Ait Global Inc. v. Pankaj Yadav

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2847-14T4
AIT GLOBAL INC.,
APPROVED FOR PUBLICATION
Plaintiff-Appellant,
June 6, 2016
v.
APPELLATE DIVISION
PANKAJ YADAV,
Defendant-Respondent.
_______________________________
Argued April 19, 2016 – Decided June 6, 2016
Before Judges Reisner, Hoffman and Whipple.
On appeal from Superior Court of New Jersey,
Law Division, Middlesex County, Docket No.
L-4211-14.
Michael J. Lauricella argued the cause for
appellant (Archer & Greiner, P.C.,
attorneys; Patrick Papalia, of counsel and
on the briefs; Mr. Lauricella, on the
briefs).
Jeremy Esakoff argued the cause for
respondent (Esakoff, Jaggi & Patel, L.L.C.,
attorneys; Mr. Esakoff, on the brief).
The opinion of the court was delivered by
WHIPPLE, J.A.D.
Plaintiff appeals two January 9, 2015 orders and a judgment
dated February 6, 2015. The sole question on appeal is whether
plaintiff, a temporary help service firm (THSF), is required to
be licensed as an employment agency pursuant to the Private
Employment Agency Act (the Act), N.J.S.A. 34:8-43 to -66, in
order to enforce an employment agreement with defendant.
Because we conclude that registration, rather than licensing, is
required for a THSF to enforce an employment agreement pursuant
to the Act, we reverse and remand.
I.
Plaintiff is a New Jersey corporation registered with the
New Jersey Division of Consumer Affairs as a THSF, providing
short-term information technology (IT) consultants. On November
4, 2013, plaintiff hired defendant as an IT consultant to
perform software consulting services for plaintiff's customers.
The parties entered into an employment agreement. The agreement
contained a term provision, an early termination provision, and
a restrictive covenant. The term provision states that:
The initial term of this Agreement shall be
for twelve (12) working months commencing on
the date the Employee arrives at the Company
and begins working on a Company assignment
or project (the "Commencement Date"), and
expiring one (1) year after the Commencement
Date (the "Termination Date") . . . .
The early termination provision states:
The Employee agrees that if the Employee
terminates this Agreement prior to the
Commencement Date [or] Termination Date
. . . the Employee will pay the Company a
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sum of Three Thousand Dollars ($3,000.00)
for every month remaining on the [initial
term] as a liquidated damages sum for the
breach of this provision only which is in
addition to any other damages the Company
may seek for a breach of any other provision
in this Agreement . . . .
Finally, the restrictive covenant provides:
Employee agrees that during the term of this
agreement and a period of one (1) year
following the termination of the Employee's
employment or one (1) year following the
Termination Date of this Agreement,
whichever is later, the Employee shall not
directly or indirectly, on behalf of any
individual or entity, be employed by any
Company client, vendor, broker, end-client,
end-user or any entity introduced to the
Employee by the Company or any entity that
Employee provided services for or through
pursuant to Employee's obligations under
this Agreement.
On May 12, 2014, approximately five months before the
conclusion of defendant's initial twelve-month term, defendant
sent an email to plaintiff, indicating he was resigning and
giving two weeks' notice. Plaintiff filed suit, seeking to
recover liquidated damages pursuant to the early termination
provision of the employment agreement. Plaintiff's complaint
asserted claims of breach of contract, tortious interference,
breach of the duty of good faith and fair dealing, unjust
enrichment, and breach of the duty of loyalty.
Defendant filed an answer and counterclaim, asserting that
the employment agreement was unenforceable and seeking legal
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fees and costs associated with defending against plaintiff's
lawsuit, based on the premise that plaintiff violated the
Consumer Fraud Act by including "improper and/or fraudulent"
provisions in the employment agreement. On October 24, 2014,
defendant moved for summary judgment, seeking dismissal of
plaintiff's claim and judgment on his counterclaim. Plaintiff
subsequently filed cross-motions in support of amending its
complaint and in support of summary judgment.
On January 9, 2015, the motion judge entered two
dispositive orders. The first order dismissed plaintiff's
complaint with prejudice and entered judgment for defendant on
his counterclaim. Citing N.J.S.A. 34:8-45 and 34:8-46(h), the
motion judge concluded that the employment agreement was
unenforceable because plaintiff was not licensed as an
employment agency at the time the cause of action arose. The
motion judge's second order denied plaintiff's cross-motions for
substantially the same reason.1 This appeal followed.
II.
Because this issue comes to us following the adjudication
of motions for summary judgment, we "employ the same standard
[of review] that governs the trial court." Henry v. Dep't of
1
In connection with the counterclaim, the motion judge awarded
defendant $5,875 in legal fees and $230 in costs.
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Human Servs., 204 N.J. 320, 330 (2010) (alteration in original)
(quoting Busciglio v. DellaFave, 366 N.J. Super. 135, 139 (App.
Div. 2004)). Summary judgment should be granted only if the
record demonstrates there is "no genuine issue as to any
material fact challenged and that the moving party is entitled
to a judgment or order as a matter of law." R. 4:46-2(c);
Henry, supra, 204 N.J. at 330; Brill v. Guardian Life Ins. Co.
of Am., 142 N.J. 520, 529 (1995). "An issue of fact is genuine
only if, considering the burden of persuasion at trial, the
evidence submitted by the parties on the motion, together with
all legitimate inferences therefrom favoring the non-moving
party, would require submission of the issue to the trier of
fact." R. 4:46-2(c); Henry, supra, 204 N.J. at 329-30.
Moreover, where, as here, there is no genuine dispute of fact
the trial court's ruling on the legal question is "not entitled
to any special deference." Manalapan Realty L.P. v. Manalapan
Twp., 140 N.J. 366, 378 (1995); see also Henry, supra, 204 N.J.
at 330; Perrelli v. Pastorelle, 206 N.J. 193, 199 (2011).
Plaintiff asserts the motion judge erred in dismissing its
complaint and granting defendant's motion because: the licensure
requirements for employment agencies do not apply to THSFs, and
it did not violate the Act. We agree.
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Plaintiff's appeal hinges on our interpretation of N.J.S.A.
34:8-43 to -66. When interpreting a statute, we must give the
relevant statutory language its ordinary meaning and construe it
"in a common-sense manner." State ex rel. K.O., 217 N.J. 83, 91
(2014) (citations omitted); see also N.J.S.A. 1:1-1 (stating
that the words of a statute are customarily construed according
to their generally accepted meaning). We do not add terms which
may have been intentionally omitted by the Legislature; nor do
we speculate or otherwise engage in an interpretation which
would contravene the statute's plain meaning. DiProspero v.
Penn, 183 N.J. 477, 492-93 (2005). Where plain language "leads
to a clear and unambiguous result, then the interpretive process
should end, without resort to extrinsic sources." State v.
D.A., 191 N.J. 158, 164 (2007).
The Act's primary purpose is to "alleviate abuses in the
employment-agency industry," Accountemps Div. of Robert Half,
Inc. v. Birch Tree Grp., Ltd., 115 N.J. 614, 623 (1989). The
Act prohibits "deceptive or otherwise unfair practices when
dealing with both job seekers and employers." Data Informatics
v. Amerisource Partners, 338 N.J. Super. 61, 71 (App. Div. 2001)
(quoting A. 3018, 203rd Leg., 2d Sess. (N.J. 1989)). The
remedial purpose of the Act is served by requiring licensure or
registration of entities whose activities are regulated by the
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Act. Id. at 71-72; Accountemps, supra, 115 N.J. at 623. An
entity subject to the Act's provisions cannot maintain a lawsuit
to collect a fee from a job seeker or an employee unless the
entity can prove that it met the Act's licensure/registration
requirement. N.J.S.A. 34:8-45 ("A person shall not bring or
maintain an action in any court of this State for the collection
of a fee . . . without alleging and proving licensure or
registration, as appropriate, at the time the alleged cause of
action arose."). With regard to this requirement, the Act makes
a distinction between two types of entities: employment agencies
and THSFs.
The Act defines an "[e]mployment agency" as "any person
who, for a fee, charge or commission: . . . (2) [s]upplies job
seekers to employers seeking employees on a part-time or
temporary assignment basis who has not filed notification with
the Attorney General pursuant to the provisions of [N.J.S.A.
56:8-1.1]." N.J.S.A. 34:8-43. In turn, N.J.S.A. 56:8-1.1,
which is part of the Consumer Fraud Act, imposes notification,
registration fee, and bonding requirements on THSFs.
The Act defines a THSF as "any person who operates a
business which consists of employing individuals directly or
indirectly for the purpose of assigning the employed individuals
to assist the firm's customers in the handling of the customers'
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temporary, excess or special workloads . . . ." N.J.S.A. 34:8-
43. In contrast to an employment agency, "[a THSF] is required
to comply with [N.J.S.A. 56:8-1.1]." N.J.S.A. 34:8-43.
Employment agencies must obtain a license, which requires
them to demonstrate compliance with extensive statutory and
regulatory criteria. See N.J.S.A. 34:8-48; N.J.A.C. 13:45B-
2.1(a). By contrast, THSFs only need to obtain registration,
which is a significantly less-stringent process than obtaining
licensure. See N.J.S.A. 56:8-1.1. Defendant asserts that
plaintiff needed to be licensed as an employment agency — as
opposed to merely registered as a THSF — in order to bring suit
to enforce the employment contract in this case. In support of
that argument, defendant cites to the following section of the
Act, which states in relevant part:
The provisions of this act shall not apply to:
. . . .
h. Any [THSF] which does not:
(1) Charge a fee or liquidated charge to
any individual employed by the firm or in
connection with employment by the firm;
(2) Prevent or inhibit, by contract, any of
the individuals it employs from becoming
employed by another person . . . .
[N.J.S.A. 34:8-46(h).]
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Defendant argues this provision means that THSFs that are
not licensed as employment agencies "are proscribed . . . from
imposing restrictive covenants on their workers and from seeking
liquidated damages," and that contracts between merely
registered, but non-licensed, THSFs and their employees are
unenforceable if they contain a restrictive covenant or
liquidated damages provision.
We disagree. We note that this is an issue of first
impression in this court, although the issue was previously
addressed by Judge Douglas Wolfson, in his well-reasoned opinion
in Logic Planet, Inc. v. Uppala, 442 N.J. Super. 488 (Law Div.
2015). Like the court in Logic Planet, we conclude that
defendant's interpretation is contrary to the plain language of
the statute. Nowhere in the Act does the Legislature suggest
that registered THSFs cannot include enforceable restrictive
covenants and liquidated damages provisions in employment
contracts. Rather, N.J.S.A. 34:8-46(h) merely exempts THSFs
from the Act's purview if they do not impose restrictive
covenants and liquidated damages provisions on their employees.
The only conclusion that can be drawn from a plain reading of
N.J.S.A. 34:8-46(h) is that, because plaintiff included a
restrictive covenant and liquidated damages provision in the
employment agreement with defendant, it is subject to those
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provisions of the Act that apply to THSFs, including the
registration requirement.
Plaintiff did not violate that requirement. Contrary to
defendant's implicit argument, the Act does not require every
entity subject to the Act to be licensed as an employment agency
in order to bring suit; rather, it requires every entity subject
to the Act to "prov[e] licensure or registration, as
appropriate, at the time the alleged cause of action arose."
N.J.S.A. 34:8-45(b) (emphasis added). In other words, the Act
requires employment agencies to be licensed, and THSFs to be
registered, in order to bring actions to enforce contracts made
with their employees. Had the Legislature intended to impose a
licensing requirement upon THSFs that included non-compete and
liquidated damages clauses in their contracts, it would not have
differentiated between those entities for which it mandated
licensing and those for which it only mandated registration.2
Indeed, this is precisely what has been done in the context
of other entities regulated by the Act. See N.J.A.C. 13:45B-
13.6a (requiring licensure as a pre-requisite to health care
service firms charging fees or liquidated damages in its
2
The pertinent regulations, adopted by the agency charged with
enforcing the Act, provide no mechanism allowing THSFs to obtain
licensure; THSFs are only provided with a means to register.
N.J.A.C. 13B:45B-12.2. By contrast, the regulations require
employment agencies to obtain a license. N.J.A.C. 13:45B-2.1.
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employment contracts). As the parties do not dispute that
plaintiff was a properly-registered THSF, the Act does not
preclude plaintiff’s suit to enforce the employment agreement it
entered into with defendant.
Therefore, we reverse the orders granting defendant's
motion for summary judgment and fees and denying plaintiff's
cross-motion for leave to file an amended complaint. We remand
for further proceedings consistent with this opinion.
Reversed and remanded. We do not retain jurisdiction.
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