Arguing that, when an Employee Prevails in An Action Brought for Wages Under G.L. c. 149, § 150, for Unpaid Wages, and Receives the “Liquidated” Treble Damages Mandated By the Statute, Prejudgment Interest is Not Available on Any Portion of the Recovery.
In 2008, the Massachusetts legislature amended G.L. c. 149, § 150, which governs the right to bring suit for violation of a number of state wage laws. As relevant here, previous to the amendment, § 150 had permitted an award of treble damages to be made to a prevailing plaintiff, but the Supreme Judicial Court had held that such an award was discretionary and that, because the enhanced damages were punitive in nature, they required the plaintiff to prove the employer’s bad faith, willfulness, or other culpable conduct, in order to avoid due process problems connected with the imposition of punitive damages. The 2008 amendment worked a major change in § 150—it made the treble damages unconditionally mandatory so that plaintiffs no longer would have the burden of proving bad faith. Perhaps to get around the due process problem such mandatory treble damages might create, in the 2008 amendment the legislature expressly characterized the new mandatory treble damages as “liquidated,” hence compensatory and not punitive.
The present case raised the question of what effect, if any, the amendment has on a plaintiff’s right to prejudgment interest, which is the primary means of compensating a plaintiff for the loss of use of money or its unlawful detention during the time before judgment enters. In other words, does the declared “liquidated” character of the new treble damages mean (as it ordinarily would in other legal contexts) that the damages are intended to compensate comprehensively for all injuries, including those that may be difficult to prove or quantify, such as those arising out of loss of use of money or its wrongful detention?
The plaintiffs here had settled their wage claims with the employer, with the exception of a dispute over their alleged right to prejudgment interest under one of the state’s general prejudgment interest statutes. They construed literally the apparently mandatory language of the prejudgment interest statute. The company’s view, by contrast, was that § 150’s treble liquidated damages function as any liquidated damages provision would, i.e., they displace all other forms of compensatory damages, including prejudgment interest. At the parties’ request, the U.S. District Court certified to the Massachusetts Supreme Judicial Court the question of whether plaintiffs who are awarded liquidated treble damages under § 150 retain a right to separate prejudgment interest in addition.
NELF filed an amicus brief in support of the employer, asking the court to answer no to the question. In the first half of its brief, after recounting the history leading up to the amendment to § 150, NELF focused on the term “liquidated,” noting that it sharply alters the nature of the treble damages from punitive, with all the latter’s attending legal due process complications, to simply compensatory. In particular, NELF observed that the SJC itself has stated that courts owe deference to the legislature’s legal characterizations, like “liquidated,” when the constitutionality of a law may be involved. NELF cited also the U.S. Supreme Court’s decision in Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697 (1945). There, against the background of a mandatory state prejudgment interest statute, much like the one in this case, the court ruled that the liquidated multiple damages awarded under the federal Fair Labor Standard Act precluded application of the state prejudgment interest statutes because liquidated damages compensate for all harms, including those usually addressed by prejudgment interest.
In the second half of its brief, NELF critiqued the plaintiffs arguments directly. First, NELF cited SJC cases holding that the mandatory language of the prejudgment interest statutes must not be taken literally when to do so would defeat the purpose of the statutes and over-compensate a party by awarding duplicative damages. For this reason, NELF rejected the plaintiffs’ contention that there is a “clash” between the mandatory prejudgment interest statutes and mandatory language of § 150. NELF also rebutted the contention that § 150 plaintiffs would be under-compensated if they do not receive prejudgment interest. NELF pointed out that all liquidated damages inherently are an approximation of full compensation, and NELF urged the Court not to modify by judicial decision the general “treble liquidated damages” formula inserted into § 150 by the legislature in its sound discretion. Moreover, NELF argued, the Court should not violate its traditional policy of not taking a “second look” at liquidated damages, in order to see, after the fact, whether they provide full compensation. NELF concluded by pointing out the deficiencies in the plaintiffs’ understanding of the 1945 Brooklyn decision and by explaining to the Court the difficulties that would arise if it accepted the plaintiffs’ last-ditch suggestion to treat the “liquidated” treble damages as punitive.
In its decisions, issued in June, 2017, the Supreme Judicial Court disagreed with NELF and answered yes to the certified question. The court expressed doubt that the legislature would have intended some plaintiffs to receive smaller damages after the amendment than they would have received before the amendment, as might happen in certain circumstances if prejudgment interest were no longer to be available. In effect, the court took a “second look” at the statutory damages and second-guessed the sufficiency of the liquidated formula decreed by the legislature.
In 2008, the Massachusetts legislature amended G.L. c. 149, § 150, which governs the right to bring suit for violation of a number of state wage laws. As relevant here, previous to the amendment, § 150 had permitted an award of treble damages to be made to a prevailing plaintiff, but the Supreme Judicial Court had held that such an award was discretionary and that, because the enhanced damages were punitive in nature, they required the plaintiff to prove the employer’s bad faith, willfulness, or other culpable conduct, in order to avoid due process problems connected with the imposition of punitive damages. The 2008 amendment worked a major change in § 150—it made the treble damages unconditionally mandatory so that plaintiffs no longer would have the burden of proving bad faith. Perhaps to get around the due process problem such mandatory treble damages might create, in the 2008 amendment the legislature expressly characterized the new mandatory treble damages as “liquidated,” hence compensatory and not punitive.
The present case raised the question of what effect, if any, the amendment has on a plaintiff’s right to prejudgment interest, which is the primary means of compensating a plaintiff for the loss of use of money or its unlawful detention during the time before judgment enters. In other words, does the declared “liquidated” character of the new treble damages mean (as it ordinarily would in other legal contexts) that the damages are intended to compensate comprehensively for all injuries, including those that may be difficult to prove or quantify, such as those arising out of loss of use of money or its wrongful detention?
The plaintiffs here had settled their wage claims with the employer, with the exception of a dispute over their alleged right to prejudgment interest under one of the state’s general prejudgment interest statutes. They construed literally the apparently mandatory language of the prejudgment interest statute. The company’s view, by contrast, was that § 150’s treble liquidated damages function as any liquidated damages provision would, i.e., they displace all other forms of compensatory damages, including prejudgment interest. At the parties’ request, the U.S. District Court certified to the Massachusetts Supreme Judicial Court the question of whether plaintiffs who are awarded liquidated treble damages under § 150 retain a right to separate prejudgment interest in addition.
NELF filed an amicus brief in support of the employer, asking the court to answer no to the question. In the first half of its brief, after recounting the history leading up to the amendment to § 150, NELF focused on the term “liquidated,” noting that it sharply alters the nature of the treble damages from punitive, with all the latter’s attending legal due process complications, to simply compensatory. In particular, NELF observed that the SJC itself has stated that courts owe deference to the legislature’s legal characterizations, like “liquidated,” when the constitutionality of a law may be involved. NELF cited also the U.S. Supreme Court’s decision in Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697 (1945). There, against the background of a mandatory state prejudgment interest statute, much like the one in this case, the court ruled that the liquidated multiple damages awarded under the federal Fair Labor Standard Act precluded application of the state prejudgment interest statutes because liquidated damages compensate for all harms, including those usually addressed by prejudgment interest.
In the second half of its brief, NELF critiqued the plaintiffs arguments directly. First, NELF cited SJC cases holding that the mandatory language of the prejudgment interest statutes must not be taken literally when to do so would defeat the purpose of the statutes and over-compensate a party by awarding duplicative damages. For this reason, NELF rejected the plaintiffs’ contention that there is a “clash” between the mandatory prejudgment interest statutes and mandatory language of § 150. NELF also rebutted the contention that § 150 plaintiffs would be under-compensated if they do not receive prejudgment interest. NELF pointed out that all liquidated damages inherently are an approximation of full compensation, and NELF urged the Court not to modify by judicial decision the general “treble liquidated damages” formula inserted into § 150 by the legislature in its sound discretion. Moreover, NELF argued, the Court should not violate its traditional policy of not taking a “second look” at liquidated damages, in order to see, after the fact, whether they provide full compensation. NELF concluded by pointing out the deficiencies in the plaintiffs’ understanding of the 1945 Brooklyn decision and by explaining to the Court the difficulties that would arise if it accepted the plaintiffs’ last-ditch suggestion to treat the “liquidated” treble damages as punitive.
In its decisions, issued in June, 2017, the Supreme Judicial Court disagreed with NELF and answered yes to the certified question. The court expressed doubt that the legislature would have intended some plaintiffs to receive smaller damages after the amendment than they would have received before the amendment, as might happen in certain circumstances if prejudgment interest were no longer to be available. In effect, the court took a “second look” at the statutory damages and second-guessed the sufficiency of the liquidated formula decreed by the legislature.
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