs

within Article 3 as placing a limit on a previously broad

interpretation of Article 3, under which a seniority analysis was

always required to span all of a company's offices in Puerto Rico.

But if that understanding of Article 3's original scope is right,

then on the plaintiffs' view, subparagraph (b) did not merely place

a limit but also simultaneously broadened the scope of Article 3

dramatically, by creating an obligation to conduct a worldwide

seniority analysis under some circumstances.

It is notable, therefore, that the Reyes Sánchez Court's

description of the legislative history to Article 3 consistently

referred to the two subparagraphs of Article 3 as a limitation

impacting "companies that have more than one establishment in

Puerto Rico." Id. at 602 (certified translation at 16) (emphasis

added). By contrast, the Reyes Sánchez Court's description of

that legislative history makes no reference to what plaintiffs

contend is the linchpin of the provision: that transfers must be

made within the same corporate entity, and not among different

ones, even if they are related subsidiaries of the same parent

company.

- 11 - Nevertheless, a holding in favor of American would

require an inference from silence as well. The Reyes Sánchez

holding, although framed in broad terms, was crafted to dispose of

a particular case with particular facts. The Court simply did not

clearly address, because it had no occasion to address, a scenario

in which the employer's Puerto Rico and other offices all operated

within the same corporate entity. And, as noted, the plain text

of Article 3, standing on its own, does not itself provide a ready

basis for finding a general limitation of the kind the District

Court, quite understandably, read Reyes Sánchez to have found

residing in the statute.

We are thus left with a choice between applying the

holding of Reyes Sánchez to a factual scenario it did not expressly

address, or applying the unqualified text of the statute despite

the Puerto Rico Supreme Court's having already limited that

language in Reyes Sánchez. Faced with such a choice, our guide

normally would be other Puerto Rico precedent interpreting Article

3 of Law 80. Here, however, it appears that no on-point precedent

besides Reyes Sánchez exists. Neither American nor the plaintiffs

have cited any such precedent, and we have found none.

Thus, we lack "sufficient guidance to allow us

reasonably to predict" which of our two options the Puerto Rico

Supreme Court would choose. See Pagán-Colón v. Walgreens of San

Patricio, Inc., 697 F.3d 1, 18 (1st Cir. 2012) (quoting Ropes &

- 12 - Gray LLP v. Jalbert (In Re Engage, Inc.), 544 F.3d 50, 53 (1st

Cir. 2008).4 And although Reyes Sánchez contains a number of

indicators suggesting that the Puerto Rico Supreme Court might be

likely to extend that holding to this case, we are reluctant to

"encroach on the prerogative of that court by resolving the

question ourselves." Id.; see Santiago-Hodge v. Parke Davis &

Co., 859 F.2d 1026, 1033 (1st Cir. 1988) ("[O]ur creating an

across-the-board rule may be unnecessary, and may offend the comity

due to local courts, since Puerto Rico courts have never addressed

this specific issue."). Instead, this is a case "in which there

are local issues of law that are decisive in the cause of

action . . . , for which there are no clear precedents in the

decisions of the Supreme Court of the Commonwealth of Puerto Rico,"

P.R. Laws Ann. tit. 32, app. III, Rule 53.1(f). We thus believe

the better course is, consistent with the plaintiffs' suggestion

in their briefing to us, [Reply Br. 10-11], to certify the question

in accordance with the rules of the Puerto Rico Supreme Court.

See Pagán-Colón, 697 F.3d at 19.

4American argues that the remainder of the Reyes Sánchez opinion makes clear that the Court intended its holding to apply broadly, but we can spot no passage from the opinion that could not be read consistently with the plaintiffs' position.

- 13 - III.

Accordingly, we hereby certify the following question to

the Puerto Rico Supreme Court:

In Reyes Sánchez v. Eaton Elec., 189 P.R. Dec. 586, 608 (2013), the Puerto Rico Supreme Court stated that the analysis of employer transfer activity under Article 3 of Law 80 "is limited to determining the frequency of transfers of employees between the company's establishments in the jurisdiction of Puerto Rico." Under Reyes Sánchez, does that limitation apply where the employer has one office in Puerto Rico and multiple offices in other jurisdictions and operates all of its offices under the same corporate entity?

We would also welcome any further guidance about

relevant Puerto Rico law that the Puerto Rico Supreme Court may

choose to provide. See Boston Gas Co. v. Century Indem. Co., 529

F.3d 8, 24 (1st Cir. 2008).

The Clerk of this court is directed to forward to the

Puerto Rico Supreme Court, under the official seal of this court,

a copy of the certified question and our opinion in this case,

along with copies of the briefs and appendix filed by the parties.

We retain jurisdiction over this appeal pending resolution of the

certified question.

-Appendix Follows-

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