Supreme Judicial Court Splits the Baby in Class Action Wage Claim -- Ruling in Part for Employees and in Part for Employers

Employees in Massachusetts who believe that they have not been paid properly often have the option of pursuing claims under the Fair Labor Standards Act (in federal court) the Massachusetts Wage Act (in state court), the Massachusetts Overtime Act (also in state court), or the Massachusetts Tips Act (also in state court). Employees bring claims under these statutes for unpaid overtime, unpaid commissions, unpaid bonuses, and unpaid tips. Employees sometimes have the option of bringing these types of claims on a class action basis. In those situations, one or more employees act in a representative capacity, essentially acting as a representative for employees who are not part of the lawsuit. On April 12, 2019, the Massachusetts Supreme Judicial Court, in Gamella v. P.F. Chang’s China Bistro, Inc., resolved lingering doubt as to whether state and federal courts would use the same analysis when determining whether to allow wage claims to proceed on a class action basis.

Felice Gamella worked at P.F. Chang’s greeting customers, helping behind the bar, taking food to tables, and assembling delivery orders. He filed a class action suit against P.F. Chang’s, on behalf of himself and other P.F. Chang’s employees, alleging that P.F. Chang’s violated the Massachusetts Reporting Pay requirement by not paying employees for at least three hours of work if they were scheduled to work three hours and were sent home before working at least three hours. Mr. Gamella brought his class action claims under the Massachusetts Wage Act. The case eventually made its way to the Massachusetts Supreme Judicial Court regarding three issues, two of which are discussed below.

First, Mr. Gemella argued that class action wage claims brought under the Massachusetts Wage Act should be subject to a more lenient standard relative to whether they can proceed on a class action basis than claims brought under the Fair Labor Standards Act. P.F. Chang’s, on the other hand, argued that class action claims brought under the Massachusetts Wage Act should be subject to the same standard as those brought under the Fair Labor Standards Act. The Supreme Judicial Court agreed with P.F. Chang’s and held that class action claims brought under the Massachusetts Wage Act should be subject to the same standard as those brought under the Fair Labor Standards Act. This is an important victory for Massachusetts employers as they will no longer be vulnerable to arguments that class action wage claims are easier to get certified under the Massachusetts Wage Act than the Fair Labor Standards Act. As a result, plaintiffs bringing class action wage claims under the Massachusetts Wage Act will have to satisfy Rule 23’s requirements that: (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defense of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

Second, P.F. Chang’s argued that Mr. Gemella could not act as a class representative because he had rejected an offer of settlement. During the course of the case, P.F. Chang’s made an offer of judgment to Mr. Gemella for $962.08, plus attorneys’ fees, interest, and costs. The offer provided that it shall expire if not accepted by the plaintiff within 10 days. The plaintiff did not accept the offer. Subsequently, P.F. Chang’s made an offer in the form of a certified check for $1,732.50, with an accompanying certified letter that explained that the letter would tender complete relief for Mr. Gemella’s individual claims as the amount tendered exceeded what Mr. Gemella could hope to recover if he prevailed at trial. Mr. Gemella did not accept that offer either. P.F. Chang’s moved to dismiss the entire case, even the part that was a class action, arguing that Mr. Gemella’s rejection of the two offers rendered his claims moot, meaning he no longer had a personal stake in the matter. Mr. Gemella opposed that argument, arguing that the unaccepted settlement offer could not render his claims moot. The court rejected P.F. Chang’s argument, holding that under basic principles of contract law, stating that “the suit of a plaintiff who rejects a defendant’s offer of judgment under rule 68 is not rendered moot because the parties remain adverse.” This pronouncement should effectively put a stop to defendant’s practice of trying to “pick off” a lead plaintiff in a class action by offering to pay him or her whatever damages they may individually have. In that sense, this is an important victory for Massachusetts employees.

Steffans Legal has extensive experience with wage and hour class action lawsuits. If you think you and your colleagues are owed wages and want to learn more about your rights under the Fair Labor Standards Act and Massachusetts Wage Act contact us today.