DIANA ACEVEDO v. FLIGHTSAFETY INTERNATIONAL INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

DIANA ACEVEDO,

Plaintiff,

and

REX FORNARO,

Plaintiff-Appellant/

Cross-Respondent,

v.

FLIGHTSAFETY INTERNATIONAL,

INC.,

Defendant-Respondent/

Cross-Appellant,

and

GREG WEDDING, DANNY ROBAYO,

and LISA ESPOSITO,

Defendants.

March 6, 2017

Argued October 5, 20161 - Decided

Before Judges Reisner, Koblitz and Sumners.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-8474-10.

Ty Hyderally argued the cause for appellant/cross-respondent (Hyderally & Associates, attorneys; Mr. Hyderally, of counsel and on the brief; Francine Foner, on the brief).

Steven Adler argued the cause for respondent/cross-appellant (Mandelbaum Salsburg, attorneys; Mr. Adler, of counsel and on the brief).

Kathryn K. McClure argued the cause for amicus curiae National Employment Lawyers Association of New Jersey (Deutsch Atkins, P.C., attorneys; Ms. McClure, of counsel and on the brief).

Andrew Rubin argued the cause for attorneys pro se (Lurie Law Firm, attorneys; Mark D. Lurie, of counsel and on the brief).2

The opinion of the court was delivered by

REISNER, P.J.A.D.

Plaintiff Rex Fornaro, a flight instructor, filed a disability discrimination and retaliatory discharge claim against his employer, defendant Flightsafety International, Inc. (Flightsafety), a flight training school, under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-12 to -49 (LAD).3 In rendering its verdict, the jury found that defendant fired plaintiff due to his disability and as a reprisal for seeking accommodation of his disability.

The jury awarded defendant back pay of about $83,000, but awarded nothing for pain and suffering, apparently rejecting plaintiff's testimony that he was emotionally devastated by the loss of his job. The trial judge reduced the back pay award by about $14,000, representing fifty percent of the unemployment compensation plaintiff had received. A second judge heard the counsel fee motions and awarded plaintiff's trial counsel about $275,000 in fees and costs, and awarded about $104,500 in fees and costs to the law firm that represented plaintiff prior to trial.

Plaintiff appeals, contending that the trial judge erred in offsetting his back pay award by fifty percent of his unemployment compensation, dismissing his punitive damages claim at the close of the trial evidence, dismissing his separate claim against defendant for failure to accommodate his disability, dismissing the individual defendants, and declining to recuse herself from post-trial motions other than the counsel fee applications.

Defendant cross-appeals, arguing that the judge should have offset the back pay award by the entire amount of plaintiff's unemployment compensation, plaintiff failed to prove a prima facie case of discrimination, and the verdict was against the weight of the evidence. Defendant further contends that the trial judge erred in excluding evidence of plaintiff's prior lawsuits and in recusing herself from hearing the fee motions, and that the second judge awarded an excessive amount of fees.

We hold that the collateral source statute, N.J.S.A. 2A:15-97, does not apply to LAD cases, and we find no other basis on which to deduct unemployment compensation from back pay awarded under the LAD. Therefore, we reverse that portion of the judgment reducing plaintiff's back pay award by one-half of the unemployment compensation he received. We remand for the limited purpose of entering an amended judgment reflecting that modification. In all other respects, we affirm on the appeal and the cross-appeal.

I

We begin by addressing defendant's contentions that the verdict was against the weight of the evidence and the trial court should have granted its motions for judgment at the close of the evidence, or for judgment notwithstanding the verdict. For purposes of our discussion, a brief summary of the parties' evidence will suffice.

Plaintiff worked for Flightsafety as a pilot instructor at the Teterboro training center for eleven and one-half years. There was no dispute that he was an excellent instructor and was well-liked by the firm's clients, who paid up to $60,000 each to be trained as jet pilots. In fact, the center's manager admitted referring to plaintiff as a "rock star."

Plaintiff produced evidence that, for the first several years of his employment, he received excellent evaluations. He also produced evidence that he eventually developed herniated discs in his spine which required him to take periodic medical leaves of absence, and that he also suffered a torn meniscus in his knee. The knee injury required him to request an additional accommodation shortly before he was fired.

Although defendant honored his requests for leaves of absence due to the herniated discs, plaintiff produced evidence that he received lower job evaluations after he sought and received those accommodations. He also produced some evidence that his supervisors criticized and disciplined him for matters that, according to plaintiff, were either trivial or unsubstantiated, or for which other employees were never disciplined.

On the other hand, defendant produced evidence that, in its view, plaintiff was a difficult employee who liked to do things his way and resisted taking on additional assignments that did not directly involve classroom teaching. According to defendant, plaintiff was suspended from work because he failed to consistently arrive at his assigned classroom fifteen minutes before the class was scheduled to start and failed to get permission before working at home on a coursework project. Defendant claimed that plaintiff was then fired because he failed to submit a sufficiently specific "corrective action plan" addressing those failings. Defendant admitted that other instructors had failed to arrive early to their classes but were not disciplined, and no other employee had been required to submit a corrective action plan.

Plaintiff's version was that defendant's underlying criticisms of his work were inaccurate, and the requirement of the corrective action plan was a "set up" to get him to admit that he violated policies that either did not exist or which he had not violated. According to plaintiff, the five-page corrective action plan that he submitted was a last-ditch effort to try to save his job, by reminding defendant that he was an excellent employee who should be valued, not suspended or terminated.

After reviewing the entire trial transcript, we find no miscarriage of justice in the verdict. R. 2:10-1. The case hinged on credibility, and reasonable jurors could have found plaintiff more credible than the defense witnesses. We owe enormous deference to the jury's role as fact finders, bearing in mind that they see and hear the witnesses and have a feel for the case which we cannot obtain from a cold record. Fritsche v. Westinghouse Elec. Corp., 55 N.J. 322, 330 (1970). Making credibility determinations is exclusively the jury's role, and neither we nor the trial judge may substitute our evaluation for that of the jury. City of Long Branch v. Liu, 203 N.J. 464, 491 (2010) ("It is the unique role of the jury to assess the credibility of the witnesses and the weight to be given to their testimony."). We agree with the trial judge that rational jurors could have determined that defendant's explanation for terminating plaintiff's employment was a pretext to get rid of him because of his disability or to retaliate against him because of his most recent request for a leave of absence due to his torn meniscus.

The trial judge's insights about the case, as she expressed them, are telling. During oral argument of defendant's motion for judgment notwithstanding the verdict, the trial judge stated, based on her own observation of the testimony, that defendant's witnesses appeared to have come in to "testify without getting themselves really prepared" and it seemed to her that they "were kind of . . . up here winging it a little bit." She also acknowledged thinking to herself during their testimony that "you could look at their testimony and think, we're getting a couple of things different from what was in the written [documentation] and you could either say to yourself, well, that's just because they haven't read it in a while or you could say to yourself, it's because they're kind of like dancing around what really happened." Like the jury, the trial judge had the opportunity to observe the witnesses, and we owe some deference to her impressions of their testimony. See Klawitter v. City of Trenton, 395 N.J. Super. 302, 324 (App. Div. 2007).

In short, we are persuaded that this case could have gone either way depending on which witnesses the jurors believed. They obviously found plaintiff's evidence more persuasive, and we find no basis to second-guess them.

II

Next, we address whether plaintiff's back pay award should be offset by the amounts of unemployment compensation he received. After his termination from Flightsafety, plaintiff was unemployed for eleven months, during which he received unemployment benefits. He then obtained a position as a pilot instructor with another company, at a higher salary than he was earning at Flightsafety.

Defendant argues that the entire amount of unemployment benefits plaintiff received should have been deducted from the back pay award; plaintiff contends that none of it should have been deducted. Amicus curiae National Employment Lawyers Association of New Jersey, Inc. supports plaintiff's position that unemployment benefits should not be deducted from back pay awarded under the LAD.

The trial court reduced plaintiff's back pay award by one-half of the unemployment benefits he received, reasoning that this result was equitable because both the employer and the employee had contributed to the State unemployment fund. We review a trial court's legal interpretations de novo. Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995).

On this appeal, defendant initially relied on N.J.S.A. 2A:15-97, which provides as follows

In any civil action brought for personal injury or death, except actions brought pursuant to the provisions of [N.J.S.A. 39:6A-1] et seq., if a plaintiff receives or is entitled to receive benefits for the injuries allegedly incurred from any other source other than a joint tortfeasor, the benefits, other than workers' compensation benefits or the proceeds from a life insurance policy, shall be disclosed to the court and the amount thereof which duplicates any benefit contained in the award shall be deducted from any award recovered by the plaintiff, less any premium paid to an insurer directly by the plaintiff or by any member of the plaintiff's family on behalf of the plaintiff for the policy period during which the benefits are payable. Any party to the action shall be permitted to introduce evidence regarding any of the matters described in this act.

[Ibid.]

It is clear from its language and legislative history that this statute was intended to reduce automobile insurance premiums by abrogating the common-law collateral source rule in personal injury cases.

The Legislature's purpose in enacting N.J.S.A. 2A:15-97 was to do away with the common-law collateral-source rule. That rule permits a tort victim to retain collateral benefits--that is, benefits that do not come from a defendant--in addition to any amount that the victim might recover from that defendant. The effect of the rule is to deny a wrongdoer the benefit of any rights that the victim might have against other entities based on contract, employment, or some other relation. Patusco v. Prince Macaroni, Inc., 50 N.J. 365, 368 (1967). The premise of the rule is that "[i]t should not concern the tortfeasor that someone else is obligated to aid his victim because of a duty assumed by contract or imposed by law," ibid., and that "an injured party may recover fully from a tortfeasor for personal injuries notwithstanding that much of his loss was covered by contractual arrangements, such as for example an accident or life insurance policy."

[Kiss v. Jacob, 138 N.J. 278, 281 (1994) (quoting Theobald v. Angelos, 44 N.J. 228, 239 (1965)).]

In Kiss, the Court recognized that the Legislature enacted the statute "in an effort to control spiralling automobile-insurance costs[.]" Id. at 282 (citing Statement to Senate Bill No. 2708 (Nov. 23, 1987)).

Neither the plain language nor the history and purpose of N.J.S.A. 2A:15-97 supports its application to LAD cases. Implicitly acknowledging the weakness of its statutory argument, defendant subsequently modified its position, contending that unemployment benefits should be deducted from LAD back pay awards as a matter of policy, on a discretionary basis, to avoid giving a LAD plaintiff a double recovery. We cannot agree.

The LAD is remedial legislation, intended "to eradicate the cancer of discrimination[,]" protect employees, and deter employers from engaging in discriminatory practices. Jackson v. Concord Co., 54 N.J. 113, 124 (1969); see Nini v. Mercer Cty. Cmty. Coll., 202 N.J. 98, 108-09 (2010) (quoting Fuchilla v. Layman, 109 N.J. 319, 334, cert. denied, Univ. of Med. & Dentistry v. Fuchilla, 488 U.S. 826, 109 S. Ct. 75, 102 L. Ed. 2d 51 (1988)). Shifting the benefit of unemployment compensation from the wronged employee to the discriminating employer does not serve the LAD's deterrent purpose. See Nini, supra, 202 N.J. at 108-09. The Legislature has amended the LAD multiple times since 1987, and has never adopted a provision such as N.J.S.A. 2:15-87 providing for the deduction of unemployment compensation from back pay awards.4

Moreover, as one commentator has observed, the Division on Civil Rights, the agency charged with enforcing the LAD, does not deduct unemployment benefits from back pay awards. See Rosemary Alito N.J. Employment Law, 4-54, at 359 (2014).

We also note that the model jury charge applicable to damages in LAD cases specifically provides that unemployment benefits are not deducted from back pay awards. Model Jury Charge (Civil), 2.33A(8) "General Mitigation Principles" (2014). The charge contains a footnote to two cases, discussed below, which specifically address the collateral source rule in the employment context. See Sporn v. Celebrity, Inc., 129 N.J. Super. 449, 459-60 (Law Div. 1974); Craig v. Y & Y Snacks, 721 F.2d 77, 83-84 (3d Cir. 1983). Research reveals that Model Charge 2.33A(8) has remained the same since 1993. See Model Jury Charge (Civil), 2.33A(8) "General Mitigation Principles" (1993); Notice to the Bar: Model Civil Jury Charges Updates, 218 N.J.L.J. No. 5 (Nov. 3, 2014). While model jury instructions are not binding authority, State v. Bryant, 419 N.J. Super. 15, 28 (2010), the re-adoption of this model charge in 2014 signals a consensus that those cases are still regarded as persuasive authority in this area of law.

In Sporn, the court applied the common-law rule to a case involving an employer's breach of an employment contract. The court reasoned

Reducing recovery by the amount of the [unemployment] benefits received by plaintiff would be granting a windfall to defendant by allowing him an undeserved credit on his own wrongdoing from a source never so intended. In balancing these conflicting principles New Jersey courts have tended to permit what might appear as a form of double recovery by a plaintiff under such circumstances rather than allow reduction of the damages to be paid by the defendant wrongdoer.

[Sporn, supra, 129 N.J. Super. at 459-60.]

The Supreme Court cited Sporn with approval in a landlord-tenant case involving a similar underlying principle. N.J. Indus. Props. v. Y.C. & V.L., 100 N.J. 432 (1985). The issue before the Court was whether a defaulting tenant was entitled to a credit for "the rent, in excess of that due under the original lease, that the landlord collects from a subsequent tenant for the unexpired term of the original lease." Id. at 433. Citing Sporn, the Court reasoned that any windfall realized from the excess rent should benefit the wronged landlord rather than the breaching tenant.

In other areas of the law, courts in this state have not allowed a wrongdoer to benefit from his wrongful actions. Sporn v. Celebrity, Inc., 129 N.J. Super. 449 (Law Div. 1974), was a suit for wrongful discharge of employment in violation of an alleged oral employment contract. There the court held that the defendant was not entitled to a mitigation of damages by the amount of unemployment compensation received by the plaintiff. Although the court recognized that mitigation is "always a matter to be considered where contract damages are in issue," the court held that the employer should not have a benefit conferred upon him when he is the wrongdoer. Id. at 456, 459. In concluding that the reasons for denying mitigation were more persuasive than those favoring it, the court noted that

New Jersey courts have tended to permit what might appear as a form of double recovery by a plaintiff under such circumstances rather than allow reduction of the damages to be paid by the defendant wrongdoer.

[Id. at 447-48 (quoting Sporn, supra, 129 N.J. Super. at 459).]

Defendant has not cited any New Jersey precedent indicating that our Court has departed, or would depart, from that rationale with respect to employment discrimination cases under the LAD.

We also find persuasive the relevant federal cases plaintiff cites. More than fifty years ago, the United States Supreme Court construed the National Labor Relations Act (NLRA) as providing that unemployment compensation is not to be deducted from back pay awards in unfair labor cases. NLRB v. Gullett Gin Co., 340 U.S. 361, 365-66, 71 S. Ct. 337, 340-41, 95 L. Ed. 337, 342-43 (1951). The Court rejected an argument that the rule gave the employee an unjustified windfall

Payments of unemployment compensation were not made to the employees by respondent but by the state out of state funds derived from taxation. True, these taxes were paid by employers, and thus to some extent respondent helped to create the fund. However, the payments to the employees were not made to discharge any liability or obligation of respondent, but to carry out a policy of social betterment for the benefit of the entire state. We think these facts plainly show the benefits to be collateral. It is thus apparent from what we have already said that failure to take them into account in ordering back pay does not make the employees more than "whole" as that phrase has been understood and applied.

[Id. at 364, 71 S. Ct. at 340, 95 L. Ed. at 342.]

In construing Title VII, which was based on the NLRA, the Third Circuit Court of Appeals held that unemployment benefits may not be deducted from back pay awards under Title VII. Craig, supra, 721 F.2d at 82-83. The court considered that "[u]nemployment compensation most clearly resembles a collateral benefit which is ordinarily not deducted from a plaintiff's recovery." Id. at 83. As in New Jersey Industrial Properties, supra, the Third Circuit considered the equities involved in the rule

The rationale for a rule that at first glance may appear to provide an inequitable double recovery is that a wrongdoer should not get the benefit of payments that come to the plaintiff from a source collateral to the defendant. There is no reason why the benefit should be shifted to the defendant, thereby depriving the plaintiff of the advantage it confers. This policy also may have somewhat punitive undertones, as it focuses on what the defendant should pay rather than on what the plaintiff should receive.

[Ibid. (citations omitted).]

Additionally, the court reasoned that the rule furthered the purpose of Title VII to deter employers from engaging in discrimination. "A rule precluding deduction of unemployment benefits from a back pay award would further the two key objectives of Title VII's back pay provision, . . . to end employment discrimination and secondarily to compensate injured victims in a make whole fashion." Ibid.; see also Gelof v. Papineau, 829 F.2d 452, 455 (3d Cir. 1987) (applying the Craig rule to a back pay award under the Age Discrimination in Employment Act, 29 U.S.C.A. 621-634); Davis v. Rutgers Cas. Ins. Co., 964 F. Supp. 560, 574 (D. N.J. 1997) (following the Craig rule). While Craig is not binding on us, we find its reasoning persuasive.

Accordingly, we hold that unemployment compensation benefits may not be deducted from back pay awarded under the LAD. We thus modify the back pay award, and remand for entry of an amended judgment reflecting this opinion.

III

The parties' arguments on the remaining issues are without merit and, except as briefly addressed below, they do not warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Defendant argues that the trial judge erred in barring the defense from introducing evidence that plaintiff filed a lawsuit against a previous employer. However, during in limine motions on May 13, 2013, defense counsel explicitly told the judge that he was not seeking to introduce that evidence, nor was he seeking to introduce evidence that plaintiff knew how to manipulate the legal system. Defendant is barred from raising on appeal issues waived in the trial court. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).

We find no abuse of the trial judge's discretion in excluding evidence of plaintiff's non-employment related prior lawsuits, and his alleged pattern of lateness at a prior job. We affirm for the reasons the judge stated on the record on May 13, 2013.

We affirm the trial judge's decision to dismiss plaintiff's claim for punitive damages at the close of all the evidence. This was a garden variety discrimination case with no "'especially egregious'" features that might have justified punitive damages. Quinlan v. Curtiss-Wright Corp., 204 N.J. 239, 273-74 (2010) (citation omitted); see Cavuoti v. N.J. Transit Corp., 161 N.J. 107, 113 (1999). We agree with the trial judge's statement of reasons for granting the defense motion on that issue, as amplified in her August 9, 2013 oral statement of reasons denying plaintiff's post-trial motion for reconsideration.

Next, we address the recusal issue. As we understand it from reviewing the record, after the trial judge had decided all of the other post-trial motions, she focused on the counsel fee motions. During that process, she discovered that, as part of his motion submission, plaintiff's counsel had engaged in a tactic which the judge found was inappropriately designed to cast doubt on her impartiality to decide the fee application. Out of an abundance of caution, the judge decided to transfer the fee application to a second judge, who would review and decide the fee motions ab initio. While we might not have transferred the fee motion, we will not second-guess the trial judge's exercise of her discretion to do so. See State v. McCabe, 201 N.J. 34, 45 (2010). Nor do we find a basis to disturb her previous decisions of the other post-trial motions.

One final comment is warranted on this point. Based on our review of the entire trial transcript, the judge presided over this trial in an efficient manner that was scrupulously fair and even-handed. She appropriately expected the attorneys to be well-prepared and focused in their presentations. She required the attorneys to clearly define the issues they were raising, and she properly exercised control of the witnesses to keep them from rambling. The fact that the judge assisted the attorneys in settlement discussions, with their on-the-record consent, did not require her recusal from conducting the trial or hearing post-trial motions.

Lastly, we address the fee awards. The second judge issued a thorough written opinion deciding the fee applications, and attached to her opinion copies of the firms' billing records with her notations as to the specific hours she had disallowed. We will disturb a trial court's fee award only in the rarest of cases, and only where the court has clearly abused its discretion. See Rendine v. Pantzer, 141 N.J. 292, 317 (1995). None of defendant's appellate submissions satisfy that very high standard. The arguments are without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).

Affirmed in part, reversed and remanded in part.

1 After the oral argument, we directed the attorneys to file supplemental briefs on the issue of unemployment benefits. The supplemental briefing was completed in January 2017.

2 This firm is representing its interest in the counsel fee issue only.

3 Defendant also sued several corporate employees for aiding and abetting, N.J.S.A. 10:5-12(e), but the trial court dismissed those claims on summary judgment. We refer to Flightsafety as "defendant."

4 Defendant's brief suggests that employers sometimes purchase insurance to cover against the risk of discrimination lawsuits. However, defendant does not cite to any expression of legislative concern about the affordability of that type of insurance, as opposed to auto insurance and other types of insurance covering personal injury claims.