New Jersey Supreme Court Addresses Proof and Evidence Issues in Retaliation Case

The New Jersey Law against Discrimination, N.J.S.A. 10:5-1 et seq., (the LAD), as do most laws prohibiting discrimination in employment, makes it unlawful for an employer to retaliate against an employee who makes a complaint of discrimination. The employer may be held liable for the retaliation alone, even if the employee ultimately cannot prove that discrimination, in fact, had occurred. In Carmona v. Resorts International Hotel, Inc., ___ N.J. ___, 2007 WL 517104(Feb. 21, 2007), the New Jersey Supreme Court considered an appeal arising out of a retaliation claim brought under the LAD by a hotel desk clerk who claimed he was terminated for complaining that the employer’s medical leave practices discriminated against Hispanics. The employer claimed that the plaintiff was terminated for stealing. Both the trial court and the Appellate Division held that (1) the LAD contains no independent requirement that a plaintiff in a LAD-retaliation case also prove that the complaint predicate to a retaliation claim must have a reasonable, good-faith basis, and (2) it was proper to exclude from evidence an investigative report offered by the employer as an independent basis for the termination decision. The New Jersey Supreme Court considered both of these issues and reversed the lower courts on both issues.

Facts

Plaintiff was hired as a desk clerk by Resorts in Atlantic City. Plaintiff was a recovering cocaine user who missed work on several occasions because of relapses. Resorts had a progressive discipline policy for absenteeism, but the policy did not apply in instances of serious misconduct, including theft. Plaintiff had accumulated absences to the point whereby one more unexplained or unauthorized absence would subject him to termination. Although plaintiff’s supervisor explained to him that absences pursuant to an approved medical leave would not be counted against him, plaintiff did not seek medical leave to treat his cocaine dependency. Instead, he made a complaint to the Director of Resorts’ Equal Employment Opportunity Department that Resorts applied its absenteeism/termination policy in a way that discriminated against Hispanics. Specifically, he cited to the way in which the policy was being applied to himself and another desk clerk William Santiago, both Hispanic, as compared to the way the policy had been applied to one Robin Hewitt, another desk clerk. Resorts’ EEO director informed plaintiff that she would conduct an investigation of his allegations but terminated the investigation when she was advised that both plaintiff and Santiago had been terminated for stealing.

At about the time of plaintiff’s discrimination complaint, both he and Santiago had been under investigation by Resorts for upgrading room accommodations for “tips” without authorization. When interviewed, Santiago admitted doing so and implicated plaintiff, among others. Plaintiff when interviewed also admitted to the upgrading without authorization but denied taking “tips.” According to Resorts’ investigative report, he had no answer when asked what his motive had been.

Subsequently, plaintiff sued Resorts, “claiming that Resorts had violated the LAD by allowing a hostile work environment; by discriminating against him in respect of the medical leave of absence and attendance policy; and by retaliating against him for complaining to Resorts’ EEO office of the alleged harassment and discrimination.” During the litigation Plaintiff voluntarily withdrew his hostile work environment and discrimination claims, maintaining only his retaliation claim. At trial, Resorts sought to introduce the investigative report into evidence. as a business record relevant prove it motivation in terminating the plaintiff. The trial court, however, ruled that the report was inadmissible hearsay, although the court did permit Resorts to demonstrate that an investigation had taken place that led to a report and permitted the investigator to use the report to refresh his recollection when testifying. In excluding the report the trial court reasoned that because it had been maintained electronically, it had been subject to possible tampering.

In addition, the trial court rejected Resorts’ request that the jury be instructed that to establish his retaliation claim the plaintiff had to prove that he had a good faith, reasonable basis to make a discrimination complaint in the first place.

During its deliberations the jury requested to see a copy of the investigative report but the trial court denied the request. The jury returned a verdict in plaintiff’s favor on the retaliation claim and awarded plaintiff $175,000 in compensatory damages and $3,400 in lost wages. The Appellate Division affirmed the judgment of the trial court.

The Supreme Court’s Decision

The Supreme Court first addressed Resorts’ claim “that, as a condition precedent to a retaliation claim under the LAD, a plaintiff bears the burden of proving that his or her initial complaint that triggered the later claimed retaliation was filed reasonably and in good faith in the first instance.” The Court noted that “[i]n the development of this State’s anti-discrimination jurisprudence, we have frequently looked to case law under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e, for guidance in developing standards to govern the resolution of LAD claims.” The Court also noted that its “continuing examination of the LAD has led us also to look to subsequent legislative enactments for guidance on the LAD’s scope. Thus, we have compared the LAD with the later-adopted Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8. The Court noted that “to sustain a cause of action under CEPA’s anti-retaliation provisions, it is not enough that the employee ‘blow any whistle.’ A CEPA plaintiff must show that ‘he or she reasonably believed that his or her employer’s conduct was violating either a law, rule, or regulation promulgated pursuant to law, or a clear mandate of public policy[.]'” The Court then held that “a requirement that a LAD-retaliation plaintiff demonstrate that his underlying complaint was reasonable and in good faith is entirely consonant with the purpose of the LAD.” The Court noted that in so holding it was following federal precedents, under which a plaintiff must show he or she had a reasonable, good-faith belief that discrimination occurred to prevail on a retaliation claim. The Court reasoned that this requirement as an element of plaintiff’s required proofs in a LAD-retaliation claim is required to prevent abuse. “Common sense tells us that the Legislature could not have intended that the LAD provide a safe harbor to one who files a baseless, meretricious complaint. It also tells us that the LAD cannot protect one who preemptively files a complaint solely in anticipation of an adverse employment action by the employer. Thus, the Court held that “in a case in which a plaintiff alleges retaliation under the LAD, N.J.S.A. 10:5-12d, the plaintiff bears the burden of proving that his or her original complaint-the one that allegedly triggered his or her employer’s retaliation-was made reasonably and in good faith. The obverse also holds true: an unreasonable, frivolous, bad-faith, or unfounded complaint cannot satisfy the statutory prerequisite necessary to establish liability for retaliation under the LAD.” Finally the Court concluded that under the facts of the case before it, the jury could very well have reached a different result had it been properly instructed on the plaintiff’s burden to prove that he had a good faith, reasonable basis for his discrimination complaint.

The Supreme Court next addressed the trial courts exclusion form evidence of Resorts’ investigative report. The Court held that the report was not hearsay because it had not being offered to prove the truth of the allegations against plaintiff as made in the report but had been offered to prove Resorts’ actual motivation in terminating the plaintiff. The Court held that “within the usual limits that govern the admissibility of evidence as a whole, an investigative report concerning an employee is admissible as non-hearsay statements whenever the employer’s motivations are directly at issue. As a general proposition, ‘[w]here statements are offered, not for the truthfulness of their contents, but only to show that they were in fact made and that the listener took certain action as a result thereof, the statements are not deemed inadmissible hearsay.’ In reaching this conclusion, the Court again found guidance in the federal precedents, noting that that N.J.R.E. 801(c) is identical to its federal counterpart, Fed.R.Evid. 801(c). Thus the Court held that the trial court abused its discretion when it excluded Resorts’ investigative report as hearsay. “Instead, that report would be admissible as a non-hearsay statement relevant to show that Resorts terminated plaintiff’s employment for non-pretextual reasons, provided Resorts also demonstrates (1) that one of its decision makers knew of the report’s contents and acted in reliance thereof, and (2) that all portions of the report were separately admissible or properly and intelligibly redacted. The Court cautioned, however, that, “like any other evidence, the tender of an investigative report must be relevant. Thus, it is not enough for an employer to simply state that it has an investigative report concerning a terminated employee and that such report is ipso facto relevant to the terminated employee’s discrimination or retaliation claim. That relevance burden requires that the employer also prove a logical nexus between the report and the witness who speaks of it, that is, that the employer knew of the report’s contents and acted based on the information therein contained. The Court also noted the potential “hearsay within hearsay” issue, cautioning that “if the investigative report itself contains hearsay statements, each of these must be separately admissible or it is subject to redaction.”

Finally, assuming, arguendo, the investigative report constituted a business record for purposes of the hearsay rule, the Court rejected the trial court’s ruling the report was inadmissible because it had been maintained electronically. The Court held that “business records maintained in a computer system are not treated differently from hard copies merely because they are stored electronically. Stated in the context of the business records exception to the hearsay rule, ‘[t]here is no reason to believe that a computerized business record is not trustworthy unless the opposing party comes forward with some evidence to question its reliability.’. . . All that is needed to lay the foundation for the admission of systematically prepared computer records otherwise qualified as business records is if “the witness (1) can demonstrate that the computer record is what the proponent claims and (2) is sufficiently familiar with the record system used and (3) can establish that it was the regular practice of that business to make the record.'”

Conclusion

The Carmona decision represents an important victory for employers. The requirement that an employee have a good faith, reasonable belief that he or she been the victim of discrimination as a prerequisite to a retaliation claim will serve to protect employers from frivolous claims of discrimination and retaliation. Employers can also take comfort in the decision’s rulings with regard to the investigative reports issue. It is now clear that employers who conduct investigations of alleged employee wrongdoing are free to rely on the reports of those investigations in defending against charges of discrimination or retaliation. Subject to the relevance requirements discussed by the Court, those reports will be admissible to support the employer’s position that it took action against the employee for purely non-discriminatory or non-retaliatory reasons.