Enforceability of Class Action Waivers Under Massachusetts Law

Federal and state law specifically provide for employees to bring claims against their employers on a class action basis. On many occasions, the value of an individual’s claim doesn’t justify bringing a lawsuit solely on that individual’s behalf, such as when an employer reimburses mileage at 25 cents per mile as opposed to 57 cents per mile. In those types of situations (and there are many others), the only sensible way to vindicate the right is to bring the claim on a class action basis. These claims can be damaging to employers, which is why they oftentimes have employees sign agreements when they are hired in which they promise to arbitrate any disputes and that they will do so on an individual basis only. Massachusetts courts historically pushed back on these provisions, finding them to be unenforceable in certain situations. Those courts, however, have had to yield to the United States Supreme Court’s pro-employer view of these provisions, rendering them much easier to enforce in Massachusetts. For example, on March 4, 2021, the Massachusetts federal district court forced a group of individuals to arbitrate their claims on an individual basis as opposed to litigating them, in court, as a class action.

ARE CLASS ACTION WAIVERS ENFORCEABLE UNDER MASSACHUSETTS LAW IN THE EMPLOYMENT CONTEXT?

In 2009, the Massachusetts Supreme Judicial Court refused to enforce a class action waiver in the consumer context, holding that to do so was contrary to the statutory right to pursue such claims on a class action basis and that prohibiting class claims in the consumer context would undermine the public interest in deterring wrongdoing. Feeney v. Dell, Inc., 454 Mass. 192 (2009)(“Feeney I”).

In 2011, the United States Supreme Court held that the Federal Arbitration Act limits a state’s ability to invalidate a class action waiver based upon the state’s public policy. AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).

In 2013, the Massachusetts Supreme Judicial Court revisited Feeney I as required by the Supreme Court’s Concepcion decision. In that case, which is known as Feeney II, the Court held that a class action waiver could be invalidated if a consumer could demonstrate that she cannot effectively pursue a claim on an individual basis, thus rendering her claim non-remediable. Feeney v. Dell, Inc., 465 Mass. 470 (2013)(“Feeney II”).

Again in 2013, Massachusetts Supreme Judicial Court extended Feeney II to claims arising in the employment context. Machado v. System4 LLC, 465 Mass. 508 (2013). Machado was issued on the same day as Feeney II. At that time, individuals could proceed on a class basis, in both consumer and employment claims, even if they signed a class action waiver, if they could prove that not allowing the claim to proceed on a class basis essentially eliminated the right.

Shortly after Machado and Feeney II were decided, the United States Supreme Court held that a class waiver is enforceable even when a plaintiff shows that the waiver will prevent her from vindicating her statutory rights. American Exp. v. Italian Colors Restaurant, 570 U.S. 228 (2013). In doing so, the Supreme Court directly contradicted the central holdings of Machado and Feeney II. Feeney v. Dell Inc., 466 Mass. 1001 (2013).

To get to its holding in American Express, the highest court in this land made some pretty stunning statements:

“the fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy"

"the FAA's command to enforce arbitration agreements trumps any interest in ensuring the prosecution of low-value claims.”

In doing so, the Supreme Court essentially ignored the reality that without class remedies, workers’ rights oftentimes will be violated without recourse because it will frequently be too costly to effectively pursue that remedy. And in a not-so-subtle nod to business interests, the Court also elevated an employer’s right to arbitration over the interest in pursuing low-value claims on a class basis.

In response to Italian Colors, the Massachusetts Supreme Judicial Court was forced to issue Feeney III, holding that after American Express, its analysis in Feeney II (and by extension Machado) were no longer good law, thus eliminating important grounds upon which to invalidate class action waivers.

The Massachusetts Supreme Judicial Court reluctantly followed this binding guidance, stating:

Although we regard as untenable the Supreme Court's view that “the FAA's command to enforce arbitration agreements trumps any interest in ensuring the prosecution of low-value claims,” we are bound to accept that view as a controlling statement of Federal law.

As an employee, being able to bring a class action is an important right. Employees who have signed class action waivers can still bring class claims, but the ability to do so is narrowing.