Court Opinion

ID: 9862526
Source: CourtListenerOpinion
Date Created: 2023-09-25 01:17:57.774569+00
Date Added: 2024-06-11T11:25:43.323509
License: Public Domain

ZAZZALI, J.,
dissenting.
Because I believe the majority applies the wrong standard in evaluating Silvestri’s satisfaction contract for employment, I respectfully dissent. In my opinion, application of an objective standard is appropriate based on both the subject matter and the language of the contract. Applying an objective standard helps to *127ensure that the employee is not exposed to the risk of forfeiture, properly places on the drafter of the employment agreement the burden of articulating effectively when a subjective standard should apply, and mitigates the problems of proof inherent in attempting to show an employer’s bad faith. An objective standard also is consistent with our ruling in Fitzmaurice v. Van Vlaanderen Mach. Co., 57 N.J. 447, 273 A.2d 561 (1971). Finally, even if a subjective standard is applied in this appeal, I believe that we should remand for a jury trial on the issue of the genuineness of Optus’s dissatisfaction.
As a preliminary matter, I note that “[t]he fact that a contract contains a general satisfaction clause, without more, does not mandate the application of a subjective standard.” Hutton v. Monograms Plus, Inc., 78 Ohio App.3d 176, 604 N.E.2d 200, 205 (1992). By definition, almost all satisfaction contracts condition performance on the obligor’s “satisfaction.” Mere use of that term should not cause a court to embark reflexively on a narrow inquiry into the genuineness of an obligor’s dissatisfaction without considering whether a further inquiry into the reasonableness of that dissatisfaction also is required.
The Second Restatement of Contracts expresses a clear preference for courts to apply whenever practicable a reasonableness standard when interpreting satisfaction contracts. It states:
When it is a condition of an obligor’s duty that he be satisfied with respect to the obligee’s performance ... and it is practicable to determine whether a reasonable person in the position of the obligor would be satisfied, an interpretation is preferred under which the condition occurs if such a reasonable person in the position of the obligor would be satisfied.
[Restatement (Second) of Contracts § 228 (1981).]
Moreover, when an “obligor would subject the obligee’s right to compensation to his own idiosyncracies he must use clear language.” Id. at cmt. b. See also Muka v. Estate of Muka, 164 Ill.App.3d 223, 115 Ill.Dec. 262, 517 N.E.2d 673, 678 (1987) (citation omitted) (“[Cjourts generally prefer a reasonable man standard over a subjective standard when it is unclear whether subjective satisfaction is reserved.”). I would argue both that the *128contract at issue in this appeal requires a performance by Silvestri that is amenable to objective assessment and that the language of that contract does not foreclose an inquiry into the reasonableness of Optus’s dissatisfaction with that performance. Accordingly, I believe that the majority unjustifiably departs from application of the objective standard.
Silvestri’s responsibilities under the contract included “supervision of the support services staff, responsibility for communication with resellers of the Optus computer software to end-users, and coordination of ongoing training for support staff and resellers of the company’s products....” A jury can evaluate his performance of those duties based on any number of relevant objective indicia including, but not limited to, call wait times, the number of misdirected calls, the number of repeat callers, the amount of time spent responding to customers, the amount of time taken and the expense incurred in training support staff, and complaints or recommendations received relative to his performance. Moreover, the language of his contract simply states that Silvestri may be terminated and his salary forfeited on his “failure or refusal to faithfully, diligently, or completely perform his duties hereunder to the satisfaction of the Company____” Optus did not commit the decision to terminate Silvestri to its sole and absolute discretion, as the plain terms of many satisfaction contracts do and as this contract might have done. An objective standard of reasonableness is therefore appropriate.
More generally, I believe that the better rule is to extend a preference for the objective standard to satisfaction clauses in employment contracts whenever the subject matter or the language of the contract permits its application. By requiring an employer to be reasonable in its exercise of discretion under the satisfaction clause, an employee .is better able to anticipate whether his or her performance will justify termination under the contract. Application of such a standard thereby reduces the risk of forfeiture by the employee. As Chief Judge Posner has noted, applying an objective standard in the satisfaction contract context *129indulges the sensible “presumption that the performing party would not have wanted to put himself at the mercy of the paying party’s whim____” Morin Bldg. Prods. Co., Inc. v. Baystone Constr., Inc., 717 F.2d 413, 415 (7th Cir.1983). Accordingly, that presumption should be overcome only “when the nature of the performance contracted for is such that there are no objective standards to guide the court.” Ibid.
An objective standard also is appropriate when, as in this case, preparation of the satisfaction contract is exclusively within the employer’s control. A presumption that the objective standard applies properly places on the drafter of the employment agreement the burden of explicitly invoking application of a subjective standard. See In re Miller, 90 N.J. 210, 221, 447 A.2d 549 (1982) (‘Where an ambiguity appears in a written agreement, the writing is to be strictly construed against the draftsman.”) (citation omitted); Medivox Prods., Inc. v. Hoffmann-LaRoche, Inc., 107 N.J.Super. 47, 61, 256 A.2d 803 (Law Div.1969) (“Performance to the sole and final satisfaction of another is not readily implied in the absence of plain language.”).
The objective standard also mitigates the problems of proof that inevitably accompany a plaintiffs efforts to show an employer’s bad faith. Experience counsels that “direct evidence is seldom attainable when seeking to probe an employer’s mind to determine the motivating cause of his actions.” N.L.R.B. v. Bird Mach. Co., 161 F.2d 589, 592 (1st Cir.1947). As one commentator has noted, “the plaintiff-employee in a satisfaction employment contract suit is put in the difficult position of having to prove that the employer’s ‘mental state’ was such that the employer was actually not dissatisfied with the employer’s performance or behavior.” Carey A. DeWitt, Satisfaction Employment Contracts, 1992 Det. C.L.Rev. 827, 836. Stated simply, it is virtually impossible for an employee to disprove the “genuineness” of an employer’s reasons for termination when a subjective standard is applied.
The majority also understates our past willingness to extend an objective standard to satisfaction clauses contained in contracts for *130employment. In Fitzmaurice, supra, cited by the majority, we held that it was proper for the jury to decide whether the employer “had a reasonable basis for dissatisfaction with the plaintiffs performance.” 57 N.J. at 450, 273 A.2d 561. Fitzmaurice involved a suit for breach of a contract that conditioned a management consultant’s continued employment on his employer finding that his work was “profitable.” The majority distinguishes Fitzmaurice on the ground that our decision in that appeal rested on the parties’ use of the term “profitable,” rather than “satisfactory,” and suggests that in Fitzmaurice we inferred from that choice of language the parties’ “intention to resort to an objectively measurable valuation.” Ante at 125, 814 A.2d at 608. In Fitzmaurice, however, we recognized that “[t]he term profit in the [contract] was interpreted as synonymous with benefit,” and that “the parties frequently indicated throughout the trial that the question of dollar profit was irrelevant.” Fitzmaurice, supra, 57 N.J. at 449, 273 A.2d 561. Thus, the fact that the term “profitable” was at issue in Fitzmaurice did not result in the consideration of factors any less subjective than those presented here.
Finally, even if the trial court were to apply a subjective standard, the genuineness of Optus’s dissatisfaction with Silvestri’s performance constitutes an issue of material fact sufficient to defeat summary judgment. Brill v. Guardian Life Ins. Co., 142 N.J. 520, 523, 666 A.2d 146 (1995). Viewing the competent evidence presented in the light most favorable to the non-moving party, particularly the conflicting certifications submitted by Avellino and Silvestri, a rational factfinder could find that Optus’s dissatisfaction with Silvestri’s performance was not genuine. Ibid. Even so, the myriad of reasons set forth above support an inquiry under the objective, not the subjective standard.
In sum, for all the foregoing reasons and as a matter of sound contract law, I believe that the preferable disposition is to remand to the trial court so that the jury may address whether a reasonable employer in the position of Optus Software would have been satisfied by Silvestri’s performance under the contract. More*131over, because of the potential for unfairness inherent in the subjective standard, and in order to provide bright-line direction for the benefit of employers, I would limit future application of the subjective standard to satisfaction contracts for employment to those instances when the clear and explicit language of the contract requires its use or, in the absence of such language, when the subject matter of the contract is wholly unamenable to objective evaluation.
Satisfaction contracts, evaluated under an objective standard of reasonableness, sensibly and fairly position the employee midway on the legal continuum between “at will” and “for cause” employment. Although the majority makes well-intentioned efforts to distinguish satisfaction contracts from relationships of employment-at-will, Ante at 123-24, 814 A.2d at 607-08, for all practical purposes that distinction cannot be maintained when the propriety of an employer’s dissatisfaction becomes a question of subjective “genuineness.” To apply such a standard is to create, if not employees-at-will, then employees-at-whim.
Justice LONG joins in this opinion.
For reversal and remandment — Chief Justice PORITZ and Justices COLEMAN, VERNIERO, LaVECCHIA and ALBIN— 5.
Dissenting — Justices LONG and ZAZZALI — 2.