George v. Nat'l Water Main Cleaning Co.

477 Mass. 371

77 N.E.3d 858

Robert GEORGE & others¹

v.NATIONAL WATER MAIN CLEANING COMPANY & others.²

SJC-12191

Supreme Judicial Court of Massachusetts, Suffolk..

February 14, 2017.

June 26, 2017.

Adam J. Shafran (Jonathon D. Friedmann also present) for the plaintiffs.

Richard L. Alfred (Dawn Reddy Solowey & Anne S. Bider also present) for the defendants.

John Pagliaro & Martin J. Newhouse, for New England Legal Foundation, amicus curiae, submitted a brief.

Annette Gonthier Kiely, Kathy Jo Cook, Thomas R. Murphy, & Timothy J. Wilton, for Massachusetts Academy of Trial Attorneys, amicus curiae, submitted a brief.

Present: Gants, C.J., Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

GANTS, C.J.

Several employees of National Water Main Cleaning Company filed a class action suit against the company and its parent company, Carylon Corporation, in the Superior Court, alleging, among other claims, nonpayment of wages in violation of the Massachusetts Wage Act, G. L. c. 149, §§ 148, 150 (Wage Act). After the case was removed to the United States District Court for the District of Massachusetts, the judge granted final approval of a class settlement agreement that resolved all outstanding issues except one question of law. To resolve that question, the judge certified to this court the following question pursuant to S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981):

"Is statutory interest pursuant to [ G. L. c. 231, § 6B or 6C,] available under Massachusetts law when liquidated (treble) damages are awarded pursuant to [ G. L. c. 149, § 150 ]?"

In answer to the question, we declare that, under Massachusetts law, statutory prejudgment interest pursuant to G. L. c. 231, § 6H, shall be added by the clerk of court to the amount of lost wages and other benefits awarded as damages pursuant to G. L. c. 149, § 150, but shall not be added to the additional amount of the award arising from the trebling of those damages as liquidated damages.³

Interpretation of the certified question . Before we answer the certified question, which the judge issued at the joint request of the parties, we must first ascertain its meaning. The question is an inquiry into the availability of statutory interest pursuant to two statutes: G. L. c. 231, § 6B, which directs the clerk of court to add interest at the rate of twelve per cent per year to awards of judgment "for personal injuries to the plaintiff or for ... damage to property"; and G. L. c. 231, § 6C, which directs the clerk to add interest at the same twelve per cent rate to awards of judgment "[i]n all actions based on contractual obligations." The parties appear to treat the certified question essentially as two questions: first, whether Wage Act claims fall within the scope of either § 6B or § 6C, and second, if they do, whether prejudgment interest should be added to the award of damages for lost wages and other benefits where § 150, as amended in 2008, provides for the trebling of those damages and characterizes such an award as "liquidated damages." We decline to answer the first of these questions because, even if prejudgment interest could not be added to Wage Act awards under § 6B or § 6C, it plainly could be added under G. L. c. 231, § 6H, which declares that interest at the rate of twelve per cent per year shall be added to the award of damages "[i]n any action in which damages are awarded, but in which interest on said damages is not otherwise provided by law."⁴ The question we shall answer, which we consider to be the true gist of the certified question, is whether the Legislature, when it amended § 150 in 2008 to require the award of treble damages on Wage Act judgments and characterized the award as "liquidated damages," intended that prejudgment interest not be added to any part of this award because such interest was included within the scope of "liquidated damages." See Tyler v. Michaels Stores, Inc ., 464 Mass. 492, 499 n.12, 984 N.E.2d 737 (2013) (declining to limit answer to narrow confines of certified question where broader discussion was necessary to articulate law regarding issue presented).

Discussion . The Wage Act was enacted "to protect wage earners from the long-term detention of wages by unscrupulous employers." Melia v. Zenhire, Inc ., 462 Mass. 164, 170, 967 N.E.2d 580 (2012), quoting Cumpata v. Blue Cross Blue Shield of Mass., Inc ., 113 F.Supp.2d 164, 167 (D. Mass. 2000). Employers violate the Wage Act when they fail to pay "each ... employee the wages earned" and when they fail to do so within the time period set by statute. See G. L. c. 149, § 148.

Before the 2008 amendment, G. L. c. 149, § 150, provided that an aggrieved employee may initiate "a civil action for ... any damages incurred, including treble damages for any loss of wages and other benefits" and, if he or she prevails, "shall be entitled to an award of the costs of the litigation and reasonable attorney fees." St. 2005, c. 99, § 2. In Wiedmann v. The Bradford Group, Inc ., 444 Mass. 698, 709, 831 N.E.2d 304 (2005), we noted that the text of this statute "states only that a plaintiff 'may' institute a suit for damages that includes a request for treble damages," and concluded that "there is nothing in the plain language of the statute that requires an award of treble damages." We declined to require a judge to award treble damages to a prevailing plaintiff where the plain language of § 150 did not require it, and declared that the award of treble damages in Wage Act cases was a decision left to the discretion of the judge. Id . at 710, 831 N.E.2d 304. This conclusion was similar to the conclusion we reached in Goodrow v. Lane Bryant, Inc ., 432 Mass. 165, 178-179, 732 N.E.2d 289 (2000), where we rejected the argument that the award of treble damages was mandatory once a plaintiff requested such an award for an employer's failure to pay required overtime compensation, in violation of G. L. c. 151, § 1B. Wiedmann , supra . We noted that we had declared in Goodrow that "treble damages are punitive in nature, allowed only where authorized by statute, and appropriate where conduct is 'outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others.' " Wiedmann , supra , quoting Goodrow , supra at 178, 732 N.E.2d 289.

Three years after we decided Wiedmann , the Legislature "effected a critical change in the language of the statute, removing the provision that treble damages 'may' be awarded, and replacing it with the directive that treble damages 'shall be awarded.' " Rosnov v. Molloy , 460 Mass. 474, 479, 952 N.E.2d 901 (2011). Under G. L. c. 149, § 150, as amended through St. 2008, c. 80, § 5, where an aggrieved employee prevails in a civil action seeking damages under the Wage Act, the employee "shall be awarded treble damages, as liquidated damages, for any lost wages and other benefits and shall also be awarded the costs of the litigation and reasonable attorneys' fees."⁵ By its plain language, the 2008 amendment to § 150 mandates the award of treble damages for lost wages and benefits once an aggrieved employee prevails on a Wage Act claim; the plaintiff no longer need show that the defendant's conduct was "outrageous" to obtain such an award.

The 2008 amendment did more than mandate the award of treble damages to a prevailing plaintiff in a Wage Act case; it characterized the treble damages "as liquidated damages." The crux of this appeal is to ascertain what the Legislature intended by this characterization. The defendants contend that the inclusion of this phrase reflects the intent of the Legislature that, apart from the award of reasonable attorney's fees and the costs of litigation, the judgment in favor of a prevailing plaintiff shall be limited to three times the amount of lost wages and benefits; it shall not include any prejudgment interest, whether under § 6B, 6C, or 6H, because prejudgment interest is included within the award of liquidated damages. The plaintiff contends that the inclusion of this phrase reflects the intent of the Legislature that treble damages be treated as compensatory in nature, rather than punitive, and does not reflect an intent to deprive employees of prejudgment interest they would otherwise be due as a matter of statute for their lost wages and benefits.

"Liquidated damages" is a term derived from contract law to identify the amount of damages that the parties agree must be paid in the event of a breach. See Cochrane v. Forbes , 267 Mass. 417, 420, 166 N.E. 752 (1929) ("Liquidated damages ... mean damages, agreed upon as to amount by the parties, or fixed by operation of law, or under the correct applicable principles of law made certain in amount by the terms of the contract, or susceptible of being made certain in amount by mathematical calculations ..."). See also 24 R.A. Lord, Williston on Contracts § 65:1 (4th ed. 2002). "A liquidated damages provision will usually be enforced, provided two criteria are satisfied: first, that at the time of contracting the actual damages flowing from a breach were difficult to ascertain; and second, that the sum agreed on as liquidated damages represents a 'reasonable forecast of damages expected to occur in the event of a breach.' "

NPS, LLC v. Minihane , 451 Mass. 417, 420, 886 N.E.2d 670 (2008), quoting Cummings Props., LLC v. National Communications Corp ., 449 Mass. 490, 494, 869 N.E.2d 617 (2007). "Where damages are easily ascertainable, and the amount provided for is grossly disproportionate to actual damages or unconscionably excessive, the court will award the aggrieved party no more than its actual damages." NPS, LLC , supra .

The term is used in the damages provision of the Federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 216(b), which provides, "Any employer who violates the provisions of [§ 206 or 207] of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be,...