Sutton v. Jordan's Furniture, Inc.

229 N.E.3d 1091

Matthew SUTTON¹

v.JORDAN’S FURNITURE, INC.

SJC-13382

Supreme Judicial Court of Massachusetts, Middlesex.

Argued October 4, 2023.

Decided March 28, 2024.

Massachusetts Wage Act. Labor, Wages, Overtime compensation, Minimum wage. Minimum Wage. Practice, Civil, Class action, Summary judgment, Attorney’s fees, Costs, Retroactivity of judicial holding. Statute, Construction. Administrative Law, Agency’s interpretation of statute. Retro activity of Judicial Holding. Damages, Attorney’s fees.

Civil action commenced in the Superior Court Department on June 19, 2019.

The case was heard by Camille F. Sarrouf, Jr., J., on motions for summary judgment; a motion to amend the judgment and for attorney’s fees and costs was also heard by her; and a second amended judgment was entered by her.

The Supreme Judicial Court granted an application for direct appellate review.

Brant Casavant (Hillary Schwab, Boston, also present) for the plaintiff.

Julie B. Brennan, Norwood (Ariel D. Cudkowicz & Dawn Reddy Solowey, Boston, also present) for the defendant.

Joshua D. Nadreau, Boston, for Retailers Association of Massachusetts, was present but did not argue.

The following submitted briefs for amici curiae:

Michael J. Sheehan, P. Kevin Connelly, & Barrick Bollman, of Illinois, Robert J. Cordy, Andrew Liazos, Boston, Frank J. Bailey, & Selena Fitanides for Pioneer Public Interest Law Center.

Raven Moeslinger, Boston, for Massachusetts Employment Lawyers Association & others.

Andrea Joy Campbell, Attorney General, & Alexander Sugerman-Brozan, Assistant Attorney General, for the Attorney General.

Present: Budd, C.J., Gaziano, Lowy, Kafker, Wendlandt, & Georges, JJ.²

GEORGES, J.

The primary issue in this case is whether the commissions-based compensation scheme for sales employees of a retail employer, Jordan’s Furniture, Inc. (Jordan’s), complied with the overtime statute, G. L. c. 151, § 1A, and the Sunday pay statute, G. L. c. 136, § 6 (50).³ We held in Sullivan ?. Sleepy’s LLC, 482 Mass. 227, 228, 121 N.E.3d 1210 (2019) (Sleepy’s), that (1) employers must make "separate and additional payments" to one hundred percent commission sales employees, to compensate the employees "for every hour [they] worked over forty hours or on Sunday"; and (2) "draws and commissions cannot be retroactively allocated" to meet these requirements "even if th[o]se draws and commissions equaled or exceeded the minimum wage for the employees’ first forty hours of work and one and one-half times the minimum wage for all hours worked over forty hours or on Sunday."

This class action lawsuit was brought in the Superior Court by a former Jordan’s employee on behalf of all persons employed at one of Jordan’s Massachusetts stores as sales employees between 2016 and 2019 and who worked more than forty hours in any work week or on any Sunday. The plaintiff class alleged that Jordan’s failed to comply with the requirements this court outlined in Sleepy’s. See Sleepy’s, 482 Mass. at 228-229, 121 N.E.3d 1210. On cross motions for summary judgment, the motion judge agreed and granted summary judgment in favor of the plaintiff class because Jordan’s compensation plan "failed to remit separate and additional payments to its sales [employees] for overtime and Sundays," thereby violating the overtime and Sunday pay statutes. Subsequently, after the plaintiff class sought statutory attorney’s fees and costs as the prevailing party, the same judge utilized the lodestar method to calculate the award of attorney’s fees, discounted hours spent in settlement negotiations, and enhanced the lodestar figure by using a four times multiplier.⁴

Jordan’s now appeals, maintaining that its compensation scheme complied with the overtime and Sunday pay statutes, that the judge erred in applying our decision in Sleepy’s retroactively, and that there is no private right of action for violations of the Sunday pay statute.⁵ Both parties also appeal from aspects of the judge’s calculation of attorney’s fees.

We conclude, as the motion judge did, that Jordan’s compensation scheme violated G. L. c. 151, § 1A, and G. L. c. 136, § 6 (50). Further, the judge did not err in applying our holding in Sleepy’s to this case. We also conclude that the Sunday pay statute is enforceable under the Wage Act’s private right of action, G. L. c. 149, § 150.

Regarding attorney’s fees, we hold that the judge abused his discretion by relying exclusively on common fund cases to support the application of a four times lodestar multiplier and by categorically deducting time spent toward settlement negotiations.

Accordingly, while we affirm the order on summary judgment, we vacate so much of the second amended judgment as awards attorney’s fees to the plaintiff class, and remand this matter to the Superior Court for recalculation of the award of attorney’s fees consistent with this opinion.⁶

1. Background. a. Facts. Jordan’s is a Massachusetts corporation that owns and operates retail furniture stores in Massachusetts and other States. Matthew Sutton, the named plaintiff, is a former Jordan’s sales employee. He represents a class of employees who worked at Jordan’s Massachusetts stores as "sale consultant[s]" or "sleep technician[s]" between June 19, 2016, and August 1, 2019, and worked more than forty hours in any work week or on any Sunday. Jordan’s sales employees work at its retail stores and sell furniture and related products to customers. As part of their regular work schedules, Jordan’s sales employees often work on Sundays. Some of Jordan’s sales employees occasionally work more than forty hours per week. All members of the plaintiff class worked either on a Sunday or over forty hours in at least one week between 2016 and 2019.

Jordan’s compensated its sales employees on a one hundred percent commission basis. Sales employees only earned commissions if they made sales. Jordan’s utilized a system of draws under its Sales Draw Plan (Draw Plan), which functioned like a loan or advance on the sales employees’ future commissions because the draws were deducted, or "pa[id] back," from the sales employees’ commissions once earned. Employees received a draw that was at least equal to the minimum hourly wage for all time that they worked in one week, up to forty hours, plus one and one-half times the minimum wage for any time that they worked over forty hours in one week or for any time that they worked on Sundays.

The Draw Plan included three primary types of draws: (1) a base draw, (2) an overtime draw, and (3) a premium draw. Jordan’s calculated the base draw by multiplying the number of hours the employee worked during the pay period by a base hourly rate, which was equivalent to the minimum wage rate at the time. The overtime draw was calculated by multiplying the hours an employee worked over forty hours in a given week by the base hourly rate and then applying a 1.5 overtime multiplier. Similarly, the premium draw was calculated by multiplying the hours a sales employee worked on Sunday by the base hourly rate, and then by a 1.5 "premium" multiplier. All three categories of draws were "recoverable from future commissions."

Jordan’s only used future commissions to cover an employee’s draw if the employee had a "negative draw balance" -- which was created where commissions earned during a pay period were less than the total draw owed for the same period. In those instances, the negative balance of. the recoverable draw was carried forward to future weeks "and deducted from future Sales Earnings." Sales earnings included commissions.

b. Hypotheticals. Given the complexity of Jordan’s pay scheme, we provide the following hypotheticals for clarity. In these hypotheticals, we will use a base hourly rate of $10 and a 1.5 premium multiplier for time worked on a Sunday.⁷

The over-all effect of Jordan’s compensation scheme was that a sales employee’s gross pay for a particular week would be an amount equal to his or her total draw if the sales employee’s commissions did not exceed the total draw for that week, although this would create a negative draw balance for subsequent weeks if the commissions were less than the total draw. Conversely, in weeks where the sales employee’s commissions exceeded his or her total draw, the sales employee’s gross pay would be in an amount equal to his or her commissions minus the negative draw balance (if any), but would not be any lower than the amount of the employee’s total draw.

i. Example no. 1. If a sales employee worked forty hours in a given week (week no. 1), which included ten hours on a Sunday, the employee’s total draw would be $450, comprised of a $300 base draw (30 hours x $10 hourly rate) plus a $150 premium draw (10 hours x $10 hourly rate x 1.5 premium multiplier). If this employee also earned $400 in commissions in week no. 1, then the employee’s gross pay would be $450, with a $50 negative balance ($400 commissions - $450 total draw) carried over to the following week (week no. 2). We will also assume that the hypothetical sales employee has no negative draw balance going into the first week (week no. 1) of the hypothetical.

If during week no. 2, the sales employee worked thirty hours on days other than Sunday and earned $400 in commissions, the employee’s gross pay would be $350 rather than $400 because the $50 negative balance from week no. 1 would be deducted from the employee’s commissions.

In total, the sales employee would receive $800 in gross pay over the two weeks ($450 from week no. 1 + $350 from week no. 2).

ii. Example no. 2. If the sales employee worked forty hours in week no. 1 on days other than Sunday and earned $400 in commissions, the employee would receive $400 of gross pay. In this scenario, the employee’s commissions would be equal to the total draw and therefore there would not be any negative balance carried over into week no. 2. We will also assume that the sales employee has no negative draw balance going into the first week (week no....