ALEXIS CHECHOWITZ v. AUTOFAIR INC (2023)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

The appellants bring this appeal from the order of a Superior Court judge approving the settlement of a class action lawsuit. We affirm.

Background. Plaintiff-appellee Alexis Chechowitz and others similarly situated (collectively, the plaintiffs) brought a class action lawsuit in Middlesex Superior Court against defendants-appellees Autofair, Inc., and Haverhill Ford, LLC (collectively, the defendants), alleging claims for unpaid wages.

Ryan Daly, David C. Thomas, Paul T. Silva, and Diane Ingram (collectively, the objectors), who are four members of the class of former sales employees of the defendants, learned of the class action and brought a similar action in Essex Superior Court. The objectors then initiated arbitration of their claims against the defendants.

Meanwhile, the plaintiffs and the defendants negotiated a settlement of the Middlesex Superior Court class action. On the defendants' motions, the four arbitrators stayed the arbitrations of the objectors' claims on the grounds that the settlement of the Middlesex class action would, if approved, resolve those claims.

In Middlesex Superior Court, the plaintiffs moved for preliminary approval of the class action settlement, Mass. R. Civ. P. 23 (c), as amended, 471 Mass. 1491 (2015), assented to by the defendants. The objectors moved to intervene, pursuant to Mass. R. Civ. P. 24, 365 Mass. 769 (1974). After a hearing, a judge (first judge) denied the motion to intervene, noting, “[t]he lawyers for the [objectors] are positioned for larger fees if they can stay the lawsuit and complete their clients' arbitrations, but that is not a factor for consideration in the intervention analysis.” On June 1, 2021, the first judge allowed the motion for preliminary approval of the class settlement and certified the class, noting that the requirements of Mass. R. Civ. P. 23 (a), as amended, 471 Mass. 1491 (2015), “are well-established and uncontested.” The objectors did not appeal.⁴

Also on June 1, 2021, the objectors filed in Federal District Court an action for declaratory and injunctive relief, seeking to compel the defendants to arbitrate the objectors' claims and to enjoin the defendants from settling the Middlesex class action. A District Court judge denied relief, concluding that the objectors were seeking to stay the plaintiffs' class action in favor of their own individual arbitrations, but the arbitrators had ruled that the claims raised in arbitration would be resolved by settlement of the class action. The objectors appealed to the Court of Appeals for the First Circuit, but then stipulated to dismissal of the appeal.

In Middlesex Superior Court, the plaintiffs moved pursuant to Mass. R. Civ. P. 23 (c) for final approval of the class action settlement, assented to by the defendants. The objectors filed an objection to final approval of the settlement. After a hearing at which the objectors' counsel was present, a second Superior Court judge approved the settlement.⁵ The objectors appeal from that order.⁶

Discussion. 1. Standing. We begin by noting a procedural issue not briefed by the parties or the objectors. “As a general rule, only parties to a lawsuit, or those who properly become parties, may appeal from an adverse judgment.” Corbett v. Related Cos. Northeast, Inc., 424 Mass. 714, 718 (1997). See Mass. R. A. P. 3 (c) (1), as appearing in 481 Mass. 1603 (2019) (“The notice of appeal shall specify the party or parties taking the appeal” [emphasis added]).

Here, however, none of the parties to the case filed any notice of appeal. Although the objectors style themselves as appellants, they are not parties to the case in the trial court. Unlike its Federal counterpart, Mass. R. Civ. P. 23 does not permit class members to opt out of a class action. Thus, although the objectors are members of the class of plaintiffs in the Middlesex class action, they are not parties because their motion to intervene was denied, and they did not appeal from its denial. An order denying intervention is ordinarily appealable, “[a] nonparty has no right to seek review of [other] rulings.” Reznik v. Garaffo, 466 Mass. 1034, 1034-1035 & n.2 (2013). Cf. DiCerbo v. Commissioner of Dep't of Employment & Training, 54 Mass. App. Ct. 128, 136 (2002) (judge properly allowed intervention of class member); Cleary v. Commissioner of Pub. Welfare, 21 Mass. App. Ct. 140, 147 (1985) (class member who unsuccessfully moved to intervene was substituted for original plaintiff who became disinterested in pursuing appeal). “Unless and until [an objector] vindicates a right to intervene, he [or she] has no right to challenge any of the other rulings in the underlying action.” Reznik, supra at 1035. This case does not present one of the narrow circumstances in which courts have allowed exceptions to this rule, such as when a nonparty seeks to appeal from an otherwise unreviewable discovery order. See Matter of an Impounded Case, 491 Mass. 109, 115 (2022) (permitting sexual assault victim who has not intervened to appeal from discovery order for deposition of social worker); Randolph v. Commonwealth, 488 Mass. 1, 6 (2021) (permitting third party who has not intervened to appeal from order to provide DNA sample).

In these circumstances, it may be questioned whether the objectors have standing to bring this appeal. See Matter of the Receivership of Harvard Pilgrim Health Care, Inc., 434 Mass. 51, 55-56 (2001). Cf. Matter of Cohen, 435 Mass. 7, 11 n.11 (2001) (appeal dismissed for lack of standing, where attorney “persisted in prosecuting” cases on behalf of class members who unsuccessfully tried to “opt out” of class actions). We need not pause to consider that issue, because in any event the objectors' claims are meritless.

2. Defendants' authority to settle. “In reviewing the fairness of the settlement, we will reverse only upon a showing of abuse of discretion by the judge of the [Superior] Court.” Sniffin v. Prudential Ins. Co. of Am., 395 Mass. 415, 425 (1985). “[A]lthough we consider the existence of any objection as a factor in our inquiry, we will not reverse if we conclude that the judge did not abuse his discretion in determining that the settlement is in the best interests of the class as a whole.” Id. at 426.

The objectors argue that since their arbitration agreements mandated that the defendants arbitrate the objectors' dispute, the defendants were precluded from settling the class action with the plaintiffs. The arbitration agreement states that the parties “agree to submit to binding arbitration any dispute concerning the arbitrability of any controversy or claim.”

When the arbitrators stayed the four arbitration proceedings with each of the objectors, they clearly contemplated that the class action in Superior Court might resolve the objectors' claims, making further arbitration proceedings unnecessary. The arbitrators plainly interpreted the arbitration agreement to give them the power to stay the arbitrations pending that settlement. We defer to the arbitrators' interpretation of the arbitration agreement. See Marie v. Allied Home Mtge. Corp., 402 F.3d 1, 10 (1st Cir. 2005) (although court decides threshold question of validity of arbitration clause, other claims, “even some 'gateway questions' that might dispose of the entire claim, are presumptively left to the arbitrator”). See also Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 569 (2013) (arbitrator's decision construing contract “must stand, regardless of a court's view of its (de)merits”); Massachusetts Highway Dep't v. American Fed'n of State, County & Mun. Employees, Council 93, 420 Mass. 13, 15 (1995) (“absent fraud, we have no business overruling an arbitrator because we give a contract a different interpretation” [citation omitted]).

We conclude that the judge did not abuse his discretion in determining that the settlement was in the best interests of the class as a whole, and in approving the final settlement. See Sniffin, 395 Mass. at 425.

3. Appellate costs. Autofair has requested that this court award it costs incurred in defending this appeal, pursuant to Mass. R. A. P. 26 (a), as appearing in 481 Mass. 1655 (2019), and further requests that those costs be doubled on the grounds that the appeal was frivolous, pursuant to Mass. R. A. P. 25, as appearing in 481 Mass. 1654 (2019). We agree that such a remedy is appropriate here. See Avery v. Steele, 414 Mass. 450, 456 (1993). Consistent with the requirements of Fabre v. Walton, 441 Mass. 9, 10 (2004), Autofair may file a request for its costs, along with supporting documentation, within fourteen days of the issuance of the decision in this case. The objectors shall have fourteen days thereafter within which to respond.

Order dated December 14, 2021, approving settlement of class action affirmed.

FOOTNOTES

4.   The objectors did file a notice of appeal from the denial of their motion to intervene, and the trial court clerk transmitted notice of assembly of the record to this court, but the objectors never paid the docketing fee and so the appeal was not entered in this court. Mass. R. A. P. 10 (a) (1), as appearing in 481 Mass. 1618 (2019).

5.   The objectors moved to stay the final approval of the settlement, which the judge denied. Thereafter, the Essex County class action was dismissed pursuant to Superior Court Standing Order 1-88.

6.   The question has not been raised as to whether the order approving the settlement is an appealable final judgment. We exercise our discretion to reach the objectors' appeal of the approval of the settlement, because “[d]ismissal of the appeal would serve no purpose and might require the parties to return to reargue issues already briefed and argued” (citation omitted). Commercial Wharf E. Condominium Ass'n v. Boston Boat Basin, LLC, 93 Mass. App. Ct. 523, 532 n.20 (2018).