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Court: Treble Damages Law Does Not Cover Claims Before July 2008

Posted by Brad MacDougall on Sep 7, 2011 10:30:00 AM

The Massachusetts Supreme Judicial Court (SJC) has affirmed that employees may not seek mandatory treble damages for violations of the Massachusetts Wage Act that took place before the Legislature changed the treble-damages law in 2008.

Treble DamagesThe SJC ruled in a compensation dispute between two lawyers that the treble-damages law applied “only prospectively, to claims arising on or after the amendment's effective date of July 12, 2008.” The ruling supported the position of Associated Industries of Massachusetts and the New England Legal Foundation, which argued in a joint brief that applying treble damages retrospectively to cases filed before 2008 would unleash a torrent of unproductive litigation.

“The SJC confirmed the idea that laws operate prospectively. AIM still opposes mandatory treble damages, but appreciates the court’s ruling that employers cannot violate a law that did not exist at the time,” said John Regan, Executive Vice President of Government Affairs.

Writing for the SJC in the case of Elena Rosnov versus John Molloy, Justice Margot Botsford said:

"In the absence of an express legislative directive, this court has usually applied '[t]he general rule of interpretation . . . that all statutes are prospective in their operation, unless an intention that they shall be retrospective appears by necessary implication from their words, context or objects when considered in the light of the subject matter, the pre-existing state of the law and the effect upon existent rights, remedies and obligations.

“Doubtless all legislation commonly looks to the future, not to the past, and has no retroactive effect unless such effect manifestly is required by unequivocal terms. It is only statutes regulating practice, procedure and evidence, in short, those relating to remedies and not affecting substantive rights, that commonly are treated as operating retroactively, and as applying to pending actions or causes of action."

Lawyer Elena Rosnov brought the case against her former employer, Attorney John Molloy, in an attempt to collect 40 percent of a $432,500 legal settlement she claims to have been promised for referring the case to Molloy. A jury found in 2009 that an oral contract for the division of fees existed between Rosnov and Molloy, and that Molloy had breached the contract by not providing Rosnov a referral fee.

The SJC ruled only on the question of whether Rosnov could seek treble damages under the 2008 law. The high court decision means that Rosnov’s claim for treble damages is now under the discretion of the Superior Court rather than the mandate of the 2008 law.

AIM believes that the awarding of treble damages should be at the discretion of the court, not an automatic award.  The current law rejects that notion and sends a message that all employers act in willful disregard for the wellbeing of their employees.

Representative Martha Walz filed legislation this year, H.1411, on behalf of AIM that would limit treble damages to “willful” violations of the wage and hour statute.  The proposal would remove the threat of punitive damages for employers who make honest mistakes understanding the complex state wage laws or who are involved in good-faith compensation disputes.  Lawmakers considered the legislation during the Fiscal Year 2012 budget process, but did not include it in the final compromise bill.

A public hearing on the bill is expected in late September.

Please contact me at bmacdougall@aimnet.org if you would like to receive updates on this issue.

Topics: Associated Industries of Massachusetts, Employment Law, Treble Damages Law, Massachusetts Supreme Judicial Court

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