Defending the Immunity from Suit, under the Workers Compensation Act, of an Insured Alternate Employer
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This case raised an important issue of first impression under Massachusetts workers compensation law. The plaintiff worked for a temporary staffing agency (his general employer) and was sent out on a job assignment to the defendant (his special, or alternate, employer). He was injured on the first day of the assignment, while performing a task under the direct control of the defendant on the latter’s premises. Later, after collecting workers compensation benefits, he sued the defendant on the theory that the company had not been his employer under workers compensation law and so did not enjoy an employer’s statutory immunity from suit. The trial judge granted the defendant summary judgment, and the plaintiff appealed. He argued that the defendant could not be regarded as his employer because the benefits he received were paid on the temp agency’s workers compensation policy.
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As NELF noted in its brief, filed with co-amicus Associated Industries of Massachusetts, the defendant was named as an additional insured on an “Alternate Employer Endorsement” attached to the temp agency’s policy. As NELF successfully argued several years ago in another legal context, the effect of being named as an additional insured on a policy is to create a direct relationship between the insurer and the additional insured for the latter’s own liabilities, without regard to which party paid the premium for the additional coverage or who was identified as the named insured on the policy. Of crucial importance in this connection is the fact that the workers compensation act specifically permits a special employer, like the defendant, to agree with the general employer that it, not the general employer, will be liable for workers compensation, provided that the special employer is insured. The “Alternate Employer Endorsement” reflects precisely such an agreement and provides precisely such insured status to the defendant. In fact, as NELF pointed out, this particular endorsement form has been approved by the Massachusetts Division of Insurance for use in such situations, a fact of which both parties in the case were unaware. 

NELF further showed that such endorsements are used nationally for this purpose, typically in the exact same standardized form found here (the form is promulgated by the National Council of Compensation Insurers). NELF called the Appeals Court’s attention to the use of the form in other states (New York, North Carolina, Texas, Delaware, Minnesota), where the form is officially approved and sometimes even prescribed for this use. Molina’s contentions that the use of the endorsement amounted to “an illusory promise” and a nefarious “artifice” were therefore without merit. In short, NELF concluded that State Garden was clearly the relevant insured employer for purposes of the work-related injury Molina suffered and that the company was therefore entitled to employer immunity from suit.

In its decision issued on September 3, 2015, the Massachusetts Appeals Court agreed with NELF that, under the endorsement, the plaintiff’s special employer was immune from suit under the Workers Compensation Act.

​On September 23, 2015, Molina applied for further appellate review by the Supreme Judicial Court. This application remains pending.

Opposing a Local Zoning Board’s Attempt to Block a Comprehensive Permit for Affordable Housing Based on a Misinterpretation of the Rules Governing Appeals to the Housing Appeals Committee

This case concerns a developer’s attempt to secure a comprehensive permit under c. 40B for a multi-unit dwelling in Scituate that would include affordable housing units. After protracted hearings, the local zoning board (“board”) denied a permit on the ground that a very small patch of the project site was defined as wetlands under the town’s regulations, and that local concerns therefore outweighed the regional need for affordable housing. The developer appealed to the Housing Appeals Committee (“HAC”), where the case was largely fought out over highly factual issues. The developer won the appeal and obtained its permit, but the board appealed the HAC’s decision to the Land Court, where the developer won again.

The board has now appealed to the Appeals Court and makes two legal arguments. Of these, NELF’s amicus brief concentrates on refuting the board’s view of what a developer must do to make out a prima facie case in an appeal to the HAC. The applicable regulation, 760 C.M.R. 56.07(2)(a)(2), states that an appellant establishes a prima facie case by proving “that its proposal complies [with] the federal or state statutes or regulations, or with generally recognized standards as to matters of health, safety, the environment, design, open space, or other matters of Local Concern.” The board contends that developers must prove compliance with restrictive local regulations as part of the prima facie case, not just with State and Federal law dealing with the same local concerns. NELF argues that, in making this argument, the board has misread the plain language of the regulation. Compliance with local regulations is not mentioned. In fact, compliance with restrictive local regulations is deliberately omitted from the developer’s prima facie case because the validity of such local concerns is precisely what is put into question by c. 40B as a matter of law. Because there is a history of towns using restrictive local rules as a means to keep affordable housing from being built within in their boundaries, the reasonableness of local rules and the validity of the local concerns they address are matters that must be established by a town as part of its case, before the developer can be required to accommodate the local rules.

The board’s approach would, in effect, present a great obstacle to developers seeking to construct housing that includes affordable units. In its brief, NELF focuses on construing the plain language of the regulation and explaining the public policy rationale for the regulation and why the board’s reading is in sharp conflict with the purposes of c. 40B. NELF expresses its view that the board’s reading, if affirmed, could have a disastrous effect on most developers’ ability to stay in the HAC and get a full review of a permit denial.

In a March 2014 decision, the Appeals Court agreed with NELF that the approach advocated by Scituate was inconsistent with the rationale of the comprehensive permit scheme and the role of the HAC in that scheme.

Successfully Arguing that Massachusetts Should Adopt a Balanced Approach to the Enforcement of Easements

In this case the plaintiff (Martin) owns a vacant lot that is only accessible via an easement (Way A) over property owned by the defendant (Simmons). Simmons’ property abuts and surrounds Martin’s property, and is burdened by Way A. (The technical terms are that, with respect to his easement, Martin is the dominant and Simmons is the servient property owner.) Simmons’ and Martin’s properties, and Martin’s easement, are all registered with the Massachusetts Land Court. In August, 2007, Martin brought an action against Simmons in the Land Court, alleging that Simmons had “interfered with his right of way by …placing encroachments in, parking on, and improperly placing fill within” Way A. Martin requested that Simmons be ordered to remove all such alleged encroachments from Way A. After an extensive hearing and the submission of much evidence, the Land Court denied Martin’s request for relief and entered judgment in Simmons’s favor, noting among other things that Martin himself had conceded that none of the alleged encroachments had ever had any adverse impact on his ability to use Way A.

Martin appealed to the Massachusetts Appeals Court, which reversed the Land Court’s decision with regard to Way A, primarily on the ground that Martin’s easement was registered with the Land Court, and therefore in the Appeals Court’s eyes was inviolable. Simmons then sought further appellate review from the Supreme Judicial Court, which granted Simmons application.

NELF filed an amicus brief in support of Simmons, in which NAIOP joined as co-amicus. In its brief, NELF called the Court’s attention to its own 2004 decision,  M.P.M. Builders, LLC v. Dwyer, 442 Mass. 87, in which the Court adopted §4.8(3) of the Restatement (Third) of Property (Servitudes), which states:

Unless expressly denied by the terms of an easement, as defined in § 1.2, the owner of the servient estate is entitled to make reasonable changes in the location or dimensions of an easement, at the servient owner's expense, to permit normal use or development of the servient estate, but only if the changes do not (a) significantly lessen the utility of the easement, (b) increase the burdens on the owner of the easement in its use and enjoyment, or (c) frustrate the purpose for which the easement was created.

442 Mass. at 91. While M.P.M. dealt with recorded (not registered) land, NELF argued that this difference in status has to do with the validity of title and therefore not with any issue relevant to the application of the Supreme Judicial Court’s adoption of the Restatement section in M.P.M. (As both Simmons and NELF pointed out, no party in this case is questioning Martin’s title to his easement over Simmons land.)

Rather, NELF argued, what is important is the principal, recognized by the Court in M.P.M., that an appropriate balance must be struck between the rights and interests of dominant and servient property owners. As the SJC stated in M.P.M., “an easement is created to serve a particular objective, not to grant the easement holder the power to veto other uses of the servient estate that do not interfere with that purpose.” M.P.M., 442 Mass. at 92.

NELF argued, in support of Simmons, that, under §4.8(3) of the Restatement and in light of the Land Court’s findings and Martin’s admission that Way A has not been unreasonably burdened and he has never been inconvenienced in any way by Simmons’s actions. In accordance with the policy behind § 4.8(3), the land of the servient owner should be permitted to attain its highest and best use when to do so does not adversely affect the dominant owner’s use of his easement. NELF urged the SJC to reject the Appeals Court’s distinction based on the registered nature of the easement.

In a victory for both Simmons and NELF, the SJC, on January 16, 2014, reversed the Appeals Court and affirmed the judgment of the Land Court. Agreeing with NELF, the SJC concluded that the fact that the land and easement in this case were registered with the Land Court made no difference to the analysis. The SJC expressly confirmed and expounded upon its adoption in M.P.M. of § 4.8(3) of the Restatement (Third) of Property (Servitudes) and agreed with the Land Court “that the width of the easement property may be reduced as the defendant has done here, since the plaintiff does not dispute that at all times he has been able to use the remaining unobstructed portion of the easement for the purpose of travel to and from his parcel.”

Opposing an Administrative Judicial Expansion of the Classes of Persons Protected from Handicap Discrimination Under Mass. G.L. c. 151B

The issue in this case was whether an able-bodied individual has standing under Mass. G.L. c. 151B, § 4(16) to sue on her own behalf for discrimination that she alleges took place because of her association with a handicapped person. 

The plaintiffs—a husband and wife—both asserted discrimination claims under the statute against their common employer, but it was undisputed that only the husband qualified as disabled (and that only temporarily). His wife’s discrimination claim rested on her assertion that she was terminated from her employment because of her husband’s disability.  Her claim was dismissed by the Superior Court and that decision was on appeal before the Massachusetts Appeals Court. The wife’s argument for standing was supported by decisions of the Massachusetts Commission Against Discrimination (“MCAD”) that purported to recognize so-called associational standing in this factual context. 

In its amicus brief in support of the employer, NELF argued that the MCAD’s decisions were clearly erroneous and that Appeals Court should not make the MCAD’s errant view of the statute part of the decisional law of the Commonwealth. As NELF demonstrated, the express language of G.L. c. 151B, § 4(16) and other sections of c. 151B permit only a handicapped person to have standing to bring a claim for handicap discrimination, unlike the corresponding federal law, which expressly recognizes the type of associational standing claimed in this case.   

NELF argued that because the decisions of the MCAD on this issue are contrary to the plain language of statute, they are entitled to no deference from the court.  NELF observed that, while it may be desirable for non-statutory reasons to recognize this form of associational standing, the Massachusetts Legislature has not seen fit to allow for it in the controlling statutes.  As a result, NELF contended, whether or not the class of persons protected under c. 151B should be expanded to include those associated with a disabled individual is a decision that must be left solely for the Legislature to make, not the MCAD or the courts.  

Although the Appeals Court’s decision upheld the trial court’s dismissal of the plaintiff’s claim, the result that NELF ultimately supported, the Appeals Court did not address the legal question of the class of permissible plaintiffs, finding instead that, as a matter of law, the facts of the case failed to show that the company had acted toward Brelin-Penney in a discriminatory manner.  The issue brief by NELF therefore remains unresolved.

Arguing Against an Improper Attempt to Increase a Business's Liability by an Overly-Expansive Definition of Interstate Travel

This case concerned the reach of federal law over intrastate commerce.  At issue is the claim by the plaintiffs Mr. and Mrs. Barton that the limousine ride they took from Sunderland, MA, to Logan (where they took a plane to Jamaica) was in interstate commerce.  An accident occurred during the trip, allegedly resulting in injuries to Mrs. Barton.  If it had been determined that the ride indeed was in interstate commerce, federal law governing passenger motor carriers would have applied, and the limousine company’s insurer—Arbella—could have been liable to pay any judgment the Barton’s win up to $1.5 million, a much higher limit than that which would apply under state law.

The Bartons argued that the limousine ride was in interstate commerce because (a) the limo had been used in interstate commerce routinely before they used it, (b) the limo was in any case available for interstate commerce; and (c) their limo ride was part of their trip to Jamaica.  (Apparently, they carried on with their trip despite Mrs. Barton’s alleged injuries.) Arbella, the party NELF intended to support, prevailed in the trial court.  However, in NELF’s view, the trial court’s decision, while correct in result, was erroneous in reasoning.  Because of the economic and regulatory importance of the case, NELF’s planned to file an amicus brief so that the correct reasoning could be presented to  the Appeals Court in order to ensure that the trial court’s decision would be upheld and sound precedent established.

In the brief that NELF drafted, it argued that federal law mandates, and therefore exclusively governs, the interstate-travel insurance endorsement under which the Bartons sought to recover.  The trip was not in interstate commerce because, according to unanimous federal case law, that determination is to be made based on the use of the vehicle as of the time of the accident.  NELF pointed out in its brief that trips to an airport, like the Bartons’, lack “integral” ties to interstate commerce and have been repeatedly found by state and federal courts to be entirely intrastate under the holding of United States v. Yellow Cab Co., 332 U.S. 218 (1947). 

Unfortunately, one week before NELF’s fully completed brief was due to be filed, we were informed by Arbella’s counsel that the case had settled.  Accordingly, NELF’s brief was not filed.

Opposing Expansion of Consumer Protection Liability to Violations of Statutes Unrelated to Consumer Protection

This was a class action alleging that Home Depot had violated the Massachusetts Consumer Protection Act, G.L. c. 93A (“chapter 93A") by charging the class member excess sales tax on certain purchases.  Plaintiffs based their Chapter 93A claim on the Massachusetts Attorney General regulation 940 C.M.R. §3.16(3) (“AG regulation”), promulgated pursuant to Chapter 93A, which provides that the violation of any Massachusetts statutes “meant for the protection of the public’s health, safety or welfare” and “intended to provide the consumers of this Commonwealth protection” constitute an unfair or deceptive practice giving rise to potential liability under Chapter 93A.  

In its amicus brief in support of Home Depot, NELF argued that, in this case, the AG regulation did not provide a basis for a Chapter 93A claim. As NELF explained, the stated purpose of Chapter 93A is to protect consumers in their commercial relationships with businesses. Thus, NELF argued, the AG regulation is limited, both by its express terms and by the scope of its enabling legislation, to violation of state statutes enacted for the protection of consumers.  The Massachusetts sales tax code, the purpose of which is to raise revenue for the state, does not regulate the commercial relationship between consumers and retailers but instead addresses the tax obligations of both to the Commonwealth. NELF further argued that applying the AG regulation to matters beyond the scope of Chapter 93A would upset the legislative balance between the interests of businesses and consumers.  In its October 29, 2009, decision, the Appeals Court agreed with NELF’s position and dismissed the Chapter 93A claim.  The Court relied in part on the SJC’s recent decision in Feeney v. Dell, 454 Mass. 192 (2009) to conclude that a claim alleging the wrongful collection of  a sales tax is not a consumer claim under c. 93A because it does not address the business defendant’s commercial or profit-seeking purposes. Instead, the claim concerns the business’s efforts to fulfill its statutory duty to collect taxes on behalf of the Commonwealth.  

Embracing NELF’s reasoning, the Appeals Court stated that the claim does not address the relationship between retailer and consumer (the sole focus of c. 93A) but instead reaches the relationship between the government and the consumer as taxpayer.  Not only is this relationship outside Chapter 93A’s scope but it also falls within the exclusive province of the state tax code, a comprehensive statutory scheme that occupies the field of sales tax claims and provides the exclusive remedy of a tax abatement from the Commonwealth.

Preserving the Business-to-Business Exemption under the Massachusetts Abandoned Property Act

This case arose out of an audit of Biogen initiated by the Massachusetts Treasurer in 2003 for the purpose of determining whether Biogen had complied with the reporting and property surrender requirements of the Massachusetts Abandoned Property Act, G. L. c. 200A, § 5, (“MAPA”).  At issue was  the scope of the so-called “business-to-business” exemption under the Act, which excludes from MAPA’s purview “any outstanding credit balances” between businesses arising in the ordinary course of business.  During the audit of Biogen in 2004, State Treasurer Cahill issued “emergency” regulations reversing regulations promulgated in 2001 that had applied the exemption to “credits either current or past that are or were owing to a vendor or commercial customer . . . .”  The new regulations redefined “credit balances” narrowly to include only “[o]utstanding balances that are recorded as current accounts receivable or accounts payable of a holder.” (emphasis added).  Applying the the new regulations, the Treasurer concluded that Biogen should have reported as abandoned property, and turned over to the Commonwealth, over $780,000 in uncashed accounts payable checks for the period 1984-2004.  Biogen appealed the Treasurer’s determination on the ground that the new regulations were invalid and Judge Allan van Gestel, sitting in the Business Litigation Session of the Massachusetts Superior Court, allowed Biogen’s motion for judgment on the pleadings, declining to apply Treasurer Cahill’s regulation retroactively to Biogen.  Judge van Gestel further noted that the 2001 regulations “best comport” with the apparent intent and purpose of the statutory exemption and rejected Treasurer Cahill’s contrary interpretation on the ground that it would “hobble the statute’s effectiveness.”  Treasurer Cahill appealed the Superior Court decision and the SJC took the case sua sponte for direct appellate review.  

NELF, joined by the Associated Industries of Massachusetts, filed an amicus brief in support of Biogen. In its brief NELF argued, inter alia, that the ordinary meaning and legislative history of the business-to-business exemption demonstrate that it was intended to apply generally to debts between businesses arising in the ordinary course of business and that Treasurer Cahill has erroneously used technical accounting definitions to restrict the exemption’s scope.  NELF’s brief further argued that Treasurer Cahill’s new regulatory definition impermissibly rendered the statutory exemption virtually meaningless.  Property is not deemed abandoned under the Act until the passage of three years, while “current liabilities” are those due for payment within the business’s operating cycle, which is generally one year,.  “Current” accounts payable are therefore not abandoned property and require no exemption.  Finally, NELF’s amicus brief explained that, to the extent Biogen’s financial records reflect undelivered, canceled checks, MAPA does not even apply.  Those canceled checks do not establish an obligation to pay on the part of Biogen.  

In affirming the trial court’s decision, the SJC chose not to deal with these challenges to Treasurer Cahill’s amended regulations, but affirmed simply based on its determination that the original 2001 regulations (under which Biogen would not be liable for uncashed accounts payable checks) were reasonable and that, under the circumstances, Treasurer Cahill’s amended regulations could not be applied retroactively.

 

Upholding Parties' Contract Rights

NELF filed an amicus brief in support of MASSPOWER in this case before the Massachusetts Appeals Court.  The case involved construction of the termination provision in a power supply contract, which permitted MMWEC to terminate the agreement only for a material breach that materially and adversely affected MMWEC.  As NELF demonstrated in its brief, similar language, setting forth dual requirements of materiality and adverse effect, is used in termination clauses and other provisions in many corporate transactional, real estate, and commercial agreements.  Judge Ralph D. Gants had issued a decision below, in the Superior Court’s Business Litigation Session, in which he effectively nullified the second requirement of the termination provision at issue -- that the material breach have an adverse effect on the terminating party --  by ruling that any material breach of a material contract term, by virtue of that breach alone, adversely affects the non-breaching party.   Judge Gants further suggested that it would be “irrational” to require demonstration of adverse effect beyond the loss of the contractual right inherent in the material breach.  

NELF argued in its brief that Judge Gants’s construction of the parties’ agreement was inconsistent with the plain language and obvious intent of such restrictive termination clauses and would introduce uncertainty into a great many contractual relationships based on agreements containing similar language.  NELF argued, moreover, that affirmance of Judge Gants’s decision could discourage the construction of major projects in the Commonwealth, including energy facilities, that depend on enforcement of contract obligations for payment of capital and financing costs and to provide returns on investments.  The Appeals Court agreed with NELF’s contract interpretation and, finding a genuine issue of fact as to whether there was any adverse effect from the alleged breach here, remanded the case for trial.  In a footnote in its decision the Court expressly acknowledged the assistance of NELF’s brief.

Supporting Parties' Right to Control the Scope of Commercial Relationships

The Massachusetts Appeals Court also agreed with NELF’s position in the case of Fronk v. Fowler, involving clarification of the business opportunity doctrine.  Under that doctrine, corporate executives, partners, and other fiduciaries must disclose business opportunities to the corporation or partnership rather than pursue them for their own benefit.  Here the parties’ limited partnership was devoted to ownership and management of a single piece of real estate and expressly permitted the general partners, who were real estate developers, to pursue other real estate opportunities on their own behalf. The appellant limited partners nonetheless argued that the general partners had to bring to the partnership an opportunity that arose to purchase another parcel in the same vicinity, a position that called into question the very ability of parties to maintain single-purpose or special-purpose entities.  

In its decision, the Appeals Court, relying in part on a number of the authorities cited in NELF’s amicus brief in support of the general partners, agreed with NELF that where parties have by agreement expressly limited the scope of a business enterprise, an opportunity beyond its scope cannot properly be considered a business opportunity triggering fiduciary disclosure obligations. The court further found that this partnership agreement expressly allowed the challenged actions by the general partners and that, in such circumstances, “ ‘the obligations of the parties are determined by reference to contract law, and not by the fiduciary principles that would otherwise govern.’ ”   The decision is of considerable importance, given the prevalence and role of limited-purpose entities in the real estate industry and the negative impact on commercial activity that could be expected if parties were unable to control the scope of their commercial relationships.

Opposing Consumer Protection Claims When the Consumer Suffers No Injury

In Kwaak v. Pfizer, Inc., the Massachusetts Appeals Court, agreeing with NELF and AIM, upheld the requirement of class-wide injury in consumer class actions.  The court held that consumers of Listerine mouthwash, which had been advertised to be “as effective as floss,” did not suffer similar injuries, as required for class certification under the Massachusetts Consumer Protection Act, G. L. c. 93A.  The court found that “the facts underlying the claims of the purported class are too diverse,” and on that basis reversed an order of the Superior Court granting class certification.  Distinguishing the case factually from others in which class certification has been upheld, the court determined that there was “insufficient information in the record to identify any such similarity of exposure, deception, and causation.”  With respect to the injury component in particular, the court explained: “[U]nclear is whether those exposed to the deceptive aspects of the advertising campaign purchased Listerine for reasons unrelated to the advertising, such as to freshen their breath or as an adjunct to flossing. … Whether a causal connection exists between a deceptive act and a loss is not just difficult to identify but appears to vary widely depending on the customer.”  In these circumstances, the court agreed with amici that there was no showing that the putative class consisted of consumers “similarly situated and similarly injured by a common deceptive act or practice,” as required for class certification under G. L. c. 93A.

Opposing the Extension of Employer Liability under the Massachusetts Maternity Leave Act Beyond the Act’s Eight-Week Maternity Leave Requirement

This case challenged a guideline of the Massachusetts Commission Against Discrimination (“MCAD”) concerning an employer’s liability under the Massachusetts Maternity Leave Act (“MMLA”), G. L. c. 149, § 105D.  The MMLA requires that employees be provided with eight weeks of unpaid maternity leave and reinstatement to their positions at the end of the eight weeks.  The MMLA expressly allows employers to agree to more generous benefits, such as a longer leave period.  An employer who violates the MMLA’s requirement of eight weeks’ leave and reinstatement is subject to extensive statutory remedies, including damages for emotional distress, punitive damages, and reasonable attorneys’ fees.  An MCAD guideline provides that, when an employer agrees to a longer leave period, the statutory remedies will apply in the event of breach of that agreement unless the employer gives advance written notice that full MMLA rights will not apply.   

The plaintiff in this case was terminated from her job after taking a maternity leave of 11 weeks.  The jury found that Global NAPs had violated an agreement that Stephens could take an 11-week leave and, following instructions based on the MCAD guideline, awarded Stephens statutory punitive and emotional distress damages.  In the appeal of this decision, NELF filed an amicus brief on behalf of itself and the Associated Industries of Massachusetts arguing that, by extending the MMLA’s liability provisions to the entire duration of an agreed-upon leave (unless an employer gives advance written notice that the MMLA will not apply), the MCAD guideline contravenes the unambiguous eight-week requirement of the MMLA, discourages the flexibility in private arrangements that the MMLA sought to encourage, and transforms a common law claim for breach of contract into an MMLA violation.   

In a decision rendered on November 8, 2007, the Massachusetts Appeals Court held that the appeal was untimely and, therefore, did not address NELF’s arguments.

The Massachusetts Appeals Court Agrees With NELF That A Business Cannot Be Liable For Tortious Interference Merely By Choosing Not To Contract With Another Business

At issue in this case was the decision by Sovereign Bank of New England (“Sovereign Bank”) not to renew a contract between its predecessor bank, Fleet Bank, and Berkshire Armored Car Services, Inc. (“Berkshire”) for cash processing services.  Berkshire sued Sovereign Bank for intentional interference with contractual relations, alleging that Sovereign Bank’s decision caused another of Berkshire’s large customers, Victory Supermarkets (“Victory”), to terminate its wholly separate contract with Berkshire to transport and process Victory’s cash deposits with Sovereign Bank.  Berkshire prevailed at a jury trial on this claim, even though the trial judge threw out its Mass. G.L. 93A claim, which was based on the same facts.  

The issue before the Appeals Court was whether Sovereign Bank could be held liable for tortiously interfering with Berkshire’s business relationship with Victory merely by making the business decision not to contract with Berkshire.  NELF filed an amicus brief in the appeal on behalf of itself, the Massachusetts Bankers Association, and Associated Industries of Massachusetts, supporting Sovereign Bank.  In its brief, NELF argued that, as a matter of law and sound public policy, a business should be able to choose freely to do business with whomever it wishes and should not have to fear potential liability for the incidental consequences that may arise from its legitimate business decisions.  NELF also argued that courts from many other jurisdictions have rejected claims of tortious interference when one business simply has decided not to do business with another, regardless of any adverse economic consequences. Finally, NELF argued that the two verdicts in this case—the trial judge’s finding against Berkshire on its Mass. G.L. 93A claim and the jury’s verdict in Berkshire’s favor on the tortious interference claim—were inconsistent and irreconcilable and failed to provide any rational basis on which a business could plan its conduct in the marketplace.   

In November 2005 the Appeals Court ruled in Sovereign’s favor, reversing the Superior Court’s judgment.  The Appeals Court held that Sovereign's choice of armored car services was a legitimate business decision and that Berkshire “failed to establish that Sovereign had an improper motive to intentionally interfere with Berkshire's contract with Victory.” The Court noted that there was no evidence that Sovereign even knew of Berkshire's contract with Victory when it chose not to renew Berkshire’s contract, and therefore that there was no causal link between any hostility on the part of Sovereign toward Berkshire and Berkshire’s loss of its business relationship with Victory.  On December 21, 2005, the Supreme Judicial Court denied Berkshire’s application for further appellate review.

Whether There Is a Duty to Warn of an Open and Obvious Danger
(Unpublished table decision.)

The plaintiff Zackular was severely injured when she executed a stunt on an inflated Velcro obstacle course.  During the stunt she dived headlong from the top of a five-foot high obstacle, trying to reach an opening in another obstacle approximately six feet away and appreciably below her.  The plaintiff sued the product manufacturer and product lessor on theories of negligence and breach of warranty, claiming breach of the duty to warn.  The trial court held that a person of ordinary perception and judgment should have realized the danger and the risk of serious harm. Since the danger was open and obvious, the court said, there was no duty to warn.  

In its brief NELF addressed two of the plaintiff’s arguments on appeal.  The first is the argument that the defendant’s provision of some warnings created a duty to warn of the hazards of diving.  NELF argued that if manufacturers are required to warn of obvious dangers as well as non-obvious ones, it will necessarily dilute the impact of all warnings.  The plaintiff’s second argument is that the obstacle course constituted a non-obvious danger because the surface had some elasticity.  NELF argued that the stunt was obviously dangerous regardless of the surface “give” because the plaintiff dived into it from a significant height.  The Appeals Court affirmed the decision below, placing particular emphasis on the arguments about the open and obvious nature of the hazard.

Opposing Expansion of Insurance Companies’ Liability for Attorneys’ Fees to Claimants of the Insured 

NELF supported Chicago Insurance Company in its appeal of a Massachusetts superior court decision holding Chicago responsible for legal fees of a claimant against an insured, Robert Lappin. Chicago insured Lappin, an attorney, against professional liability and malpractice. During the term of the insurance coverage Lappin’s secretary embezzled several million dollars from Lappin’s clients, who eventually sued Lappin. Chicago initially defended Lappin with a reservation of rights. Arguing that Lappin had made material misrepresentations in his application for insurance, Chicago subsequently rescinded the policy and ceased to defend him. Chicago then brought an action for declaratory judgment seeking court approval of the rescission of the policy and withdrawal of defense. Chicago joined the client-claimants as defendants as required by Mass. Gen. L. c. 231A, §8, which requires joinder of all “parties who have or claim any interest which would be affected by the declaration.” The superior court held that Lappin was entitled to defense and indemnification and thus was also entitled to the fees and costs he had incurred in defending the declaratory judgment action. Although Massachusetts follows the so-called “American Rule” requiring each party to litigation to bear its own attorneys’ fees and costs, there is a narrow exception to that rule for fees and costs an insured incurs in successfully establishing an insurer’s obligation to defend him. In an unprecedented extension of this narrow exception, the superior court held that the client-claimants were intended third-party beneficiaries of the policy and thus also entitled to fees and costs they incurred in defending the declaratory judgment. Chicago appealed the decision. 

NELF filed an amicus brief in support of Chicago arguing that the court’s decision flies in the face of all known precedent in Massachusetts regarding an insurer’s liability to claimants for attorneys’ fees. The rationales that justify the limited exception to the American Rule—the “special relationship” between insured and insurer and the insured’s payment of premiums to the insurer—do not exist in this fact pattern. This extension of liability to a class that never contracted for it and never paid premiums for it, NELF argued, would create uncertainty in the industry and increase premiums for all policyholders.  On August 17, 2003 the appeals court issued an opinion overturning the award of attorneys’ fees to the claimants.