Machado v. System4 LLC
465 Mass. 508
Mass.2013Background
- Plaintiffs signed local franchise agreements with System4 and NECCS to provide janitorial services and alleged Wage Act misclassification.
- Arbitration clause in the agreements bans class actions and multiple damages; plaintiffs sought to proceed in court; prior Feeney I invalidated similar clause.
- Defendants sought stay pending arbitration; motion denied by Superior Court; invoked public policy under Feeney I.
- Concepcion (2011) held FAA preempts certain state class-arbitration rules, prompting reconsideration of Feeney I’s applicability.
- Appellate review addressed whether Feeney I survives Concepcion and whether the Wage Act allows a class waiver in arbitration.
- Court held: class waiver not invalidated; but the waiver of multiple damages under Wage Act is unenforceable and severable; case remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Feeney I survives Concepcion for Wage Act claims | Feeney I should invalidate class waiver under Wage Act. | Concepcion preempts state class-waiver rules; class waiver may be enforced. | Feeney II limits Feeney I; class waiver not invalidated here. |
| Whether the Wage Act class waiver is enforceable when plaintiffs may pursue individual arbitration | Individual arbitration is ineffective for plaintiffs to vindicate Wage Act goals. | Individual arbitration is feasible; class waiver should stand. | Class waiver upheld for Wage Act claims; individuals can pursue arbitrations. |
| Whether the waiver of multiple damages is enforceable or severable | Multiple damages waiver should be invalid as against public policy. | Waiver can be severed while preserving arbitration framework. | Waiver of multiple damages is void and severable; severed while preserving arbitration. |
Key Cases Cited
- Feeney v. Dell Inc., 454 Mass. 192 (Mass. 2009) (public policy limits on class arbitration post-Concepcion)
- Concepcion, 131 S. Ct. 1740 (S. Ct. 2011) (FAA preempts state rules against class arbitration)
- Stolt-Nielsen S.A. v. Animal-Feeds Int'l Corp., 130 S. Ct. 1758 (S. Ct. 2010) (prohibits compelling nonconsensual class arbitration)
- Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201 (S. Ct. 2012) (FAA preempts state-law public policy on arbitration forum)
- Awuah v. Coverall N. Am., Inc., 460 Mass. 484 (Mass. 2011) (damages under Wage Act; franchise fees recoverable as damages)