Fields v. Thompson Printing Co., Inc.

• Citation: 363 F.3d 259
• Decision Date: 31 March 2004
• Docket Number: No. 02-2764.,No. 02-2763.,02-2763.,02-2764.
• Parties: Gerald E. FIELDS v. THOMPSON PRINTING COMPANY, INC.; Gilbert M. Thompson, Appellants Gerald E. Fields, Appellant v. Thompson Printing Co; Gilbert M. Thompson.
• Court: U.S. Court of Appeals — Third Circuit

Page 259

363 F.3d 259

Gerald E. FIELDS v. THOMPSON PRINTING COMPANY, INC.; Gilbert M. Thompson, Appellants Gerald E. Fields, Appellant v. Thompson Printing Co; Gilbert M. Thompson.

No. 02-2763.

No. 02-2764.

United States Court of Appeals, Third Circuit.

Argued November 18, 2003.

Filed March 31, 2004.

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COPYRIGHT MATERIAL OMITTED

Anthony F. Malanga, Jr. [Argued], Gaccione, Pomaco & Malanga, Belleville, for Appellants/Cross Appellees.

Noel E. Schablik [Argued], Parsippany, for Appellee/Cross Appellant.

Before RENDELL, BARRY and CHERTOFF, Circuit Judges.

RENDELL, Circuit Judge.

These appeals come to us from the District Court's order enforcing the language of an employment contract, rejecting Thompson Printing Company's ("TPC") entreaties that doing so would violate implied covenants and public policy. The District Court granted partial summary judgment in favor of the employee, Gerald Fields ("Fields"). Both defendants, TPC and its CEO, Gilbert M. Thompson ("Thompson"), appeal. For the reasons that follow, we will affirm in part, and reverse and remand in part.

I. The Factual Situation

TPC is a closely held corporation. Thompson owned 80 of the 100 outstanding shares, and Fields owned the remaining 20. Fields started working for TPC in 1955 at age 13. On May 7, 1990, he entered into a four-page Employment Contract with TPC. It provided that Fields was to have the "designated titles" of Vice President and Chief Operations Officer, and that he was to "perform the duties attendant thereto." The agreement defined the term of employment as continuing until June 14, 2000, and detailed compensation and other benefits to which Fields would be entitled in exchange for his services.¹ It also provided for annual raises of ten percent each year during the 10-year term, and, further, that in the event of Thompson's death, Fields's salary would be doubled within 30 days. The Contract gave TPC the right to discontinue the contractual benefits in the event of Fields's voluntary termination:

If during the term of this Contract, Jerry [Fields] voluntarily terminates his employment with Thompson [Printing Company], then it is understood by and between the parties hereto that the salary compensation, employment benefits, and all retirement benefits shall cease as of the date of the termination.

It also contained a broad non-forfeiture clause in favor of Fields:

This Contract shall be non-terminable by Thompson [Printing Company]. In the event Thompson [Printing Company] shall terminate the employment of Jerry [Fields], all of the benefits as contained herein shall continue in accordance with the terms and provisions of this Agreement.

The Contract did not differentiate between termination with or without cause, providing for continuation of the benefits simply if TPC "shall terminate" Fields.

On August 11, 1997, three female employees made allegations to Thompson, then CEO, that Fields, by now titled TPC's President, had sexually harassed them by creating a hostile work environment. On August 13, Thompson telephoned Fields, who was vacationing with his family, and fired him. TPC refused to pay Fields any further compensation under the Employment Contract after that date.

The three female employees filed a lawsuit, Zarillo v. Thompson Printing Co., L-9076-97, in the Superior Court of New Jersey against TPC, Fields, Thompson and another supervisor. No findings were made since the claims were settled without any admission of wrongdoing by any of the defendants.

While the Zarillo lawsuit was still pending, Fields commenced a civil action against TPC and Thompson in the United States District Court for the District of New Jersey. He asserted a federal claim under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., contending that the retirement benefits specified in the Employment Contract were protected by ERISA, and that TPC's failure to pay those benefits violated the statute. In addition, he sought reinstatement of his salary and benefits, including some that had accrued prior to his termination and had never been paid, under a variety of state law theories, including the New Jersey Wage Law, N.J. Stat. Ann. § 34:11-4.3, breach of contract, unjust enrichment, conversion, quantum meruit, and breach of the covenant of good faith and fair dealing. He also asserted a minority shareholder oppression claim under N.J. Stat. Ann. § 14A:12-C-7(1)(c), arguing that his rights as a minority shareholder had been violated by Thompson's actions.

Thompson and TPC replied, denying Fields's allegations and claiming that Fields's ERISA claim was barred by 29 U.S.C. § 1003(b), and that his state law claims were barred by New Jersey's "entire controversy" doctrine. Furthermore, they claimed that Fields had breached the Employment Contract by engaging in acts of sexual harassment, terminating Fields's rights, as well as their obligations, under the Contract.

The parties then filed cross motions for summary judgment. Defendants' Statement of Uncontested Material Facts detailed the allegations of the Zarillo plaintiffs.² Defendants argued that by his actions Fields had breached the Employment Contract, forfeiting his rights under the agreement and warranting the entry of summary judgment in their favor. However, Fields claimed that not only were the facts in dispute, but they were not material to the resolution of his claims because the Employment Contract guaranteed that if he was terminated by TPC, his benefits were to continue.

The District Court granted Fields's summary judgment motion with regards to his ERISA, New Jersey Wage Law, breach of contract, unjust enrichment and quantum meruit claims, but denied the motion with respect to the oppression claim. The Court held that the entire controversy doctrine was inapplicable as "the validity of the sexual harassment claims [was] entirely immaterial to the adjudication of the parties' rights and obligations under the Employment Agreement." It then determined that, under the plain language of the Contract's non-forfeiture clause, Fields was entitled to both retirement and pre-retirement benefits, rejecting defendants' arguments that enforcing the agreement would violate public policy or that Fields had breached the agreement. It also held Thompson jointly and severally liable based on its view that Thompson had not drawn any distinction between himself and TPC, so both were liable. Subsequently, Fields dismissed the oppression claim, and the parties agreed upon the amount of compensation due under the Contract, but reserved the right to appeal the District Court's ruling.

The District Court had jurisdiction over Fields's ERISA claim pursuant to 29 U.S.C. § 1132, and over the state law claims pursuant to 28 U.S.C. § 1367. We have appellate jurisdiction under 28 U.S.C. § 1291.

II. Discussion

TPC and Thompson now appeal the District Court's order granting partial summary judgment. They essentially raise three issues, namely, whether the Court erred in determining 1) that Fields's suit was not barred by the entire controversy doctrine; 2) that TPC was obligated to pay Fields the compensation; and, 3) that Thompson should be held personally liable. Fields cross-appeals the District Court's determination that he was not entitled to attorneys' fees under ERISA, contending that its analysis was flawed, based on existing case precedent.

Our review of an order granting summary judgment is plenary. Morton Int'l, Inc. v. A.E. Staley Mfg. Co., 343 F.3d 669, 679 (3d Cir.2003). Under Federal Rule of Civil Procedure 56(c), summary judgment is proper where no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether a dispute regarding a material fact exists, we draw all reasonable inferences in favor of the non-moving party. Morton, 343 F.3d at 680.

A. The Entire Controversy Doctrine

We first address defendants' argument that the New Jersey entire controversy doctrine required Fields to bring his claims against TPC and Thompson as cross-claims in the Zarillo sexual harassment action, and that because he did not do so, application of the doctrine results in the preclusion of those claims.

The entire controversy doctrine is currently codified in Rule 4:30A of the New Jersey Rules of Civil Procedure, which provides that "[n]on-joinder of claims or parties required to be joined by the entire controversy doctrine shall result in the preclusion of the omitted claims to the extent required by the entire controversy doctrine." The doctrine "seeks to assure that all aspects of a legal dispute occur in a single lawsuit." Olds v. Donnelly, 150 N.J. 424, 696 A.2d 633, 637 (1997). Its purposes "are threefold: (1) to encourage the comprehensive and conclusive determination of a legal controversy; (2) to achieve party fairness, including both parties before the court as well as prospective parties; and (3) to promote judicial economy and efficiency by avoiding fragmented, multiple and duplicative litigation." Mystic Isle Dev. Corp. v. Perskie & Nehmad, 142 N.J. 310, 662 A.2d 523 (1995). The doctrine is essentially a rule of mandatory joinder of claims and parties, which precludes non-joined claims from being brought at a later date. We have characterized it as "New Jersey's specific, and idiosyncratic, application of traditional res judicata principles." Rycoline Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir.1997). Over the years, New Jersey courts have extended the doctrine to related claims, defenses, counterclaims and cross-claims. See Massari v. Einsiedler, 6 N.J. 303, 78 A.2d 572 (1951) (defenses); Ajamian v. Schlanger, 14 N.J. 483, 103 A.2d 9 (1954), cert. denied, 348 U.S. 835, 75 S.Ct. 58, 99 L.Ed. 659 (1954) (related claims); Vacca v. Stika, 21 N.J. 471, 122 A.2d 619 (1956) (co...