Saturday, August 4, 2012

The effect of prior settlements on “Buyer’s Remorse” Malpractice Cases:

Submitted by: Professional License Defense Attorney, Jeffrey Hark.

Under New Jersey law, the existence of a settlement does not preclude a defendant from seeking malpractice damages against negligent attorneys involved in or prior to the negations of that settlement. Ziegelheim v. Apollo, 128 N.J. 250, 265 (1992). Indeed, plaintiff need not make efforts to repudiate the settlement in order to prevail on such a malpractice claim, especially when the chances of success of that repudiation are slim. Guido v. Duane Morris, LLP, 202 N.J. 79, 96 (2010). A settlement will only preclude a malpractice action in those rare exceptions wherein the plaintiff recognizes that the settlement was fair and adequate and the settlement effectively “cured” the alleged malpractice of the defendant. Puder v. Buechel, 183 N.J. 428, 445 (2005); Gere v. Louis, 209 N.J. 486, 504-05 (2012); Guido, 202 N.J. at 93.


The first major case to deal with the question of whether a settlement barred later legal malpractice actions in New Jersey was Ziegelheim v. Apollo, 128 N.J. 250 (1992). In Ziegelheim, the Court recognized

that a party received a settlement that was “fair and equitable” does not mean necessarily that the party’s attorney was competent or that the party would not have received a more favorable settlement had the party’s incompetent attorney been competent.


Id. at 265. In Ziegelheim, the plaintiff argued that her divorce attorney had, in the course of pursuing her divorce, failed both to discover substantial hidden marital assets and by delaying in finalizing the divorce agreement. Id. at 266. Plaintiff in that case also argued that the settlement that she had approved differed considerably from the version read to the trial court and that her lawyer had failed to present to her the settlement in writing in advance so that she could properly review it. Id. The Court therefore held that Ziegelheim was not precluded from pursuing her malpractice claim simply because a “fair and equitable” settlement had been reached. Id. at 267. In so doing, however, the Court noted that their intent was not to open wide the door to malpractice suits to all parties dissatisfied with their settlements, holding that in any future buyer’s remorse cases the plaintiff must “allege particular facts in support of their claims of attorney incompetence and may not litigate complaints containing mere generalized assertions of malpractice.” Id.

The Court clearly established the boundaries of the Ziebling holding in Puder v. Buechel, 183 N.J. 428 (2005). In Puder, the plaintiff, Buechel, was the wife of a wealthy doctor holding several patents. Id. at 431. After her original attorney, Puder, negotiated a settlement but before the settlement was finalized in writing, Buechel approached another attorney who informed her that the settlement was “ridiculously inadequate.” Id. at 432. As such, Buechel then fired Puder and hired other counsel to pursue her divorce claims. While the trial court was in the process of determining whether the oral settlement agreement was binding, Puder sued Buechel for back fees while Buechel countersued Puder alleging malpractice in the production of the original settlement. Id. Buechel moved to have the claims against Puder stayed until the outcome of the divorce action as Buechel’s success in the marital action would “render moot” her claims against Puder (as the original settlement would not be binding). Id. at 433.

Before the trial court reached its ruling on the settlement issue, however, Buechel entered into a second settlement, only slightly more favorable to her than the first, with her husband. During the colloquy surrounding this settlement, Buechel made clear that she was only accepting this settlement based on the perceived fear that if the trial court found her first settlement binding she would receive less than the newly settled amount and on the understanding that the new settlement would not preclude her malpractice claim. Id. at 434-35. The trial court in the malpractice action, however, granted Puder summary judgment on the malpractice claim.

In considering these facts, the Court held that Buechel’s malpractice claim was barred by the new settlement. The Court noted that in her appellate brief, Buechel had acknowledged that the new settlement was acceptable and a fair compromise into which she entered voluntarilly. Id. at 439. Effectively, the Court held that Buechel’s testimony at trial that she had received a fair settlement amounted to the second settlement making whole any deficiency that existed in the original decision. Id. at 445. Indeed, the Court argued that it would be unfair to Puder to allow the malpractice action after Buechel’s recognition that she had received a fair settlement and her prior recognition that a victory in the divorce action would “render moot” her malpractice action. Id.

The Court further refined the doctrine in Guido v. Duane Morris LLP, 202 N.J. 79 (2010). In Guido, plaintiff was the majority shareholder and chairman of a cargo company who had sued the corporation over concerns he had with corporate governance. Id. at 83. On two separate, successive occasions, the matter was referred to mediation and eventually settled in a manner that placed constraints on the voting rights of Guido’s stock. Id. at 84. Plaintiff had earlier been warned by counsel that such a settlement could be disastrous for the value of his stock. Id. at 83. During the colloquy surrounding the settlement, Guido and his wife admitted to understanding the settlement and agreed to be bound by it. Two years afterwards, Guido then sued Duane Morris for failure to properly advice him of the effects that the settlement would have on the share price of his stock, which equated to malpractice. Id. at 86. Guido made no attempts prior to the malpractice suit to repudiate the settlement (which the plaintiff’s in Puder and Ziegelheim had done). Id.

In considering the case, the Court clearly held that Ziegelheim represents the standards under which malpractice claims against attorneys who counseled a settlement. Id. at 93. Puder, the Court held, instead represents “a limited exception to the Ziegelheim standard” based on fairness and public policy concerns based upon that plaintiff’s statements regarding the acceptability and fairness of her settlement. Id. As Guido had not made any statements to the trial court that he was satisfied with the settlement that had been negotiated, nor that the settlement was fair or adequate, Puder did not preclude Guido’s claims against Duane Morris regardless of his “failure” to repudiate the settlement. Id. at 95. “Although whether a malpractice plaintiff in fact has sought to vacate a prior settlement may be a relevant factor, the failure to do so cannot be, in and of itself, dispositive.” Id. at 96 (internal citations omitted). In fact, the Court recognized that as there was no reasonable expectation of success on a motion to set aside the settlement, Guido was not required to perform the useless act of attempted repudiation. Id. Ultimately, the Court held that neither the existence of a settlement nor that plaintiff had not attempted repudiation would serve as a bar to a well founded malpractice suit. Id.

In Gere v. Louis, the Court’s most recent clarification of the case law regarding “buyer’s remorse” malpractice cases, the existence of a settlement did not preclude a malpractice action against plaintiff’s original, negligent counsel. 209 N.J. 486 (2012). Even though the plaintiff in that case recognized that the settlement she received was “fair,” “reasonable,” and “the best she could do,” the Court recognized that those statements had to be tempered by the plaintiff’s assertion, during the settlement and beyond, that her original counsel’s failure to conduct discovery had hampered her successor attorney’s ability to establish her claims. Id. at 496, 505. Unlike the defendant in Puder, Gere’s final settlement did not cure the deficiencies created by the actions of her prior counsel. Id. at 504-05. Because Gere’s original attorney’s actions had left her in a situation that could not be cured by later counsel’s efforts, the Court held that the existence of a settlement, absent clear evidence that the settlement had cured the ills of the first attorney’s failings, did not preclude a suit for legal malpractice. Id. at 505.

State v. McDonald - Motor Vehicle Accident within 1,000 Feet of a School

Submitted by: Vehicle Accident Attorney, Jeffrey Hark.




In its recent decision in State v. McDonald, A-118-10, N.J. (July 23, 2012), the New Jersey Supreme Court clearly annunciated the standards for determining whether a motor vehicle accident occurred within 1000 feet of a school for the purposes of N.J.S.A. 2C:12-1(c)(3)(a) (the DWI assault by auto statute). The factual background of McDonald is as follows. At 2:18 a.m. on January 14, 2007McDonald struck and severely injured a pedestrian outside of the Tropicana Casino in Atlantic City, NJ. McDonald, Slip. Op. at 5. Following the accident, police determined that McDonald had been driving in excess of the speed limit and had a blood alcohol concentration of .19. Id. Police also determined that McDonald’s NJ license had been suspended since 1994, and his out of state license had expired prior to the accident. Id.

The central fact to this appeal, however, is that the accident occurred within two blocks of a property owned by the Our Lady Star of The Sea Church. Id. That property, approximately a single square block in size, contains not only a parish church, but also a parochial elementary school. Id. The Court also noted that there was no lease agreement between the school and the church governing the use of the church owned land by the school. Id. at 6.The accident occurred within 1000 feet of the church property, but 1048 feet from the nearest corner of the school parking lot. Id. at 25.

Defendant was arrested and indicted for second-degree assault by auto in a school zone, N.J.S.A. 2C:12-1(c)(3)(a). Id. Defendant was also issued summonses for DWI, driving with a suspended license, DWI in a school zone, reckless driving, careless driving due to speed, and unlicensed driving. Id. On May 7, 2007, McDonald requested bail so that he may discuss his case with a new counsel. Id. While still represented by original counsel, however, McDonald entered a plea agreement on May 21, 2007. Id. Under the agreement, defendant pled guilty to second-degree assault by auto in a school zone, DWI, and driving with a suspended license in exchange for a sentence as if he had pled to a third-degree offense with a recommended sentence of three years in state prison. Id.

During his plea hearing, defendant acknowledged that he was guilty of driving a vehicle recklessly while intoxicated and also within a thousand feet of school property which caused serious bodily injury to the pedestrian involved. Id. at 7. Upon being asked if he disputed that his offense occurred within a thousand feet of the parochial school, the defendant stated that “[he] didn’t see it, but I might have missed it, okay.” Id. at 7.

On October 19, 2007, McDonald moved to withdraw his guilty plea under State v. Slater, contending that his former attorney had dismissed his concerns over the distance of the accident from the school and had not adequately determined the exact distance. As such, McDonald argued that the distance was in excess of 1000 feet from the actual school grounds (as opposed to the grounds of the church) and gave him a colorable claim of innocence. Id. at 8.The trial court rejected this argument, arguing that defendant’s motion was nothing more than “buyer’s remorse” as to a proper plea. Id. The defendant appealed, arguing points including that the accident was more than 1000 feet from actual school grounds. Id. at 9. The appellate division affirmed the trial court’s finding, corrected some sentencing issues, and merged the DWI conviction into the assault by auto conviction. McDonald appealed and certification was granted. Id. at 10.

Under Slater, a court must consider whether the defendant has asserted a colorable claim of innocence, the nature and strength of defendant’s reason for withdrawing his plea, the existence of a plea bargain, and whether withdrawal would prejudice the state in determining if a plea may be withdrawn. The Court held that McDonald could assert no colorable claim to innocence and as such the defendant’s plea was not subject to withdrawal under the Slater test. The Court, in interpreting the meaning of the “within 1000 feet of a school” language of N.J.S.A. 2C:12-1(c)(3)(a) looked both to the case law and legislative history of that statute and that of N.J.S.A. 2C:35-7, which governs controlled dangerous substance offenses in school zones.

Under the statute, assault by auto is a second degree when the driver causes serious iunjury, while intoxicated and “on any school property used for school purposes which is owned by or leased to any elementary school or school board, or within 1,000 feet of such school property.” The statute precludes a defendant from claiming that he was unaware of being within that zone or that no juveniles were present at the time as a defense to the charges. Id. at 15. The Court, in interpreting the statute, first noted that the purpose of the statute was to make the streets near schools safer for students and crossing guards. Id. at 17. Looking to the CDS statute, the Court noted that the legislature had stated that N.J.S.A.’s similar language was intended to create a permanent safety zone around schools recognizing that children often congregate around school grounds even when school is not in session. Id.

The Court stated that as the statute is designed to protect children travelling to and from school, the statute does not limit its definition of school property based on whether the school is public, private, or parochial, nor whether it is an elementary or secondary school. Id. at 18. The Court likewise noted that based on the legislative history, that courts should not focus on the manner in which title to the property is held. Id. at 19. The legislature, therefore, did not define “school property” to exclude schools because they are not owned or leased by a school board.

Under this legislative history, then, the Court found that the parish church which owns the property and operates the school qualifies as an “elementary education entity” within the meaning of the statute. Id. As the legislative history clearly expresses an intent that the 1000 foot zone begins at the borders of the school’s campus and not at the edge of the building or immediate vicinity, the Court likewise found that the entirety of the parish’s property qualified as “school property” under the statute. Id. at 21-22. As such, defendant’s claim that he was “1048” feet from school and its parking lot but less than 1000 feet from other parts of the church grounds does not assert a colorable claim of innocence. Id. at 22. The Court similarly rejected McDonald’s contention that the late hour prevents the school zone language from applying. Id. at 23.

Turning to the remaining three Slater factors, the Court found that they did not make up for the lack of a colorable claim of innocence. That defendant was not permitted to contest the allegation that the event occurred within 1,000 feet of a school could not serve as a valid excuse for not raising a defense when that contest was, as a matter of law, incapable of establishing a colorable claim of innocence. Id. at 24. Likewise, the presence of a plea bargain weighed against McDonald. Id. Though the Court found that no prejudice would be done to the state, in the absence of a colorable claim of innocence, the Court ruled that the interests of justice would not be served by allowing McDonald to withdraw his plea. Id. at 26-27.

The Court also addressed the defendant’s remaining contentions. As the defendant had been intoxicated and travelling over the speed limit, the Court rejected the argument that the element of recklessness was not supported during the plea hearing. Id. at 28. The Court also rejected the argument that there was no basis for his driving with a suspended license plea. Id. at 29-30. That defendant had a North Carolina license for 15 years (which had expired) did not change the fact that his suspended NJ license had never been reinstated. As such, the defendant’s guilt for that charge was established by the letter of the statute, regardless of the out of state license. Id. As the defendant’s final contention, that he had suffered from ineffective assistance of counsel at the original plea hearing would be more properly addressed in a Post Conviction Relief hearing, the Court did not address that issue.

Ultimately, the Court held that the definition of “within 1000 feet” of a school included being within 1000 feet of any portion of the church grounds of the church which owned and operated the school. As such, McDonald could not assert a colorable claim of innocence as to his assault by auto charge, and thus had no grounds to move for the withdrawal of his guilty plea.

State v. Duprey - New Jersey Domestic Violence Case

Submitted by: New Jersey Domestic Violence Lawyer, Jeffrey Hark.


State v. Duprey,
___ N.J. Supser. ___,
Docket No. A-5469-10T4 (App. Div. August 1, 2012)


In a recent decision, the Appellate Division has ruled that testimony given during a domestic violence hearing may be now be used to impeach the credibility of the domestic violence complainant and defendant if and when they testify at a criminal proceeding arising out of the same facts. In State v. Duprey, the Appellate Division ruled that N.J.S.A. 2C:25-29(a) should not be read to bar the use of such testimony for impeachment purposes to best achieve the legislature’s intended goals. In that case, the defendant, Duprey, sought to use the transcript of domestic violence proceedings against him as affirmative evidence and as impeachment evidence during his related criminal trial for assault and terroristic threats. Duprey, Slip. Op. at 3. After several hearings and opposition by the State, the trial court ruled that the transcripts of the Domestic Violence matter could be used at the criminal trial ONLY for impeachment purposes, both against the plaintiff in the DV matter and against Duprey should he choose to take the stand. Id. at 4. The State then appealed that decision.

The Appellate Division, in considering the statute, rejected the contention that this was a pure matter of statutory interpretation, instead finding that it implicated important facets of the Confrontation Clause of the United States and New Jersey Constitutions. Turning first to the text of the statute, N.J.S.A. 2C:25-29(a) states,

If a criminal complaint arising out of the same incident which is the subject matter of a complaint brought under [the DV Act] has been filed, testimony given by the plaintiff or defendant in the domestic violence matter shall not be used in the simultaneous or subsequent criminal proceeding against the defendant, other than domestic violence contempt matters and where it would otherwise be admissible hearsay under the rules of evidence that govern where a party is available.

Id. at 7. In interpreting this clause, the Appellate Division recognized that the intent of the statute was “to facilitate simultaneous or subsequent criminal proceedings unimpacted by the DV action[.]” Id. at 8 (internal citations omitted). The Division also noted the overall purpose of the DV Act to protect the interest of DV victims. Id.

Setting aside the exceptions as inapplicable to Duprey’s matter, the Appellate Division first dealt with Duprey’s allegation that the statute only prevented the use of the DV testimony against the defendant. The Division specifically noted that the phrase “against the defendant” followed “criminal proceeding” and not “Shall not be used.” Id. at 9. As such, the contention that only the defendant was “protected” by the statute is a misreading of the text of the statute.

Instead, the Division viewed the prohibition of the statute as being broadly written and applying to any use of such testimony at the criminal trial. Id. So broad a reading, however, the Appellate Division held, “would interfere with a criminal defendant’s rights under the Confrontation Clause.” Id. Specifically, if the DV plaintiff were unavailable, her testimony could be used at trial through N.J.R.E. 804(b)(1); while if that same plaintiff did testify at the criminal trial, the defendant would be prohibited from confronting that plaintiff with her prior sworn testimony for impeachment purposes. Id. at 10.

In so noting, the Appellate Division looked to the statements of the New Jersey Supreme Court in State v. Guenther, 181 N.J. 129, 147-48 (2004), that a defendant’s right to confrontation is best expressed through cross-examination, and as such that cross examination should not “bow to the mechanistic application of a state’s rules of evidence or procedure [that] would undermine the truth-finding function [of cross examination].” Id. at 10-11. The Appellate Division also noted that the Court in Guenther recognized a difference between specific and general attacks on credibility (those couched on general assumptions such as that convicts are less trustworthy than general citizens) and specific attacks on credibility (such as showing the bias, prejudice, or ulterior motives of the witness). Id. at 11-12.

Applying those principles, the Appellate Division concluded that

The trial testimony of a DV complainant must be available for use by the defendant during cross-examination to impeach contradictory or inconsistent testimony that is material to the charges against the defendant, or to show bias, prejudice, or ulterior motives on the part of the witness.

Id. at 12-13. The proponent of such evidence need not demonstrate that such evidence is “the only available evidence” nor that it relates to “a critical issue.” Id. at 13. The Division couched this holding by noting that

A trial judge shall exercise discretion in precluding lines of inquiry that he or she finds relate solely to “general impeachment.” The “ultimate question” for the trial judge in making that determination is whether exclusion serves the interests of fairness and reliability.

Id. (internal citations omitted). The Appellate Division also ruled that should the defendant choose to take the stand and be subject to cross-examination, he would be subject to use of his DV testimony for impeachment purposes to the same extent as the DV plaintiff. Id. The Appellate Division noted that this interpretation of the statute comports with the intent of the statute, as there was no reason to believe that the legislature intended the statute to allow a DV defendant to testify falsely at a subsequent criminal trial without fear of impeachment. Id. at 15. Ultimately, Duprey stands for the proposition that testimony taken at a DV hearing may be used for impeachment purposes against plaintiff or defendant in a subsequent or simultaneous criminal action.

Vasiliki Rallatos, Petitioner v. DECISION The ARC of Atlantic County, Respondent

Posted by: New Jersey Criminal Lawyer, Jeffery Hark

___________________
Vasiliki Rallatos, Petitioner
v. DECISION
The ARC of Atlantic County, Respondent,
_________________________

BEFORE:
HONORABLE CARMINE J. TAGLIALATELLA JUDGE OF COMPENSATION

APPEARANCES:
Lawrence A. Mintz, Esquire
Goldenber, Mackler, Sayegh, Mintz, et. al.
1030 Atlantic Avenue
Atlantic City, NJ 08401
Attorney for the Petitioner

Dorothy T. Daly, Esquire
Christie, Parabue, Mortenson & Young, P.C.
Sentry Office Plaza, Suite
703216 Haddon AvenueWestmont, NJ 08108
Attorney for Respondent

This matter comes before the court on the ARC of Atlantic County’s (hereinafter “Respondent”) motion to dismiss this claim as it argued that Vasiliki Rallatos’s (hereinafter “Petitioner”) activities on May 20, 2010 were not compensable under N.J.S.A. 34:15-7 et seq.. It is Respondent’s assertion that the Petitioner should be considered a volunteer and not an employee for the purposes of determining compensability. In opposition to the motion, Petitioner contends that a discount that was extended to her in connection with her activity for Respondent qualifies as sufficient financial consideration to meet the definition of “employee” under N.J.S.A. 34:15-36.

The parties have stipulated that Petitioner was on the premises of the Respondent on May 20, 2010. As to all other issues, Respondent has left Petitioner to her proofs. It was pointed out that Respondent did initially provide Petitioner with authorized medical care. However, it is clear that such care was offered without prejudice and Respondent has since disputed the foundational issue as to Petitioner’s status as an employee.

In order to frame the issue for the court, the parties were asked to submit briefs in support of their arguments. These letter briefs were reviewed prior to the taking of testimony regarding the facts of Petitioner’s association with Respondent. The parties produced the Petitioner as well as two lay witnesses for testimony on June 7, 2012. The only documentary evidence submitted was marked as R-1, “The ARC of Atlantic County Volunteer Application.

”The Petitioner testified that she was aware of the Respondent’s thrift store in Ventnor having shopped there for some time prior to her more formal association. She said that she purchased from there regularly before submitting the application to volunteer. Unfortunately, Petitioner had the time to volunteer because she had been laid off from work as a teacher. She spoke about having “time on [her] hands” while she was looking for work and collecting unemployment benefits. Petitioner discussed her previous experience with volunteering her time to other organizations. While in high school she did some volunteer work for the VA Hospital; she also volunteered her time at a library while living in Miami. She said that she believed it was a good thing to give her time to community organizations that she felt were important; and she did agree that the Respondent was such an organization.

During her direct examination, Petitioner explained about the fifty percent (50%) discount on all items in the thrift store offered to those who volunteered their time. She was told about the discount when she submitted her volunteer application (R-1 in evidence) and she testified that it was “a great incentive.” While she did admit that she would have “possibly” volunteered at the store without the discount, she noted that the discount helped her because she was unemployed.

The Respondent produced two witnesses: Lynn Lippert, Human Resources Director for the Respondent; and Phyllis Terlecky, the lead volunteer at the thrift store. Through their testimony the court learned that Respondent does not treat its volunteers in any way like it does its employees. There are no benefits to administer and no paperwork or reporting that deals with the volunteers; as such, Ms. Lippert had no contact with the Petitioner. On the other hand, Ms. Terlecky did have contact with her. It was her responsibility to make the schedule for the volunteers. This involved discerning when they could work and what times and shifts needed to be covered. Further, Ms. Terlecky testified that she had never been paid any wage as a volunteer, nor had any other volunteer; but she was aware of the discount. She referred to it as an “unwritten rule” that volunteers were to get a reduction on the price of goods at the thrift store.

The court found the testimony of all of the witnesses to be credible. In fact, their testimony was largely corroborative. It helped to get a sense of the “business” of the thrift store and its value for the Respondent. It is also clear that this operation could only work if there were volunteers and donors to allow it to remain viable.

Following testimony the court conducted a brief session of oral argument to help illuminate the meaning of “employee” in this context. Both attorneys braved the court’s questions surrounding the definitions and meanings of words and phrases such as “value”, “financial consideration”, “employee”, and “volunteer.” The interpretation of these words and phrases are at the heart of the case.

Any analysis under the Workers’ Compensation Act must begin with the statute. We start with N.J.S.A. 34:15-36 which defines an “employee” as “synonymous with servant, and includes all natural persons,…, who perform service for an employer for financial consideration,…”. While the legislature used the term “servant” which might indicate a very broad range of persons included in the definition, this is tempered by the requirement of “financial consideration” in order to establish the relationship. Clearly, the old notion of ‘master-servant’, while referenced, is not wholly applicable.

The definitional tension is illustrated in the cases that follow: In the case of Goff v. County of Union, 26 N.J. Misc. 135, 57 A.2d 480 (Dept. Labor 1948) the opinion clearly states that in order to create the employer-employee relationship, there must be service performed for financial consideration. Id. at 138. Mr. Goff was incarcerated in the Union County jail and while doing some painting he was injured. Goff consented to do the painting as it would mean that he could receive some extra food. To the court, the provision of the “extra” food was not sufficient consideration to create an employment relationship for compensation benefits.

However, “financial consideration” need not be in the form of a wage. The case of Britten v. Berger, 18 N.J. Misc. 215 (Dept. Labor 1925) is demonstrative. Mr. Britten agreed to provide janitorial services in exchange for a place to live without paying rent. This was sufficient financial consideration to create an employment contract for workers’ compensation benefits and Mr. Britten’s estate was awarded same. The case of Heget v. Christ Hospital, 26 N.J. Misc. 189 (Hudson County 1948) involves a student nurse who was injured. While the trial court dismissed the claim, it was reinstated by the county court with the judge holding that since there was “pecuniary gain” by the hospital and given that the hospital provided room and board to the student, there was ample financial consideration to award compensation benefits. Id. at 191.

Petitioner relies most heavily on the Appellate Court’s decision in Kraivanger v. Radburn Association, 335 N.J. Super. 169 (App. Div. 2000). Ms. Kraivanger (14 years old at the time of the accident) was engaged as a counselor-in-training, or CIT, for the Radburn Association. While she was not paid a regular wage for her work, she did receive compensation for one training day and she had to file an IRS W-4 form as well as an INS I-9 form and supply “working papers”; all forms were required by respondent. Also, there were “regular” counselors who were paid for their work and petitioner was hoping to be hired as one at a later time.

The court in Kraivanger found that there was some financial consideration that passed from respondent to petitioner. In making that finding the court noted the filing of IRS and INS documents as well as the one day of pay for the training session; this distinguished petitioner from a so-called “true volunteer.” The court went on to hold that employee status exists “if any financial consideration at all” is exchanged between the parties. Id. at 172. This would appear to be a very low standard for the establishment of employer-employee relationship in order to award workers’ compensation benefits.

However, there is still this notion of a “true volunteer” and how that might be defined. Respondent relies on Armitage v. Trustees of Mt. Fern M.E. Church, 37 N.J. Super. 367 (Morris County 1954) for an answer. Mr. Armitage was one of 28 trustees of the respondent and it was decided that they would build an addition to the church. Church members were solicited for subscriptions (in units of $120) to cover the costs and it was provided that any subscriber could perform labor at a rate of $1.50 per hour as a credit against their pledge. Petitioner subscribed for two units and while doing some carpentry work on the addition he suffered an injury. In affirming the decision of the bureau, the county court found that there was not an employer-employee relationship as petitioner’s work was “voluntary and he did not perform services for the church for financial consideration as contemplated by R.S. 34:15-36,…”. Id. at 370.

Respondent not only argues that Petitioner is a “true volunteer”, but that there was no consideration of gaining anything when she engaged in her work for the thrift store. Returning to the Petitioner’s testimony it is clear that she started the process with Respondent for altruistic reasons. She had shopped at the thrift store and was a supporter of the work Respondent was doing for its members and the community.[1] She had a history of volunteering and had placed applications with several other charitable organizations. She was collecting unemployment benefits and had free time to donate. The thrift store was nearest to her home, so when they accepted her application she was happy to work there. The discount was a bonus and it did not appear to the court that she would not have taken the position if there was no discount.

Her own testimony indicated that it was likely she would have volunteered without the discount.Petitioner has argued under Kraivanger that the discount is of some value, both generally and specifically for herself; and it is this ‘value’ that is sufficient to form the basis of the financial consideration between the parties. While the court agrees with Petitioner’s argument that the discount has a value; all that is of value is not financial consideration.[2]

Here we go back to the basic legal definition of consideration. Consideration is a benefit conferred as an inducement to a commitment. It can be commonly seen in the standard employment agreement whereby a worker works the job for which he is paid a wage by the employer. There are many other forms of consideration; far too numerous to list here. The question for this court is: Was the 50% discount afforded to Petitioner an inducement to get her to commit her time and services to Respondent? The answer: No.

The court is also mindful of the broader implications for charitable organizations as a result of this decision. Many of these groups rely on donations and volunteers in order to make ends meet and survive. Given the importance of their work to society, the court is careful to consider imposing any further burdens on such entities. While the instant matter was decided solely on the facts presented in light of the cases and the Act, the issues noted are not peripheral to those organizations that are trying to do good works for the poor and disabled.

Therefore, in light of the analysis and review of the statute as set forth above, the court finds that Petitioner was not an employee of Respondent as it is defined by Section 36 of the Workers’ Compensation Act and the cases cited. As such this claim petition shall be DISMISSED with prejudice. The Respondent shall prepare the proper form of Order for the court’s execution. There shall be a stenographic fee payable to Jersey Shore Reporting Services for the day of testimony in the amount of $150 by Respondent.

________________________________ June 28, 2012

HON. CARMINE J. TAGLIALATELLA, JWC
________________________________

[1] The acronym “ARC” represents the “Association of Retarded Citizens” and while Respondent states that the full name is no longer used due to current word usage standards, its name is illustrative of it purpose and goals.

[2] In fact, even if Ms. Rallatos were a wage earning employee, the IRS would not consider the discount a taxable event. See generally I.R.C. Sec. 132(a)(2); Reg Sec. 1.132-1(a)(2) and I.R.C. Sec. 132(c)(3); Reg Sec. 1.132(b)(1).