-: SJC-13121, Beth Reuter v. City of Methuen
Judge: Okay, attorney Ecker.
-: May it please the Court, Debra Ecker,
for the defendant, appellant
and cross appellee, City of Methuen.
There are two issues here that are on appeal.
The first is the measure of damages
under the Massachusetts Wage Act.
When an employer pays an employee their wages, albeit late,
but prior to the filing of complaint.
The second issue is whether the plaintiff here
was a prevailing party for purposes
of the award of attorney's fees.
The facts of this case were undisputed at trial,
and in fact, were undisputed at the time
of the filing of the complaint.
The plaintiff was terminated from the City of Methuen
on March 7th, 2013.
At the time of her termination, she was incarcerated,
was not provided and did not earn a regular paycheck.
The City mailed the accrued vacation pay three weeks late.
Once the plaintiff received the vacation pay,
there were no other wages that were earned.
For purposes of filing the complaint
over a year later, there were no lost wages.
The plaintiff appealed her termination through Civil Service
and then appeal the Civil Services
decision upholding the termination to the Superior Court.
While a motion for judgment on the pleadings
was pending in the Superior Court,
plaintiff's counsel wrote a letter to school council
saying that the City had violated the Wage Act
because they paid plaintiff's wages late,
the accrued vacation time.
School counsel then sent a check on behalf of the school
for the lost interest from the period of termination
to the period that those vacation wages were paid, trebled.
All of that was paid, it is undisputed,
prior to the filing of a complaint.
The amounts at trial here were not disputed either,
even though there were no damages left to be awarded,
plaintiff filed a complaint.
In the complaint, plaintiff requested treble the wages,
but also styled the request as a Class Certification,
there's one for Class Certification.
The discovery that was conducted in this case
was all on the issue of Class Certification,
how the City of Methuen and its school department
paid its employees when they left employment,
either through termination or resignation-
-: Counsel, you paid the, or your client paid,
the interests at treble,
from what period to what period?
The date of termination to three weeks later,
is that the interest calculation?
-: Correct, from the date of termination
until she received it, the lost use of the money.
-: Why isn't the interest
from the date of termination to the date you paid it?
-: Because the lost use of money is the wages themselves.
So once she had her wages, she had all that she was due
from the school department.
And so the measure-
-: But you held whatever amount, I mean,
it may be diminimous, the interests until you...
She would have been earning on that interest.
Do you see what I'm saying?
So why isn't her actual loss from the date of termination
to the date you paid the interest?
-: Because the measure of damages typically is,
and there's nothing in the Wage Act that speaks to that,
is that it's the lost use of the underlying money,
not the calculation of the interest,
except when there's a judgment and there's no judgment here.
So she didn't have that money in hand for three weeks.
It's the interest on that amount.
I understand what you're saying,
why isn't it the interest from the date of payment
to the date of the filing of the complaint.
But there's nothing in the statute
that provides for that and that would be
really diminimous amounts of money on $185.
-: But if we're to be fair,
that's the money that she was out,
that is, even if it's diminimous after you pay the wages
three weeks later, she's still out whatever interests
she could have earned on the interest, right?
-: You're correct. When you say that, yes,
but that's not argued and that wasn't pled anywhere.
-: Okay and is it your position that she was due?
Why did you pay the interest times three?
-: School council did that based on the Case law
that was out there at the time.
-: Is that still your position though,
that she would be entitled to interest times three?
-: No, it would be a single interest,
because the statute, as it reads on the second paragraph,
talks about trebling if you're a prevailing party
in the litigation, and that dovetails to my other argument,
that she's not a prevailing party
because the award of damages and,
there was no dispute of fact at the time,
we conceded this, was 185 and that's all she got
from having filed this complaint.
So again, on the first issue that we're here to discuss,
it is the City of Methuen's position,
and employer's position, that when the wage is paid
prior to a complaint being filed and the employer,
knowing of the complaint,
because what the statute wants to avoid
is an employer who just pays the wages, right?
When they learned that a complaint is filed
to bring that as a defense.
-: Well, the Statue want you to pay the wages,
right when the person leaves so that they're not destitute.
That's the purpose of the statute.
So a lot of people live paycheck to paycheck,
and they've just been fired,
so they want them to have the money.
I mean, this is a pretty pro-employee statute.
It's very, very, very protective, right?
-: It is a very important pro-employee statute,
particularly the trebling and the award of interests,
the award of the attorney's fees.
However, the statute also doesn't want to prevent
an employer, who learns of the mistake,
and mistakes do happen all the time in payroll,
from one, not providing those wages,
thinking that they're going to have to treble them
and see whether an employee files a complaint.
-: It just seems like if you're only trebling the interest,
if you're only providing interest in trebling it,
it's like you're hitting with a tiny little hammer.
There's never going to be any money, really, at stake.
It's like almost no incentive to do anything, is it?
-: Well, there is an incentive and most employers act
in good faith, certainly the City of Methuen.
-: I'm not saying most important employers don't,
but the statute's directed at those who aren't paying
and it's providing this interest, remedy is a very,
what are you got heavy hitters and light hitters.
It's a pretty light hit, right?
I'm not saying it's not correct,
but it's like a nothing hit.
-: Two responses to that.
First, the statute does provide is the defense,
the payment of the wages in the first paragraph.
But two, from the employer's perspective, for instance,
and this is hypothetical,
let's say there's a glitch in the direct deposit
for a day or two, and the employees are paid late.
Does that mean then that the employer
has to treble everybody's wages
because there was a disconnect between a computer system?
So here, certainly, the plaintiff received her money
and didn't think anything of it until a year later
when she's appealing the termination
and her attorney brings that forward to school council,
based on the facts here.
So one, that's our position and that's really, well,
I know all the case law that I have found
from the lower courts, have held that.
The Wage Act was amended in 2008.
The case that decided this initially,
from Judge Gans was already out there in 2003.
So had the legislature wanted to change, to make clear
that no matter what an employee receives treble-
-: I'm actually, we do we assume the legislature knows
what the Superior Court judges are doing?
I know they're supposed to know what we're doing,
which is also probably a fiction,
but they certainly don't know what's going on
in the Superior Court every day, do they?
-: Well, I would hope that those who lobbied the legislator
for the change would have brought that forward
and had said, there are these decisions that are out there.
And if you're on the employee side,
said "that's not fair to the employee,
can you make clear that regardless
of when a complaint is filed, there are treble wages?"
But that didn't happen, and the statute does provide,
as a defense, if you pay the wages prior
to the complaint being filed.
-: I that there some issue about
whether that's only directed at an AG complaint,
as opposed to an individual complaint. Is that right?
-: Yes, that was raised on plaintiff's briefing.
However, the statute, read as a whole,
employees must go to the AG first.
It's not a situation where they can skip over that piece.
That piece provides it as a defense.
And when you file a complaint, any complaint in court,
your damages are at the time you filed the complaint.
At the time, there are no lost wages
because you have already been paid.
So you wouldn't file a complaint
having already been paid for lost wages
That damage has already been paid.
There'd be no reason for an employee to file.
-: So I think, if I have the right case,
maybe it's Jobin case, when then Associated Justices
the Superior Court can throw that,
he was concerned that employers
have an incentive to pay the wages,
as soon as they become aware of the situation
and that holding the other way
would be inconsistent with that.
But the other side of that is
that if you haven't paid the wages,
then you violated the Wage Act, and Justice Kafker saying,
okay, you violated the Wage Act, and he's saying,
even though you violated the Wage Act,
you get a little hammer and $185.
-: Right, so there's no- -: So-
Debra: Sorry.
-: So I guess the issue is,
is that protective of enough of employees when,
if you make a late payment, you've violating the Wage Act,
but regardless of how quickly the suits file,
you're limited to your damages
if you're paid before the suit.
-: Yes, and that's how the statute is set up.
So Judge Gaines did find, obviously,
that you're limited to the interests
but there's also, for those employers who repeatedly do it,
who were so unscrupulous, there is this filing with the AG
and the AG has the discretion to prosecute the employer.
It's not as if you're going to get,
or maybe the AG chooses not to,
but if the employer is one who consistently is violating
the Wage Act, waiting until a complaint is filed
or just pays right before the complaint is filed.
And employees file with the AG, as they're required to,
before the AG can take action to prosecute.
-: There is a present value of money argument, though,
which is, in this particular instance,
I got the $185 interest, but the situation could be,
I got the 185 interests, but for three weeks,
I didn't have enough money to buy milk.
-: It could be,
but the statute is written as such
as you still don't get the treble wages.
The statute, if you read it as a whole,
you don't get treble, you're just limited to your interest.
Justice Kafker: The word interest doesn't appear
in the statute anywhere though, right?
Debra: It does not. It does not.
-: That's just a judicial embellishment
to the statute, right?
-: It is your Honor, and typically the lost use of the money,
presumably, is what the Justice is thinking
when they'd consistently- -: Can you talk about
what you think of $185 turning into
$74,000 of attorney's fees.
-: Yes, so it's obviously the defendant's position
that plaintiff do not prevail.
Under any tests, but certainly under the Catalyst test,
did not prevail at trial.
The filing and the complaint did not give the plaintiff
anything that the plaintiff didn't otherwise have
prior to filing in the complaint.
Again, this was filed as a Class Action.
The motion to certify the Class was denied.
And I don't believe that was,
well, I know it wasn't appealed,
and the only damage awarded at trial was 185,
which was the interest that had been paid
prior to the complaint ever being filed.
So certainly the filing of the complaint
wasn't a factor in the City's decision to pay the interest,
already had paid the wages.
And then the attorney's fees are awarded only if a plaintiff
prevails at trial, even under the statute,
in reading the paragraph, it talks about an employee,
so aggrieved who prevails.
So you have to prevail before there's any award
of attorney's fees under the statute.
-: If he prevails, he gets $185, he gets maybe,
I guess you've given him the interest too, but I don't know.
It just, it seems like we don't have any sense from,
do we have a set from this record,
what the $74,000 was spent on?
Was it spent on the Class Action?
Was it spent on the Civil Service case?
Or is it only spent on this wage issue?
Because the plaintiff wins something on the wage issue,
but it looks like loses on everything else.
And I'm just wondering whether the Judge sorted through
the different legal issues and who won and who lost on them.
-: The Judge did not your Honor, so what occurred,
it's still, it's our position that they didn't prevail.
So they get nothing, they had the 185,
but then they submitted the attorney's fees,
and I believe that is in the record, we objected.
And the Judge didn't go through point-by-point,
entry-by-entry as to why it was relevant
to the Wage case versus the Class Certification
versus Civil Service, et cetera.
We argued that it wasn't related,
but the Judge didn't make a decision on each specific point.
-: Well, even if you lose,
we should remand to have have the Judge do that, right?
-: Yes, if you determined
that there should be attorney's fees.
Yes. It should be remanded for that.
-: Counsel, can I just ask about that
because I read the record a little bit differently.
Judge Lou might've said, in summary fashion,
that it was all appropriate, but that encompasses
that he went through all of the entries of both attorneys
and came to the conclusion that it were appropriate.
So, perhaps he didn't go seriate them the way you did.
But he certainly looked at all of the records
and made a determination that they were fair and reasonable
for the time investment.
-: If the judge had actually gone point-by-point,
it's the defendant's position he would have seen
that it's not related to the award of 185
because the facts were undisputed all along.
At the time the complaint was filed,
the facts were undisputed,
we could have filed a motion right then
for judgment on the pleadings
or however the Court had wanted to do that,
but for this issue of Class Certification.
Thank you, your honors.
Judge: Thank you so much.
Okay, attorney Augeri?
-: Yes. Can you hear me?
Judge: Yes.
-: Thank you, may it please the Court, I am Tony Augeri,
I am representing the plaintiff appellee, cross appellant
Beth Reuter in this matter.
We do not have anything further to add
on the stipulated facts.
Although, I will add, work a little backwards
on this attorney's fee piece.
Judge Lou considered extensive affidavits
that were broken down through the lodestar method
and actually further broken down,
identifying what time was spent
on Class Action versus non-Class Action.
So there was extensive briefing on this issue
that Judge Lou turned to.
But, if I may go back to the primary basis.
-: When we look through the record,
we're going to find $74,000, or thereabouts,
devoted to the Wage Act claim you won.
As opposed to the Civil Service appeal,
as opposed to the Class Certification, which you lost,
we're going to be able to do that?
-: Yes, there's nothing in the Civil Service.
The Class Action time is outlined,
but, as is our argument, we believe Judge,
the Trial Court correctly ruled
that there was a Wage Act violation,
but incorrectly ruled the measure of damages.
Miss Reuter's position is that the Wage Act terms are clear.
And so is the binding precedent of this Court
and the strong persuasive authority of the recent
First Circuit Court of Appeals.
A violation of the Wage Act occurs
when an employee is terminated
and is not paid all wages on the day of discharge.
It is unquestionable-
-: Can I give you a hypothetical?
Can I give you a hypothetical?
Tony: Sure.
-: We've got this famous criminal case
where a software employee shoots up the office.
If they don't pay that person's vacation time that day,
is that a Wage Act violation?
Or is there some play built into the system?
Because, I mean, I'm trying to understand
from an HR perspective, how you do this.
Because sometimes people get terminated
by stuff they do that day, it's so egregious
and no one's calculated any of this stuff.
-: First, I would say, I happen to be living in Wakefield,
if you're talking about the incident
that I believe you're talking about Justice.
In the first instance, that would be potentially deemed
a "I quit" provision, which does not apply here.
And they would have until the next regular payday
to make any such payment, but that doesn't apply here.
And, to the parade of horribles,
I would point to that this Court's own finding in Dixon.
Chief Justice Ireland, at the time,
dropped in footnote seven of that opinion saying,
if there's any unjust, the windfall or unfairness
falls squarely in favor of an employee,
because as you noted before,
this is a termination provision.
This means that they are not getting another paycheck.
The City to prevail, under the clear and unambiguous terms
of the Wage Act that says they have to be paid
on the day of discharge.
To say that we're going to import statutory interest,
to say that we're going to say
"well, if they don't get to the court
before they're eventually paid,
they don't get afforded chapter one, section 150 damages"
is a complete burden shift
that is just not within the statute.
And I would point to, as the City did,
and as Amicus have pointed to,
this whole corollary argument about
the defendant shall not set up a defense of payments
after the bringing of the complaint.
You correctly noted that that's in the first paragraph
of section 150, dealing with the Attorney General,
but even more important
is the sentence immediate before that,
which says "at the trial of a complaint,
no defense for failure to pay as required shall be valid.
And in the interim, there are five enumerated exceptions,"
none of which apply here.
There's attachment of wages by trustee process,
valid assignment, a set off,
which coincidentally Chief Justice Ireland
talked about in footnote eight of the Dixon opinion,
saying if there's a tardy payment of wages,
a defendant would not be foreclosed
from claiming a set off against what is owed
and Miss Reuter's argument is that what is owed
are the wages due one the day of discharge
that are not paid, just like Dixon.
They are definitely determinable,
they're stipulated to an uncontroverted.
$8,952.15 of vacation time was owed on March 7th
and it wasn't paid on March 7th.
This isn't a glitch.
This isn't Dobin, who received tendered payment that day,
but they were post-dated checks.
This isn't Claremont, which was a glitch
in the direct payroll payment that lasted a day.
This was no payment for three weeks.
It clear, this Court has held in,
in Somers vs. Converged Access.
This statute is held strictly liable against employers,
regardless of intent.
We've heard from Amicus and from the City
about the parade of horrible.
"Oh, if it's a software glitch,"
one of the Amicus said, "oh, well,
hey, delays are going to happen. It's inevitable."
Well, that's not an employee's problem.
And it's certainly, there's no exception under this statute
that allows for that eventuality.
And that is why we believe strongly
that this is a clear violation of the Wage Act.
And the Wage Act itself tells us what the damages are.
It's the wages, this isn't the
"interest in the delay of payment act,"
it's the Wage Act. It's the wages.
And if you're not going to find that,
then it defeats the entire purpose.
And we would argue,
goes into violating Statutory Construction,
that this Commonwealth has long-held.
If it's clear and unambiguous, we don't read in language.
We're not going to read-in interest.
The City just conceded the word interest
is nowhere in this statute.
Amicus for the City admitted that.
We're going to import the statutory interest statute.
There's no reference to the statutory interest.
The delay in payment, there's nothing that is in this Act.
It says, shall be paid on the day of discharge.
And if there's no defense for failure to pay as required.
And then they go on and say, "and in addition,
the defendant can't say that set up a defense
that the payment of wages
after the complaint is filed is valid."
So the statute provides all of the answer
to these questions.
There it, and yes in your extreme examples,
it could fall on a defendant on winning,
but on the balance between protecting the employees
of the Commonwealth and the employer defendants, this Court,
and the statute is clear that it falls
in favor of employees.
Miss Reuter also argues that she is the prevailing party.
In addition to that,
Judge Lou got missed awarding substitute damages,
as is expressly allowed,
including triple damages as liquidated damages.
Miss Reuter argues it's the $8,952.15.
That's what needs to be tripled as liquidated damages.
She further argues that she's entitled
to her appellate attorney's fees,
under Fermin vs. Sturgis Dry Cleaners.
That has to be affirmatively requested.
In addition to doing it orally,
it is also requested in our briefs.
And if so allowed, we would ask for additional time
under the Favored Decision to make those submissions.
The Judge Saylor in the First Circuit Court of Appeals,
who's colorful legal writer put it best
when examining this provision of the statute that applies.
That an employee terminated from an employment
shall be paid on the day of discharge.
You know, it means what it says, and it says what it means.
And he went on to say that even a payment a day late
is a cognizable injury, recoverable under the Act.
It's the same.
Literally, you could interchange on page 452 and 453
of the Dixon opinion and supersede it,
put in Miss Reuter, as opposed to Mr. Dixon
and change the $13,000, the definitive amount in Dixon,
and put in the $8,952.15 that are at issue here.
And it literally just fits right in.
So for those reasons, we believe that Judge Lou
correctly awarded attorney's fees and costs,
incorrectly, as a matter of law,
failed to award the substantive damages,
plus those triple damages as expressed in section 150
of the Wage Act.
There is no valid defense.
And it says so in the second sentence of section 150.
So if there are no further questions from the Court,
we would rest and rely on submissions. Thank you very much.
Judge: Thank you, counsel.
Clerk: All rise.