Lawyers applaud SJC ruling for protecting low-wage-earners

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In brief

• SJC rules it was an abuse of discretion to reduce anti-SLAPP attorneys‘ fees.
• Case involved Wage Act claims and employer counterclaims for abuse of process.
• Court emphasizes fee awards should reflect reasonable work, not damages value.
• Decision seen as strengthening protections for low-wage workers and their counsel.

Employment lawyers say the Supreme Judicial Court‘s recent reversal of the reduction of a fee award in an anti-SLAPP case brought by a Wage Act plaintiff will reinforce protections for low-wage workers.

Plaintiff Andres Hidalgo sued his employer, defendant Watch City Construction Corp., under the Wage Act for allegedly paying him for only two of the six weeks he worked for the company.

The employer brought counterclaims for abuse of process and malicious prosecution.

In response, Hidalgo filed and, following an interlocutory appeal, prevailed on a special motion to dismiss the counterclaims under the anti-SLAPP statute, G.L.c. 231, §59H.

Hidalgo then sought counsel fees and costs for the anti-SLAPP work, using the “lodestar” method as the basis for his request. Under the lodestar method, the number of hours reasonably spent on a case are multiplied by reasonable hourly rates.

Though an Appeals Court panel deemed the hours and rate to be appropriate for an anti-SLAPP case, it halved the fee award, characterizing it as disproportionate to the relatively low amount of damages at stake in the underlying Wage Act claim.

The SJC reversed.

“Here, having found that the number of hours spent and the rates charged regarding the anti-SLAPP motion on appeal were reasonable, particularly because the legal issues regarding anti-SLAPP are notoriously difficult, it was an abuse of discretion to use the monetary value of the Wage Act claims, for which no legal fees were sought, as the basis for reducing the attorney’s fees to be awarded for the anti-SLAPP work,” Justice Scott L. Kafker wrote for the court.

Plaintiff’s counsel David E. Belfort of Cambridge applauded the decision.

“It allows low-wage earners to meaningfully thwart unsupported SLAPP claims because they can attract capable lawyers to represent them,” he said. “The decision stands for a lot of good in an otherwise strained justice system.”

Raven Moeslinger of Boston, who co-authored an amicus brief for the Massachusetts Employment Lawyers Association, described the initial Appeals Court decision as encouraging a “legal caste system” in which low-wage workers would struggle to find counsel while high-earning employees would not.

“That would lead to less Wage Act enforcement, which is the opposite of what the Legislature intended by including a fee-shifting provision in the Wage Act,” Moeslinger said.

The 15-page decision is Hidalgo v. Watch City Construction Corp., et al., Lawyers Weekly No. 10-029-26.

Fee reduction

In a March 2021 Wage Act complaint, the plaintiff claimed the defendants failed to pay him for four of the six weeks he allegedly worked for them.

His claim totaled $11,216 after trebling his alleged damages pursuant to the Wage Act, but not including attorneys’ fees.

The decision is a reminder that employers should not be filing bogus counterclaims against employees because it can ultimately be very expensive.

— Raven Moeslinger, Boston

Watch City denied the allegations and brought counterclaims for malicious prosecution and abuse of process.

Hidalgo moved to dismiss the counterclaims under the anti-SLAPP law, arguing that they were based solely on his petitioning activity of filing suit to recover unpaid wages.

A District Court judge rejected that assertion and denied the anti-SLAPP motion.

Ruling on Hidalgo’s interlocutory appeal, the Appeals Court reversed and ordered dismissal of the counterclaims pursuant to the anti-SLAPP statute.

The Appeals Court then invited Hidalgo to file a petition for appellate attorneys’ fees and costs pursuant to the anti-SLAPP law’s fee-shifting provision.

Hidalgo’s petition sought $67,361.25 in fees, a sum he reached through the lodestar method.

To support his petition, he submitted affidavits from his attorneys, their time records, and affidavits from two other Massachusetts labor and employment lawyers affirming that the hourly rates used in the lodestar calculation reflected market rates.

Watch City did not oppose the fee request.

An Appeals Court panel subsequently awarded Hidalgo $33,680.65, which was half his requested fee.

The panel concluded that the hours and rates used in the lodestar calculation appeared reasonable and conceded that the anti-SLAPP issues raised in the appeal were “fairly complex” and involved a new standard issued by the SJC while the appeal was pending.

Regardless, the panel determined that Hidalgo’s award should reflect the monetary value of his Wage Act claims.

Hidalgo appealed further, and the SJC allowed his application for further appellate review.

Abuse of discretion

The SJC found that the Appeals Court panel abused its discretion by slashing Hidalgo’s fee award.

Under SJC precedent, fair market rate for time reasonably spent preparing and litigating a case is the basic measure of a reasonable attorneys’ fee and should govern unless there are special reasons to depart from it, Kafker said.

Here, he said, Hidalgo sought attorneys’ fees only for the anti-SLAPP work his lawyers performed, which was necessitated by Watch City’s counterclaims, and he fully prevailed on the anti-SLAPP issues.

“As the [Appeals Court] panel recognized, the anti-SLAPP issues were complex; furthermore, the complexity of the anti-SLAPP issues on appeal did not depend in any way on the value of the underlying Wage Act claims,” Kafker wrote. “In these circumstances, using the modest sum at stake in the Wage Act claims as a basis for reducing the fee award related to the anti-SLAPP counterclaims was error.”

Meanwhile, he noted, both the Legislature and the SJC have emphasized the importance of Wage Act claims.

“Although individual nonpayment may not provide significant monetary recovery, such amounts are often, if not always, critical to the wage earners involved,” Kafker stated. “Reducing an anti-SLAPP fee award based on the amount of damages sought for lost wages in the underlying Wage Act claims impermissibly minimizes the importance of such claims and risks disincentivizing lawyers from taking Wage Act cases.”

Hard to square?

Though Watch City’s attorney, Elliott M. Loew of Newton, could not be reached for comment, Boston attorney Michael E. Steinberg, who defends wage-and-hour cases, said he found it difficult to square the SJC’s decision with the discretionary nature of court determinations regarding the reasonableness of fee petitions.

An important factor that both Massachusetts and federal courts have repeatedly considered in evaluating the propriety of a prevailing party’s requested fees is a realistic assessment of the benefits the litigation actually produced, he said.

Here, Steinberg said, the value of the plaintiff’s Wage Act claim would seem to be a highly relevant indicator of the value of the dismissed SLAPP counterclaims.

Along those lines, the SJC did not address the fact that the anti-SLAPP dismissal in Hidalgo was without prejudice, and should the plaintiff’s Wage Act claims end up lacking a colorable factual basis, the employer could reinstitute its abuse of process or malicious prosecution claims, he said.

“To my mind, a court, prior to Hidalgo, would be within the bounds of discretion to conclude that such a result — potentially only a pyrrhic victory — may not warrant such a substantial fee award,” he said.

Still, Steinberg said, in the wake of the ruling, employers should give careful consideration to bringing counterclaims premised upon employees’ assertion of claims against them, particularly when the employee’s claims remain unresolved in ongoing litigation.

Boston employment attorney Jacob P. LaFreniere, on the other hand, called the ruling “a shining example” of the Wage Act and anti-SLAPP law working to achieve their ends.

“The Wage Act is designed to prevent unscrupulous employers from unlawfully and unreasonably detaining employee wages,” he said. “Those same unscrupulous employers cannot judicially bully employees into submission by filing frivolous counterclaims against employees who bring suit to oppose the unlawful detention of their earned wages. Those that attempt to do so can now expect to pay the price.”

Moeslinger agreed.

“The decision is a reminder that employers should not be filing bogus counterclaims against employees because it can ultimately be very expensive,” he said. “I think it’s in line with the legislative intent underlying both the anti-SLAPP statute’s and the Wage Act’s fee-shifting provisions and public policy considerations.”