Boston Business Litigation Blog

In Vera V. v. Seymour S., the Appeals Court recently considered whether it was proper for a trial judge to deny a request for an extension of an ex parte abuse prevention order pursuant to G. L. c. 209A, based on the defendant ("husband") being subject to certain pretrial release conditions that had been ordered in the related criminal case and the subject of a Department of Children and Families ("DCF") investigation. The criminal case involved allegations of physical abuse of the plaintiff ("wife") by the husband while the wife was attempting to breastfeed the parties' newborn. The pretrial release conditions in that case included a "no abuse" order that could have resulted in the husband's being held without bail if he violated them.

Under the theory of respondeat superior, an employer may be vicariously liable for the torts of its employee. In order to prevail on a claim of vicarious liability, the plaintiff must show two elements: (1) that an employer-employee relationship exists and (2) that the alleged conduct occurred within the course and the scope of employment.

In T-Mobile Northeast LLC v. Town of Barnstable, et. al., the First Circuit affirmed the decision of the United States District Court for the District of Massachusetts to deny local residents' motion for leave to intervene.

In a recent Rule 23 decision, the Appeals Court of Massachusetts provided further clarification relating to the Young v. Young decision and how a judge is expected to calculate alimony. In a nutshell, if a payor's "ability to pay" is not an issue, then the amount of alimony will be determined by the recipient's reasonable need. If the parties do not have sufficient income to maintain the lifestyle that both spouses enjoyed during the marriage, then the statutory alimony percentages will be used to calculate the amount of a support order.

In a decision recently issued in the case of Maldonado et al. v. Cultural Care, Inc. et al., a group of "local childcare consultants" ("LCCs") brought a class action suit against Cultural Care, a company that places foreign au pairs with host families located in the United States. The plaintiffs alleged that Cultural Care and its officers violated the Fair Labor Standards Act ("FLSA") by misclassifying them as independent contractors and paying them less than the minimum wage required by both the FLSA and state law in Massachusetts, New York, and California. Cultural Care moved to dismiss the plaintiffs' claims based on a lack of subject matter jurisdiction and failure to state a claim upon which relief could be granted.

This issue was examined by the Appeals Court in the recent case, Hoy v. Hoy. In that case, the wife was the primary wage earner during the parties' long-term marriage and the trial judge in the divorce found that the husband was in need of alimony. However, because the wife's income was substantially reduced by the time of the trial, the judge did not order her to pay alimony. Instead, the judge noted that the issue of alimony could be brought back before the Court and modified at a later date and ordered the wife to provide the husband with notice if her income increased by more than 5%. Additionally. the judge awarded the husband slightly more than half of the marital assets, including half of the wife's retirement accounts accrued over length of the marriage and more than half of the proceeds of the sale of the marital home.

In a recent Rule 23 decision, the Appeals Court of Massachusetts upheld a finding of contempt against a father who, without the mother's consent, registered the children for soccer.

As we have pointed out before, the use of international arbitration for banking and finance disputes continues to grow. The International Chamber of Commerce also recently came out with a report discussing this growing trend for financing disputes.

In Knous v. Broadridge Financial Solutions, Inc., the United States District Court for the District Court of Massachusetts awarded summary judgment to an employer on the employee's claims of unpaid wages and earned vacation at the time of discharge.

As a result of restructuring, the employer decided to terminate the employee. The employer informed the employee of his termination in a meeting on May 17, 2019, during which the employer "instructed" the employee to return company property, stop working, and vacate the site. The employer also specifically informed the employee that he would still receive wages and benefits as of May 24, 2019, and also presented the employee with a severance agreement that defined his date of termination as May 24, 2019.

As we have pointed out before, the use of international arbitration for banking and finance disputes continues to grow. The International Chamber of Commerce also recently came out with a report discussing this growing trend for financing disputes.

In Tomasella v. Nestlé, a politically charged case involving three of the United States' most prominent chocolate manufacturers, the First Circuit recently affirmed dismissal of a putative class action against Nestlé USA Inc., Mars, Inc., and the Hershey Company. The plaintiff in that case, Danell Tomasella, alleged that the chocolate manufacturers violated the Massachusetts Consumer Protection Act that prohibits unfair or deceptive trade practices (Chapter 93A) by failing to disclose on their packaging that child and slave labor abuses likely exist in their cocoa bean supply chains. The plaintiff also alleged that the chocolate manufacturers were unjustly enriched by such omissions.

In Stevens v. Zoning Board of Appeals of Bourne, et. al., the Massachusetts Appeals Court upheld the Bourne Board of Selectman's decision to reinstate a cease and desist order against Plaintiff Lighthouse Realty Trust despite a Land Court settlement agreement between the Plaintiff and the Town.

In March 2011, a massive 9.0 magnitude earthquake occurred just off the coast of Japan and triggered a 45-foot tsunami, which in turn breached the seawall and resulted in a series of explosions and a widescale nuclear disaster at the Fukushima Daiichi Nuclear Power Plant (the "FNPP") in Japan. Shinya Imamura and several other individuals and business entities from the surrounding area who suffered property damage and/or economic harm as a result of the disaster filed a class action lawsuit, against General Electric Company ("GE"), Imamura v. General Electric Co., in the U.S. District Court for the District of Massachusetts. They sought compensatory and punitive damages from GE, based on their assertions that GE negligently designed the nuclear reactors and safety mechanisms at the FNPP and was at least partially responsible for the nuclear disaster GE's corporate headquarters and principal place of business in Boston, Massachusetts provided basis for jurisdiction over the lawsuit in the Massachusetts federal court.

The United States Court of Appeals for the Seventh Circuit has split from holdings by the Fifth and Eighth Circuits in holding that the Fair Debt Collection Practices Act ("FDCPA") does not contain a "benign language" exception to the requirement that the envelope for a debt collection letter contain no language other than the debt collector's address. Preston v. Midland Credit Management, Inc.

A case recently filed with the United States District Court for the District of Massachusetts, Rinnigade Art Works v. Hartford Financial Group, is the first suit in Massachusetts seeking class action status in challenging an insurance company's denial of coverage for COVID-19 related business losses.

The Massachusetts obsolete mortgage statute, G.L. c. 260, § 33, provides, in relevant part, that "power of sale in any mortgage of real estate shall not be exercised . . . nor proceeding begun for foreclosure of any such mortgage after the expiration of . . . 5 years from the expiration of the term or from the maturity date." The purpose of the statute is to create a date certain by which an old mortgage is deemed discharged as a matter of law in order to provide certainty for title examiners and thereby remove impediments to the purchase and sale of real estate subject to mortgages for which a discharge was never filed in the applicable Registry of Deeds.

Recently, in NuVasive, Inc. v. Day, the United States Court of Appeals for the First Circuit upheld the decision of the United States District Court for the District of Massachusetts to apply Delaware law and grant an employer a preliminary injunction against a former employee related to a nonsolicitation clause.

In his open letter dated March 24, 2020, Chief Justice Casey indicated that it is important, during the current Covid-19 crisis and corresponding Stay-at-Home Advisory, for children to spend time with both of their parents. While this provided welcome clarity for upcoming parenting exchanges, it also created an opportunity - especially for parties operating under a parenting schedule by way of a temporary order and in the midst of contested litigation concerning custody issues - to put contested litigation issues aside and create a parenting arrangement (perhaps even a temporary, equal parenting) that more effectively deals with the reality of school/child-care closures and the requirements of working remotely (for both parents and students).

The Hague Conference on Private International Law (the "HCCH") has just published its Guide to Good Practice on the use of video-conferencing technology in the taking of evidence (the "Guide") pursuant to the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (the "Convention"). Though the HCCH undertook to investigate such best practices long before the advent of COVID-19, its publication is particularly timely in light of the pandemic.

It is no exaggeration to state that the coronavirus (COVID-19) pandemic has been the largest disruptor to businesses this year. Productivity has slowed as co-workers self-quarantine to prevent the risk of exposure to the virus, and offices across the nation are closed as a way of slowing the spread of the disease. Naturally, one question that arises out of these events is whether businesses are expected to perform under their contracts or whether they are excused from performance in light of the current crisis. The answer to that question may rely on the heretofore rarely used force majeure clauses contained in their contracts.

The United States District Court for the District of Massachusetts, in a matter of first impression in the First Circuit, has joined the majority of courts to find that a junior lienholder's issuance of a 1099-C to a mortgagor following foreclosure does not extinguish the junior lienholder's claim to excess proceeds from a senior lienholder's foreclosure. Wells Fargo Bank, N.A and Orlans PC, Plaintiffs, v. Thomas Fraze et al., Defendants.

In Kaur v. World Bus. Lenders, LLC, Judge Willian Young of the United States District Court for the District of Massachusetts has partially denied a motion brought by World Business Lenders, LLC and Axos Bank to dismiss claims that the defendant lenders violated the Massachusetts usury statute and the Massachusetts Consumer Protection Act, General Law Chapter 93A.

Usury laws limit the interest rate that lenders can charge on a line of credit or a loan. The Massachusetts law against usury, Massachusetts General Law Ch. 271, §49(d), creates an annual interest rate cap of 20 percent. However, the Massachusetts usury statute allows lending institutions to avoid the 20% state usury cap if they register the loan with the State Attorney General's Office within two years of making it. Further, the National Bank Act exempts nationally chartered banks from such state usury caps. Moreover, there is a controversial practice of non-bank lenders marketing, funding, and collecting on a loan that a nationally charted bank has formally underwritten and originated on paper before assigning the loan to the non-bank lender. This essentially allows the non-bank lender to borrow a nationally charted bank's federal preemption. Proponents of these so-called "rent-a-bank" operations argue that such high-interest loans provide a legitimate service by granting credit to under-served, high-risk borrowers. Opponents argue that these loans trap borrowers in a cycle of debt where they either default or pay far more in interest than the original principal. This is one of the issues discussed in Kaur v. World Bus. Lenders, LLC.

In March 2018, borrowers Ramanjeet Kaur and Kulwinder Singh Uppal took out a $175,000 loan for their small business from World Business and Axos's predecessor with annual percentage rate interest in excess of 92 percent. The borrowers, a married couple, used their home as collateral for the loan. Less than seven months later, World Business began foreclosure proceedings against the borrowers' home after their loan fell into arrears. The borrowers filed suit alleging World Business had violated the state's usury law, because it identified the Axos, as opposed to World Business, as the lender when it registered with loan with the Attorney General pursuant to Gen. Law Ch. 271 §49(a). They also alleged that World Bank had engaged in two forms of unfair and deceptive business practices in violation of Gen. Law Chapter 93A: (1) issuing a loan that was doomed to fail and (2) deceptively identifying World Business as the loan "servicer" in the loan documents when it was actually the "true lender." The lenders move to dismiss the borrowers' claims.

The Court found that the borrowers' claims that the loan violated state usury laws could not survive and must be dismissed, because World Business had registered the loan with the Massachusetts Attorney General's Office within two years of making the loan, as required by section 49(d) of Gen. Law Ch. 271, which did not require the registration to identify the actual lender (and required only information concerning the borrower and the loan itself).

However, the Court found that the borrowers had alleged sufficient facts to proceed with their claims that the defendant lenders were in violation of Chapter 93A. In Massachusetts, the Supreme Judicial Court has held that a "high cost home mortgage loan" violates Chapter 93A if the lender should have recognized the borrower was unlikely to be able to repay the loan. Although the loan in this case was not a home mortgage loan, Judge Young concluded that the law from home mortgage cases "serves as a 'recognized or established common law or statutory concept of unfairness' relevant to this case." Citing the fact that the borrowers' loan was roughly the same amount that they had paid for their house (which was the collateral for the loan), the loan application was missing important information about the business itself that could have been used to evaluate the likelihood that the loan could be repaid, and World Business marketed its loans to applicants with low credit scores who could not otherwise obtain a loan as factors potentially relevant to whether the issuance of the loan was an unfair and deceptive practice, the Court denied so much of the defendants' motion as sought dismissal of the claims that the defendants had violated General Law Ch. 93A.

The legal issues surrounding these lending practices are very much unsettled areas of law within Massachusetts, and it is highly likely these issues will arise again.

Large, multi-unit, multi-building real estate developments can be seen all over the greater Boston area these days. As with any major project, problems can arise, and what looked like perfect, shiny new building may start to form a few cracks. Once cracks start to appear, when does the statute of limitations clock begin to run?

In a recent Memorandum and Order, the United States District Court for the District of Massachusetts District Court granted summary judgment to a group of defendant banks after applying a "precondition" test established by the First Circuit regarding overtime pay to employees for their participation in required training programs. The case, Miller et al v. Citizens' Financial Group et al., stemmed from the plaintiff employees' claims that the banks had failed to pay them overtime compensation for time spent outside of regular working hours to study for mandatory licensing exams, and that this failure constituted a violation of both the Fair Labor Standards Act and Massachusetts and Pennsylvania state law. The District Court analyzed the summary judgment motion under controlling First Circuit precedent as established in Ballou v. General Electric Co. and Bienkowski v. Northeastern University. In both cases, the plaintiffs claimed that they were not compensated for time spent on mandatory classwork and/or training in connection with their employment and, in both cases, the First Circuit upheld summary judgment rulings against the plaintiffs. 

Mediation and conciliation are two of the most common methods of alternative dispute resolution ("ADR"). In each of these voluntary processes, a third party neutral with no stake in the case tries to facilitate a compromise or agreement between parties who are in dispute. The mediator, or conciliator, will spend time with the parties and work with them, and their counsel, to assess each of their goals and help them move towards an agreement that is fair and reasonable and something each of the parties can live with. 

In Merlini v. Canada, the First Circuit dealt with an interesting case involving a clerical employee of the Canadian embassy who was injured on the job. After numerous twists and turns in her attempt to get worker's compensation coverage for her injury, she ultimately sued the country of Canada, asserting that because it did not have worker's compensation coverage under Massachusetts law, she could recover from it directly. Canada argued that it was immune from suit under the Foreign Sovereign Immunities Act ("FSIA").