Berry v. Playboy Enterprises, Inc.

• Decision Date: 15 August 1984
• Citation: 195 N.J.Super. 520,480 A.2d 941
• Parties: , 5 Employee Benefits Cas. 2682 Carolyn and Lawrence BERRY, Plaintiffs-Appellants, v. PLAYBOY ENTERPRISES, INC., and Playboy of Sussex, Inc., Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 520

195 N.J.Super. 520

480 A.2d 941, 5 Employee Benefits Cas. 2682

Carolyn and Lawrence BERRY, Plaintiffs-Appellants, v. PLAYBOY ENTERPRISES, INC., and Playboy of Sussex, Inc. Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Submitted April 17, 1984.

Decided Aug. 15, 1984.

John G. Simmonds, Sparta, for plaintiffs-appellants.

Apruzzese & McDermott, Springfield, for defendants-respondents (Charles F. Waskevich, Jr., Springfield, on the brief).

Before Justice SULLIVAN, and Judges KING and BILDER.

The opinion of the court was delivered by

KING, J.A.D.

This appeal presents the issue of whether an employer has a duty to explain with reasonable care an employee's options as to health and other supplemental benefits upon hiring. The appeal is taken from a summary judgment in favor of defendant Playboy Enterprises, Inc. The plaintiffs alleged that defendants' agents negligently misrepresented plaintiff Carolyn Berry's options for a health-benefit plan when she was hired as a cook at Playboy's Great Gorge Resort in Sussex County. Plaintiffs claim that as a result they suffered money damages because they were without family medical benefits for the first 90 days of Carolyn Berry's employment. Her husband, plaintiff Lawrence Berry, was injured during that period and was without medical insurance. We conclude that defendant had a duty to use reasonable care in explaining employment benefit options. Because the record before us seems to generate factual conflict, because the issue is somewhat novel ¹ and because the parties' credibility is critical to the dispositive issue, we reverse and remand for a plenary hearing on the merits.

This is the factual background. Carolyn Berry was hired as a banquet cook by Playboy on March 4, 1981. At that time she signed this document called "Playboy Benefit Program Enrollment and Record Card":

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

From this card it is unclear whether dependent coverage was declined or accepted. The entry for "Dependent Coverage" is marked "Spouse Only" but Carolyn Berry also signed the entry declining dependent coverage. She also signed an "Employee Record Card" on the same date, electing union status with the local of the Hotel-Restaurant Employees and Bartenders Union, and indicating that she chose dependent coverage with an effective date of June 4, 1981.

According to the collective bargaining agreement between Playboy and the union local, the "health, hospitalization and life insurance benefits are reserved for all full-time employees who have completed at least ninety (90) continuous calendar days of service." During the 90-day period, on March 24, plaintiff Lawrence Berry was injured in an accident. The Berrys' claim that the medical plan refused to pay his medical bills because of the 90-day waiting period. Of further note, Carolyn Berry never filed a grievance under her union's collective bargaining agreement. The core of the dispute is plaintiffs' contention that Carolyn Berry was never told that she could have chosen either salary or hourly status and that in a salaried status she would have had immediate health care benefits for herself and her husband.

The transcript of argument in the Law Division reveals that summary judgment was granted solely because Carolyn Berry was a union member and therefore subject to the collective bargaining agreement, which the trial judge interpreted as requiring recourse to prescribed grievance procedures. That Carolyn Berry was a union member is beyond cavil on this record and the trial judge correctly so found. However, this finding does not necessarily mean that the present dispute is the proper subject of a grievance claim.

The Berrys' complaint sounds in tort. They claim that they incurred extensive medical expenses because of defendants' "negligence, misrepresentation and misconduct." Specifically, they allege in the complaint that

1. On or about the latter part of February, 1981, the plaintiff, Carolyn Berry, interviewed for a job at Playboy Club, Great Gorge, Sussex County, New Jersey.

2. At that time, she was interviewed by the personnel department and the chef, Peter Enbler, all agents, servants or employees of Playboy Enterprises, Inc., Playboy of Sussex Inc., and/or ABC Corporation, a fictitious name.

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4. This plaintiff was advised by the above persons to receive her compensation by hourly wage, rather than the salary rate for her position.

5. As a result of this instruction, and unknown to the plaintiff, she became eligible for a medical benefits plan requiring a ninety-day waiting period, rather than a medical benefit plan with no waiting period. The plaintiff was never advised of the second medical plan, until several weeks after employment by Todd Feit, Broiler Chef.

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7. On or about March 24, 1981, the plaintiff, Lawrence Berry, suffered injuries and required medical care. As a result, medical bills were incurred by the plaintiffs. These medical bills would not be paid by the medical benefit plan because of the ninety-day waiting period.

8. As a result of the negligence, misrepresentation and misconduct of the defendants, these plaintiffs were caused to incur extensive medical expenses.

We conclude that the claim alleged by plaintiff does not fall within the collective bargaining agreement's mandatory grievance procedure. Courts must decide if a dispute is within the scope of a collective-bargaining agreement. Machine Printers, U.S. v. Merrill Works, Inc., 12 N.J.Super. 26, 31, 78 A.2d 834 (App.Div.1951). "If the subject matter of the claim is not dealt with in any of the provisions of the contract, expressly or by implication, the inference is permissible that the claim, because not within the contemplation of the contracting parties, is outside the scope of the arbitration agreement." Annotation, "Collective Labor Contract-Arbitration" 24 A.L.R.2d 752, 756 (1952). See Harmuth Eng. Co. v. Franklin Universal Bldg. Corp., 178 N.J.Super. 380, 384, 429 A.2d 378 (App.Div.), certif. den. 87 N.J. 390, 434 A.2d 1072 (1981); Polshek v. Bergen Cty. Iron Works, 142 N.J.Super. 516, 521-522, 362 A.2d 63 (Ch.Div.1976).

The grievance and arbitration procedure of the collective bargaining agreement between Local 69 and Playboy provided, in pertinent part, that "should differences arise between the Company, the Union, or any employee as to the meaning or application of this Agreement, the following procedures shall be followed." The prescribed procedures begin with informal steps to resolve the matter, and ultimately provide for binding arbitration if the grievance is not settled. The important thing to note is that the procedures only govern "differences ... as to the meaning or application of" the collective bargaining agreement.

We find that appellants' complaint does not implicate a dispute as to the meaning or application of the collective bargaining agreement. The only provision of the agreement dealing with medical benefits is Article XVIII entitled--"Health and Welfare," which states, in pertinent part, that

The Company agrees to maintain its present health, hospitalization and life insurance benefits for all full-time employees who have completed at least ninety (90) continuous calendar days of service. The Company shall pay the full cost of such coverage for all eligible employees.

Eligible employees who elect to have dependent coverage shall contribute Five ($5.00) dollars per week toward the cost of such dependent coverage.

The complaint does not invoke a claim as to the meaning or application of the collective bargaining agreement. The language from Article XVIII of the agreement is concerned with health benefits to be maintained for employees and their dependents. Plaintiffs do not call in question the meaning or application of this provision; rather, the complaint alleges "negligence, misrepresentation and misconduct" on the part of employees of respondents in failing to advise Carolyn Berry of an alternative medical benefit plan under a salaried rather than hourly status. The statement in the complaint that the medical bills incurred "would not be paid by the medical plan because of the ninety-day waiting period" clearly indicates that there is no difference between the parties as to the meaning or application of Article XVIII. Appellants implicitly admit that they are not entitled to payment for the medical bills under the union's health plan; their complaint does not dispute the 90-day waiting period, but seeks to hold respondents liable for breaching an alleged duty to fully advise Carolyn Berry of the alternate medical benefit plan she could have opted for at the time she was hired. The collective bargaining agreement is silent regarding any such duty of Playboy.

We therefore find that appellants' complaint does not implicate a dispute as to the meaning or application of the collective bargaining agreement and thus does not fall within the agreement's mandatory grievance procedure. The Law Division judge erred insofar as he concluded that the grievance procedure under the collective bargaining unit was plaintiff's sole remedy, especially since any alleged breach of duty occurred before the formal employment relationship began.

The plaintiffs have adequately pleaded a prima facie case of negligent misrepresentation. As noted, the complaint alleges that plaintiff Carolyn Berry was "interviewed by the personnel department and the chef" of Playboy and "was advised ... to receive her compensation by hourly wage rather than the salary rate." She further asserts that "as a result of this instruction and unknown to the plaintiff, she became eligible for medical benefits requiring a ninety-day waiting period, rather than a medical benefit plan with no waiting period" and that she "was never advised of the second medical plan." This, she contends, was "negligence, misrepresentation and misconduct."...