Heard: September 6, 2016.
action commenced in the Superior Court Department on February
review by this court, 469 Mass. 323 (2014), the case was
heard by Janet L. Sanders, J., on motions for judgment on the
Supreme Judicial Court granted an application for direct
Russell (Katherine D. Shea with him) for the plaintiff.
Iraida J. Alvarez, Assistant Attorney General, for Department
of Mental Health.
Valvo & Ariel G. Sullivan, for Advocates, Inc., &
others, were present but did not argue.
G. Matuschak & Robert Kingsley Smith, for Pioneer
Institute, Inc., were present but did not argue.
S. Lichtblau & Robert E. Cowden, III, for Massachusetts
Council of Human Services Providers, Inc., & others,
amici curiae, submitted a brief.
Present: Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy,
& Budd, JJ.
the second time that the plaintiff labor union appeals from
dismissal of the declaratory judgment action it first brought
against the Department of Mental Health (DMH or agency) in
2012. Service Employees International Union, Local 509 (SEIU
or union) maintains that certain contracts DMH made in 2009
with private vendors are "privatization contracts"
subject to the requirements of the Pacheco Law, G. L. c. 7,
§§ 52-55. The Pacheco Law establishes certain
prerequisites that agencies must meet when seeking to enter
into privatization contracts. Because DMH had determined that
the subject contracts were not privatization contracts,
however, it did not comply with those statutory
prerequisites. In bringing this action, the union seeks,
among other things, a declaration invalidating the contracts
on the basis of G. L. c. 7, § 54 (§ 54), which
provides that no privatization contract "shall be
valid" where an agency did not follow the necessary
previous decision in this case, Service Employees
Int'l Union, Local 509 v. Department of
Mental Health, 469 Mass. 323, 324 (2014) (SEIU
I), we rejected DMH's contention that the union
lacked standing to challenge, in a declaratory judgment
action, the agency's unilateral determination that the
contracts were not privatization contracts. While recognizing
that the Pacheco Law does not expressly provide a private
right of action, we also recognized that the Legislature did
not contemplate the situation presented there (and here), in
which an agency determines on its own that it need not comply
with the requirements of the statute. Id. at
335-336. Because unreviewable agency decision-making on such
a matter would thwart legislative intent, we concluded that
in these circumstances "declaratory judgment is an
appropriate vehicle for relief to ensure that agencies may
not evade the requirements of the Pacheco Law with
impunity." Id. at 336. We accordingly vacated
the judgment of dismissal and remanded the case to allow
joinder of necessary parties. Id. at 339.
SEIU I was under advisement in this court, however,
the five-year term of the subject contracts drew to an end
and, pursuant to the provisions of those contracts, DMH
exercised options renewing them for successive one year
periods.Following our decision in SEIU
I and the amendment of the complaint, DMH again
successfully moved to dismiss the union's declaratory
judgment action, this time asserting it was moot. The basis
for the dismissal was two-fold: first, the action was moot as
to the now-expired 2009 contracts, and, second, the remaining
extant renewal contracts were immune from challenge by virtue
of G. L. c. 7, § 53 (§ 53) ("any agreement
renewing . . . a privatization contract shall not be
considered a privatization contract"). The union
appealed, asserting, in essence, that because the
non-compliant 2009 initial contracts are invalid under §
54, so too are any renewal contracts made pursuant to them.
thus called upon to construe §§ 53 and 54 as they
apply in these unusual circumstances. Cognizant that the
Pacheco Law only contemplates the situation, unlike this one,
where an agency recognizes a potential privatization contract
as such and acts in compliance with the statutory
requirements to assure its validity, see, e.g., SEIU
I, 469 Mass. at 329-330; Massachusetts Bay Transp.
Auth. v. Auditor of the Commonwealth,
430 Mass. 783, 784-787 (2000) (MBTA), we interpret
§§ 53-54 with that framework in mind. Fidelity to
the intent and purpose of the Legislature in enacting the
Pacheco Law, evident in both the plain language of the
statute when read as a harmonious whole, and the legislative
history, requires that the protection afforded renewal
contracts by § 53 not be extended to those renewal
contracts made pursuant to timely challenged and subsequently
invalidated privatization contracts under §54. We
accordingly vacate the judgment of dismissal.
following facts are taken from SEIU's amended complaint,
which, at this stage, we assume to be true, see, e.g.,
Iannacchino v. Ford Motor Co., 451
Mass. 623, 636 (2008), supplemented by undisputed facts in
the record. For more than fifteen years, DMH had
employed case managers to provide services to individuals
with mental illness. In late 2008 and early 2009, DMH
initiated a new program, the Community Based Flexible
Supports program, that was intended to provide similar but
more personalized services to DMH clients. As part of the
Community Based Flexible Supports program, DMH entered into
agreements with nineteen private organizations to provide
services substantially similar to those previously provided
by the case managers. Over the same period, DMH laid off
approximately eighty case managers. DMH unilaterally
determined that these new contracts were not
"privatization contracts" within the meaning of the
Pacheco Law and therefore did not attempt to follow any of
the procedures that the law requires when an agency intends
to privatize a service.
in 2009, SEIU notified the Auditor of the Commonwealth of
DMH's intent to enter into the contracts and the
union's objections to the contracts. The Auditor's
office undertook an investigation and, in September, 2010,
the Auditor's general counsel sent DMH, SEIU, and the
Attorney General a letter and memorandum stating that the
contracts "[had] the effect ... of privatizing services
previously performed by public employees, " and
therefore should have been submitted for review prior to
taking effect. The Auditor's office told the Office of
the Attorney General "to take whatever steps [the
Attorney General felt] were appropriate, " but the
Attorney General's office did not take any action.
failed to obtain relief through administrative channels, the
union filed its initial complaint in 2012. As discussed, a
Superior Court judge dismissed that complaint for lack of
standing; we vacated the decision, concluding that the union
did have standing, and remanded for further proceedings. On
remand, a different Superior Court judge dismissed the
amended complaint, this time as moot; SEIU appealed, and we
granted direct appellate review.
discussed at some length in prior decisions the statutory
framework, purpose, and history of the Pacheco Law. See
SEIU I, 469 Mass. at 329-330; MBTA, 430 Mass.
at785-787. In brief, G. L. c. ...