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Ferman v. Sturgis Cleaners, Inc.

Supreme Judicial Court of Massachusetts, Suffolk

February 19, 2019

BELKY FERMAN & another [1]
STURGIS CLEANERS, INC., & another. [2]

          Heard: December 4, 2018

          Civil action commenced in the Superior Court Department on November 19, 2014. Following a stipulation of dismissal, an application for attorney's fees and costs was heard by Karen F. Green, J. The Supreme Judicial Court granted an application for direct appellate review.

          John J. McGlone, III (David T. Norton also present) for the defendants.

          Elizabeth Soltan (Patricio S. Rossi also present) for the plaintiffs.

          Joseph Michalakes & Liliana Ibara, for Immigrant Worker Center Collaborative & others, amici curiae, submitted a brief.

          Margaret E. Monsell & Ruth A. Bourquin, for Massachusetts Law Reform Institute & another, amici curiae, submitted a brief.

          Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher, & Kafker, JJ.

          KAFKER, J.

         This case requires us to consider whether employees, whose claim against their employer under the Wage Act, G. L. c. 149, §§ 148, 150, resulted in a favorable settlement agreement and stipulation of dismissal, "prevailed" in their suit for purposes of an award of attorney's fees and costs under the Wage Act's fee-shifting provisions.[3] The defendants contend that the trial judge should have applied the test for determining prevailing party status under Federal fee-shifting statutes established by Buckhannon Bd. & Care Home, Inc. v. West Virginia Pep't of Health & Human Resources, 532 U.S. 598 (2001) (Buckhannon). Because Buckhannon requires a prevailing litigant to obtain judicial approval or "imprimatur" of a private settlement, the defendants argue that the plaintiffs did not prevail. Id. at 605. The plaintiffs disagree, arguing that, because we have previously decided that the Buckhannon test has no applicability to Massachusetts fee-shifting statutes, the correct standard to determine prevailing party status under the Wage Act is the "catalyst test." Under the catalyst test, if the plaintiff's lawsuit is a necessary and important factor in causing the defendant to grant a material portion of the requested relief, a settlement agreement, even without any judicial involvement, may qualify the plaintiff as a prevailing party for fee-shifting purposes. None of the parties disputes that the plaintiffs met the catalyst test; rather, the central issue is the threshold question of the proper test to apply to determine prevailing party status under the Wage Act. We hold that the catalyst test applies to Wage Act claims and that the trial judge correctly found that the plaintiffs satisfied that test in the instant case, and we therefore affirm the award of attorney's fees to the plaintiffs under the fee-shifting provisions of the Wage Act.[4]

         1. Facts and procedural history.

         The facts and procedural posture of this case are not contested. The plaintiffs are former employees of the defendants' dry cleaning business who brought suit in November 2014, claiming that the defendants failed to pay them approximately $28, 000 in regular and overtime wages as required by G. L. c. 149, §§ 148 and 150, and G. L. c. 151, §§ 1A and IB. Both of these chapters confer a private right of action on an employee "aggrieved" by an employer's violation of their provisions.[5] They further provide that "[a]n employee so aggrieved who prevails in such an action shall be awarded treble damages . . . and shall also be awarded the costs of the litigation and reasonable attorneys' fees." See G. L. c. 149, § 150; G. L. c. 151, § IB. In their complaint, the plaintiffs claimed treble damages, as well as costs and attorney's fees.[6]

         Following an almost two-year period in which there was the entry and lifting of a default judgment against the defendants, discovery, and the filing of various pretrial motions, the case was scheduled for trial in November 2016. Several weeks before the trial date, the court referred the parties to mediation. As a result of mediation, the parties executed a memorandum of understanding in which they agreed to settle the case for $20, 500, but reserved the issue of the plaintiffs' entitlement to attorney's fees for resolution by the court. The parties then executed a mutual release and settlement agreement that provided that it "is the result of a compromise and that nothing set forth herein constitutes an admission of wrongdoing or liability." Subsequently, the parties filed a stipulation with dismissal in court, agreeing that "[p]ursuant to the Memorandum of Understanding and . . . Mutual Release and Settlement Agreement . . . Plaintiffs may file a Motion for Costs and Attorneys' Fees," following determination of which the matter would be "dismissed with prejudice" and "all rights of appeal . . . waived."[7]

         In their motion for attorney's fees, filed in February 2017, the plaintiffs claimed approximately $40, 000 in attorney's fees and $1, 000 in costs. The defendants opposed the motion. The judge concluded that the catalyst test and not the Buckhannon test applied to Massachusetts fee-shifting statutes. Applying the catalyst test, the judge found that the parties' agreement, which amounted to approximately seventy percent of the plaintiffs' initially demanded monetary relief, resulted "in a practical benefit as a result of their attorneys' efforts." This made the plaintiffs "prevailing parties" for purposes of an award of attorney's fees ...

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