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Frost v. Malden/Dockside, Inc.

Superior Court of Massachusetts, Suffolk

July 24, 2018

Janine FROST

          File Date: July 25, 2018


          Brian A. Davis, Associate Justice of the Superior Court

          In this putative class action, plaintiff Janine Frost ("Ms. Frost"), individually and on behalf of others similarly situated, alleges that defendants Malden/Dockside, Inc., Chelsea Dockside, Inc., Dockside at Wakefield, Inc., and Jack Urbaczewski (collectively, "Defendants") violated the Massachusetts Wage Act, G.L.c. 149, § 148, by failing to pay waitstaff overtime compensation required by the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. Ms. Frost further alleges that Defendants violated the Massachusetts Tips Act, G.L.c. 149, § 152A, by requiring waitstaff to cover shortages (e.g., when a customer departs without paying) out of their tips, and the Massachusetts Minimum Wage Law, G.L.c. 151, §§ 1 and 7, by improperly requiring waitstaff to report for tax purposes more tip income than they actually received.

         Ms. Frost filed her initial complaint on July 14, 2017. After Defendants filed and prevailed on a motion to dismiss Ms. Frost’s Wage Act claim, Ms. Frost amended her complaint to correct the deficiencies that resulted in that claim’s dismissal.[1] On April 12, 2018, prior to the completion of discovery, this Court stayed the entire case at the parties’ request. The purpose of the stay was to facilitate the parties’ class settlement discussions. The parties recently filed a motion to extend the stay to facilitate a mediation, which is scheduled to take place on July 26, 2018. During the course of the parties’ discussions, Defendants produced payroll records for the putative class members. Both parties now agree that Defendants failed to pay at least some of their employees overtime compensation as required by the FLSA.

         Beginning sometime in June 2018, Jack Urbaczewski ("Mr. Urbaczewski") started reaching out to current and past employees and inviting them to meet with him individually to discuss this litigation. Mr. Urbaczewski purportedly developed the concept for the original Dockside restaurant, which opened in Boston in 1981, and still is involved in the management of the two Dockside restaurant locations at issue in this case.

         Multiple employees accepted Mr. Urbaczewski’s invitation to meet. At each meeting, Mr. Urbaczewski reportedly offered to pay the employee a certain amount of money (with the amount varying by employee) in return for the employee’s agreement to release any claims that he or she may have against Defendants. Mr. Urbaczewski simultaneously presented each employee with a "disclosure letter" (the "Disclosure Letter") and a form "Confidential Settlement Agreement and General Release" (the "General Release"). Copies of the Disclosure Letter and the General Release have been provided to the Court.

         The two-page Disclosure Letter describes Ms. Frost’s class action claims and the availability of treble damages under the Wage Act. It also mentions the upcoming mediation, notes the possibility that the amount from any class-wide settlement obtained during mediation could exceed the amount being offered by Mr. Urbaczewski, suggests that the employee consider speaking with an attorney, provides contact information for Ms. Frost’s attorneys, and states (in bold and underlined text) that the employee’s decision regarding the settlement would have no effect on his/her employment. The Disclosure Letter further states, however, that "Dockside does not agree with the factual or legal contentions in [Ms. Frost’s] complaint" and that they "do not believe that [Ms. Frost] is likely to win at trial." The Disclosure Letter makes these statements notwithstanding the fact that Defendants already have acknowledged that they failed to pay at least some of their employees overtime compensation as required by the FLSA, and that Ms. Frost is almost certain to prevail on at least some of her claims under the FLSA as a result.

          The Disclosure Letter contains a blank space for insertion of the amount of settlement money to be paid each employee. Of the twenty-eight putative class members who were provided with the letter, four were offered amounts of less than ten dollars (including one, whose Disclosure Letter was provided to the Court and who was offered the sum of $2.47), nine were offered amounts between ten and one hundred dollars, eleven were offered between one hundred and one thousand dollars, and four were offered amounts of more than one thousand dollars.

         The General Release attached to the Disclosure Letter is four pages long. It provides, in part, that,

[i]n exchange for the amounts described in Paragraph 1, the mutual commitments, undertakings and agreements stated in this Agreement, the receipt of which Employee hereby acknowledges as good, valuable and adequate consideration, Employee, his representatives, agents, heirs, successors and assigns ("Releasor"), absolutely and unconditionally hereby releases, remises, discharges, covenants not to sue, indemnifies and holds harmless the Dockside Parties, their insurers, and/or any of their former and current officers, employees, trustees, agents, attorneys and directors and all persons acting by, through, under or in concert with any of them, all both individually, in their capacity acting on behalf of the Dockside Parties and in their official capacities (collectively, "Releasees"), from any and all actions or causes of action, suits, claims, complaints, liabilities, agreements, promises, contracts, torts, debts, damages, controversies, judgments, rights and demands, whether existing or contingent, known or unknown, including: (i) any and all claims arising out of or in connection with Employee’s employment with the Dockside Parties; (ii) any and all claims arising out of or in connection with any relationship between Employee and the Dockside Parties; (iii) any and all claims based on any federal, state or local law, constitution or regulation regarding either payment of employment benefits or wages, including, without limitation, any claims that Employee may have under the Fair Labor Standards Act or the Massachusetts Wage Act.

         General Release at § 4. Thirteen employees signed the General Release.

         On July 5, 2018, two days after the parties filed their joint motion to extend the stay, counsel for Ms. Frost learned from a former Dockside employee that Defendants were seeking and obtaining releases from putative class members whose claims are the subject of this litigation. Counsel immediately sought and obtained a temporary restraining order on July 6, 2018, and now seeks a preliminary injunction enjoining Defendants from engaging in further settlement communications with the putative class members until the Court has ruled on the issue of class certification.

         The Court conducted a hearing on Ms. Frost’s motion for a preliminary injunction on July 16, 2018. All parties appeared. Upon consideration of all of the written materials submitted by the parties, the information provided at the motion hearing, and the oral arguments of counsel, Ms. Frost’s motion is ALLOWED for the reasons summarized, briefly, below.

         Rule 23(d) of the Massachusetts Rules of Civil Procedure grants the Court broad authority to exercise control over a class action and the conduct of counsel and parties. SeeChambers v. RDI Logistics, Inc.,476 Mass. 95, 111 (2016). Among other things, it expressly empowers the Court, "at any stage" of an class action proceeding, to "require such security and impose such terms as shall fairly and adequately protect the interests of the class in whose behalf the action is brought or defended." Mass.R.Civ.P. 23(d). This power includes, but is not limited to, the discretion to impose "a protective order ... to prevent ‘[m]isleading or coercive ...

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