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Carrasquillo-Ortiz v. American Airlines, Inc.

United States Court of Appeals, First Circuit

January 22, 2016

ELIZABETH CARRASQUILLO-ORTIZ; CARMEN GUZMÁN-VÁZQUEZ; DANIEL OUVIÑA; VÍCTOR RIVERA; MATILDE RODRÍGUEZ-NOA; BRENDA ENID VÁZQUEZ-DÍAZ; FRED VOLTAGGIO-DE JESÚ S, Plaintiffs, Appellants,
v.
AMERICAN AIRLINES, INC., Defendant, Appellee

As Amended January 26, 2016.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO. Hon. Gustavo A. Gelpí, Jr., U.S. District Judge.

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.

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

OPINION

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

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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 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 Sanchez v. Eaton Elec., 2013 TSPR No. 108, 189 D.P.R. 586, 2013 Juris P.R. No. 111 (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 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 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.

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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 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 Sanchez, 189 D.P.R. at 608 (certified translation at 24), the Court held: " Article 3 does not require an analysis of movement of personnel between the company's 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 Sanchez 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 Sanchez, 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 Sanchez 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

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in Reyes Sanchez, 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 Puerto Rico that were at issue in Reyes Sanchez 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 Sanchez 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 Sanchez 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 Raina, Dominican Republic to Eaton's plant[s] " in Puerto Rico. Reyes Sanchez, 189 D.P.R. at 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 Raina, 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 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.

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And the Reyes Sanchez 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 company with which the employee has had no relationship whatsoever." Id. at 603 (certified translation at 17-18) (emphasis added).

Thus, Reyes Sanchez 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 Sanchez 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 Sanchez 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.

Nevertheless, a holding in favor of American would require an inference from silence as well. The Reyes Sanchez 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 Sanchez to have found residing in the statute.

We are thus left with a choice between applying the holding of Reyes Sanchez 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 Sanchez. 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 Sanchez 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

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our two options the Puerto Rico Supreme Court would choose. See Pagan-Colon v. Walgreens of San Patricio, Inc., 697 F.3d 1, 18 (1st Cir. 2012) (quoting Ropes & Gray LLP v. Jalbert (In re Engage, Inc.), 544 F.3d 50, 53 (1st Cir. 2008).[4] And although Reyes Sanchez 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 Pagan-Colon, 697 F.3d at 19.

III.

Accordingly, we hereby certify the following question to the Puerto Rico Supreme Court:

In Reyes Sanchez v. Eaton Elec., 2013 TSPR No. 108, 189 D.P.R. 586, 608, 2013 Juris P.R. No. 111 (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 Sanchez, does that limitation apply where the employer has one office in Puerto Rico ...

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