On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3319-01.
Before Judges Skillman, Cuff and Lefelt.
The opinion of the court was delivered by: Cuff, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
In this appeal, we review an order granting plaintiff's motion for summary judgment and granting specific performance of the early retirement provisions of a law firm partnership agreement. We affirm.
Plaintiff Robert Borteck is a lawyer and a former capital partner at defendant Riker, Danzig, Scherer, Hyland, & Perretti LLP (Riker). After eleven and one-half years at Riker and at fifty three years of age, he withdrew from the partnership and joined Edwards & Angell, LLP (E&A) as a partner in its New Jersey office. In accordance with Riker's partnership agreement, Borteck received his share of the capital account. When the firm refused to pay him early retirement benefits, he filed an action seeking specific performance of the partnership agreement; Riker filed a counterclaim in which it asserted claims for breach of fiduciary duty, breach of the duties of loyalty and confidentiality, and tortious interference with prospective economic advantage. It also asserted a claim for breach of the partnership agreement due to Borteck's failure to provide ninety days notice of his intention to resign from the firm.
Borteck filed a motion for summary judgment on the specific performance claim; Riker filed a cross-motion. Borteck also filed a motion to quash various subpoenas served by Riker on E&A and three individuals. Judge Cramp granted Borteck's motion for summary judgment. He ruled that in light of Rules of Professional Conduct (RPC) 5.6 and interpretative caselaw, the early retirement plan established by Riker, including the ninety-day notice provision, was anti-competitive in effect and unenforceable. He said:
I think that the New Jersey cases, including our Supreme Court, have made it very clear that if there is an anticompetitive effect of any kind of a plan or any rule in a law firm that the rule or plan cannot stand. And I think that's what is happening here.
This does have anticompetitive effects. Nobody can dispute that.... There may be many good reasons for the plan. There may be nice dovetailing into 401Ks and that type of thing, but the fact of the matter is that this is not a retirement plan with an age requirement that applies to everyone. It's an age requirement that applies essentially only to those who may leave for reasons other than public service. And it seems to me clear that most people who leave law firms... go with other law firms. And that seems to me to be the effect of this agreement, despite the fact there may have been very good intentions with respect to the agreement. But it has that effect. And I understand that RPC 5.6 indicates an exception and that's an agreement concerning benefits upon retirement. I'm not convinced that that provision would deal with a retirement plan that has anticompetitive effects.
I find the same with respect to the 90-day requirement. That's anticompetitive in and of itself. There may be many good reasons why you should have a 90-day requirement, but you can't look at that kind of requirement as anything other than anticompetitive, and that's the effect of it.
The motion judge also limited the scope of the subpoenas issued by Riker. In separate orders, this court ruled that the February 22, 2002 summary judgment order is a final judgment and denied Riker's motion for leave to appeal from the orders concerning the subpoenas issued by it.
Riker has been governed by the partnership agreement at issue in the present appeal since 1989. The partnership agreement includes two provisions, Paragraph 14 and Paragraph 17, at issue in this appeal.*fn1
Paragraph 17 sets out Riker's retirement plan. Paragraph 17(A) provides that a capital partner of the firm is entitled to a share of the firm's"net worth" and that, upon withdrawal from the firm, the capital partner will be paid the value of that share over the first twelve months of such withdrawal. Borteck has received this benefit.
Paragraph 17(C) sets out the"Early Retirement Benefit Payments" due a withdrawing capital partner. The portion at issue provides that:
In addition to payment for Net Worth, as set forth in Paragraph 17(A) of this Agreement, a retiring Capital Partner who has been a partner of the [Riker] Firm, or predecessor firms, for a period of at least ten (10) consecutive years, and who, throughout the subsequent five year Early Retirement Benefit Payment period following such Retirement from the Firm, continuously remains in retirement status hereunder, shall receive Early Retirement Benefit Payments equal to a percentage ("Applicable Early Retirement Percentage") of such partner's average annual earnings from the Firm or predecessor firms for his or her last five full calendar years immediately preceding retirement as a Capital Partner of the Firm....
Paragraph 17(C) also sets out a"schedule" to determine the applicable early retirement percentage to be applied to particular classes of retiring capital partners. Under the schedule, the applicable early retirement percentage for retiring partners with Borteck's years of service as a partner with Riker, ten or more but less than fifteen years, is ...