NJ Supreme Court Case Makes it More Difficult to Reduce Jury Emotional Distress Damage Award

In a recent employment discrimination case, Cuevas v. Wentworth Group, the NJ Supreme Court upheld the jury’s award of emotional distress damages to the Plaintiffs, Ramon and Jeffrey Cuevas, two brothers who suffered derogatory and humiliating racial remarks and discrimination at work. The brothers are Hispanic. Wentworth fired the brothers shortly after Jeffrey complained about the harassment.

At the trial court level, the jury awarded over $1 million in lost wages, $800,000 in emotional distress damages and $52,500 in punitive damages to Ramon. It awarded Jeffrey $150,000 in lost wages, $600,000 in emotional distress damages and $32,500 in punitive damages. Both the trial court and the Appellate Division denied defendants’ request for a remittitur (reduction) of the emotional distress damages.

On certification, the New Jersey Supreme Court upheld the jury’s emotional distress damages award to the Cuevas brothers. The Court held that a judge should not rely on personal knowledge of other verdicts or comparative-verdict methodology when deciding a remittitur motion to reduce a damage award because each case is unique. Moreover, the Court held that a judge should only consider the record itself, in order to maintain the deferential standard of review of a jury’s award of damages.

In its opinion, the Court reiterated that the applicable legal standard is whether the jury’s award was so “grossly excessive” that it “shocks the judicial conscience.” It held that a court should reduce the amount of damages awarded by a jury only in a rare case in which it is glaring and obvious from the record that it was “grossly excessive.”

This case is notable because the Court affirmed an extremely high emotional distress damages award without obtaining any expert testimony from a treating psychotherapist or an expert witness regarding the emotional distress suffered by the Plaintiffs. It held that courts should be reluctant to interfere with a jury’s decision about pain and suffering damages.

Written Warning Could be an Adverse Employment Action under the NJLAD

The New Jersey Appellate Division recently held that a written warning, if part of a system of progressive discipline, may constitute an adverse employment action under the New Jersey Law Against Discrimination (“NJLAD”), which in turn could mean an employer could be held liable for discriminatory or retaliatory actions.

In Prager v. Joyce Honda, Inc., No. A-3691-14T3, ____N.J. Super _____ (App. Div. August 22, 2016), Plaintiff was a former receptionist who was inappropriately touched by a long-standing, valued customer of the Joyce Honda car dealership. Plaintiff filed a municipal court complaint against the customer. Plaintiff claimed that she thereafter became isolated by her coworkers and, about a week after she filed the report, received two written warnings for leaving early without permission. When management presented Plaintiff with the written warnings, she became upset, stating that the warnings were false and issued in retaliation for pressing charges against the customer. The Plaintiff claimed that she had left early many times before without incident and that her high level of anxiety was causing her to throw up before work. In response, management offered to rescind the warnings and suggested that if work was making her feel sick; it would be in her best interest to resign. Plaintiff resigned the next day.

Plaintiff then filed a lawsuit against Joyce Honda, claiming retaliation under the NJLAD. The trial court dismissed, holding that Plaintiff’s municipal court complaint against the customer was not protected activity under the NJLAD. On appeal the Appellate Division affirmed on different, but notable grounds. The Appellate Division found that the Plaintiff’s municipal court complaint was protected activity. Nevertheless, her retaliation claim failed because she could not demonstrate that the two written warnings constituted an adverse employment action. The court used an objective standard to evaluate whether the warnings were an adverse employment action: whether a reasonable person could have found them to be materially adverse. It noted the analysis was case specific, and explained that a written warning could be deemed a materially adverse employment action, such as in the case where a formal system of progressive discipline exists and is enforced. In the Prager case the Appellate Division ruled that the written warnings Plaintiff received were not an adverse employment action since it was not certain that Plaintiff would receive future discipline (Plaintiff resigned the next day and the employer offered to rescind the warnings).

Prior to Prager New Jersey courts generally found that written warnings, absent consequential discipline, did not constitute adverse employment actions. This case makes it clear that, if the warnings set forth even future mandatory progressive discipline, such warnings may be considered an adverse employment action for purposes of imposing liability under the NJLAD.

Employer May be Held Liable for Retaliatory Intent of Low Level Employee

The Second Circuit in Vasquez v. Empress Ambulance Service, Inc., recently adopted the “cat’s paw” theory of liability under Title VII and found that the retaliatory intent of a low-level, non-supervisory employee may be ascribed to an employer where “the employer’s own negligence gives effect to the employee’s retaliatory animus and causes the victim to suffer an adverse employment decision.”

The Plaintiff in this case was an emergency medical technician. She reported to her supervisors that a fellow EMT had sexually harassed her. The harasser suspected that the Plaintiff had complained about his behavior and, in retaliation, manipulated a series of text messages and photos to make it appear as if it was in fact Plaintiff who was soliciting a sexual relationship with him, and presented the altered evidence to the Employer during its investigation.

The Employer then concluded that Plaintiff was having an inappropriate sexual relationship with the co-worker and terminated her. Plaintiff informed the Employer that the co-worker was lying to cover up his own indiscretions and offered to show the Employer her unaltered cell phone messages. The Employer declined to review Plaintiff’s cell phone and further refused to show her the “racy self-taken photo” that the co-worker claimed Plaintiff had sent him. Apparently, this photo was obscured and Plaintiff’s face could not be identified.

Plaintiff brought suit against the employer under Title VII of the Civil Rights Act and the New York State Human Rights Law, claiming that the Employer wrongfully terminated her in retaliation for her complaint of sexual harassment. The district court granted the Employer’s motion to dismiss the complaint on the theory that the co-worker’s retaliatory intent could not be attributed to the Employer and therefore the Employer could not have engaged in retaliation against Plaintiff.

The Second Circuit reversed on agency principles. As a result of the Employer’s negligent investigation of Plaintiff’s claims, the retaliatory intent of the low-level co-worker could be imputed to the Employer. The court adopted the “cat’s paw” theory in holding that even “absent evidence of illegitimate bias on the part of the ultimate decision maker, so long as the individual shown to have the impermissible bias played a meaningful role in the decision-making process.”

The court noted that the decision “should not be construed as holding an employer liable simply because it acts on information provided by a biased co-worker,” where such action is taken “non-negligently and in good faith.” Moreover, “an employer who negligently relies on a low-level employee’s false accusations in making an employment decision will not be liable under Title VII unless those false accusations themselves were the product of discriminatory or retaliatory intent.” The court seemed to be swayed by the egregious facts in this case – the Employer’s refusal to consider all evidence while conducting its investigation. The Employer had accorded the co-worker an “outsize role” in its own employment decision, which prompted the court to impute the employee’s animus to the Employer under a cat’s paw theory.

The theory of liability here could also be applied in a discrimination case. Employers are obligated to conduct a thorough investigation of an employee’s claims of harassment, discrimination and retaliation. It must take into account the potential biases and motivations of decision-makers and witnesses. Employers should document all aspects of an investigation and keep a clear record showing that all facts and potential motivations were considered when making a decision to discipline or discharge.

NJ Court Refuses to Require Arbitration of Employment Dispute

The NJ Appellate Division has ruled, once again that it will not require enforcement of an arbitration clause absent a showing that the clause constituted a clear waiver by the plaintiff of his or her right to a jury trial.

In Anthony v. Eleison Pharmaceuticals LLC, Docket No. A-932-15T4 (App. Div. July 18, 2016), a former executive filed a lawsuit against his former employer under the New Jersey Wage Payment Act, alleging that the company failed to pay him wages that were due to him following the termination of his employment. The lawsuit also included breach of contract claims. The employer filed a motion to dismiss the lawsuit and order arbitration pursuant to a clause in the employment agreement which stated, among other things, that “[t]he parties agree that should any dispute arise out of this Agreement, a phased dispute resolution process shall resolve the dispute,” ending in binding arbitration. The trial court granted the employer’s motion, stating that the arbitration clause constituted a valid waiver by the employee of his right to pursue his claims in a judicial forum.

The lower court’s ruling in Anthony was clearly in error. The New Jersey Supreme Court ruled in Atalese v. U.S. Legal Services Group LP, 219 N.J. 430 (2014), that NJ courts will not enforce arbitration clauses unless they contain explicit language informing the employee that he or she was giving up the right to go to court and have a jury trial. The arbitration clause at issue in Anthony clearly did not contain such language. Accordingly, the Appellate Division reversed the lower court and the case will proceed to trial.

Both employers and employees considering arbitration as an alternative dispute resolution forum, should consult legal counsel to confirm that that any agreement signed has the necessary waiver language.

NJ Court Rules Employer Cannot Shorten SOL for Discrimination Claims

We are pleased to write that the New Jersey Supreme Court ruled, last week, that the two-year statute of limitations for filing a discrimination claim under the NJ Law Against Discrimination (“LAD”) couldn’t be shortened by an employer seeking to insert a clause in an employment agreement or contract.

The case arose when Raymours Furniture Co., fired an employee, Sergio Rodriguez who had signed a job application which stated, in capital letters, that he agreed “that any claim or lawsuit relating to [his] service with Raymour & Flanigan must be filed no more than six moths after the date of the employment action that is the subject of the claim or lawsuit. I waive any statute of limitations to the contrary.” Mr. Rodriguez claimed that Raymour & Flanigan wrongfully terminated him on account of his disability and in retaliation for filing a workers’ compensation claim. He sued under the LAD nine months after he was fired. Both a trial judge and the Appellate Division ruled that the lawsuit was time-barred, even though New Jersey law allows a plaintiff two years to bring such an action.

The Supreme Court disagreed with the lower courts. The Court noted that the “contractual shortening of the LAD’s two-year limitations period for a private action is contrary to the public policy expressed in the LAD.” The Court noted the unequal bargaining power of the potential employer and employee. Clearly, mandating that the employee agree to a shorter statute of limitations in an employment application before they can be hired is, by definition a contract of adhesion. Although some employers may argue that two-years is too long of a time period to hold an employer responsible for defending an action for discrimination – where documents may have disappeared, key witnesses have left the company and the memories of decision-makers have faded – it is not for a private employer to alter a statutory limitation period by contract. We believe that this could only be done, after careful consideration by the legislature.

EEOC Releases New Guidance on What is a Reasonable Accommodation under the ADA

On May 9, 2016, the Equal Employment Opportunity Commission (“EEOC”) released new guidance on what is a reasonable accommodation under the Americans with Disabilities Act (“ADA”). The guidance makes clear that employers must not only provide employees with disabilities access to leave as an accommodation on the same basis as similarly situated employees without disabilities, but may be required to modify its policies to provide leave for a disability even where the employer does not offer leave to other employees. The guidance also addresses common issues for employers including analyzing undue hardship, requests for “indefinite” leave, maximum leave policies, and return to work issues. The guidance is a welcome relief for both employees and employers since it clears up some previous ambiguities in the law’s application.

The guidance states that if an employee requests leave related to a disability and the leave falls within the employer’s existing leave policy, the employer should treat the employee making the request the same as an employee who requests leave for reasons unrelated to a disability. For example, if an employer provides sick leave as well as annual leave that may be used for any purpose, an employer may not require an employee to designate leave as sick time simply because it is being used for a purpose related to a disability, because doing so would deny the employee use of annual leave due to his or her disability.

Further, the guidance provides that an employer must consider unpaid leave as a possible reasonable accommodation even when:

  • the employer does not offer leave as an employee benefit;
  • the employee is not eligible for leave under the employer’s policy; or
  • the employee has exhausted the leave provided under the employer’s benefit policy (including leave under the FMLA or similar state or local laws or under a workers’ compensation program).

However, the guidance states that ADA does not require an employer to provide paid leave beyond what it provides as part of its paid leave policy. Further, and as is the case with all other requests for accommodation, an employer can deny a request for leave if it can show that providing the accommodation would impose an undue hardship.

The guidance provides a number of factors that an employer should consider to determine whether providing leave would result in an undue hardship, including:

  • the amount and/or length of leave required;
  • the frequency of the leave;
  • if there is any flexibility with respect to the days on which leave is taken;
  • if the need for intermittent leave on specific dates is predictable or unpredictable;
  • the impact of the employee’s absence on coworkers and on whether specific job duties are being performed in an appropriate and timely manner; and
  • the impact on the employer’s operations and its ability to serve customers/clients appropriately and in a timely manner, this factor takes into account the size of the employer);

The guidance also states that “leave as a reasonable accommodation includes the right to return to the employee’s original position,” and “if an employer determines that holding open the job will cause an undue hardship, then it must consider whether there are alternatives that permit the employee to complete the leave and return to work.”

The guidance reiterates the EEOC’s longstanding position that requests for “indefinite” leave—that is, where an employee cannot say whether or when he or she will be able to return to work at all, as opposed to where a definitive or approximate date or range of dates can be provided—constitutes a per se undue hardship under the ADA and does not need to be provided as a reasonable accommodation.  However, employers are cautioned to carefully consider any state and local laws regarding reasonable accommodation that may apply before rejecting a request for an “indefinite” leave.

The guidance states that while employers “are allowed to have leave policies that establish the maximum amount of leave an employer will provide or permit,” the ADA requires that employers may nevertheless be required to “grant leave beyond this amount as a reasonable accommodation to employees who require it because of a disability, unless the employer can show that doing so will cause an undue hardship.” Employers who utilize “form letters” or standardized communications for employees who are nearing the end of a designated leave period are advised to “modify them to let employees know that if an employee needs additional unpaid leave as a reasonable accommodation for a disability, the employee should ask for it as soon as possible so that the employer may consider whether it can grant an extension without causing undue hardship.” The guidance also emphasizes that employers should ensure that any third party providers with whom the employer contracts to manage its leave policies (including short- and long-term disability leave programs) are instructed to notify the employer of any requests for leave beyond the maximum periods under the programs, and to refrain from terminating the employee until there has been an opportunity to engage in the interactive process.

The guidance also addresses return to work issues, including “100% healed policies” and reassignment. “100 healed policies” are policies requiring employees to return to work only if they can demonstrate that they have no medical restrictions. The EEOC’s new guidance states that an employer will violate the ADA if it prohibits an employee with a disability from returning to work unless he/she has no medical restrictions if the employee can perform his or her job with or without reasonable accommodation (unless the employer can show that providing the accommodation would cause an undue hardship).

The EEOC provides that if reassignment is required as a reasonable accommodation because the disability prevents the employee from performing one or more essential functions of the current job (even with a reasonable accommodation) or because any accommodation in the current job would result in undue hardship to the employer, an employer “must place the employee in a vacant position for which he is qualified, without requiring the employee to compete with other applicants for open positions.” However, the guidance notes that “reassignment does not include promotion, and generally an employer does not have to place someone in a vacant position as a reasonable accommodation when another employee is entitled to the position under a uniformly-applied seniority system.”

We are pleased to see that this newly issued guidance clarifies the rights and responsibilities of employers and employees regarding providing reasonable accommodations under the ADA. Of course, as always, employers may provide more accommodations to its employees than the law requires.

Gov. Christie Vetoes Equal Pay Bill

As reported by NJ.com, Governor Chris Christie has vetoed SB 992, a bill which sought to bar gender-based pay discrimination.  A full text of the proposed legislation may be read here.  The bill would have amended the New Jersey Law Against Discrimination by adding language prohibiting an employer from paying one gender less than the other for “substantially similar” work.  Employers would be permitted to pay workers of different sexes doing similar jobs in an unequal manner only if they could demonstrate that the unequal treatment was justified based on factors such as training, education, experience, or job performance.  The bill also contained a triple damages provision for employees who won cases brought under the law, and a transparency provision mandating that businesses who contract with the State file equal pay information to ensure compliance with the statute.

Governor Christie, in his veto message, criticized the law as “depart[ing] significantly from well-established law” and stated that the law would make New Jersey “very business unfriendly.”  The bill’s main sponsor, Sen. Loretta Weinberg (D-Bergen), has signaled that she may attempt a veto override, in that the bill passed by decisive margins in both houses — 28-4 in the Senate and 54-14-6 in the Assembly.

Pay equity is an important issue to New Jersey’s professional workforce.  There is no question that women and men should be paid the same for the same or similar work.  There is also no question that this bill would have helped New Jersey to achieve its goal of eradicating discrimination from the workplace.

NY MAYOR SIGNS LEGISLATION STRENGTHENING EMPLOYEE PROTECTIONS UNDER NYC HUMAN RIGHTS LAW

On Monday, March 28, 2016, Mayor Bill de Blasio signed several bills amending the NYC Human Rights Law (“NYCHRL”). We are pleased because these amendments should ultimately provide employees more protection under the law.

The bills incorporate three NYC judicial decisions as appropriate examples of the liberal construction requirement of the NYCHRL. In Albunio v. City of New York, 17 N.Y.3d 472 (N.Y. 2011), the Court of Appeals held that it must construe the anti-retaliation provision of the NYCHRL broadly in favor of discrimination plaintiffs, to the extent that such construction was reasonable under the facts of a case. In Williams v. New York City Housing Authority, 61 A.D.3d 62 (1st Dep’t 2009), the Appellate Division held that a Plaintiff need not prove that harassment was severe or pervasive in order to prove a hostile work environment claim under the NYCHRL. Instead, the Plaintiff need only show that he or she has been treated less well than other employees of his or her protected class. The court noted that questions of severity and pervasiveness go only to consideration of the scope of permissible damages, and not to the question of underlying liability. The court noted that “petty slights or trivial inconveniences” would not result in liability. Finally, in Bennett v. Health Management Systems, 92 A.D.3d 29 (1st Dep’t 2011), the court clarified the burden shifting analysis set forth by the U.S. Supreme Court in McDonnell Douglas v. Green, 411 U.S. 792 (1973), especially in the summary judgment content, in order to “maximize the opportunities for discrimination to be exposed.”

One bill, Intro 818-A amends the administrative code in relation to the NYCHRL to provide attorneys’ fees, expert fees, and other costs in complaints brought before the New York City Human Rights Commission.

TREATING PHYSICIAN NEED NOT BE AN EXPERT WITNESS TO TESTIFY ABOUT EMPLOYEE’S DISABILITY

In Delvecchio v. Township of Bridgewater, (A-24-14) (074936), the New Jersey Appellate Division ruled on April 28, 2016, that a Plaintiff may rely on the testimony of a treating physician who has not been designated as an expert witness, to establish the existence of a disability for a claim under the New Jersey Law Against Discrimination (“LAD”), N.J.S.A. 10:5-1 et. seq.  

Ms. Delvecchio worked as a police dispatcher for the Township of Bridgewater (“Township”) for more than 10 years. At that time, the Township maintained three shifts for police dispatchers, including a midnight shift, and required dispatchers to work each of the shifts on a rotating basis. In 2003, Ms. Delvecchio developed inflammatory bowel syndrome (“IBS”), and began treatment with Dr. Gary Ciambotti, a gastroenterologist. Dr. Ciambotti wrote to Ms. Delvecchio’s supervisors and stated that her symptoms were under control as long as she worked regular daytime hours, but would be exacerbated by an assignment to the midnight shift.

For three years, the Township did not require Ms. Delvecchio to work the night shift, but eventually it stated that it was no longer possible to assign her consistently to the daytime shift due to the burden that this imposed on other employees who covered the remaining shifts. In December 2007 the Township asked Ms. Delvecchio to resign. She refused, and accepted another position within the Township as a records clerk, but at a lower salary. On September 26, 2009 the Township terminated Ms. Delvecchio’s employment for neglect of duty and chronic/excessive absenteeism. Ms. Delvecchio sued, claiming that the Township fired her instead of providing her a reasonable accommodation for her disability, in violation of the LAD.

At trial, the judge limited Dr. Ciambotti’s testimony because he had not submitted an expert report. The judge allowed Dr. Ciambotti to testify about the fact that he treated Ms. Delvecchio for IBS, and permitted Ms. Delvecchio to use his notes to prove she requested an accommodation. However, the judge ruled that the doctor could not testify about Ms. Delvecchio’s medical condition even though he had been her treating physician. Moreover, the judge instructed the jury that it could not use his notes to support Ms. Delvecchio’s claim that she had a disability.

The Township provided the testimony of its own expert, Dr. Steven Fiske, who testified that even though he treated thousands of patients who have IBS, none of them were unable to work a night shift because of it. He also stated it was possible that Ms. Delvecchio was using her medical condition as an excuse to avoid being assigned to an undesirable shift.

The jury found that Ms. Delvecchio failed to establish that she had a protected disability within the meaning of the LAD. The judge denied Ms. Delvecchio’s request for a new trial. This appeal to the Appellate Division considered the limited issue of whether the trial judge improperly limited the consideration of Dr. Ciambotti’s testimony.

The Appellate Division reversed the trial court, explaining that although a treating physician is usually an “expert,” they are not required to provide an expert report to be able to testify about facts relevant to their evaluation and treatment of their patient. Accordingly, it ruled that Dr. Ciambotti should have been permitted to testify at the trial court level. The Appellate Division further found that the trial court’s constraint of the testimony was not harmless error. Rather, it was very likely that the exclusion of this evidence may have changed the outcome of this trial since the jury had no evidence to rely on to determine whether Ms. Delvecchio had a disability within the meaning of the LAD. Accordingly, the Appellate Division held that the standard for ordering a new trial, that a miscarriage of justice occurred, was met.

This case clearly represents a victory for employees who seek to vindicate their rights under the LAD.

NY Court Rejects FLSA Settlement That Contains a “No Rehire” Provision

We have negotiated many settlement agreements for claims brought under the New Jersey Law Against Discrimination (“LAD”), the Conscientious Employee Protection Act (“CEPA”), and various other New Jersey laws that have included a provision barring the settling employee from seeking future employment with the defendant employer.  Employers argue in favor of including these clauses in order to prevent future claims of retaliation in the event the employer does not agree to re-hire the employee.  Truth be told, most employees have no desire to work again for the offending employer, but these no re-hire provisions can become complicated when companies are sold and/or merged and the employee seeks future employment with the re-constituted employer.

A federal court in New York (see, Reyes v. Hip at Murray Street) recently refused to approve a proposed settlement for a lawsuit brought under the Fair Labor Standards Act because it contained such a no re-hire provision.  It will be interesting to see if there is more push back on these clauses in settlement agreements for a wider range of employment law claims.  Stay tuned!