Source: http://www.nelfonline.org/docket/archives/10-2009
Timestamp: 2019-04-19 15:15:04+00:00

Document:
In this case District Judge Wolf of the U.S. District Court for the District of Massachusetts entertained a summary judgment motion seeking dismissal of this whistleblower action, which alleges that CIGNA violated the federal False Claims Act, 31 U.S.C. §§ 3729 – 33, (“FCA”) by requiring claimants under its long-term disability (“LTD”) policies to file claims for Social Security Disability Insurance (“SSDI”) even though CIGNA knew or should have known that many of those claimants were ineligible for SSDI benefits.
NELF submitted an amicus brief in the case in support of CIGNA’s summary judgment motion, seeking recognition and application of a government knowledge defense to qui tam claims. It was undisputed that requiring individuals seeking benefits under private LTD policies to apply to the Social Security Administration (“SSA”) for SSDI benefits is a longstanding, industry-wide practice. In fact, many public providers of disability benefits, including the federal government and numerous state agencies, have for decades also required their claimants to apply for SSDI benefits. In light of these and other undisputed facts, NELF argued that Barrett cannot prove that CIGNA was acting with the requisite scienter in causing the alleged false claims to be filed because neither CIGNA nor the SSA treated those claims as representations of eligibility. The claims were instead intended to be, and were in fact, treated by the SSA as requests for official determinations of eligibility. Given the SSA’s knowledge of and acquiescence in this widespread practice, NELF argued, CIGNA should not be found to have acted with the requisite fraudulent intent and Barrett could not prove that the alleged false claims of eligibility were material to SSA’s decision-making. In addition, NELF argued that recognition of an FCA claim in the circumstances presented here would undermine two aspects of the rule of law essential for a healthy economy – namely, certainty and predictability. Longstanding and transparent, industry-wide business conduct that is both accepted and followed by the government should not be susceptible to after-the-fact characterization as fraudulent behavior.
Judge Wolf, ruling from the bench at oral argument, acknowledged the possible viability of a government knowledge defense to a qui tam whistleblower action but concluded that there were disputed questions of fact here about the extent of the SSA’s knowledge regarding the disputed practice that precluded the entry of summary judgment.
This case raised, on a question certified by the federal court to the SJC, the issue of the standard for the certification in class actions brought in connection with employment actions under G. L. c. 149, § 150. The federal case, which had generated a fair amount of press coverage, was filed by American Airlines skycaps who allege that, under the Massachusetts tips statute, a fee the airline charges for curbside baggage services constitutes a tip that must be paid over to them. U.S. District Court Judge William G. Young certified a question of statutory construction to the Massachusetts high court on the issue and the plaintiffs tried to use the occasion to seek a determination from the SJC that G. L. c. 149, § 150, which permits class actions to be brought on behalf of “similarly situated” plaintiffs based on violations of any of nine employment statutes, creates an exemption from the class action requirements set out in Rule 23 of the federal and state Rules of Civil Procedure.
NELF and the Associated Industries of Massachusetts argued in an amicus brief filed in support of American Airlines that since Judge Young had already refused to certify a class, the plaintiffs were using the certified question procedure as a way to obtain an impermissible review in state court of a federal court order. NELF argued that the SJC should therefore not respond at all to the plaintiffs’ request for an opinion on the issue of class action requirements under G. L. c. 149, § 150. NELF also argued the SJC should decline the request because, unlike a properly certified question, any answer that SJC might give to this question would not determine any issue in the federal court, where Judge Young had firmly declared himself bound by federal law to apply federal Rule 23 standards, regardless of the public policy of the Commonwealth. In the alternative, NELF argued that if the Court nonetheless addressed the plaintiffs’ question, it should reject the contention that § 150 relaxes the requirements for maintaining class actions. NELF argued by analogy that SJC precedent requires the application of Rule 23(a) standards to putative class actions under the state Consumer Protection Act, G. L. c. 93A, § 9(2), which employs identical “similarly situated” language. NELF further argued that the requirement of numerosity is fundamental to the very notion of a class action, which is meant to provide a substitute procedure when joinder is impracticable, and that application of the other Rule 23(a) requirements ensures the economical use of judicial resources and protects the due process rights of class members who are not named plaintiffs.
In its decision, the SJC followed the first course of action urged by NELF and declined to consider the class certification issue because the question was not properly before it.
In this case the Massachusetts Attorney General (“AG”) claimed that EDS violated the Massachusetts Payment of Wages Act, G. L. c. 149, § 148 (“Act”) when it refused to pay a terminated employee for accrued but unused vacation time, despite the fact that EDS’s vacation policy expressly stated that a departing employee would not be entitled to payment for outstanding accrued vacation time. While, by its terms, the Act does not require employers to provide paid vacations for their employees, it does require that a terminated employee shall be paid all wages due on the day of discharge, and it defines wages as “includ[ing] any holiday or vacation payments due an employee under an oral or written agreement . . . .” (Emphasis added.) The Act also provides that “[n]o person shall by a special contract with an employee or by any other means exempt himself from this section . . . .” The AG argued that, once an employer chooses to provide for paid vacation time, this payment constitutes “wages” under the Act and the employer therefore must pay any departing employee for any earned but unused vacation time. According to the AG, EDS’s policy denying payment to a terminated employee for accrued but unused vacation time violated the Act and constituted a “special contract” by which the employer attempted to exempt itself from the payment of wages.
The SJC took the case on direct appellate review and NELF, together with co-amici Associated Industries of Massachusetts and the Retailers Association of Massachusetts, filed an amicus brief in support of EDS. NELF argued that the AG’s argument was contradicted by the Act’s express language, which only requires a payment for unused vacation time when such payment is provided for “under an oral or written agreement.” G. L. c. 149, § 148. Based on this language, NELF argued that where, as in this case, an employer’s vacation policy did not provide for payment for unused vacation time, the Act was not violated and the former employee had no claim for unpaid wages under the Act. NELF also expressed concern with both the economic impact of the AG’s interpretation on employers seeking to control the costs of their vacation policies and the possibility that the AG’s view might in fact cause employers to curtail or even eliminate paid vacations.
Disagreeing with NELF, the SJC held that the Act entitles an involuntarily terminated employee to payment for earned but unused vacation time, notwithstanding an employer’s express policy to the contrary. The Court deferred to the AG’s statutory authority to interpret the Wage Act (here the AG's 1999 advisory interpreting "vacation payments"), while acknowledging that “[t]he Attorney General's interpretation is not the only meaning that could be attached to the [statutory] phrase ‘vacation payments due ... under an [employment] agreement.’” The Court expressly preserved for a future occasion the issue whether an employee who voluntarily quits his or her job would also be entitled to payment for unused vacation time irrespective of the employer’s vacation policy.
This case raised yet again the question of whether a claim could go forward under the Massachusetts Consumer Protection Act, G. L. c. 93A, when the plaintiff had suffered no real injury. Here the plaintiff complained that when he asked a licensed ticket reseller the prices for certain Red Sox tickets, the prices quoted were substantially higher than the tickets’ face values. The plaintiff, however, never purchased any tickets at the higher prices. Nonetheless, he brought claims under the Massachusetts anti-scalping statute, G.L. c. 140, § 185D, and c. 93A. NELF and co-amicus Associated Industries of Massachusetts argued that, under Hershenow v. Enterprise Rent-A-Car Co., 445 Mass. 790 (2006), the plaintiff had no claim under c. 93A because, having not purchased any tickets at the higher prices, he had suffered no actionable injury.
Warfield v. Beth Israel Deaconess Medical Center, Inc.
The issue addressed by NELF in this interlocutory appeal under the Massachusetts Arbitration Act, G. L. c. 251, § 18(a)(1), was whether an employee who enters into an agreement with her corporate employer to arbitrate all disputes “arising out of or in connection with this Agreement or its negotiations” has agreed also to arbitrate these same claims against fellow employees, even though those employees were not specifically named in or were signatories of the arbitration agreement.
NELF and co-amicus Associated Industries of Massachusetts argued in support of the defendants, that an employee should not be able evade her commitment to arbitrate employment claims by suing in court agents of the corporation who were not specifically named in the agreement. NELF argued that the proper interpretation of the arbitration agreement would require arbitration of the type of claim identified in the agreement, no matter who in the corporate structure was allegedly responsible for the conduct at issue.
Despite extensive briefing by all parties on the issue that NELF addressed, the SJC ultimately did not reach it. Rather, in a holding that will effect arbitration provisions in employment agreements throughout Massachusetts, the Court invalidated the entire arbitration provision insofar as it purported to cover discrimination claims. Noting that the plaintiff’s complaint contained employment discrimination claims under Mass. G.L. c. 151B, the Court ruled that such claims may not be arbitrated pursuant to a pre-dispute arbitration agreement unless the agreement expressly, clearly and unmistakably indicates the employee’s intention to limit or waive her rights or remedies under c. 151B. Thus, the fact that the agreement at issue was fairly read to require arbitration of “all disputes” arising out of the plaintiff’s employment was not good enough to encompass the plaintiff’s claims under c. 151B, even though, but for her employment, those claims would not exist. The SJC therefore ruled that, despite her agreement to arbitrate, the plaintiff’s claims had to be adjudicated in court.
Feeney v. Dell Computer Corp.
The principal legal issue in this putative consumer class action was whether Massachusetts would enforce waivers of class action arbitration included in the service contracts that the plaintiffs had purchased, where the waivers were unquestionably enforceable under the law applicable to the contracts (in this case, Texas law). (The plaintiffs alleged that, in violation of c. 93A, they had been improperly charged Massachusetts sales tax on the purchase of those contracts.) The arbitral panel that initially heard the matter enforced the class action waivers and found for Dell on the plaintiffs’ Chapter 93A claims. The Superior Court affirmed the arbitrators’ decision; on appeal, the Massachusetts Supreme Judicial Court granted direct appellate review.
NELF, joined by co-amicus Associated Industries of Massachusetts, submitted an amicus brief in support of Dell, arguing that, under basic contract law principles, the waivers could only be declared invalid if enforcing them would offend a fundamental Massachusetts public policy. NELF argued that the waivers did not offend a fundamental policy in Massachusetts especially where, as here, the contracts expressly preserved the consumers’ statutory right to recover reasonable attorneys’ fees. NELF also argued that, whether or not the waivers should be enforced, the plaintiffs had failed to state a claim because their complaint had to do with the collection of sales tax, which is not covered by Chapter 93A.
In a decision likely to have a wide impact with respect to consumer sales, the SJC disagreed with NELF on the waiver issue, holding that Massachusetts does have a fundamental public policy in favor of consumer class actions under Chapter 93A and, as a result, waivers of class arbitration in consumer cases are unenforceable in Massachusetts. Nevertheless, despite invalidating the waivers, the SJC agreed with NELF that the plaintiffs had not stated a consumer protection claim. Since plaintiffs complain of Dell’s collection of sales tax, the SJC, based on its precedent that “[w]here a party’s actions are motivated by a ‘legislative mandate, not business or personal reasons’ Chapter 93A does not apply,” remanded the case to the trial court for dismissal without prejudice, providing an opportunity to the plaintiffs to allege, if they could, that there was a “profit-seeking” motive behind Dell’s collection of the tax. The Court noted that the record is currently devoid of any such allegation or fact.

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