Fields v. Thompson Printing Co

• Court: Court of Appeals for the Third Circuit
• Decided: March 31, 2004
• Docket: 02-2763
• Status: Published

Opinion

Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

3-31-2004

Fields v. Thompson Printing Co Precedential or Non-Precedential: Precedential

Docket No. 02-2763

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Recommended Citation "Fields v. Thompson Printing Co" (2004). 2004 Decisions. Paper 878. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/878

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UNITED STATES COURT OF APPEALS Anthony F. M alanga, Jr. [ARGUED] FOR THE THIRD CIRCUIT Gaccione, Pomaco & Malanga 524 Union Avenue P.O. Box 96 Nos. 02-2763 and 02-2764 Belleville, NJ 07109 Counsel for Appellants/Cross Appellees

GERALD E. FIELDS Noel E. Schablik [ARGUED] 20 Waterview Boulevard, 3rd Floor v. Parsippany, NJ 07054 Counsel for Appellee/Cross Appellant THOMPSON PRINTING COMPANY, INC.; GILBERT M. THOMPSON, Appellants No. 02-2763 OPINION OF THE COURT

GERALD E. FIELDS, RENDELL, Circuit Judge. Appellant No. 02-2764 These appeals come to us from the v. District Court’s order enforcing the language of an employment contract, THOMPSON PRINTING CO; rejecting Thompson Printing Company’s GILBERT M. THOMPSON (“TPC”) entreaties that doing so would violate implied covenants and public policy. The District Court granted partial Appeals from the United States summary judgment in favor of the District Court for the employee, Gerald Fields (“Fields”). Both District of New Jersey defendants, TPC and its CEO, Gilbert M. (D.C. Civil No. 99-cv-03743) Thompson (“Thompson”), appeal. For the District Judge: Honorable reasons that follow, we will affirm in part, Alfred M. Wolin and reverse and remand in part. I. The Factual Situation Argued November 18, 2003 TPC is a closely held corporation. Thompson owned 80 of the 100 Before: RENDELL, BARRY and outstanding shares, and Fields owned the CHERTOFF, Circuit Judges. remaining 20. Fields started working for TPC in 1955 at age 13. On May 7, 1990, contractual benefits in the event of Fields’s he entered into a four-page Employment voluntary termination: Contract with TPC. It provided that Fields If during the term of this Contract, Jerry was to have the “designated titles” of Vice [Fields] voluntarily terminates his President and Chief Operations Officer, employment with Thompson [Printing and that he was to “perform the duties Company], then it is understood by and attendant thereto.” The agreement defined between the parties hereto that the salary the term of employment as continuing until compensation, employment benefits, and June 14, 2000, and detailed compensation all retirement benefits shall cease as of the and other benefits to which Fields would date of the termination. be entitled in exchange for his services.1 It also provided for annual raises of ten percent each year during the 10-year term, It also contained a broad non-forfeiture and, further, that in the event of clause in favor of Fields: Thompson’s death, Fields’s salary would be doubled within 30 days. The Contract This Contract shall be non-terminable by gave TPC the right to discontinue the Thompson [Printing Company]. In the event Thompson [Printing Company] shall terminate the employment of Jerry 1 [Fields], all of the benefits as contained The Contract provided Fields with a herein shall continue in accordance with starting annual salary of $131,000, the terms and provisions of this inclusion in any and all employee benefit Agreement. programs and packages, annual vacation leave, a credit card for his use, a new car - “a Cadillac or the equivalent at [Fields’s] The Contract did not differentiate between choice” - every four years, a second termination with or without cause, vehicle (every time TPC provided Fields providing for continuation of the benefits with a new car, the old vehicle which was simply if TPC “shall terminate” Fields. being replaced would become the second vehicle), death benefits for Fields’s wife in On August 11, 1997, three female the event that he died prior to retirement, employees made allegations to Thompson, and retirement benefits. Commencing then CEO, that Fields, by now titled TPC’s after the ten-year term, his retirement President, had sexually harassed them by benefits included a $2,000/week payment, creating a hostile work environment. On the continued use of the credit card, the August 13, Thompson telephoned Fields, continued use of the two cars (with a new who was vacationing with his family, and car every sixth year, instead of every fired him. TPC refused to pay Fields any fourth year), and continued medical f u r t h e r c o m pe nsation und er th e benefits with the premiums to be paid by Employment Contract after that date. TPC.

2 The three female employees filed a “ e n t i r e c o n t r o v e r s y ” d o c tr i n e. lawsuit, Zarillo v. Thompson Printing Co., Furthermore, they claimed that Fields had L-9076-97, in the Superior Court of New breached the Employment Contract by Jersey against TPC, Fields, Thompson and engaging in acts of sexual harassment, another supervisor. No findings were terminating Fields’s rights, as well as their made since the claims were settled without obligations, under the Contract. any admission of wrongdoing by any of The parties then filed cross motions the defendants. for summary judgment. Defendants’ While the Zarillo lawsuit was still Statement of Uncontested M aterial Facts pending, Fields commenced a civil action d e t a il e d the alleg atio ns of the against TPC and Thompson in the United Zarillo plaintiffs.2 Defendants argued that States District Court for the District of by his actions Fields had breached the New Jersey. He asserted a federal claim Employment Contract, forfeiting his rights under the Employment Retirement Income under the agreement and warranting the Security Act (“ERISA”), 29 U.S.C. § 1001 entry of summary judgment in their favor. et seq., contending that the retirement However, Fields claimed that not only benefits specified in the Employment were the facts in dispute, but they were not Contract were protected by ERISA, and material to the resolution of his claims that TPC’s failure to pay those benefits because the Employment Contract violated the statute. In addition, he sought guaranteed that if he was terminated by reinstatement of his salary and benefits, including some that had accrued prior to 2 his termination and had never been paid, One employee claimed that Fields had under a variety of state law theories, grabbed her buttocks on one occasion and including the New Jersey Wage Law, N.J. attempted to touch her breast on another, Stat. Ann. § 34:11-4.3, breach of contract, and had repeatedly made lewd and unjust enrichment, conversion, quantum sexually suggestive comments. Several meruit, and breach of the covenant of good incidents were specifically outlined, such faith and fair dealing. He also asserted a as Fields’s request, during the company’s minority shareholder oppression claim search for a part-time receptionist, to let under N.J. Stat. Ann. § 14A:12-C-7(1)(c), him know if any of the applicants had big arguing that his rights as a minority breasts so that he could come out to look. shareholder had been violated by Another plaintiff alleged that Fields Thompson’s actions. repeatedly told her to wear short skirts, one time going so far as to draw a line on a Thompson and TPC replied, wall and say, “I don’t want your skirt to be denying Fields’s allegations and claiming below that line.” She also claimed that that Fields’s ERISA claim was barred by Fields attempted to pull up her skirt on at 29 U.S.C. § 1003(b), and that his state law least two occasions. claims were barred by New Jersey’s

3 TPC, his benefits were to continue. District Court’s order granting partial summary judgment. They essentially raise The District Court granted Fields’s three issues, namely, whether the Court summary judgment motion with regards to erred in determining 1) that Fields’s suit his ERISA, New Jersey Wage Law, breach was not barred by the entire controversy of contract, unjust enrichment and doctrine; 2) that TPC was obligated to pay quantum meruit claims, but denied the Fields the compensation; and, 3) that motion with respect to the oppression Thompson should be held personally claim. The Court held that the entire liable. Fields cross-appeals the District controversy doctrine was inapplicable as Court’s determination that he was not “the validity of the sexual harassment entitled to attorneys’ fees under ERISA, claims [was] entirely immaterial to the contending that its analysis was flawed, adjudication of the parties’ rights and based on existing case precedent. obligations under the Employment Agreement.” It then determined that, Our review of an order granting under the plain language of the Contract’s summary judgment is plenary. Morton non-forfeiture clause, Fields was entitled Int’l, Inc. v. A.E. Staley Mfg. Co., 343 to both retirement and pre-retirement F.3d 669, 679 (3d Cir. 2003). Under benefits, rejecting defendants’ arguments Federal Rule of Civil Procedure 56(c), that enforcing the agreement would violate summary judgment is proper where no public policy or that Fields had breached genuine issue of material fact exists, and the agreement. It also held Thompson the moving party is entitled to judgment as jointly and severally liable based on its a matter of law. Celotex Corp. v. Catrett, view that Thompson had not drawn any 477 U.S. 317, 322-23 (1986). In distinction between himself and TPC, so determining whether a dispute regarding a both were liable. Subsequently, Fields material fact exists, we draw all reasonable dismissed the oppression claim, and the inferences in favor of the non-moving parties agreed upon the amount of party. Morton, 343 F.3d at 680. compensation due under the Contract, but reserved the right to appeal the District Court’s ruling. A. The Entire Controversy Doctrine The District Court had jurisdiction We first address defendants’ over Fields’s ERISA claim pursuant to 29 argument that the New Jersey entire U.S.C. § 1132, and over the state law controversy doctrine required Fields to claims pursuant to 28 U.S.C. § 1367. We bring his claims against TPC and have appellate jurisdiction under 28 U.S.C. Thompson as cross-claims in the Zarillo § 1291. sexual harassment action, and that because he did not do so, application of the II. Discussion doctrine results in the preclusion of those TPC and Thompson now appeal the claims.

4 The entire controversy doctrine is applies to “virtually all causes, claims, and currently codified in Rule 4:30A of the defenses relating to a controversy between New Jersey Rules of Civil Procedure, the parties engaged in litigation.” Cogdell which provides that “[n]on-joinder of v. Hospital Center, 560 A.2d 1169, 1173 claims or parties required to be joined by (N.J. 1989). the entire controversy doctrine shall result The New Jersey Supreme Court has in the preclusion of the omitted claims to stated that “[i]n determining whether the extent required by the entire successive claims constitute one controversy doctrine.” The doctrine controversy for purposes of the doctrine, “seeks to assure that all aspects of a legal the central consideration is whether the dispute occur in a single lawsuit.” Olds v. claims . . . arise from related facts or the Donnelly, 696 A.2d 633, 637 (N.J. 1997). same transaction or series of transactions.” Its purposes “are threefold: (1) to DiTrolio v. Antiles, 662 A.2d 494, 502 encourage the comprehensive and (N.J. 1995). Thus, we must determine conclusive determination of a legal whether the facts giving rise to Fields’s controversy; (2) to achieve party fairness, claims against TPC and Thompson also including both parties before the court as gave rise to the Zarillo plaintiffs’ claims well as prospective parties; and (3) to against TPC, Thompson and Fields in the promote judicial economy and efficiency earlier action. TPC urges that absent the by avoiding fragmented, multiple and alleged behavior at the center of the sexual duplicative litigation.” Mystic Isle Dev. harassment claims, Fields would not have Corp. v. Perskie & Nehmad, 662 A.2d 523 been terminated and he would not have (N.J. 1995). The doctrine is essentially a brought suit against TPC and Thompson. rule of mandatory joinder of claims and While this is no doubt true, the causal parties, which precludes non-joined claims relationship between the two sets of claims from being brought at a later date. We is not conclusive under New Jersey law. have characterized it as “New Jersey’s Rather, “[t]he issue is, basically, whether specific, and idiosyncratic, application of a sufficient commonality of facts traditional res judicata principles.” undergirds each set of claims to constitute Rycoline Prods., Inc. v. C & W Unlimited, essentially a single controversy that should 109 F.3d 883, 886 (3d Cir. 1997). Over be the subject of only one litigation.” the years, New Jersey courts have DiTrolio, 662 A.2d at 497. extended the doctrine to related claims, defenses, counterclaims and cross-claims. Here, no such “commonality of See Massari v. Einsiedler, 78 A.2d 572 facts” exists, as the facts requiring (N.J. 1951) (defenses); Ajamian v. determination in Fields’s ERISA and Schlanger, 103 A.2d 9 (N.J.), cert. denied, breach of contract action are quite separate 348 U.S. 835 (1954) (related claims); from the facts that would have been Vacca v. Stika, 122 A.2d 619 (N.J. 1956) determined in the Zarillo action. There, (counterclaims). Thus, the doctrine the plaintiffs blamed TPC for the

5 d i s criminatory and hostile work would bar the suit to enforce the conditions, and the Superior Court was Employment Contract on the theory that a interested in the nature of the work “comprehensive determination” should environment and what TPC did to address have been sought in the Zarillo litigation. the female employees’ complaints, while, Our decision in Fornarotto v. in the instant case, we are interested in the American Waterworks Co., 144 F.3d 276 language of the Employment Contract and (3d Cir. 1998) is also instructive. There, the parties’ rights and obligations under Fornarotto, an employee of a subsidiary of that Contract and ERISA.3 Cases in which A m e r i c a n W a te rw o r k s C o m p a n y the New Jersey courts have applied the (“AWC”), was struck by an automobile entire controversy doctrine to bar a second driven by Chiapetta, also an employee of suit have been characterized by some the AW C subsidiary. Id. at 277. In 1990, duplication of proof. For instance, in Fornarotto filed a personal injury suit DiTrolio, the second action was found to against the AWC subsidiary and Chiapetta, “require[] the production of substantially who he claimed had been acting in the the same evidence that would be adduced course of his employment. Id. Fornarotto in the first action.” Id. at 507. And, in attempted to return to work, but Mystic Isle, forcing the two claims to be complications from his injuries eventually brought at the same time “would have forced him from the job. In 1995, he filed resulted in a more comprehensive a complaint against AW C under the civil determination of the underlying legal enforcement provisions of ERISA, seeking controversy.” 662 A.2d at 531. New disability benefits. Id. at 278. In 1996, Jersey’s application o f the entire Fornarotto settled the personal injury suit. controversy doctrine “emphasize[s] the Id. Shortly thereafter, the defendants in essential unfairness of forcing parties and the ERISA suit moved for, and the district courts to rerun a course previously run.” court granted, summary judgment on the Joel v. Morrocco, 688 A.2d 1036, 1040 ground that the ERISA claim arose from (N.J. 1997). Here, given that two different the same set of facts as the personal injury sets of facts are relevant to the two claim and was therefore barred by the New different types of claims, there is no reason Jersey entire controversy doctrine. Id. to believe that the New Jersey courts We reversed, holding that the personal injury suit and the disability suit 3 did not turn on the same transactional The specific claims in the Zarillo suit facts. Id. at 280. While the injuries include: discrimination under federal and suffered were relevant to both suits, the state law, constructive discharge, assault issue of Chiapetta’s negligence and the and battery, intentional infliction of issue of the employer’s obligation to pay emotional distress, breach of contract disability benefits under a pension plan based on a handbook and policy, breach of “[did] not rise to the level of ‘commonality implied covenants, and loss of consortium.

6 of facts’ necessary to trigger the entire fairness.” Fornarotto, 144 F.3d at 282; see controversy doctrine.” Id. (citing Joel, also DiTrolio, 662 A.2d at 505 (“The 688 A.2d 1036). Thus, we held that, “[t]he polestar of the application of the rule is two claims are separate and distinct, and judicial fairness.”); Cogdell, 560 A.2d at failure to join them does not require a 1177 (“Party fairness is critical in the ‘rerun’ of the preceding litigation nor does application of the doctrine.”). this allow Fornarotto to ‘seek two bites at Specifically, in applying the entire the apple.’” Id. controversy doctrine, “[f]airness is . . . a Similarly, the Zarillo plaintiffs’ protective concept that focuses primarily sexual harassment claims against TPC, on whether defendants would be in a better Thompson and Fields, and Fields’s position to defend themselves if the claims contract claims against TPC and had been raised and asserted in the first Thompson do not constitute one litigation.” DiTrolio, 662 A.2d at 505. “A controversy under the doctrine. There is key determination is w hether ‘the no “rerun” here, as the question of TPC’s defendants are now disadvantaged because obligation to Fields under the Employment they were not parties to the first Contract is a matter of contract law and litigation.’” Fornarotto, 144 F.3d at 282 turns on contractual language and (quoting DiTrolio, 662 A.2d at 505). principles, while the Zarillo litigation Here, TPC was a party to the first involved claims of harassment and hostile litigation, and is not disadvantaged now on work environment that implicated certain that basis. Furthermore, nothing occurred duties and potential liability on the part of during the Zarillo lawsuit or since its the defendants. Because the two sets of settlement that would affect TPC’s or claims involve vastly different legal issues, Thompson’s ability to defend themselves and the resolution of those legal issues in the instant case. The main elements turns upon different sets of facts, the upon which the instant controversy turns - relationship between the two suits is “too the contractual language and TPC’s attenuated to hold that both actions arise actions - remain constant and unexplored. from a ‘commonality of facts.’” Id. As a result, we can fathom no reason why TPC and Thompson would have been Furthermore, even in the event that better able to defend themselves from Fields’s claims against TPC and Fields’s ERISA and breach of contract Thompson could be said to be part of the claims had he raised them in the earlier same controversy giving rise to the Zarillo action. claims, basic notions of fairness would prevent us from applying the doctrine here. In addition to examining the effect “Despite the doctrine’s apparent rigidity, upon the defendants, “[f]airness to the New Jersey courts have clearly stated that plaintiff must also be considered.” Joel, it is not to be applied in a rigid manner 688 A.2d at 1038. The New Jersey courts divorced from concepts of equity and have stated that “[c]hief among the

7 equitable considerations determining the contention that the District Court erred in doctrine’s applicability ‘is the full and fair determining that TPC violated its opportunity of the party sought to be obligations under ERISA 5 and the terms of precluded in the second action to have the Employment Contract when it refused raised the claim there asserted in the to pay Fields compensation or benefits original action.’” Illiano v. Seaview after August 13, 1997. They argue that, in Orthopedics, 690 A.2d 662, 666 (N.J. light of Fields’s alleged acts of sexual Super. Ct. App. Div. 1997) (citation harassment, it would violate public policy omitted). The issue is whether, to enforce the agreement. In the considering what was at stake in the alternative, they argue that Fields’s alleged Zarillo action, it is “reasonable as a matter acts breached the agreement, terminating of practical jurisprudence” to require Fields to have sued his co-defendants in the same case. Id. We do not think such a 5 Fields’s retirement benefits, as requirement would be reasonable here. specified in the Employment Contract, Forcing Fields to bring his claim as a constitute a so-called “Top Hat” plan. cross-claim against TPC in the Zarillo “Top Hat plans are clearly subject to action would not have aided the Zarillo ERISA.” Kemmerer v. ICI Americas, Inc., plaintiffs’ case in any way. In fact, it 70 F.3d 281, 286 (3d Cir. 1995). A would have complicated the matter, and participant in a “Top Hat” plan may bring perhaps even jeopardized settlement. This a civil action “to recover benefits due to not a situation where Fields withheld his him under the terms if his plan, to enforce claims relevant to the Zarillo action “for his rights under the terms of the plan, or to strategic reasons,” seeking “two bites at clarify his rights to future benefits under the apple.” Id. at 1041. Thus, the entire the terms of the plan.” 29 U.S.C. § controversy doctrine does not apply, and 1132(a)(1)(B). In such situations, “breach Fields’s claims are not precluded by his of contract principles, applied as a matter failure to bring them in the earlier action.4 of federal common law, govern disputes arising out of the plan documents.” Kemmerer, 70 F.3d at 287. Thus, we B. TPC’s Obligation to Fields apply federal common law to determine Second, we examine defendants’ TPC’s obligation to Fields with respect to his retirement benefits. However, we apply New Jersey law to determine TPC’s 4 This might be a closer question if TPC obligation to Fields with respect to his pre- intended to offer proof of the alleged retirement compensation and benefits. As incidents of sexual harassment. However, both bodies of law compel the same result it has maintained that its right to terminate (and since the parties did not distinguish Fields is clear based on the allegations between the two sets of benefits), we made against him. combine the discussion of the two claims.

8 TPC’s obligation to continue to pay him.6 considerations of supposed public Both of these arguments essentially urge interests.’” Grace, 461 U.S. at 766. In us to look past the plain language of a New Jersey, for example, courts have relatively straightforward contract. Given declined to enforce contracts that violate the fact pattern before us, we will decline statutes, promote crime, interfere with the to do so. administration of justice, encourage divorce, violate public morality or restrain It is axiomatic that a court may trade. Saxon Constr. & Mgmt. Corp v. refuse to enforce a contract that violates Masterclean of North Carolina, Inc., 641 public policy. See W.R. Grace & Co. v. A.2d 1056, 1058 (N.J. Super. Ct. App. Local 759, 461 U.S. 757, 766 (1983) Div. 1994). (citing Hurd v. Hodge, 334 U.S. 24, 34-35 (1948)). “A promise is unenforceable if Here, the defendants argue that the interest in its enforcement is enforcement of the Employment Contract outweighed in the circumstances by a a n d c o m pe n s a t io n o f F i e ld s public policy harmed by enforcement of notwithstanding his alleged behavior the agreement.” Town of Newton v. violates the clear public policy against Rumery, 480 U.S. 386, 392 (1987). “Such sexual harassment of both the United a public policy, however, must be well- States, as embodied in Title VII of the defined and dominant, and is to be Civil Rights Act of 1964, 42 U.S.C. § ascertained ‘by reference to the laws and 2000e-2(a)(1), and the state of New Jersey, legal precedents and not from general as embodied in the New Jersey Law Against Discrimination, N.J. Stat. Ann. § 10:5-12. The defendants cite Stroehmann 6 Fields has requested that the sections of Bakeries, Inc. v. Local 776, 969 F.2d 1436 defendants’ brief arguing these points be (3d Cir. 1992), in which this Court held stricken because they misrepresent facts that an arbitrator’s order to reinstate an contained in the record. Specifically, employee accused of sexual harassment, Fields argues that in these sections without a determina tion tha t the defendants, rather than acknowledging that harassment did not occur, violated public Fields faced allegations of sexual policy. “There is a well-defined and harassment, instead use language that dominant public policy concerning sexual assumes Fields did, in fact, commit acts of harassment in the workplace which can be sexual harassment. He contends that this ascertained by reference to law and legal is a deliberate attempt to mislead the court. precedent.” Id. at 1441. However, defendants’ statement of facts However, Stroehmann is clearly clearly states that acts of sexual distinguishable from the case at hand. harassment were merely alleged. Anyone Unlike the arbitrator’s order there, the reading the brief as a whole would E m p l o ym e n t C o n t r a c t d o e s n o t understand that the acts were alleged and “undermine[] the employer’s ability to not proven. We see no reason to strike.

9 fulfill its obligation to prevent and Fields relies on Aramony v. United sanction sexual harassment in the Way Replacement Benefit Plan, 191 F.3d workplace.” Id. at 1442. Enforcement of 140 (3d Cir. 1999), and we find it to be the Contract does not require TPC to hire more persuasive considering the fact or reinstate someone who may have pattern before us. United Way terminated engaged in acts of sexual harassment, Aramony, its CEO, after discovering that which may violate the policy against he had engaged in fraud. Id. at 143. After “perpetuating a hostile and offensive work his conviction, United Way chose to deny environment.” Id. at 1443. Nor does the him the pension benefits he was due under Contract impinge on TPC’s ability to the organization’s retirement plan. Id. police the work environment and to Aramony filed suit to regain them. Id. On prevent sexual discrimination. Rather, it appeal, we affirmed the trial court’s ruling requires TPC to pay certain sums if they that Aramony was entitled to the benefits terminated Fields, ostensibly for any because the retirement benefit plan reason, including improper and offensive contained no felony forfeiture provision. conduct. Had TPC intended to avoid this Id. at 149-150. “The signed plan simply result, they could have bargained for a does not include a felony forfeiture limiting provision in the contract. But the exception to its otherwise sweeping non- absence of such a provision, owing to forfeiture clause. There is no basis upon TPC’s failure, does not “perpetuate a which to read one into the contract.” Id. hostile and offensive work environment.” Here, Fields’s Employment Id. The principles of public policy simply Contract, like the documentation in do not reach that far. 7 Aramony, does not include any conduct- related exception to its non-forfeiture clause. TPC asks us to save it from its 7 Our decision in Stroehmann is own failure to include such a forfeiture distinguishable for two additional reasons. clause. Doing so would essentially force First, Stroehmann involved the review of us to read clauses thought desirable from a an arbitrator’s exercise of discretion, rather policy standpoint into every employment than the application of a straightforward contract. This we cannot do. Employers contract clause. Second, the Stroehmann may legitimately offer compensation and court, while holding that reinstatement was benefits that can be taken away only for violative of public policy, specifically specific reasons, or that cannot be taken noted that the arbitrator could have away at all, in order to lure or reward concluded that a lesser punishment than employees. The absence of a forfeiture termination was appropriate. Similarly, clause here suggests that this may well here, TPC could have retained the benefits have been what was intended. As long as it was due under the Employment Contract by continuing Fields’s employment and taking less drastic steps to remedy whatever problem was found to exist.

10 the enforcement of the promise itself is not careful look at defendants’ argument is violative of public policy, we will not deny necessary. the parties the bargained-for relief. The Every contract in New Jersey does fact that it could be said to have public contain an implied covenant of good faith policy implications is not enough. We find and fair dealing. See R.J. Gaydos Ins. the payment of the bargained-for Agency, Inc. v. Nat’l Consumer Ins. Co., compensation does not violate public 773 A.2d 1132, 1145 (N.J. 2001); Wilson policy. v. Amerada Hess Corp., 773 A.2d 1121, It should also be noted at this 1126 (N.J. 2001); Sons of Thunder, Inc. v. juncture that even were we inclined to look Borden, Inc., 690 A.2d 575, 587 (N.J. with disfavor on the rights of a harassing 1997); Pickett v. Lloyd’s, 621 A.2d 445, executive to continue to rece ive 450 (N.J. 199 3); Onderdonk v. compensation in this situation, there has Presbyterian Homes, 425 A.2d 1057, 1063 been no finding that Fields was in fact (N.J. 1981); Bak-A-Lum Corp. v. Alcoa guilty of harassment. Clearly, any Bldg. Prods., Inc., 351 A.2d 349, 352 (N.J. consideration of TPC’s claim that it was 1976); Association Group Life, Inc. v. entitled not to compensate Fields because Catholic War Veterans, 293 A.2d 382, 384 of his conduct would have to be based on (N.J. 1972); Palisades Properties, Inc. v. a finding that his behavior did rise to a Brunetti, 207 A.2d 522 (N.J. 1965). We level that had policy and contract have previously noted the New Jersey implications. And, defendants have made courts’ adherence to this view. See no claim that they need an opportunity to Emerson Radio Corp. v. Orion Sales Inc, prove that Fields did behave in such a 253 F.3d 159, 170 (3d Cir. 2001) (stating manner, apparently resting on the principle that New Jersey courts recognize an that the allegations to that effect supported implied covenant of good faith and fair a denial of compensation. dealing). Under the implied covenant of good faith and fair dealing, neither party Defendants’ other argument is that, shall do anything which will have the based on the allegations, Fields breached effect of destroying or injuring the right of the Employment Contract, giving TPC the the other party to receive the fruits of the right to discontinue payment of the contract. R.J. Gaydos Ins. Agency, 773 contractual benefits. The District Court A.2d at 1146; 13 Williston on Contracts § dismissed this line of reasoning out of 38:15 (4th ed. 2000). hand, concluding that TPC “was not deprived of the fruits of the Employment In addition, every employee owes a Agreement,” and that “the implied duty duty of loyalty to their employer. Cameco, defendants posit is trumped by the Inc. v. Gedicke, 724 A.2d 783, 789 (N.J. language of the parties’ agreement.” 1999). The duty of loyalty “consists of However, while we agree with the District certain very basic and common sense Court’s ultimate conclusion, a more obligations.” Lamorte Burns & Co. v.

11 Walters, 770 A.2d 1158, 1168 (N.J. 2001). the Vice President of TPC, and that he did This duty usually arises in situations where so until the day that he was terminated, by an employee has assisted a competitor of which time he had been named President the employer or engaged in self-dealing. of the company. He cites authority for the See Cameco, 724 A.2d at 789. However, proposition that courts are obligated to it is also phrased more generally. “An enforce contracts as they are made by the employee must not while employed act parties and not to create additional terms contrary to the employer’s interest.” out of thin air. See, e.g., Marchak v. Lamorte Burns & Co., 770 A.2d at 1168. Claridge Commons, Inc., 633 A.2d 531 (N.J. 1993). However, “[i]mplied covenants are as effective components of Defendants argue that Fields an agreement as those covenants that are breached the implied covenant of good express,” and “a party’s performance faith and fair dealing inherent in the under a contract may breach [an] implied Employment Contract and the duty of covenant even though that performance loyalty inherent in his relationship with does not violate a pertinent express term.” TPC, based on the employees’ allegations Wilson, 773 A.2d at 1126. See also of sexual harassment. These allegations, Emerson, 253 F.3d at 170 (stating that they contend, destroyed TPC’s ability to New Jersey law holds that a party to a reap to the benefits to which it was entitled contract can breach the implied duty of under the Employment Contract - namely, good faith even if that party abides by the Fields’s services for ten years - by making express and unambiguous terms of that it impossible for them to continue to contract); Sons of Thunder, 690 A.2d at employ him. In light of his breach and 588 (noting favorably that other courts failure of performance, they maintain that have stated that a party can violate the they have the right to not perform their implied covenant of good faith and fair part. 8 dealing without violating an express term Fields argues that the only of the contract). affirmative obligation that he had under Further, an employee may violate the agreement was to perform the duties of the implied covenant of good faith and fair dealing even while performing his or her listed job duties to perfection. And we can 8 TPC has also framed this argument as imagine circumstances in which an Fields having, by his conduct, “voluntarily employee who has committed acts of terminated” his position, relieving TPC of sexual harassment could be deemed to the responsibility to compensate him under have breached this implied covenant. the specific term of the Contract that so However, while the “principle of fair provides. However, the pleadings did not dealing pervades all of [New Jersey] rely on this theory and we find it contract law . . . [t]hat principle will not unnecessary to engage in this analysis.

12 alter the terms of a written agreement.” words, if TPC should fire him, it must still Rudbart v. North Jersey District Water pay him. There is no differentiation Supply Comm’n, 605 A.2d 681, 692 (N.J. between termination with cause and 1992). “The implied duty of good faith termination without cause; Fields’s and fair dealing does not operate to alter benefits are to continue in any event. the clear terms of an agreement and may Thus, under the express terms of the not be invoked to preclude a party from agreement, Fields has a right to benefits exercising its express rights under such an even in the event that he is terminated for agreement.” Fleming Cos., Inc. v. cause. Thriftway Medford Lakes, Inc., 913 F. Defendants’ argument urges us to Supp. 837, 846 (D.N.J. 1995) (citing treat Fields’s alleged behavior - behavior Glenfed Fin. Corp. v. Penick Corp., 647 that could give rise to termination for A.2d 852, 858 (N.J. Super. Ct. App. Div. cause - as a breach of the implied covenant 1994)). So, where the terms of a contract of good faith and fair dealing. However, are not specific, the implied covenant of whether he breached this covenant, giving good faith and fair dealing may fill in the rise to a clear right to terminate him, is not gaps where necessary to give efficacy to the issue. The fact remains that even if he the contract as written. But where the committed the alleged acts and the terms of the parties’ contract are clear, the termination was justified, the express implied covenant of good faith and fair terms state that if he is terminated, benefits dealing will not override the contract’s will continue. We cannot read the implied express language. covenant of good faith and fair dealing to Here, the Employment Contract essentially alter the terms of the Contract, specifically provides: enabling TPC to discontinue Fields’s benefits in the event that he was This Contract shall be non-terminable by terminated for cause. Because TPC did Thompson [Printing Company]. In the not include a proviso that it would not event Thompson [Printing Company] shall have to continue Fields’s benefits in the terminate the employment of Jerry event he was terminated even for cause, [Fields], all of the benefits as contained we will not read that language into the herein shall continue in accordance with Contract. the terms and provisions of this Agreement. Defendants argue that the New Jersey courts have relieved an employer of the duty of strict performance of an This provision not only prohibits TPC employment contract when the employee from terminating the Contract but it has engaged in misconduct, relying on provides further that if it should McGarry v. St. Anthony of Padua Roman “terminate” Fields’s “em ployment,” Catholic Church, 704 A.2d 1353 (N.J. Fields’s benefits will continue. In other Super. Ct. App. Div. 1997). There,

13 McGarry had entered into an employment For one thing, the court clearly viewed the contract with St. Anthony’s. Id. at 1354. criminal nature of McGarry’s acts to be The contract required the church to give critical to its analysis. Furthermore, the McGarry notice of termination at least 30 issue in McGarry was whether the days in advance of termination and to termination was justified based on breach continue to pay him during the 30-day of an implied covenant. Id. The court period if it did not wish him to work held that is was. Id. Here, the issue is not during that period. Id. at 1355. Three whether termination was appropriate or months after starting work, McGarry was called for, but rather, if termination occurs, arrested in the parking lot of the church for what happens to Fields’s benefits. Unlike receiving shipments of illegal steroids and McGarry, here the Contract speaks he admitted that he had been using the specifically to that issue. Thus, we will church property to receive other affirm the District Court’s conclusion that shipments. Id. Upon learning of the TPC’s failure to pay the required arrest, the church terminated M cGarry, compensation constituted a breach of the instructed him to stay off church grounds employment agreement and its obligations and refused to pay him, even under the 30- under ERISA, and that Fields is entitled to day notice requirement. Id. McGarry filed all of the compensation and benefits that suit, contending that he had been he was due under the plain meaning of the wrongfully terminated and argued that he Contract. 9 was entitled to 30 days’ pay because the church had failed to follow the 30-day notice requirement. Id. at 1356. 9 TPC argues that it has no obligation to The New Jersey Superior Court pay Fields’s “Top Hat” retirement benefits found that “even where . . . the employee because it has no unencumbered assets, performs the duties contracted for and that, in the event that Fields contests satisfactorily, criminal activity by the its claim that it has no unencumbered employee can justify his discharge for assets, the case must be remanded to make breach of an employment contract.” Id. at such a determination. We find this 1357. As a result, St. Anthony’s “had position to be meritless. “Top Hat” plans good cause to terminate the employment are treated like unilateral contracts. contract by virtue of [McGarry’s] breach Goldstein v. Johnson & Johnson, 251 F.3d of the implied covenant of good faith and 433, 442 (3d Cir. 2001). According to fair dealing.” Id. Furthermore, McGarry “unilateral contract principles, once the was “not . . . allowed to recover employee performs, the offer becomes termination pay under the termination irrevocable, the contract is completed, and clause of the breached contract.” Id. at the employer is required to comply with its 1358. Howev er, Mc Garry is side of the bargain.” Kemmerer, 70 F.3d distinguishable from the instant situation. at 287. Thus, TPC became obligated to pay Fields retirement benefits on his first

14 C. Thompson’s Personal Liability its motion, and identifying those portions of ‘the pleadings, depositions, answers to Finally, we consider defendants’ interrogatories, and admissions on file, argument that the District Court erred together with the affidavits, if any,’ which when it imposed personal joint and several it believes demonstrate the absence of a liability on Thompson. The Court’s order genuine issue of material fact.” Celotex, stated: 477 U.S. at 323. In order to be entitled to Finally, because defendants have not judgment against Thompson, Fields had to argued what if any distinction should be aver, and demonstrate he could prove, drawn between defendant Thompson sufficient facts to support liability against Printing and defendant Gilbert M. Thompson under ERISA and under state Thompson with respect to their liability to law. Fields, the Order shall not differentiate So, while the District Court placed between them and they shall be jointly and the onus on the defendants to distinguish severally liable for the relief granted by the liability of TPC from Thompson, it was this Court’s Order of Partial Summary really Fields’s burden to not only plead, Judgment. but also to prove, that he was entitled to judgment as a matter of law against Thompson. Thompson was the CEO of As a preliminary matter, Fields TPC, and the corporate officer responsible contends that Thompson has waived this for terminating Fields and discontinuing issue through his failure to raise it at the his benefits. The pleadings allege trial level. However, while Thompson generally that he violated fiduciary duties clearly could have raised a genuine issue owed to Fields under ERISA, and that he of material fact to avoid personal liability, and TPC breached the Contract by refusing the threshold burden was on Fields, who to pay Fields salary and benefits after brought the claim against Thompson, to Fields’s termination. But, these pleadings plead and prove undisputed facts that fall short of alleging, let alone warranted an imposition of liability against establishing, a basis for personal liability Thompson personally as a matter of law. against a corporate officer, on any of the “A party seeking summary judgment claims at issue. always bears the initial responsibility of informing the district court of the basis for With regards to the ERISA claim, the parties have stipulated that Fields’s post-employment benefits plan is a “Top Hat” plan. “Top Hat” plans are “unique day of work under the Contract. Only animal[s] under ERISA’s provisions.” Fields’s voluntary termination could end Goldstein v. Johnson & Johnson, 251 F.3d that obligation. Whether or not TPC has 433, 442 (3d Cir. 2001). Because “these unencumbered assets has no bearing on the plans are intended to compensate only question of its duty to pay.

15 highly-paid executives, and . . . such Id. (citing Welch v. Bancorp Mgmt. employees are in a strong bargaining Advisor, Inc., 675 P.2d 172, 178 (Or. position relative to their employers,” they 1983)). are free from some of the requirements Thus, Thompson can be held personally that are imposed upon most ERISA plans liable only if Fields alleges and proves that in order to protect those employees Thompson was not acting with the intent covered by such plans. Id. Specifically, to benefit TPC when he refused to pay “Top Hat” plans are not subject to Fields the benefits and compensation that ERISA’s requirements for vesting and were due u nder the em ployment funding, see 29 U.S.C. §§ 1051(2); agreement. See also Law of Corp. 1081(a), and the administrators of these Officers and Dir., § 3:30 (2004) (“[A] plans are not subject to ERISA’s fiduciary corporate officer or director is not requirements. See 29 U.S.C. §§ 1051(2), personally liable for . . . inducing the 1081(a), 1101(a). Thus, Thompson did not breach of a corporate contract, provided have a fiduciary duty with respect to the officer or director acts in good faith Fields’s “Top Hat” plan, and may not be and for the benefit of the corporation.”); held personally liable for any violations of 3A W. Fletcher, Cyclopedia of the Law of ERISA with respect to that plan. Private Corporations § 1158.10 (2002). With respect to the breach of Fields has failed to make such an contract claim, New Jersey law provides allegation, let alone present proof of facts that “an officer who causes his corporation necessary to impose officer liability. to breach a contract for what he conceives Fields’s motion for summary judgment is to be in the best interest of the corporation not accompanied by any evidence that does not thereby incur personal liability.” could provide a basis for a finding that Zeiger v. Wilf, 755 A.2d 608, 622 (N.J. Thompson acted in bad faith. The Super. Ct. App. Div. 2000). In Zeiger, the Statement of Facts that Fields filed in New Jersey Superior Court cited with support of his motion for summary approval Oregon’s test for determining judgment contains facts about Fields’s whether an officer has acted in the best employment history with TPC, the interest of the corporation. Id. at 623. The company’s termination of Fields, and its test asks failure to pay him salary and benefits after that termination. However, nowhere does whether the agent acts within the scope of it state any facts that would support his authority, and with the intent to benefit Thompson’s being held personally liable. the principal. When this test is met an In fact, the only specific allegations agent is not liable to a third party for relating to Thompson were in connection intentional interference with contract even with the ERISA claim, dealt with above, if the agent acts with ‘mixed motives’ to and the minority oppression claim, which benefit himself or another principal as was withdrawn before this appeal. As a well.

16 result, the imposition of personal liability with the following statement: and judgment against Thompson was Plaintiff has requested attorney’s fees improper, and that portion of the District which are available pursuant to our Court’s opinion will be reversed. discretion under 29 U.S.C. § 1132(g)(1). We will deny that request. Colt has neither acted in bad faith, nor pressed a D. Cross-Appeal of Attorneys’ Fees clearly meritless position. On cross-appeal, Fields challenges the District Court’s decision not to grant him attorneys’ fees. ERISA provides that Id. We noted there that “the district court “the court in its discretion may allow considered factors one and five of the reasonable attorney’s fees and costs of Ursic catechism, but did so without action to either party.” 29 U.S.C. § analysis or articulation of its reasons. 1132(g)(1). We have set forth five policy Moreover, the district court’s opinion factors for a district court to consider in [was] silent with respect to the other Ursic determining whether to award fees: (1) the factors.” Id. at 1012. Thus, we were offending parties’ culpability or bad faith; hampered in our review function because (2) the ability of the offending parties to the district court failed to enunciate the satisfy an award of attorney’ fees; (3) the reasons for the conclusions it reached in deterrent effect of an award of attorneys’ denying . . . attorneys’ fees, and fees; (4) the benefit conferred upon additionally [had] utterly failed to members of the pension plan as a whole; recognize, analyze, explain or enunciate and (5) the relative merits of the parties’ conclusions concerning the other Ursic positions. Ursic v. Bethlehem Mines, 719 factors which it was required to consider. F.2d 670, 673 (3d Cir. 1983). In Anthuis v. Colt Indus. Operating Corp., 971 F.2d 999, 1011 (3d Cir. 1992), we reiterated Id. As a result, we remanded the issue to that “we regard our requirement that the district court for further consideration. district courts consider and analyze these factors as a mandatory requirement.” See Here, the District Court denied also McPherson v. Employees’ Pension Fields’s request for attorneys’ fees by Plan of Am. Re-Insurance Co., 33 F.3d stating: 253, 254 (3d Cir. 1994). We require such The statute provides that fees may be an analysis “in order that we may awarded to a prevailing litigant upon a intelligently review the judgments reached showing, inter alia, of culpability or bad by those courts.” Anthuis, 971 F.2d at faith of the party in violation of the statute. 1011. 29 U.S.C. § 1132(g)(1). Plaintiff’s In Anthuis, the district court had showing on this motion falls well short of denied a party’s request for attorney’s fees establishing this peculiarly fact-sensitive

17 element beyond any reasonable dispute. on which the district court relied when it exercised its discretion.” Id. Here, the District Court did err in not providing an Fields contends that this statement adequate basis for its reasoning under provides insufficient reasoning for the Ursic. Accordingly, we will vacate its court to have ruled on the issue of fees. ruling in this regard and remand this issue Inasmuch as it is nearly identical to the for further consideration. statement deemed insufficient in Anthuis, III. we agree. The District Court did not mention four of the Ursic factors, much For all of the reasons above, we less analyze them in a rigorous fashion. A will affirm the order of the District Court conclusory statement that one of the insofar as it authorizes judgment against factors has not been fulfilled is not enough TPC, reverse the order of the District to discharge the District Court’s Court insofar as it authorizes judgment responsibility to explain its reasoning. In against Thompson, and vacate and remand addition, the Ursic factors are not to District Court for further proceedings requirements in the sense that a party must with respect to the issue of the award of demonstrate all of them in order to warrant attorneys’ fees. an award of attorney’s fees, but rather they are elements a court must consider in exercising its discretion. Even if the District Court’s analysis of the first factor was sufficient - which it was not - it was obliged to examine the remaining factors as well. Although we find the District Court’s explanation wanting, we cannot, as Fields asks, conclude that the court abused its discretion in denying the fees. While he urges that we should examine the record ourselves and draw our own conclusions regarding the propriety of awarding attorneys’ fees, “the function of analyzing and balancing [the Ursic] considerations is not ours to undertake.” Anthuis, 971 F.3d at 1012. We may review a district court’s decision regarding fees and costs “only when we know the reasons for, and the basis of, those factors