X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
A company president who was fired in the wake of sexual harassment accusations has scored a second victory in his court battle to win back the salary, perks and benefits promised in his contract now that the 3rd U.S. Circuit Court of Appeals has rejected the company’s argument that enforcing such a contract would violate public policy. In Fields v. Thompson Printing Co. Inc., a unanimous three-judge panel found that since Gerald E. Fields’ contract clearly promised that his benefits would continue even if he were fired — and included no “conduct-related exception” to that clause — the company was essentially asking the court “to save it from its own failure to include such a forfeiture clause.” Writing for the court, U.S. Circuit Judge Marjorie O. Rendell said that a ruling for the company “would essentially force us to read clauses thought desirable from a policy standpoint into every employment contract. This we cannot do.” According to court papers, TPC is a closely held corporation, with 80 percent of the shares owned by Gilbert M. Thompson and 20 percent owned by Fields, who started working for the company in 1955 at age 13. In 1990, Fields was named vice president and chief operations officer. At the same time, he signed a 10-year contract with a starting salary of $131,000 and a promise of 10 percent annual raises and a doubling of his salary if Thompson died. If Fields quit, the contract said, his salary and benefits would cease immediately. But it also contained a broad non-forfeiture clause in favor of Fields that said that the contract was “non-terminable” by TPC and that if Fields were ever terminated, “all of the benefits as contained herein shall continue.” In August 1997, three female employees made allegations to Thompson, then CEO, that Fields, who by then had become TPC’s president, had sexually harassed them. Just two days later, Thompson telephoned Fields, who was vacationing with his family, and fired him. TPC later refused to pay Fields any further compensation under the contract. In addition to the salary and health and pension benefits, the contract also provided Fields with a credit card and a new Cadillac or equivalent car every four years. The three female employees filed suit in the Superior Court of New Jersey against TPC, Fields, Thompson and another supervisor. The case was later settled with no admission of wrongdoing by any of the defendants. While the sexual harassment suit was pending, Fields filed a breach of contract and ERISA suit in U.S. District Court in New Jersey, demanding reinstatement of his salary and benefits. TPC’s lawyers moved for dismissal of the suit, arguing that Fields himself had breached the contract by engaging in acts of sexual harassment — conduct that, TPC said, terminated Fields’ rights under the contract as well as the company’s obligations. But Fields argued that his contract clearly said that his salary and benefits would continue if his employment were terminated by TPC. U.S. District Judge Alfred M. Wolin sided with Fields and granted summary judgment in his favor on his claims under ERISA, the New Jersey Wage Law, breach of contract, unjust enrichment and quantum meruit. Wolin concluded that under the plain language of the contract’s non-forfeiture clause, Fields was entitled to both retirement and pre-retirement benefits — rejecting TPC’s arguments that enforcing the agreement would violate public policy. On appeal, TPC argued that in light of Fields’ alleged acts of sexual harassment, it would violate public policy to enforce the agreement and that Fields had breached the contract by harassing the employees. The 3rd Circuit disagreed, saying, “Both of these arguments essentially urge us to look past the plain language of a relatively straightforward contract.” Although courts may refuse to enforce a contract that violates public policy, Rendell found that TPC was asking the court to stretch that principle too far. “As long as the enforcement of the promise itself is not violative of public policy, we will not deny the parties the bargained-for relief,” Rendell wrote in an opinion joined by Circuit Judges Maryanne Trump Barry and Michael Chertoff. “The fact that it could be said to have public policy implications is not enough. We find the payment of the bargained-for compensation does not violate public policy,” Rendell wrote. Enforcement of the contract, Rendell said, “does not require TPC to hire or reinstate someone who may have engaged in acts of sexual harassment, which may violate the policy against perpetuating a hostile and offensive work environment.” The contract also does not “impinge on TPC’s ability to police the work environment and to prevent sexual discrimination,” but instead simply “requires TPC to pay certain sums if they terminated Fields, ostensibly for any reason, including improper and offensive conduct,” Rendell wrote. “Had TPC intended to avoid this result, they could have bargained for a limiting provision in the contract. But the absence of such a provision, owing to TPC’s failure, does not perpetuate a hostile and offensive work environment. The principles of public policy simply do not reach that far,” Rendell wrote. Employers, Rendell said, “may legitimately offer compensation and benefits that can be taken away only for specific reasons, or that cannot be taken away at all, in order to lure or reward employees.” The fact that the contract contained no misconduct clause that would cause Fields to forfeit his benefits, Rendell said, suggested that “this may well have been what was intended.” Rendell also said it was important to note that since the sexual harassment suit was settled, Fields was never found to have committed the acts. “Even were we inclined to look with disfavor on the rights of a harassing executive to continue to receive compensation in this situation, there has been no finding that Fields was in fact guilty of harassment,” Rendell wrote.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.