The opinion of the court was delivered by: Stein, J.
On appeal from the Superior Court, Law Division, Somerset County.
This is an interlocutory appeal arising from a civil action for false arrest, invasion of privacy, malicious prosecution, false imprisonment, and other causes of action against several defendants including thirteen employees of the Somerset County Prosecutor's Office (SCPO). We must determine whether pursuant to the relevant provisions of the Tort Claims Act (TCA), N.J.S.A. 59:1-1 to 12-3, the State of New Jersey is vicariously liable for the actions of the SCPO's employees and whether the State is required to indemnify and defend them. The trial court held that the State was neither vicariously liable for the SCPO's employees' conduct nor required to defend and indemnify them. The Appellate Division denied appellants' motions for interlocutory review.
We reverse. We hold that the State may be held vicariously liable for the tortious conduct of the SCPO's prosecutors and investigative subordinates during the investigation, arrest and prosecution of Isaac Wright and that the State may be required to indemnify and defend those prosecutors and subordinates in respect of the claims alleged by Wright in this litigation.
In 1989, the SCPO, along with other law enforcement agencies, conducted a lengthy investigation concerning plaintiff Isaac Wright's leadership of a drug distribution network extending throughout the counties of Somerset, Middlesex, and Passaic. That investigation culminated in July 1989, when Wright, as well as several of his co-conspirators, were arrested for numerous violations of the narcotics laws. In August 1989, Wright was indicted and charged with leading a narcotics trafficking network, contrary to N.J.S.A. 2C:35-3; possession of cocaine with intent to distribute, contrary to N.J.S.A. 2C:35- 5a(1), N.J.S.A. 2C:35-5b(1), and N.J.S.A. 2C:35-5b(2); maintaining or operating a narcotics production facility, contrary to N.J.S.A. 2C:35-4; and conspiracy to distribute cocaine, contrary to N.J.S.A. 2C:35-5a(1) and N.J.S.A. 2C:5-2. State v. Wright, 143 N.J. 580, 581 (1996). In April 1991, following a trial, the jury found Wright guilty of all charges alleged against him in the indictment. Ibid. The trial court sentenced Wright to an aggregate term of life imprisonment with a thirty-year period of parole ineligibility. Ibid.
In July 1991, Wright and his wife, Adriel McNair, filed a lawsuit alleging false arrest, invasion of privacy, malicious prosecution, false imprisonment, assault and battery, loss of consortium, and other causes of action. The complaint also included allegations that defendants beat Wright at the time of his arrest, suborned perjury, and illegally searched his prison cell. The named defendants included, among others, Somerset County and its prosecutor's office, Middlesex County and its prosecutor's office, Passaic County and its prosecutor's office, Franklin Township and its police department, the City of Passaic and its police department, twenty past and present employees of prosecutors' offices, three municipal police officers, one municipal prosecutor, and the State of New Jersey. Wright alleged that former Somerset County Prosecutor Nicholas L. Bissell, Jr., and several employees of the SCPO including individual appellants Veronica Nolan (Assistant Prosecutor), Stuart Buckman (Detective), and Robert Smith (Deputy Chief of Detectives), among others, acted to effect his false arrest and to invade his privacy.
In 1995, in an unreported opinion, the Appellate Division affirmed all of Wright's convictions except the conviction for leading a narcotics trafficking network. See Wright, supra, 143 N.J. at 582. The Appellate Division determined that the jury instruction regarding Wright's drug-kingpin status was inadequate. Ibid. In 1996, this Court affirmed the Appellate Division's decision. Ibid. Wright subsequently filed a motion for post-conviction relief seeking to have his remaining convictions reversed, alleging prosecutorial and police misconduct throughout the investigation, arrest, grand jury proceedings, and trial. In December 1997, the Law Division reversed Wright's remaining convictions after an evidentiary hearing on Wright's petition for post-conviction relief. The court found that high-ranking Somerset County law-enforcement officials concealed evidence of the illegal search for and seizure of cocaine used at Wright's trial. The court also found that former Somerset County Prosecutor Bissell knew about, but concealed, the terms of a favorable plea agreement with one of the co-defendants who was a State's witness at Wright's trial. Following the court's decision, the indictment against Wright was dismissed without prejudice.
Plaintiffs' initial civil complaint joined as defendants all of the appellants in this appeal with the exception of Veronica Nolan and the State of New Jersey, who both were joined in the second amended complaint. However, the second amended complaint was not served with a summons on the Attorney General as required by Rule 4:4-4(a)(7) for the institution of a civil lawsuit against the State. The State subsequently was joined as a defendant with the filing of plaintiffs' third amended complaint in August 1998, and the service of a summons on the State in November 1998.
In February 1997, prior to the State's joinder, appellant Somerset County sent the Attorney General a letter requesting representation and indemnification on behalf of the SCPO's employees whom Somerset County was then representing. The Attorney General declined Somerset County's request. In September and October of 1998, appellants Veronica Nolan, Stuart Buckman, and Robert Smith, as well as other defendants in the action including both prosecutorial employees and municipal police officers, filed cross-claims demanding that the State provide them with indemnification and legal representation, but none of those parties served the cross-claims on the State. In March 1999, the trial court ordered appellants and other cross- claiming defendants to serve their cross-claims on the State.
In a motion initially filed in February 1999, and in a supplemental motion filed in April 1999, the State moved for summary judgment dismissing plaintiffs' third amended complaint as well as all cross-claims demanding indemnification and representation. The appellants and other defendants cross-moved for summary judgment on their cross-claims against the State for vicarious liability, indemnification and defense costs.
In August 1999, the trial court issued an order holding that Somerset County was liable for defense and indemnification of the SCPO's employees. The court relied partly on an unpublished federal court opinion holding that Somerset County, and not the State, was responsible for legal fees incurred in defending a county prosecutor. The trial court held that Somerset County was collaterally estopped from seeking defense costs from the State because the same issue had been litigated in the federal court. The trial court also relied on Michaels v. State of New Jersey, 968 F. Supp. 230 (D.N.J. 1997), aff'd, 150 F.3d 257 (3d Cir. 1998) (holding that there was no authority to support finding that prosecutorial defendants are "State employees" within meaning of N.J.S.A. 59:10-1 and N.J.S.A. 59:10A-1), to conclude that the State was not required to defend and indemnify Somerset County and the SCPO employees.
The trial court did not decide the issue of vicarious liability, noting that discovery was not complete. However, the trial court indicated that its decision regarding that issue would depend on whether responsibility for the actions of SCPO employees was a function of administrative oversight, for which the county would be responsible, or a function of law enforcement duties, for which the State would be vicariously liable. Thus, the trial court granted the State's motion for summary judgment on the issue of defense and indemnification, and denied the summary judgment motions of the State as well as Somerset County and the other counter-claimants with respect to the issue of vicarious liability.
Both Somerset County and the State moved for reconsideration of the trial court's August 1999 decision. In January 2000, the trial court issued its interlocutory opinion and order responding to appellant Somerset County's reconsideration motion. The trial court denied Somerset County's request for reconsideration. In the statement of reasons attached to the order, the trial court reiterated its earlier determination that the incompleteness of discovery precluded it from deciding the vicarious liability issue. Regarding the issue of indemnification and defense costs the trial court amended the language of the August 1999 order to read as follows: "Since a prosecutor's office is not a public entity capable of being sued, and having concluded that the State is not obligated for these costs, payment of these costs must be resolved between the county and its prosecutorial employees."
In February 2000, the trial court issued its interlocutory opinion and order granting summary judgment to the State on all claims that it was vicariously liable for the acts of the county prosecutors or their employees. The trial court stated that "[w]hile the State may have supervisory powers over the county prosecutors' offices, no statute or case law directly imposed economic obligations on the State for these offices." The trial court also stated that it was "satisfied that any public entity obligation for a county prosecutor's office, including for vicarious liability for negligent acts in carrying out law enforcement duties, should not be imposed on the State." Thus, the trial court ruled in favor of the State on the issue of vicarious liability and dismissed the remaining counts of the third amended complaint.
According to the State, Somerset County, as well as all the individual appellants, except Stuart Buckman, sought interlocutory review and reversal of the Law Division's January 2000 order. In addition, appellants Somerset County, Robert Smith, and Stuart Buckman sought interlocutory review and reversal of the Law Division's February 2000 order granting the State summary judgment with respect to vicarious liability for the employees of the SCPO. Appellant Veronica Nolan did not seek review of that issue.
In April 2000, the Appellate Division denied interlocutory review of both orders. Each appellant, Somerset County, Veronica Nolan, Stuart Buckman, and Robert Smith, filed a motion in this Court seeking reversal of each Appellate Division order denying interlocutory review. In December 2000 we granted those motions for interlocutory review.
A threshold issue in this appeal is whether the State should be held vicariously liable for the alleged tortious conduct of the SCPO's employees during the investigation, arrest, and prosecution of Isaac Wright. "The New Jersey Tort Claims Act, N.J.S.A. 59:1-1, et seq., effective July 1, 1972, is dispositive, with respect to causes of action in tort accruing on and after that date, of the nature, extent and scope of state and local tort liability and the procedural requisites for prosecuting tort claims against governmental agencies." Pressler, Current N.J. Court Rules, comment 17.1 on R. 4:5-4 (2001). Thus, this case is governed by the TCA. N.J.S.A. 59:1-2. The provision relevant to the issue of the vicarious liability of a public entity provides: "A public entity is liable for injury proximately caused by an act or omission of a public employee within the scope of his employment in the same manner and to the same extent as a private individual under like circumstances." N.J.S.A. 59:2-2(a). The TCA defines "[p]ublic entity" as including "the State, and any county, municipality, district, public authority, public agency, and any other political subdivision or public body in the State." N.J.S.A. 59:1-3. It defines "[p]ublic employee" as an "employee of a public entity," and an employee as "includ[ing] an officer, employee, or servant, whether or not compensated or part-time, who is authorized to perform any act or service; provided however, that the term does not include an independent contractor." Ibid. The comment to N.J.S.A. 59:2-2(a) reads in pertinent part:
The primary source of public entity liability is contained in subsection (a) of this section. It establishes the principle of vicarious liability for all public entities for "injury proximately caused by an act or omission of a public employee within the scope of his employment" and thereby relies upon the established principles of law such as the doctrine of respondeat superior. This provision specifically adopts the general concept of vicarious liability expressed by the New Jersey Supreme Court in McAndrew v. Mularchuk, 33 N.J. 172, 162 A.2d 820 (1960). [Comment to N.J.S.A. 59:2-2.]
In McAndrew, supra, 33 N.J. at 190, we recognized that "[t]here is perhaps no doctrine more firmly imbedded in the law than the principle that liability follows tortious wrongdoing and that employers or principals, individual or corporate, are responsible for that wrongdoing when committed by agents and employees acting within the scope of the employment." We explained that "[a]ll corporate entities, governmental and otherwise, as artificial creatures accomplish their purposes through human agents." Id. at 192. In addition, we noted that "[t]he responsibility of the master or principal for the negligent acts of a servant or agent, committed while performing his delegated tasks, has always existed in this State as a matter of public policy." Id. at 191.
We also noted that "[o]ne basis for the doctrine is that it creates an incentive to be careful in the selection, instruction and supervision of such persons." Id. at 191-92. In addition, "from the standpoint of the injured third person, the master is better able to bear the burden of the losses resulting from such tortious acts by absorbing them as an incident of the operation of his enterprise." Id. at 192. Thus, we held "that where negligent [a]cts of commission form the basis of the claim against a municipal corporation, the issue of obligation to respond in damages shall be determined on general principles of [r]espondeat superior." Id. at 193.
With regard to the common-law principles of the doctrine of respondeat superior, "[i]t has long been recognized that control by the master over the servant is the essence of the master- servant relationship on which the doctrine of respondeat superior is based." New Jersey Prop. Liab. Ins. Guar. Assn. v. State, 195 N.J. Super. 4, 8 (App. Div.), certif. denied, 99 N.J. 188 (1984); see also Restatement (Second) of Agency § 220(1) (1958) ("A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other's control or right to control."). In New Jersey Prop.-Liab. Ins. Guar. Assn., supra, 195 N.J. Super. at 9 n.2, the court noted that the terms "servant" as used in the Restatement (Second) of Agency § 220 and "employee" as used in N.J.S.A. 59:1-3 can be used interchangeably.
"Under the control test, "the relation of master and servant exists whenever the employer retains the right to direct the manner in which the business shall be done, as well as the result to be accomplished, or in other words, not only what shall be done, but how it shall be done." New Jersey Prop. Liab. Ins. Guar. v. State, supra, 195 N.J. Super. at 9 (citations and internal quotation marks omitted). The first factor to explore under the control test is "the degree of control exercised by the employer over the means by which the task is accomplished." Delbridge v. Office of Pub. Defender, 238 N.J. Super. 288, 320 (Law. Div. 1989) (citations omitted). Furthermore, "[a]mong the factors our courts have considered to infer an employer's right of control over an employee (aside from direct evidence of control) are method of payment[,] who furnishes the equipment, and right of termination." New Jersey Prop. Liab. Ins. Guar. Assn. v. State, supra, 195 N.J. Super. at 14.
We next examine the constitutional and statutory scheme under which prosecutors and their subordinates operate. "The office of county prosecutor in the State of New Jersey is a constitutionally established office." Coleman v. Kaye, 87 F.3d 1491, 1500 (3d Cir. 1996), cert. denied, 519 U.S. 1084, 117 S. Ct. 754, 136 L. Ed. 2d 691 (1997). The New Jersey Constitution states that
[c]county prosecutors shall be nominated and appointed by the Governor with the advice and consent of the Senate. Their term of office shall be five years, and they shall serve until the appointment and qualification of their respective successors. [N.J. Const. Art. VII, § 2, ¶ 1.]
"The specific powers and authority of the county prosecutor are fully set forth in Title 2A of the New Jersey Revised Statutes." Coleman, supra, 87 F.3d at 1500. "Each prosecutor [is] vested with the same powers and [is] subject to the same penalties, within his county, as the attorney general shall by law be vested with or subject to . . . ." N.J.S.A. 2A:158-5.
"Similar to the county prosecutor, the New Jersey Attorney General is a constitutional officer pursuant to art. V., § 4, ¶ 3 of the New Jersey Constitution." Coleman, supra, 87 F.3d at 1500. Thus, the principal concern of the Attorney General in supervising the county prosecutors seems to be "the maintenance of an effective statewide law enforcement policy." Id. at 1501. Moreover, N.J.S.A. 2A:158-4 states that "[t]he criminal business of the State shall be prosecuted by the Attorney General and the county prosecutors." In addition, the Legislature has afforded the Attorney General the power to supersede a county prosecutor:
Whenever requested in writing by the Governor, the Attorney General shall, and whenever requested in writing by a grand jury or the board of chosen freeholders of a county or the assignment judge of the superior court for the county, the Attorney General may supersede the county prosecutor for the purpose of prosecuting all of the criminal business of the State in said county, intervene in any investigation, criminal action, or proceeding instituted by the county prosecutor, and appear for the State in any court or tribunal for the purpose of conducting such investigations, criminal actions or proceedings as shall be necessary for the protection of the rights and interests of the State.
Whenever the Attorney General shall have superseded a county prosecutor as aforesaid, the county prosecutor, the assistant county prosecutors and other members of the staff of the county prosecutor shall exercise only such powers and perform such duties as are required of them by the Attorney General. [N.J.S.A. 52:17B-106.]
Moreover, N.J.S.A. 52:17B-107a, states that "[w]henever in the opinion of the Attorney General the interests of the State will be furthered by so doing, the Attorney General may (1) supersede a county prosecutor in any investigation, criminal action or proceeding, (2) participate in any investigation, criminal action or proceeding, or (3) initiate any investigation, criminal action or proceeding." Accordingly, "the Attorney General's supersedure power appears to have been bestowed with the understanding that it was intended to ensure the proper and efficient handling of the county prosecutors' ?criminal business.'" Coleman, supra, 87 F.3d at 1501 (citing N.J.S.A. 52:17B-106).
We examined the relation between county prosecutors and the executive branch of state government in Cashen v. Spann, 66 N.J. 541, certif. denied, 423 U.S. 829, 96 S. Ct. 48, 46 L. Ed. 2d 46 (1975). Cashen involved a search of a private residence pursuant to a search warrant that was obtained on the basis of an affidavit that was "grossly erroneous in significant respects[.]" Id. at 544. "The theory upon which plaintiffs assert[ed] liability on the part of the County of Morris [was] that the prosecutor and his aides were acting . . . as agents of the county[,] which was therefore vicariously liable on principles of [r]espondeat superior." Cashen v. Spann, 125 N.J. Super. 386, 403 (App. Div. 1973), aff'd, 66 N.J. 541 (1975). The Appellate Division in Cashen held that "the prosecutor and his aides were not agents of the county, but rather the State in their actions with respect to plaintiffs." Ibid. Thus, the Appellate Division concluded that "there [was] no liability as to the county for those actions under the doctrine of [r]espondeat superior." Id. at 404. We affirmed and noted that "[w]e also agree with the Appellate Division that in the context of this case, the prosecutor and the detectives are to be considered as agents of the State and not the county." Cashen, supra, 66 N.J. at 552. We also stated:
We wish to make it clear, however, that our resolution of this issue is limited to the factual circumstances here presented. We find it appropriate to regard the defendant officials as State agents where the alleged tortious conduct arose out of the investigation of criminal activity, but we express no opinion on the question of whether the prosecutor or his detectives can be considered State or county employees for other purposes. We also leave for another day the question of whether a county may be held vicariously liable for the conduct of a prosecutor or his detectives in other circumstances. [Ibid. (citations omitted).]
Accordingly, we held that a county could not be held liable for the actions of the county prosecutor and his detectives when their tortious conduct arose out of the investigation of criminal activity. Ibid.
In Dunne v. Fireman's Fund Am. Ins. Co., 69 N.J. 244, 247 (1976), we considered the limited issue of "whether the County of Morris, or its liability insurance carrier, Fireman's Fund American Insurance, or neither [was] obligated to furnish a defense for the detectives in the Cashen suit." Id. at 245. In relevant part we explained that
[c]county prosecutors' detectives possess a hybrid status. The position has been created by the County Detectives and County Investigators Act, N.J.S.A. 2A:157-1 et seq. — the title, perhaps indicative of some legislative intent, reflects their identification with the county. The Act authorizes the prosecutor to appoint persons "to be known as county detectives, to assist the prosecutor in the detection, apprehension, arrest and conviction of offenders against the law." N.J.S.A. 2A:157- 2. The prosecutor, a State officer, selects and supervises them. The financial burdens related to the position are imposed on the county. The salary is paid by the county. N.J.S.A. 2A:157-18. . . . Further, all necessary expenses incurred by county detectives, such as costs of insurance, automobiles, and other necessities, must be paid by the county. N.J.S.A. 2A:157-19 and 2A:158-7. [Id. at 248-49.]
Further, we noted that "[r]ecognition of county control over county detectives and of [the] existence of an employer-employee relationship is not novel." Id. at 249. Thus, we concluded that
[f]rom all the foregoing it may be seen that the county-county detective relationship is that of employer-employee for certain administrative and remunerative purposes. This finding is not inconsistent with our conclusion that in preparing and executing the affidavit upon which the search warrant was based and conducting the search Dunne, Bickley and Spann were ?agents of the State.' At the same time they were also employees of and there existed an employer-employee relationship with the County. [Id. at 250-51 (footnote omitted).]
We reasoned that because the "literal" language of the insurance policy afforded coverage for the detectives despite their "hybrid status," the Fireman's Fund was "under a duty to defend the suit." Id. at 251-52. In so holding, we noted that "[n]either the plaintiff detectives nor the Fireman's Fund ha[d] sued the State, and no adjudication was made on the third party action of the County of Morris against the State." Id. at 252. Thus, we explained that we were "not passing upon what responsibility, if any, the State may have to bear the cost of the defense or satisfy any judgment that may be entered against the detectives." Ibid.
With regard to federal case law, in Coleman, supra, 87 F.3d at 1499, the Third Circuit Court of Appeals considered whether the County of Monmouth could be held vicariously liable for acts performed by the county prosecutor in his administrative capacity and unrelated to his duty to investigate criminal activity. In Coleman, the plaintiff was an employee who brought a sex discrimination action against the Monmouth County Prosecutor, the Monmouth County Prosecutor's Office and certain individuals based on the defendants' failure to promote her from investigator to sergeant or lieutenant. Id. at 1495. "The County of Monmouth [argued] that it [could not] be held accountable for Prosecutor Kaye's actions because he [was] a state official over whom the County exercise[d] no control." Id. at 1499.
The court began its analysis by noting that "[t]his is an issue of first impression, as the New Jersey Supreme Court has yet to address the specific issue of whether a county prosecutor acts as a state or county official when making personnel decisions at the county level." Ibid. The court also noted that in Dunne we had found that county prosecutors and their employees possess a "hybrid status":
A review of related authorities leads us to conclude that county prosecutors in New Jersey can be characterized as having a dual or hybrid status. It is well established that when county prosecutors execute their sworn duties to enforce the law by making use of all the tools lawfully available to them to combat crime, they act as agents of the State. On the other hand, when county prosecutors are called upon to perform administrative tasks unrelated to their strictly prosecutorial functions, such as a decision whether to promote an investigator, the county prosecutor in effect acts on behalf of the county that is the situs of his or her office. We therefore predict that the New Jersey Supreme Court, if presented with a case in this posture, would hold that county prosecutors are acting on behalf of the county when they make personnel decisions. [Ibid. (emphasis added).]
Moreover, the court's analysis included a review of the statutory and constitutional scheme relating to the position of county prosecutor. Id. at 1500-02. The court concluded that this scheme "provides county prosecutors in the State of New Jersey with a substantial degree of autonomy from the State government in matters that do not involve the enforcement of the criminal laws of the State." Id. at 1502. The court held that "[t]he decision whether to promote an investigator falls within the exclusive province of the county prosecutor," ibid., and stated that
[w]hen county prosecutors engage in classic law enforcement and investigative functions, they act as officers of the State. But where, as here, the county prosecutor decides whether an employee in his or her office is worthy of an open promotion, the county prosecutor is performing an administrative function on the local level entirely unrelated to the duties involved in criminal prosecution. [Id. at 1505-06 (emphasis added).]
Thus, the court concluded that Monmouth County could be held vicariously liable for the discriminatory acts of the prosecutor and his employees.
The holdings in Cashen and Coleman were reaffirmed in Michaels v. State, 968 F. Supp. 230, 236 (D.N.J. 1997), aff'd, 150 F.3d 257 (3d Cir. 1998), in which a nursery school teacher brought a 42 U.S.C. § 1983 action and a malicious prosecution action under New Jersey law against a former county prosecutor, three assistant county prosecutors, a county investigator, the State of New Jersey and Essex County. Relying on Cashen and Coleman the district court held that
so long as the prosecutorial defendants in this case were "investigat[ing] . . . criminal activity" or "execut[ing] their sworn duties to enforce the law by making use of all the tools lawfully available to them to combat crime," the County cannot be held vicariously liable under New Jersey law for claims arising therefrom. The State . . . concedes that the prosecutorial defendants "were executing their sworn duties to enforce the laws when they participated in the investigation [and] prosecution that form the basis of plaintiff's claims." Plaintiff's claim against the County, therefore, falls squarely within ...