We Owe How Much??? New Wage Act Decision from Appeals Court

August 5, 2015:– How much could an employer end up paying for violating the anti-retaliation provisions of the Wage Act, M.G.L. c. 149, §§148A and 150? Much more than you might expect.

Today’s decision from the Appeals Court says that “an employee terminated by an employer for asserting a wage right may recover damages stemming from the termination… [which] may include earnings from the date of termination up to trial.” That means the employer is liable not only for what it should have paid prior to termination but also for everything the employee would have earned during the years between termination and trial, minus whatever the employee actually earned elsewhere in the meantime. That could be a sizable sum.

And then, of course, the court can treble that amount, which is what happened in Wessel v. Mink Brook Associates. At the time of firing, the employer owed the employee $3,750.00 for lost wages and unused vacation time. The final damage award, factoring in the termination-trial period: $187,111.38.

In a nutshell, if an employee rightfully complains about owed wages, and the employer responds by firing her, the employer better hope that the fired employee finds another (highly paid) job, and fast. Even better, at the risk of stating the obvious, employers should refrain from retaliating against employees to whom they owe wages.

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Peter Vickery, Esq.

Found and lost

What does the verb “find” mean? For one litigant, it will forever be synonymous with “lost,” more precisely “$1.1 million lost.”

In a case that has important implications for employers and employees alike, the Appeals Court upheld a Superior Court judge’s decision to override the jury and allow a company to keep the $1.1 million it would otherwise have had to fork over to an ex-employee. After finding that Deborah Kiely’s former employer, Teradyne, Inc., had retaliated against her, the jury awarded Ms. Kiely $1.1 million in punitive damages. Although she prevailed on the retaliation claim, Ms. Kiely lost on the underlying claim of gender discrimination and the jury declined to award her compensatory damages. So the judge not only vacated the $1.1 million damages award but also ruled that Teradyne would not have to pay Ms. Kiely’s attorney’s fees.

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Why was this even a possibility in a place where parties traditionally bear their own costs and expenses? That, after all, is the “American rule.” But there are exceptions. Under this state’s anti-discrimination law, a successful plaintiff can obtain attorney’s fees, which creates an important incentive for attorneys to accept discrimination cases on a contingent-fee basis. Instead of agreeing to a share of the judgment amount, e.g. one-third, the lawyer can opt for legal fees, which might well be higher. The right to attorney’s fees depends on the court finding for the petitioner. Here is what the statute (M.G.L. c. 151B, S. 9) says:

If the court finds for the petitioner [plaintiff], it may award the petitioner actual and punitive damages. If the court finds for the petitioner it shall, in addition to any other relief and irrespective of the amount in controversy, award the petitioner reasonable attorney’s fees and costs unless special circumstances would render such an award unjust.

Without devoting much ink to the meaning of “finds,” and none to the words “irrespective of the amount in controversy,” the Appeals Court chose to ask a different question: Can a plaintiff in a discrimination case obtain attorney’s fees when the jury has made a finding of retaliation but declined to award compensatory damages? No, said the court in Kiely v. Teradyne, Inc., a decision it announced on June 6. A plaintiff has to obtain some kind of recovery — injunction or damages — in order to qualify for attorney’s fees. The fact that the Legislature could have chosen to include this condition, but did not, means that in terms of statutory construction the decision has, in popular parlance, some issues.

Putting to one side the question of whether the court arrived at the right destination, it is worth considering the route it took. Section 9 does not say that attorney’s fees are available “if the court finds for the petitioner and awards relief.” In fact, two simple words in the text of the statute demonstrate that the Legislature contemplated the possibility of a finding without an award.

First, the phrase “[i]f the court finds for the petitioner, it may award the petitioner actual and punitive damages” establishes that a court is free to find in the plaintiff’s favor and, if it chooses, decline to award damages of any kind.

Secondly, the provision says “[i]f the court finds for the petitioner it shall, in addition to any other relief.” Any implies the possibility of none. What the Legislature could have said — but did not — was “if the court finds for the petitioner, in addition to all other relief.”

The word “all,” unlike “any,” would have created two triggers, (1) a finding and (2) an award. Unless the court pulled both triggers, there would be no attorney’s fees.  Had the Legislature intended to create this kind of two-trigger mechanism, it would have done so.  Nevertheless, the Appeals Court went ahead and created just such a mechanism anyway, despite the plain and unambiguous language of Section 9.

It need not have done so. The last nine words of the provision (“unless special circumstances would render such an award unjust”) give judges the discretion to refuse attorney’s fees, without reading into the statute words that are not there. Rather than relying on that exception, however, the court added a requirement that the Legislature did not enact.

On a more positive note, what the decision lacks in coherence it somehow makes up for in clarity. The Appeals Court’s conclusion is, at least, unambiguous: “[W]e conclude that a finding of retaliation alone, without any form of relief or recovery, cannot support an award of attorney’s fees under G.L. c. 151B, S.9.” This is not what the statute actually says, of course, and if the disappointed Ms. Kiely takes her matter to the Supreme Judicial Court, we may end up with an interpretation of Section 9 that hews more closely to legislative intent.

Another welcome feature of the Appeals Court’s decision is its reiteration of the Supreme Judicial Court’s declaration that punitive damages warrant review on the grounds of due process in that a “grossly excessive” award constitutes an “arbitrary deprivation of property.” Not that this proposition was in any doubt, but in a decision that involves the judicial exercise of legislative powers, contra Article 30 of the Declaration of Rights, any reference to bedrock constitutional principles brings some comfort.

It is not clear whether the SJC will have an opportunity to consider this case and rule on the meaning of the word “finds” in Section 9. For the time being then, readers who celebrate due process, legal certainty, and the separation of powers may find themselves greeting Kiely v. Teradyne, Inc., with one cheer or perhaps two cheers, but probably not three.

No workers comp for criticism or questions

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Criticism not compensable

If the boss criticizes you, can you claim workers’ comp? Some readers may consider the question unworthy of judicial resources but it was at the heart of Joseph Upton’s Case, which the Appeals Court had to ponder recently.

Imagine this situation. An employer suspects that an employee may not have been completely candid about a work-related matter relating to money. The employer questions the employee about the discrepancy. After being questioned the employee experiences an emotional reaction with physical symptoms (e.g. chest pains, shortness of breath) serious enough to prevent a return to work. May the employee collect workers compensation for the “emotional disability”?

Last week the Appeals Court said no. If an emotional disability arises out of “supervisory criticism or questioning” it constitutes a bona fide personnel action, and under Section 1(7A) of the Workers’ Compensation Act disabilities that arise principally out of such actions are not compensable. In reaching this conclusion, the court overturned the decision of the reviewing board in the Department of Industrial Accidents, which had itself overturned the decision of the administrative judge who heard the case.

The current version of Section 1(7A) is the product of several attempts by the Legislature to limit the circumstances in which employees can collect for emotional injuries. Given this progressive tightening of the statute by barring recovery for emotional distress resulting from transfer, demotion, and termination, the Appeals Court found it “improbable that the Legislature would… then allow compensation for the preliminary and tentative events of investigation and fact finding.” This reading of the plain language of the statute in the context of the problem the Legislature was trying to solve produced a common-sense result in line with that of the administrative judge. In contrast, if the court had let board’s decision stand employers would find themselves in an impossible situation, unable to even question an employee for fear of triggering an emotional-disability workers’ comp claim.

After explaining how its analysis of the Workers’ Compensation Act differed from the board’s, the Appeals Court addressed the issue of judicial deference. Where an administrative agency has the task of administering a statute, traditionally the courts defer to the agency’s interpretation. But after noting that “the policy of judicial deference is not a practice of judicial abdication,” the court observed that the board had never before taken the position that emotional injuries resulting from questioning or criticism merited compensation. So, the court concluded, “the usual factors supporting deference for an agency interpretation are absent.”

What should employers take away from this decision? The statute does not entitle employees to compensation for emotional disabilities arising out of bona fide personnel actions, which can include “supervisory criticism or questioning.”

Click here for an account of the underlying case.

How not to impress the judge

Earlier today the Massachusetts Appeals Court affirmed a motion to dismiss in the case of Kelley v. Cambridge Historical Commission (12-P-1309).  From the following description, I get the sense that the plaintiff’s complaint failed to impress the justices:

“[It] is written in a discursive, stream of consciousness style, it lacks any organizational coherence, and it is riddled with overblown language and inappropriate ad hominem attacks. As a result, the specific legal theories on which the plaintiffs purport to rely are not readily discernible.”

Then, in a footnote, they add: “We appreciate the difficulties the motion judge faced as he diligently tried to make sense of the plaintiffs’ alleged causes of action.”

From time to time (like most attorneys, I suspect) I have had to discuss with a client why things did not turn out as well as hoped, and although those conversations have always been professional not one of them has ever been delightful. But I am relieved that not once have I had to explain anything like the judicial blasting above.

While I do not know the lawyer who prompted it, I am grateful to him: I plan on framing and showing the foregoing expression of the Appeals Court’s ire to anyone who expresses misgivings about the admittedly spare and to-the-point nature of my legal writing.