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As previously reported, the Massachusetts Supreme Judicial
Court will be reviewing the continued vitality of its decision in
Feeney v. Dell Inc. (Feeney I), governing the
enforceability of class action waivers in consumer arbitration
agreements, in light of the United States Supreme Court's
decision in AT&T Mobility LLC v. Concepcion.
Along with Feeney II, the court will also hear the appeal of
Machado v. System4 LLC, a case concerning the application of
Concepcion to claims under the Massachusetts Wage Act.
The plaintiffs in Machado are janitorial cleaning workers who
have been classfied by the defendant (System4) as
franchisees. They claim that, under the Massachusetts Independent Contractor
statute, they should have been classified as employees,
and that, as a result of the misclassification, they have
wrongfully been denied wages. They purport to bring their
claims on behalf of themselves and others similarly
situated.
Before the Supreme Court decided Concepcion, System4 filed a
motion to stay the litigation pending arbitration, based on
agreements containing arbitration provisions with class action
waivers. The Massachusetts Superior Court denied the request.
After the Supreme Court decided Concepcion, System4 moved for
reconsideration, which the Superior Court also denied.
System4 appealed, and the SJC accepted direct appellate
review. The Court has placed the case on the same hearing
schedule as Feeney II, with argument expected to take place in the
fall.
Machado raises important issues for companies facing employment
class actions in Massachusetts, including 1) whether Concepcion
effectively overruled Feeney I, requiring enforcement of class
action waivers (the same issue raised in Feeney II), and 2)
whether the Feeney I rationale, which precluded the
enforcement of waivers of state consumer class actions as a
matter of state public policy, applies to class actions for alleged
violations of Massachusetts employment statutes. System4
argues that the Feeney I rationale (that without class actions,
small-value consumer claims will, as a practical matter, not be
pursued), does not apply to the employment claims in Machado
(in which the individual plaintiffs stand to recover
substantially more money).
Of course, because they involve the application of a decision of
the United State Supreme Court interpreting a federal statute (the
Federal Arbitration Act), the decisions the SJC reaches in Feeney
II and Machado will be binding only in
Massachusetts state courts. Since the 2005 passage of the
Class Action Fairness Act, most class actions are filed in or
removed to federal court, and the SJC's decisions in these two
cases will therefore have limited impact. Nevertheless, for
those parties who continue to litigate class actions in
Massachusetts state courts, these cases will be important to watch,
as is the evolving federal jurisprudence on the applicability of
Concepcion to class actions raising state law claims.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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