A plaintiff in an overtime wage class action accepted a Rule 68 settlement offer from her employer that included $80,000 in damages but left prejudgment interest for the court to determine. Both parties agreed on a twelve percent interest rate but disputed the calculation date. The defendant argued that because multiple pay periods were involved, interest should accrue only from the date the action was filed. The plaintiff contended that each pay period constituted a separate breach when she failed to receive overtime compensation, and interest should run from each pay period’s end date.
The court held that prejudgment interest should be calculated from the date of each breach. Under Massachusetts General Laws Chapter 231, Section 6C, interest accrues from the date of breach or demand when that date can be established. The plaintiff’s overtime claims involved discrete breaches occurring at the end of each pay period when paychecks lacked overtime compensation. These dates were easily ascertainable and undisputed. The court rejected the defendant’s reliance on Peabody N.E., Inc. v. Town of Marshfield, which addressed situations where the date of breach was unclear due to mutual responsibility for contractual failures. Here, only the defendant was responsible for the alleged breach, and the plaintiff had not contributed to any wrongdoing. The purpose of prejudgment interest is to compensate the wrongfully deprived party for the loss of use of money, making her whole as of the time she experienced the loss.
The court awarded prejudgment interest of $60,613.09, calculated by apportioning the settlement over 72 pay periods and running interest from each period’s end date.
The full text of the opinion follows below. Slip opinions are subject to formal revision; the official version is published in the official reports.
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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
Civ. No. 2015-3599-BLS2
ASHLEY SCHIEFER, COLLEEN McPHERSON,
ELIZABETH BURNHAM, and REBECCA SHAAL,
for themselves and on behalf of all others similarly situated,
Plaintiffs
vs.
BAIN CAPITAL, LP, f/k/a BAIN CAPITAL, LLC,
Defendant
MEMORANDUM OF DECISION AND ORDER ON
ASHLEY SCHIEFER’S APPLICATION FOR
PRE-JUDGMENT INTEREST
On August 21, 2017, Ashley Schiefer, one of four plaintiffs in this putative class action alleging failure to pay overtime wages, accepted a Rule 68 Offer of Judgment (the Offer) made by defendant Bain Capital LP (Bain). The Offer included $ 80,000, reasonable attorney’s fees and costs, and prejudgment interest as determined by the Court. This Court has already made a determination as to the attorney’s fees. This Memorandum addresses the question of prejudgment interest. Although both parties agree as to the applicable rate (twelve percent), they disagree as to the date from which interest should be calculated.
Section 6C applies to actions like this one based on contractual obligations. By its terms, the statute provides that that interest accrues ““from the date of the breach or demand,” provided that such date can be determined. If the date of the breach or demand is not established, interest accrues “from the date of the commencement of the action.” The purpose of Section 6C is to “compensate a damaged party for the loss of use or unlawful detention of money.” Sterilite Corp. v. Continental Cas. Co., 397 Mass. 837, 841 (1986), quoting Perkins School for the Blind v. Rate Setting Comm’n, 383 Mass. 825, 835 (1981). Although Section 6C “commands a
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ministerial act, its sole or primary purpose was not to provide administrative ease” but to ensure that the person wrongfully deprived of the use of money is “made whole for his loss.” Sterilite, 396 Mass. at 841-842. Thus, even if there are multiple breaches so as require different calculations, the Court should engage in that analysis in keeping with that statutory purpose. Id.
Plaintiff argues that the dates of defendant’s breaches are “established” within the meaning of Section 6C because the Offer pays Schiefer on her breach of contract claim, and a breach of that contract occurred at the end of each pay period when Bain failed to compensate her for overtime — — a point in time that is easily ascertained and is undisputed. Schiefer worked 72 pay periods during her employment at Bain. If the $ 80,000 Offer is apportioned equally over those pay periods, $ 1,111 should be apportioned to each pay period, with interest calculated from that date. In a chart attached as Exhibit A to her Application, plaintiff explains how those calculations amount to a total of $ 60,813.09 in prejudgment interest. Bain does not dispute the dates on which each pay period ended. Nor does it question the correctness of the formula that Schiefer uses if this Court were to accept her reasoning that she is entitled to prejudgment interest where there are multiple breaches of the contract. Rather, Bain argues more broadly that, because there are multiple breaches, she is precluded from obtaining prejudgment interest that predates the commencement of the action. In support of this argument, Bain relies heavily on Peabody N.E., Inc. v. Town of Marshfield, 426 Mass. 436 (1998) and argues that Peabody, not Sterilite, should guide this Court’s analysis. This Court disagrees.
The action in Peabody arose out of a contract dispute between a plaintiff construction company and defendant town over the construction of a waste treatment facility. The contract in question called for the construction to be completed by a certain date. Based on a master’s report, the lower court concluded that both parties had not fulfilled their contractual obligations
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and thus could not recover on their respective breach of contract claims: the construction company failed to complete its work by the date specified in the contract, and the town had contributed to the delay. The court nevertheless awarded damages to the plaintiff on a quantum meruit theory, and the SJC affirmed. The SJC then turned to the issue of prejudgment interest and stated: “Where no demand is made and multiple breaches occur…interest must accrue ‘from the date of the commencement of the action.’” Peabody, 426 Mass. at 445. The SJC went on to modify the lower court’s decision so that prejudgment interest was calculated from the date suit was filed.
Bain seizes on this language in Peabody and argues that, notwithstanding Sterilite (which clearly contemplated the possibility of prejudgment interest based on multiple breaches), Schiefer’s prejudgment interest can only be calculated from the date that she joined as a plaintiff in this action. But Bain ignores the context in which the SJC in Peabody made its pronouncement. As the SJC explained, the date of breach in that case was not easily established since both parties were responsible for at least one breach of the contract; indeed, neither party was able to recover on a contract theory. The instant case is quite different.
First, the Offer is to pay Schiefer on her breach of contract claim, not just on the more general claim of quantum meruit. Second unlike the plaintiff in Peabody, Schiefer did not share in any of the responsibility for the alleged wrongdoing or contribute in some way to cause a breach. Finally, the date of breach is easily ascertainable given the nature of the claim at issue: having failed to include compensation for overtime in each paycheck, Bain breached its obligation to pay her overtime each time Schiefer received that paycheck – that is, at the end of each pay period. As of that date, Schiefer was wrongfully deprived of some amount of money. The award of interest is to compensate her for her loss of that money at that point in time when
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she experienced the loss and (as Sterilite requires) to make her whole for her loss. The SJC in Peabody gave no indication that it intended to overrule Sterilite or that, if faced with a situation like the instant one, that it would adopt Bain’s reasoning. Accordingly, plaintiff’s Application for Interest is ALLOWED and prejudgment interest is awarded in the amount of $ 60,613.09.
______________________________
Janet L. Sanders
Justice of the Superior Court
Dated: November 8, 2017