Hospital's radiology contractor must answer negligence claim over patient death, per third-party doctrine

Saint Vincent Hospital, Worcester, Mass.
Terageorge~commonswiki via Wikimedia Commons CC BY-SA 4.0

A hospital's radiology contractor may be on the hook for failure to provide emergency medical treatment to a patient who died, the Massachusetts Appeals Court ruled last week.

The decision offers a solid analysis of third-party beneficiary doctrine in tort law. Under the doctrine, a duty in common law tort can arise from a contract that benefits a third party. So if B and C contract for the protection of A, an injured A may sue C for for its failure under the contract, even though C had no contract with A and would not otherwise have owed any common law duty to A.

In the instant case, Saint Vincent Hospital (SVH) in Worcester, Massachusetts, had contracted with Saint Vincent Radiological Associates, Inc., (SVRA) for radiology services for SVH patients. The plaintiff-decedent was an SVH patient suffering from an acute gallbladder infection requiring an emergency procedure. SVH did not have staff to do the procedure and transferred the patient to another hospital. The patient died before the procedure could be completed. 

The plaintiff-representative discovered later that an SRVA physician on call for SVH was able to do the procedure. The representative sued SVH and SVRA. The representative settled with SVH, but the representative's negligence claim against SVRA was dismissed for want of duty.

The trial court erred, the Appeals Court decided. Ordinarily, an SVRA doctor might have owed no duty to an SVH patient, any more than any doctor who was a stranger to the patient. However, SVRA had contracted with SVH for the benefit of third parties, namely, patients, such as the decedent. The plaintiff therefore could pursue a negligence claim against SVRA, the Appeals Court agreed, remanding and reinstating the claim.

There remains a question of fact in the case, which might have confused the issue in the trial court, over whether the SVH-SVRA contract provided for SVRA doctors to do emergency procedures, if needed, more than mere radiology consultations. If the scope of the contract was so limited, then there is no basis in the contract for the duty to perform the procedure that could have saved the patient's life. The parties had settled contract claims in the case below, so the courts never had occasion to opine on the scope of the contract.

Another question that will have to be resolved on remand, if the case is tried, is whether the defendant was negligent, that is, breached the standard of care. Even breach of contractual obligation, if that were the case, is not negligence per se under the third-party beneficiary doctrine.

In working out its conclusion, the Appeals Court noted an important additional feature of the doctrine, which is that a contract can only support a duty familiar to common law, assuming there were a social-contractual link between A and C. If a contract imposes some exotic obligation, then the only remedy for breach arises between the contracting parties, B and C, in contract law. Here, though, this requirement is not an impediment. C is a doctor, and A is a patient. The duty relationship is easily recognizable once the contract bridges the social gap.

The case is Brown v. Saint Vincent Radiological Associates, Inc., No. 23-P-771 (Oct. 24, 2024). Justice Gregory I. Massing wrote the opinion of the unanimous panel, which also comprised Justices Shin and D'Angelo.

High court construes tenure contract to constrain faculty salary cuts at Tufts medical school

TUSM Arnold Wing, 2012, Boston
John Phelan via Wikimedia Commons CC BY 3.0

Academic freedom won a rare court victory last week when the Massachusetts high court allowed claims that Tufts University improperly reduced the salaries of tenured medical faculty.

(As an aside, I wrote just yesterday about academic freedom in the case of FAMU's efforts to fire the law school's first and only tenured Latina professor for speaking on a matter of public concern, namely, the school dean's contentious resignation. Please consider signing the letter in support of Prof. Maritza Reyes.)

In the scrappy remains of what academia has become, the Tufts School of Medicine (TUSM) in the late 2010s told eight faculty that they would have to bring in external research support to cover half their salaries and their lab space, or they would see their salaries and space cut. The eight plaintiffs didn't meet the new standards, and TUSM imposed the cuts.

As things usually go in these cases, the trial court awarded summary judgment to the defense. Much responsibility for the sorry state of academic tenure in the United States can be laid at the feet of its once defenders, such as the American Association of University Professors (AAUP), which became so enamored with procedural arcana in the early 20th century that it forgot the substantive rights it was supposed to be fighting for. I wrote in 2011 about this problem and the urgent need to address it then. The law too often says that as long as a university dots its is and crosses its ts, it can fire for any reason.

The typical bulwark in the tenure contract is simply that firing must be "for cause," a wishy-washy term that reduces the contract practically to year-to-year employment. A university can disavow termination as a violation of civil rights, then turn right around and point to bad breath and a disagreeable disposition as sufficient "cause." Judges usually are eager to defer to universities, reasoning that workers could strike better bargains if they wanted to; they have the AAUP working for them, after all.

Just such ambiguity contributed to the plaintiffs' grief in the instant case. The Massachusetts Supreme Judicial Court (SJC) opined that the term "economic security" in the Tufts tenure contract "is ambiguous." Upon the ambiguity, the term could be not be said to include a guarantee of lab space, and the lower court so concluded correctly.

A state high court typically would send plaintiffs packing wholesale upon deference to university interpretation of the contract. However, the SJC reversed and remanded, concluding that "more evidence is required regarding the customs and practices and reasonable expectations related to salary and full-time status for tenured professors at TUSM, and even other universities and medical schools," to determine whether the compensation reduction violated the contract.

Massachusetts is a labor-friendly state, for better and for worse. The courts are permissive, for example, in "wrongful termination" tort suits that would be shut down in a flash in other states. Here, the SJC was willing to look for evidence that other states' courts would eschew breezily. While I'm usually hesitant to see a court broadly construe a meticulous private contract, I'll here let myself be bettered by anxiety over academic freedom facing evisceration by the looming dismantling of faculty job security.

The plaintiffs in the Tufts case had been awarded tenure at different times, from 1970 to 2009. The SJC looked to the TUSM faculty handbook, which usually is construed as contractual in higher ed employment law. The handbook includes an academic, freedom, tenure, and retirement policy that incorporated language verbatim from the 1940 AAUP Statement on Principles of Academic Freedom and Tenure.

The 1940 statement speaks eloquently to the importance of "freedom of teaching and research and of extramural activities," as well as "a sufficient degree of economic security." All good. But the statement characteristically left "the precise terms and conditions" to ad hoc negotiation, as long as termination is permitted "only for adequate cause" and the result of some kind of review process. That's long left the tenured professor in an AAUP-style contract to wonder whether anything would stop the university from reducing salary to a penny and relocating the professor's office to the boiler room.

When Tufts presented a faculty hearing board with a multi-million operating deficit in the late 2010s, the board was more than willing to throw some faculty under the bus to save the rest. The union at my school did the same thing during the pandemic: eagerly approving faculty salary cuts, and even asking that they be higher, rather than calculating how many quarter-million-dollar-a-year assistant-associate-vice-provost-chancellors we might do without instead. 

Thus, another problem with tenure as we have it is that the AAUP, enraptured as it was and is with collectivism, never thought to consider the need to protect faculty from each other. Unlike the First Amendment, AAUP academic freedom allows the collective to run roughshod over dissenting voices.

With due process duly delivered, the Tufts plaintiffs saw salary reductions from 10 to 50%.

Taking stock of the matter, the SJC concluded, again, exceptionally, that "economic security is an important substantive provision of the tenure contract and not a prefatory or hortatory term." The court relied on the 1940 statement and strained in structuralist contract construction to distinguish a 2022 New York decision to the contrary. 

The record at Tufts probably does not support plaintiffs in resisting any salary reduction, but, the SJC concluded, at least created a question of fact as to how much is too much.

The case is Wortis v. Trustees of Tufts College (Mass. Mar. 14, 2024). Chief Justice Scott L. Kafker wrote the unanimous opinion.

Pomeranian isn't a child, but must be shared by separating human parents, court rules in equity

Pexels, licensed, by Tiểu Bảo Trương (not Teddy Bear)

Who's a good boy?

A Pomeranian named Teddy Bear will split his time between his adoptive parents since their separation, the Massachusetts Appeals Court ruled yesterday in a 20-page opinion.

"Dog" is my favorite keyword atop a Mass. court decision, and it was the first one here. Teddy Bear's legal status as beloved personal property was at issue.

In the plaintiff and defendant's separation, they agreed to share custody of Teddy Bear on alternating weeks. Over time, the arrangement soured, and, according to the plaintiff, the defendant played the nine-tenths-of-the-law card.

The plaintiff sued, and the motion judge of the Superior Court (Shannon Frison, since returned to practice) ordered that Teddy Bear's alternating schedule be restored. The defendant appealed, and a single justice of the Appeals Court (Marguerite T. Grant, as long as we're naming names) vacated the motion judge's order. (Attorney Justin R. McCarthy has some of the court docs uploaded.)

The single justice opined that "the motion judge had improperly treated Teddy Bear as if he were the parties' child." The equitable remedy of specific performance ordered by the motion judge would be suitable for a case of child custody, the single justice reasoned, but is not appropriate to the disposition of personal property. Rather, the defendant, if held responsible, would owe damages for conversion.

The plaintiff then appealed, and the three-judge panel of the Appeals Court sided with the plaintiff.  The single justice erred, and specific performance is a suitable remedy.

Alas, for poor Teddy Bear, the plaintiff prevailed not because a dog is more than mere chattel, a sentient creature capable of love for both his feuding parents.

Rather, the Appeals Court determined, it is simply so that a court possesses the equitable power to enforce a contract relating to personal property and "grant relief for delivery of a thing wrongfully withheld."  The usual rule of injunction pertains to require that "the remedy at law for damages would be inadequate."

Teddy Bear got some cred on the inadequacy analysis. Quoting the Restatements of Contracts, the court wrote that personal property may have sentimental value that well exceeds its market value: "Contracts may be specifically enforceable because they involve a grandfather's clock, even though it will not run, a baby's worn-out shoe, or faithful old Dobbin the faithful horse whose exchange value in the market is less than nothing."

Moreover, the court observed, the motion judge did not fashion an equitable order from whole cloth. Rather, the plaintiff asked the court to enforce a contract that the private parties already had worked out and already had executed on in the past. Thus, it was not so that the motion judge had treated Teddy Bear as if he were a child.

The Appeals Court decision thus accords with the contemporary trend in tort law, a welcome departure from historical common law, to quantify the value of pets to account for their emotional value to their owners, more than their mere replacement or resale value, which might be nought.

The case is Lyman v. Lanser (Mass. App. Ct. Mar. 7, 2024). Justice Peter W. Sacks wrote the opinion of the unanimous panel, which also comprised Justices Brennan and D'Angelo.

Teddy Bear's a good boy; that's who.

Consultant panning contractor was not 'improper' interference with lucrative reno deal, court holds

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An architect whom homeowners hired to review their bills in multimillion-dollar renovation did not tortiously interfere with the reno contract when he advised them to terminate and hire another contractor, the Massachusetts Appeals Court held yesterday.

The devil in the details here is the element "improper" in the tort of interference. The same element, or the same concept, lives at the heart of many a business tort, and it's a difficult line to find. Indeed, the Appeals Court wrote that "improper" "has proved difficult to capture in a universal standard."

Interference with contract in Massachusetts law requires a contract or prospective business relation, knowing inducement to break the contract, interference by "improper motive or means," and harm to the plaintiff as a proximate result. Here, the architect told the homeowners they were being overbilled and urged them to terminate the renovation contract and hire a contractor the architect recommended. They did, and the terminated contractor sued the architect for interference with contract.

The fact pattern is common for generating interference claims, as the very job of the defendant is, in a sense, interference, that is, to run interference between consulting client and its contractor. Only "improper" was in dispute, and the plaintiff-contractor could not show evidence that measured up.

The plaintiff disputed the veracity and quality of the defendant's consultation and advice. But worst case, the court reasoned, the plaintiff might persuade a jury to find negligence or gross negligence. That can't be the basis of an interference claim, because then the interference tort would make actionable every negligent infliction of economic loss. 

The negligence tort usually requires a physical infliction of loss or harm. Business torts are exceptional in this regard, but they are predicated on a strong duty relationship, such as contract or fiduciary obligation. The plaintiff-architect and defendant-contractor here were not in privity of contract.

The court looked to an earlier case in which the Massachusetts Supreme Judicial Court had allowed interference predicated on deceit or intentional misrepresentation. That can suffice to support interference. But there was no evidence here of deceit. So the court pondered what improper means short of that standard.

The court leaned heavily on the Second Restatement of Torts, which suggested, besides deceit, threats, defamation, or other conduct "innately wrongful, [and] predatory in character." Inversely, the Second Restatement advises that no interference liability can arise from "truthful information" or "honest advice within the scope of a request for advice."

The latter standard fit, the court opined. And the Restatement comments elaborated, "[N]o more than good faith is required," regardless of competence. "The rule as to honest advice applies to protect the public and private interests in freedom of communication and friendly intercourse," affording latitude especially to "the lawyer, the doctor, the clergyman, the banker, the investment, marriage or other counselor, and the efficiency expert."

The court affirmed the superior court award of summary judgment to the defendant.

There's unfortunately one point of confusion reiterated in the court's opinion. The court correctly pointed to a line of Massachusetts cases approving of "actual malice" as supporting interference claims in the context of employment, when a disgruntled terminated worker claims interference against a supervisor or corporate officer for interfering with the worker's employment contract. In this context, the courts defined "actual malice" as "spiteful, malignant purpose unrelated to a legitimate corporate interest."

Common law malice

That's not what "actual malice" means, at least in the civil context. "Actual malice" generally is a stand-in for reckless indifference and is distinguishable from "common law malice," which represents spite, ill will, or hatred. It's been observed many times that "actual malice" is unfortunately named, and it would be better had there been a different term from the start. Common law malice can be evidence of actual malice, but certainly is not required. The difference can be confusing to jurors.

The Massachusetts precedents on interference in the employment context seem to have misused the term "actual malice" to refer to common law malice. OK, I guess, as long as we all know that malevolence is the one that can evidences tortious interference.

I have some doubts, by the way, about the correctness of the Massachusetts cases that apply the interference tort in fact patterns involving a fellow worker as defendant. A basic rule of interference is that one cannot be said to have interfered tortiously with a contract to which one is a party. If the defendant was clearly acting within the scope of employment, that is, as an agent of the employer, then I don't see that a tortious interference claim can arise, and there's no need to analyze impropriety. But then, I guess, the threshold requirement overlaps with the "unrelated to a corporate legitimate interest" piece of the impropriety test.

The case is Cutting Edge Homes, Inc. v. Mayer, No. 23-P-388 (Mass. App. Ct. Feb. 27, 2024) (temp. slip op. posted). Justice John C. Englander wrote the opinion of a unanimous panel that also comprised Justices Ditkoff and Walsh.

Acuerdo en inglés para arbitrar vincula al firmante de habla hispana aunque no lo entendió, tribunal concluye

(English translation by Google: Agreement in English to arbitrate binds Spanish-speaking signatory even though he did not understand it, court rules.)

Un hombre de habla hispana se comprometió a un acuerdo de arbitraje en inglés incluso si no lo entendía, dictaminó ayer el Tribunal de Apelaciones de Massachusetts.

El día de su cirugía para corregir la visión con Lasik, el demandante Lopez firmó cuatro formularios en inglés, incluido el consentimiento y el acuerdo para arbitrar cualquier disputa. Más tarde, insatisfecho con la cirugía, Lopez presentó una demanda, alegando negligencia médica.

CC0

Revocando la decisión del Tribunal Superior, el Tribunal de Apelaciones ordenó la desestimación tras la moción del demandado de obligar al arbitraje.

Las cláusulas de arbitraje obligatorio han sido un punto de dolor para los defensores de consumidores durante décadas. Son una parte del problema de los términos de servicio densos y no negociables que son omnipresentes en las transacciones de consumo contemporáneas, tema de libros como Wrap Contracts (2013), por Nancy Kim, y Boilerplate (2012), por Margaret Jane Radin.

Los defensores de consumidores como Ralph Nader lamentan la eliminación masiva de disputas del sistema de justicia civil, un impacto en la Séptima Enmienda y una propagación democráticamente problemática de la justicia secreta. Y detrás de las puertas cerradas del arbitraje, las probabilidades favorecen a los negocios de manera tan abrumadora que alimentan dudas sobre la justicia. Los árbitros que no dictaminan la forma en que los demandados recurrentes corren el riesgo de quedarse sin trabajo.

A pesar de estos potentes motivos de preocupación, los legisladores y los tribunales se han puesto del lado de las empresas para proteger y hacer cumplir el arbitraje obligatorio, supuestamente para proteger al comercio de los intolerables costos de transacción de los litigios.

En el ley común de daños, el consentimiento y la asunción expresa del riesgo niegan la responsabilidad, porque se debe permitir que dos personas establezcan los términos de su propia relación. Podrán apartarse del contrato social siempre que los términos que fijen no violen el orden público; es posible que, por ejemplo, no acepten cometer una herida. En teoría, ambas defensas se basan en el acuerdo voluntario y consciente del demandante.

El demandante que firma un contrato sin leerlo cuestiona esta teoría. La firma evidencia el acuerdo subjetivo del demandante. De hecho, no existe ningún acuerdo subjetivo; el conocimiento y la comprensión de los términos acordados no se pueden encontrar en la mente del demandante.

La regla general es que la firma vincula de todos modos. Y en gran medida, esta regla es necesaria, incluso si significa que las personas están obligadas a cumplir términos que no habrían aceptado si los hubieran entendido. El comercio depende de la fiabilidad de los contratos. Si una parte del contrato  siempre pudiera impugnar la aplicabilidad basándose en testimonios interesados de malentendidos, entonces el litigio sería tan gravoso que paralizaría los negocios.

Un malentendido subjetivo puede causar un incumplimiento del contrato en el derecho de daños si mitiga la evidencia de la aquiescencia del demandante. Así, por ejemplo, las empresas a veces buscan establecer la asunción expresa del riesgo por parte de los clientes con un cartel que diga que "cualquiera que proceda más allá de este punto asume el riesgo de sufrir daños por negligencia." (A veces, tales carteles son exigibles por ley.) En tal caso, el demandante puede al menos argumentar que no vio el cartel, o, mejor, no lo entendió debido al lenguaje.

Desafortunadamente para Lopez, no conocía esos datos. El tribunal relató: "Lopez testificó que había vivido en Massachusetts durante doce años en el momento de su cirugía y había aprendido 'un poco' de inglés 'en las calles.'" (Las opiniones de los tribunales y el testimonio citado están en inglés; todas las traducciones aquí son mias.) El Tribunal Superior había determinado que "Lopez no tenía un comprensión suficiente del inglés para permitirle leer el Acuerdo de Arbitraje." Al mismo tiempo, la oficina de cirugía tenía un traductor de español disponible; Lopez no pidió ayuda. El hecho de su firma era inequívoco.

El tribunal razonó:

"Los contratos escritos tienen como objetivo preservar los términos exactos de las obligaciones asumidas, de modo que no estén sujetos a la posibilidad de una falta de recuerdo o una declaración errónea intencionada." [Grace v. Adams (Mass. 1868).] Esta regla de larga data 'se basa en la necesidad fundamental de seguridad en las transacciones comerciales." [Williston on Contracts (4a ed. 2022).] Estos principios legales subrayan que existe una "solemnidad [para] firmar físicamente un contrato escrito" que hace que una firma sea algo más que un simple adorno elegante en un documento. [Kauders v. Uber Techs., Inc. (Mass. 2021).]

Lopez testificó que no habría firmado el acuerdo de arbitraje si hubiera podido entenderlo. El mayor problema político para la protección del consumidor en Estados Unidos es que esta afirmación probablemente sea falsa, sin el beneficio de la retrospectiva. Es prácticamente imposible vivir en el mundo moderno—tarjetas de crédito, teléfonos móviles, sitios web, servicios públicos, viajes—sin aceptar un arbitraje obligatorio todos los días.

El caso es Lopez Rivera v. Stetson, No. 22-P-904 (Mass. App. Ct. Aug. 31, 2023). El juez Christopher P. Hodgens redactó la opinión del panel unánime, en el que también estaban los jueces Wolohojian y Shin.

Grubhub drivers signed away right to sue, court rules

Haydn Blackey via Flickr CC BY-SA 2.0

Grubhub drivers signed away their right to sue on unfair wage claims, the Massachusetts Supreme Judicial Court ruled today.

Plaintiff Grubhub drivers complained that the company is stiffing them on minimum wages and tips under state law and, worse, retaliating against drivers who complain.

I have no knowledge of the validity of these claims, but I worry a lot about the exploitation of gig workers in our economy. This exploitation is a big slice of the broader problem of employers' over-classification of personnel as independent contractors to avoid having to provide fair wages and benefits. Sometimes employers cross the legal line and sometimes they don't; regardless, the effect of even the lawful leeway contributes to our glut of working people who cannot make ends meet, put us all at risk with insufficient insurance for healthcare and accidents, and spend so much on necessities as to have paralyzed American socioeconomic mobility. Our woefully outdated measures of employment fail to reflect this problem, which is why media pundits and Washington pointy-heads scrunch their faces in confusion over how we can have favorable job numbers and an "it's the economy, stupid" political crisis happening at the same time.

Collateral to labor exploitation, we have long had the problem of our court system being subverted by the supposed freedom to contract. At this point, we all know without even having to read the fine print that every terms-and-condition box we check, just like every product we liberate from shrinkwrap, binds us to arbitrate any disgruntlement and frees our adversaries from ever having to answer to us in the courts, which were designed for that very purpose. Many of us know furthermore that the terms of arbitration profoundly favor the respondent companies, both substantively, evidenced empirically by companies' overwhelming win rates, and, often, procedurally, by way of inconvenient venues, arcane procedures in contrast with small claims courts, and the burdens of transaction costs.  I've cited the definitive books on this subject by Nancy Kim and Margaret Jane Radin so many times, that, frankly, I just don't have the energy today to look up their URLs again.  Let's instead invoke the tireless Ralph Nader and his persistent admonition that we have undermined the Seventh Amendment, to which point I add humbly that anti-vigilantism is an important function of our civil dispute resolution system, and maybe we ought remember that in a society in which the least mentally stable among us apparently have ready access to firearms.

So it's the confluence of these two socio-legal problems that interests me in the present case, more than the merits. On the merits, the Grubhub complainants tried to work around their 2017 clickwrap agreement to arbitrate by characterizing themselves as a kind of interstate transportation worker that is exempt from the Federal Arbitration Act. But Grubhub drivers are not long-haul truckers. A for creativity, F for achievement. The court held that the drivers indeed signed away their right to sue.

F is likely to be the final disposition of the complaints in arbitration after remand, too.

You can read more in Archer v. Grubhub, Inc., No. SJC-13228 (July 27, 2022). Justice Dalila Argaez Wendlandt wrote the unanimous opinion (temporarily posted).  The case in Suffolk County Superior Court is no. 1984CV03277 (class action complaint filed Oct. 21, 2019).

The U.S. Chamber, dependable opponent of transparency and accountability, was among the amici on the prevailing side.  The Harvard Cyberlaw Clinic was among the amici for the workers. The office of Commonwealth Attorney General Maura Healey entered an appearance as amicus, but filed no brief. Healey's office sued Grubhub one year ago, alleging the company overcharged Massachusetts restaurants during the pandemic (complaint, press release). That case, no. 2184CV01719 in Suffolk County Superior Court, is pending currently on cross motions for summary judgment.

Families retain common law rights over loved ones' remains when a church sells a graveyard, court holds

Photo by Bicanski via Pixnio

Principles of common law trust give families a say over the disposition of their loved ones' remains when a church closes and sells its burial ground, the Massachusetts Appeals Court held in May.

The chronic closure of churches and sale of their buildings has spun off a collateral issue of what happens to human remains and who gets to decide.

The 2015 closure of the Episcopal Church of the Holy Spirit of Wayland, Mass., generated such a problem. The diocese decided to close the church and agreed to sell the property to the Coptic Church.

The Coptic Church was not keen, though, to take over and maintain the churchyard burial grounds as they were. The Coptics were interested in developing the property, and they have a religious objection to cremation, which was the state of some of the deceased.

The Episcopal Church explored disinterment and relocation options with families of the deceased. The last burial there was in 2006. Not all families were willing to get on board; some wanted their loved ones to stay put. The Episcopal Church therefore endeavored to move the remains without consent, to see the sale to the Coptic Church go through, and litigation ensued.

The court reviewed the potentially applicable law of property and contract. Both parties made good arguments, and none persuaded the court dispositively. In essence, the church claimed conventional property ownership, and the families pointed to a contractual promise of "perpetual care."

The court instead decided to hang its hat on the amorphous but persuasive notion of common law trust. Some kind of right clearly persists in family over members over the disposition of loved ones' remains, the court reasoned, because we don't think twice in entertaining disputes between family members when there is a question about where a loved one should be laid to rest. Something more than mere property must be going on; the court quoted a New York court's "eloquent" reasoning in an 1844 case:

"When these graves shall have worn away; when they who now weep over them shall have found kindred resting places for themselves; when nothing shall remain to distinguish this spot from the common earth around, and it shall be wholly unknown as a grave-yard; it may be that some one who can establish a 'paper title,' will have a right to its possession; for it will then have lost its identity as a burial-ground, and with that, all right founded on the dedication must necessarily become extinct."

The instant case is hardly akin to that distant day, the court countered; rather, the complainants here are first-degree survivors. "For these reasons," the court concluded, "we now hold that in the absence of a governing statute, common law trust principles apply to the disinterment of human remains from a dedicated burial ground until the families of the deceased have abandoned the remains or the burial ground is no longer recognizable as such."

The court made short work of the Coptic Church's claim that its freedom of religious exercise would be violated by the presence of cremated remains. Essentially, the court reasoned, the bodies are already there. And the family's religious rights might as well be implicated were the court to countenance disinterment.

The court acknowledged that many questions would arise from this decision, for example, regarding the family's right to visit their loved ones' graves under new ownership. But those are questions for another day.

The unusual case is Church of the Holy Spirit of Wayland v. Heinrich, Nos. 21-P-7 & 21-P-8 (Mass. App. Ct. May 5, 2022). Justice James R. Milkey wrote the opinion of a unanimous panel.

Tort-contract distinction cannot block damage multiplier, Mass. high court holds in lease dispute

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A landlord may not rely on a limitation-of-liability provision in a commercial lease to evade a damage multiplier under Massachusetts consumer protection law, the Supreme Judicial Court ruled in January, regardless of whether the case is characterized as tort or contract.

The dispute arose between plaintiff-tenant Majestic Honda and its LLC landlord, owned by Alfredo Dos Anjos. Majestic accused the defendant of bad-faith lease termination, and the trial court agreed.

Massachusetts General Laws chapter 93A, under which Majestic brought its case, is a famously potent statutory remedy. Ostensibly its section 11 is a consumer protection law like any of the unfair trade practices prohibitions found throughout the states. But the statute has been read broadly in Massachusetts to operate at or beyond the margins of what lawyers usually regard as "consumer protection."

Moreover, section 11 authorizes double and treble damage awards upon "willful or knowing" misconduct. Massachusetts does not recognize punitive damages at common law, only by statute. Chapter 93A also has a four-year statute of limitations, sometimes an advantage to plaintiffs over the usual Massachusetts limitations period of three years for most tort actions.

Thus, as a result of permissive construction and powerful incentives for plaintiffs, chapter 93A is invoked frequently in what would be merely common law tort cases in other states, even to the exclusion of the common law claim in Massachusetts. Chapter 93A also is used in public enforcement, as in the Attorney General's present litigation to hold Big Oil accountable for climate change.

Tort and contract claims can be subsumed into the same 93A framework, blurring the classical distinction. The distinction is especially weak in product liability cases, in which Massachusetts plaintiffs almost always rely on 93A, in part because the commonwealth has recognized strict product liability as an extension of quasi-contractual warranty rather than as an evolution of common law negligence.

I am not a Massachusetts lawyer, and I am careful to disclaim to my 1L torts students that I am not well versed in 93A practice. It is its own field and cannot be folded into tort fundamentals. But, I admonish, they should endeavor to learn more if they intend to practice tort litigation in Massachusetts. My supremely talented colleague Professor Jim Freely once regularly taught a 93A course, but I don't think it's been offered since he was drafted (no pun intended) into the legal skills program.

Insofar as section 93A's damage multiplier is punitive in nature, it should not be disclaimable by a tort defendant, else the legislature's intended deterrent effect would be rendered moot. Upon this logic, the Massachusetts Appeals Court looked in past cases to discern whether the plaintiff's claim analogized more closely to tort or contract, to determine whether a limitation-of-liability provision should be allowed to nullify extraordinary statutory damages.

In fairness to the Appeals Court, the Supreme Judicial Court did roughly the same thing in 2018 when it applied a statute of repose for tort claims arising from real property to a 93A action, even though 93A itself has no repose period; three justices dissented from that ruling.

Here, the analogical approach is wrong, the Supreme Judicial Court decided unanimously. The court wrote, per Justice Scott Kafker, "Because G. L. c. 93A establishes causes of action that blur the distinction between tort and contract claims, incorporating elements of both, we do not adopt this formulation." The court further explained,

Our cases have also pointed out that a c. 93A claim is difficult to pigeonhole into discrete tort or contract categories, as c. 93A violations tend to involve elements of both tort and breach of contract, blurring the lines between the two. As we explained in [prior cases], "[t]he relief available under c. 93A is 'sui generis,'" being "neither wholly tortious nor wholly contractual in nature." Hence, a "cause of action under c. 93A is 'not dependent on traditional tort or contract law concepts for its definition.'"

After all, the court reasoned, the legislative intention to deter willful or knowing misconduct is not a function of whether the wrong is a tort or a breach of contract.

At a theoretical level, the vast gray area of 93A in Massachusetts law might have broader implications for the classical distinction between tort and contract, namely, whether the distinction will or should persist at all in contemporary common law. Massachusetts 93A practice might prove instructive as courts in many common law jurisdictions, such as Canada, reconsider the vitality of the so-called "economic loss rule," a historic marker of the tort-contract distinction that forbade tort actions in the absence of physical injury or damage.

The case is H1 Lincoln, Inc. v. South Washington Street, LLC, No. SJC-13088 (Mass. Jan. 24, 2022).

Belgian-waffle makers battle over whose doughy goodness won pride of place on Oprah's list

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Two Massachusetts business are embroiled in a mouth-watering lawsuit over waffles and Oprah.

Oprah's 2021 "favorite things" featured "Eastern Standard Provisions Gourmet Liège Belgian Waffle Gift Box." Yum.

Eastern Standard Provisions is based in Waltham, Mass., and lists its "Classic Liège Belgian Waffles" for sale online. Here's the pitch:

Our artisanal Classic Liège Belgian Waffles are crafted with real butter and pearl sugar imported from Belgium for a light, sweet crunch. Our Classic Liège Belgian Waffles are different than other waffles you may be used to. Most waffles are made with batter, but our Classic Liège Belgian Waffles are made from dough delivering a soft, brioche-like texture and a one-of-a-kind waffle experience.

This is not Eastern Standard's Oprah debut. Its "artisanal soft pretzels" made the grade in 2019.

But wait. Based in Attleboro, Mass., the Burgundian gourmet street-food brassiere claims in a lawsuit (via WCVB) that Oprah picked Burgundian waffles for the list, because Eastern Standard ripped off the Burgundian recipe it had learned under a non-disclosure agreement when the two explored a co-branding venture.

According to the lawsuit, Burgundian founder Shane Matlock learned how to make the Liège waffles while serving in the U.S. Army, when, for three of 15 years, he was stationed on the France-Belgium border, and, the Burgundian website says, he premiered the waffles in Providence, Rhode Island (my home state, near Attleboro) in 2017.

All I know for sure is that I now have a craving for waffles.

The case is The Burgundian LLC v. Hawthorne Food Co. (Mass. Super. Ct. Suffolk Dep't Bus. Litig. Sess. filed Feb. 3, 2022).  The plaintiff alleges, inter alia, breach of contract, violation of state trade secret law, passing off, false advertising, and unfair trade practices.

Court: Even upon liability for mere negligence, insurer may refuse to cover statutory attorney-fee award

Gerd Altmann licensed by Pixabay

An insurer is not obliged to reimburse an insured for attorney fees awarded in a quasi-tort action under Massachusetts statute, the commonwealth high court held today.

The insured was a cleaning business operating under the "Servpro" banner. In the dispute underlying the instant case, the insured cleaned up a sewage spill and was held liable to a client who suffered respiratory injury from exposure to disinfectant chemicals.

The personal-injury complainant sued under the unusually broad unfair commercial practices statute, Massachusetts chapter 93A. Chapter 93A affords prevailing parties attorney fees, as well as double or treble damages for complainants able to prove "willful or knowing" violation.

Those powerful incentives tend to cause plaintiffs to abandon common law tort claims when the 93A claim is viable. So here, the plaintiff declined to prosecute her common law negligence claim and was awarded attorney fees on a prevailing 93A theory, an implied warranty of merchantability.

Subsequently, Vermont Mutual Insurance Co. declined to pay the full sum of the award, asserting that the policy did not cover the attorney-fee award.

The Supreme Judicial Court agreed, finding the plain meaning of the insurance contract controlling. The policy covered liability for "bodily injury" and "costs," the court acknowledged. But attorney fees are not "costs 'taxed' against the insured in the suit," the court held; rather, "costs" refers to "the narrower, technical meaning of court-related or nominal costs recoverable as a matter of course to prevailing parties."

The outcome is potentially devastating to small businesses that believe themselves to be insured against negligence liability. An attorney-fee award is enough to put a small business into bankruptcy, yet personal-injury liability insurance typically excludes coverage for fees. 

That exclusion arises, I posit, upon the logic that fees typically are awarded in the states, if at all under "the American rule," only in cases of intentional or reckless wrongdoing, for which insurers also exclude liability. Chapter 93A makes fees much more readily accessible to prevailing plaintiffs and thereby burdens business with an unanticipated transaction cost, while affording multi-state insurers with a windfall.

Notwithstanding my principled objection to deviations from the American rule as an incoherent remedy to our problem of runaway transaction costs, I see no meaningful distinction between a personal injury award and an accompanying fee award when both are predicated on conduct indistinguishable from common law negligence. Vermont Mutual was let off the hook on a technicality, to my mind, and insureds should be entitled to the coverage they reasonably believe they bargained for. 

At minimum, going forward, the commonwealth insurance regulator should compel clear articulation of the risk to insureds of such a coverage limitation specially under chapter 93A. I won't hold my breath.

The case is Vermont Mutual Insurance Co. v. Poirier (Mass. July 6, 2022). Justice Scott L. Kafker wrote the unanimous opinion.

After dog bites postman, $375k jury award fits between floor and ceiling of high-low settlement agreement

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In a dog-bites-postman case in Massachusetts, the Appeals Court in late October held that the parties' "high-low" settlement agreement was a "contract like any other" and did not bar the defendants' appeal.

The plaintiff-postman in the case was covering an unfamiliar route when he was bit in the wrist and thigh by German shepherd-golden retriever mix "Chewbacca." At trial, the jury awarded the plaintiff $375,000 in damages. The defendants asked for a new trial, arguing that the jury was tainted by improper admission of information about the plaintiff's federal worker compensation benefits, in violation of the collateral source rule.

Before the jury verdict, on the last day of trial, the parties had struck a handwritten "high-low" settlement agreement.  They set a floor recovery of $150,000, if the jury verdict were anything less, and a ceiling of $1,000,000, if the jury verdict were anything more.

The plaintiff argued that the settlement agreement precluded appeal.  But it didn't say that.  Holding that the settlement agreement was to be construed as a "contract like any other," the Appeals Court found no language convincingly demonstrating defendants' waiver of appeals.  At the same time, the court held that the evidentiary admission in violation of the collateral source rule was harmless error, affirming the denial of new trial.

Regarding the high-low agreement, the court found "little law in Massachusetts."  More than 20 years ago, two New York attorneys described the agreements as "[a]n often underutilized and misunderstood litigation technique." At NYU in 2014, a research fellow examined the agreements' potential and limits in New York, Maryland, and Virginia; see also the ABA Journal in 2005.  An Illinois attorney wrote favorably about the "misunderstood" agreements in 2019, after a medmal plaintiff-baby's verdict was halved by a high-low from $101 million.  Virginia attorneys advised on drafting the agreements in 2007.

In a harder scholarly vein, research published in The Journal of Law & Economics in 2014 reported empirical research on high-low conditions and posited optimal conditions for their appearance.  Published soon thereafter, a Michigan law student argued that high-low agreements should be disclosed to juries.

The Massachusetts case is David v. Kelly, No. 20-P-706 (Mass. App. Ct. Oct. 25, 2021). Justice Mary Thomas Sullivan wrote the opinion of the court, which Justice Kenneth V. Desmond Jr. joined.  Justice Sabita Singh dissented as to the court's conclusion that the error on the collateral source rule was harmless rather than prejudicial.

Latest installment of Trump family litigation saga includes tortious interference claim against media

A leaked Trump 1040 from 2005

Former President Donald Trump has sued his niece, Mary Trump, and The New York Times Co. in the latest installment of intrafamilial litigation related to Mary's 2020 book, Too Much and Never Enough.

Filed yesterday in Dutchess County, New York, this latest lawsuit (complaint at CNS; Times's own coverage) mainly alleges breach of contract in the earlier settlement of litigation by Mary against Donald over the handling of the estate of Donald's father, Fred, who died in 1999.  I wrote on the course blog for my Trump Litigation Seminar in 2020 about another lawsuit, which is ongoing, by Mary against Donald over the estate of her father, Fred, Jr.; and about a suit by Donald's brother Robert, who died in 2020, which failed to enjoin publication of Mary's book.

The instant complaint alleges that Mary Trump was the source of Trump tax records published by The New York Times in its 2020 exposé.  The bits that interest me are counts of tortious interference with contract and of "aiding and abetting" tortious interference—or the civil equivalent of aiding and abetting, more accurately described as "providing substantial assistance or encouragement"—against the Times.  The complaint alleges that the Times "relentlessly" encouraged Mary to leak the tax records while knowing full well that doing so would breach her confidentiality agreement.

An intentional tort, tortious interference is not confined to business or media, though it's often classified as a "business tort," its usual injury being economic loss.  And it's often included in mass comm law treatments as a "media tort," because it's sometimes deployed against news media.

The paradigmatic case of an interference tort leveled against news media is the threat of Brown & Williamson Tobacco to sue CBS for its 1995 60 Minutes interview with whistleblower-scientist Jeffrey Wigand in violation of Wigand's non-disclosure agreement.  There is a classic scene in the feature film about the matter, The Insider, in which CBS producer Lowell Bergman (Al Pacino) loses his marbles upon admonition by CBS counsel Helen Caperelli (Gina Gershon) that truth is not a defense to interference, rather is an aggravating factor.  "What is this, Alice in Wonderland?" Bergman wonders aloud.  The instant Trump case is compelling for its similarity to the Insider facts.  

Interference as a media tort in the public imagination, or at least the lawyer-public imagination, surfaces periodically.  I wrote about the issue in 2011 when Wikileaks for a while threatened to spill the secrets of big banks.  (That fizzled.)  The high incidence of non-disclosure agreements in settlements of Me Too matters, and the former President's enthusiasm for NDAs combined to fuel another spurtive engagement with the issue in recent years. 

The issue prompts sky-is-falling missives from media because the role of, or any role for, the First Amendment as a defense to tortious interference is fuzzy.  In reality, the problem rarely gets that far.  Without unpacking the nitty gritty, it suffices to say that tortious interference has public policy built into its rigorous heuristic.  It is prohibitively difficult to press the tort against a publisher operating with at least a gloss of public interest.

The Trump complaint tries to circumnavigate that problem by accusing the Times of profit motive in its pursuit and publication of the tax records.  But the history of tort litigation against mass media is littered with failed attempts to drive the stake of profit-making through the heart of the journalistic mission.  Whatever degradations have afflicted mass media in our age of misinformation, no court is going to buy the argument against the Times on that score, at least not on these facts—cf. Palin v. N.Y. Times (N.Y. Times), in which the alleged editorial misconduct is substantially more egregious.

The case is Trump v. Trump, Index No. 2021-53963 (N.Y. Sup. Ct. filed Sept. 21, 2021).

Statute of repose fells tort claim dressed in contract

A farm house in Glocester, R.I.

(Flickr by Peter Rintels CC BY-ND 2.0)

Immersed in grading perdition in recent weeks, I fell behind in my usually steady diet of popular culture.  Better late than never, I offer, here and in two subsequent posts, for your amazement and amusement, an overdue eclectic assortment of three savory news pickins.

Back in January, remember January? Capitol Riot, Inauguration, that one, the Rhode Island Supreme Court held that the state's 10-year statute of repose and three-year statute of limitations on tort actions for latent defects in real property apply to homeowners who purchased from the builder.  The plaintiff-homeowners purchased their lakefront home in northwestern Rhode Island from the builder in 1997, and they discovered extensive water damage to the lake-facing wall of the house in 2012.  They attributed the damage to improper workmanship and materials.  Because they purchased from the builder, the plaintiffs tried to escape the statute of repose by characterizing their action for breach of implied warranty of habitability as sounding in contract law rather than tort law.  The court disagreed, deciding that the design of the law was to limit builder liability, regardless of whether the plaintiff was an original or subsequent purchaser.  The case is Mondoux v. Vanghel, No. 2018-219-Appeal (R.I. Jan. 27, 2021).  Hat tip to Nicole Benjamin and Crystal Peralta of Adler Pollock & Sheehan, via the Appellate Law Blog at JD Supra.

Uber suffers high court loss, but binding arbitration, blanket disclaimers still devastate consumer rights

Image by Mike Lang CC BY-NC-SA 3.0

Signs of life were spotted on the dead planet of consumer rights in click-wrap agreements. But don't get too excited; the life is microbial and already has been exterminated by the corporatocracy.

A blind man who was refused Uber service because he had a guide dog was successful in the Massachusetts Supreme Judicial Court last week in voiding loss of his disability discrimination claim because Uber failed to give him sufficient notice of its terms and conditions compelling defense-friendly arbitration.

Uber can easily correct its notice problem—and likely has already; this plaintiff signed up in 2014—so the rest of us are out of luck if we have an Uber problem.  But the plaintiff's rare win exposes the abject failure of federal and state law to protect consumer rights against gross overreach by online service providers.  And the case arises amid a deluge of reported ride-share sexual assaults, from which service providers have been widely successful in washing their hands of legal responsibility.

In the instant case, the Massachusetts high court followed 2018 precedent in the First Circuit, also applying Massachusetts law to the same Uber interface, to conclude that Uber's means of obtaining the plaintiff's consent to the app's terms and conditions (T&C) in 2014 fell short of the notice required to bind a consumer to a contract.

Uber required ride-share passengers to assent to the T&C by clicking "DONE" after entering payment information.  The court explained that the focus of the app's virtual page was on payment, and the language about the T&C, including the link to the terms themselves, was marginalized in page location and diminished in type size.  (The law gives the plaintiff no special treatment because of his blindness, and the case suggests no contrary argument.)  Uber knew how to do better, the Court reasoned, because drivers signing up with the app plainly must click "I AGREE" to their T&C: an easy fix for app makers.

The Court adopted for the Commonwealth what has become widely accepted as the two-part test for online T&C contract enforcement, "[1] reasonable notice of the terms[,] and [2] a reasonable manifestation of assent to those terms."  It is not necessary that a consumer actually read, or even see, the terms.  The Court acknowledged research (Ayres & Schwartz (2014); Conroy & Shope (2019)) showing that a vanishing number of consumers ever read, much less understand, T&C.  But the law requires only that the consumer be given the opportunity.

This approach to "click-wrap" agreements, kin to "browse-wrap" agreements, dates back to "shrink-wrap" agreements, by which a consumer could be bound to hard-copy license terms upon opening a product box, and earlier to the simple doctrine in analog contract law that a person's mark can bind the person to a contract that she or he has not read.

The rule works well to smooth commerce.  But the problem for consumer rights is that T&C have become unspeakably onerous.  British retailer GameStation made headlines in 2010 when it was reported that 7,500 online shoppers unwittingly(?) sold their "immortal soul[s]" as a term of purchase; that demonstration is not unique.  Legendary cartoonist Robert Sakoryak turned the infamously voluminous iTunes "terms and conditions" into a graphic novel (2017) years after South Park mocked Apple mercilessly (2011).  On a more serious note, the problem has generated ample scholarship, including at least two books (Kim (2013); Radin (2014)), and has been a flashpoint of controversy in European privacy law, which, unlike American law, requires a bit more than a token click-box to signify a person's consent to process personal data, especially when the person is a child.

The Massachusetts Court recognized the scope of Uber's T&C as a factor to be weighed in the sufficiency of notice.  "Indeed," the Court wrote, "certain of the terms and conditions may literally require an individual user to sign his or her life away, as Uber may not be liable if something happened to the user during one of the rides."  Uber's terms "indemnify Uber from all injuries that riders experience in the vehicle, subject riders' data to use by Uber for purposes besides transportation pick-up, establish conduct standards for riders and other users, and require arbitration."

Though arguably subject to a rare override in the interest of public policy, such terms still can prove prohibitive of legal action when a passenger becomes a crime victim.  And that's been happening a lot.  Uber itself reported in 2019 that over the preceding two years, the company had received about 3,000 claims of sexual assault each year (NPR).  The problem is so prevalent that ride-share sex assault has become a plaintiff's-attorney tagline.  Yet recovery is easier promised than won.  Even if a consumer somehow prevails in arbitration, a process hostile to consumer rights, T&C such as Uber's also limit liability awards.

Litigants have struggled to circumvent ride-share app providers' disavowal of responsibility.  In November, the federal district court in Massachusetts rejected Uber liability as an employer, because drivers are set up as independent contractors, a convenience that has summoned some heat on app service providers in the few states where legislators worry about employment rights in the gig economy.  Lyft won a case similarly in Illinois.  Meanwhile a Jane Doe sex-assault claim filed in New York in 2020 takes aim at Uber upon a direct-negligence theory for failure to train or supervise drivers (N.Y. Post).

In 2018, Uber and Lyft relaxed enforcement of compelled arbitration clauses in sex-assault claims (NPR)—if they hadn't, they might eventually have suffered a humiliating blow to their T&C, as unconscionability doctrine is not completely extinct in contract law—so hard-to-prove direct-negligence cases such as N.Y. Doe's are hobbling along elsewhere too.  Oh, Uber also relaxed its gag on sex-assault victims who settle, allowing them to speak publicly about their experiences (NPR).  How generous.

All of this is tragic and avoidable, if routine.  But in the Massachusetts case, I saw a troubling legal maneuver that goes beyond the pale: Uber counter-sued its passenger.

In a footnote, the Massachusetts Court wrote, "In arbitration, Uber brought a counterclaim for breach of contract against the plaintiffs, alleging that they committed a breach of the terms and conditions by commencing a lawsuit and pursuing litigation in court against Uber. Through this counterclaim, Uber sought to recover the 'substantial unnecessary costs and fees' it incurred litigating the plaintiffs' lawsuit."

So it's not enough that our warped American enslavement to corporatocracy allows Uber and its ilk to impose crushing, if industry-norm, T&C on customers, depriving them of rights from Seventh Amendment juries to Fourteenth Amendment life.  Uber moreover reads its own indemnity clause with the breathtaking audacity to assert that it is entitled to recover attorney's fees from a consumer who dares to make a claim—a claim of disability discrimination, no less. This reactionary strategy to chill litigation by weaponizing transaction costs exemplifies my objection to fee-shifting in anti-SLAPP laws.  Uber here shamelessly pushed the strategy to the next level.

Nader (2008)
Photo by Brett Weinstein CC BY-SA 2.5

Compelled consumer arbitration has stuck in the craw of consumer and Seventh Amendment advocates, such as Ralph Nader, for decades.  Nader is widely quoted: "Arbitration is private. It doesn't have the tools to dig into the corporate files. It's usually controlled by arbitrators who want repeat business from corporations not from the
injured person."  As the corporatocracy is wont to do, it pushes for more and more, ultimately beyond reason.  Industry pushing got a boost when the Trump Administration set about dismantling the Consumer Finance Protection Bureau.  Make no mistake that compelled arbitration is somehow about a free market; a free market depends on a level playing field, a fair opportunity to exercise bargaining power, and transparency of transactional information.  The unilateral imposition of an absolute liability disclaimer upon penalty of fee-shifting in a secret tribunal is none of that.

I'm tempted to say something like "enough is enough," but I would have said that 20 years ago, to no avail.  So I can only shake my head in amazement as we double down on the abandonment of civil justice in favor of secret hearings to rubber-stamp rampant venality.

Full disclosure: I use Uber, and I like it.  Taxis got carried away with their market monopolization, and a correction was needed.  Now that's feeling like a Catch-22.

The case is Kauders v. Uber Technologies, Inc., No. SJC-12883 (Jan. 4, 2021) (Justia).  Justice Scott Kafker wrote the opinion for a unanimous Court.  In amicus briefs, the ever vigilant U.S. Chamber of Commerce and the "free market"-advocating New England Legal Foundation squared off against plaintiffs' lawyers and "high impact lawsuit"-driving Public Justice.

Secret civil justice undermines employee rights

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A story investigated by ProPublica and featured on Planet Money highlights the problem of secret justice in perpetuating the willful abuse of at-home gig workers.

I expected that "Call Center Call Out," reported by Planet Money's Amanda Aronczyk and ProPublica's Ariana Tobin, Ken Armstrong, and Justin Elliott, based on the ProPublica story, would be a sad and frustrating tale of work-from-home gig economy labor being exploited, principally by the misclassification of employees as independent contractors to reap savings in compensation, work conditions, and employee benefits.

Turns out, there is even worse dissimulation afoot.  And there are worrisome implications for the health of the civil justice system.

To work these call-center jobs, for intermediary contractors such as Arise Virtual Solutions, the not-quite-employees are compelled to sign non-disclosure agreements (NDAs), arbitration agreements, and class action waivers.  These all are enforceable, even when the workers do not fully understand their implications.

When a worker has the temerity to commence arbitration proceedings, challenging misclassification as an independent contractor, the worker wins.  In one example in the story, a worker easily qualified as an employee under the labor test applied by the arbiter.  A worker can win thousands of dollars in reimbursement of expenses—they have to pay out-of-pocket for the privilege of their training and then buy their own computers and telecomm equipment—and back wages to bring their compensation history up to minimum wage.  

But here's the rub: the workers already are bound by their NDAs, and the arbitration is secret, too.  So there is no public record of the misdeeds of the employer.  The arbitration-winning complainant cannot even tell other mistreated workers that their labor rights are being violated.

According to the reporters, the secret justice system of arbitration is actually part of the business model for enterprises such as Arise.  They can pay liability to a small percentage of workers while willfully exploiting most others.  Because of the NDAs, arbitration clauses, and, most importantly, class action waivers, a lawyer said in the program, she can fight this abuse only behind a veil of secrecy, one case at a time, amounting to thousands of cases, even though every case is winnable on precisely the same analysis.

There's a classic scene from Fight Club (1999) when the Narrator (Ed Norton) is telling an airliner seatmate about his car company's "formula" for issuing a recall only when it's cost effective, regardless of the cost of human life.  (Think GM ignition switch recall.)

"Which car company do you work for?" the seatmate asks.

The Narrator pauses, staring her in the eyes.  Then, nodding knowingly, he answers,

"A major one."

So what companies use these call centers to take advantage of the cheap and ill-begotten labor forces organized by companies such as Arise?

Major ones.  Ones you've talked to.

Have a magical day.

 

The stories are Amanda Aronczyk & Ariana Tobin, Call Center Call Out, Planet Money, Oct. 2, 2020; and Ken Armstrong, Justin Elliott, & Ariana Tobin, Meet the Customer Service Reps for Disney and Airbnb Who Have to Pay to Talk to You, ProPublica, Oct. 2, 2020.