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June 2015 Litigation Report - Recent Decisions

6/4/2015

 

Meshna v. Scrivanos 

6/3/2015

 
Arguing that the Massachusetts Wage Act allows a business to maintain a no-tipping policy

At issue in this case, which was before the Massachusetts Supreme Judicial Court (“SJC”), was whether the tips provision of the Massachusetts Wage Act, G. L. c. 149, § 152A, allows a business establishment to maintain a no-tipping policy, under which patrons are requested not to tip employees, and employees are, in turn, required not to accept any such tips. The plaintiffs were employees of various Dunkin’ Donuts franchises owned and operated by the defendants Constantine Scrivanos and the Scrivano Group (collectively “Scrivanos”). The plaintiffs claimed, on behalf of themselves and all other similarly situated employees, that Scrivanos violated their rights under the Wage Act by preventing them from accepting tips offered to them by customers. The Superior Court (Fabricant, J.) ruled that a no-tipping policy is permitted under the statute, so long as the policy is “clearly and conspicuously announced” to provide notice to patrons. The SJC took the case on direct appellate review and requested amicus briefing on this issue.

NELF argued, in support of the defendants, that the Wage Act does not prohibit, or address in any other way, a no-tipping policy. While NELF is not opposed to the practice of tipping, nevertheless NELF does not believe that the statute requires a business to permit tipping on its premises. Nowhere does the statute provide that a business must permit its patrons to tip its employees. Instead, the Act addresses only the consequences that result when a business does permit tipping—i.e., such a business cannot confiscate tips from its employees. And, since the statute does not require a business to permit tipping, its silence on the issue should be interpreted as leaving undisturbed “the traditional broad authority of owners and proprietors of business establishments to adopt reasonable rules regulating the conduct of patrons or tenants.” Butler v. Adoption Media, LLC, 486 F. Supp.2d 1022, 1030 (N.D. Cal. 2007) (citation and internal quotation marks omitted). After all, “[a] statute is not to be interpreted as effecting a material change in or a repeal of the common law unless the intent to do so is clearly expressed.” Reading Co-Op. Bank v. Suffolk Constr. Co., 464 Mass. 543, 549 (2013) (citation and internal punctuation marks omitted) (emphasis added). Therefore, the Act, lacking any clearly expressed intent to the contrary, should be interpreted as preserving the bedrock common law principle that “[t]he status of an invitee is not absolute but is limited by the scope of the landowner’s invitation.” 62 Am. Jur. 2d Premises Liability § 100.”). In short, the statute allows each business to exercise its own judgment and decide for itself whether tipping is a good idea for its particular establishment. 

In its decision of April 10, 2015, the Court agreed with NELF and held that the tipping statute does not require an employer of wait staff to permit tipping. Instead, the statute only addresses the circumstances when the employer does permit tipping. “No language in [the tipping statute] prohibits an employer from imposing a no-tipping policy. The Tips Act addresses circumstances in which tipping is permitted and wait staff employees have been given tips, directly or indirectly; it prescribes what the employer is required to do with such tips.” Meshna v. Scrivanos, 471 Mass. 169 (2015). 

David F. Miller v. Amica Mutual Insurance Co.

6/3/2015

 
Arguing the Rhode Island Supreme Court to Affirm the Individuals and Businesses Who Assist Law Enforcement are Shielded from Civil Liability for Those Actions

The background to this case is the history of acrimonious relations between car insurers and the auto body repair industry in Rhode Island. Simply put, each side has long believed that it is being cheated by the other.

David Miller, the plaintiff in this case, is the former head of the trade association of repair shops and has long played a prominent role in the ongoing dispute between the shops and insurers like Amica. In 2001 he was the target of two sting operations. Apparently allegations had been made by several sources that Miller inflated the costs of repairs; in other words, Miller was alleged to have committed insurance fraud. As part of the undercover investigation, Metropolitan Property and Casualty Insurance Co. provided the Rhode Island State Police with a vehicle that was taken into Miller’s shop for repairs. This sting operation led to Miller’s being charged with billing more than $1,100 in fraudulent repairs. In a second sting operation, Amica provided a damaged vehicle and a fake insurance policy, and Miller supposedly billed $1,050 in fraudulent repairs on that job. Miller was arrested and charged with insurance fraud and with attempting to obtain money under false pretenses. The charges were later dismissed because of evidentiary problems, but Miller was required to surrender his license to run his repair shop.

In this case, he claimed that Amica and Metropolitan vindictively abused legal process in order to get him arrested. The case went to a jury, which found against both insurers. The trial judge, however, finding a dearth of evidence against Amica, granted Amica’s motion for judgment notwithstanding the verdict (he, however, found ample evidence to justify the jury’s verdict against Metropolitan). Miller appealed. Miller’s argument urging reinstatement of the abuse of process verdict rested entirely upon an analysis of the sufficiency of the evidence presented at trial. He claims that the evidence is sufficient to support a jury-finding that Amica initiated the investigation against him, rather than Amica’s having merely assisted the police when called upon to do so.

On appeal, Amica argued that the evidence presented at trial was insufficient, as a matter of law, to support the verdict against it. It also responded that it merely did its civic duty in assisting police in an investigation that the insurer played no role in initiating.

NELF filed an amicus brief in support of Amica. While NELF was in no position to decide between conflicting views of the trial evidence, it laid out for the Court the ancient, widely-recognized Anglo-American public policy of protecting private individuals from civil liability when they have rendered assistance to law enforcement officials at the latter’s request. First, NELF reviewed the numerous Rhode Island statutes, including insurance law statutes, that codify this policy, some of which acknowledge the living common law background of the policy. Then NELF discussed the policy’s broader common law background as most memorably embodied in Justice Cardozo’s decision in Babington v. Yellow Taxi Corp., 250 N.Y. 14, 164 N.E. 726 (1928). NELF concluded by examining two federal cases that it suggests clarify the situation in which Amica finds itself in this case. In filing its brief, NELF hoped to spur the Court to use the occasion of this appeal to acknowledge, for the first time in Rhode Island decisional law, the vitality of the common law principle.

In its March 20, 2015 decision, Miller v. Metropolitan Property and Cas. Ins. Co., 111 A.3d 332 (R.I. 2015), the Court decided the appeal in Amica’s favor on the basis of a release Miller had given as part of the dismissal of the criminal case against him. Unfortunately, therefore, the Court did not reach the issue of common law immunity.

Christakis v. Jeanne D'Arc Credit Union

6/3/2015

 
Defending the Rights of a Secured Judgment Creditor Against an Asserted Discharge of the Debt in Chapter 7 Bankruptcy

This case was the subject of an amicus call by the SJC and presented what was essentially an issue of first impression in the Court, at least under modern bankruptcy law. The defendant credit union was a secured creditor that, in an earlier action, obtained a judgment against the present plaintiff and perfected a judicial lien on her real property to secure the judgment. It intended to sell the property in order to satisfy a judgment arising out her unpaid credit card debt. About a year after the credit union won its judgment and lien, the plaintiff filed for bankruptcy and her debts were discharged under Chapter 7. She then brought this action to “remove cloud on title” in order to forestall the sale of her property, arguing that the bankruptcy discharge voided the judgment on which the creditor’s pre-bankruptcy lien rested. Other than a glancing remark in a short, 1937 decision, the Court had not discussed, let alone decided, whether, in circumstances like these, a creditor retains a secured interest upon which it may foreclose.

Concerned by the failure of the parties and the trial judge to discuss controlling federal case law, NELF filed a brief in support of the credit union. In its brief, NELF identified Johnson v. Home State Bank, 501 U.S. 78 (1991), as providing the rule of decision in this case. NELF explained the reasoning of Johnson and cited numerous lower court decisions acknowledging the precedential status of Johnson. Briefly put, a discharge of debts only reaches debts for which the debtor’s personal assets in bankruptcy are liable; property interests (such as, here, liens interests) validly conveyed to another party before bankruptcy do not form part of the debtor’s later bankruptcy estate, and thus the debts secured by such interests remain unaffected by a discharge. NELF also rebutted Christakis’ attempts to exempt non-consentual liens, like the judgment lien in question here, from the rule of Johnson. NELF pointed out the Johnson itself relied on two cases involving judicial liens, noting further that Christakis conceded that she could not satisfy the sole statutory exception addressing judgment liens. Finally, NELF demonstrated that the few cases Christakis cited offer no support to her position for a variety of reasons; in particular, NELF observed that her strongest case actually rests on a serious misquotation of an earlier case on a crucial point of law.

In its May 6, 2015 decision, Christakis v. Jeanne D’Arc Credit Union, 471 Mass. 365, 2015 WL 2069689 (2015), the Court agreed with NELF and applied Johnson as the rule of decision in the case. Finding that the discharge did not reach the property interest transferred by the judgment lien, it rejected the plaintiff’s contention that the case turned on an issue of Massachusetts law, i.e., whether state courts should allow the credit union to execute on a judgment supposedly voided by the discharge. Interestingly, the Court went on to declare that other secured creditors, who had been defaulted in this case for failure to answer and were not part of the appeal, were entitled to judgment in their favor because Christakis’s complaint was legally insufficient as to them too for the reasons stated in the opinion.

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