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NECCO Candy Shuts Down Without Notice, Gardner & Rosenberg Files WARN Claim on Behalf of Employees

NECCOThis week, local Revere, Mass. company New England Confectionery Company, Inc. ("Necco"), longtime maker of iconic candies, abruptly closed its doors, leaving its employees without jobs and without much in the way of notice.  Gardner & Rosenberg PC today filed a class action complaint on behalf of the terminated employees, under the federal Worker Adjustment Retraining and Notification Act, 29 U.S.C. §2101 et seq. (the "WARN Act"), requiring 60-days notice to terminated employees and entitling the employees to up to 60-days back pay.  The complaint names as defendants Round Hill Investments LLC and its affiliate Sweethearts Candy Co. LLC., which the Complaint alleges took over NECCO's operations and are responsible for the shutdown.  See a copy of the Complaint here.

Innocent Insured Mother Can Collect Where Additional Insured Son Is Alleged to Have Started Fire, Massachusetts Federal Court Rules

burning houseIn an important victory for policyholders, the Massachusetts Federal Court recently granted coverage to an innocent insured whose son was alleged to have caused the fire that destroyed the family house. Massachusetts insurers – in this case Metropolitan Property and Casualty – often deny coverage to a named insured where an additional insured, such as a family member, intentionally causes a fire or other loss. A property owner who had nothing to do with a fire can thus be left with a burnt home and no coverage.

This new ruling clarifies that Massachusetts is on its way to joining the majority of states where an innocent insured can receive coverage if not involved in the fire.

In the case, a mother was the sole owner of her Salem house and the only named insured under the policy. The judge found that her grown son was a resident of the household, and thus an additional insured under the policy. The son did not have his own house. Rather, he stayed in motels while travelling for his job and lived with his mother when not on the road.

The judge, however, declined to adopt the reasoning of a 1938 decision on which many Massachusetts insurers rely to deny coverage in such circumstances. The judge noted that a growing majority of states, as well as two lower Massachusetts courts, have found coverage for an innocent insured.

The judge ruled that the language in the policy in this case would technically deny coverage for all insured parties – even those who are innocent of any wrongdoing. The judge noted, however, that this language deviated from the model Massachusetts policy, which distinguishes between “the insured” and “a(ny) insured.” The judge ruled that “the” insured is not barred from coverage where “a” insured intentionally causes the damage. Accordingly, “the insured” mother is not barred from coverage where her “additional insured” son may have caused the fire.

While a significant victory for policyholders, the judge indicated that the outcome may have been different if the party who started the fire was also a named insured. So, where both spouses are named in the policy, there may not be coverage for the innocent spouse.

Finally, it is important to note that the Massachusetts Supreme Judicial Court has not itself weighed in on this important issue. The federal court judge was required to base his ruling on a prediction that the Massachusetts Supreme Judicial Court would join the growing majority of states allowing coverage for an innocent insured.

Gardner & Rosenberg, P.C. represents policyholders in all types of complex coverage disputes involving many different types of policies, including Director and Officer, Commercial General Liability, Employment Practices Liability, Errors and Omissions, Life, Homeowners, and Long Term Care.

 

SJC Seeks Amicus Briefs in Gardner Rosenberg Wage Case

Gardner & Rosenberg represents a class of over 200 employees terminated without notice when the maternity and parenting education and services company they worker for suddenly shut its doors in 2014.  The company never paid the employees "back pay" required under the federal Worker Adjustment Retraining and Notification Act, 29 U.S.C. § 2101.  Gardner & Rosenberg obtained a judgment on behalf of the employees against the company for the "back pay" owed, but the company claimed insolvency and never paid.  The employees then sought damages against certain individual officers under the Massachusetts Wage Act, M.G.L. c. 149 § 148.  That issue is now before the Supreme Judicial Court, which is requesting amicus briefs on the issue of whether WARN Act back pay constitutes wages under the Massachusetts Wage Act.

For more information go to the SJC website, or contact Nick Rosenberg

SJC-12515 Jillian Calixto & another vs. Heather Coughlin & others Whether “back pay” paid by an employer to displaced workers under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq., constitutes “wages” for purposes of the Massachusetts wage act, G. L. c. 149, § 148.

Insurance Coverage: Massachusetts Insurers Cannot Recoup Defense Costs Provided Under Reservation of Rights

A Massachusetts Superior Court last month issued a significant victory for policyholders. In the case Holyoke Mutual Insurance v. Vibram, the court ruled that an insurer that provides a defense under a reservation of rights may not later recoup attorney fees from the policyholder if a court ultimately determines there to have been no coverage.

Someone sues you or your company. You submit a claim to your insurance carrier. Your insurer hires a lawyer to represent you. But then your own insurance company turns and brings a new suit against you for a declaratory judgment that it no longer needs to pay your lawyer in the underlying case. In many states, if the court ultimately determines there to be no coverage, the insurer can then go so far as to recoup from you the money the insurer paid your lawyer. At least for now, that is not the law in Massachusetts.

In the Holyoke case, the family of an Ethiopian marathon runner sued Vibram for naming a shoe after the runner without the family’s permission. Vibram submitted the claim to two of its insurers under its commercial general liability policies. The insurers issued a reservation of rights, but tendered a defense to Vibram.

The insurers then brought a separate declaratory judgment action, in which the court determined there was no coverage for the underlying claim. The insurers then sought to recoup from Vibram the insurers’ costs in defending the underlying suit.

Judge Mitchell Kaplan noted that states are split on whether an insurer may recoup its defense costs, and the Massachusetts Supreme Judicial Court has not yet addressed the issue.

Judge Kaplan rejected the insurers’ argument that they never agreed to pay for defense costs that ultimately were not owed, and making them do so would unjustly enrich the policyholder.

Instead, Judge Kaplan noted that an insurer’s duty to defend arises broadly when the underlying complaint shows even a possibility that there may be coverage. He reasoned that insurers are not unjustly enriched by fronting defense costs. Rather, insurers have financial incentives to provide a defense. For example, providing a defense may insulate an insurer from paying a policyholder’s attorney fees in an action by an insured to establish a duty to defend. Providing defense costs may similarly protect an insurer from a bad faith coverage claim and exposure to multiple damages under Chapter 93A. The court explained, that “when in doubt an insurer has an economically sound and self-interested reason to provide a defense under a reservation of right until the coverage issue can be resolved.” Nor, the court reasoned, is there any explicit language in the Vibram policy that would allow for recoupment. The court, however, chose not to force the insurers to pay for the defense costs that had been incurred by Vibram, but not yet paid by the insurers, before the court found there to be no coverage.

Both sides have appealed the decision.

Gardner & Rosenberg, P.C. represents policyholders in all types of complex coverage disputes involving many different types of policies, including Director and Officer, Commercial General Liability, Employment Practices Liability, Errors and Omissions, Life, Homeowners, and Long Term Care.

Delay in Responding to Lawsuit Not a Waiver of Arbitration Provision

The Massachusetts Appeals Court ruled in favor of Gardner & Rosenberg’s client, reversing the trial court’s denial of his request to compel arbitration of a fee dispute with prior counsel.

After obtaining an award and subsequent settlement in favor of the client in an underlying property dispute, the former counsel sought to recover a disputed fee from the client. Despite the arbitration provision in the fee agreement with the client, counsel brought suit in Superior Court. The Superior Court denied the client’s request to compel arbitration and other efforts to seek arbitration, implicitly based on the client’s delayed response to the lawsuit.

The Appeals Court reversed and remanded the case to be sent to arbitration per the parties’ agreement. The Court held that although a default later entered on the docket, the client did not waive his right to arbitration – the first thing he did when responding to the lawsuit was to demand arbitration and he acted consistently with his desire to resolve the dispute through arbitration. Read the Appeals Court's decision here.

Gardner & Rosenberg “SLAPPS” Back for Clients

In two recent cases, Gardner & Rosenberg won motions to dismiss under the so-called Anti-SLAPP statute. The law is designed to prevent lawsuits brought to stifle participation in petitioning activities to the government. The statute is a powerful shield against suits brought to deter a party from exercising its legal rights. The court must award attorney fees to a party that brings a successful motion.

In the first case, Gardner & Rosenberg represented a commercial tenant who complained to a town Board of Health about the conditions in its offices, and then brought suit to be relieved from its lease. The landlord counterclaimed against the tenant claiming the tenant exaggerated the scope of the issues to the town board. The court agreed with Gardner & Rosenberg that its client’s acts of speaking to the Board of Health and bringing suit were protected petitioning activity, and dismissed the landlord’s claim. Click here for a copy of the court’s decision.

In the second case, a tenant brought suit against its landlord concerning conditions at its property. The landlord then brought a separate lawsuit against the tenant’s attorneys, claiming that the attorneys "conspired" with the tenant to bring the first case. Gardner & Rosenberg represented the tenant’s attorneys in the suit against them. The court fully agreed with Gardner & Rosenberg that the attorneys' acts in representing their client in the case against the landlord were protected petitioning activity, and dismissed the claims against the attorneys. Click here for a copy of the court’s decision.