(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
John W. Mac Dougall v. James M. Weichert, et al. (A-116-94)
Argued March 14, 1995 -- Decided June 10, 1996
HANDLER, J., writing for a majority of the Court.
John MacDougall was a sales associate for Weichert Co., Realtors (Weichert). He began working at
Weichert's Chester office on March 5, 1984. At the time, he was also an elected member of the Chester
Borough Council (the Council) and its President. Robert Merriam is a real estate developer who used
Weichert to sell his properties. Merriam owned a two-story office building in Chester, which had several
tenants. As a Council member, MacDougall voted for an ordinance that would ban public parking in front
of Merriam's office building. MacDougall was subsequently discharged from his real estate sales position
because Merriam, an important Weichert client, threatened to terminate his business relationship with
Weichert if it continued to retain MacDougall as a sales associate.
MacDougall filed a complaint, alleging essentially that: 1) Weichert, through its President and
Regional Vice President, 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. All defendants moved for summary judgment. The
trial court granted the motions, dismissing the claims related to both wrongful discharge and tortious
interference. By stipulation, the trial court dismissed the libel count with prejudice. The Appellate Division
affirmed the trial court's decision.
The Supreme Court granted MacDougall's petition for certification.
HELD: N.J.S.A. 2C:27-3 and -5 are the source of the clear mandate of public policy that serves to protect an
employee from the threat or infliction of unlawful harm that is intended to influence his or her
official action as an elected legislative representative. That harm would be unlawful if it is a
violation of criminal law, the commission of a tort, or the violation of a civil or legal duty or an
applicable code of ethics, including a violation of the principles that define the conflict-of-interest
laws that govern the official actions of persons holding public office. The record in this case fairly
poses the issue of whether Weichert's conduct in terminating MacDougall's employment was based
on interests or relationships that would constitute an impermissible conflict of interest and may have
offended the standards that govern conflicts of interest, thereby violating a clear mandate of public
policy.
1. The wrongful discharge doctrine protects at-will employees who are under the total control of the
employer and are without separate or independent contractual rights that provide employment protections.
Independent contractors are not protected under this doctrine. The categorization of a working relationship
does not depend on the label used by the parties, but rather on the type of relationship and the rights and
duties of the parties arising from that relationship. In this case, MacDougall and Weichert signed an
agreement that purported to make MacDougall and independent contractor and, MacDougall did not receive
a salary, pension, sick leave, sick pay, or other attributes of an employee relationship. Nevertheless, there
are facts suggesting that Weichert exerted substantial control over MacDougall. Because there exists genuine
issues of material fact in regard to whether MacDougall is an independent contractor or a Weichert
employee, summary judgment was inappropriate. Therefore, the matter must be remanded to the trial court
to determine whether MacDougall was Weichert's employee for purposes of invoking a cause of action based
on wrongful discharge. (pp. 6-8)
2. If on remand the trial court determines that the working relationship was one of employment, then it
must consider whether MacDougall was wrongfully discharged. The Court explains the standards that should
inform and guide the trial court in the event it reaches that issue. An employee has a cause of action for
wrongful discharge when the discharge is contrary to a clear mandate of public policy. The public policy
must be clearly identified and firmly grounded. In some cases, the employee may show that the retaliation is
based on the employee's exercise of certain established rights, violating a clear mandate of public policy.
(pp. 9-13)
3. MacDougall argues that the clear mandate of public policy that was violated by his termination is derived
from two statutes: N.J.S.A. 2C:27-3 and 27-5. Based on the statutory language and structure of those
provisions, as well as the extensive legislative history, the Court determines that to threaten unlawful harm or
to harm another by an unlawful act means to threaten or inflict a harm that is unlawful as a crime, tort, or
violation of the law, administrative regulation, or other legal duty. Unlawful harm may also include actions
that violate recognized and accepted standards of conduct, such as applicable codes of ethics. That statutory
understanding expresses a clear mandate of public policy that serves to protect public officials holding
legislative office in the exercise of official duties relating to legislative matters. (pp. 13-20)
4. Conduct that is directed against constitutionally-protected activity may violate a clear mandate of public
policy, even though it may not violate any other statutory or legal standard. Such activity is not involved in
this case. The harm directed against an employee who holds a legislative office does not have to be criminal
in order to be regarded as unlawful and in violation of the clear mandate of public policy. The initial dissent
argues that the harm entailed in firing an employee for exercising his vote as an elected official violates the
clear mandate of public policy against the infliction of harm because such retaliatory action amounts to a
"bribe" or "corrupt fix." However, the Court cannot conclude that either the threat of the loss of employment
or retaliation through the actual loss of employment was understood by the Legislature as a "bribe," or its
equivalent. Thus, absent aggravating circumstances that would elevate a threatened or retaliatory firing to
the level of bribery or corruption, such action, not otherwise contrary to any law or legal duty, does not
violate a clear mandate of public policy. (pp. 21-23)
5. Because MacDougall was a public official, and because N.J.S.A. 2C:27-3 and -5 and the public policy
derived therefrom concern public officials, the determination of whether harmful acts directed against a
public official violates the clear mandate of public policy should be informed by the laws that govern the
conduct of persons in public office. The conflict-of-interest laws impose duties on public employees and
constrain persons dealing with those public employees. These laws lend strength to the clear mandate of
public policy that has its basic source in the laws that proscribe harmful conduct directed at public officials,
N.J.S.A. 2C:27-3 and -5. That public policy affords protection to at-will employees who hold public office
from threats or retaliation based on interests or relationships that would engender disqualifying conflicts
under the laws governing conflicts of interest. On remand it must be determined whether Weichert's
conduct resulting in MacDougall's discharge equates with the kind of conduct and is based on the kind of
interest that would have created a disqualifying conflict of interest. (pp. 23-26)
6. On the issue of tortious interference with prospective economic interests, the critical inquiry is whether
Merriam's interference was "without justification or excuse" and was, thus, malicious. A threat to terminate
ordinary business relations with an employer, even if intended to cause the discharge of an employee and
even though undertaken with malice, is not actionable unless its purpose is not reasonably related to the
protection of the actor's legitimate business interests. The record suggests that Merriam believed that his
economic interests as a landlord were adversely affected by MacDougall's vote as an elected official for the
parking ordinance. Therefore, on remand, the analysis should be directed to whether there was a sufficiently
reasonable relationship between Merriam's conduct and his legitimate business interests. (pp. 27-30)
Judgment of the Appellate Division is REVERSED and the case is REMANDED for further
proceedings consistent with this opinion.
JUSTICE O'HERN, concurring, joins in the opinion and judgment of the Court and writes
separately to suggest that the differences between the majority and the dissent may be more rhetorical than
real. Justice O'Hern notes his agreement that a test that first inquires whether there has been a violation of
the clear mandate of public policy expressed through our conflict-of-interest laws best balances the public
interest and the free exercise of political rights by employers and employees.
CHIEF JUSTICE WILENTZ, dissenting, in which JUSTICE STEIN joins, is of the view that there
is a general mandate of public policy in the duty of public officials to vote honestly in accordance with their
conscience and with due regard for the interest of their constituents. Moreover, there is no clearer specific
mandate than the prohibition against bribes and threats that would corrupt their honesty and their vote.
While the Court recognizes the connection in this case between the facts and the conflict-of-interest laws, its
reasoning and result disserve both the general mandate and specific mandate of public policy by giving undue
weight to the interests of employers. Its opinion creates a complex doctrinal maze that provides insufficient
guidance on standards for the courts and litigants. This matter is simple and should be governed by the
principle that in New Jersey an employer should not be able to fire an employee because, as a public official,
the employee refuses to participate in a corrupt fix.
JUSTICE POLLOCK, dissenting, agrees with both the Law Division and the Appellate Division that
MacDougall was not a Weichert employee. He would affirm solely for that reason and, therefore, has no
need to reach the provocative issues that divide the other members of the Court.
JUSTICE STEIN, dissenting, is of the view that, MacDougall's discharge violates a clear mandate of
public policy -- the mandate that public officials can neither be bribed nor unreasonably pressured to
influence their official action. The Court should state emphatically and unequivocally that, assuming those
facts are proved, MacDougall can recover damages from Weichert and Merriam.
JUSTICES GARIBALDI and COLEMAN join in JUSTICE HANDLER's opinion. JUSTICE
O'HERN filed a separate concurring opinion. CHIEF JUSTICE WILENTZ filed a separate dissenting
opinion in which JUSTICE STEIN joins. JUSTICES POLLOCK and STEIN filed separate dissenting
opinions.
SUPREME COURT OF NEW JERSEY
A-
116 September Term 1994
JOHN W. MAC DOUGALL,
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.
Argued March 14, 1995 -- Decided June 10, 1996
On certification to the Superior Court,
Appellate Division.
Steven K. Greene argued the cause for
appellant (Bongiovanni, Collins & Warden,
attorneys; John B. Collins, of counsel).
Jerrold J. Wohlgemuth argued the cause 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.
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 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
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 court's decision. We granted plaintiff's petition for
certification.
139 N.J. 183 (1994).
The initial question in this case is whether MacDougall was an employee of Weichert for purposes of raising a wrongful discharge claim under Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58 (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. 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.
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 (App. Div.), certif. denied, 122 N.J. 387 (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. 110 (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 MacDougall to take its
training program, and Weichert shared the commission profits.
The critical issue is whether the elements of control and
dependence coupled with the absence of any employment protection
predominate over factors that favor an independent contractor
status. Although in some respects that issue implicates an
ultimate factual determination as well as a legal conclusion,
there are material issues of subsidiary facts concerning the
working relationship between the parties that are unresolved on
this record. Consequently, the matter was not amenable to
summary judgment. Brill v. Guardian Life Ins. Co. of Am.,
142 N.J. 520 (1995). We note, in addition, that MacDougall did not
present the issue of his employment status on appeal until he
filed his reply brief, raising the possibility that the question
of employment was not fully presented.
Therefore, we remand the case to the trial court to
determine whether MacDougall was Weichert's employee for purposes
of invoking a cause of action based on wrongful discharge.
The trial court determined by summary judgment that even if MacDougall were an employee, he did not demonstrate that he was wrongfully discharged. The Appellate Division sustained that determination. If on the retrial of this matter, the trial court determines that the working relationship was one of employment, then it must consider whether plaintiff was wrongfully discharged. That issue, we note, has been fully briefed and argued on the appeal before us. Accordingly, we deem it appropriate to explain the standards that should inform and guide the trial court in the event it reaches the issue of wrongful discharge.
In Pierce, we recognized that "an employee has a cause of action for wrongful discharge when the discharge is contrary to a clear mandate of public policy." 84 N.J. at 72. We therefore modified the common law rule permitting employers and employees, in the absence of an employment contract, to terminate the employment relationship with or without cause. Id. at 65-66. We recognized the wrongful discharge cause of action only after balancing the interests of the employee, the employer, and the public. "Employers have an interest in knowing they can run their businesses as they see fit as long as their conduct is consistent with public policy." Id. at 71.
Out of respect for the employer's interest, employees can
bring wrongful discharge claims only if they can identify an
expression that equates with a clear mandate of public policy and
if they can show that they were discharged in violation of that
public policy. Id. at 72-73. Sources of public policy include
the United States and New Jersey Constitutions; federal and state
laws and administrative rules, regulations, and decisions; the
common law and specific judicial decisions; and in certain cases,
professional codes of ethics. Hennessey v. Coastal Eagle Point
Oil Co.,
129 N.J. 81, 92-93, 94-95 (1992); Pierce, supra, 84 N.J.
at 72.
A basic requirement of the wrongful discharge cause of
action is that the mandate of public policy be clearly identified
and firmly grounded. See, e.g., Potter v. Village Bank,
225 N.J.
Super. 547, 558-60 (App. Div.) (holding that discharge of bank
president for reporting suspected illegal money laundering by
bank directors violated clear mandate of public policy; "few
people would cooperate with law enforcement officials if the
price they must pay is retaliatory discharge from employment."),
certif. denied,
113 N.J. 352 (1988); Cerracchio v. Alden Leeds,
Inc.,
223 N.J. Super. 435, 446 (App. Div. 1988) (holding that
"under Pierce, an employee in New Jersey may maintain a private
action in tort or contract for retaliatory discharge as a result
of the filing of an OSHA complaint because such discharge
contravenes our public policy"); Kalman v. Grand Union Co.,
183 N.J. Super. 153, 157-59 (App. Div. 1982) (holding that discharge
of pharmacist for refusing to violate state administrative
regulation requiring pharmacist to be present at all times
pharmacy operates for business and for reporting his employer's
intended violation pursuant to statutory provision and his
professional code of ethics would violate clear mandate of public
policy); O'Sullivan v. Mallon,
160 N.J. Super. 416, 418-19 (Law
Div. 1978) (holding that complaint alleging that plaintiff x-ray
technician was fired for refusing to perform catheterizations,
which she could not legally perform, stated a cause of action).
A vague, controversial, unsettled, and otherwise problematic
public policy does not constitute a clear mandate. Its alleged
violation will not sustain a wrongful discharge cause of action.
See, e.g., Pierce, supra, 84 N.J. at 76 ("As a matter of law,
there is no public policy against conducting research on drugs
that may be controversial, but potentially beneficial to mankind,
particularly where continuation of the research is subject to
approval by the FDA."); DeVries v. McNeil Consumer Prods. Co.,
250 N.J. Super. 159, 172 (App. Div. 1991) (holding that discharge
of employee for having distributed "expired" drugs at employer's
direction did not violate clear mandate of public policy because
the discharge "implicated only the private interests of the
parties"); Schwartz v. Leasametric, Inc.,
224 N.J. Super. 21, 30
(App. Div. 1988) (holding that discharge of employee to avoid
paying commissions on future transactions did not violate clear
mandate of public policy); Giudice v. Drew Chem. Corp.,
210 N.J.
Super. 32, 36 (App. Div.) ("Private investigation of possible
criminal activities of fellow employees does not implicate the
same public policy consideration as if plaintiffs had been fired
as a result of cooperating with law enforcement officials
investigating possible criminal activities of fellow
employees."), certif. denied,
104 N.J. 465 (1986); Alexander v.
Kay Finlay Jewelers, Inc.,
208 N.J. Super. 503, 508 (App. Div.)
(determining that discharge of employee who filed civil suit
against employer to collect allegedly unpaid salary did not
violate clear mandate of public policy because there is "no
statutory or regulatory proscription against [the] firing"),
certif. denied,
104 N.J. 466 (1986); Warthen v. Toms River
Community Memorial Hosp.,
199 N.J. Super. 18, 28 (App. Div.)
(ruling that discharge of nurse for refusing to administer kidney
dialysis to terminally ill patient did not violate clear mandate
of public policy where employee was motivated by "her own
personal morals"), certif. denied,
101 N.J. 255 (1985).
In most cases of wrongful discharge, the employee must show
retaliation that directly relates to an employee's resistance to
or disclosure of an employer's illicit conduct. See, e.g., Lally
v. Copygraphics,
85 N.J. 668, 670-71 (1981); Potter v. Village
Bank, supra, 225 N.J. Super. at 558-60; Cerracchio v. Alden
Leeds, Inc., supra, 223 N.J. Super. at 446; Kalman v. Grand Union
Co., supra, 183 N.J. Super. at 157-59; O'Sullivan v. Mallon,
supra, 160 N.J. Super. at 418-19. In some cases, however, the
employee may show that the retaliation is based on the employee's
exercise of certain established rights, violating a clear mandate
of public policy. Hennessey, supra, 129 N.J. at 91, 102-03, 106-07 (determining that discharge of employee for failing (or
refusing to take) a random test for illegal drug use implicates a
clear mandate of public policy protecting individual privacy
rights, but holding that discharge was lawful where employee
served in a safety-sensitive position); Velantzas v. Colgate-Palmolive Co.,
109 N.J. 189, 192 (1988) (per curiam) (holding
that employee demanding her personnel file stated cause of action
under the Law Against Discrimination, N.J.S.A. 10:5, by alleging
that "she was discharged for seeking to establish a gender
discrimination claim"); Lally v. Copygraphics, supra, 85 N.J. at
670-71.
MacDougall has a cause of action for wrongful discharge if the discharge was contrary to a clear mandate of public policy. Pierce, supra, 84 N.J. at 72. He essentially contends that his vote as a councilman on legislative matters that were before the local governing body is an official action that cannot be subjected to retaliation by his employer. MacDougall argues that the clear mandate of public policy that was violated by his termination is derived from two particular statutes: N.J.S.A. 2C:27-3 and 27-5. We therefore first consider whether these enactments and their underlying policy reflect a clear mandate of public policy that prohibits the discharge of MacDougall for his official actions as an elected representative.
MacDougall stresses primarily the first section of N.J.S.A.
2C:27-3, viz:
a. Offenses defined. A person commits an
offense if he directly or indirectly:
(1) Threatens unlawful harm to any person
with purpose to influence a decision,
opinion, recommendation, vote, or exercise of
discretion of a public servant, party
official or voter on any public issue or in
any public election[]
[Ibid. (emphasis added).]
MacDougall asserts that N.J.S.A. 2C:27-5 is also a source
for the clear mandate of public policy. That statute provides:
A person commits a crime of the fourth
degree if he harms another by any unlawful
act with purpose to retaliate for or on
account of the service of another as a public
servant.
[Ibid. (emphasis added).]
Whether these statutes and their underlying policy express a clear mandate of public policy applicable to MacDougall's employment requires foremost an understanding of the terms of the statutes, more specifically, the meaning of "unlawful harm." It is significant that the statutes themselves differentiate between public officials holding legislative office and those holding non-legislative offices. That difference relates to the kind of harm that may be directed against a public official. The threat of "harm" that N.J.S.A. 2C:27-3a(1) proscribes is "unlawful harm." If, however, the public servant holds a judicial or administrative office, N.J.S.A. 2C:27-3a(2),(3) proscribes the
threat of any harm, not just the threat of "unlawful harm."
Thus, paragraphs (2) and (3) broaden the proscription to the
threat of any "harm" but limit its application to only non-legislative officials. Under these provisions, a person commits
an offense if he or she:
(2) Threatens harm to any public servant
with purpose to influence a decision,
opinion, recommendation, vote or exercise of
discretion in a judicial or administrative
proceeding; or
(3) Threatens harm to any public servant or
party official with purpose to influence him
to violate his official duty.
[N.J.S.A. 2C:27-3(a)(2), (3)
(emphases added).]
The history of N.J.S.A. 2C:27-3 sheds light on the
distinction between harm that is unlawful and harm that is not
unlawful, and elucidates the meaning of "unlawful harm." The
source of our statute is the Model Penal Code ("MPC"). That
history is highly relevant in determining the legislative intent
underlying our parallel enactments. State v. Sewell,
127 N.J. 133, 143 (1992) (noting that where the Legislature has seen fit
to adopt a portion of the MPC substantially unaltered, borrowed
language should be interpreted in accordance with the meaning
intended by the drafters of the MPC); State v. Butler,
89 N.J. 220, 227 (1982); see also State v. Haliski,
140 N.J. 1, 31 (1995)
(Stein, J., dissenting) (same).
Subparagraphs 240.2(1)(a) through (c) of the MPC are almost
identical to N.J.S.A. 2C:27-3a(1) through (3).See footnote 1 Like our
statute, the first subparagraph of the MPC provision prohibits
only threats of "unlawful harm," while the next two subparagraphs
prohibit the threat of any "harm." The presence of this
distinction in the Final Draft of the MPC reflects a careful
decision by the members of the American Law Institute to
accommodate concerns in the provision's tentative drafts.
Commentary to one of the tentative drafts focuses on the
distinction between permitted and impermissible threats. Section
240.2 is a composite of two provisions contained in MPC Tentative
Draft Number 8, Section 208:11 ("Intimidation in Official and
Political Matters") and Section 208:14 ("Corrupt Influence in
Official Proceedings"). The official commentary to Section
208:11 advises that "[t]he principal [drafting] difficulty is
drawing the line between permissible and prohibited threats." It
proceeds to explain that:
[f]or example, threats of political
opposition are legitimate means of
influencing political decisions. A political
official's threat to discharge a subordinate,
if he pursues a particular course of official
behavior, may be reprehensible interference
or legitimate supervision. It would be
intolerable to subject such threats to review
by way of criminal prosecution. . . .
One way of solving the problem would be to
restrict the section to threats to do
"unlawful" acts. That would include, for
example, threat of physical injury to the
person, threat of property harm forbidden by
the law of torts, and threat to discharge a
public servant in violation of an applicable
civil service code. Even if the threatened
harm would be a civil wrong ordinarily, it
would be appropriate to invoke the criminal
law against the use of such threats to coerce
official or political action.
[Model Penal Code § 208.11, cmt. at
108 (Tentative Draft No. 8 1958)]
In addition, the history of N.J.S.A. 2C:27-3 and -5 discusses how to define what threats are impermissible. Those provisions both employ identical language in their characterization of harm as "unlawful" and share a common history. N.J.S.A. 2C:27-5 is modelled after § 240.4 of the MPC, which also uses the language "harms another by any unlawful act." The final MPC provision is identical to its Tentative Draft version, § 208.13. The Commentary to § 208.13 explains that
"[t]here is here a problem of defining the kinds of retaliatory
acts [that] should be covered, similar to the problem of defining
forbidden threats under Section 208:11. Retaliation is limited
to unlawful acts." Model Penal Code § 208.13 cmt. at 110
(Tentative Draft No. 8 1958).
We note, further, that under the statute the harm threatened
against a public servant who occupies a judicial or
administrative office need not be "unlawful" to constitute a
violation. See supra at __ (slip op. at 15)(quoting N.J.S.A.
2C:27-3(a)(2)). The same distinction is recognized in the
parallel provision of the MPC, viz:
(b) threatens harm to any public servant with
purpose to influence his decision, opinion,
recommendation, vote, or other exercise of
discretion in a judicial or administrative
proceeding.
That distinction is important as a matter of public policy because MacDougall's official action that allegedly triggered his retaliatory discharge -- his vote for the parking ban -- was undertaken in a legislative proceeding, not a judicial or administrative one. The underlying public policy that differentiates between legislative office holders and those occupying judicial or administrative office tolerates a wider range of conduct intended to influence legislators as opposed to conduct directed toward public officials exercising judicial or administrative authority. The commentary to proposed MPC section 208.14 observes that there is a "universal concern to protect judicial proceedings from improper influence." Model Penal Code
§ 208.14, cmt. at 111 (Tentative Draft No. 8 1958). In addition,
it argues that in light of the important quasi-judicial roles now
undertaken in administrative proceedings, administrative
officials should be included in the ambit of the special
protections afforded to the judiciary.
Significantly, in considering what kind of harm would be
unlawful when directed against a legislative representative, the
Institute expressly contemplated that employers would be free to
"attempt[] to influence an employee's decision as a legislator .
. . by threat[ening] to terminate the employment." Model Penal
Code cmt. § 208.11, page 108 (Tentative Draft No. 8 1958).See footnote 2
Based on the legislation's extensive history and its
statutory language and structure, we determine that to
"threaten[] unlawful harm" or to "harm[] another by an unlawful
act" means to threaten or inflict a harm that is unlawful as a
crime, tort, or violation of a law, administrative regulation, or
other legal duty. That statutory understanding expresses a clear
mandate of public policy that serves to protect public officials
holding legislative office in the exercise of official duties
relating to legislative matters. We conclude further that
because the clear mandate of public policy derived from these
statutes to protect public employees is the basis for a civil
action for wrongful discharge, rather than a criminal charge, in
analyzing the wrongful discharge claim, that public policy is
broader in scope and application than the statutes themselves.
Consequently, unlawful harm under that public policy may include
actions that violate recognized and accepted standards of
conduct, such as applicable codes of ethics.
The critical question in this case is whether under all of
the surrounding circumstances MacDougall's termination by
Weichert violated that clear mandate of public policy and was in
retaliation for either his vote on the municipal parking ban
ordinance or his refusal to change the ordinance.
At the outset, we recognize that conduct that is directed
against constitutionally-protected activity may violate a clear
mandate of public policy, even though it may not offend any other
statutory or legal standard. Supra at __ (slip op. at 9, 12).
Compare Shovelin v. Central New Mexico Elec. Coop., Inc.,
850 P.2d 996 (N.M. 1993) (holding that employee's retaliatory
discharge based on employee's election to public office did not
violate public policy) with Novosel v. Nationwide Ins. Co.,
721 F.2d 894, 898-900 (3d Cir. 1983) (holding that termination of an
employee for refusing employee's request to engage in political
lobbying activities violates clear mandate of public policy under
Pennsylvania law). In this case, MacDougall does not claim that
his exercise of first amendment rights prompted his discharge nor
that his official actions as a councilman were constitutionally
protected.
We recognize that the harm directed against an employee who
holds a legislative office need not be criminal in order to be
regarded as unlawful and in violation of the clear mandate of
public policy. The dissent of the Chief Justice similarly
stresses that the harm inflicted on a public official need not be
criminal to violate either the underlying statutes or the clear
mandate of public policy that they express. The dissent argues,
however, that the harm entailed in firing an employee for
exercising his vote as an elected representative violates the
clear mandate of public policy against the infliction of harm
because such retaliatory action is the "equivalent" of a "bribe"
or "corrupt fix." Post at __ (slip op. at 8-10).
If retaliatory conduct against a public officer approximates
bribery or comparable corruption, it would be an egregious harm
that violates the clear mandate of public policy that is rooted
in N.J.S.A. 2C:27-3 and -5, even if it does not meet the
statutory definition of bribery. We are unable to conclude,
however, that either the threat of the loss of employment or
retaliation through the actual loss of employment was understood
by the Legislature as a "bribe," or its equivalent. The
Institute considered those specific kinds of harms -- the threat
of the loss or the actual loss of employment -- and determined
them not to be the kind of unlawful harm that triggers the
prohibitions of the statute. Thus, in considering the statutory
prohibition, the Institute observed:
However, restricting Section 208.11 to
"unlawful" acts would leave obvious gaps in
coverage. The section would then not reach a
defendant who attempted to influence a judge,
legislator, or administrator by threatening
to foreclose a mortgage, or to inform the
district attorney of a law violation, or to
publicize a scandal in a public official's
private life, or to withhold business
patronage. Nor would it cover a private
employer who attempts to influence an
employee's decision as a legislator, juror,
or voter, by threat to terminate the
employment.
[Model Penal Code § 208.11, cmt. at
108 (Tentative Draft No. 8 1958)
(emphasis added).]
This comment reflects an understanding that employers must have
reasonable flexibility in conducting their businesses and should
be free to disassociate themselves from controversial political
positions that their employees may take. Many local issues
create such heated controversy that certain political views could
hurt the employer's rapport with its clients and customers. It
would be unfair to categorize acting on those business concerns
as bribery or corruption. Thus, absent aggravating circumstances
that would elevate a threatened or retaliatory firing to the
level of bribery or corruption, such action, not otherwise
contrary of any law or legal duty, does not violate a clear
mandate of public policy.
The unlawful harm that violates the clear mandate of public
policy derived from N.J.S.A. 2C:27-3 and -5 may consist of
tortious conduct or conduct that violates a civil or legal duty.
Supra at __ (slip op. at 19). Such unlawful harm may also
include conduct that violates an applicable code of ethics.
Supra at __ (slip op. at 10). We have noted that wrongful
discharge frequently involves retaliation based on the employee's
opposition to the employer's unlawful or unethical conduct.
Supra at __ (slip op. at 12). The Legislature itself has
expressly recognized in other contexts that retaliation against
an employee need not be predicated on a clear or actual violation
of law by the employer. Retaliation against an employee who acts
only on a reasonable belief that the employer has violated a law
or regulation or a clear mandate of public policy can constitute
a wrongful discharge. See, e.g., The Conscientious Employee
Protection Act, N.J.S.A. 34:19-3 (protecting workers who based on
reasonable belief disclose or object to violations of "a law, or
a rule or regulation promulgated pursuant to law."); Barratt v.
Cushman & Wakefield, Inc., __ N.J. __ (1996); Abbamont v.
Piscataway Township Bd. of Educ.,
138 N.J. 405 (1994).
The clear mandate of public policy derived from N.J.S.A.
2C:27-3 and -5 affords protections for public employees that go
beyond criminal sanctions. As previously noted, the unlawful
harm directed against a public official that is proscribed by
these statutes can be based on civil wrongs and need not be
criminal in nature. Here, because MacDougall was a public
official, and because N.J.S.A. 2C:27-3 and -5 and the public
policy derived therefrom deal with public officials, the
determination of whether harmful acts directed against such
public officials violate the clear mandate of public policy
should be informed by the laws that govern the conduct of persons
in public office.
The Local Government Ethics Law (N.J.S.A. 40A:9-22.1 to -22.25) requires municipalities to establish municipal ethics
boards under codes of ethics that must be at least as restrictive
as provisions set forth in N.J.S.A. 40A:9-22.5. N.J.S.A. 40A:9-22.21. Those provisions mandate that "No local government
officer or employee shall act in his official capacity in any
matter where he, a member of his immediate family, or a business
organization in which he has an interest, has a direct or
indirect financial or personal involvement that might reasonably
be expected to impair his objectivity or independence of
judgment." N.J.S.A. 40A:9-22.5(d). This law demands that an
officeholder discharge duties with undivided loyalty.
We conclude that the conflict-of-interest laws not only
impose duties on public employees but they also constitute
constraints on persons dealing with public employees. These laws
give added substantive meaning and lend strength to the clear
mandate of public policy that has its basic source in the laws
that proscribe harmful conduct directed at public officials.
N.J.S.A. 2C:27-3 and -5. That public policy affords protection
to at-will employees who hold public office from threats or
retaliation based on interests or relationships that would
engender disqualifying conflicts under the laws governing
conflicts of interests.
In this case, the conflict-of-interest laws necessarily
direct the focus of the analysis on whether Weichert violated a
clear mandate of public policy in discharging MacDougall. These
laws are germane to this analysis because they demarcate types of
interests that do not conflict with governmental responsibilities
and pose no threat to the public interest. See, e.g., Van
Itallie v. Borough of Franklin Lakes,
28 N.J. 258, 268 (1958)
(determining that public action on zoning ordinance affecting
employer of councilman's brother did not involve disqualifying
conflict of interest). However, the analysis of whether a
discharge is wrongful because it offends the principles that
define prohibited conflicts of interest is extremely difficult in
view of the factual and legal complexities that abound in the
application of conflict-of-interest laws.See footnote 3 Ultimately, the
court must determine whether Weichert's conduct resulting in
MacDougall's discharge equates with the kind of conduct and is
based on the kind of interests that would have created a
disqualifying conflict of interest. See Wyzykowski v. Rizas,
132 N.J. 509, 525 (1993) (noting that a disqualifying conflict can
arise when officials have indirect pecuniary interests in the
voting matter, such as when someone closely tied to the official,
like an employer or family member, is directly affected
financially by the vote); Pyatt v. Mayor & Council,
9 N.J. 548,
557 (1952) ("it is most doubtful that participation by a
councilman in a municipal action of particular benefit to his
employer can be proper in any case.").
In conclusion, we determine that N.J.S.A. 2C:27-3 and -5 are the source of a clear mandate of public policy that serves to protect an employee from the threat or infliction of unlawful harm that is intended to influence his or her official action as an elected legislative representative. That harm would be unlawful if it is a violation of criminal law, the commission of a tort, or the violation of a civil or legal duty or an applicable code of ethics, including a violation of the principles that define the conflict-of-interest laws that govern the official actions of persons holding public office.
The record in this case fairly poses the issue of whether Weichert's conduct in terminating plaintiff's employment was based on interests or relationships that would constitute an impermissible conflict of interest and may have offended the standards that govern conflicts interest, thereby violating a clear mandate of public policy.
Plaintiff raises a claim against Merriam for tortious interference with prospective economic interest. Plaintiff alleges that he would not have been discharged without Merriam's tortious interference, and that the discharge resulted in damages in the form of lost clients and earnings. The lower courts rejected this claim.
The tort of intentional interference with prospective
economic relations proscribes inducing a third person not to
"continue" a "prospective relation." Restatement (Second) of
Torts, § 766B(a) (1979). This Court has set forth four
requirements for maintaining an action for tortious interference.
Printing Mart-Morristown v. Sharp Elecs. Corp.,
116 N.J. 739
(1989). First, the complaint "must allege facts that show some
protectable right -- a prospective economic or contractual
relationship. Although the right need not equate with that found
in an enforceable contract, there must be allegations of fact
giving rise to some 'reasonable expectation of economic
advantage.'" Id. at 751 (citation omitted). Second, "the
complaint must allege facts claiming that the interference was
done intentionally and with 'malice.' . . . [M]alice is defined
to mean that the harm was inflicted intentionally and without
justification or excuse." Ibid. (citation omitted). Third, "the
complaint must allege facts leading to the conclusion that the
interference caused the loss of the prospective gain. A
plaintiff must show that 'if there had been no interference[,]
there was a reasonable probability that the victim of the
interference would have received the anticipated economic
benefits.'" Ibid. (citations omitted). Fourth, "the complaint
must allege that the injury caused damage." Id. at 752.
In this case, the critical inquiry is whether Merriam's
interference was "without justification or excuse," and thus
malicious. Id. at 756. That inquiry must focus on the propriety
of the defendant's actions in the context of the case presented.
Id. at 757. Plaintiff bears the burden of proving the absence of
justification. Ibid.
We concluded in Printing Mart that although the Restatement
(Second) of Torts, § 766B (1979), uses the term "improper" in
place of "malice," "the Restatement test is similar to the
'malice' standard currently applied by New Jersey courts."
Printing Mart, supra, 116 N.J. at 752. The Restatement
prescribes a balancing test for determining whether an
interference is improper. Restatement (Second) of Torts § 767B
cmt. a, § 767 (1979). It considers eight factors. Id. at § 767.
In our view, the factors most pertinent to the "malice" standard
and to this case are: (a) the nature of the actor's conduct, (b)
the actor's motive, (d) the interests sought to be advanced by
the actor, and (e) the social interest in protecting the freedom
of action of the actor and the contractual interests of the
other.
The actor's interest is significant because it is usually
economic and "[a]n interest of this type is important and will
normally prevail over a similar interest of the other if the
actor does not use wrongful means." Id. at cmt. f. Therefore, a
threat to terminate ordinary business relations with an employer,
even if intended to cause the discharge of an employee and even
though undertaken with malice, is not actionable unless it is
"for a reason not reasonably related to the protection of a
legitimate business interest of the actor." Smith v. Ford Motor
Co.,
221 S.E.2d 282, 296 (N.C. 1976).
The record suggests that Merriam believed that his economic
interests as a landlord were adversely affected by plaintiff's
vote as an elected official for the parking ordinance. Moreover,
the record indicates that at least two issues remained unresolved
at the time of MacDougall's discharge: whether an expanded
parking ban would cover the remainder of the street and whether
the municipality would provide alternate parking for the
businesses in Merriam's office building. (MacDougall himself
stated that after the initial vote, "we were still trying to
resolve some of this.") On remand, the analysis should be
directed to whether there was a sufficiently reasonable
relationship between Merriam's conduct and his legitimate
business interests.
The judgment of the Appellate Division is reversed. The case is remanded for further proceedings consistent with this opinion.
JUSTICES GARIBALDI and COLEMAN join in JUSTICE HANDLER's
opinion. JUSTICE O'HERN filed a separate concurring opinion.
CHIEF JUSTICE WILENTZ filed a separate dissenting opinion in
which JUSTICE STEIN joins. JUSTICES POLLOCK and STEIN filed
separate dissenting opinions.
SUPREME COURT OF NEW JERSEY
A-
116 September Term 1994
JOHN W. MAC DOUGALL,
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.
O'HERN, J., concurring.
I join in the opinion and judgment of the Court announced by
Justice Handler. I write separately to suggest that the
differences between the majority and dissent may be more
rhetorical than real. My own views are perhaps oversimplified
but help me to put the case in focus.
This case is not just about political bribery, although that
is a legitimate concern. It is also about the rights of
employers to be disassociated from the political views of their
employees. I have no sense of the flavor of the controversy over
this parking ordinance in the Borough of Chester. However, we
are all familiar with similar heated controversies in our towns.
Some citizens may consider the refusal to build an addition to a
high school the most destructive decision imaginable. Others may
consider the construction of the high school a serious economic
loss to them. Some citizens may consider that a vote on a high-rise building may destroy the character of the community and may
affect their economic well being while others may not.
Those issues can become terribly controversial. The
citizens in the community may divide into separate camps. One of
the legal questions that we must consider is whether an elected
official may hold the boss bound to the official's political
views.
The dissent faults the majority for creating "an ill-defined
remedy" tied to a specific conflict of interest. Post at ___
(slip op. at 42). But the dissent's remedy is also limited to
"the hidden fix attempted by someone specially economically
impacted by a vote and undertaken through a bribe or a threat or
a retaliatory discharge." Post at ___ (slip op. at 38). We can
all agree that an employee of an employer "specially economically
impacted by a vote" is thereby disqualified to vote. See Griggs
v. Borough of Princeton,
33 N.J. 207, 220-21 (1960). Hence, the
two remedies are conceptually alike.
A broader holding would undermine, not reinforce, democratic
ideals. Ours is the oldest continuous form of democracy. It has
survived thus far in New Jersey without a tort action for the
wrongful discharge of a public officer for reasons related to the
exercise of official duties. We must carefully mold any remedy
that we fashion on this subject.
I believe that everyone's politics are personal. When a
public official solemnly swears, as the dissent emphasizes,
"faithfully, impartially and justly [to] perform all the duties
of . . . [a] councilman," post at ___ (slip op. at 42), that
public official has no right to expect that his or her employer
must at every moment remain associated with the political views
expressed in the performance of those duties when those views are
calamitous to the employer's business. In a responsible
democracy it is the public official who must choose between
public office and his or her own private interest. I do not
believe that we can require every citizen-employer to be bound to
the politics of an employee.
In the long run, I believe that any more sweeping restraint
on the right of employers to disassociate themselves from the
politics of their employees would damage the effort to encourage
citizens to participate in a democracy. Employers will
necessarily hesitate to employ elected officials for fear that
fair-minded employment decisions may become the subject of a
lawsuit. I thus agree with the majority that a test that first
inquires whether there has been a violation of the clear mandate
of public policy expressed through our conflict-of-interest laws
best balances the public interest in the free exercise of
political rights by employers and employees.
SUPREME COURT OF NEW JERSEY
A-
116 September Term 1994
JOHN W. MAC DOUGALL,
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.
WILENTZ, C.J., dissenting.
There is no clearer general mandate of public policy than the duty of public officials to vote honestly in accordance with their conscience and with due regard for the interests of those they represent. And there is no clearer specific mandate of public policy than the prohibition against bribes and threats that would corrupt their honesty and their vote. In a democracy governed by the vote of elected officials, it is understood and accepted that those officials must vote for what they believe is in the best interest of society, and not for their own or another's economic interest. The Court today perceptively recognizes the connection between the facts of this case and the conflict-of-interest