Sovereign immunity shields MBTA from misclassification claim

Eric T. Berkman//July 9, 2020

Sovereign immunity shielded the Massachusetts Bay Transportation Authority from a misclassification suit brought by workers a staffing agency had hired to provide information technology services, a Suffolk Superior Court judge has ruled.

The plaintiffs claimed that, because they were misclassified as independent contractors, they were unlawfully denied benefits available to MBTA employees.

In bringing their claim, the plaintiffs argued that the independent contractor statute, G.L.c. 149, section148B, implicitly waives the state’s sovereign immunity from misclassification claims. The statute states that “whoever” fails to properly classify someone as an employee fails to comply with the Wage Act.

The plaintiffs contended that because “remedial statutes” such as section148B are to be construed broadly, the absence of a specific exception for the commonwealth and its agencies implies that state entities are not immune.

But Judge Kenneth W. Salinger, sitting in the Business Litigation Session, disagreed.

“The Commonwealth is immune from suit under a broad remedial statute unless the statute waives sovereign immunity expressly or by necessary implication,” Salinger wrote in granting the MBTA’s motion to dismiss. “[T]he mere passage of a remedial statute that protects workers or citizens in general is not enough to waive sovereign immunity.”

Salinger similarly found that the MBTA’s enabling statute — which says the MBTA may “sue or be sued” — does not, contrary to the plaintiffs’ arguments, waive the agency’s sovereign immunity as to claims of all types.

The 11-page decision is Harrison, et al. v. Massachusetts Bay Transportation Authority, Lawyers Weekly No. 09-065-20.

Narrowly construed

Lead plaintiffs’ counsel John Regan of Boston declined to comment. Attorneys for the MBTA could not be reached for comment prior to deadline.

But Christopher J. Petrini, who represents municipalities in wage-and-hour disputes and serves as Framingham’s city solicitor, said the decision is the latest in a line of Massachusetts cases that construe waivers of sovereignty narrowly.

“The case law is clear that waiver of sovereign immunity must be clear and unequivocal, and must be accomplished by express statutory waiver or by necessary implication,” Petrini said.

Lynnfield practitioner Thomas A. Mullen said Harrison has important instructional value for attorneys like him who represent governmental entities.

“[The case] is a strong reminder that the first question any public sector attorney should consider in defending against a statutory claim is whether the statute expressly or by necessary implication waives sovereign immunity,” Mullen said. “The court emphasized that absent a clear waiver of sovereign immunity, even a remedial statute such as [section148B] cannot be used as a weapon against the commonwealth or its political subdivisions.”

Barry J. Miller of Boston, who represents employers, said the case illustrates how courts seem more willing to dismiss a claim under section148B in which a worker has at least one entity, like a staffing agency, standing in the shoes of the employer.

“This makes sense if one thinks of the independent contractor statute as intended to ensure that some entity can be held responsible for providing the worker with the substantive entitlements of the wage laws,” Miller said. “This approach also avoids imposing responsibility for day-to-day supervision and compensation of a worker on business partners or the worker’s primary employer, who may be in no realistic position to ensure that worker is properly supervised or paid.”

However, Matthew J. Fogelman, a plaintiff-side employment attorney in Newton Center, described the ruling as “restrictive” and said it could have gone the other way.

“It’s unclear to me why the enabling language would not save the day here,” Fogelman said, adding that it seems unjust that any entity, including the MBTA, can essentially violate the independent contractor statute.

“Whether it’s legislative or whether it’s an appeal, this seems like an important enough issue to deserve some clarification or some amplification,” Fogelman said.

Nicholas F. Ortiz, who represents plaintiffs in wage and misclassification cases, said Harrison is an interesting ruling from a pleading perspective. He wondered whether a plaintiff in a future case could obtain a different result by opting not to sue a sovereign for misclassification damages under sectionsection148B and 150 of G.L.c. 149, and instead simply sue for a subset of damages under sectionsection148 and 150.

“That subset would be the differential between what an employee would be paid for that work by the sovereign and what the individual was paid as a contractor,” the Boston lawyer said, noting that the MBTA did not seek to dismiss a claim brought by one of the plaintiffs alleging that the MBTA violated section148 by failing to pay her for all the hours she worked.

While the commonwealth might still argue that there was no such differential, Ortiz said, the plaintiff might allege that the worker is an employee under both the section148 test and the “right to control” test.

“This is an untested strategy, but the logic goes: ‘The commonwealth didn’t pay an employee — and I was an employee’ and point to what wasn’t paid,” Ortiz said. “It’s a pleading technique that may be worth trying.”

Wrongly classified?

A staffing agency placed plaintiffs Barbara Ruchie and Craig Harrison with the MBTA, where they were to provide IT services. They apparently were classified as independent contractors.

According to the plaintiffs, the MBTA required them to be on site every day for set hours on a full-time basis.

The MBTA also allegedly assigned them an MBTA manager and gave them annual performance reviews.

Harrison, et al. v. Massachusetts Bay Transportation Authority, Lawyers Weekly No. 09-065-20 (11 pages)

THE ISSUE: Did sovereign immunity shield the Massachusetts Bay Transportation Authority from a misclassification suit brought by workers a staffing agency had hired to provide information technology services?

DECISION: Yes (Suffolk Superior Court/BLS)

LAWYERS: John Regan of The Employee Rights Group, Boston; Jeffrey Strom of Boylston (plaintiffs)

Amanda L. Carney, John S. Gearan III, Justin F. Keith, Terrence P. McCourt and David G. Thomas, of Greenberg Traurig, Boston (defense)

Additionally, the plaintiffs alleged, they were required to follow work priorities set by the MBTA.

In September 2018, the plaintiffs filed a putative class action on behalf of themselves and 110 similarly situated IT workers alleging violation of section148B.

They claimed in their complaint that, as a result of their misclassification as independent contractors, they were denied benefits and wages the MBTA paid to full-time employees performing similar work.

Both plaintiffs also alleged unjust enrichment stemming from their not being paid what they were entitled to. Harrison, meanwhile, brought a retaliation claim alleging that he was fired for complaining about being misclassified, and Ruchie alleged that the MBTA violated the Wage Act by failing to pay her for all hours worked.

The MBTA moved to dismiss all three counts for failure to state a claim.

No clear waiver

Salinger rejected the plaintiffs’ assertion that the MBTA had waived sovereign immunity.

Simply passing a remedial statute that protects workers or citizens in general does not, on its own, waive sovereign immunity, Salinger said.

Additionally, he said section148B does not waive sovereign immunity by necessary implication, drawing a contrast to other statutes that do.

For example, Salinger said, the state anti-discrimination law, Chapter 151B, waives sovereign immunity of the “Commonwealth and all political subdivisions” by including them in the statutory definition of employers subject to the statute.

Similarly, the Wage Act waives sovereign immunity by necessary implication because it states that the commonwealth and every municipality must pay timely wages to all employees, Salinger continued.

“In contrast, Plaintiffs have not identified any statute that expressly or by necessary implication waives sovereign immunity with respect to a claim against the MBTA under the independent contractor statute,” he wrote.

Salinger was also unmoved by the plaintiffs’ argument that the Legislature waived the MBTA’s sovereign immunity to claims of all kinds by providing in the MBTA’s enabling statute that the agency could “sue or be sued.”

“It is hard to square this argument with existing case law regarding the MBTA’s sovereign immunity,” Salinger said. “[T]he Supreme Judicial Court has repeatedly held that the MBTA would not be subject to tort liability without a clear statutory waiver of sovereign immunity as to tort claims. Those rulings would be incorrect if the ‘sue and be sued’ provision was a global waiver of the MBTA’s sovereign immunity.”

Finally, Salinger found that the unjust enrichment claim should be dismissed as well, though not on sovereign immunity grounds. Rather, he concluded, the parties’ rights and obligations were defined by valid contracts.

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