ADAMI v. CARDO WINDOWS, INC. et al
Filing
152
OPINION. Signed by Chief Judge Jerome B. Simandle on 6/10/2014. (drw) n.m.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
FRED ADAMI and JACK VARNER, on
behalf of themselves and all
others similarly situated,
HONORABLE JEROME B. SIMANDLE
Civil No. 12-2804 (JBS/JS)
Plaintiffs,
v.
OPINION
CARDO WINDOWS, INC. d/b/a
“Castle, ‘The Window People’”
et al.,
Defendants.
APPEARANCES:
Richard S. Hannye, Esq.
HANNYE LLC
128 West Cottage Avenue
Haddonfield, NJ 08033
Attorney for Plaintiffs
Kenneth Goodkind, Esq.
Peter J. Tomasco, Esq.
Michael D. Homans, Esq.
FLASTER GREENBERG P.C.
Commerce Center
1810 Chapel Avenue West
Cherry Hill, NJ 08002
Attorneys for Defendants
SIMANDLE, Chief Judge:
TABLE OF CONTENTS
I.
INTRODUCTION
II. BACKGROUND
2
3
A.
Factual Background
3
B.
Procedural Background
4
III. STANDARD OF REVIEW
6
IV. DISCUSSION
7
A.
7
Defendants’ Motion for Summary Judgment
1.
Facts
7
2.
Overtime Claims
11
3.
Unjust Enrichment
22
4.
Defamation
27
5.
Adami’s Claim for Overtime as a Manager
31
6. New Jersey Construction Industry Independent Contractor
Act
33
7.
B.
34
Conclusion
Plaintiffs’ Motion for Summary Judgment
34
1.
Fraud
37
3.
Conversion
40
4.
Conspiracy
43
5.
Tortious Interference with Contractual Relations
45
6.
I.
35
2.
V.
Facts
Conclusion
47
48
CONCLUSION
INTRODUCTION
This matter comes before the Court on cross-motions for
summary judgment by Defendants Cardo Windows, Inc. d/b/a “Castle
‘The Window People,’” Christopher Cardillo, Sr., Christopher
Cardillo, Jr., Nicholas Cardillo, Edward Jones, John J.
Belmonte, and Pat Tricocci [Docket Item 87] and by Plaintiffs
Jack Varner and Fred Adami [Docket Item 88.] This action arises
from Defendants alleged misclassification of its window
installers as independent contractors. Plaintiffs maintain
claims for unpaid overtime and all other relief they are due
2
under the Fair Labor Standards Act, the New Jersey State Wage
and Hour Law, and the New Jersey Construction Industry
Independent Contractor Act, as well as a claim for unjust
enrichment. Plaintiff Fred Adami also maintains claims for
slander per se and for unpaid overtime and benefits when he was
a manager for Cardo. The Court recently granted Plaintiffs’
motion for conditional certification of a collective action
under the Fair Labor Standards Act. The following addresses only
the individual claims remaining in the case.
For the reasons discussed below, the Court will grant in
part, deny in part, and defer in part Defendants’ motion for
summary judgment. The Court will also grant in part and deny in
part Plaintiffs’ motion for summary judgment.
II.
BACKGROUND
A. Factual Background
Defendant, Cardo Windows, Inc. (“Cardo”) does business
under the trademark, “Castle the Window People.” Cardo sells and
installs windows and doors in multiple states including New
Jersey, Pennsylvania, Delaware, Massachusetts, Rhode Island,
Vermont, New Hampshire, Connecticut, New York, and Ohio. Cardo
uses installation work crews to install windows for customers.
Generally, these work crews consist of an installer and one or
more helpers.
3
Central to this suit are substantial factual disputes
regarding the relationship between Cardo and its installers
including the named Plaintiffs, Fred Adami and Jack Varner.
Plaintiff Jack Varner asserts that he worked 10 to 14 hours per
day as an installer for Cardo from February 2003 to October
2012. Plaintiff Fred Adami asserts that he worked 10 to 12 hours
per day installing windows for Cardo from March 2001 to June
2012. Both contend that they primarily completed work orders in
New Jersey as sole proprietors and admit that they signed
agreements characterizing their relationship with Cardo as
independent contractors. Adami asserts that he became an office
manager in his final few months working for Cardo before being
fired for allegedly stealing supplies from Cardo and falsifying
invoices.
B. Procedural Background
On May 10, 2012, Plaintiff Fred Adami, individually and on
behalf of all others similarly situated, filed a putative
collective action and class action against Defendants Cardo
Windows, Inc. d/b/a “Castle ‘The Window People,’” Christopher
Cardillo, Sr., Christopher Cardillo, Jr., Nicholas Cardillo,
Edward Jones, John J. Belmonte, and Pat Tricocci. [Docket Item
1.] Adami asserted claims under the Fair Labor Standards, Act
(“FLSA”), the New Jersey Wage and Hour Law (“NJWHL”), the New
Jersey Construction Industry Independent Contractor Act
4
(“CIICA”), and the Employee Retirement Income Security Act
(“ERISA”). Adami also asserted claims for injunctive relief
requiring Cardo to pay federal and state taxes on behalf of
plaintiffs and comply with FLSA, NJWHL, CIICA, and ERISA in the
future. Defendants filed an Answer on June 22, 2012 and Cardo
asserted counter-claims against Adami for breach of contract,
fraud, conversion, and tortious interference with contract.
[Docket Item 6.] On July 12, 2012, Adami filed an Answer to
Cardo’s counter-claims. [Docket Item 9.] Adami filed an Amended
Complaint on November 27, 2012, adding a second plaintiff, Jack
Varner, and an additional defendant, Nicholas Brucato. [Docket
Item 18.] On December 11, 2012, Defendants filed a partial
motion to dismiss Plaintiffs’ Amended Complaint. [Docket Item
22.] The Court granted in part and denied in part Defendants’
partial motion to dismiss, dismissing Counts VI and X, for
failure to maintain records under the FLSA and NJWHL; Counts III
and IX, for violation of § 502(a)(3) of ERISA; and Count XIII,
for wrongful discharge. [Docket Items 60 & 61.]
On January 29, 2014, the Court granted Plaintiffs’ motion
for conditional certification of a FLSA “opt-in” collective
action and denied Plaintiffs’ motion for certification of a Rule
23 “opt-out” state wage class action. [Docket Items 112 & 113.]
The Court also granted Plaintiffs’ motion to dismiss Cardo’s
counter-claims for breach of contract against Jack Varner and
5
denied Plaintiffs’ motion to dismiss Cardo’s counter-claims for
breach of contract against Fred Adami. On April 14, 2014,
following briefing and oral argument, the Court approved a form
of collective action notice to be sent to potential collective
action members within seven days.
The parties filed the instant motions for summary judgment
on December 2, 2013 in conformance with the deadline imposed for
dispositive motions as to the named Plaintiffs’ individual
claims. [Docket Item 58.]
III. STANDARD OF REVIEW
Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a). A dispute is “genuine” if “the evidence is such that a
reasonable jury could return a verdict for the non-moving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A fact is “material” only if it might affect the outcome
of the suit under the applicable rule of law. Id. Disputes over
irrelevant or unnecessary facts will not preclude a grant of
summary judgment. Id. The Court will view any evidence in favor
of the nonmoving party and extend any reasonable favorable
inferences to be drawn from that evidence to that party. Scott
v. Harris, 550 U.S. 372, 378 (2007).
6
IV.
DISCUSSION
A. Defendants’ Motion for Summary Judgment
Defendants’ motion for summary judgment [Docket Item 87]
seeks dismissal of Plaintiffs’ claims for unpaid overtime under
the FLSA, the NJWHL, and the CIICA, as well as Plaintiffs’
claims for unjust enrichment. Defendants also seek dismissal of
Adami’s claim for slander per se, his claim for overtime for
periods in which he was an “installation manager,” and his claim
for benefits under the CIICA. The Court will address each in
turn.
1. Facts
Cardo markets its windows, doors, and installation services
to the general public through its website and direct mailings.
(Defendants’ Statement of Undisputed Facts (“SMF”) [Docket Item
87-27] ¶ 5.)1 Upon the sale of a product, homeowners enter a
1
Plaintiffs failed to furnish a responsive statement of
undisputed material facts, but their opposition brief contains
detailed citations to the record that make clear certain
disputed facts. Although Plaintiffs failed to comply with Local
Civil Rule 56.1, the Court declines to ignore Plaintiffs’
citations. However, to the extent Plaintiffs failed to make
clear any dispute of material fact in Defendants’ Rule 56.1
statement, the Court will deem any such fact undisputed for
purposes of the instant motion. See L. Civ. R. 56.1(a) (“[A]ny
material fact not disputed shall be deemed undisputed for
purposes of the summary judgment motion.”). While the Court will
not ignore counter-stated facts that are apparent from
Plaintiffs’ brief, so too will the Court not comb the voluminous
record in search of disputed facts that should have been part of
Plaintiffs’ response to Defendants’ Rule 56.1 statement.
7
contract with Cardo that includes the price of the product to be
installed and the cost of installation. (Id.)
Plaintiffs Adami and Varner installed windows and doors for
Cardo and were required to sign independent contractor
agreements outlining the terms and conditions of their work.
(Id. ¶ 6.) As window installers for Cardo, Plaintiffs were paid
based upon the size and type of window installed. For example,
in 2009 and 2010 Plaintiffs were paid $40 to install a wooden
double-hung window, $50 for a metal double-hung window, $75 for
a wooden section slider, $85 for a metal section slider, $300
for a bow window with roof, $175 for a garden window, $150 for a
standard door, $300 for a two-sided door, $200 for a patio door,
and $65 for storm doors. (Id. ¶ 10.) At some point, Cardo began
paying installers “an adjustment of $10 additional per window on
double hungs only.” (Deposition of Edward Jones on January 9,
2013 (“Jones Dep.”) [Docket Item 87-7] 176:3-5.) The amount of
time it would take to install a certain window product would
vary based on the details of the job and the speed of the
installer. (SMF ¶ 12.) Cardo would not pay more than ten percent
of the total cost of an installation job to cover labor
expenses. (Deposition of Fred Adami on March 29, 2013 (“Adami
Dep.”) [Docket Item 87-4] 462:7-463:13.) Plaintiffs provided
Cardo daily and bi-weekly worksheets recording the projects
worked, the number of windows and doors installed, and the
8
amounts to be paid for each. (SMF ¶ 13.) Both Adami and Varner
earned more than $100,000 per year for their work for Cardo.
(Id. ¶ 16.)
It is undisputed that Cardo did not maintain records of the
hours worked by its installers. Jack Varner certified that he
worked 10-14 hours a day installing windows for Cardo from
February 2003 to October 2012. (Certification of Jack Varner,
Pl. Ex. F [Docket Item 104-3] ¶ 1.) Varner also testified that
he worked 10-14 hours a day, six days per week. (Deposition of
Jack Varner on May 7, 2013 (“Varner Dep.”), Pl. Ex. G [Docket
Item 104-3] 46:1-6; 62:2-3.) Similarly, Adami testified that “a
typical day at [Cardo] is easily 10 to 12 hours” and he worked
six or seven days per week. (Adami Dep. 113:11-12; 241:6-9.)
Former Cardo manager and owner, Roderick Arce testified that
Cardo installers worked “60, 65 hours a week,” which he knew
because he completed recap sheets showing how much work
installers completed each day. (Deposition of Roderick Arce
(“Arce Dep.”), Pl. Ex. I [Docket Item 104-3] 99:1-13.)
Adami acknowledged that many variables contribute to the
time it would take to complete a window installation (Adami Dep.
112:13-16) and that there were occasions when he would only
install as few as three windows in a day. (Adami Dep. 262:2123.) Varner conceded that there were days when he could not
recall whether he worked for eight hours (Varner Dep. 73:18-20)
9
and admitted that there were occasions when he worked fewer than
six days per week (Varner Dep. 61:20-25; 63:20-23; 64:13-20;
65:9-11; 66:16-21; 72:1-6; 73:1-5; 73:23-74:1.) Both Adami and
Varner’s estimates of their hours worked include travel time
returning home. (Varner Dep. 136:5-13; Adami Dep. 456:9-457:16.)
Adami testified that he was an “office manager” for Cardo
paid $1500 per week and he had the right to hire and fire Cardo
workers. (Adami Dep. 196:2, 197:10-25.) However, Edward Jones,
manager of installation at Cardo’s Mt. Laurel facility,
testified that Adami was not a manager at the Mechanicsburg
warehouse, but that he was paid a fixed amount of $1500 per week
while working in Mechanicsburg. (Jones Dep. 76:8-77:24.)
Christopher Cardillo, Sr. denied that Adami ever became an
installation manager in Mechanicsburg. (Deposition of
Christopher Cardillo, Sr. (“Cardillo, Sr., Dep.”), Pl. Ex. P
[Docket Item 104-3] 53:19-22.)
At his deposition, Adami stated that Jones told other Cardo
employees that Adami was a “scumbag” and a “motherfucker” and
warned them against maintaining a relationship with him. (Adami
Dep. 200:18-201:18.) In support of Adami’s defamation claim,
Plaintiffs only identify Jones’ deposition testimony that
sometime in September 2011 he accused Adami of theft in the
presence of Mike Lucas. (Jones Dep. 42:21-43:2.) Lucas was an
individual who performed service work for Cardo in the
10
Mechanicsburg area and who reported that aluminum coil had been
stolen from the Mechanicsburg warehouse. (Jones Dep. 83:185:24.) Adami was accused of the theft of coil, as discussed
further below.
2. Overtime Claims
Defendants argue that Plaintiffs’ claims for overtime under
the FLSA must fail because they would not be entitled to
overtime as commissioned employees of a retail or service
establishment. Defendants also argue that Plaintiffs’
allegations as to their hours worked are insufficient to prove
an overtime violation under the FLSA or New Jersey law.
Plaintiffs respond that Cardo does not qualify for the retail or
service establishment exemption because Cardo does not satisfy
the requirements under Section 13(a)(2) of the FLSA. Plaintiffs
also argue that Cardo’s installers are not paid on a commission
basis and Cardo has the burden to rebut Plaintiffs’ testimony
that they worked 72 hours per week.
a. Retail Commission Exemption
The Court first considers whether Plaintiffs are subject to
the retail commission exemption to the FLSA’s overtime
requirements. The FLSA requires that employers pay their
employees one and one-half times their regular rate of pay for
any hours worked in excess of forty hours per week. 29 U.S.C. §
207(a). The FLSA provides an exemption to the overtime
11
requirements for certain employees working in retail or service
establishments. Section 7(i) provides:
No employer shall be deemed to have violated subsection (a)
of this section by employing any employee of a retail or
service establishment for a workweek in excess of the
applicable workweek specified therein, if (1) the regular
rate of pay of such employee is in excess of one and onehalf times the minimum hourly rate applicable to him under
section 206 of this title, and (2) more than half his
compensation for a representative period (not less than one
month) represents commissions on goods or services. In
determining the proportion of compensation representing
commissions, all earnings resulting from the application of
a bona fide commission rate shall be deemed commissions on
goods or services without regard to whether the computed
commissions exceed the draw or guarantee.
29 U.S.C. § 207(i). Courts are to construe FLSA exemptions
narrowly against the employer. Madison v. Res. for Human Dev.,
Inc., 233 F.3d 175, 183 (3d Cir. 2000). “The employer has the
burden of demonstrating that it is eligible for the retail
commission exception.” Parker v. NutriSystem, Inc., 620 F.3d
274, 277 (3d Cir. 2010) (citing Mitchell v. Kentucky Fin. Co.,
359 U.S. 290, 295-96 (1959)).
The Court notes that Plaintiffs’ reliance on the
requirements to satisfy the Section 13(a)(2) exemption under the
FLSA is misplaced.2 The exemption under Section 13(a)(2) has been
2
29 C.F.R. § 779.337 sets forth the requirements to satisfy the
Section 13(a)(2) exemption as follows:
a) An establishment which is a “retail or service
establishment” within the Act’s statutory definition of
that term (See discussion in §§ 779.312 to 779.336) must,
to qualify as an exempt retail or service establishment
12
repealed and differs from the exemption under Section 7(i) upon
which Defendants rely. Although the regulations interpreting
Section 13(a)(2) remain relevant to define a “retail or service
establishment,” Plaintiffs’ argument relies on the requirements
to qualify for the Section 13(a)(2) exemption, not the
requirements to satisfy the definition of a “retail or service
establishment.”3 La Parne v. Monex Deposit Co., 714 F. Supp. 2d
under section 13(a)(2) of the Act (See § 779.301), meet
both of the following tests:
(1) More than 50 percent of the retail or service
establishment’s total annual dollar volume of sales must be
derived from sales of goods or services (or both) which are
made within the State in which the establishment is
located; and
(2) Either:
(i) The retail or service establishment must not be in an
enterprise of the type described in section 3(s), or
(ii) If the retail or service establishment is in an
enterprise of the type described in 3(s), it has an annual
volume of sales (exclusive of excise taxes at the retail
level which are separately stated) of less than $250,000.
29 C.F.R. § 779.337(a).
3
29 C.F.R. § 779.411 provides that “[a]s used in section 7(i),
as in other provisions of the Act, the term ‘retail or service
establishment’ means an establishment 75 per centum of whose
annual dollar volume of sales of goods or services (or of both)
is not for resale and is recognized as retail sales or services
in the particular industry.” 29 C.F.R. § 779.318(a) discusses
the characteristics or a retail or service establishment as
follows:
Typically a retail or service establishment is one which
sells goods or services to the general public. It serves
the everyday needs of the community in which it is located.
The retail or service establishment performs a function in
the business organization of the Nation which is at the
very end of the stream of distribution, disposing in small
quantities of the products and skills of such organization
and does not take part in the manufacturing process.
13
1035, 1045 (C.D. Cal. 2010) (explaining that the exemptions in
Sections 7(i) and 13(a)(2) were intended to address
“‘fundamentally different wage and hour concerns’” and 29 C.F.R.
§ 779.337 “defines the exemption of 13(a)(2)” without
“constrain[ing] the definition of ‘retail or service
establishment,’ which was but one element of the exemption.”)
(quoting English v. Ecolab, Inc., Civ. 06-5672, 2008 WL 878456,
at *2, n.6 (S.D.N.Y. Mar. 31, 2008)). Accordingly, the Court
rejects as inapposite Plaintiffs’ arguments that Cardo’s annual
gross sales exceed $250,000, that more than 50 percent of
Cardo’s sales revenue is derived from sales in New Jersey, and
that Cardo is an “enterprise of the type described in § 3(s) of
the FLSA.”
The Court next considers whether the amounts paid to
Plaintiffs constitute a “commission” under Section 7(i). In
Parker, the Third Circuit noted that the FLSA does not define
the term “commission.” Parker, 620 F.3d at 278. After
considering the legislative history and statutory purpose of the
FLSA and reviewing Department of Labor interpretations of the
term, the Parker court “decline[d] to adopt a test that requires
a commission under § 7(i) to be strictly based on a percentage
of the end cost to the consumer.” Id. at 283. Instead, the court
29 C.F.R. § 779.318. See also English v. Ecolab, Inc., Civ. 065672, 2008 WL 878456, at *8 (S.D.N.Y. Mar. 31, 2008).
14
“conclude[d] that when the flat-rate payments made to an
employee based on that employee’s sales are proportionally
related to the charges passed on to the consumer, the payments
can be considered a bona fide commission rate for the purposes
of § 7(i).” Id.
The present case is distinguishable from Parker because on
the record before the Court there is no way to determine whether
the flat-rate payments made to Plaintiffs were proportional to
the charges passed on to Cardo’s customers. Defendants contend
that the amount paid to installers was roughly ten percent of
the total cost of the windows; however, Defendants misconstrue
Adami’s deposition testimony.4 Adami stated that Cardo capped
labor costs at ten percent of the total costs of an installation
job. Drawing all reasonable inferences in Plaintiffs’ favor,
Cardo paid its installers on a piece-rate basis and would only
consider the total cost of the job to ensure labor costs did not
exceed ten percent. Here, the record, when viewed most favorably
to Plaintiffs, shows that Plaintiffs were paid a flat-rate with
no connection to the cost to the consumer. If the Court were to
accept Defendants’ reasoning, all flat-rate payments would be
4
Additionally, at oral argument, Defendants could not identify
anything in the record establishing the relationship between the
flat-rate payments and the cost to customers.
15
commissions under 207(i), and the Third Circuit has not adopted
such a bright line rule.
Further, the Parker court distinguished three opinion
letters from the Wage and Hour Division of the Department of
Labor on the basis that “NutriSystem’s payments to employees
[were] based on consumer preference and the ability of the sales
associate to persuade a customer to purchase a meal plan.” Id.
at 282-83. Importantly, one such opinion letter addressed a
factual scenario similar to the present action. There, the
Department opined that alarm system installers who were paid
based on a percentage of the sales price of the systems they
installed were paid a commission, but installers who were paid a
flat fee per installation were not paid a commission under
Section 7(i). Id. at 280. See also Dep’t of Labor Op. Ltr., 1996
WL 1031770 (Apr. 3, 1996). The Parker court reasoned that,
unlike the alarm installers who were paid a flat fee per
installation, the number of calls the sales associates made was
irrelevant to the number of additional payments they received
because sales ability and customer preference actually dictated
whether sales associates were paid additional compensation.
The present case lacks such distinguishing features. Just
like the alarm installers, Plaintiffs were paid a flat fee per
installation based on the type of window they installed. Because
Plaintiffs had no role in selling the windows, sales ability and
16
customer preference were irrelevant to their compensation.
Further, unlike Yi v. Sterling Collision Centers, Inc., 480 F.3d
505 (7th Cir. 2007), noted by the Parker court and cited by
Defendants, there is nothing in the present record to suggest
that Cardo “base[d Plaintiffs’] compensation on sales.” Id. at
283-84.
As such, the Court concludes, based on the present record,
that the amounts paid to Plaintiffs do not constitute a
“commission” under Section 7(i). “[I]f the record is unclear as
to some exemption requirement, the employer will be held not to
have satisfied its burden.” Martin v. Cooper Elec. Supply Co.,
940 F.2d 896, 900 (3d Cir. 1991) (citing Idaho Sheet Metal
Works, Inc. v. Wirtz, 383 U.S. 190, 206 (1966)). Therefore, the
Court will deny Defendants’ motion for summary judgment to the
extent it relies on the Section 7(i) exemption under the FLSA.5
b. Plaintiffs’ Damages Calculation
Defendants also argue that Plaintiffs’ allegations as to
overtime are insufficient to approximate damages under the FLSA.
Plaintiffs contend that Cardo failed to keep written records for
each of its installers as required under the FLSA and
5
Having found that the amounts paid to Plaintiffs do not
constitute a “commission,” the Court will not address
Plaintiffs’ argument that Cardo cannot be considered a retail or
service establishment because Cardo is a manufacturer of
windows. See 29 C.F.R. § 779.318(a).
17
Plaintiffs’ testimony regarding their hours and pay is
sufficient to shift the burden to Cardo to present evidence of
the precise number of hours worked.
An employee who brings a claim for unpaid wages or unpaid
overtime under the FLSA “has the burden of proving that he
performed work for which he was not properly compensated.”
Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946).
Courts must be conscientious of the employer’s duty to maintain
proper records of wages, hours and other conditions under
Section 11(c) of the FLSA, as well as the fact that “[e]mployees
seldom keep such records themselves.” Id. “When the employer has
kept proper and accurate records the employee may easily
discharge his burden by securing the production of those
records.” Id. However, where an “employer’s records are
inaccurate or inadequate and the employee cannot offer
convincing substitutes,” an employee satisfies his burden if
he proves that he has in fact performed work for which he
was improperly compensated and if he produces sufficient
evidence to show the amount and extent of that work as a
matter of just and reasonable inference. The burden then
shifts to the employer to come forward with evidence of the
precise amount of work performed or with evidence to
negative the reasonableness of the inference to be drawn
from the employee's evidence. If the employer fails to
produce such evidence, the court may then award damages to
the employee, even though the result be only approximate.
Id. at 687-88. See also Reich v. Gateway Press, Inc., 13 F.3d
685, 701 (3d Cir. 1994) (“[I]t is settled that the burden (with
18
respect to a given employee) is met if it is proved that the
employee has in fact performed work for which he was improperly
compensated and if the employee produces sufficient evidence to
show the amount and extent of that work as a matter of just and
reasonable inference.”).
Because Defendants assume that Plaintiffs were employees
entitled to overtime under the FLSA for the purposes of the
instant summary judgment motion, the Court will do the same.6 The
Court is mindful of a significant dispute regarding what records
Cardo has produced in discovery and what documents the parties
believe are necessary to calculate a reasonable estimate of
damages.7 Irrespective of the discovery dispute, it is clear that
6
Defendants’ moving papers state, “Although plaintiffs were
independent contractors and not ‘employees’ under state and
federal overtime laws, for purposes of this motion only
defendants do not argue this point.” (Def. Br. [Docket Item 872] at 3.)
7
Defendants state that “[i]n response to plaintiff’s [discovery]
requests, defendants subsequently produced more than 2800 pages
of documentation, including detail sheets as to all projects
that plaintiffs worked on for Cardo, the number of windows or
doors installed, all payments made, and the basis for each such
payment.” (SMF ¶ 24.) However, Plaintiffs contend that “Cardo
has produced no records, or even estimates, of the hours worked
by its installers.” (Pl. Opp. at 13.) Plaintiffs emphasize that
“the discovery necessary for an expert to render an opinion on
the overtime damages due to [Plaintiffs] and the putative class
has not yet been produced.” (Id. at 14.) Specifically,
Plaintiffs assert that Defendants have not produced “job
packets” for each window installation by Plaintiffs. Plaintiffs
further note that production of “job packets” were subject to a
discovery dispute and Judge Schneider ordered Defendants to
produce only “one complete representative ‘job packet’ for each
plaintiff.” [Docket Item 57.]
19
Cardo did not maintain records of its installers’ hours. As
such, Cardo’s records are inadequate and Plaintiffs’ may rely on
the burden-shifting framework to prove damages. See Prof’l
Appraisal Servs., Inc. v. Melton, Civ. 05-621, 2006 WL 3203901,
*2 (W.D. Mich. Nov. 3, 2006) (noting that employer did not keep
records of hours worked by individual characterized as an
independent contractor and finding individual’s testimony,
substantiated by co-workers’ affidavits, sufficient to create a
genuine issue of material fact). Therefore, the question in this
summary judgment motion is whether Plaintiffs have adduced
evidence from which a reasonable fact-finder could find that
they have carried their burden of showing the amount and extent
of work for Cardo as a matter of just and reasonable inference.
It is undisputed that Cardo failed to produce any documents
in discovery containing the addresses of the customers for which
Plaintiffs installed windows. These addresses are necessary for
Plaintiffs to estimate damages because time traveling from the
Cardo warehouses to the customer’s location is compensable under
the FLSA and the NJWHL. Accordingly, pursuant to Fed. R. Civ. P.
56(d), the Court will defer decision on Defendants’ motion to
the extent it is based on the lack of a precise damages
calculation. Fed. R. Civ. P. 56(d) (“If a nonmovant shows by
affidavit or declaration that, for specified reasons, it cannot
present facts essential to justify its opposition, the court
20
may: (1) defer considering the motion or deny it; (2) allow time
to obtain affidavits or declarations or to take discovery; or
(3) issue any other appropriate order.”). Unless the parties can
reach a stipulation regarding Plaintiffs’ average compensable
travel time each day, Plaintiffs are entitled to discover the
addresses of the each customer serviced because such information
is necessary to compute Plaintiffs’ average hourly earnings.8 The
parties will have an opportunity for supplemental briefing after
this discovery is produced. Therefore, pursuant to Rule 56(d),
the Court will defer decision on Defendants’ motion for summary
judgment to the extent it is based on Plaintiffs’ failure to
provide a reasonable estimate of damages for unpaid overtime
under the FLSA and New Jersey law.9 Plaintiffs’ supplemental
8
Plaintiffs provide an estimate of damages for unpaid overtime
in opposition to Defendants’ motion for summary judgment. At
oral argument, Plaintiffs’ counsel stated that this calculation
was based on 29 C.F.R. § 548.302. The Court has reviewed 29
C.F.R. § 548.302 and finds no basis for Plaintiffs’ methodology.
29 C.F.R. § 548.302 pertains to the calculation method in 29
C.F.R. § 548.3(b) by which an hourly pay rate is “obtained by
averaging the earnings . . . of the employee for all work
performed during the workday or any other longer period not
exceeding sixteen calendar days.” Plaintiffs’ calculation
averaged Plaintiffs’ earnings for the entire year based on their
pay indicated on 1099 forms. The Court expects Plaintiffs’ to
submit a reasonable estimate of damages upon supplemental
briefing.
9
The standard for proving damages under the NJWHL is similar to
that under the FLSA. When determining whether a plaintiff has
established a prima facie case under NJWHL, New Jersey courts
have held that a plaintiff need not prove damages with precision
where it is impractical or impossible to do so. See Mosley v.
Femina Fashions, Inc., 811 A.2d 910, 916 (N.J. Super. Ct. App.
21
brief and accompanying evidence of a reasonable estimate of
damages will be due in 21 days, and any reply is due seven days
thereafter.
3. Unjust Enrichment
Defendants argue that Plaintiffs’ claims for unjust
enrichment, Counts IV and XI of their Amended Complaint, fail
because they are preempted by the FLSA. Plaintiffs argue that
the Third Circuit directly addressed this question in Knepper v.
Rite Aid Corp., 675 F.3d 249 (3d Cir. 2012), and held that
plaintiff’s state law claims were not preempted by the FLSA.
At the outset, the Court notes that the Third Circuit in
Knepper did not directly address the issue before the Court. In
Knepper, the Third Circuit considered whether the FLSA preempts
the Maryland Wage and Hour Law (MWHL) and the Ohio Minimum Fair
Wage Standards Act (OMFWSA). Knepper, 675 F.3d at 262. The Court
of Appeals observed that the FLSA contains a savings clause that
expressly preserves state or local laws establishing a higher
minimum wage than that established under the FLSA and concluded
that the FLSA did not preempt the MWHL and OMFWSA. Id. As such,
the Third Circuit did not address the question presented here:
Div. 2002). Specifically, damages need only be proved with “such
certainty as the nature of the case may permit, laying a
foundation which will enable the trier of facts to make a fair
and reasonable estimate” of damages. Id. (quoting Lane v. Oil
Delivery, Inc., 524 A.2d 405, 409 (N.J. Super. Ct. App. Div.
1987).
22
whether the FLSA preempts a state common law claim for unjust
enrichment.
Although the Third Circuit has not addressed whether the
FLSA preempts state common law causes of action, courts in the
District of New Jersey have held that “claims brought under
state common law and ‘directly covered’ by the FLSA, including
overtime claims, must be brought under the FLSA.” Kronick v.
bebe Stores, Inc., Civ. 07-4514 (RBK), 2008 WL 4509610, at *4
(D.N.J. Sept. 29, 2008). “Courts that have considered this issue
analyze whether the FLSA and common law claims are grounded in
the same facts.” Moeck v. Gray Supply Corp., Civ. 03-1950 (WGB),
2006 WL 42368, at *2 (D.N.J. Jan. 6, 2006). Here, unlike Kronick
and Moeck, Plaintiffs’ state law claim for unjust enrichment are
not “merely . . . based on” Plaintiffs’ FLSA overtime claims.
Id.
Count IV of Plaintiffs’ Amended Complaint incorporates the
preceding allegations and states, “Should Employer not pay
Plaintiffs their overtime compensation and other benefits and
perquisites of employment, Employer will be unjustly enriched to
Plaintiffs’ substantial detriment.”10 (Am. Compl. ¶ 87.)
10
Count XI of the Amended Complaint contains substantially
similar language: “Should Cardo not pay Plaintiff his overtime
compensation and other benefits and perquisites of employment
during the time he was a manager of Cardo, Cardo will be
unjustly enriched to Plaintiff’s substantial detriment.” (Am.
Compl. ¶ 169.)
23
Plaintiffs seek monetary damages and injunctive relief requiring
Defendants to pay on Plaintiffs’ behalf federal and state
payroll and income taxes and other amounts Defendants were
required to withhold from Plaintiffs’ wages. Plaintiffs’ claims
for unjust enrichment are thus factually distinct from their
FLSA claim for two reasons. First, Plaintiffs’ unjust enrichment
claims are not limited to Cardo’s alleged failure to pay
overtime, but include Cardo’s alleged failure to provide certain
benefits to which Plaintiffs were allegedly entitled. Second,
Plaintiffs seek relief beyond that available under the FLSA. As
such, the Court finds that Plaintiffs’ common law claims for
unjust enrichment are not based on the same facts and are not
directly covered by the FLSA.
Defendants further argue that even if Plaintiffs’ unjust
enrichment claims are not preempted by the FLSA, Plaintiffs
cannot show that Defendants wrongfully secured and retained any
benefit as required to prevail on a claim for unjust
enrichment.11 Defendants contend that Plaintiffs signed
11
“To establish unjust enrichment, a plaintiff must show both
that defendant received a benefit and that retention of that
benefit without payment would be unjust.” VRG Corp. v. GKN
Realty Corp., 641 A.2d 519, 526 (N.J. 1994) (citation omitted).
“The unjust enrichment doctrine requires that plaintiff show
that it expected remuneration from the defendant at the time it
performed or conferred a benefit on defendant and that the
failure of remuneration enriched defendant beyond its
contractual rights.” Id. (citing Associates Commercial Corp. v.
Wallia, 511 A.2d 709 (N.J. Super. Ct. App. Div. 1986)). “A
24
agreements characterizing them as independent contractors for
Cardo and Plaintiffs understood the terms and conditions of
their relationship with Cardo, including how they would be
compensated. Plaintiffs argue that the agreements signed by
Plaintiffs were unenforceable contracts of adhesion.
Plaintiffs may only pursue a quasi-contractual claim such
as unjust enrichment in the absence of a valid express contract.
Von Nessi v. XM Satellite Radio Holdings, Inc., Civ. 07-2820
(PGS), 2008 WL 4447115, at *4 (D.N.J. Sept. 26, 2008) (citing
Suburban Transfer Svc., Inc. v. Beech Holdings, Inc., 716 F.2d
220, 226-27 (3d Cir. 1983)). A contract of adhesion is a
contract “presented on a take-it-or-leave-it basis, commonly in
a standardized printed form, without opportunity for the
‘adhering’ party to negotiate.” Stelluti v. Casapenn
Enterprises, LLC, 1 A.3d 678, 687 (N.J. 2010) (quoting Rudbart
v. N. Jersey Dist. Water Supply Comm’n, 605 A.2d 681, 685 (N.J.
1992)). “Although a contract of adhesion may require one party
to choose either to accept or reject the contract as is, the
agreement nevertheless may be enforced.” Id. “When making the
common thread running through the successful invocation of a
claim of unjust enrichment is that the plaintiff expected
remuneration from the defendant, or if the true facts were known
to plaintiff, he would have expected remuneration from defendant
at the time the benefit was conferred.” Hipple v. Estate of
Mayer, A-4003-05T5, 2007 WL 1080421, at *8 (N.J. Super. Ct. App.
Div. Apr. 12, 2007) (citation and internal quotation omitted).
25
determination that a contract of adhesion is unconscionable
and unenforceable, we consider, using a sliding scale analysis,
the way in which the contract was formed and, further, whether
enforcement of the contract implicates matters of public
interest.” Id. at 687 (citing Delta Funding Corp. v. Harris, 912
A.2d 104, 111 (N.J. 2006)).
Plaintiffs contend that they were required to sign the
agreements on a “take it or leave it” basis without having read
the agreements and without any attorney review. (Pl. Opp. at
18.) Further, Plaintiffs assert that there was unequal
bargaining power between Plaintiffs and Cardo, and Cardo did not
provide additional consideration to Plaintiffs for signing the
agreement. Plaintiffs were told that they would not receive any
additional work from Cardo if they did not sign the agreements.
In addition to material questions of fact regarding the signing
of the agreements, the central aspect of this case is a dispute
over whether Plaintiffs were independent contractors or
employees. As such, the Court cannot conclude that the
agreements signed by Plaintiffs are unenforceable contracts of
adhesion at this stage. Penn Nat’l Ins. v. HNI Corp., 482 F.
Supp. 2d 568, 598 (M.D. Pa. 2007) (“Given . . . question of fact
[regarding whether Haldeman was an independent contractor or an
employee], we can not [sic] conclude that the Independent
Contractor Agreement is unenforceable on the basis that it is
26
[a] contract of adhesion containing unconscionable terms when
applied to an employee.”).
Although Plaintiffs may not obtain double recovery, if the
agreements they signed were unenforceable contracts of adhesion,
then they may pursue their claims for unjust enrichment.
Therefore, the Court will deny Defendants’ motion for summary
judgment as to Plaintiffs’ unjust enrichment claims.
4. Defamation
Defendants argue that Adami’s defamation claim against
Edward Jones must fail because he has offered only vague
allegations of slander supported only by inadmissible hearsay.
Defendants also argue that Jones’ alleged name-calling is not
capable of defamatory meaning. In response, Plaintiffs only
address statements by Jones accusing Adami of theft and contend
that accusations of criminal conduct constitute slander per se.
Because Plaintiffs provide no argument regarding alleged
statements by Jones that Adami was a drug addict or name-calling
by Jones referring to Adami as a “scumbag” and a
“motherfucker,”12 the Court will only address Plaintiffs’
12
Plaintiffs failed to provide a statement of undisputed
material facts or discuss these allegedly defamatory statements
in their opposition papers. Therefore, the Court finds them
insufficiently specific to create a genuine dispute of material
fact.
27
defamation claim based on the accusation that he stole aluminum
coil from Cardo.
To establish defamation under New Jersey law, a plaintiff
must show the defendant (1) made a false and defamatory
statement concerning the plaintiff, (2) communicated the
statement to a third party, and (3) had a sufficient degree of
fault.13 Singer v. Beach Trading Co., 876 A.2d 885, 894 (N.J.
Super. Ct. App. Div. 2005). The accusation of criminality is
defamatory as a matter of law. Robles v. U.S. Envtl. Universal
Servs., Inc., 469 F. App’x 104, 109 (3d Cir. 2012) (citing
Romaine v. Kallinger, 537 A.2d 284, 291 (N.J. 1988)). However, a
defendant may raise qualified privilege is an affirmative
defense. Binkewitz v. Allstate Ins. Co., 537 A.2d 723, 730 (N.J.
Super. Ct. App. Div. 1988) (“Just as in a defamation action, the
qualified privilege is a defense which must be raised by
defendant.”). A communication is privileged if the person
communicating the alleged defamation and the audience have a
“commensurate interest or duty in the communication.” Cruz v.
13
The New Jersey Supreme Court has occasionally listed
“unprivileged publication” as an element of a successful
defamation claim. See Leang v. Jersey City Bd. Of Educ., 969
A.2d 1097, 1113 (N.J. 2009). However, while a privileged
statement cannot lead to liability, the Supreme Court of New
Jersey has held that privileges are affirmative defenses to be
established by the defendant. Coleman v. Newark Morning Ledger
Co., 149 A.2d 193, 203 (N.J. 1959).
28
HSBC, Civ. 10-135 (JBS/JS), 2010 WL 2989987, at *4 (D.N.J. July
26, 2010).
The test to determine whether a communication is entitled
to the common interest privilege requires the Court to look
to (1) the appropriateness of the occasion on which the
defamatory information is published, (2) the legitimacy of
the interest thereby sought to be protected or promoted,
and (3) the pertinence of the receipt of that information
by the recipient.
Prof’l Recovery Servs., Inc. v. General Elec. Capital Corp., 642
F. Supp. 2d 391, 401 (D.N.J. 2009) (citing Bainhauer v.
Manoukian, 520 A.2d 1154, 1170 (N.J. Super. Ct. App. Div.
1987)).
Further, “[w]hen such privilege applies, liability for
defamatory statements comes into being only where the
publication is not made in good faith; where there is express
malice or absence of belief in the truth thereof; or where they
are motivated by a desire other than to carry out the company’s
right of discipline in good faith.” Jorgensen v. Pennsylvania R.
Co., 118 A.2d 854, 870 (N.J. Super. Ct. App. Div. 1955)
(citation omitted).
In the present case, as in Robles, Plaintiffs have not
presented any evidence that Jones’ statements were false, nor
that his statements were unprivileged. Robles, 469 F. App’x at
109 (finding allegation that plaintiff stole copper when he
applied for unemployment benefits entitled to qualified
privilege). See also Jorgensen, 118 A.2d at 869 (finding
29
statements in letter read at grievance hearing and sent to union
chairman alleging that plaintiff stole company property
protected by qualified privilege); Sokolay v. Edlin, 167 A.2d
211, 218 (N.J. Super. Ct. App. Div. 1961) (finding accusation
that plaintiff was responsible for missing Demerol tablets in
the presence of other employees protected by qualified
privilege). The only evidence in the record identified by
Plaintiffs in support of Adami’s defamation claim is testimony
by Jones admitting that sometime in September 2011 he accused
Adami of theft in the presence of Mike Lucas. (Jones Dep. 42:2143:2.) Lucas was an individual who performed service work for
Cardo in the Mechanicsburg area and who said aluminum coil had
been stolen from the Mechanicsburg warehouse. Plaintiffs’
argument that Lucas was a management consultant, not an employee
of Cardo at the time of the meeting is irrelevant because,
regardless of Lucas’ specific arrangement with Cardo, he had a
legitimate interest in preventing theft at Cardo.14 Further,
Plaintiffs have not provided evidence of abuse sufficient to
overcome the privilege.15 Therefore, the Court will grant
14
Nor is the Court persuaded by Plaintiffs’ suggestion that
Jones may have accused Adami of theft in the presence of others
in addition to Lucas because Jones was named as a witness in
Cardo’s private criminal complaint against Adami.
15
“A qualified privilege is abused if: ‘1) the publisher knows
the statement is false or the publisher acts in reckless
disregard of its truth or falsity; 2) the publication serves a
purpose contrary to the interests of the qualified privilege; or
30
Defendants’ motion for summary judgment as to Adami’s defamation
claim.
5. Adami’s Claim for Overtime as a Manager
Defendants argue that Adami’s claim for overtime for his
final months at Cardo when he was a manager paid a fixed salary
is self-defeating because his allegations exempt him from
overtime pay under the FLSA and the NJWHL.16 Plaintiffs respond
that there is a factual dispute regarding whether Adami was a
manager at Cardo.
29 U.S.C. § 213(a)(1) states that any person employed in a
bona fide executive, administrative, or professional capacity is
exempt from the FLSA’s mandatory overtime compensation
provision. See Davis v. Mountaire Farms, Inc., 453 F.3d 554, 557
(3d Cir. 2006). To qualify as exempt, the employee must satisfy
the criteria set forth in 29 C.F.R. § 541.100, which provides:
(a) The term “employee employed in a bona fide executive
capacity” in section 13(a)(1) of the Act shall mean any
employee:
(1) Compensated on a salary basis at a rate of not less
than $455 per week (or $380 per week, if employed in
American Samoa by employers other than the Federal
3) the statement is excessively published.’” Govito v. W. Jersey
Health Sys., Inc., 753 A.2d 716, 726 (N.J. Super. Ct. App. Div.
2000) (quoting Williams v. Bell Tel. Labs. Inc., 623 A.2d 234,
240 (N.J. 1993)).
16
N.J.A.C. § 12:56-7.2 expressly adopts the exemptions to the
FLSA identified in 29 C.F.R. § 541 et seq., including the bona
fide executive exemption. See N.J.A.C. § 12:56-7.2(a) (“Except
as set forth in (b) below, the provisions of 29 CFR Part 541 are
adopted herein by reference.”).
31
Government),
exclusive
of
board,
lodging
or
other
facilities;
(2) Whose primary duty is management of the enterprise in
which the employee is employed or of a customarily
recognized department or subdivision thereof;
(3) Who customarily and regularly directs the work of two
or more other employees; and
(4) Who has the authority to hire or fire other employees
or whose suggestions and recommendations as to the hiring,
firing, advancement, promotion or any other change of
status of other employees are given particular weight.
29 C.F.R. § 541.100(a).
Adami testified that he was an “office manager” for Cardo
paid $1500 per week and had the right to hire and fire people.
However, Jones testified that Adami was not a manager at the
Mechanicsburg warehouse, but he was paid a fixed amount of $1500
per week while working in Mechanicsburg. Christopher Cardillo,
Sr., denied that Adami ever became an installation manager in
Mechanicsburg. However, the parties agreed at oral argument that
Adami cannot assert a claim under the FLSA for any period during
which he was a manager with Cardo due to the bona fide executive
exemption, but he may maintain a claim for breach of contract
for uncompensated services during his last pay period with
Cardo. Accordingly, the Court will grant Defendants’ motion for
summary judgment to the extent it relies on the FLSA’s bona fide
executive exemption for the period when Adami alleges he was a
manager with Cardo. This exemption does not prohibit Adami from
seeking other damages related to this period under a breach of
contract theory.
32
6. New Jersey Construction Industry Independent
Contractor Act
Defendants also argue that Plaintiffs’ claim for unpaid
benefits under the CIICA must fail because Plaintiffs have no
statutory or contractual right to benefits. Plaintiffs respond
that under the CIICA they are entitled to any benefits provided
to Cardo’s other non-exempt employees, including employer
contributions to social security.
N.J.S.A § 34:20-5 establishes penalties for an employer
“who fails to properly classify an individual as an employee”
and “fails to pay wages, benefits, taxes or other contributions
required by” certain enumerated acts. Those acts are “the ‘New
Jersey Prevailing Wage Act,’ P.L.1963, c. 150 (C.34:11-56.25 et
seq.), the ‘unemployment compensation law,’ R.S.43:21-1 et seq.,
the ‘Temporary Disability Benefits Law,’ P.L.1948, c. 110
(C.43:21-25 et seq.), the ‘New Jersey Gross Income Tax Act,’
N.J.S.54A:1-1 et seq., P.L.1965, c. 173 (C.34:11-4.1 et seq.) or
other applicable State tax laws, and the ‘New Jersey State Wage
and Hour Law,’ P.L.1966, c. 113 (C.34:11-56a et seq.).” N.J.
Stat. Ann. § 34:20-5(a). The regulations also reference the New
Jersey Wage Payment Law, N.J.S.A. § 34:11-56a et seq. Therefore,
the Court will grant Defendants’ motion for summary judgment to
the extent it seeks to limit Plaintiffs’ recovery under the
CIICA to the benefits to which Plaintiffs would be entitled
33
under the laws specifically enumerated in the CIICA and
accompanying regulations.17
7. Conclusion
For the reasons discussed above, the Court will grant in
part, deny in part, and defer in part Defendants’ motion for
summary judgment. The Court will grant Defendants’ motion for
summary judgment as to Adami’s defamation claim against Edward
Jones and to the extent Defendants seek to limit Plaintiffs’
recovery under the CIICA to the benefits to which Plaintiffs
would be entitled under the laws specifically enumerated in the
CIICA and accompanying regulations. The Court will deny
Defendants’ motion for summary judgment as to Plaintiffs’ claims
for unjust enrichment and to the extent it relies on the FLSA’s
retail commission exemption. However, the Court will defer
decision on Defendants’ motion to the extent it argues that
Plaintiffs failed in their obligation to provide a reasonable
estimate of damages.
B. Plaintiffs’ Motion for Summary Judgment
Plaintiffs’ motion for summary judgment seeks dismissal of
Defendants’ counter-claims against Fred Adami for fraud,
conversion, conspiracy, tortious interference with contractual
17
In so finding, the Court is not determining the contours of
the CIICA, nor the specific damages recoverable under the
statute.
34
relations, and breach of contract. [Docket Item 88.] The Court
will address each separately below.18
1. Facts
Plaintiffs did not submit a statement of undisputed facts
to accompany their motion for summary judgment as required by
Local Civil Rule 56.1. Therefore, the Court considers as
undisputed the following facts contained in Defendants’ 56.1
statement.19
Adami admitted to Cardo management that he accepted payment
for jobs he did not perform based on false invoices he submitted
18
The Court previously denied Plaintiffs’ motion to dismiss
Defendant’s counter-claim for breach of contract against Fred
Adami. Adami v. Cardo Windows, Inc., Civ. 12-2804 (JBS/JS), 2014
WL 320048, at *19 (D.N.J. Jan. 29, 2014). Plaintiffs provide no
new argument in support of their motion for summary judgment on
Defendant’s counter-claim for breach of contract against Fred
Adami and merely incorporate by reference their previous
argument that there is no cause of action for employers under
the FLSA. Therefore, the Court declines to revisit its previous
decision at this time.
19
Defendants argue that Plaintiffs’ motion for summary judgment
must be denied for failure to provide a statement of undisputed
facts pursuant to Local Rule 56.1. Plaintiffs submitted a
belated Rule 56.1 statement on January 14, 2014 nearly six weeks
after filing their initial moving papers and after Defendants
filed opposition to Plaintiffs’ motion. However, Plaintiffs’
moving papers contain detailed citations to the record and
Defendants’ cannot be said to have been prejudiced by
Plaintiffs’ failure to comply with the local rule. Accordingly,
the Court will excuse Plaintiffs’ failure to comply with Local
Rule 56.1 on the instant motion, but the Court will deem as
unopposed any future motion for summary judgment unaccompanied
by a 56.1 statement. See L. Civ. R. 56.1(a) (“A motion for
summary judgment unaccompanied by a statement of material facts
not in dispute shall be dismissed.”).
35
to Cardo. (SMF ¶ 3.) At the direction of Roderick Arce, Adami
would “turn in a bill stating he did a job,” he would accept a
check from Cardo, then give some of the money to Arce. (Id. ¶
4.) Adami testified that he was instructed on a few occasions to
give cash back to either Arce or Edward Jones and he understood
that they would put the cash in their pocket. (Id. ¶ 5.) Adami
provided money in this manner on at least 20 different occasions
which Defendants have documented. (Id. ¶ 6.) Jones denies that
he had any involvement in the alleged kickback arrangement and
he testified that he was used as a “dupe” to perpetuate a
fraudulent scheme by Arce and Adami. (Id. ¶ 7.) Both Arce and
Jones testified that Adami never gave them any overpaid cash.
(Id. ¶ 8.)
Adami also admitted to Cardo managers Edward Jones and Mike
Lucas that he stole aluminum coil from Cardo’s warehouse in
Mechanicsburg, Pennsylvania. (Id. ¶ 13.) Adami admitted to Ed
Jones that he also stole coil from Cardo’s warehouse in Mt.
Laurel, New Jersey. (Id. ¶ 14.) Following a fire in the Cardo
warehouse in Berlin, Connecticut, Adami, at the direction of
Arce, “scrapped” certain amounts of aluminum coil and gave the
cash to Arce. (Id. ¶¶ 16-17.)
Arce signed a “Separation and Termination Agreement” dated
April 19, 2011 with a termination date of January 7, 2011. (Id.
36
¶ 32.) Paragraph IX of the Agreement is titled “Non-Competition”
and states:
For the period beginning on the Termination Date and
continuing for three (3) years after the Termination Date
(“the Restricted Period”), Arce shall not:
. . .
(iv) Hire, engage, contract or otherwise do business with,
directly or indirectly, whether as an employee, independent
contractor, or otherwise, any person (including any entity
with which such person may be affiliated) or entity that as
of the Termination Date was, or may at any time during the
Restricted Period be, engaged by Cardo or any of its
affiliates as an employee or independent contractor (the
“Restricted Workers”), including but not limited to its
office employees and its contracted sales persons, dealers,
and installers.
(Id. ¶ 33.) Adami testified that he knew Arce was not permitted
to work in the window business, “directly or indirectly,” after
he was terminated. (Id. ¶ 34.) Adami also testified that on one
occasion Arce referred a window job to Adami because Arce did
not want to be involved. (Id. ¶ 35.)
2. Fraud
Plaintiffs argue that Defendants’ counter-claim for fraud
against Fred Adami must be dismissed because it is based
entirely on the allegation that Adami submitted bills to Cardo
for work he did not perform and Jones testified that he prepared
the bills upon which Cardo’s claims for fraud are based.
Further, Plaintiffs argue that Defendants have failed to satisfy
the elements of fraud by clear and convincing evidence because
Defendants have not identified with specificity the date, place,
37
and name of the allegedly fraudulent jobs. Defendants respond
that Plaintiffs misconstrue the basis for the fraud claim and
note that an omission may also form the basis for common law
fraud.
To establish a claim for common law fraud under New Jersey
law, plaintiff must show: “(1) a material misrepresentation of a
presently existing or past fact; (2) knowledge or belief by the
defendant of its falsity; (3) an intention that the other person
rely on it; (4) reasonable reliance thereon by the other person;
and (5) resulting damages.” Gennari v. Weichert Co. Realtors,
691 A.2d 350, 367 (N.J. 1997) (citation omitted). “The
deliberate suppression of a material fact that should be
disclosed is viewed as equivalent to a material
misrepresentation (i.e., an affirmative misrepresentation),
which will support a common law fraud action.” Winslow v.
Corporate Express, Inc., 834 A.2d 1037, 1044 (N.J. Super. Ct.
App. Div. 2003) (internal quotation and citation omitted).
Plaintiff must prove each element by clear and convincing
evidence. In re Resorts Int’l, Inc., 181 F.3d 505, 509 (3d Cir.
1999) (citing Stochastic Decisions, Inc. v. DiDomenico, 565 A.2d
1133, 1137 (N.J. Super. Ct. App. Div. 1989)).
The Court finds that the record, when viewed in a light
most favorable to Defendants, shows that Adami participated in a
fraudulent scheme with Arce to submit false paperwork and accept
38
payment for jobs he did not perform. Adami either kept the money
he was overpaid or gave it to Arce. Jones’ testimony that he may
have completed and approved “time cards” and “labor bills” for
Adami does not defeat Defendants’ claim for fraud. (Jones Dep.
210:19-212:7.) Jones also testified that he was unaware of any
fraudulent scheme between Adami and Arce and did not know that
the information provided by Adami or Arce was false. As such,
the Court is unpersuaded by Plaintiffs’ argument that
Defendants’ fraud claim must fail because Jones completed
certain paperwork based on information provided to him by Adami
or Arce. The Court also rejects Plaintiffs’ argument that
Defendants will be unable to satisfy each element of fraud by
clear and convincing evidence because Defendants’ have not
identified with specificity the date, place, and name of the
allegedly fraudulent jobs. In fact, Defendants have identified
documents related to at least 20 specific occasions when Adami
submitted false paperwork.20 A reasonable jury could conclude
based on the evidence in the record that Defendants have
satisfied each element of fraud by clear and convincing
evidence. Therefore, the Court will deny Plaintiffs’ motion for
20
Cardillo, Sr. testified about these documents, but they are
not part of the record. That neither party saw fit to include
these 20 files in the record does not make these claims any less
specific. These are the instances of fraud of which Defendants
complain.
39
summary judgment as to Defendants’ counter-claim for fraud
against Adami.
3. Conversion
Plaintiffs argue that Defendants have not provided
inventory records for each warehouse from which Adami allegedly
stole aluminum coil and these records are necessary for
Defendants to prevail on its conversion claim against Adami.
Plaintiffs also contend that Defendants committed spoliation by
destroying the inventory records and summary judgment is the
only appropriate sanction. Defendants respond that Plaintiffs
have failed refute any of the evidence in the record which
supports their conversion claim. As to spoliation, Defendants
argue that the record shows that Cardo did not maintain detailed
inventory sheets for aluminum coil and thus could not have
destroyed any such records.
The Court first considers Plaintiffs’ argument that
Defendants committed spoliation by failing to maintain or
destroying inventory records. “Spoliation occurs where: the
evidence was in the party’s control; the evidence is relevant to
the claims or defenses in the case; there has been actual
suppression or withholding of evidence; and, the duty to
preserve the evidence was reasonably foreseeable to the party.”
Bull v. United Parcel Serv., Inc., 665 F.3d 68, 73 (3d Cir.
2012) (citation omitted). In Brewer, the Court of Appeals stated
40
that “[n]o unfavorable inference arises when the circumstances
indicate that the document or article in question has been lost
or accidentally destroyed.” Brewer v. Quaker State Oil Refining
Corp., 72 F.3d 326, 334 (3d Cir. 1995). In Bull, the Court
similarly observed that “a finding of bad faith is pivotal to a
spoliation determination.” Bull, 665 F.3d at 79.
In the present action, Plaintiffs are unable to identify
specific documents which have not been produced and unable to
establish bad faith necessary to support a claim for spoliation.
The parties agreed at oral argument that Plaintiffs’ claim for
spoliation is limited to inventory records at the Mt. Laurel
warehouse because Defendants produced inventory records related
to the Connecticut and Mechanicsburg warehouses. However,
Plaintiffs have not shown that Cardo maintained the inventory
records at the Mt. Laurel warehouse that Plaintiffs claim were
withheld or destroyed. Further, Defendants note that they never
relied on inventory records in alleging theft by Adami because
the inventory records would not prove or disprove a series of
thefts over time. Because Plaintiffs have not identified any
documents not maintained or destroyed in relation to the alleged
theft at the Mt. Laurel warehouses or any evidence of bad faith,
the Court finds that Plaintiffs have not established sufficient
grounds for spoliation.
41
Turning to the merits of Defendants’ counter-claim for
conversion, the Court concludes that the evidence in the record
supports a claim for conversion against Adami. “The elements of
common law conversion under New Jersey law are (1) the existence
of property, (2) the right to immediate possession thereof
belonging to plaintiff, and (3) the wrongful interference with
that right by defendant.” Corestar Int’l Pte. Ltd. v. LPB
Commc’ns, Inc., 513 F. Supp. 2d 107, 127 (D.N.J. 2007). Adami
admitted to Cardo management that he stole aluminum coil from
Cardo warehouses in Mechanicsburg and Mt. Laurel.21 He also
testified that he participated in a scheme with Arce to receive
cash for scrapped aluminum coil following a fire at the Cardo
warehouse in Berlin, Connecticut.22 It is undisputed that
21
Plaintiffs argue that testimony by Lucas that Adami admitted
to stealing aluminum coil is inadmissible hearsay because Lucas
is not an opposing party. Plaintiffs’ opposition states, “Please
note that Mike Lucas is not a party in this case and therefore
he is not testifying about ‘opposing party statement’ that would
make his testimony ‘not hearsay’ under Fed. R. Evid. 801(d)(2).”
Plaintiffs clearly misunderstand Rule 801(d)(2). Rule 801(d)(2)
excludes from the definition of hearsay a “statement . . .
offered against an opposing party” that “was made by the party
in an individual or representative capacity.” Fed. R. Evid.
801(d)(2)(A). There is no question here that Lucas’ testimony
about Adami’s admission to stealing coil is a statement offered
against an opposing party that was made by the party.
22
Plaintiffs assert that Christopher Cardillo, Sr., testified
that Cardo’s insurance claim following the fire at the
Connecticut warehouse did not include the loss of coil. However,
documents obtained from Harleysville Insurance Company prove
that Cardo did submit an insurance claim for the damaged coil
and that the coil was not scrapped immediately after the fire as
Defendants contend. Although the insurance documents undermine
42
aluminum coil existed at the three Cardo warehouses, that
Defendants had the right to immediate possession thereof, and
Adami, by his own admission, stole aluminum coil and/or
participated in a scheme to scrap aluminum coil and retain the
proceeds. The Court finds that the lack of inventory records for
aluminum coil at most presents an issue of material fact for the
jury regarding damages.23
4. Conspiracy
Plaintiffs argue that Defendants’ counter-claim against
Adami for conspiracy must fail because conspiracy requires at
least two defendants and Adami is the only counter-claim
defendant. Plaintiffs also argue that Defendants’ conspiracy
claim fails to the extent Defendants’ claims for conversion,
fraud, and tortious interference fail. Defendants respond that
not all members of a conspiracy need to be named as defendants
Cardillo’s credibility, when viewed most favorably to
Defendants, these documents support Defendants’ contention that
Cardo intended to scrap the damaged aluminum. The insurance
claim report states, “The aluminum coil stock my [sic] be
salvageable for its weight as scrap, however the amount of stock
available and the cost to scrap the stock exceeds the amount of
the insured’s losses which will not be paid due to the policy
limit.” (Pl. Supp. Ex. 3 [Docket Item 108-3.])
23
The Court finds no reason to address Plaintiffs’ argument that
a memo prepared by Mike Lucas entitled “The Fred Affair” is
inadmissible. The Court has not relied on this document in its
decision today, and Defendants have not had an opportunity to
explain how and when the memo was created.
43
to establish liability for civil conspiracy and the evidence in
the record supports such a claim.
It is clear in the criminal context that alleged coconspirators need not be joined in the same action. See United
States v. Obialo, 23 F.3d 69, 72 (3d Cir. 1994) (“The failure of
the government to be able to name and personally identify the
other conspirator is not fatal to a conspiracy conviction.”).
Courts have applied this same rule to civil conspiracy claims.
See US Investigations Servs., LLC v. Callihan, Civ. 11-0355,
2012 WL 933069, at *2 (W.D. Pa. Mar. 19, 2012) (“In order for
one member of a civil conspiracy to be liable, not all members
of the conspiracy need be named as defendants or joined as
defendants.”); Stillwagon v. Innsbrook Golf & Marina, LLC, Civ.
11-1338, 2013 WL 1180312, at *13 (W.D. Pa. Mar. 20, 2013)
(same). Plaintiffs have failed to identify any case law in
support of its argument that a claim for civil conspiracy
requires that all members of the alleged conspiracy be joined as
parties. Moreover, the only case cited by Plaintiffs is of
questionable relevance. Plaintiffs provide only a quotation from
Farris v. Cnty. of Camden, 61 F. Supp. 2d 307 (D.N.J. 1999), and
emphasize the court’s use of the plural, “defendants,” in its
discussion of the elements of a civil conspiracy claim. Farris,
61 F. Supp. 2d at 330 (“Thus, the conspiracy is not the gravamen
of the charge, but merely a matter of aggravation, enabling the
44
plaintiff to recover against all the defendants as joint
tortfeasors. The actionable element is the tort which the
defendants agreed to perpetrate and which they actually
committed . . . . A conspiracy is not actionable absent an
independent wrong[.]”) (internal alterations in original).
Nothing in this language requires all defendants to be joined in
the action. Therefore, the Court will deny Plaintiffs’ motion
for summary judgment on Defendants’ counter-claim for conspiracy
against Adami.24
5. Tortious Interference with Contractual Relations
Plaintiffs assert that Defendants’ counter-claim for
tortious interference with contractual relations must fail
because Defendants are unable to show damages. Plaintiffs
contend that Defendants’ tortious interference claim is based on
Adami’s work for a “blown-in insulation” company owned by Arce
and Cardo has admitted that it has never been in the blown-in
insulation business. Defendants respond that damages need not be
proven to an exact amount and Defendants’ have sufficiently
shown harm in the loss of potential customers.
Under New Jersey law in order to bring a claim of tortious
interference with a prospective or existing economic
24
Because the Court finds sufficient evidence in the record to
support claims for fraud, conversion, and tortious interference
against Adami, Plaintiffs’ argument that there is no underlying
wrong is without merit.
45
relationship, a plaintiff must show: (1) a plaintiff’s existing
or reasonable expectation of economic benefit or advantage; (2)
the defendant’s knowledge of that expectancy; (3) the
defendant’s wrongful, intentional interference with that
expectancy; (4) the reasonable probability that the plaintiff
would have received the anticipated economic benefit in the
absence of interference; and (5) damages resulting from the
defendant’s interference. Lightning Lube, Inc. v. Witco Corp., 4
F.3d 1153, 1167 (3d Cir. 1993) (citing Fineman v. Armstrong
World Indus., Inc., 980 F.2d 171, 186 (3d Cir. 1992); Printing
Mart–Morristown v. Sharp Elecs. Corp., 563 A.2d 31, 37 (N.J.
1989)). “New Jersey law requires that a plaintiff alleging
tortious interference with existing or prospective advantage
present proof that but for the acts of the defendant, the
plaintiff ‘would have received the anticipated economic
benefits.’” Id. at 1168 (quoting Printing Mart–Morristown, 563
A.2d at 37).
There is insufficient evidence in the present record, even
when viewed most favorably to Defendants, of a reasonable
probability of anticipated economic benefit and damages
resulting from Adami’s alleged interference. Defendants identify
only one occasion on which Adami stated that he accepted a
referral from Arce because Adami understood that Arce was not
allowed to be involved in the window business. Adami testified
46
definitively, “I don’t do windows and doors for Rod Arce or
anybody, for that matter.” (Adami Dep. 428:19-21.) Defendants
provide no other evidence to support its contention that
“Adami’s assistance to Arce in evading his non-compete
restrictions caused harm to Cardo in its loss of customers,
potential customers and goodwill in the market.” (Def. Opp. at
12.) Defendants need not specify an exact amount of damages, but
to prevail on a claim for tortious interference, Defendants must
do more than identify a single occasion on which Adami received
a referral from Arce, conduct which may not even violate Arce’s
non-compete agreement since Arce apparently did not perform the
work or derive indirect benefit from the work. Therefore, the
Court will grant Plaintiffs’ motion for summary judgment as to
Defendants’ counter-claim for tortious interference against
Adami.
6. Conclusion
For the reasons discussed above, the Court will grant in
part and deny in part Plaintiffs’ motion for summary judgment.
The Court will grant Plaintiffs’ motion as to Defendants’
counter-claim for tortious interference with contractual
relations against Adami, but deny Plaintiffs’ motion as to
Defendants’ counter-claims for fraud, conversion, and conspiracy
against Adami.
47
V.
CONCLUSION
In light of the foregoing, the Court will grant in part,
deny in part, and defer in part Defendants’ motion for summary
judgment. The Court will also grant in part and deny in part
Plaintiffs’ motion for summary judgment. An accompanying Order
will be entered.
June 10, 2014
Date
s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
48
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