JONES v. HESP SOLAR
2:20-cv-13056
| D.N.J. | May 12, 2021Background
- Plaintiffs Ralph Jones and Philip Pietrafeso worked in business development for HESP Solar from 2014 until their termination on July 19, 2019; compensation allegedly consisted of modest base salaries, commission-per-watt rates, and annual commission draws that were advances against commissions.
- Plaintiffs allege HESP paid only the draws and never paid earned commissions after project completion, despite repeated complaints and promises of payment; they were terminated shortly before the Wage Theft Act (WTA) amendments to the New Jersey Wage Payment Law (WPL) took effect.
- Plaintiffs filed suit (Second Amended Complaint) asserting: (1) WPL — failure to pay wages, (2) WPL — retaliatory discharge, (3) breach of contract, and (4) wrongful termination violating New Jersey public policy (Pierce claim).
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6); the court applied the Iqbal/Twombly pleading standard and considered statutory retroactivity principles for the 2019 WTA amendments.
- The court found at the pleading stage that Plaintiffs plausibly alleged commissions could be “wages” under the WPL, but held the 2019 WTA amendments do not apply retroactively; it dismissed the WPL retaliation and certain remedy claims (with varying prejudice/leave to amend) and dismissed other claims against the CEO individually.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claimed commissions qualify as “wages” under the New Jersey WPL | Commissions (with draws and expected material role in total compensation) are direct monetary compensation and thus wages | Commissions were supplementary incentive/bonus pay excluded from WPL protection | Denied dismissal — plaintiffs plausibly alleged commissions may be WPL wages; factual determination reserved for later stages |
| Whether 2019 WTA amendments (adding retaliation cause of action, liquidated damages, fees) apply retroactively | WTA should apply to these claims (or some commissions accrued after enactment) | WTA effective date and NJ law favor prospective application; no clear legislative intent or curative purpose for retroactivity | WTA not retroactive. WPL claims seeking remedies added by WTA dismissed without prejudice (leave to replead if commissions accrued after enactment). WPL retaliation claim dismissed with prejudice |
| Whether breach of contract claim can proceed against CEO Abe Grohman individually | Plaintiffs sue Grohman for breach along with HESP | Contract was with HESP LLC; no allegations piercing the corporate veil or personal contractual liability | Breach claim dismissed with prejudice as to Grohman; HESP breach claim remains |
| Whether wrongful termination (Pierce) claim survives for termination after complaining about unpaid commissions | Termination for inquiring about unpaid, non-discretionary commissions violates clear public policy | No statute or clear public policy at pre‑WTA time protected employees from discharge for such complaints; dispute is primarily private | Dismissed with prejudice — Pierce claim fails because no clear mandate of public policy protects these complaints pre‑WTA |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: factual allegations must plausibly show liability)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading standard: claims must be plausible, not merely conceivable)
- Pierce v. Ortho Pharm. Corp., 84 N.J. 58 (1980) (wrongful discharge exists when termination violates a clear mandate of public policy)
- James v. N.J. Mfrs. Ins. Co., 216 N.J. 552 (2014) (statutory retroactivity: presumptively prospective; three exceptions and constitutional limits)
- Cruz v. Central Jersey Landscaping, Inc., 195 N.J. 33 (2008) (prospective application favored; fairness/due process concerns for retroactivity)
- Grayson v. Mayview State Hosp., 293 F.3d 103 (3d Cir. 2002) (amendment futile standard — leave to amend need not be given when amendment would be futile)
- Schwartz v. Leasametric, Inc., 224 N.J. Super. 21 (App. Div. 1988) (termination to avoid paying commissions does not, by itself, establish a Pierce public‑policy claim)