February 14, 2017:-Today the highest court in Massachusetts marked St. Valentine’s Day by demonstrating its love for free speech.
The question was this: If bloggers accuse a scientific consulting company of fraud, questionable ethics, and intentionally manipulating findings, may the company sue the bloggers for defamation? The answer: No, not in Massachusetts, at least not if the company is providing expert testimony in high-profile litigation.
In a case connected to the Deepwater Horizon explosion and oil spill, the Supreme Judicial Court (SJC) considered the defamation complaint one of BP’s experts, Chemrisk, had brought against two environmental activists. The activists wrote that Chemrisk had engaged in fraud and “intentionally manipulated findings.” Relying on the anti-SLAPP statute, they had asked a lower court to dismiss Chemrisk’s lawsuit. The lower court denied the motion, but the SJC essentially overturned that denial and, to boot, awarded the activists their costs and legal fees. To read the SJC decision, click here.
The anti-SLAPP statute protects defendants not only in directly petitioning governmental bodies, but also in making “any statement reasonably likely to enlist public participation” in that petitioning effort effort. According to the SJC, the activists’ blog post was “part of [their] ongoing efforts to influence governmental bodies by increasing the amount and tenor of coverage around the environmental consequences of the spill, and closes with an implicit call for its readers to take action.”
Today’s decision represents a very welcome victory for freedom of speech.
August 17, 2016:- If you are interested in electricity prices, today’s decision from the Supreme Judicial Court (SJC) affects you. The case saw the Conservation Law Foundation and the power company Engie Gas (formerly GDF Suez) on the same side. Neither wanted to see electricity companies able to buy pipeline capacity, as this article in the Springfield Republican explains.
The question before the SJC: May the Department of Public Utilities (DPU) approve contracts that electricity-distribution companies want to enter into with natural-gas power generators?
The answer: No. That is the abridged version of today’s 37-page decision.
The impact? Find out by looking at your electricity bills over the months and years ahead.
Note to grammarians and students of legislative drafting: You too may be interested in this decision because it discusses redenda singula singulis, AKA the rule of the last antecedent.
May 24, 2015:- Today the Supreme Judicial Court (SJC) sent back to the Housing Court a summary process case that started almost four years ago in August 2012. In its decision (in favor of the tenants) the SJC points out the need to promote “the legislative goal of just, speedy, and inexpensive resolution of summary process cases.” But it is not only connoisseurs of irony who will find the decision noteworthy. Although the case concerns an attempted post-foreclosure eviction, it refers to yet another defense against claims for possession (a defense, as opposed to a mere counterclaim) that may have an impact on the more run-of-the-mill landlord-tenant cases as well.
In May 2012, a mortgage company recorded the foreclosure deed for home of Edward and Emanuela Rego. At the foreclosure sale, the Federal National Mortgage Association (Fannie Mae) took title. In August it started a summary process action in Housing Court to evict the Regos. In October 2012, the Regos filed their Answer, replete with 25 affirmative defenses and one counterclaim alleging that the mortgage company had violated the Consumer Protection Act, G.L. c. 93A. According to the Regos’ counterclaim, the company had violated 93A by charging excessive late fees and sending deceptive notices about their eligibility for loan modifications.
Fannie Mae filed a motion for summary judgment in February 2014, almost two years after it had purchased the house. The Housing Court awarded it possession and dismissed the Regos’ counterclaim. In July 2014, the Housing Court entered final judgment in favor of Fannie Mae. But the judge did not expressly state whether he agreed with Fannie Mae’s argument that because he had awarded possession he now lacked jurisdiction to decide the 93A counterclaim. The judge scheduled a separate hearing this particular question, and dismissed the 93A counterclaim, but did not state why. This bit is important, by the way.
When Fannie Mae prevailed on its motion for summary judgment and the Housing Court awarded it possession, its lawyers may well have thought they could discern the proverbial light at the end of the tunnel. When the judge entered final judgment, the light may have shone a little more brightly. But today the SJC — which had reached down to transfer the matter to itself from the Appeals Court — vacated the summary judgment and reinstated the tenants’ counterclaims, thereby snuffing out the light and turning Fannie Mae back into the tunnel of Housing Court.
On appeal, the Regos argued that the mortgage company had failed to comply with the writing-under-seal requirement of the foreclosure statute, focusing on a statutory amendment enacted in 1906. The SJC’s decision goes into laudable detail explaining why this argument must fail. But the 93A counterclaim is another matter, the SJC held. Please note: The Regos raised 93A as a counterclaim, not a defense.
Fannie Mae argued that even if the 93A counterclaim was successful, it would not entitle the Regos to possession, only to monetary damages. Not so, contended the Regos: The court could deploy the equitable remedy of rescinding the foreclosure sale.
One of the organizations that responded to the SJC’s request for amicus briefs was Community Legal Aid, which stated that:
In certain cases, the equitable rescission of a foreclosure sale might not be the trial court’s remedy for violations of G.L.c. 93A. Nevertheless, the adjudication of different claims arising from the same facts supports both judicial economy and access to justice for low-income and elderly litigants who may be unable to advance claims independently.
Even if rescission is not on the cards and no right to possession is at issue any more, the Housing Court should retain jurisdiction, in other words. Of like mind, the SJC held:
“[U]nable to determine whether, in the context of the summary process action, the judge determined that the Regos’ G.L.c. 93A counterclaims and defenses did not entitle them to equitable relief affecting the right to possession, or whether he intended to consider that form of equitable relief, along with all other potential forms of equitable and monetary relief in the separate proceeding but erroneously concluded that he lacked the jurisdiction to do it.” (Emphasis added).
Of course, the Housing Court judge did, in fact, rule on the counterclaim, which tends to suggest that he had concluded that he had the jurisdiction to do so. Had he “erroneously concluded that he lacked the jurisdiction” he could have chosen a different course. But this absence of an express ruling on Fannie Mae’s jurisdictional argument led the SJC to sent the case back.
“All very interesting, I’m sure,” I hear you think, “but how does this affect me?” Here’s how:
Landlords seeking possession should bear in mind that a tenant’s 93A counterclaim is an equitable defense.
May 17, 2016:- Today the Supreme Judicial Court (SJC) told the Massachusetts Department of Environmental Protection (DEP) that it has to issue more regulations in order to comply with the Global Warming Solutions Act, which the Legislature enacted in 2008. In Kain v DEP, the SJC ruled in favor of the Conservation Law Foundation and held that the DEP’s current regulations do not comply with the statute’s requirement of “declining aggregate [greenhouse gas] emissions limits.”
More to follow. In the meantime, two questions for diligent readers:
(1) By how much have our commonwealth’s greenhouse gas emissions declined since 2008?
(2) For bonus points, what is the main reason for the decline?
April 29, 2016:- Security deposits are supposed to help cover the cost of damage to the landlord’s property. Yesterday, security deposits themselves sustained damage on an Alderaan scale.
In its decision in Meikle v. Nurse (see my earlier post) the Supreme Judicial Court held that a landlord’s violation of the security deposit statute provides the tenant not only with a counterclaim but provides a defense to possession. In plain English, a defense to possession means the tenant gets to stay.
For many years, Massachusetts landlords wise to the ways of the law have known that any mistake handling the security deposit (e.g. failing to give the tenant a piece of paper stating the name of the bank holding the deposit and the account number) could result in them paying the tenant multiple damages plus the tenant’s attorney’s fees. But yesterday’s decision means that a mistake gives the tenant the right not just to money but to remain in the landlord’s property. Not forever, of course: The tenant “does not enjoy that right in perpetuity,” the SJC states reassuringly. To avoid a tenancy in perpetuity the landlord need only bring “a second summary process action for possession after he or she has remedied the violation of the security deposit statute.”
So what does bringing a summary process action for possession ordinarily involve? Serving a new notice to quit; waiting either two weeks or a full rental period depending on the nature of the notice; completing the new summons and complaint and making sure it aligns perfectly with the notice to quit (on pain of dismissal if it does not); serving a new summons and complaint (with the attendant sheriff’s fees) at the right time, not too early and not too late (on pain of dismissal for premature or tardy filing); filing the summons and complaint (again, not too early and not too late on pain of dismissal); paying the court’s filing fee; appearing in court; being presented with the tenant’s list of interrogatories, which automatically postpones the trial for 10 days; prevailing at trial (if the stars are aligned); seeking a writ of execution; watching the judge grant the tenant a stay of execution; and then, when the first stay has expired, watching the judge grant another stay of execution, and so on. Not quite perpetuity, perhaps, but close. The line between ad nauseam and ad infinitum starts to get a bit blurry after a year or so.
Will this new decision discourage landlords from taking security deposits? One would think so, those who fall into the rational-economic-actor category at any rate. Without security deposits, how will these rational economic actors insure themselves against the risk of tenants damaging their property (bearing in mind that an increase in the risk involved in renting increases the cost of renting)? Applying some basic economics, perhaps landlords will respond to an increase in the cost by raising the [fill in the blank].
March 31, 2016:- Yesterday the Supreme Judicial Court issued its decision in Van Liew v. Stansfield, a case I wrote about here involving two Chelmsford politicians. What a relief that the Court ruled that politicians should not use the anti-harassment laws to shut up their critics, and what a disgrace that the question even came up in Massachusetts in the Twenty-first Century.
By way of a reminder: When one politician (Van Liew) referred to the other (Stansfield) as corrupt and a liar, called her uneducated and stupid during a phone conversation, and allegedly said during the course of a meet-and-greet event at the local library “I’m coming after you,” Ms. Stansfield sought a civil harassment-prevention order. The judge not only granted the order, but even prohibited Mr. Van Liew from using Ms. Stansfield’s name online and in print, an order that brings to mind the 1982 Zimbabwean law that forbade jokes about the name of the president, Canaan Banana.
After the election, Mr. Van Liew sued Ms. Stansfield for malicious prosecution and abuse of process, and Ms. Stansfield brought a special motion to dismiss the case under the anti-SLAPP statute. Yesterday’s decision from the Supreme Judicial Court means that Mr. Van Liew’s case can go forward (four years after a judge banned him from uttering his opponent’s name during a political campaign). A welcome vindication of the rights of the citizen, to be sure, but how unfortunate that a candidate for public office would ask a judge for a gag order and how much more unfortunate that a judge would issue one.
Lopsided laws are annoying. But here in Massachusetts we have the right to require that our legislators observe the principles of justice and moderation in formulating our laws. It says so in the Massachusetts Declaration of Rights (article 18, to be precise). So immoderate, unjust laws do more than annoy; they flout some fundamental constitutional principles.
Which prompts me to ask, Why do we put up with the dramatically different burdens that the law places on landlords who hold security deposits vis-à-vis tenants who withhold rent?
If you are a Massachusetts landlord you are free to ask for a security deposit to insure against the tenants damaging your property. But if you do, you had better comply with every jot and tittle of the security-deposit law, M.G.L. c. 186, §15B. The amount of the security deposit must not exceed one month’s rent (not by so much as a dollar), you have to place the deposit it in a separate, interest-bearing account in a Massachusetts bank — not a New Hampshire bank or a Connecticut bank — and give the tenant (1) a detailed receipt within 30 days, and (2) annual statements showing the interest that the deposit has earned. The law goes into great detail about what you must and must not do with the security deposit at the end of the tenancy. Innocent mistakes can prove as costly as deliberate violations. Landlords who are curious about the kind of oversights that could trigger multiple damages and attorney’s fees should watch this short slide-show video by tenants’ lawyer Arthur Hardy-Doubleday, Esq. If pushed for time start watching at the 3:45-minute mark.
In contrast, if you are a Massachusetts tenant and you wish to withhold rent from the landlord (i.e. go on rent strike) the list of legal formalities you have to comply with is considerably shorter. Here is a short video on the subject.
Rent withholding has a reasonable purpose. Tenants are allowed to withhold rent if the conditions in the dwelling are unsanitary, which encourages landlords to make repairs promptly upon request. Fair enough. Mind you, just try that rationale in the realm of workplace relations.
Employer: “Your performance is inadequate.”
Employee: “Are you going to fire me?”
Employer: “No, and you can’t quit either. You have to keep working for us. But we’re going to stop paying you.”
Any employers desiring an insightful predictive analysis of the likely outcome of such an interaction should click here.
If tenants withhold rent, do they have to set the money aside? After all, if — many months, or even years, after the rent strike started — the Housing Court judge decides that the landlord is entitled to some or all of the bank-rent, it could be difficult for the tenants to come up with money. It takes above-average self discipline to save the money rather than spend it on all the other pressing day-to-day demands, especially in a culture that actively discourages thrift (have you looked at interest rates lately?).
But no, the law does not require that tenants place the withheld rent in escrow, so nor do tenants have to provide the landlord with documentary evidence stating the name of the bank and the number of the account.
To recap, landlords holding security deposits have to comply with a long list of legal requirements whereas tenants withholding rent have to comply with none. Landlords who fail to give tenants a detailed statement within 30 days face the prospect of paying treble damages and the tenants’ legal fees. Tenants who withhold rent even if a judge concludes that the withholding was not justified do not have to pay a penalty of any kind.
If you think of tenants as wards of the state and your image of landlords conforms to popular Dickensian stereotypes, or this, or this, this imbalance in the law may not bother you much. If so, I urge to watch a real landlord, Garth Meikle, argue a real case in front of the Supreme Judicial Court. To see and hear Mr. Meikle click here, and start at minute 18:38. Mr. Meikle simply wanted his apartment back so that one of his children could move in, but the tenant alleged that Mr. Meikle had made a mistake with the security deposit. By the way, the tenant received pro bono representation from a Harvard Law School clinic; the landlord had to represent himself.
On the other hand, if you think that the provision of affordable homes is a social good that we should encourage or at least not discourage, and that it might be time to restore some balance to landlord-tenant law, there is hope. Recently I went to the State House to listen to testimony about a proposal to amend the rent-withholding law by requiring tenants to deposit the withheld rent into escrow. Will it pass? I shall keep you posted.
Now for the quiz that I promised in the headline.
If I had to choose one word to describe the current security-deposit law it would be persnickety, an adjective (possibly related to the Scottish pernickety or pernicky) that boasts the highest jurisprudential imprimatur available on this side of the Atlantic, namely a 2011 decision of the Supreme Court of the United States.
Question: Which justice penned the opinion?
Email your answer to firstname.lastname@example.org with the word persnickety in the subject line. There will be a prize for the first correct answer.* But, please, no pre-quiz use of Google, LexisNexis, etc. We use the honor system around here.
* A warm glow.**
** Subject to availability, satisfaction not guaranteed, and no warranties as to fitness for general or particular purpose. Some glow-feelers may experience side effects so before winning this quiz talk to your primary care physician, pharmacist, and faith-community leader.
February 4, 2016:- Employment lawyers have been wondering, “Will Massachusetts adopt or reject the after-acquired evidence doctrine?” Today we have the answer: No.
If an employer terminates an employee for no cause and later discovers a reason that would have provided grounds for discharge, later on in court may the employer rely on that after-acquired evidence as justification? In states with the after-acquired evidence doctrine, the answer is yes. We are not one of those states. But we do not positively not have the doctrine either, if you see what I mean.
In announcing its decision in EventMonitor, Inc. v. Leness, the Supreme Judicial Court chose not to reach the issue of after-acquired evidence. So for the time being, the doctrine is neither accepted nor rejected.
Perhaps “minefield” is over-used as a metaphor, but ask almost any landlord or attorney who has done a tour of duty in Housing Court and you will hear a war story about security deposits. It is an area where you need a map to make it across in one economic piece, and a single false step can trigger an explosion of damages.
Landlords who take tenants to court for non-payment of rent can expect counterclaims with the prospect of treble damages and attorney’s fees if they, the landlords, have ever failed to observe the least punctilio of the the security-deposit law. That much is certain. But if a landlord makes a mistake with a security deposit, does that give the tenant not simply a counterclaim but also a defense against the landlord’s claim for possession? We shall find out soon enough.
The new edition of Massachusetts Lawyers Weekly has a story about the case of Garth v. Meikle in which the Supreme Judicial Court will provide an answer. I wrote the amicus brief for Mass Landlords (link here). Oral arguments are scheduled for November 5.
Should politicians be allowed to use the harassment-prevention laws to silence their opponents? That is one way to frame the question that the Supreme Judicial Court (SJC) will consider in December. Here is the way the SJC frames the political-speech question presented by Van Liew v. Stansfield:
Whether statements made by the plaintiff, allegedly in the context of “political discourse,” could have qualified as acts of harassment for purposes of G. L. c. 258E; whether a request by the defendant, an elected official, for a harassment prevention order under c. 258E “was devoid of any reasonable factual support or any arguable basis in law” for purposes of the anti-SLAPP statute, G. L. c. 231, § 59H, where the plaintiff’s statements on which the request was based allegedly were “political speech” and made to express the plaintiff’s “version of what was happening in the town.”
In a nutshell, during a municipal election campaign in Chelmsford one local politician (Stansfield) obtained a court order banning another local politician (Van Liew) from using Stansfield’s name “in any email, blog, twitter, or any document through the internet, television show, ad, or otherwise.” In an ex parte hearing (i.e. without the opposing party) Stansfield alleged that Van Liew’s conduct amounted to harassment under M.G.L. c. 258E. The court later decided not to extend the order. Van Liew then sued Stansfield for malicious prosecution and abuse of process. After the district court dismissed his complaint and the appellate division re-instated it, the matter ended up on docket of the commonwealth’s high court.
Given the case’s implications for freedom of speech, it is not surprising that the SJC has requested amicus briefs. But with oral arguments scheduled for December, there is very little time for interested parties to weigh in.
If you would like to see and hear the litigants, click here for Ms. Stansfield (from minute 12:25) and here for Mr. Van Liew (from minute 19:40).
The question before the court is whether the statements that Mr. Van Liew made to Ms. Stansfield could constitute harassment, which the statute (chapter 258E) defines as “three or more acts of willful and malicious conduct aimed at a specific person committed with the intent to cause fear, intimidation, abuse or damage to property and that does in fact cause fear, intimidation, abuse or damage to property.” I shall write more on that question in a later post. In the meantime, an equally important question is one that the SJC has not articulated in its request for amicus briefs, namely whether a judge issuing a harassment-prevention order should engage in such sweeping prior restraint as the judge in this case.
At Ms. Stansfield’s request, the judge prohibited Mr. Van Liew from using Ms. Stansfield’s name in any TV appearance, advertisement, email, blog, or tweet. Because of this, according to his brief, Mr. Van Liew cancelled a Meet the Candidate show that had been going to run online and on TV. By way of the anti-harassment law Ms. Stansfield achieved a result that she probably could not have obtained via defamation law.
If Ms. Stansfield had been suing Mr. Van Liew for libel, and sought a preliminary injunction to prevent Mr. Van Liew from publishing further defamatory statements about her, I suspect the judge would have looked at her request through First Amendment lenses and denied the request.
So I have a question, particularly for any of my Legislative Drafting students who are reading this: Is this something best left to the discretion of a trial judge, or should the Legislature amend chapter 258E to make clear that it must not be used to chill freedom of speech? If you think a legislative fix is necessary, what would your proposed amendment say?
In some circumstances an employer may discriminate on the basis of sex without breaking the Massachusetts anti-discrimination law. As justification, the employer needs to show that being a woman — or, indeed, a man — is a bona fide occupational qualification (BFOQ). In other words, the very nature of the particular job requires a woman not a man, or a man not a woman.
In Pugsley v. Boston Police Department the Supreme Judicial Court (SJC) explained what sort of evidence will not pass muster when using sex as a BFOQ. The plaintiff, Sean Pugsley, had scored very well on the police academy exam but the Boston Police Department did not pick him. It did, however, hire women who had scored less well than Mr.Pugsley because they were, well, women. The department’s reason was statistical disparity: About 13% of the officers were female whereas “the number of females involved in police contact as a result of alleged criminal activity” was about 18%.
Evidence of this caliber will not suffice. The SJC stated that “statistical disparities, without more, will generally be insufficient to support a BFOQ” (emphasis added). What sort of “more” can an employer not do without? In a footnote the Court suggested that employers should target their recruitment efforts more carefully before resorting to the blunt tool of overt sex discrimination. So statistics plus evidence of more subtle, less obvious efforts to discriminate, are probably OK.
One aspect of the statistical disparity that did not come up was the corollary of the fact that only 18% of those individuals who find themselves interacting with Boston police officers for “alleged criminal activity” are women. Therefore 82% are male. If the statistics for Boston resemble those for Massachusetts as a whole and women and men each make up about 50% of the population, an objective observer* would expect the rates of criminal activity to be 50:50 as well.
So it is clear from the statistics that female crooks are offending with impunity while their male counterparts are being deliberately targeted because of the anti-male bias of Boston’s overwhelmingly male police force, or are suffering from the form of discrimination known as disparate impact. After all, what other possible explanation could there be?
June 3:- Can a real estate brokerage classify a salesperson as an independent contractor without breaking the law?
A review of the independent contractor statute (Chapter 149, Section 148B) would suggest not. According to that statute a worker is an employee, as opposed to an independent contractor, unless the employer can show that the worker’s services are “performed outside the usual course of the [employer’s] business.”
By definition, the work of selling real estate is within the usual course of the real estate business. Not even the most flexible mental gymnast could persuasively describe the work of a real-estate salesperson as falling outside the usual course of a real-estate businesses’s business, at least not with a straight face.
But today in Monell v. Boston Pads, LLC, the Supreme Judicial Court (SJC) held that yes, a real-estate salesperson may indeed work as an independent contractor, a decision that should come as a relief to those in the real estate business.
The reason for the Court’s decision has to do with the interplay of two statutes, and a canon of statutory construction. One statute is the independent-contractor statute, which deals with employment in general. The other deals specifically with real-estate licensing (Chapter 112, Section 87R) and expressly provides that salespersons may affiliate with brokers as either employees or independent contractors. If the independent-contractor statute controls, then salespersons must be employees, whether they like it or not. If the real-estate licensing statute controls, they can be independent contractors.
To resolve the conflict, the SJC relied on the principle that “a specific statute controls over the provisions of a general statute.” In this case, the more specific statute is the one that governs the real-estate business, which, therefore, prevails over the general independent-contractor statute.
As I mentioned in a previous post on this subject, in Massachusetts the independent contractor remains on the endangered list but is not yet extinct.
Is an employer free to establish a no-tipping policy? Yes, said the Supreme Judicial Court (SJC), rejecting the argument of a group of current and former Dunkin’ Donuts employees who contended that Massachusetts law prohibits no-tipping policies. You can read the decision by clicking here.
When it enacted the Tips Act (M.G.L. c. 149, S. 152A) the Legislature barred employers from deducting or retaining tips that customers had given to the wait staff. Counsel for the plaintiffs (the employees) argued that the words “deducting” and “retaining” are flexible enough to mean “prohibiting.” Not so, said the SJC. Making it unlawful for restaurant/bar-owners to keep or skim tips that customers have left for servers is not the same as forbidding them from trying to prevent customers from tipping in the first place. A no-tipping policy simply does not violate the Tips Act.
And so long as the owner clearly communicates the policy to customers, if customers still leave money behind, the servers do not have the right to claim that money as theirs. The employer is not breaking the law by keeping it or giving it away.
So employers: If you have a no-tipping policy, make sure that you get the message across to your customer clearly. That’s my tip for the day.
Is a physical therapist a physician? Yes, said the Supreme Judicial Court, so long as we are talking about “physician” in the context of motor-vehicle insurance law.
In Ortiz v. Examworks, Inc., the Court looked at Massachusetts General Laws chapter 90, section 34M, paragraph three, which requires that people applying for personal injury protection (PIP) benefits have to submit to “physical examination by physicians selected by the insurer.” It held that the term “physician” includes physical therapists. This is a case where the Court arrived at the right destination by an unfortunate route, using statutory construction to solve a problem that was the Legislature’s to fix.
When the plaintiff, Flor Ortiz, applied for PIP benefits the insurer, Progressive, asked Examworks to provide an independent medical examination (IME). The IME that Examworks set up for Mr. Ortiz was with a physical therapist, not a medical doctor. Although the physical therapist’s report did not become part of the court record, on the basis of what happened next it seems fair to surmise that Mr. Ortiz deemed it a disappointment.
Mr. Ortiz sued, alleging that by submitting him to an exam with a physical therapist not a medical doctor Examworks had violated, among other things, the Consumer Protection Act (which provides for multiple damages and attorney’s fees). Examworks filed a motion to dismiss, which the Superior Court granted, and Mr. Ortiz appealed. The case ended up before the Supreme Judicial Court. Ruling that the court below was correct to dismiss the case — a just outcome, I believe — the SJC chose to imbue the word “physician” with more elasticity than modern custom and usage would seem to allow.
What did the Legislature mean when it used the word “physician,” asked the SJC? The relevant provision became law in 1970, so the Court decided to consult the 1969 edition of the American Heritage Dictionary, which states that the word “physician” includes “any person who heals or exerts a healing influence.” Bingo and ergo. Exerting a healing influence is something a physical therapist does, therefore a physical therapist is a physician. Of course, so is Barney, by that standard.
Should the Legislature not have been more precise when it created the PIP system? Not at all, said the Court, quoting dicta from a 1978 decision: “In so large a legislative enterprise… there are likely to be casual overstatements and understatements, half-answers and gaps in the statutory provisions.”
The bigger and more complicated the law, in other words, the greater the degree of carelessness we should expect from lawmakers. Ask them to enact a law establishing the official state folk dance, and they will do themselves proud. But give them something as complex as, say, health care and insurance, and they will inevitably descend to a level of slap-dashery that would embarrass even the drafters of the ACA. What a dismally low standard for the judicial branch to apply to the legislative branch.
Should the law require a PIP applicant to submit to examination by a medical doctor, dentist, or physical therapist of the insurance company’s choosing? Perhaps. But does it? Not as currently written. Rewriting the statute so that it does is a task for the Legislature alone, not for the courts.
There are many places in Massachusetts that I shall never visit, but that I feel quite sure are, in some small way, benefiting humanity as a whole, and other species for that matter. Should this generalized benefit — a positive externality, I suppose economists would call it — earn the owners of such places an exemption from the local property tax? Yes, said the Supreme Judicial Court.
When a non-profit corporation applied for a tax exemption for its forest land in Hawley, Western Massachusetts, the local board of assessors said no, a decision the state’s Appellate Tax Board upheld. Why? Because, the boards claimed, mere forest management, in and of itself, does not benefit a sufficiently large number of people and is not, therefore, a charitable purpose. On May 15, the Supreme Judicial Court ruled that the boards were wrong.
The nonprofit corporation is the New England Forestry Foundation, Inc. (NEFF) and the forest for which it was seeking tax-exempt status is the 120-acre Stetson-Phelps Pine Ridge Farm. NEFF already had the benefit of reduced taxation under M.G.L. c. 61 but wanted tax-exempt status under a different statute, M.G.L. c. 59, S.5 (Clause Third). The value of the land: $96,000. The tax rate: $200. This may strike readers as a pretty good deal, but the Court noted that applying for reduced-tax status under Chapter 61 every ten years for all NEFF’s properties entailed “administrative costs.”
In contrast to the Hawley Board of Assessors and Appellate Tax Board, which had decided that NEFF’s forest did not sufficiently benefit the public to qualify for an exemption under Clause Third, the Supreme Judicial Court (citing the Massachusetts 2011 Climate Change Report) held that “large forested blocks of land [contribute] to ‘ecosystem resilience’ in the face of rising temperatures and more severe storms because forests naturally absorb carbon and other emissions.” The boards had thought the forest owners should have to do something with the land in order to qualify for the exemption, e.g. educate the public, invite people in to walk around and enjoy the scenery, etc. Not really, held the Court:
“[B]y holding land in its natural pristine condition and thereby protecting wildlife habitats, filtering the air and water supply, and absorbing carbon emissions, combined with engaging in sustainable harvests to ensure the longevity of the forest, NEFF engages in charitable activities of a type that may benefit the general pubic.”
The holding in this case invites many more applications for tax-exempt status from forest owners, and prompts a few questions. For example, while most of us probably agree that woodland-owning non-profit corporations should not have to pay as much tax as for-profit corporations, should the non-profits not have to pay any property tax at all? And what about other activities that foster “ecosystem resilience,” such as the Vickerys’ back-yard vegetable patch?
Before redefining myself, wife, and children as not so much a “family” and more of a “bona fide non-profit land conservation organization,” and dashing down to Amherst Town Hall to claim our tax-free status (esto perpetua), I shall re-read footnote 10 of the SJC’s decision. To hold closed the metaphorical floodgates it sets out some “factors that may prove relevant” (nothing so stifling as a “precise formula”) for determining the bona fides of a land conservation organization. But I feel confident that after planting a few more apple and plum trees, plus a few quiet summer evenings devoted to libation-assisted imaginative lawyering, I shall meet the Court’s criteria and do my part to both restore climate equilibrium and further erode Amherst’s tax base.
April 14, 2014:- An unsettling decision emerged from the Massachusetts Supreme Judicial Court (SJC) today. For readers who prefer executive agencies to stick to executing the law rather than making fundamental policy, the decision will come as rather a disappointment. The case involved the question of regulatory takings and its name is Fitchburg Gas & Electric Company v. Department of Public Utilities, No. SJC-11397. In this decision the seven justices of the SJC interpreted a statute one way, and then granted the enforcing agency the right to interpret the same statute in exactly the opposite manner. Appropriately, the statute in question had its origins in the confusion and finger-pointing that followed a natural disaster.
After the storms of 2011, the consensus among state lawmakers was that the response of the utilities had been somewhat desultory. So in 2012 the Massachusetts Legislature enacted a statute establishing the Storm Trust Fund to help the Department of Public Utilities (DPU) examine the power companies’ storm preparedness. The law required all electric utilities to pay for the Fund via an annual assessment.
But, readers may wonder, as rational economic actors with a duty to their shareholders, would not the utilities simply pass on the cost of the assessment to the consumers? Ah, the Legislature thought of that. In order to prevent that very outcome it crafted section 18, para. 3, prohibiting the utilities from seeking “recovery of any assessments in any rate proceeding before the department.” Five electric companies sued on the basis that, among other things, the law amounted to a regulatory taking. The result was today’s decision from the SJC upholding the law.
A quick reminder: Did the Legislature intend to give the utility companies leeway to pass the cost of the assessment on the consumers? No, because (as the court explained) the Legislature’s intent was to raise funds to “investigate public utilities’ storm preparedness and responsiveness” and require the companies to “absorb the costs associated with achieving these purposes.” So the DPU must prohibit the utilities from effectively recouping that cost, correct? No. The DPU can interpret the statute in a way that permits the utilities to do exactly that.
Yes, you read that correctly.
Here is how the court summarized its decision: “[T]he Legislature may… prohibit the companies from including the assessment as a direct cost in a rate proceeding… However, even when such an assessment is properly excluded from the rate base, the department must permit the utilities to achieve a fair and reasonable rate of return on their investment, in accord with our constitutional mandates… What constitutes a reasonable return is a fact-specific inquiry that must be made in the context of a particular rate proceeding.”
The court held that although the DPU could interpret the statute to prevent a utility from claiming the assessment as part of its rate base, the DPU could — on the other hand — “offset the impact of the assessment through the allowance of a higher rate of return.” In footnote 4 the court observed, “It appears that the [DPU]… has not settled on an interpretation of the statutory language.”
Because the industry is such a highly regulated one the case is, in some respects, quite complex. But in one regard it is reasonably clear: An executive agency may interpret a statute in a way that contradicts what the SJC has determined to have been the clear intent of Legislature in enacting it. If you can call that reasonably clear.
This post is about real estate law. But, lest my alliterative headline cause confusion, I begin with three brief definitions. First, in the language of the law the word “taking” refers to the government acquiring somebody’s property. Second, the term “a take,” as it appears in endangered-species statutes, refers to somebody doing something that could cause harm to an endangered creature or its habitat. As for the third term, “trammel,” it was the only synonym I could find for “stop” that begins with the letter T. Now to consider whether the trammeling of turtle takes could constitute a taking.
In 1991 a walker spotted an eastern box turtle “on or near” property that now belongs to William and Marlene Pepin in the town of Hampden in Western Massachusetts. Some years later, the Pepins decided to build a single-family home on their land but the Division of Fisheries & Wildlife imposed restrictions that would significantly increase the cost of the project by requiring them to set aside some of their land and pay money to the state, as this MassLive article points out. Why? Because the Division — on the basis of that 1991 sighting — had designated the Pepins’ land as a “priority habitat” for the eastern box turtle. Disrupting the habitat could constitute a “take” of the turtle within the meaning of the Massachusetts Endangered Species Act (MESA). This meant that the Pepins, not the public purse, would bear the cost of preserving the habitat that supposedly once hosted an eastern box turtle.
Readers inclined to look for the term “priority habitat” in the statute should not bother. Although the Legislature created a framework for designating “significant habitats,” replete with notice, public hearing, judicial review of the agency decision, and recordation in the registry of deeds, it did not provide for “priority habitats.” That is a category the Division came up with all by itself. And shunning the procedural safeguards the Legislature built around the “significant habitat” designation, when it invented the “priority habitat” designation the Division decided to give landowners no similar protections.
Can an executive agency do this? The Supreme Judicial Court said yes, holding that by way of MESA the Legislature “delegated to the division broad authority” to implement the statute’s provision. The Court drew attention to the Legislature’s grant of authority to adopt “any regulations necessary,” words that appear in Section 4 of the statute, whose plain and ordinary meaning is clear. But what the Court ignored was Article 30 the Constitution of the Commonwealth of Massachusetts.
As I mentioned in a previous post, the Massachusetts Constitution prohibits the Legislature from delegating its lawmaking power, i.e. the power to make fundamental policy decisions, to executive agencies. This doctrine of non-delegation came up in the Pepin case. Attorney Donald R. Pinto, Jr., of the Boston law firm Rackeman, Sawyer & Brewster co-authored an amicus brief for the Pacific Legal Foundation, which argued that the Division’s decision “to strike this particular balance between species protection and economic development is the fundamental policy decision that must be made by the Legislature.” Although the amicus brief raised this important issue, the SJC did not address it.
As if flouting Article 30 were not enough, there is another issue here. When the government deprives landowners of their property, we call it a taking. When government does the same thing via regulations we call it a regulatory taking. How much value must a regulation destroy before we can call it a regulatory taking? In this case, the state government reduced the value of a parcel of real estate, and also required the owner to make a payment into a public fund.
Together, the reduction in value combined with the demand for money might amount to a taking. If the Pepins can stomach even more litigation, perhaps the Supreme Court of the United States will have an opportunity to let us know one way or the other.
How long is a year? That was the essence of the question the Supreme Judicial Court (SJC) answered on September 11 when it issued its decision in Brigade Leveraged Capital Structures, Inc. v. Pimco Income Strategy Fund, holding that the phrase “on at least an annual basis” means 395 days. Not as odd as it sounds, the decision represents a win for shareholder democracy and provides a reminder to attorneys who draft corporate bylaws to choose their words very carefully.
The dispute revolved around a bid to increase shareholder power. Pimco, the defendant investment management firm, managed two funds in which Brigade, the plaintiff, held shares. Brigade decided to nominate one of its partners to serve as a trustee on the boards of the two funds. Shareholders were set to elect the trustees at the funds’ next annual meeting. When it learned of the nomination, Pimco rescheduled the annual meeting from October 11, 2011, to July 31, 2012.
Brigade went to Superior Court asking for an order to make Pimco hold the 2011 shareholder meeting sooner. Pimco contended that under the terms of the bylaws it was entitled to reschedule the meeting even though the new date of July 31, 2012, was 19 months after the last shareholder meeting. In dispute was a provision in the trust’s bylaws which requires that regular meetings of shareholders “shall be held, so long as Common Shares are listed on the New York Stock Exchange, on at least an annual basis.” But what did that phrase — “on at least an annual basis” — mean?
Pimco said it could mean at any time during a fiscal year. With this approach, the management could conceivably hold one meeting in January 2013, but then not convene another one until December 2014, almost two years after the previous meeting. Rejecting Pimco’s interpretation, and siding with the shareholders, the SJC held that the phrase meant “no later than one year and thirty days (395 days) after the last annual shareholders meeting.” How and why did the court reach this conclusion?
Treating the bylaws the way it would a contract, the court construed the ambiguous provision against the party that drafted the document, namely Pimco. In addition, it read the words in the context of another section of the bylaws that referred to an “annual period,” which ended 30 days after the anniversary of the last annual meeting. But there was also an important principle at stake: the shareholders’ right to meaningful corporate democracy. “Delay in holding a shareholder election diminishes electoral rights by allowing [the] trustees to become more deeply entrenched and to continue to harm the interests of shareholders.”
What makes this case important rather than simply intriguing? The fact that other trusts and corporations in Massachusetts have bylaws that contain the same terms as the bylaws at the center of Brigade v. Pimco, such as the “annual period” provision and the requirement for shareholder meetings “on at least an annual basis.” This is not because of lazy lawyering and a fondness for copy-and-paste. Even the most diligent, detail-oriented attorneys rely on previous examples because familiarity and predictability are valuable assets in corporate governance and law, and because those older bylaws have stood the test of time. Of course, at the heart of the Brigade v Pimco case was the very meaning of time.
So what should small business owners do? First, it is worth checking their company’s bylaws to learn whether they require shareholder meetings “on at least an annual basis.” Then they should decide whether the annual-meeting provisions, as a court would likely interpret them, will work in practice. If the bylaws need changing, they can amend them by following the steps laid out in the bylaws. Without question, this involves time and other valuable resources that owners would prefer to devote to growing the business. On the other hand, it can stop misunderstandings before they start, and (no matter what your attorney charges per hour) it will prove much less expensive than litigation.
Attorney Peter Vickery practices in Amherst, Western Massachusetts.
Do you remember that day in high school or college when you learned about the separation of powers? Today the Massachusetts Supreme Judicial Court issued a decision that contains some language which might leave you wondering whether, during the intervening years, somebody went and amended the Constitution.
First some background. In 2005 the Legislature passed a law allowing vocational education teachers to increase their pensions by having up to three years of non-teaching employment count toward their “creditable service.” During that three-year period they must have been working in the same trade they ended up teaching, e.g. a plumber who becomes a vocational plumbing teacher can ask the retirement board to count three years of her pre-teaching plumbing when calculating her pension.
To qualify for this significant pension boost, teachers have to contribute “makeup payments” into the retirement system, in an amount equal to ten per cent of their regular annual compensation. They also have to pay “buyback interest.” But when should the interest accrue: when they entered the retirement system, or the start of the three-year period?
In answering that question, two agencies had competing interpretations of the statute. One agency, the Contributory Retirement Appeals Board (CRAB) said that the statute was clear and unambiguous. Interest should run from when the teacher joined the system. The other agency, the Massachusetts Teachers’ Retirement System (MTRS) disagreed, saying that the statute was silent on the issue. The Supreme Judicial Court heard the same silence, and held that the way the MTRS filled the silence was reasonable and entitled to deference.
One topic for a future post is the question of how silent the statute really is. In the meantime, I would like to address a more basic, constitutional aspect of the case.
What the Court said in explaining its decision is worth noting, not only if issues like democratic accountability rank high on your list of priorities, but also if you think that at some point your life may be affected by how an executive agency interprets a piece of legislation.
By way of a prelude to the Court’s explanation, let me refresh your memory of that high school or college lesson. The Constitution of the United States embodies the doctrine of the separation of powers, allocating the executive, legislative, and judicial roles to three distinct branches. The Massachusetts Constitution, which predates it, is more explicit. Article 30 states:
“In the government of this commonwealth, the legislative department shall never exercise the executive and judicial powers, or either of them: the executive shall never exercise the legislative and judicial powers, or either of them: the judicial shall never exercise the legislative and executive powers, or either of them: to the end it may be a government of laws and not of men.”
Because the Constitution prohibits the Legislature from delegating is lawmaking powers to the executive, courts and commentators refer to the “doctrine of non-delegation.” Of course, Massachusetts judges have long recognized that modern government requires some degree of delegation, but they have distinguished between situations where agencies are just “working out the details” of a policy that the Legislature has announced (which is permissible) and those where the agency is making “fundamental policy” (which is not).
If the Legislature has delegated to an agency the task of making “fundamental policy decisions” it has violated Article 30. That was a point the Court made very clear in 2006 when it decided Commonwealth v. Clemmey. But in today’s decision, which did not mention the non-delegation doctrine, the Court said this:
“[T]he Legislature simply chose to be silent on the issue, thereby leaving a policy gap to be filled by agency action.”
So this is a policy question, without doubt, not merely a matter of “working out the details.” Is the question of when interest accrues on a vocational teacher’s buyback a “fundamental policy question” or is it something less than that, e.g. a trifling or minor policy question? This recent report on the commonwealth’s unfunded pensions liabilities may influence how you answer that question. It mentions a figure of $23.6 billion.
One important lesson from today’s decision is this: It has become even easier for the Legislature to delegate policy questions to executive agencies, when even an issue that involves a multi-billion dollar unfunded mandate does not qualify as a “fundamental policy decision” of the sort that the Legislature has no constitutional right to delegate. If you have any questions or comments about the decision, I welcome your posts.