Justia Business Law Opinion Summaries

Articles Posted in Massachusetts Supreme Judicial Court
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The Supreme Judicial Court held that delivery drivers that delivered takeout food and various prepackaged goods from local restaurants, convenience stores, and delicatessens to Grubhub, Inc. do not fall within a residual category of workers who are exempt from arbitration pursuant to section 1 of the Federal Arbitration Act (FAA).Plaintiffs, former delivery drivers for Grubhub, brought this putative class action against Grubhub, alleging violations of the Wage Act, the Tips Act, and the Minimum Wage Act and that Grubhub unlawfully retaliated against drivers who complained about their wages. Grubhub filed a motion to compel arbitration pursuant to an arbitration agreement each Plaintiff had entered into. Because Plaintiffs transported and delivered some prepackaged food items manufactured outside Massachusetts, the judge found that Plaintiffs fell within the definition of "any other class of workers engaged in foreign or interstate commerce" who were exempt from arbitration under section 1 of the FAA. The Supreme Judicial Court reversed, holding that Plaintiffs were not transportation workers actually engaged in the movement of goods in interstate commerce, as required by the residual clause of section 1. View "Archer v. Grubhub, Inc." on Justia Law

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The Supreme Judicial Court affirmed the judgment of the jury finding that Defendant violated his fiduciary duties to a corporation and converted the corporation's assets for his own benefit, holding that the judge did not err in denying Plaintiff's request for a surcharge and that there were no other prejudicial errors.In this disputed between family members in a closely-held corporation over asserted conversions of corporate funds the corporation and one of its shareholders (collectively, Plaintiffs), brought this action against an officer (Defendant), alleging that the officer diverted money from the corporation for the benefit of himself and his individually-owned corporation. The jury found in favor of Plaintiffs and awarded $1 million in damages to the corporation. The Supreme Judicial Court affirmed, holding (1) a surcharge may be used to award a plaintiff fiduciary the costs of attorney's fees under certain circumstances; (2) the judge did not err in denying Plaintiff's request for a surcharge; and (3) Defendant was not entitled to relief on his remaining claims of error. View "Tocci v. Tocci" on Justia Law

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The Supreme Judicial Court held that, where a franchisee is an "individual performing any service" for a franchisor, the three-prong test set forth in the independent contractor statute, Mass. Gen. Laws ch. 149, 148B, applies to the relationship between a franchisor and the individual and is not in conflict with the franchisor's disclosure obligations under the "FTC Franchise Rule."Plaintiffs filed a complaint alleging that they were 7-Eleven employees and had been misclassified as independent contractors in violation of the independent contractor statute, Mass. Gen. Laws ch. 149, 148B. A federal judge granted summary judgment in favor of Eleven, concluding that the independent contractor statue does not apply to franchisee-franchisor relationships because there is a conflict because that statute and the FTC franchise Rule, 16 C.F.R. 436.1 et seq., a series of regulations promulgated by the Federal Trade Commission (FTC) regarding franchises. The Supreme Judicial Court answered a certified question, holding that the independent contractor statute applies to the franchisor-franchisee relationship and is not in conflict with the franchisor's disclosure obligations set forth in the FTC Franchise Rule. View "Patel v. 7-Eleven, Inc." on Justia Law

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The Supreme Judicial Court affirmed the judgments of the superior court in this dispute over a commercial lease, holding that contractual provisions limiting liability for violations of Mass. Gen. Laws ch. 93A, 11 will not be enforced to protect defendants who willfully or knowingly engage in the unfair or deceptive conduct prohibited by the statute.The statute at issue makes unfair or deceptive acts or practices between businesses unlawful. When Defendants attempted to terminate a lease agreement between the parties, Plaintiff alleged a violation of Mass. Gen. Laws ch. 93A, 11. The judge found for Plaintiff on its claim and granted specific performance. After finding that Defendants' violations of the statute were willful or knowing the judge doubled the damages awarded. After reopening the trial, the judge awarded Plaintiff additional damages for willful or knowing violations. The Supreme Judicial Court affirmed, holding (1) Defendants' conduct met the standard for unfair or deceptive acts or practices under chapter 93A, 11; (2) the double damages award was warranted; and (3) a limitation of liability provision provides no protection in a chapter 93A, 11 action where the violation of the statute was done willfully or knowingly, as in this case. View "H1 Lincoln, Inc. v. South Washington Street, LLC" on Justia Law

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The Supreme Judicial Court affirmed the judgment of the superior court allowing Defendants' motion for judgment on the pleadings on the ground that the claims in this case were based on issues that had been litigating and decided in previous litigation between the same parties, holding that this action was precluded.In 2014, Plaintiff, the owner of the closely held corporation at the center of the parties' dispute, filed a complaint alleging that Defendants breached a contract and their fiduciary duties. The superior court judge found against Plaintiffs on his claims and found in favor of Defendants on their counterclaims. In 2017, Plaintiff brought this action alleging breach of contract and breach of fiduciary duty and asserting derivative claims. The superior court judge allowed Defendants' motion for judgment on the pleadings. The Supreme Judicial Court affirmed, holding (1) issue preclusion applied in this case; and (2) where the interests of the parties fully coincided with that of the closely held corporation, Plaintiff was precluded from asserting his claims by means of a derivative action. View "Mullins v. Corcoran" on Justia Law

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In this case involving the Attorney General's investigation into Facebook, Inc. under Mass. Gen. Laws ch. 93A focusing on whether Facebook misrepresented the extent to which it protected or misused user data the Supreme Judicial Court held that most of the civil investigative demands (demands) served by the Attorney General were not covered by the attorney-client privilege but that the work product doctrine applied to the documents requested.After potential widespread misuse of Facebook user data by third-party applications was reported Facebook started an investigation, known as the app developer investigation (ADI), to identify the extent to which the apps had misused user data and to determine potential resulting legal liabilities. At issue were six requests contained with the Attorney General's demands. Facebook argued that the attorney-client privilege and the work product doctrine protected the information. A judge determined that most of the information was neither privileged nor work product. The Supreme Judicial Court reversed in part, holding (1) the documents sought by the first five requests were covered by the work product doctrine; (2) the sixth request required further review; and (3) a remand was required to determined whether some of the documents requested constituted opinion work product. View "Attorney General v. Facebook, Inc." on Justia Law

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In this case involving a final judgment entered against a professional corporation for the fraudulent activity of one of its associates, the Supreme Judicial Court held that, in the unique circumstances of this case, Plaintiff, who was defrauded by the associate, may pursue successor liability against the sole proprietorship of Defendant, the sole shareholder and officer of the professional corporation.Plaintiff was defrauded by the corporation's associate in a mortgage scam. Defendant was the sole shareholder and officer of the corporation, RKelley-Law, P.C. (the P.C.). After the entry of final judgment against the P.C. Defendant voted to wind up the corporation and, that same day, began operating his law practice as a sole proprietorship. Thereafter, the P.C. was placed into bankruptcy proceedings. Because the P.C. had no assets, Plaintiff sought to recover from Defendant personally. The district court granted summary judgment in favor of Defendant, concluding that the doctrine of successor liability could not be applied where the successor in interest was a natural person rather than a corporate entity. The court of appeals affirmed. The Supreme Judicial Court reversed, holding that because Defendant's sole proprietorship was a mere continuation of the former professional corporation Plaintiff may pursue successor liability against the proprietorship. View "Smith v. Kelley" on Justia Law

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In this case concerning the legal relationship between the commercial custodian of three nondiscretionary IRAs and a named beneficiary of those accounts the Supreme Judicial Court reversed in part the decision of the superior court judge allowing UBS Financial Services, Inc.'s (UBS) motion for judgment on the pleadings as to all of Donna Aliberti's claims, holding that the facts alleged stated a claim that UBS's conduct violated Mass. Gen. Laws ch. 93A, 9 (chapter 93A).Following the death of the IRAs' original account holder this dispute arose between Aliberti, a named IRA beneficiary, and UBS, as IRA custodian. Aliberti asserted claims of breach of contract, breach of fiduciary duty, violation of chapter 93A, and intentional infliction of emotional distress. The superior court judge allowed UBS's motion for judgment on the pleadings as to all claims. The Supreme Judicial Court reversed in part, holding (1) there was no plausible claim for breach of fiduciary duty because the custodian of a nondiscretionary IRA does not generally owe a fiduciary duty to a named beneficiary of that IRA; and (2) the interactions between the commercial custodian of a nondiscretionary IRA and a named beneficiary of that IRA occur in a business context within the meaning of chapter 93A, and the alleged injurious conduct of UBS plausibly constituted a chapter 93A violation. View "UBS Financial Services, Inc. v. Aliberti" on Justia Law

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The Supreme Judicial Court affirmed the order of the motion judge denying Defendants' special motion to dismiss Plaintiffs' defamation claim pursuant to the anti-SLAPP statute, Mass. Gen. Laws ch. 231, 59H, holding that the motion judge did not err in concluding that Plaintiffs' colorable defamation claim was not a SLAPP suit.Plaintiffs, nine nurses who had been fired from Steward Carney Hospital, Inc., filed this defamation action against the hospital and others (collectively, Defendants). Defendants filed a special motion to dismiss the defamation claim under the anti-SLAPP statute. A superior court judge denied the motion. The Supreme Judicial Court affirmed in Blanchard v. Steward Carney Hospital, Inc., 477 Mass. 141 (2017), after augmenting the anti-SLAPP framework devised in Duracraft Corp. v. Holmes Products Corp., 247 Mass. 156 (1998) (Duracraft) and remanded for further proceedings. On remand, the motion to dismiss was again denied. The Supreme Judicial Court affirmed after applying the newly augmented framework, holding that the defamation claim was not a SLAPP suit because it was not brought with the primary motivation of chilling the hospital defendants' right to petition. View "Blanchard v. Steward Carney Hospital, Inc." on Justia Law

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The Supreme Judicial Court vacated the superior court's grant of summary judgment in favor of Defendants, the former accounts of Plaintiff, the Chelsea Housing Authority, on the ground that Plaintiff's claim of negligence against Defendants was barred by the common-law doctrine of in pari delicto, holding that, by enacting Mass. Gen. Laws ch. 112, 87A 3/4, the Legislature intended to preempt the doctrine of in pari delicto in cases where an accountant is sued for failing to detect fraud committed by a client.In this action, Plaintiff sought to recover the losses incurred from the accountants' alleged negligent failure to detect the fraudulent conduct of its former executive director, its former finance director, and others. A superior court judge concluded that Plaintiff's claim was barred by the doctrine of in pari delicto without addressing the applicability of section 87A 3/4. The Supreme Judicial Court vacated the summary judgment, holding that the Legislature has preempted the common-law doctrine of in pari delicto doctrine as it applies to the negligent conduct of accountants and auditors in failing to detect fraud. View "Chelsea Housing Authority v. McLaughlin" on Justia Law