Metro Commercial Management Services, Inc. v. Van Istendal, 457 N.J. Super. 66 (App. Div. 2018). This opinion, issued today, is the first published opinion authored by Judge Firko. It involves an appeal from a decision of the Chancery Division that granted summary judgment dismissing the counterclaim of defendant, a shareholder who had been employed by plaintiff as an accountant for thirteen years, that invoked the oppressed minority shareholder statute, N.J.S.A. 14A:12-7(1)(c). The Chancery Division held, and the Appellate Division agreed, that because that counterclaim was premised on allegedly wrongful plaintiff’s termination of defendant’s employment, but her employment was concededly at will and could thus be terminated at any time, defendant had no reasonable expectation of continued employment that could support an oppression claim.
Since this appeal was from a summary judgment ruling, Judge Firko applied the de novo standard of review. She observed that “there is no statute, case law, or rule in New Jersey that addresses whether an employee’s at-will status is a relevant consideration in analyzing whether an employee has a reasonable expectation of continued employment.”
Defendant did not dispute that she was an employee at will. Instead, she urged that the courts “consider the potential interplay between at-will status and a minority shareholder’s “reasonable” expectations of continued employment. She asserts that it was error for the court to conclude she was legitimately terminated” after thirteen years of employment with plaintiff.
Judge Firko rightly recognized that termination of a minority shareholder’s employment may constitute oppression under the statute “because a person who acquires a minority share in a closely-held corporation often does so “but for the assurance of employment in the business in a managerial position.” Such a person has a reasonable expectation of long-term employment, and when that expectation is defeated, oppression can be found.
But here, a Shareholders’ Agreement that bound defendant and others contained a provision in which “[e]ach Shareholder acknowledge[d] that she is an employee at[-]will and thus can be terminated by the Corporation at any time for any reason.” Defendant had stipulated, in a Consent Order that resolved prior litigation between the parties, that “the parties’ Shareholder Agreement was valid and states that she contracted to be an employee at-will.”
Given the language of the Shareholders’ Agreement, reaffirmed in the Consent Order, Judge Firko concluded that the Chancery Division correctly ruled that defendant had no reasonable expectation of continued employment that could support an oppression claim. Defendant had cited cases from other jurisdictions, but they were unpublished, and Judge Firko declined to discuss them, citing Rule 1:36-3. Besides, those cases did not involve employment agreements and were unpersuasive in any event.