MacDougall v. Weichert

• Court: United States State Supreme Court (New Jersey)
• Writing for the Court: HANDLER; O'HERN; WILENTZ; O'HERN; WILENTZ; STEIN; POLLOCK; STEIN; O'HERN
• Citation: 144 N.J. 380,677 A.2d 162
• Parties: , 65 USLW 2080, 11 IER Cases 1411 John W. MacDOUGALL, Plaintiff-Appellant, v. James M. WEICHERT, individually, Weichert Co., Realtors, a New Jersey Corporation, and Walter J. Sherman, individually, Defendants-Respondents, and Robert Merriam, individually, Defendant.
• Decision Date: 10 June 1996

Page 380

144 N.J. 380 677 A.2d 162, 65 USLW 2080, 11 IER
Cases 1411 John W. MacDOUGALL, Plaintiff-Appellant,
v.
James M. WEICHERT, individually, Weichert Co., Realtors, a
New Jersey Corporation, and Walter J. Sherman,
individually, Defendants-Respondents,
and
Robert Merriam, individually, Defendant. Supreme Court of New Jersey. Argued March 14, 1995.
Decided June 10, 1996.

Page 385

Steven K. Greene, Denville, for appellant (Bongiovanni, Collins & Warden, attorneys; John B. Collins, of counsel).

Jerrold J. Wohlgemuth, Liberty Corner, for respondents (Apruzzese, McDermott, Mastro & Murphy, attorneys).

The opinion of the Court was delivered by

HANDLER, J.

In this case, plaintiff was engaged as a salesperson for a real estate firm. He was also an elected member of the local municipal governing council. As a member of the municipal council, he voted for a parking ordinance that was opposed by a client of the real estate firm. Plaintiff was subsequently discharged from his real estate sales position because the client threatened to terminate his business relationship with the realtor if it continued to retain plaintiff as a sales associate.

Plaintiff claimed that his termination by his employer, the real estate firm, constituted a wrongful discharge and that the client tortiously interfered with his prospective economic relations by instigating his termination. Those claims were dismissed on the basis of summary judgments.

Because the record presents unsettled issues of fact, we remand this case for a retrial. Accordingly, we undertake to explain the standards that should govern retrial of the matter.

The initial issue that must be considered on remand is whether the working relationship between a real estate salesperson and the realtor is one of employment that is covered by the wrongful discharge doctrine. If the relationship is one of employment, the court must then determine whether the termination of that relationship because the salesperson's vote to approve a municipal parking ban was contrary to the interests of the realtor's customer constitutes a wrongful discharge. The court must further determine whether the customer's conduct constituted a tortious interference with the salesperson's prospective economic relations.

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I

Plaintiff John W. MacDougall was a sales associate for defendant Weichert Co., Realtors ("Weichert"). He began working for Weichert on March 5, 1984, at Weichert's Chester office. At the time, he was also an elected member of the Chester Borough Council ("the Council") and its President. Defendant Robert Merriam was a real estate developer who used Weichert to sell his [677 A.2d 165] properties. He also owned a two-story office building in Chester, which had several tenants.

In the Spring of 1987, the Council began considering an ordinance that would ban public parking in front of Merriam's office building. Merriam opposed the ordinance. Bernice Fisher, manager of Weichert's Mendham office, telephoned MacDougall before the vote on the parking ban. Fisher said she was calling on behalf of her friend Merriam and questioned MacDougall about the proposed ordinance. MacDougall did not know Merriam's relationship with Weichert, and Fisher did not indicate that Merriam had a substantial business relationship with Weichert. When MacDougall told Fisher that the parking ban had been recommended by the police department in response to complaints from local residents about overparking and would probably be enacted, Fisher replied: "Well, in that case, just forget this call," and hung up.

MacDougall voted in favor of the parking ban, which was passed on a split vote by the Council. Residents, however, complained almost immediately that the ordinance merely created parking problems further down the street. Their complaints prompted the Council to consider extending the parking ban to the entire street and to explore the possibility of providing an alternate parking location for the tenants of Merriam's building. To assist the Council, MacDougall went to Merriam's property to photograph the cars parked there. When Merriam saw MacDougall, he ordered MacDougall off his property. Two days later, Merriam had a sign painted on the side of his building that read: "To

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Councilman MacDougall, No Trespassing, and that's carved in stone."

Within a week after the initial vote, Charles Schultz, manager of Weichert's Chester office, said to MacDougall: "I have a party very disturbed about the no parking ordinance." MacDougall did not recall whether Schultz mentioned Merriam by name at that meeting. MacDougall told Schultz that he could not change his vote. Schultz replied: "Well, so be it."

Shortly thereafter, defendant Walter J. Sherman, Weichert's regional vice president, handed MacDougall a letter formally terminating him. The letter said:

Robert Mirriam [sic], the owner of a professional building in Chester, has involved us in his ongoing problem with the town in reference to his parking situation.

As you may know, Bob is a long time builder who has worked with our company for a number of years in the Somerset, Hunterdon, and Morris Counties.

Bob has advised us he can no longer do business with us due to your involvement with the council and our company as an Independent Contractor.

Regretfully, this dispute could have a substantial economic impact upon the company. In order to extract Weichert, Realtors from any involvement in this dispute, we deem it necessary to terminate your relationship with our company as an Independent Contractor effective immediately.

Please advise us where we can transfer your license.

Respectfully,

s/Walter J. Sherman

Regional Vice President

MacDougall filed a complaint, alleging essentially that (1) Weichert, James M. Weichert (President of Weichert), and Walter J. Sherman (collectively, "Weichert defendants") violated a clear mandate of public policy by terminating him in retaliation for his vote on the parking ordinance; (2) Merriam tortiously interfered with his relationship with Weichert by causing his termination; and (3) Merriam libeled him. Defendants moved for summary judgment. The trial court granted summary judgments, dismissing the claims relating to both wrongful discharge and tortious interference. By stipulation, the trial court dismissed the libel count with prejudice. The Appellate Division affirmed the trial

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court's decision. We granted plaintiff's petition for certification. 139 N.J. 183, 652 A.2d 172 (1994). II

The initial question in this case is whether MacDougall was an employee of [677 A.2d 166] Weichert for purposes of raising a wrongful discharge claim under Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58, 417 A.2d 505 (1980). That question was resolved by the trial court by summary judgment. The court found that MacDougall was an independent contractor and therefore not protected under the wrongful discharge doctrine. On appeal, the Appellate Division considered and affirmed the trial court's grant of summary judgment on that ground.

The wrongful discharge doctrine is grounded in public policy and is designed to protect employees when failing to do so would violate a clear mandate of public policy. Id. at 72, 417 A.2d 505. It does not protect independent contractors. The doctrine grew out of a need to protect at-will employees, who are under the total control of the employer and without separate or independent contractual rights that provide employment protections. Id. at 65-67, 417 A.2d 505.

An individual may be considered an employee for some purposes but an independent contractor for others. "Whether or not a person is dubbed an employee can have many [legal] consequences.... The answer to the employment question properly varies with the varying consequences of the determination, and the public policies engaged." Crowe v. M & M/Mars, 242 N.J.Super. 592, 598, 577 A.2d 1278 (App.Div.), certif. denied, 122 N.J. 387, 585 A.2d 389 (1990). The categorization of a working relationship depends not on the nominal label adopted by the parties, but rather on its salient features and the specific context in which the rights and duties that inhere in the relationship are ultimately determined. See Volb v. G.E. Capital Corp., 139 N.J.

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110, 651 A.2d 1002 (1995) (determining status as special employee using relationship's salient features).

Many facts impelled the lower court to determine that MacDougall's relationship with Weichert was that of an independent contractor and hence did not constitute the kind of employment that is the basis for a tort claim based on wrongful discharge. MacDougall and Weichert signed an agreement that purported to make MacDougall an independent contractor. Weichert promised to provide real estate listings and office facilities and MacDougall was to be paid by commissions. Moreover, neither party was liable for the other's expenses. The contract also stated that there were no sales quotas or mandatory sales meetings. In addition, MacDougall was responsible for his own license, trade dues, and health insurance. Either side could terminate the contract at any time by written notice. The contract provided further:

The Sales Associate acknowledges that he/she is not an employee nor a partner, but a Sales Associate with an independent contractor status, with no rights of [worker's] compensation, salary, pension, sick leave, sick pay, or other attributes of an employee relationship. The Sales Associate will not be treated as an employee with respect to the services performed by such salesperson as a real estate agent for federal tax purposes.

Finally, after the relationship ended, MacDougall could not use any remaining prospects, listings, or referrals.

Nevertheless, several facts suggest that Weichert exerted substantial control over MacDougall. MacDougall worked in an office maintained by Weichert, a Weichert manager supervised MacDougall's work, Weichert required...