Killeen v. Westban Hotel Venture, Lp.

• Citation: 69 Mass. App. Ct. 784,872 N.E.2d 731
• Decision Date: 21 August 2007
• Docket Number: No. 05-P-1553.,05-P-1553.
• Parties: Constance M. KILLEEN v. WESTBAN HOTEL VENTURE, LP.
• Court: Appeals Court of Massachusetts

872 N.E.2d 731

69 Mass. App. Ct. 784

Constance M. KILLEEN v. WESTBAN HOTEL VENTURE, LP.

No. 05-P-1553.

Appeals Court of Massachusetts, Suffolk.

Argued October 19, 2006.

Decided August 21, 2007.

Linda L. Morkan, Hartford, CT (David B. Wilson & Alida Bogran-Acosta, Boston, with her) for the defendant.

Michael K. Gillis, Newton, for the plaintiff.

Present: CYPHER, McHUGH, & KATZMANN, JJ.

McHUGH, J.

Westban Hotel Venture, LP, doing business as Westin Copley Place, appeals from a judgment awarding the plaintiff, Constance M. Killeen, damages in the amount of $1.26, trebled to $3.78, for violation of G.L. c. 149, § 152A, as amended by St.1983, c. 343, a statute regulating the manner in which employers distribute tips they collect on behalf of their employees, and attorney's fees and costs in the amount of $153,717.77.¹ We vacate the judgment and remand for further proceedings.

1. Background. The plaintiff worked as a server at banquets and functions in the defendant's hotel, the Westin Copley Place, for more than fourteen years. During that period, she worked at an average of 400 events per year. At each of these events, the plaintiff was supervised by one or more banquet captains, who were responsible for supervising the servers and doing whatever else was necessary to ensure smoothly run functions. From time to time, the captains assisted in actual service of food and beverages, but food and beverage service was a minor component of their over-all mission. At all times material to the litigation, the defendant customarily assigned captains to supervise more than one function simultaneously.

The defendant routinely added a fourteen percent service or gratuity charge to the food and beverage charges for each function. From 1983 through August, 1995, the defendant distributed an equal share of an event's service charge to each employee, including the captains, who had worked at the event. As a result, when working multiple functions simultaneously, banquet captains would receive a larger portion of the gratuities than the servers who actually served food and beverage.²

In September of 1997, this action was commenced to challenge the defendant's tip allocation procedures.³ In the complaint, the plaintiff claimed that captains should not have received distributions from the service charges the defendant collected because G.L. c. 149, § 152A,⁴ limited recipients to those who engaged in "the serving of food or beverage" to event patrons and the captains did not provide "service" within the meaning of the statute. In addition to alleging that the defendant's tip distribution policy violated the statute, the plaintiff claimed that the policy (1) was a breach of contract; (2) was a breach of the covenant of good faith and fair dealing implied in the employment relationship between the plaintiff and the defendant; (3) amounted to fraud; (4) constituted conversion; and (5) was an intentional interference with an advantageous relationship.

Ultimately, the case proceeded to a jury-waived trial that bifurcated liability and damages. In the liability phase, the trial judge found that captains did provide "service" to banquet patrons and were entitled to share in the service charges the defendant collected. The judge also found, however, that the defendant's custom and practice of allowing banquet captains who simultaneously worked at multiple functions to collect a proportionate share of the service charges generated by each function violated the statute's "proportionality" provision (see note 4, supra). Based on that conclusion, the judge also concluded that the defendant's practice violated the covenant of good faith and fair dealing implicit in an at-will employment relationship and amounted to conversion and unjust enrichment. The judge dismissed the plaintiff's claims of fraud, interference with an advantageous relationship, and breach of an express contract. Finally, and although the defendant had abandoned the challenged practice in 1995, some two years before the action began, the judge, sua sponte, issued a declaratory judgment pursuant to G.L. c. 231A stating that the defendant's practice of giving "banquet captains working simultaneously scheduled or overlapping functions a single share from the 14% gratuity pool of each one of the multiple functions supervised by that captain or captains while only compensating servers from the tip pool worked by that server unlawfully violates the proportionality provisions of G.L. c. 149, § 152A."

At the subsequent damage phase of the trial, the plaintiff, who had sought damages ranging from approximately $78,000 to $127,000, was only able to prove that she had been harmed by the defendant's practice on one occasion and that the damages for that one occasion amounted to $1.26. Because she believed that G.L. c. 149, § 152A, required an award of treble damages, the judge ordered entry of judgment in the amount of $3.78. The judge also awarded the plaintiff $153,717.77 in costs and attorney's fees pursuant to G.L. c. 149, § 150.

On this appeal, the defendant challenges the judge's decision to treble the damages and to award costs and attorney's fees.

2. Trebling damages pursuant to G.L. c. 149, § 150. General Laws c. 149, § 150, as appearing in St.1993, c. 110, § 182, provides, in pertinent part: "Any employee claiming to be aggrieved by a violation of [G.L. c. 149, § 152A,] may ... institute and prosecute in his own name and on his own behalf ... a civil action for injunctive relief and any damages incurred, including treble damages for any lost wages and other benefits." In her findings and conclusions following the damage phase of the trial, the judge stated, "It would not appear from a reading of the statute that such a trebling is discretionary." Accordingly, she trebled the $1.26 basic award to $3.78. Subsequently, however, the Supreme Judicial Court held in Wiedmann v. The Bradford Group, Inc., 444 Mass. 698, 708-710, 831 N.E.2d 304 (2005),⁵ that treble damages under G.L. c. 149, § 150, are discretionary, not mandatory, stating that its conclusion was similar to that in Goodrow v. Lane Bryant, Inc., 432 Mass. 165, 178-179, 732 N.E.2d 289 (2000), interpreting a similar provision in G.L. c. 151, § 1B. The court pointed out that multiple damages are essentially punitive damages and are appropriate where "conduct is `outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others.'" Wiedmann v. The Bradford Group, Inc., 444 Mass. at 710, 831 N.E.2d 304, quoting from Goodrow v. Lane Bryant, Inc., 432 Mass. at 178, 732 N.E.2d 289.⁶ Because Wiedmann holds that trebling is not mandatory under G.L. c. 149, § 150, and because the judge made no finding on the question whether the defendant's conduct was "outrageous" or showed a "reckless indifference to the rights of others," we must "vacate the award of treble damages and remand the issue for the judge's reconsideration whether treble damages are warranted." Wiedmann v. The Bradford Group, Inc., 444 Mass. at 710, 831 N.E.2d 304.

3. Award of attorney's fees. General Laws c. 149, § 150, is an exception to the "American Rule," which requires each party to bear its own litigation costs. See generally Police Commr. of Boston v. Gows, 429 Mass. 14, 17, 705 N.E.2d 1126 (1999). In pertinent part, § 150 provides: "An employee ... who prevails in [an action for a violation of G.L. c. 149, § 152A,] shall be entitled to an award of the costs of the litigation and reasonable attorney fees" (emphases added). G.L. c. 149, § 150, as appearing in St.1993, c. 110, § 182.

In opposing the fee award in this case, the defendant claims that the plaintiff's failure to recover anything more than "nominal" damages means that she should not be viewed as the "prevailing party" for purposes of a fee award and, even if she should be, the award in this case is not "reasonable." We consider those claims in succession a. Prevailing party. In Farrar v. Hobby, 506 U.S. 103, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992), the United States Supreme Court explored the question whether a civil rights litigant who is awarded nominal damages is a "prevailing party" and entitled to attorney's fees under 42 U.S.C. § 1988 (2000), the Federal fee-shifting statute. "[A] plaintiff `prevails,'" the Court held, "when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." Id. at 111-112, 113 S.Ct. 566. See Mendoza v. Licensing Bd. of Fall River, 444 Mass. 188, 210, 827 N.E.2d 180 (2005). Because "[a] judgment for damages in any amount, whether compensatory or nominal, modifies the defendant's behavior for the plaintiff's benefit by forcing the defendant to pay an amount of money he otherwise would not pay," the Court concluded that one who recovers nominal damages is a "prevailing party." Farrar v. Hobby, 506 U.S. at 113, 113 S.Ct. 566.

The Court went on to say, however, that

"[a]lthough the `technical' nature of a nominal damages award or any other judgment does not affect the prevailing party inquiry, it does bear on the propriety of fees awarded under § 1988. Once civil rights litigation materially alters the legal relationship between the parties, `the degree of the plaintiff's overall success goes to the reasonableness' of [the] fee award.... Indeed, `the most critical factor' in determining the reasonableness of a fee award `is the degree of success obtained.' ... In some circumstances, even a plaintiff who formally `prevails' under § 1988 should receive no attorney's fees at all. A plaintiff who seeks compensatory damages but receives no more than nominal damages is often such a prevailing party."

Id. at 114-115, 113 S.Ct. 566. In the aftermath of Farrar, numerous Federal decisions have declined to award attorney's fees to litigants who recovered only nominal damages in civil rights...