Wage Act lawyers seek clarity on retroactive damages (809)

A lawyer who recently won a Massachusetts Wage Act lawsuit against a Boston restaurant says she is disappointed the judge in the case did not address a hotly debated issue in the employment bar: whether last year’s mandatory treble damages bill applies retroactively.

In Benoit, et al. v. The Federalist, Inc., Superior Court Judge Merita A. Hopkins trebled $180,000 in damages from a December 2007 jury verdict in favor of 40 waiters at The Federalist who claimed the restaurant had withheld from them service charges added to bills for private functions.

While she obtained the dollar amount she was seeking for the plaintiff wait staff, Shannon Liss-Riordan said the judge, like many of her colleagues on the bench, decided on the award by erroneously applying a discretionary standard test set out by the Massachusetts Supreme Judicial Court in 2005.

“A clear answer on this question from the appellate courts would be useful to provide clarity for the bar, because right now there is none,” said Liss-Riordan, of Boston. “Obviously, it’s hard on both sides looking to settle a case when you don’t know whether the outcome is going to be X, or three times X. There is a real disagreement here, and unless a court of appellate record answers the question definitively, we’re simply not going to know.”

Defense co-counsel Krista Green-Pratt, of Seyfarth Shaw in Boston, agreed that the issue has come up on several occasions and would benefit from appellate review.

“Any time you have a statute passed, the idea is you put the litigant on notice going forward of what the potential penalties are,” she said. “That simply hasn’t happened here. When you’re talking about retroactivity, you’re talking about a hardship on employers who might not have otherwise known what the legal requirements were. To hold otherwise is just simply unfair.”

Green-Pratt, who declined to discuss the specifics of The Federalist case, added that the Legislature’s silence on the matter coupled with conflicting lower court authority requires a ruling in favor of employers.

“You need to have some basis for asserting retroactivity,” she said. “I haven’t seen it based on the caselaw and the way the statute itself is written. It’s not as clear cut as plaintiffs’ counsel always makes it out to be.”

Undoing ‘Weidmann’

Uncertainty surrounding the issue began in 2005 when the SJC, in Weidmann v. The Bradford Group, held treble damages could be awarded only if a trial judge found an employer had willfully and intentionally committed an infraction.

However, use of that test was struck down last year by the enactment of Chapter 80 of the Acts of 2008, which made Massachusetts the first state in the country to impose automatic treble damages for wage and hour law violations.

While the 2008 amendments clearly did away with the discretionary standard, what was unclear was whether the Legislature intended the damages provision to apply to cases that pre-date the passage of the bill.

Two frequently cited lower court rulings demonstrate that judges at the state and federal level do not necessarily see eye to eye on the issue.

In a July 2008 decision issued weeks after the bill went into effect, U.S. District Court Judge Joseph L. Tauro held in Campbell, et al. v. Energy Nuclear Operations Inc. that judges should apply the treble damages provision in effect at the time a decision is rendered.

But three months later, Superior Court Judge Raymond J. Brassard, in Pantano v. Artificial Life, Inc., found retroactive application is only appropriate where a statute expressly provides for it or the context of a case indicates the clear intent of the Legislature. Since Chapter 80 is silent on the question, Brassard ruled for the employer.

Brassard vs. Tauro

Despite the conflicting authority, David J. Kerman, a Boston employers’ lawyer familiar with both rulings, said Brassard came to the right conclusion.

Unlike Tauro’s decision, which Kerman said did not address the question on point, Brassard’s findings were based on the premise that imposing treble damages is a substantive, not remedial, change. As a result, the judge said the law did not allow for retroactive application.

“While I think Judge Brassard’s decision correctly states the law, this has certainly become an issue of contention because some attorneys representing employees seem to feel that, until there is an appellate decision, the law is still unresolved,” said Kerman, a lawyer at Jackson Lewis. “While that’s technically true, the legal authority cited by Brassard is quite compelling and is likely to win the day when the Appeals Court or SJC resolves the issue.”

David C. Casey, of Littler Mendelson in Boston, added that there is a presumption that newly enacted statutes apply only prospectively under Massachusetts law.

“While there is a narrow exception to the presumption against retroactive application for those measures deemed procedural rather than substantive, that exception does not apply to the treble damages provision,” he said. “Legislation that increases liability affects the substantive rights of parties and, as a substantive measure, cannot be applied retroactively absent unequivocally clear legislative intent.”

‘Huge number of cases’

But Liss-Riordan, who practices at Pyle, Rome, Lichten, Ehrenberg & Liss-Riordan, has argued in several lawsuits, including one before the SJC last month, that retroactive application should apply to all cases.

“You’re talking about a huge number of cases out there, because this applies to every pending wage and hour case involving conduct before July 2008,” she said. “The reality is that most of the current cases in Massachusetts courtrooms fit into that category.”

Contrary to many employers’ arguments, the Boston lawyer countered that the history of the
Wage Act makes clear the Legislature always intended trebling to be mandatory. Prior to Wiedmann, she said, wage laws were consistently interpreted by judges to mandate treble damages.

“Even though we think we’re right, and we think the Legislature intended for this to be
retroactive, the reality is that, without clarity from the courts, a plaintiff’s lawyer is still going to have to prove the case under the discretionary standard,” she said. “When you have something that is affecting a mere remedy and is a clarification of existing law, which is what we’re dealing with here, it can be retroactive.”