Tag: Massachusetts

Massachusetts Sets Energy Storage Target

On June 30, 2017, the Massachusetts Department of Energy Resources (DOER) announced that Massachusetts would adopt an aspirational 200 megawatt-hour (MWh) energy storage target to be achieved by January 1, 2020. The target is the second largest in the nation, although it is far lower than California’s 1.3 gigawatt storage mandate. Still, Massachusetts’ storage target will make the commonwealth a leader in the burgeoning energy storage field.

The process of setting storage targets began last summer, when Massachusetts enacted a law directing DOER to determine whether to set targets for electric companies to procure energy storage systems by January 1, 2020. In September 2016, Massachusetts released a report called the “State of Charge,” which recommended the installation of 600 megawatts (MW) of energy storage by 2025. The report predicted that 600 MW of storage could capture $800 million in system benefits to Massachusetts ratepayers. The energy storage industry praised the 600 MW level as a good starting point.

DOER’s “aspirational” 200 MWh by 2020 target falls short of the “State of Charge” recommendation, but leaves the door open to achieving 600 MW by 2025. DOER’s letter announcing the target noted that “[s]torage procured under this target will serve as a crucial demonstration phase” for Massachusetts to gain knowledge and experience with storage. “Based on lessons learned from this initial target,” the letter continues, “DOER may determine whether to set additional procurement targets beyond January 1, 2020.”

Beyond DOER’s storage target, Massachusetts has a broader Energy Storage Initiative, which includes a $10 million grant program aimed at piloting energy storage use cases and business models in order to increase commercialization and deployment of storage technologies. DOER also announced that it will examine the benefits of amending the Alternative Portfolio Standards, an incentive program for installing alternative energy systems, to expand the eligibility of energy storage technologies able to participate. While Massachusetts’ storage targets are not as lofty as some in the industry were hoping, the commonwealth is demonstrating a clear commitment to developing its energy storage industry beyond the few megawatts currently installed.

This post was written by William M. Friedman of  McDermott Will & Emery.

Banning Salary History Questions, Subway Restaurant Partners with DOL, Non-Competes: Employment Law This Week – August 15, 2016 [VIDEO]

Massachusetts Bans Salary History Question

Subway, DOL, Pay EquityOur top story: Beginning in 2018, pay history will be off limits for Massachusetts job applications and interviews. In a unique attempt to close the gender wage gap, the state has passed a pay equity law that will bar employers from asking applicants about their previous salaries. Employers will also be prohibited from seeking that information from an applicant’s prior employers. While this provision is the first of its kind in the country, the new law also contains more common equal pay protections, broadens the definition of “equal work,” and prevents employers from banning the discussion of salary among employees. Mickey Neuhauser, from Epstein Becker Green, has more.

“The hope is that by taking the salary history question off the table, employers will rely only on relevant factors and won’t even unconsciously rely upon an irrelevant factor, such as the employee’s prior salary. . . . The law does not prohibit applicants from disclosing their current salaries or salary history, and it doesn’t prevent applicants and employers from negotiating over salary. However, the law does not protect employers from paying a salary lower than what would otherwise be permitted under the act simply because an individual has agreed to accept that salary. In other words, an employee cannot agree to be illegally underpaid.”

Subway Partners with the DOL

The U.S. Department of Labor (DOL) and Subway teamed up to break new ground. The world’s largest fast-food franchisor has reached a voluntary agreement with the DOL to provide wage and hour compliance training to franchisees. The agency conducted more 800 investigations into underpayment of workers at Subway franchises in recent years. This partnership will focus on helping the franchises comply with federal wage and hour laws moving forward. While the DOL hopes to enter into more agreements like this one, franchisors are hesitant, noting that the deal could make them joint employers under the National Labor Relations Board’s standard.

New York Attorney General Cracks Down on Non-Competes

New York’s crackdown on non-compete agreements continues. An investigation by New York Attorney General Eric Schneiderman revealed that Examination Management Services Inc. required all of its workers, even those who had no access to trade secrets or sensitive information, to sign non-compete agreements. Non-compete agreements in the state are usually permissible only for employees with a high level of access to trade secrets or sensitive information. Under the agreement, the company will stop using the non-competes for most employees in New York.

Citigroup Unit Pays Misclassified Workers After DOL Probe

A Citigroup affiliate shells out a hefty sum for misclassifying workers. A subsidiary of Citigroup in Florida recently paid almost $2 million to workers whom it had misclassified as exempt from overtime pay. An investigation by the DOL’s Wage and Hour Division found that the company mistakenly applied the Fair Labor Standards Act’s exemption to a group of 882 employees. This case serves as a reminder that salaried workers are not necessarily exempt from overtime.

Tip of the Week

Lisa Glass, Chief Human Resources Officer for The Child Center of NY, is here with advice on how to create an effective onboarding program.

“An important way organizations can help combat employee turnover and help employees adjust to the new organization is through an effective onboarding program. An onboarding program allows employees to understand the expectations of their role in terms of performance as well as social expectations. . . . Effective onboarding is key in creating employee expectations and sharing organization values. The goals must align with the goals of the organization, and the program initiative must be driven by senior management, and not solely driven by human resources.”

ARTICLE BY George Carroll Whipple, III of Epstein Becker & Green, P.C.

©2016 Epstein Becker & Green, P.C. All rights reserved.

Groundhog Day: Declaring Impending Death of Massachusetts Noncompetes

or the last three years, we have reported on legislative efforts to ban noncompetes in Massachusetts. You can see a sample of those reports here and here. Thus far none of those efforts have been successful. Here again in 2016, legislative efforts to ban noncompetes promise to continue in Massachusetts, with one commentator declaring, “This is the year.”

Our job as business lawyers is to advise clients on how widely varying state laws affect their ability to use noncompetes, then they can make their business decisions from there. Different businesses take very different views on noncompetes, as those seeking to ban them in Massachusetts have learned. Therefore, our job does not drive any particular policy position on noncompetes. However, I have observed that opponents seem quick to share stories about stories about seeming extreme noncompetes (certainly they exist but good luck enforcing them) and/or declare noncompetes’ ongoing decline (they’re not) and/or say they have a negative impact on the economy (I’m still waiting for proof of what the impact may be, pro or con) – none of those things always supported by facts and data.

The above-linked commentator has “heard” that noncompetes have prevented 19 year olds from switching employment at summer camps. I have not seen that, directly or indirectly, and it seems that it would be difficult even in a pro-enforcement state like Ohio to enforce such a noncompete. But it certainly makes a nice story, even if it may jeopardize the support of the summer camp trade association for the legislation.

The commentator also talks about the “stifling effect” noncompetes have on the Massachusetts economy, though I do not see any data supporting that conclusion. I am no economist either, but my first result in a Google search lists Massachusetts as the 6th best economy among states in the last quarter of 2015. Just think how highly the state would be ranked if its economy were not stifled.

Maybe this is the year for Massachusetts; we will see. In any event, we will continue to watch developments by state, some of which will be pro-enforcement and some of which will not, and keep you posted on how it affects your businesses.

Article By William A. Nolan of Barnes & Thornburg LLP

© 2016 BARNES & THORNBURG LLP

Massachusetts Appeals Court Ruling: Contractor Justified Not Paying Subcontractor That Refused To Perform Work

The general contractor on a public demolition project paid nothing to a subcontractor that had performed the majority of its work but refused to perform work that it claimed was outside of its scope of work. The subcontractor sued the general contractor and after cross-motions for summary judgment the Superior Court sided with the general contractor, holding that the work in dispute was within the subcontractor’s scope and that the subcontractor breached the subcontract by refusing to perform the work. The Superior Court also held that the subcontractor was not entitled to be paid for the work it did perform because it had not substantially performed its obligations under the subcontract. The subcontractor appealed, and the Massachusetts Appeals Court affirmed the Superior Court’s decision. Acme Abatement Contractor, Inc. v. S&R Corporation, No. 2014-P-257, 2015 Mass. App. Unpub. LEXIS 855 (Aug. 20, 2015). Click here to view the Appeals Court decision.

Contracting Background

S&R Corp. (“S&R”) was awarded a demolition contract by the Town of Weymouth (the “Town”). Part of S&R’s work included the demolition of concrete bleachers adjacent to an athletic field. S&R subcontracted the asbestos abatement work to Acme Abatement Contractor, Inc. (“Acme”). Among other things, Acme was required to remove asbestos containing paint from the bleachers prior to demolition.

Scope Dispute Arises

After Acme had commenced work, it informed S&R that it would remove paint only from the side walls of the bleachers but not the risers because Acme believed that paint did not contain asbestos and, therefore, was not within its scope. S&R directed Acme to the project specifications and identified the contract language that it believed clearly required Acme to remove the riser paint. Despite this language, Acme claimed it did not have to remove the riser paint and even went so far as to have the riser paint tested, which test results came back negative for asbestos. Even though tests performed after the subcontract was signed and work had commenced showed that the riser paint did not contain asbestos, the subcontract language included the risers within Acme’s scope and Acme “owned” that work. Nevertheless, Acme refused to remove the riser paint.

Acme performed the remainder of its obligations and then abandoned the project without removing the riser paint. S&R was forced to engage a substitute contractor to remove the riser paint because the project schedule was in jeopardy and S&R faced the prospect of being assessed liquidated damages by the Town if it did not complete the project on time. S&R did not issue payment for any of Acme’s work, even the two-thirds of the subcontract work that Acme performed, on the ground that Acme had materially breached its subcontract.

Subcontractor Sues and Contractor Wins Summary Judgment

Acme brought suit against S&R seeking $145,000 in damages for breach of contract and quantum meruit. Acme also sought treble damages and attorneys’ fees under M.G.L. c. 93A, for a total of damages in excess of $450,000. Both parties eventually moved for summary judgment. The Superior Court granted summary judgment in S&R’s favor finding that: (1) the subcontract required the removal of the riser paint; (2) the subcontract required that Acme perform the disputed work under protest and that Acme’s failure to do so was a material breach of the subcontract; (3) Acme had failed to provide required closeout documents; and, (4) Acme could not recover under quantum meruit for the work it did perform because it did not substantially complete its subcontract obligations.

Subcontractor Appeals

Acme appealed to the Massachusetts Appeals Court, which affirmed the Superior Court’s decision in S&R’s favor. Rather than address whether the removal of the riser paint was within Acme’s scope, the Appeals Court held that Acme breached the subcontract by not performing the disputed work as required by the subcontract. The relevant language provided:

Click here to continue reading…

Article By Andrew G. Wailgum & James F. Radke of Murtha Cullina
© Copyright 2015 Murtha Cullina

Troubles for Massachusetts Town’s Wind Turbine

Beveridge & Diamond PC environmental and energy law firm

In the long-running dispute between the Town of Falmouth and the neighbors to the Town’s wind turbine that powers the municipal wastewater treatment facility (WWTF), score one for the neighbors. The Massachusetts Appeals Court reversed the decision of Barnstable Superior Court Justice Robert C. Rufo in Drummey v. Town of Falmouth, 87 Mass. App. Ct. 127 (2015), finding that the Town was required to obtain a special permit from the Falmouth Zoning Board of Appeals to install the wind turbine on Town land.

Claiming harm from sound pressures and noise from the turbine’s operations, the plaintiffs first sought the building commissioner’s enforcement of the Zoning Bylaw. They alleged that the town violated the Bylaw by failing to secure a special permit for the turbine’s construction and maintenance. The building commissioner denied their request. The plaintiffs appealed to the ZBA and the Superior Court, both of which affirmed the building commissioner’s ruling.

Notwithstanding that the Bylaw provides that a petitioner may apply for a special permit to construct a windmill, the Superior Court found that this provision did not “apply in the limited circumstance where the Town itself desires to construct and operate a windmill for municipal purposes in a district where all such purposes are permitted as of right.” The Court explained that the turbine was a “municipal purpose” that fell within the enumerated community service uses permitted as of right in the Bylaw, which includes: “All municipal purposes, including the administration of government, parks, playgrounds, recreation buildings, Town forests, watershed, water towers and reservoirs, beaches, fire and police stations and armories.” Although turbines were not expressly included in the list of municipal purposes, the Superior Court found the list to be illustrative and not exclusive.

On appeal, the Appeals Court first recited the rule of law that the interpretation of a town’s bylaw raises a question of law. As such, the Court “reviews the judge’s… interpretations of zoning bylaws, de novo[anew or afresh].” It remarked that, as in other districts of the Bylaw, windmills were specifically designated in the public use district as an accessory use by special permit. Therefore, it logically followed that windmills could not have been intended to fall within the list of more general municipal uses allowed as of right. While the Superior Court’s understanding of the non-exclusive nature of the list was accurate, the Appeals Court found that that characterization of the list “did not adequately consider the weight that must be given a specific by-law provision that has been drafted to take into account the public welfare.” Specifically, the Bylaw included “a comprehensive scheme” for wind turbines including controls on their placement and impact on the town. In effect, the lower court erroneously reviewed the key Bylaw provision in isolation, not in context as the law requires.

The Court vacated the judgments of the Superior Court and remanded the case to the Superior Court for entry of new judgments consistent with its opinion. The Town has filed an application for further appellate review, which is pending before the Supreme Judicial Court.

ARTICLE BY

Brian C. Levey
Beveridge & Diamond PC

Massachusetts Announces Significant Changes to the Medical Marijuana Dispensary Program

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

At today’s Massachusetts Public Health Council meeting, Department of Public Health Commissioner Monica Bharel, MD, MPH, announced sweeping changes to the Medical Marijuana Dispensary Program in Massachusetts. The changes follow what Dr. Bharel described as a “top to bottom” review of the application process that has been plagued with difficulties.  The revisions shift the focus of the application process from its current form, which has followed a competitive procurement model, to a licensure focus similar to other health care facilities.   The revised application process will launch on May 15, 2015, and will feature a rolling basis application process. The application review will include a sharp focus on security issues and the background of those involved in the proposed dispensary.  Dr. Bharel noted that this shift will result in a more efficient, straightforward application process and that DPH will strive to make the process more straightforward and more transparent. No regulatory changes are needed, as the changes affect DPH’s process only.

Starting today, DPH will post and update the status of dispensaries in the approval and development “pipeline,” and the number of registered and certified patients on its website.  Those applicants with pending applications will not need to reapply.  DPH will clarify the process to resubmit applications that were previously rejected.

Public Health Council member Harold Cox (Associate Dean of Public Health Practice, Boston University School of Public Health) addressed ongoing legalization efforts – marijuana is legal in four states and the District of Columbia – and suggested that DPH should be proactive in understanding what is happening in those states and how potential legalization would affect Massachusetts’ program.  Public Health Council member Dr. Michele David expressed concern regarding the packaging of marijuana edibles, particularly candy, that may look like ordinary candy to children.

The DPH press release is available here.

ARTICLE BY

M. Daria Niewenhous
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Recent Changes to the Law of Private Construction Contracts – Your Government is Here to Help You Again – Massachusetts

As part of the end-of-session rush at the Massachusetts General Court this summer, significant changes were made to Massachusetts law governing private construction contracts at the urging of general contractor and subcontractor industry groups. Members of the development and lending community were largely taken unaware as the bill moved forward, and unsuccessfully attempted in the later stages of the process to modify or defeat the legislation. Consequently, developers, lenders, contractors, sub-contractors, design professionals and attorneys need to be aware of substantial changes (and many unanswered questions) created by the new statute in the areas of withholding and release of retainage, defining substantial completion, and preparation of punchlists.

Key highlights of Chapter 276 of the Acts of 2014, to be codified at M.G.L. c. 149, sec. 29F:

  • Applicability: All contracts on projects on which the prime contract (a) is entered into after November 6, 2014, and (b) has a contract price of $3 million or more, except projects of 1 to 4 dwelling units.

  • Withholding of Retainage:  Caps retainage to be withheld from progress payments at 5% (long-standing practice has been to retain 10% of each progress payment, with reduced (or no) withholding of further retainage after the project achieves some level (typically 50%) of completion).

  • New Definition of “substantial completion”: “The stage in the progress of the project when the work… is sufficiently complete in accordance with the contract for construction so that the project owner may occupy or utilize the work for its intended use…”  Parties may divide a project into phases and apply the statutory scheme applicable to “substantial completion” separately to each designated project phase.

Process for determining substantial completion:

  • Within 14 days after achieving substantial completion, the prime contractor submits a notice of substantial completion to the owner (form provided in the statute) with contractor’s determination of the date of substantial completion.

  • Within 14 days after receiving this notice, the owner must accept or reject it and return it to the contractor.  If the owner does neither, the notice is deemed accepted and the date of substantial completion determined by the contractor is binding.

  • If the owner rejects the notice, it must notify the prime contractor within this 14-day period, including the “factual and contractual basis for the rejection”, which must be certified as made in good faith.  The dispute is then governed by the contractual dispute resolution provisions, which the contractor must commence within 7 days of its receipt of the owner’s rejection notice.

Punchlist:

  • Within 14 days after the date of substantial completion is established (either through the notice process described above or the applicable dispute resolution proceeding), the owner must submit to the prime contractor a list (certified as made in good faith) of (a) all defective or incomplete work and (b) all outstanding deliverables required under the prime contract.

  • Within 7 days after the prime contractor’s receipt of that list, it must submit a similar list (certified as made in good faith) of all defective or incomplete work and outstanding required deliverables to each sub from whom it is withholding retainage.

Release of Retainage:

  • Applications for release of retainage can be submitted starting 60 days after the date of substantial completion (unless the contract provides for earlier submission), and each application must be accompanied by a list (certified as made in good faith) identifying the defective or incomplete work and deliverables on that party’s punchlist which have been completed, repaired and delivered.

  • Contract must permit applications for release of retainage at least monthly.

  • Retainage (other than that withheld in accordance with the new statute) must be released within 30 days of submission of the application for release, with an additional 7 days added for each tier of subcontractor.

Withholding Release of Retainage:

  • Only the following amounts can be withheld from retainage in response to an application for its release:

    • For incomplete, incorrect or missing deliverables, either (a) the value of the deliverables as mutually agreed to by the contracting parties, or (b) if no value has been agreed to, the reasonable value of the deliverables (not to exceed 2.5% of the total adjusted contract price of the party seeking release of retainage);

    • 150% of the reasonable cost to complete or correct incomplete or defective work; and

    • Reasonable value of any claims, costs, expenses and, where permitted under the contract of the party seeking release of retainage, attorneys’ fees.

  • No retainage can be withheld unless the withholding party provides to the party seeking the retainage, before the date payment is due, a notice (certified as made in good faith) (i) identifying the defective or incomplete work and the incomplete, incorrect or missing deliverables, (ii) the “factual and contractual basis” for any claims, and (iii) the value attributable to each item of incomplete or defective work, deliverable, and claim.

  • Multiple sequential applications for release of retainage are permitted as work is completed or corrected/deliverables are delivered/claims are resolved.

  • Unless the owner has declared the prime contractor in default under its contract, the owner cannot withhold retainage owed by the contractor to a subcontractor except for withholding based on a default by that sub.

  • Rejection of an application for release of retainage is subject to contractual dispute resolution procedures.  Contract provisions requiring a party to wait more than 30 days after rejection of an application for release of retainage before being permitted to commence dispute resolution procedures are void and unenforceable.

Additional Provisions:

  • All communications provided for in the new statute may be made electronically.

  • Section 29F(l) provides that any provision in a contract “which purports to waive, limit or subvert this section or redefine or expand the conditions for achievement of substantial completion for payment of retainage, shall be void and unenforceable.”

The new statute creates major areas of uncertainty for all parties on private construction projects, including:

  • How far an owner can go in adding requirements for deliverables, issuance of permanent C of Os, completion of commissioning, etc. as conditions to achieving “substantial completion”, in light of the new statutory definition of that term and the limitations imposed by Section 29F(l);

  • How an owner can mobilize its design professionals, its lender’s construction inspector, and its own construction team to respond to the prime contractor’s notice of substantial completion in the detailed manner required by the statute within the very short (but required) 14-day period;

  • How disputes over whether substantial completion has been achieved can be resolved through contractual dispute resolution procedures without jeopardizing project delivery deadlines;

  • What constitutes the “factual and contractual basis” required for various actions by the owner; and

  • How lenders will respond to the mandatory reduction in retainage to 5% (some are already saying that they will require an additional 5% in equity from the owner to make up the 10% retainage traditionally withheld by owners).

Although the consequences (intended or otherwise) of this new statute for the real estate lending, development and construction industries in Massachusetts remain to be seen over the coming months and years, they are likely to include:

  • Owners requiring retainage to be withheld on components of the contract price that previously may not have been subject to retainage (e.g., contractor’s fee, general conditions); exercising much greater control over a contractor’s use of contingency funds; requiring bonds from prime contractors and subs more regularly; and policing variations from the project schedule and/or the contract documents more strictly earlier in the project; and

  • Owners being much more selective in the choice of prime contractors and subs, tending towards repeat relationships, leading to greater consolidation within the industry and raising the barriers to entry by new companies.

There is already discussion underway about efforts to amend, limit or repeal this statute, so this will be something to watch for in 2015.

© 2014 SHERIN AND LODGEN LLP
ARTICLE BY

Peter Friedenberg
OF
Sherin and Lodgen LLP

Paid Sick Leave: Connecticut Tweaks and Newark Speaks

Jackson Lewis Logo

The Connecticut Paid Sick Leave Law has been tweaked in three respects: (1) to allow employers to determine the 50-employee applicability threshold in the same manner as under the state’s Family and Medical Leave Act, i.e., by determining whether the employer has at least 50 employees on its payroll for the week containing October 1; (2) to allow accrual of paid sick leave hours on any annual basis, not just a calendar year, and (3) to add one additional job title—radiologic technologists—to the list of “service worker” titles that are eligible for paid sick leave. The law adopting the tweaks— An Act Creating Parity between Paid Sick Leave Benefits and Other Employer-Provided Benefits (Public Act 14-128)—is effective January 1, 2015.

Newark, N,J. whose  Paid Sick Leave Ordinance became effective on June 21, 2014, has issued FAQs about the ordinance. There are 24 FAQs–a dozen directed to employers and a dozen directed to employees. The FAQs address a myriad of questions on topics such as employee eligibility, accrual of paid sick leave, employer notice obligations, appropriate uses of paid sick leave and the law’s integration with collective bargaining agreements.

Also on the paid sick leave issue, the Massachusetts Secretary of State announced last week that voters in November will be asked whether to approve a mandatory earned sick time law. If the issue passes, Massachusetts would become the second state and ninth jurisdiction to adopt a paid sick time law.

Article By:

Michael J. Soltis
Of:
Jackson Lewis P.C.

Price Comparison Advertising – Massachusetts Law

GT Law

Retailers doing business in Massachusetts should ensure that their price comparison advertising complies with Massachusetts law, particularly 940 C.M.R. § 6.05 (Section 6.05). Otherwise, they may face a civil enforcement action by the Massachusetts Office of the Attorney General (MA AGO), a putative class action brought by a consumer under the Massachusetts Consumer Protection Act – Chapter 93A, or even a civil action brought by a competitor alleging unfair and deceptive trade practices.

What is price comparison advertising?

As defined in Section 6.05, price comparison advertising “is a form of advertising used in the sale of products whereby current prices are compared with the seller’s former or future prices, the prices of other sellers, or other stated values to demonstrate price reductions or cost savings.” According to the regulation, which was promulgated by the MA AGO, (1) “price comparisons based on false, arbitrary or inflated prices or values deceive or mislead the public” and (2) “[a]buse also occurs when sellers fail to disclose material information which is important to enable consumers to understand the price comparison.” To protect against this alleged deception and abuse, Section 6.05 regulates price comparison advertising.

Which practices does Section 6.05 deem unfair or deceptive?

Section 6.05 is divided into various sections (as more fully described below) that provide retailers with guidance concerning what the MA AGO deems to be unlawful. Violations of Section 6.05 may be enforced by the MA AGO in a civil enforcement action as well as by consumers, who may seek to assert claims individually and on behalf of all those “similarly situated” under Chapter 93A.  Massachusetts law even supports civil actions brought by competitors harmed by unlawful advertising practices.

Specifically, Section 6.05 provides that the following are unfair or deceptive acts:

  • Unidentified Price Comparisons. Sellers cannot state or imply that they are offering any product savings by making a direct or indirect price comparison, unless they “clearly and conspicuously”1   describe the basis for the comparison; provided, however, that sellers may claim a savings or make such a comparison (without disclosing the basis) if they are making a comparison to their own “former price” (as determined by Section 6.05(3)).
  • Comparison to Seller’s Own Former Prices. Sellers cannot compare their current price with their own former price for any product, unless such former price is a “bona fide, actual price” that they had offered “openly and in good faith for a reasonably substantial period of time in the recent past” to the public.2
  • Introductory Offers and Future Price Comparisons. Sellers cannot make an introductory offer or compare their current product price with a future product price unless (i) the future price takes effect immediately after the sale and not later than 60 calendar days after “the dissemination date of the introductory offer or price comparison” and (ii) following the effective date of the future price, the product is offered “openly and in good faith” at that price for at least equal to  the period of time offered at the introductory price, but not less than 14 days (except for certain circumstances).3
  • Use of “Sale” Terminology. Sellers cannot use the words “priced for sale,” “on sale,” “sale,” “selling out,” “clearance,” “reduced,” “liquidation,” “must sell,” “must be sacrificed,” “now only $X,” or other terms which state or imply a price savings unless certain specific factors listed in Section 6.05 are met.4
  • Use of “List Price” or Similar Comparisons. Sellers cannot compare their current product price with a “list price,” “manufacturer’s suggested retail price” or similar term, unless the list or manufacturer’s suggested retail price is the price charged for the advertised product by a reasonable number of sellers in the seller’s trade area as of a particular “measurement date” determined by Section 6.05.5
  • Comparison to Other Seller’s Price for Identical Product. Sellers cannot compare their price with another seller’s price for an identical product, unless the stated higher comparative price is at or below the price at which the identical product is being offered in the seller’s trade area as of the “measurement date” or other specifically identified period under certain circumstances.6
  • Comparison to Seller’s Own or Other Seller’s Price for Comparable Product. Sellers cannot compare their price with their own price or another seller’s price for a comparable product unless the comparable product is being offered for sale as of the “measurement date,” or other specifically identified period, at the stated higher comparative price, unless certain factors are met.7
  • Price Comparisons on Price Tickets or Labels. Sellers cannot imprint or attach any ticket or label to a product that contains a fictitious or inflated price which is capable of being used by sellers as a basis for offering fictitious price reductions.8
  • Range of Savings or Price Reduction Claims. Sellers cannot state or imply that any products are being offered for sale at a range of prices or at a range of percentage or fractional discounts unless various factors are met.9
  • Use of Terms “Wholesale” or “At Cost.” Sellers cannot state or imply that any product is being offered at or near a “wholesale” price or “at cost” (or words of similar meaning) unless the price is, in fact, either at or below the price paid by the seller at wholesale, or, in the case of a service, the seller’s cost for the service excluding overhead and profit.
  • Use of Terms “Two for the Price of One” or “Buy One – Get One Free.” Sellers cannot state or imply that products are being offered at the usual price of a smaller number of the same or a different product unless (i) they clearly and conspicuously disclose all material sale conditions being imposed; (ii) the price advertised as the usual price for the smaller number of products is their own “former price”; and (iii) the products are of substantially the same quality, grade, material and craftsmanship as the seller offered prior to the advertisement.
  • Use of Term “If Purchased Separately.”  Sellers cannot make any price comparison based on the difference between the price of a system, set or group of products and the price of the products “if purchased separately” (or words of similar meaning) unless: (i) a reasonable number of sellers in the trade area are currently offering the products as separate items at or above the stated separate purchase price as of the “measurement date”; or (ii) they have actually sold or offered the products for sale as separate items at the stated separate purchase price.
  • Prices for Parts or Units of Sets or Systems. Sellers cannot advertise a price for any product that normally sells as part of a pair, system, or set without clearly and conspicuously disclosing that the price stated is the price per item or unit only, and not the price for the pair, system or set.
  • Gifts. Sellers cannot state or imply that any product is being offered for free or at a reduced price (“a gift”) in conjunction with the purchase of another product unless various factors are met.10
  • Use of Disclaimers. Sellers cannot use a price comparison that is prohibited even if the advertisement contains disclaimers or explanatory language.
  • Are there any other requirements11  that sellers should consider when assessing their price comparison advertising?
  • Record Keeping Requirements. Sellers must maintain records for a period of six months after the last dissemination of subject advertisements and provide those records to the MA AGO, upon request, to substantiate the propriety of such advertisements.12
  • Deceptive Pricing Generally, Examples, and Loss Leaders. Although not contained within Section 6.05 itself, the MA AGO has adopted a more general regulation dealing with “Deceptive Pricing” set forth in 940 C.M.R. § 3.13(2).13  This subsection describes generally what the MA AGO deems deceptive and provides some examples. In addition, related § 3.13(3) prohibits sellers from selling or offering for sale so-called “loss leaders” to induce a buyer to make a purchase of a product sold only in combination with other merchandise on which the seller recovers such loss.
Article By:

Michael E. Pastore
James P. Ponsetto
David G. Thomas
Of:
Greenberg Traurig, LLP

1 “Clearly and conspicuously” means that “the material representation being disclosed is of such size, color, contrast or audibility and is so presented as to be readily noticed and understood by a reasonable person to whom it is being disclosed.” Section 6.01 provides guidelines for determining if disclosures are proper. 

2 Section 6.05(3) lists various factors that are considered when determining whether a “former price” is a “bona fide, actual price.” Section 6.05(4) provides certain safe harbors for comparison prices.  A complete list of factors and a description of the safe harbors are contained in 940 C.M.R. §§ 6.05(3)(a) and 6.05(4), which are available at  http://www.mass.gov/ago/government-resources/ags-regulations/940-cmr-600.html  (MA AGO’s Website). 

3 These circumstances and exceptions for certain offers limited to certain consumers who are deemed “first time purchasers” as defined in the regulation are contained in 940 C.M.R. § 6.05(5), which is available at  the MA AGO’s Website. Also, Section 6.05(5) contains separate requirements for health clubs. 

4 These factors are contained in 940 C.M.R. § 6.05(6), which is available at the MA AGO’s Website. 

5 Section 6.05(7) contains separate requirements for manufacturers or franchisors. Also, the “measurement date” is defined in Section 6.01. 

6 These requirements are contained in 940 C.M.R. § 6.05(8), which is available at the MA AGO’s Website. 

7 These factors are contained in 940 C.M.R. § 6.05(9), which is available at the MA AGO’s Website. 

8 There are certain exceptions for prices that are pre-ticketed by manufacturers or other sellers, as contained in 940 C.M.R. § 6.05(10), which is available at the MA AGO’s Website. 

9 These factors are contained in 940 C.M.R. § 6.05(11), which is available at the MA AGO’s Website. 

10 These factors are contained in 940 C.M.R. § 6.05(16), which is available at the MA AGO’s Website. 

11 This advisory does not contain an all-inclusive list of the MA AGO’s advertising regulations and requirements. Sellers, among other things, should be aware of additional requirements set forth in 940 C.M.R. § 3.00 (General Regulations) and 940 C.M.R. § 6.00 (Retail Advertising). 

12 940 C.M.R. § 6.14 contains specific and detailed record retention requirements for price comparison advertising, which is available at the MA AGO’s Website. 

13 This more general regulation is available at http://www.mass.gov/ago/government-resources/ags-regulations/940-cmr-3-00/940-cmr-300.html. 

Massachusetts' Highest Court Upholds State's Endangered Species Regulations

 

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In a long-awaited ruling, the Massachusetts Supreme Judicial Court affirmed the legality of the “priority habitat” regulations created by the Division of Fisheries and Wildlife (DFW) of the Massachusetts Department of Environmental Protection under the Massachusetts Endangered Species Act (MESA). In Pepin v. Division of Fisheries and Wildlife, SJC No. 11332 (February 18, 2014), the petitioners challenged the DFW’s establishment of “priority habitat” regulations “for which MESA makes make no express provision.”

MESA does expressly authorize DFW to designate certain areas as “significant habitats” of endangered or threatened species.  Land designated a “significant habitat,” entitles an owner to (i) advance written notice that the land is being considered for designation as a significant habitat, (ii) a public hearing before any decision on the proposed designation is made, and (iii) an opportunity to appeal and seek compensation under the “takings” clause of the U.S. Constitution. Arguably to avoid paying just compensation, the DFW has never designated land “significant habitat.”

Instead, the DFW promulgated regulations establishing a second type of protected habitat  denoted “priority habitat,” to protect species that are either endangered or threatened, or that fall into a third category of “species of special concern.” Delineations are “based on the best scientific evidence available.” A sixty-day public comment period follows the reevaluation of the priority habitat map every four years and a final map is posted on the DFW’s web site.  The DFW reviews projects in a “priority habitat” on a case-by-case basis to determine whether it would result in either (i) a “no” take, (ii) a “conditional” no take, or (iii) a take. Even if DFW finds the project would be a “conditional” no take or a “take,” the project may proceed under DFW-imposed conditions or a “conservation and management permit.”

Here, the petitioners’ property consists of two building lots, totaling approximately 36 acres. In 2006, the property was delineated a priority habitat for a species of special concern (eastern box turtle). Challenging the validity of the “priority habitat” regulations, the petitioners maintained that MESA’s creation of the “significant habitat” designation with critical procedural protections meant that all landowners were entitled to the same protections whenever property development is restricted under MESA.  Citing the broad authority granted by MESA, the Court rejected this view and instead found that that statute “extends to the formulation of the priority habitat concept as a means of implementing MESA’s prohibition on takes.”  The Court refused to “substitute [its] judgment as to the need for a regulation, or the propriety of the means chosen to implement the statutory goals, for that of the agency, …[where] the regulation … [was] rationally related to those goals.”  The petitioners could not overcome the presumption of validity accorded “duly promulgated regulations of an administrative agency….”

The Court also ruled that in deciding the petitioners’ challenge to the application of the priority habitat mapping guidelines to their property, a Division of Administrative Law Appeals (DALA) magistrate judge properly ruled in favor of the DFW even without a hearing because the petitioners failed to meet their burden of demonstrating that the DFW improperly delineated their property as priority habitat.

Article By:

Brian C. Levey
Marc J. Goldstein
 
Of:
Beveridge & Diamond PC