Found and lost

What does the verb “find” mean? For one litigant, it will forever be synonymous with “lost,” more precisely “$1.1 million lost.”

In a case that has important implications for employers and employees alike, the Appeals Court upheld a Superior Court judge’s decision to override the jury and allow a company to keep the $1.1 million it would otherwise have had to fork over to an ex-employee. After finding that Deborah Kiely’s former employer, Teradyne, Inc., had retaliated against her, the jury awarded Ms. Kiely $1.1 million in punitive damages. Although she prevailed on the retaliation claim, Ms. Kiely lost on the underlying claim of gender discrimination and the jury declined to award her compensatory damages. So the judge not only vacated the $1.1 million damages award but also ruled that Teradyne would not have to pay Ms. Kiely’s attorney’s fees.

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Why was this even a possibility in a place where parties traditionally bear their own costs and expenses? That, after all, is the “American rule.” But there are exceptions. Under this state’s anti-discrimination law, a successful plaintiff can obtain attorney’s fees, which creates an important incentive for attorneys to accept discrimination cases on a contingent-fee basis. Instead of agreeing to a share of the judgment amount, e.g. one-third, the lawyer can opt for legal fees, which might well be higher. The right to attorney’s fees depends on the court finding for the petitioner. Here is what the statute (M.G.L. c. 151B, S. 9) says:

If the court finds for the petitioner [plaintiff], it may award the petitioner actual and punitive damages. If the court finds for the petitioner it shall, in addition to any other relief and irrespective of the amount in controversy, award the petitioner reasonable attorney’s fees and costs unless special circumstances would render such an award unjust.

Without devoting much ink to the meaning of “finds,” and none to the words “irrespective of the amount in controversy,” the Appeals Court chose to ask a different question: Can a plaintiff in a discrimination case obtain attorney’s fees when the jury has made a finding of retaliation but declined to award compensatory damages? No, said the court in Kiely v. Teradyne, Inc., a decision it announced on June 6. A plaintiff has to obtain some kind of recovery — injunction or damages — in order to qualify for attorney’s fees. The fact that the Legislature could have chosen to include this condition, but did not, means that in terms of statutory construction the decision has, in popular parlance, some issues.

Putting to one side the question of whether the court arrived at the right destination, it is worth considering the route it took. Section 9 does not say that attorney’s fees are available “if the court finds for the petitioner and awards relief.” In fact, two simple words in the text of the statute demonstrate that the Legislature contemplated the possibility of a finding without an award.

First, the phrase “[i]f the court finds for the petitioner, it may award the petitioner actual and punitive damages” establishes that a court is free to find in the plaintiff’s favor and, if it chooses, decline to award damages of any kind.

Secondly, the provision says “[i]f the court finds for the petitioner it shall, in addition to any other relief.” Any implies the possibility of none. What the Legislature could have said — but did not — was “if the court finds for the petitioner, in addition to all other relief.”

The word “all,” unlike “any,” would have created two triggers, (1) a finding and (2) an award. Unless the court pulled both triggers, there would be no attorney’s fees.  Had the Legislature intended to create this kind of two-trigger mechanism, it would have done so.  Nevertheless, the Appeals Court went ahead and created just such a mechanism anyway, despite the plain and unambiguous language of Section 9.

It need not have done so. The last nine words of the provision (“unless special circumstances would render such an award unjust”) give judges the discretion to refuse attorney’s fees, without reading into the statute words that are not there. Rather than relying on that exception, however, the court added a requirement that the Legislature did not enact.

On a more positive note, what the decision lacks in coherence it somehow makes up for in clarity. The Appeals Court’s conclusion is, at least, unambiguous: “[W]e conclude that a finding of retaliation alone, without any form of relief or recovery, cannot support an award of attorney’s fees under G.L. c. 151B, S.9.” This is not what the statute actually says, of course, and if the disappointed Ms. Kiely takes her matter to the Supreme Judicial Court, we may end up with an interpretation of Section 9 that hews more closely to legislative intent.

Another welcome feature of the Appeals Court’s decision is its reiteration of the Supreme Judicial Court’s declaration that punitive damages warrant review on the grounds of due process in that a “grossly excessive” award constitutes an “arbitrary deprivation of property.” Not that this proposition was in any doubt, but in a decision that involves the judicial exercise of legislative powers, contra Article 30 of the Declaration of Rights, any reference to bedrock constitutional principles brings some comfort.

It is not clear whether the SJC will have an opportunity to consider this case and rule on the meaning of the word “finds” in Section 9. For the time being then, readers who celebrate due process, legal certainty, and the separation of powers may find themselves greeting Kiely v. Teradyne, Inc., with one cheer or perhaps two cheers, but probably not three.

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