Carrasquillo-Ortiz v. American Airlines, Inc. ( 2016 )

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
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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
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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
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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
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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.
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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.
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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
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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.
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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
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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.
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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 &
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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.
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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.
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