Machado, et al. v. System4 LLC, et al. (Lawyers Weekly No. 10-059-15)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us SJC-11681 EDSON TELES MACHADO & others[1] vs. SYSTEM4 LLC & another.[2] Norfolk. December 4, 2014. – April 13, 2015. Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ. Massachusetts Wage Act. Contract, Franchise agreement, Arbitration. Arbitration, Damages, Arbitrable question. Civil action commenced in the Superior Court Department on March 24, 2010. Following review by this court, 465 Mass. 508 and 466 Mass. 1004 (2013), a motion for a ruling that an arbitration clause did not apply to certain claims was heard by Patrick F. Brady, J. The Supreme Judicial Court granted an application for direct appellate review. Eric H. Karp for the defendants. Shannon Liss-Riordan for the plaintiffs. CORDY, J. This case was filed in 2010 by a franchisee janitorial worker, on behalf of himself and other similarly situated individuals, against System4 LLC (System4), a “master franchisor,” and NECCS, Inc., doing business as System4 of Boston, LLC (NECCS), a regional “subfranchisor,” originally alleging, in relevant part, breach of contract, rescission of contract, and misclassification as independent contractors in their franchise agreements.[3] The franchise agreements are signed only by the plaintiffs and NECCS; however, the complaint as originally filed, and as subsequently amended, does not differentiate NECCS from System4 and alleges that the former is “the agent of” and “exists solely to conduct [the] business” of the latter. The agreements govern a franchisee’s right to customer account referrals and the use of System4′s proprietary information in operating commercial janitorial cleaning businesses. They also require the franchisee plaintiffs to arbitrate virtually all disputes. While the plaintiffs raise a number of arguments on appeal, of central importance is the question whether System4, a nonsignatory, can compel the franchisee plaintiffs to arbitrate their substantive claims in accord with the arbitration provision in the plaintiffs’ franchise agreements. We conclude that by reason of equitable estoppel they can do so in the circumstances of this case. Background. System4, an Ohio limited liability company, contracts with a regional subfranchisor in the Boston area, NECCS, who subsequently enters into franchise agreements with franchisees, such as the plaintiffs.[4] Although System4 is not a signatory to these agreements, the agreements provide the franchisees with access to System4′s marketing expertise, business practices, training, and use of trademarks, by way of a separate agreement between System4 and NECCS. […]
Machado, et al. v. System4 LLC, et al. (Lawyers Weekly No. 10-143-13)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us SJC‑11175a EDSON TELES MACHADO & others[1] vs. SYSTEM4 LLC & another.[2] August 1, 2013. Massachusetts Wage Act. Contract, Arbitration. Arbitration, Waiver, Damages. Public Policy. Federal Preemption. Practice, Civil, Class action. In Machado v. System4 LLC, 465 Mass. 508 (2013) (Machado), we applied our holding from Feeney v. Dell Inc., 465 Mass. 470 (2013) (Feeney II), that, following the United States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), a court may properly invalidate a class waiver in an arbitration agreement if a plaintiff “can demonstrate that he or she effectively cannot pursue a claim against [a] defendant in individual arbitration according to the terms of the agreement.” Machado, supra at 513, quoting Feeney II, supra at 472. In applying that holding to the facts of the case, we concluded that the plaintiffs could not make such a demonstration, and accordingly reversed the decision of a judge in the Superior Court invalidating that class waiver on public policy grounds. Machado, supra at 516-517. Following the release of the Supreme Court’s decision in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013) (Amex), which called into question the viability of our holding in Feeney II, we stayed the rescript in Machado and invited the parties to submit their views on the impact, if any, of Amex on our decision in Machado. The plaintiffs did not submit a timely response. The defendants submitted a response expressing their view that Amex had in fact abrogated our decision in Feeney II, but did not directly affect our holding in Machado because we ultimately declined to invalidate the class waiver in that case. We agree with the defendants that Amex abrogates so much of our analysis in Machado as relies on our decision in Feeney II. See Feeney v. Dell Inc., ante 1001, (2013). Our analysis on the issue of the waiver of multiple damages, as well as our ultimate holding, remain sound. The case is hereby remanded to the Superior Court for further proceedings consistent with this opinion. So ordered. The case was submitted on briefs. Eric H. Karp for the defendant. [1] Jocilene da Silva, Poliane Santos, Luiz Santos, Stenio Ferreira, and Glaucea de Olivera Santos. [2] NECCS, Inc., […]
Machado, et al. v. System4 LLC, et al. (Lawyers Weekly No. 10-104-13)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us SJC‑11175 EDSON TELES MACHADO & others[1] vs. SYSTEM4 LLC & another.[2] Norfolk. December 4, 2012. ‑ June 12, 2013. Present: Ireland, C.J., Spina, Cordy, Botsford, Gants, Duffly, & Lenk, JJ. Massachusetts Wage Act. Contract, Arbitration. Arbitration, Waiver, Damages. Public Policy. Federal Preemption. Practice, Civil, Class action. Civil action commenced in the Superior Court Department on March 24, 2010. A motion to stay was heard by Patrick F. Brady, J., and a motion for reconsideration was considered by him. A proceeding for interlocutory review was heard in the Appeals Court by Andrew R. Grainger, J., and the case was reported by him to the Appeals Court. The Supreme Judicial Court granted an application for direct appellate review. Eric H. Karp (Brigid Harrington with him) for the defendants. Shannon Liss-Riordan (Claret Vargas & James W. Simpson, Jr., with her) for the plaintiffs. The following submitted briefs for amici curiae: Audrey R. Richardson & Donald J. Siegel for Massachusetts AFL-CIO & others. Victoria W. Ni, Leslie A. Bailey, & Spencer J. Wilson, of California, Scott L. Nelson & F. Paul Bland, Jr., of the District of Columbia, & Matthew W.H. Wessler for Public Justice, P.C., & another. Robin S. Conrad, Kate Comerford Todd, & Shane B. Kawka, of the District of Columbia, Alan E. Schoenfeld, of New York, & Mark C. Fleming for Chamber of Commerce of the United States of America. Ben Robbins & Martin J. Newhouse for New England Legal Foundation. CORDY, J. The plaintiffs are individuals who have entered into contracts, called “local franchise agreements,” with defendants System4 LLC (System4) and NECCS, Inc. (NECCS) (collectively, defendants), for the provision of commercial janitorial services to third-party customers.[3] The plaintiffs commenced this action in the Superior Court as a class action, alleging that the defendants misclassified the named plaintiffs and other similarly situated individuals as independent contractors and committed other violations of the Massachusetts Wage Act, G. L. c. 149, §§ 148, 148B, and 150 (Wage Act). The defendants moved to stay the court proceedings pending arbitration according to the terms of the arbitration clause contained in the parties’ franchise agreements. A judge in the Superior Court denied the motion, concluding that because the arbitration clause barred class proceedings and prohibited an award of multiple damages, it was invalid […]