Awuah v. Coverall North America, Inc.

985 F. Supp. 2d 185, 2013 WL 6325135, 2013 U.S. Dist. LEXIS 171870
CourtDistrict Court, D. Massachusetts
DecidedDecember 5, 2013
DocketCivil Action No. 07-10287-WGY
StatusPublished

This text of 985 F. Supp. 2d 185 (Awuah v. Coverall North America, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Awuah v. Coverall North America, Inc., 985 F. Supp. 2d 185, 2013 WL 6325135, 2013 U.S. Dist. LEXIS 171870 (D. Mass. 2013).

Opinion

MEMORANDUM

YOUNG, District Judge.

I. BACKGROUND

The above captioned plaintiffs (collectively, the “Plaintiffs”) are current and former franchisees of Coverall North America, Inc. (“Coverall”), a company that provides janitorial services through franchise agreements with individuals. See Third Am. Compl. ¶ 1, ECF No. 79.1 The Plaintiffs pled six causes of action on their own behalf and on behalf of all “similarly situated individuals,” including, inter alia, breach of contract, deceptive trade practices, and violation of state wage and labor laws. See id. at 12-15.

On September 22, 2011, this Court certified a class of all individuals who have owned a Coverall' franchise and performed work for Coverall customers in Massachusetts at any time since February 15, 2004, and who have not signed an arbitration •agreement or otherwise had their claims adjudicated. Status Conference Tr. 2:22-3:6, Sept. 22, 2011, ECF No. 365. On March 15, 2012, the Court entered final judgment for the vast majority of the certified class, exclusive of attorneys’ fees, costs, and interest. Order, Mar. 15, 2012, ECF No. 455, 2012 WL 910260.

Shortly before entering final judgment, this Court ruled that some franchisees who bought their franchises through consent-to-transfer agreements were not provided with proper notice of the arbitration clause in the franchise agreements. See Awuah v. Coverall N. Am., Inc. (Awuah I), 843 F.Supp.2d 172, 180 (D.Mass.2012), rev’d, 703 F.3d 36 (1st Cir.2012). Because of that lack of notice, this Court ruled that those franchisees were not bound by the arbitration clause, and were thus part of the certified class. See id. at 180-82.

On December 27, 2012, the First Circuit reversed that decision. Awuah v. Coverall N. Am., Inc. (Awuah II), 703 F.3d 36 (1st Cir.2012). It held that “Massachusetts law, which governs this dispute, does not impose any such special notice requirement upon these commercial contractual provisions. Such a requirement, in any event, would be preempted by the Federal Arbitration Act (‘FAA’), 9 U.S.C. § 1 et seq. ...” Awuah II, 703 F.3d at 39.

Complicating matters, ten days earlier the Massachusetts Supreme Judicial Court (the “Supreme Judicial Court”) had held in Crocker v. Townsend Oil Co., 464 Mass. 1, 979 N.E.2d 1077 (2012), that waiver of claims under the Wage Act, Mass. Gen. Laws ch. 149, §§ 148, 150, must be done in [187]*187“clear and unmistakable terms.... [The waiver] must specifically refer to the rights and claims under the Wage Act .... ” Crocker, 464 Mass. at 14, 979 N.E.2d 1077.

As a result of these two decisions, the Plaintiffs filed two motions for reconsideration. Pis.’ Mot. Reeons. Enforceability Releases Signed Cleaning Workers Ordinary Course Coverall’s Business Light Supreme Judicial Ct.’s Decision Crocker v. Townsend Oil Co. (“Mot. Recons. Releases”), ECF No. 542; Pis.’ Mot. Recons. Enforceability Coverall’s Arbitration Clause Light Supreme Judicial Ct.’s Decision Crocker v. Townsend Oil Co. (“Mot. Recons. Arbitration Clauses”), ECF No. 543.

This Court concluded that it must grant the first motion for reconsideration on the enforceability of releases, Mot. Recons. Releases, because the Supreme Judicial Court’s “opinion makes clear that in order to disclaim’ Massachusetts Wage Act Claims, the settlement agreement must expressly reference those claims.” See Order 2, Feb. 13, 2013, ECF No. 565 (citing Crocker, 464 Mass. at 14, 979 N.E.2d 1077).

The second motion for reconsideration of the enforceability of the arbitration agreements, Mot. Recons. Arbitration Clauses, was a more difficult question that gave this Court pause. See Order 2, Mar. 13, 2013 (“March Order”), ECF No. 571 (describing “the question as a close call requiring further research and a well-reasoned opinion”). On that question, in light of Crocker, 464 Mass. 1, 979 N.E.2d 1077, this Court would have found that Massachusetts law requires an express statement to subject Wage Act claims to arbitration just as is required for waiving such claims outright. The First Circuit, however, stated that “[s]uch a requirement ... would be preempted by the [FAA].” See Awuah II, 703 F.3d at 39. Though that statement was dicta as the First Circuit had just stated “Massachusetts law, which governs this dispute, does not impose any such special notice requirement upon these commercial contractual provisions,”2 id., it was made during review of a previous decision in this case. As such, this Court had to follow the binding precedent of the First Circuit and deny the motion. See March Order 2. In issuing that denial, this Court acknowledged that a longer memorandum was necessary, see id. at 3. This memorandum now further elucidates this Court’s view and reasoning.

II. ANALYSIS

A. Under Massachusetts Law, Only Express Statements Can Submit Wage Act Claims to Arbitration

In essence, the Plaintiffs argue for a special notice requirement before wage claims may be subjected to arbitration agreements. See Mot. Recons. Arbitration Clauses 1-2 (arguing for a rule that “[u]nder the [Supreme Judicial Court]’s decision in Crocker, under Massachusetts law, an arbitration clause that does not specifically refer to wage claims may not be enforced so as to release such claims,” id. at 1, and further contending that since the arbitration clause at issue in this case does not expressly reference Wage Act claims, “the Court should hold that it is not enforceable as to the wage claims at issue in this case and should expand the class to include those workers who have signed the [188]*188franchise agreement containing the arbitration clause,” id. at 1-2).

The Supreme Judicial Court recently held “a settlement or contract termination agreement by an employee that includes a general release, purporting to release all possible existing claims will be enforceable as to the statutorily provided rights and remedies conferred by the Wage Act only if such an agreement is stated in clear and unmistakable terms.” Crocker, 464 Mass. at 14, 979 N.E.2d 1077. The issue for this Court to resolve is whether, under Massachusetts law, an agreement by an employee that includes a general provision to arbitrate all disputes or claims “will be enforceable as to the statutorily provided rights and remedies conferred by the Wage Act only if such an agreement is stated in clear and unmistakable terms.” Id.

In cases where this Court must apply Massachusetts law, it must at times predict what that law is without a case squarely on point. Cf. Oliver Wendell Holmes, The Path of the Law, 10 Harv. L.Rev. 457, 460-61 (1897) (“The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law.”). This Court concludes that, under Massachusetts law, to subject a Wage Act claim to arbitration, an agreement must do so explicitly.

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Bluebook (online)
985 F. Supp. 2d 185, 2013 WL 6325135, 2013 U.S. Dist. LEXIS 171870, Counsel Stack Legal Research, https://law.counselstack.com/opinion/awuah-v-coverall-north-america-inc-mad-2013.