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Miller v. Scari

January 19, 1996


Menza, J.s.c.

The opinion of the court was delivered by: Menza



Defendants move for summary judgment, contending that plaintiff's claim is barred by the entire controversy doctrine.

In 1990, plaintiff, Jeffrey Miller, applied for a McDonald's franchise and thereafter accepted McDonald's invitation to participate in the franchisee training program. Plaintiff participated in the training program from May 1991, until August 1992, during which time he worked approximately 2,700 hours at various McDonald's stores in New Jersey. His work included preparing food, landscaping, cashiering, accounting, and training other workers. In addition to the in-store training, Miller attended classes in store management and operations. Apparently, plaintiff's performance was unsatisfactory to McDonald's which terminated him from the program and refused him a franchise.

Shortly after plaintiff's termination, McDonald's, anticipating a law suit, filed an action in the U.S. District Court for the District of New Jersey seeking a declaratory judgment that 1) the plaintiff had no claim or right against it, because the plaintiff's agreements with McDonald's estopped him from asserting any claims of employment or entitlement to a franchise, and that 2) the plaintiff was not an employee of McDonald's and therefore, could not assert a claim under the New Jersey Wage and Hour Law (NJWHL) (N.J.S.A. 34:11-56a-56.25) or the New Jersey Conscientious Employee Act (CEPA) (N.J.S.A. 34:19-1-8). Plaintiff as defendant in that action asserted a four-count counterclaim against McDonald's in which he alleged violations of NJWHL, CEPA, fraud, and promissory estoppel.

The district court Judge granted McDonald's summary judgment on each count of its complaint for declaratory relief. Specifically, he found that 1) "based upon the terms of the franchise application program, and Miller's admitted understanding of the arrangement, he is estopped from denying his acceptance of those terms," and that 2) "his performance in the franchise program did not qualify him as an employee who may benefit from the protections of the NJWHL or the CEPA." Based upon his finding that Miller was not an employee of McDonald's, the court also granted summary judgment to McDonald's on Miller's first and second counterclaims, which were also based upon NJWHL and CEPA. Finally, the court concluded that the facts did not support Miller's third and fourth counterclaims for fraud and promissory estoppel, and accordingly granted McDonald's summary judgment on those counterclaims as well. The plaintiff appealed to the U.S. Court of Appeals for the Third Circuit which affirmed. Plaintiff now brings this action against the individual managers and owners of the franchises in which he had worked during the franchise training program, charging each of them with tortious interference with economic opportunity, conspiracy, violation of the New Jersey Law Against Discrimination (LAD) (N.J.S.A. 10:5-1-42), and defamation.

Each of the franchisees move for summary judgment contending that the state suit is barred by the entire controversy doctrine.

The entire controversy doctrine requires that:

to the extent possible courts must determine an entire controversy in a single judicial proceeding and that such a determination necessarily embraces not only joinder of related claims between the parties but also joinder of all persons who have a material interest in the controversy.

[ Cogdell v. Hospital Center at Orange, 116 N.J. 7, 26, 560 A.2d 1169 (1989).]

The rule not only mandates the joinder of claims and parties in state court actions, but requires the joinder of all claims and parties in a federal court action as well. In Mortgagelinq Corp. v. Commonwealth Land Title, 142 N.J. 336, 662 A.2d 536 (1995), the Court held that the entire controversy doctrine barred a plaintiff who had brought suit in a federal district court in Pennsylvania from bringing a subsequent suit in the New Jersey state courts, because the plaintiff could have joined all parties in the federal case, and that failure to do so violated the entire controversy doctrine.

The court set out the rule as follows: "a New Jersey court need not later entertain the claims against the omitted parties if jurisdiction was available in the first forum." Id. at 338.

The first question that must be decided in order to determine whether the entire controversy doctrine bars a party who has litigated a claim in federal court from bringing a similar claim against a party in a subsequent state action, is whether the federal court in the action brought ...

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