Ferman v. Sturgis Cleaners, Inc.

• Decision Date: 19 February 2019
• Docket Number: SJC-12602
• Parties: Belky FERMAN & another v. STURGIS CLEANERS, INC., & another.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

481 Mass. 488

116 N.E.3d 1196

Belky FERMAN & another¹

v.STURGIS CLEANERS, INC., & another.²

SJC-12602

Supreme Judicial Court of Massachusetts, Suffolk..

Argued December 4, 2018.

Decided February 19, 2019.

John J. McGlone, III (David T. Norton also present), Quincy, for the defendants.

Elizabeth Soltan (Patricio S. Rossi also present) for the plaintiffs.

Joseph Michalakes & Liliana Ibara, for Immigrant Worker Center Collaborative & others, amici curiae, submitted a brief.

Margaret E. Monsell & Ruth A. Bourquin, Boston, for Massachusetts Law Reform Institute & another, amici curiae, submitted a brief.

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

KAFKER, J.

This case requires us to consider whether employees, whose claim against their employer under the Wage Act, G. L. c. 149, §§ 148, 150, resulted in a favorable settlement agreement and stipulation of dismissal, "prevailed" in their suit for purposes of an award of attorney's fees and costs under the Wage Act's fee-shifting provisions.³ The defendants contend that the trial judge should have applied the test for determining prevailing party status under Federal fee-shifting statutes established by Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep't of Health & Human Resources, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001) ( Buckhannon ). Because Buckhannon requires a prevailing litigant to obtain judicial approval or "imprimatur" of a private settlement, the defendants argue that the plaintiffs did not prevail. Id. at 605, 121 S.Ct. 1835. The plaintiffs disagree, arguing that, because we have previously decided that the Buckhannon test has no applicability to Massachusetts fee-shifting statutes, the correct standard to determine prevailing party status under the Wage Act is the "catalyst test." Under the catalyst test, if the plaintiff's lawsuit is a necessary and important factor in causing the defendant to grant a material portion of the requested relief, a settlement agreement, even without any judicial involvement, may qualify the plaintiff as a prevailing party for fee-shifting purposes. None of the parties disputes that the plaintiffs met the catalyst test; rather, the central issue is the threshold question of the proper test to apply to determine prevailing party status under the Wage Act. We hold that the catalyst test applies to Wage Act claims and that the trial judge correctly found that the plaintiffs satisfied that test in the instant case, and we therefore affirm the award of attorney's fees to the plaintiffs under the fee-shifting provisions of the Wage Act.⁴

1. Facts and procedural history. The facts and procedural posture of this case are not contested. The plaintiffs are former employees of the defendants' dry cleaning business who brought suit in November 2014, claiming that the defendants failed to pay them approximately $ 28,000 in regular and overtime wages as required by G. L. c. 149, §§ 148 and 150, and G. L. c. 151, §§ 1A and 1B. Both of these chapters confer a private right of action on an employee "aggrieved" by an employer's violation of their provisions.⁵ They further provide that "[a]n employee so aggrieved who prevails in such an action shall be awarded treble damages ... and shall also be awarded the costs of the litigation and reasonable attorneys' fees." See G. L. c. 149, § 150 ; G. L. c. 151, § 1B. In their complaint, the plaintiffs claimed treble damages, as well as costs and attorney's fees.⁶

Following an almost two-year period in which there was the entry and lifting of a default judgment against the defendants, discovery, and the filing of various pretrial motions, the case was scheduled for trial in November 2016. Several weeks before the trial date, the court referred the parties to mediation. As a result of mediation, the parties executed a memorandum of understanding in which they agreed to settle the case for $ 20,500, but reserved the issue of the plaintiffs' entitlement to attorney's fees for resolution by the court. The parties then executed a mutual release and settlement agreement that provided that it "is the result of a compromise and that nothing set forth herein constitutes an admission of wrongdoing or liability." Subsequently, the parties filed a stipulation with dismissal in court, agreeing that "[p]ursuant to the Memorandum of Understanding and ... Mutual Release and Settlement Agreement ... Plaintiffs may file a Motion for Costs and Attorneys' Fees," following determination of which the matter would be "dismissed with prejudice" and "all rights of appeal ... waived."⁷

In their motion for attorney's fees, filed in February 2017, the plaintiffs claimed approximately $ 40,000 in attorney's fees and $ 1,000 in costs. The defendants opposed the motion. The judge concluded that the catalyst test and not the Buckhannon test applied to Massachusetts fee-shifting statutes. Applying the catalyst test, the judge found that the parties' agreement, which amounted to approximately seventy percent of the plaintiffs' initially demanded monetary relief, resulted "in a practical benefit as a result of their attorneys' efforts." This made the plaintiffs "prevailing parties" for purposes of an award of attorney's fees and costs. The judge granted the plaintiffs' motion with respect to $ 16,153 in attorney's fees and the entire amount of costs.⁸ This appeal followed.

2. Analysis. Whether a plaintiff is a "prevailing party" for purposes of a statutorily authorized award of attorney's fees "is an issue of law that we consider de novo." LaChance v. Commissioner of Correction, 475 Mass. 757, 764, 60 N.E.3d 1157 (2016), quoting Newell v. Department of Mental Retardation, 446 Mass. 286, 298, 843 N.E.2d 1084, cert. denied, 549 U.S. 823, 127 S.Ct. 158, 166 L.Ed.2d 40 (2006). To determine whether the plaintiffs here were prevailing parties, the defendants argue that the trial judge should not have defaulted to the catalyst test, but rather should have considered whether, as required by Buckhannon, there was a "material alteration of the legal relationship of the parties" (citation omitted) and a "judicial imprimatur on the change." Buckhannon, 532 U.S. at 604-605, 121 S.Ct. 1835. The plaintiffs are correct, however, that we have expressly "rejected the application of Buckhannon... and its progeny to fee requests under Massachusetts fee-shifting statutes or other Massachusetts authority." Brown v. F.L. Roberts & Co., 452 Mass. 674, 689, 896 N.E.2d 1279 (2008), citing T & D Video, Inc. v. Revere, 450 Mass. 107, 115 n.21, 876 N.E.2d 842 (2007).⁹ Consequently, the question is not whether the Buckhannon test or the catalyst test applies, but whether the catalyst test or another, previously undefined test applies. If the catalyst test applies, we have nothing further to decide, because the defendants concede that the plaintiffs prevail under the catalyst test, and do not contest the amount awarded pursuant to that test.¹⁰

We conclude, as did the motion judge, that there are only two well-defined alternatives for determining whether a negotiated settlement arising under a fee-shifting statute qualifies a litigant as a prevailing party: the catalyst test, which only requires the lawsuit "to be a catalyst for a defendant's voluntary change in conduct"; and the Buckhannon test, which states that the judge must take an additional step and "at least impose its judicial sanction on the agreed-upon material change in the legal relationship." Nogeiro v. Commissioner of the Dep't of Transitional Assistance, 72 Mass.App.Ct. 496, 499, 893 N.E.2d 62 (2008). Although we have never expressly applied the catalyst test to determine prevailing party status under a State fee-shifting statute, we have, as previously stated, expressly rejected the alternative. In this case, we take the logical next step and conclude that the catalyst test applies in the context of determining prevailing parties under the Wage Act. We do so for the following reasons.

We begin with the "two major purposes" of statutory fee-shifting provisions: "First, they act as a powerful disincentive against unlawful conduct. Second, they often provide an incentive for attorneys to provide representation in cases that otherwise would not be financially prudent for them to take on, and in that sense they help to assure that claimants who might not be able to afford counsel, or whose claims are too small to warrant an expenditure of funds for counsel, will be represented." Commonwealth v. Augustine, 470 Mass. 837, 842, 26 N.E.3d 709 (2015). See Buckhannon, 532 U.S. at 623, 121 S.Ct. 1835 (Ginsburg, J., dissenting) (rejection of catalyst test will "impede access to court for the less well heeled, and shrink the incentive ... created" by fee-shifting statutes enforced by private attorneys general). It is for these reasons that the Legislature included such provisions in select statutes such as the Massachusetts Civil Rights Act, G. L. c. 12 § 11I, and the Massachusetts consumer protection act, G. L. c. 93A, §§ 9 and 11, as well as the wage laws at issue here. See Augustine, supra (citing these and other statutes containing fee-shifting provisions).

The catalyst test promotes both purposes, and does so more vigorously than the Buckhannon test. See Albiston & Nielsen, The Procedural Attack on Civil Rights: The Empirical Reality of Buckhannon for the Private Attorney General, 54 U.C.L.A. L. Rev. 1087, 1121, 1130 (2007) ( Buckhannon discourages public interest organizations from representing plaintiffs in enforcement actions). In particular, the catalyst test provides for attorney's fees if a party's lawsuit was a "necessary and important factor" in causing the defendant to provide a material portion of the requested relief, but does not require litigation to a final judicial determination or other judicial imprimatur. Handy v. Penal Insts. Comm'r of Boston, 412 Mass. 759, 765, 592 N.E.2d 1303 (1992).¹¹

The catalyst test thus recognizes that successful...