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Clowes v. Terminix International Inc.

Decided: March 21, 1988.


On certification to the Superior Court, Appellate Division.

For affirmance -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None. The opinion of the Court was delivered by Clifford, J.


[109 NJ Page 577] The principal issue posed by this appeal is whether alcoholism is to be deemed a handicap under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -42 (the Law). The Director of the Division on Civil Rights (Director) held that it is, that the employer in this case had discharged complainant in violation of the Law, and that damages should be awarded. The Appellate

Division, in an unreported opinion, did not reach the question of whether alcoholism is a handicap under the Law, because it found insufficient support in the record for the Director's conclusion that the proffered reasons for complainant's discharge were pretextual. It therefore dismissed the complaint. Although we conclude that alcoholism is a handicap under the Law, we affirm the judgment below because complainant failed to establish a prima facie case of unlawful discrimination.


In Part III of this opinion we address the Appellate Division's rejection of the Director's conclusions, which implicates the question of the appropriate standard to be used by an appellate court in reviewing the decisions of an administrative agency. Although we break no new ground in this standard-of-review area but rather adhere closely to well-established principles of law, we nevertheless perceive the issue of sufficient importance to justify the unusually detailed recitation of facts that follows.

The complainant, Robert W. Clowes, Sr., was hired by respondent, Terminix International, Inc., as a pest control salesman on July 16, 1981. His employment duties included inspecting properties for pests (e.g., roaches and the like), instructing property owners on preventive measures, prescribing a course of treatment to eliminate pests, and attempting to secure a contract with the property owners for that treatment.

At the time he was hired, Clowes had had about thirty-five years of sales experience, most of which involved the sale of business machines. According to respondent's regional manager Terminix had high expectations for Clowes because of his prior experience.

Complainant was one of two pest control salesmen at respondent's Trenton branch. The second salesman, hired at about the same time as Clowes, was fired by Terminix in November 1981 because of his poor sales productivity. Terminix also employed four termite control salesmen at the Trenton branch.

Of those four, one was discharged in November 1981, and a second was discharged in June 1982. Both also were terminated because of their poor sales productivity.

At the hearing before the Administrative Law Judge (the ALJ), respondent presented the testimony of James Toney, its regional manager for the Philadelphia region (including the Trenton branch), and Ron Stegall, the former manager of the Trenton branch. Both witnesses testified that Terminix had definite goals for its salesmen. As a pest control salesman, Clowes was expected to make ten to twelve calls daily. Some of those calls were based on leads -- inquiries received by the branch from potential customers -- and others were creative sales, based on the salesman's independent efforts to create sales. The leads were referred to the salesmen by the branch on a territorial basis. Each lead was expected to generate three additional contacts and two additional sales. Each pest control salesman was expected to present eight proposals daily. A written proposal details the services to be provided by Terminix and the cost of those services. (Termite control salesmen, on the other hand, were expected to put out only four proposals per day, because they were required to prepare detailed graphs in connection with each such proposal.) Once the proposal was accepted and signed by the customer, it became the contract for services between the parties. Each salesman was expected to close -- i.e., reach a contract on -- seventy-five percent of his leads. Toney testified that respondent communicated these guidelines to all of its sales force, although Clowes denied ever having been told about such guidelines or requirements.

The salesmen worked on a commission basis. During the first ninety days of their employment, their draws were guaranteed, and no deficit was posted against their commissions. After that initial period the salesmen worked on a commission basis of fifteen percent, with a monthly draw against commissions. Once overhead, benefits, and allowances were included,

a salesman needed to produce between $7,500 and $8,000 in sales monthly in order for Terminix to make a profit.

Toney and Stegall used several tools to evaluate the salesmen in their region and branch respectively. First, they used the daily sales management report, prepared in each branch based on the daily reports submitted by the salesmen. That report detailed the number of proposals put forward, the number of sales made, and the dollar amounts produced by those sales on both a daily and cumulative monthly basis.

Second, they used a sales ladder, ranking all the salesmen within the company. The sales ladder recorded both the services actually performed for the customer, and the raw sales, that is, those sales for which the services had not been completed.

Third, they used the commission reports, which detailed the commissions paid to the salesman on a monthly and quarterly basis.

Fourth, they used the daily sales reports prepared by the salesmen. Those reports recorded the salesman's daily activities, including the number of contacts made with customers, the number of proposals made, any follow-up, and the salesman's general organization of his day.

Finally, the branch manager worked directly with salesmen to improve their sales ability. In addition, both Toney, the regional manager, and Howard Strelsin, the regional sales manager, visited the branches to review the salesmen's performance. Toney testified that he would communicate with each branch in his region at least every other day, and that he and Strelsin evaluated each salesman's performance on a weekly basis.

Toney first noticed problems with Clowes's performance in August 1981, within a month after complainant was hired. He discussed with Stegall the fact that Clowes's lead closure rate was below respondent's expected closure rate of seventy-five percent, and that Clowes's creative sales were even lower. Toney instructed Stegall to spend more time with Clowes in

order to improve his performance. There is no indication in the record that Clowes was made aware at that time that his sales performance was unsatisfactory.

In mid-November 1981 Toney and Stegall decided that the second pest control salesman had to be discharged because of his poor sales productivity. Stegall testified that he told complainant at that time that his lead closure rate would have to improve, and that he would have to make more creative calls. In contrast, Clowes testified that Stegall never told him that problems had been perceived with his sales performance. He specifically denied ever being told that he was not making enough creative calls, or that he was not closing on enough leads.

According to Toney and Stegall, their decision to terminate Clowes was made sometime during the period between mid-November and early December 1981. That decision was reached after they had reviewed the monthly reports for August, September, and October. As branch manager, Stegall was able to delay the actual discharge, because he was still working with Clowes in an attempt to improve his productivity. Stegall was accompanying Clowes on visits to accounts of any size to assist in closing the deal. As the Appellate Division noted, two sales made with Stegall's assistance constituted almost one half of Clowes's total sales for the month of December.

Toney and Stegall discussed Clowes's poor performance and possible discharge on several occasions in December. They decided that Strelsin, the regional sales manager, should ride with Clowes to make an independent evaluation of his performance. Strelsin was not told prior to his evaluation of Clowes that a decision had already been reached to terminate the complainant. Strelsin accompanied Clowes on December 17, 1981, and subsequently filed a written report, which stated in pertinent part that

Bob Clowes is another story, however. He doesn't seem to have any direction, and there are obvious shortcomings in his organization as well as his knowledge of the general nuts and bolts of the business. He has the sales ability. He just

needs someone to point him in the right direction. I feel the time spent with him was productive, and I will be monitoring his improvement.

Both Toney and Stegall testified that Strelsin's evaluation confirmed their decision to discharge Clowes.

That decision allegedly was made by mid-December at the latest. Complainant was not actually fired until February 1982, after his release from an alcohol rehabilitation facility. In explaining the delay Toney testified that it was a "cardinal rule" that it is the branch manager's responsibility to terminate employees. Simply stated, it is Terminix's position that during the relevant period there was no branch manager in Trenton with the authority to fire Clowes. Stegall, the Trenton branch manager at the time Clowes was hired, applied for and received a transfer to a Terminix branch in Tennessee. Although Stegall's last official day in the Trenton branch was December 31, 1981, he took the latter part of the month as vacation in order to prepare for his move. The Trenton branch manager position was offered to Dave Ralphs, who was at that time employed by Terminix at an Oklahoma branch. Ralphs accepted the job on January 8, 1982, but was unable to report to the branch as manager until February 1, 1982. Toney testified that he told Ralphs on January 8 that Ralphs would have to terminate Clowes as soon as he reported to the Trenton branch. During the month of January, a management trainee, Larry Bruce, was the interim branch manager.

On Friday, January 8, 1982, Clowes "collapsed" at a regional sales meeting, which also was attended by Ralphs and Toney. Complainant told Ralphs that he was undergoing treatment for vertigo. Clowes was hospitalized that day, was discharged from the hospital on January 11, and returned to work on January 12. Complainant testified that his treating physician made no diagnosis.

On January 18, without prior notice to Terminix, Clowes admitted himself to Princeton House, a division of the Princeton Medical Center for psychiatric and alcohol rehabilitation. That same day Clowes's wife telephoned Larry Bruce, the interim

branch manager, and told him that her husband had been hospitalized. Mrs. Clowes also spoke with a secretary at Terminix to determine whether treatment for alcoholism was covered under the company's insurance policy. Not knowing the answer, the secretary referred Mrs. Clowes to Terminix's insurance carrier in Tennessee. Mrs. Clowes also testified that during the first week of her husband's hospitalization, she spoke with someone named "Jack" at Terminix, and told him that her husband had a drinking problem.

On January 25, 1982, Clowes called Bruce with the information that his condition had been diagnosed as an anxiety disorder and that his prognosis was good. Complainant testified that at that time, he had not yet admitted to himself that he was an alcoholic.

On February 1, Clowes had a second phone conversation with Bruce, in which Bruce indicated that Clowes had been given an extended leave of absence by his employer. On February 4, Clowes spoke with the new branch manager, Ralphs, and told Ralphs that he was going to be released from the hospital on February 7. Ralphs told Clowes to get a note from his doctor stating that Clowes was medically able to return to work, and to report for work early on the morning of February 8.

When Clowes reported on that date, Ralphs told him that the decision had been made to fire him, based on Clowes's continuing poor sales performance. Clowes told Ralphs that he believed that the real reason for his discharge was the fact that he had been hospitalized for alcoholism. According to Clowes, Ralphs told him that "the company had to protect its interests, and they couldn't take a chance on [Clowes] having a relapse."

Both Toney and Stegall denied at the hearing that they had been informed, prior to Clowes's discharge, that he was an alcoholic. Toney further testified that Clowes's ...

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