PLUTARCO FLORES v. GUARDIAN DRUG COMPANY, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0321-04T10321-04T1

PLUTARCO FLORES,

Plaintiff-Appellant,

v.

GUARDIAN DRUG COMPANY, a

corporation of the State of

New Jersey, and ARVIN DHRUV,

Individually, and in his

capacity as President of

Guardian Drug Company,

Defendants-Respondents.

___________________________________

 

Argued: February 28, 2006 - Decided May 11, 2006

Before Judges Skillman, Axelrad and Miniman.

On appeal from the Superior Court of New Jersey, Law Division, Mercer County, L-2390-99.

John E. MacDonald argued the cause for appellant (Stark & Stark, attorneys; Mr. MacDonald of counsel and on the brief; Michael Osborne, on the brief).

Casey B. Green argued the cause for respondents (Sidkoff, Pincus & Green, attorneys; Casey Green, of counsel; Christopher D. Mannix, on the brief).

PER CURIAM

Plaintiff Plutarco Flores brought a whistleblower claim under the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8, against his former employer, Guardian Drug Company (Guardian), and the president and owner of Guardian, Arvin Dhruv. Following the first trial, the jury found that Guardian violated CEPA when it terminated Flores' employment and awarded him $750,000 in compensatory damages for emotional distress. Defendants moved for a new trial on all issues, a new trial on emotional distress damages only, remittitur and judgment pursuant to Rule 4:40-2. On July 11, 2003, the court granted a new trial on all issues.

A second trial ended in a mistrial. The third trial took place in May 2004, with the jury returning a verdict in defendants' favor. Plaintiff's motion for a judgment n.o.v. or, alternatively, a new trial, was denied by the trial judge by order of September 29, 2004.

Plaintiff appeals from the July 11, 2003 order, arguing that the judge applied the wrong standard when he overturned the first jury verdict as to liability and damages and granted defendants' motion for a new trial. More particularly, he contends the trial judge failed to articulate any evidence that would support the grant of a new trial. Alternatively, if the sole basis for the judge's decision was that he believed the award was too high, plaintiff argues the proper remedy would have been remittitur, rather than the grant of a new trial as to both liability and damages. He also challenges various evidentiary rulings in the first trial. Plaintiff also appeals from the September 29, 2004 order, and argues that as a result of trial errors he was entitled to a judgment n.o.v. at the close of the third trial.

As we are satisfied the first judge erred in granting a new trial on all issues rather than having granted a new trial on damages only, we need not address any of the other issues raised by plaintiff. We are also satisfied that remittitur was the proper remedy and that the circumstances of this case warrant our exercise of original jurisdiction. R. 2:10-5.

The following testimony and evidence was adduced at trial. Guardian is a pharmaceutical manufacturer of over-the-counter antacid drugs. In 1998, Guardian had about eighty employees. Since 1992, Dhruv has been the sole owner of Guardian.

Plaintiff has a two-year mechanical engineering degree from the University of Santo Domingo. In March 1995 he was hired as the plant manager at Guardian at an annual salary of $40,000 with no medical benefits. In his position at Guardian, he managed the plant, maintained the machines and was in charge of security as well as opening and closing the plant. Dhruv agreed that plaintiff was a good mechanic and called upon plaintiff's bilingual skills in training employees and hiring and firing staff who spoke Spanish. Plaintiff testified that he had good job performance evaluations from 1995 through 1997, and received raises and bonuses for each of those years. He claimed that Dhruv was happy with his work and they had a good relationship. Plaintiff testified that Dhruv often commented that "he wanted to clone [him], to have two Plutos running the plant" because of his "mechanical abilities and [his] loyalty to the system."

The only dissension appeared to be plaintiff's employment with Home Depot, which began in January 1995 and continued throughout his employment with Guardian. Plaintiff testified that Dhruv understood he had another job when he was first hired, that plaintiff explained he needed the additional income to support his family, and that Dhruv did not object. Plaintiff testified he made it clear to Dhruv he was not available on a twenty-four hour/seven day a week basis because of his other work commitment. Although Dhruv later expressed his preference that plaintiff not hold two jobs, plaintiff testified Dhruv never told him it interfered with his performance at Guardian and denied Dhruv gave him a $10,000 raise six months after he was hired in return for quitting his job at Home Depot. According to plaintiff, his relationship with Dhruv changed for the worse after the FDA conducted an unannounced periodic inspection at the plant on July 6, 1998. Plaintiff claimed Dhruv told him not to volunteer information, to be careful with what he told the inspectors and to move a piece of machinery into the area of the factory called "junk city" so it would be hidden. According to plaintiff, the following day Dhruv held a meeting with plaintiff and the managers in charge of quality control, production, and manufacturing and packaging and told them to lie to the FDA.

Plaintiff further testified that Dhruv demanded he backdate a performance and operation qualification (PQ/OQ) document for a Siebler machine. Plaintiff objected but, over an express threat from Dhruv of termination if he did not cooperate, on July 7, 1998 plaintiff completed and signed the document to show a completion date of April 13, 1998, and another document to show a date of April 15, 1998. The documents were also signed by Vithal Patel, defendants' vice-president of operations, and Rajani Dakwala, defendants' packaging supervisor. Plaintiff stated that when Dhruv realized the backdated dates were incorrect because the machine was not in the factory at that time, he requested plaintiff backdate a new set of documents, which plaintiff initially refused to do. On July 8, however, plaintiff ultimately signed additional backdated documents because he was "threatened to be fired." After that point, plaintiff purchased a mini-tape recorder because he believed he was being ordered to perform illegal acts and wanted to record such conversations.

Plaintiff asserted that on July 9 there was another meeting where Dhruv instructed employees on how to hide information. On that date, plaintiff also met with the FDA at the plant, and the inspectors requested a large number of documents.

On the following Saturday, plaintiff drove by the factory and saw Dhruv's car parked there, which was very unusual. On Monday, July 13, Dhruv was at the plant and asked plaintiff to take a bag of garbage out and place it in the trunk of Dhruv's car, which was something Dhruv had never asked plaintiff to do before. Plaintiff claimed that Dhruv told him the bag contained ripped-up documents he did not want the FDA to see. Plaintiff took the bag and put it in the trunk of his own car, and found a different bag to put in the trunk of Dhruv's car. In the bag he had taken from Dhruv, plaintiff found a large number of ripped-up documents concerning the manufacturing processes of the plant, which he taped back together. These documents were identified by plaintiff and presented into evidence.

Plaintiff also testified about a meeting he had with Dhruv on July 23, in which he claimed Druv "emphatically insisted" he had to lie to the inspectors or he would be terminated. Plaintiff tape recorded the conversation, which was played to the jury.

Plaintiff further testified that he initiated off-site meetings with FDA agents on July l5, during which he informed them about the backdated information and Dhruv's request that his employees lie to the inspectors and hide equipment from them, and on July 29, when he turned over the documents retrieved from Dhruv's garbage bag. Plaintiff's attorney was present at the latter meeting, as was an FDA agent, a supervisor and an FDA criminal investigator.

On July 31, 1998, Dhruv terminated plaintiff's employment with Guardian, advising him business was slow and he was being temporarily laid off. At that time, plaintiff was earning about $57,500 a year, plus a bonus, from Guardian.

When asked about his financial situation, plaintiff explained that he had received loans from Guardian in 1996 and 1997 for $2000 and $2500, which were repaid in full, and had requested a loan of $5000 several months prior to termination, which Dhruv had denied. Plaintiff was in bankruptcy at the time of the FDA inspection. He testified that when he was threatened with termination of employment by Dhruv, he was "devastated" and "scared" because he "need[ed] the income for [his] family," consisting of three daughters and a granddaughter, as he was the breadwinner and had a mortgage. Plaintiff testified further that after he was terminated, following three and one-half years of service to Guardian, he felt "[b]etrayed," explaining:

I did everything for this company. From working hard, cleaning it, training. Improving the system, the equipment. I was there even when the machines -- 24 hours a day I was covering this place. I was in charge of security as you'll remember and even in the middle of the night at three o'clock in the morning [the] alarm goes off, I have to get up and run over, deal with the police and get a report and just move on from there. This is not something, you know, to me this was part of -- it was part of me. You know, I had a lot of pride in what I was doing. And all of a sudden he terminates me because I don't want to lie to the government.

Plaintiff further explained that the termination affected him financially and emotionally and impacted on his marriage. He had children in private school and his wife was not working, thus the termination affected his "wife [and] the whole family."

Plaintiff also testified that it was "tough" for him to support himself and put food on the table for his family after he was terminated from Guardian. He worked part-time at Home Depot and requested full-time employment, which "took some time." He also started diligently looking for employment in his field or otherwise so he could provide for his family. After Home Depot, plaintiff was employed as a quality control manager for Spalding Automotive for seven months and then became the administrator of plant services for Greystone Hospital through trial. In 1997, he earned $88,296 from all work, and in 1999, the year after the firing, he earned $80,805.

Abbas Dahodwala, Guardian's Vice President of Marketing and Finance, corroborated plaintiff's testimony that Dhruv fired plaintiff because he was not cooperating with Dhruv regarding the FDA inspection and he was not willing to do certain things Dhruv asked him to do. Dahodwala explained that the three of them had a short meeting the day before plaintiff was fired, in an attempt to resolve the deadlock, during which Dhruv asked plaintiff to go along with him regarding the backdating of records for a piece of equipment that had been placed into service to meet FDA requirements. Dahodwala stated that plaintiff objected to what he was being told to do and was quite upset because he felt that Dhruv was asking him to lie to federal investigators.

Dhruv testified he told plaintiff the job at Guardian required full-time attention and he could not work for Guardian and Home Depot at the same time. Dhruv further testified he gave plaintiff a $10,000 raise so he would leave his job at Home Depot, but plaintiff did not do so. According to Dhruv, on a few weekends, when plaintiff was working at Home Depot, the machines were not working correctly and they were put together improperly, which necessitated plaintiff fixing them on Monday, creating delays in production.

Dhruv admitted he had a meeting the first day the FDA arrived and told his staff, including plaintiff, not to volunteer information to the FDA inspectors, but denied he told anyone to lie. He denied he requested any documents be backdated, but could not explain why all three of his executives signed the documents in July qualifying the Siebler machine as of April 13 and l5, 1998. According to Dhruv, when he realized plaintiff had dated the forms prior to the date the technicians had arrived from Germany and qualified the machine, he requested that plaintiff admit his mistake to the FDA inspector. Dhruv stated that plaintiff's response was out of control, so Dhruv ultimately took responsibility for the mistake. Accordingly, Dhruv signed a certification on July 20 stating that he brought to the attention of the FDA inspectors that the documents misrepresented the dates and that the correct date of the qualification was April 30, 1998.

Dhruv further denied ever handing plaintiff a trash bag or ripping up documents. He reviewed the documents plaintiff gave to the FDA and explained there was nothing there he did not want the FDA to see.

Dhruv also testified about loans he gave to plaintiff over the years, which were repaid. According to Dhruv, around the third week of July plaintiff sought to extort a $3500 loan, claiming there would be no problem with the FDA, which Dhruv refused to give him. Dhruv also testified that plaintiff did not cooperate with him and the FDA inspection. Rather than becoming involved when a specific question was asked in the area of his expertise, Dhruv claimed plaintiff followed the inspector around the plant and interfered with "anybody and everybody." Dhruv testified he did not fire plaintiff because plaintiff was talking to the FDA and he did not know plaintiff was doing so off-site. He fired plaintiff primarily because plaintiff promised he would put in a full-time effort at Guardian and would not work at Home Depot; however, plaintiff continued to work at his other job and his work performance at Guardian was affected because he was not available when needed. Additionally, sales were down thirty percent at Guardian; plaintiff lied about Dhruv to the FDA; he tried to extort money; and Dhruv did not trust him. Dhruv further testified that the FDA did not impose any penalties or sanctions following its inspection and plaintiff's disclosures to its inspectors. Following the inspection, however, a product was recalled as a result of an error by Guardian in the solution testing, which product was thereafter banned by the FDA.

Plaintiff's theory of the case, expressed in summation, was that he was fired on July 31, 1998 because he made the "courageous decision" to tell the FDA inspectors about the backdating of the Siebler machine documents and to provide documents to them that Dhruv had sought to destroy. Plaintiff argued that the reasons given by Dhruv for his termination were pretextual, as Dhruv was aware that plaintiff had been working at Home Depot during the entire three years of his employment and took no action, nor did he fire plaintiff after the alleged extortion attempt or even mention it at the meeting with Dahodwala. Moreover, Dhruv acknowledged it was not plaintiff's fault that sales were down in l998. According to plaintiff, his actions constituted "whistleblowing" activities under CEPA, he was fired in retaliation for his actions and, as a result of the CEPA violation, he was entitled to compensatory damages for emotional distress and punitive damages.

As set forth in the jury interrogatories of the first trial, the jury made the following findings on liability:

Question 1:

Did plaintiff prove by a preponderance of the evidence that he reasonably believed that an activity, policy or practice of his employer was in violation of a law, rule or regulation promulgated pursuant to law?

Yes X No _

8-0

If your answer is yes, then proceed to Question #2

. . . .

Question 2:

A) Did plaintiff prove by a preponderance of the evidence that he disclosed or threatened to disclose to a supervisor or to a public body regarding that activity, policy or practice

OR

B) Did plaintiff prove by a preponderance of the evidence that he objected to or refused to participate in an activity, policy or practice which plaintiff reasonably believed:

a) is in violation of a law or a rule or regulation promulgated pursuant to law;

b) is fraudulent or criminal; or

c) is incompatible with a clear mandate of public policy concerning the public health, safety, and welfare or protection of the environment?

Sub-question A Yes X8-0

Sub-question B Yes X8-0

If your answer to either sub-question is yes, then proceed to Question #3.

. . . .

Question 3:

Did plaintiff prove by a preponderance of the evidence that an adverse employment action occurred?

Yes 8-0

If your answer is yes, then proceed to Question #4.

. . . .

Question 4:

Did plaintiff prove by a preponderance of the evidence that there was a causal link between the plaintiff's action and the retaliatory or adverse action of the defendant?

Yes 8-0

Having found liability in favor of plaintiff, the first jury then awarded plaintiff $750,000 in compensatory damages and no punitive damages. The following is the trial judge's stated basis for granting defendants' motion for a new trial on all issues:

Now, [plaintiff] looks totally resplendent. This matter initially is governed by Rule 4[:]49-1(a), as trial [counsel] knows. A new trial may be granted, and I am skipping, "as to any and all of issues on motion made to the trial judge on a motion for a new trial. The judge, in the application here for jury trial, shall grant the motion if having given due regard to the opportunity of the jury to pass upon the credibility of the witnesses it clearly and convincingly appears that there was a miscarriage of justice under the law.["]

The essential award of a judgment in determination of liability is based upon essentially a finding the emotional distress that this individual allegedly experienced. And as a result, the jury awarded $750,000 in monetary damages. Based upon the specific facts of this case, and not as comment generally on what are the proper damages generically for emotional distress, I find that award to be shocking and a total miscarriage of justice. I do not know how the jury conceivably, based upon th[e] facts of the case, even if they found liability, could have arrived at such an award, based upon the facts, again, of this case. And I am concerned that the size of the award may evidence, well evidence, a misguided evaluation of the liability issue. And, as a result, I am not going to apply remittitur. I am going to enter an order that there be a new trial as to both liability and damages. . . .

It is clear from these comments that the court's sole basis for granting a new trial on all issues, rather than remitting the verdict or ordering a new trial on damages only, was the excessive damage award. Such ruling is contrary to the holding in Fertile v. St. Michael's Med. Ctr., 169 N.J. 481 (2001), that the size of the damage award, standing alone, is insufficient to invalidate an otherwise sound liability verdict. As the Court stated:

The refusal of any trial or appellate court to invalidate an otherwise justifiable liability verdict based solely on the award of grossly excessive damages in the thirty years since Taweel [v. Starn's Shoprite Supermarket, 58 N.J. 227 (1971)] is not a coincidence. In our view, it is an implicit repudiation of the essentially standardless exercise of distinguishing between excessive and grossly excessive damages awards to determine whether a liability verdict has been impaired by passion, prejudice, or bias. Given that excessive damages in themselves must shock the judicial conscience, Baxter [v. Fairmont Food Co.], 74 N.J. [588,] 595 [(1977)], there is simply no principled distinction between those damages and grossly excessive ones. Moreover, there is no logical reason why the size of a damages award, standing alone, should invalidate an otherwise sound liability verdict. A "feeling" that something is amiss is an inadequate basis to upend an otherwise untainted verdict.

To the extent that Taweel suggests the contrary, it is disapproved. Our guiding principle is that passion, prejudice, or bias warranting a new trial on liability generally cannot be established merely by the excessiveness of a damages award, regardless of its size. (citations omitted). To justify a new trial on all issues, what is required is trial error, attorney misconduct or some other indicia of bias, passion or prejudice, impacting on the liability verdict. In the absence of such indicia, a trial court faced with an excessive damages award can only order a new damages trial, whether or not conditioned on remittitur. . . .

[Id. at 498-99 (emphasis added).]

Defendants in the present case do not argue this is the type of case noted as an exception in Fertile where the issue of damages is so interrelated with liability that one cannot be retried alone without working an injustice. Id. at 499 n.7 (citing Ahn v. Kim, 145 N.J. 423, 434-435 (1996)). Rather, they acknowledge the Fertile standard but urge that the additional basis for granting a new trial on all issues is the "prejudicial misstatements" of plaintiff's counsel in his openings and closings telling the jury to "punish" defendants, which they claimed "tainted" the jury and "poisoned the deliberative process." We are not persuaded by this argument. There was no objection at trial to plaintiff's counsel's remarks about "punishing" Guardian. Furthermore, the jury was charged on punitive, as well as compensatory damages, making such comments appropriate.

Though a close case, we are satisfied there was ample basis in the record to support the liability verdict in favor of plaintiff for violation of CEPA. It is also clear that the $750,000 compensatory damage award for emotional distress was excessive in light of the paucity of plaintiff's proofs, and that it is not sustainable on the evidence presented at trial. Thus, as neither the trial court nor defense counsel identified any type of "trial error, attorney misconduct or some other indicia of bias, passion or prejudice, impacting on the liability verdict," pursuant to Fertile, supra, 169 N.J. at 99, the trial court was limited to ordering a new damages trial, whether or not conditioned on remittitur. Accordingly, the trial court erred in granting defendants' motion for a new trial on all issues.

We thus reverse the court's order of July 11, 2003. We reinstate the liability verdict in favor of plaintiff.

It does not appear that plaintiff's counsel actually disputes that the verdict was excessive and, in fact, argues that remittitur would have been an appropriate remedy for the trial court. A remittitur, which is used not only to correct a miscarriage of justice, but also to avoid the expense and delay of a new trial, has a long history in New Jersey. Fertile, supra, 169 N.J. at 492; Baxter, supra, 74 N.J. at 595-98. There is no question as to the power of our trial and appellate courts to exercise the power of remittitur and, in fact, the practice of remittitur is encouraged at both levels of the court to avoid unnecessary expense and the delays of a new trial. Fertile, supra, 169 N.J. at 492; Caldwell v. Haynes, 136 N.J. 422, 443 (1994); Tomaino v. Burman, 364 N.J. Super. 224, 231 (App. Div. (2003), certif. denied, 179 N.J. 310 (2004). Although assessing the amount of a remittitur, which is "a slightly more complicated function than merely determining entitlement to a new damages trial," Fertile, supra, 169 N.J. at 500, should ordinarily be left to the trial court, which has a "feel of the case," Tomaino, supra, 364 N.J. Super. at 235, we are satisfied the circumstances of this case warrant our exercise of original jurisdiction. R. 2:10-5. Plaintiff's employment was terminated in l998; three years have elapsed since his first trial; the trial judge is no longer assigned to the Law Division; and plaintiff incurred the unnecessary expense of two additional trials. We thus review the record to determine "the highest figure that could be supported by the evidence" in order to compute an appropriate remittitur in this matter. Fertile, supra, 169 N.J. at 500.

We are satisfied that damages are recoverable in a CEPA case for emotional distress and that the proper standard is the one applicable in LAD cases. In Nardello v. Twp. of Voorhees, 377 N.J. Super. 428, 430-32 (App. Div. 2005), a police officer brought an action under CEPA claiming he was retaliated against because of concerns he raised about behavior in his department. The Law Division dismissed the complaint on summary judgment. Id. at 430. We reversed, stating:

We are mindful that plaintiff suffered no reduction in pay during the course of his employment. He claims among other things, however, that he suffered emotional distress as a result of his employer's actions. As our New Jersey Supreme Court recently noted in a case brought under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -42, "the Legislature intended victims of discrimination to obtain redress from mental anguish, embarrassment, and the like, without limitation to severe emotional or physical ailments." Tarr v. Ciasulli, 181 N.J. 70, 81, 853 A.2d 921 (2004). We are satisfied that this same analysis may be applied in a CEPA action.

[Id. at 436.]

See also Mehlman v. Mobil Oil Corp., 153 N.J. 163, (1998) (upholding the CEPA award, which included an emotional distress damage component).

Plaintiff's testimony on damages was limited, but we are satisfied it is sufficient under the LAD standard to support a finding of emotional distress damages. As the Court held in Tarr, supra, 181 N.J. at 81:

To suffer humiliation, embarrassment and indignity is by definition to suffer emotional distress. Emotional distress actually suffered in that manner by the victim of proscribed discrimination is compensable without corroborative proof, permanency of response, or other physical or psychological symptoms rendering the emotional distress severe or substantial. . . .

[(quoting Tarr v. Ciasulli's Mack Auto Mall, 360 N.J. Super. 265, 276-77 (App. Div. 2004).]

Plaintiff testified he was told by Dhruv to hide a piece of machinery from the FDA inspectors and was consistently instructed to lie to them and to hide information. He was then pressured to falsify documents and only acquiesced under the express threat of termination if he failed to cooperate. He was thereafter pressured to backdate additional documents and to take the blame for the misdated forms. Plaintiff further testified he was "devastated" and "scared" when he was threatened with termination because he needed the income to support his wife, three daughters and granddaughter, as he was the breadwinner, had a mortgage and his children were in private school. Dahodwala also described plaintiff as visibly upset that Dhruv had asked him to lie to the federal inspectors and that his job was in jeopardy.

Plaintiff also testified that after giving three and one-half years of dedicated service to Guardian, where the job was a part of him and for which he felt pride, he felt "betrayed" when he was terminated by Dhruv because he did not want to lie to the government. Plaintiff further explained that the termination affected him financially and emotionally, and impacted on his marriage. Furthermore, it was "tough" for him to support himself and put food on the table for his family after he was fired by Dhruv, and it took some time for him to obtain full-time employment at Home Depot.

Based on our careful review of the record, we conclude that the compensatory damage award for plaintiff's emotional distress should be reduced to the sum of $12,500, and we so direct. If our remittitur determination is not acceptable to plaintiff, a new trial for damages only is directed.

In summary, the July 11, 2003 order granting a new trial on all issues is reversed; the liability verdict entered in favor of plaintiff at the first trial is reinstated, and the $750,000 compensatory damage award is vacated as excessive and is remitted to the sum of $12,500.

Reversed and remanded for further action consistent with this opinion.

 

Judge Miniman was not present for oral argument but has reviewed the tape recording of the session.

(continued)

(continued)

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A-0321-04T1

May 11, 2006