ALEXANDRA CHAVARRIAGA v. ROSS PUBLIC AFFAIRS GROUP

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5339-09T3

ALEXANDRA CHAVARRIAGA,

Plaintiff-Appellant,

v.

ROSS PUBLIC AFFAIRS GROUP, INC.,

STEPHEN ROSS and ELIZABETH

WALLACE,

Defendants-Respondents.

________________________________________________________________

July 14, 2011

Argued March 8, 2011 - Decided

Before Judges Carchman and Waugh.

On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-2161-09.

Fredric J. Gross argued the cause for appellant.

James M. McDonnell argued the cause for respondents (Jackson Lewis, L.L.P., attorneys; Mr. McDonnell and John F. Tratnyek, on the brief).

PER CURIAM

Plaintiff Alexandra Chavarriaga appeals from the dismissal of her amended complaint against defendants Ross Public Affairs Group, Inc. (Ross PAG), Stephen Ross and Elizabeth Wallace. The complaint alleged that Ross violated the New Jersey Racketeer Influenced and Corrupt Organizations Act (RICO), N.J.S.A. 2C:41-1 to -6.2; the New Jersey Wage Payment Act (Wage Act), N.J.S.A. 34:11-1 to -67 as well as the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49. In addition, plaintiff alleged that Wallace retaliated against plaintiff for reporting the violations of the LAD. The motion judge dismissed both the RICO and Wage Act claims, concluding that they were barred because the allegations, even if true, failed to state a cause of action. As to the LAD claims, the judge dismissed the claims without prejudice to permit plaintiff to plead the claims with more specificity. Rather than file amended pleadings to adhere to the judge's ruling, plaintiff voluntarily dismissed the claims with prejudice.

We affirm the dismissal of the RICO and LAD claims and reverse and remand the Wage Act claim for further proceedings.

These are the facts adduced from the record before the judge on the motions to dismiss.

Plaintiff was employed as a part-time bookkeeper at Ross PAG in Somerville from June 26, 2006 until December 5, 2007, when she was fired by Ross. According to Ross PAG's company records, plaintiff received payment for the time she worked between November 16, 2007 and November 30, 2007, and for the time she worked during the following pay period, from November 30 until her termination on December 5, 2007.

After terminating plaintiff's employment at Ross PAG, Ross discovered numerous unauthorized purchases totaling $87,644.64. The purchases were made with a Ross PAG company business account credit card obtained by plaintiff. Ross reported plaintiff to the Somerset County Prosecutor's Office and an investigation ensued. The investigation resulted in a Somerset County Grand Jury issuing a twenty-four count indictment against plaintiff, including multiple counts of third-degree forgery and third-degree uttering a forged instrument, as well as one count of third-degree fraudulent use of a credit card and second-degree theft by deception.

Plaintiff pled guilty to all twenty-four counts of the indictment, and on May 21, 2009 was sentenced to a term of seven years imprisonment. Plaintiff was also ordered to pay $279,159.71 in restitution to defendants.

On November 30, 2009, plaintiff, who was incarcerated at the time, filed a three-count complaint against Ross and Ross PAG alleging the RICO and LAD claims. A four-count amended complaint including Elizabeth Wallace as a defendant and alleging reprisal under the LAD was filed thereafter.

As to the RICO count, plaintiff alleged that she was required to travel "for the benefit of Ross PAG" during her employment, and that Ross repeatedly declined to reimburse her for travel expenses despite her entitlement to reimbursement. She also alleged that Ross failed to compensate her for overtime. These were the allegations supporting the RICO claim. The Wage Act claim was based on plaintiff's allegation that "Ross PAG's failure to pay earned wages" violated the Wage Act, N.J.S.A. 34:11-4.4.

As to the LAD claims, plaintiff alleged that Ross created a hostile work environment for plaintiff based on her gender, and that he ultimately raped plaintiff, causing her to suffer from post-traumatic stress disorder (PTSD). Plaintiff further alleged that Ross's conduct constituted unlawful sex discrimination in violation of the LAD, N.J.S.A. 10:5-12(a). In a separate count, she alleged that she had been verbally and physically attacked by Ross's wife, Wallace, after she told Wallace about the alleged rape. She maintained that these acts constituted unlawful reprisal by both Ross PAG and Wallace in violation of LAD, N.J.S.A. 10:5-12(d) and (e).

On March 9, 2010, plaintiff filed a claim petition with the Division of Workers' Compensation. In the petition, she alleged that Ross had raped her at work and that she suffered PTSD and other psychological and physical manifestations as a result. Although the alleged date of injury is illegible,1 the petition indicates that plaintiff reported the rape to Elizabeth Wallace in October 2007, and stopped work in November 2007.

Defendants filed a motion to dismiss the amended complaint for failure to state a claim upon which relief can be granted. Rule 4:6-2(e). In support of its motion, defendants argued that plaintiff's complaint was deficient due to the failure to plead dates of the alleged illegal conduct, and that the complaint was time-barred. In opposition to defendants' motion, plaintiff's counsel averred that although he first met with plaintiff on September 15, 2009, delays in filing the complaint and responding to defendants' motion occurred due to plaintiff's naivety concerning litigation procedure and communication difficulties due to plaintiff's imprisonment. Counsel also stated his "belief" that plaintiff suffers from PTSD but did not provide any expert diagnostic or report.

The judge dismissed both the RICO and Wage Act claims with prejudice. As to the violations of the LAD, the judge found that plaintiff's complaint failed to state when the alleged rape occurred and instead "urge[d] that the two-year statute of limitations should be equitably tolled because the rape caused the plaintiff to suffer [PTSD], which . . . interfered with her ability to timely bring her claim." The judge declined to rule on the statute of limitations issue but found that the complaint failed to put defendants on notice of the allegations. The complaint failed to specify the dates on which the alleged events occurred. The judge then dismissed the LAD counts without prejudice "to allow plaintiff to specify [the dates] and re-file."

Plaintiff appealed and notified the motion judge that it refused to file an amended complaint with the specific dates. In counsel's letter to the judge, he said: "Plaintiff has no intention of seeking leave to amend in the future, although assuming reinstatement, she does not waive the right to have the pleadings conform to the proofs." Instead of amending, plaintiff voluntarily submitted an order dismissing the LAD claims with prejudice.

On appeal, plaintiff asserts, in essence, that she stated a cause of action as to the RICO and Wage Act claims, and the judge erred by refusing to decide the limitations issue as well as by requiring plaintiff to file amended proceedings.

We first address our standard of review. We employ the same standard as the trial court when reviewing a complaint dismissed pursuant to Rule 4:6-2(e). Malik v. Ruttenberg, 398 N.J. Super. 489, 494 (App. Div. 2008). Our review "is limited to examining the legal sufficiency of the facts alleged on the face of the complaint." Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989). See also Rieder v. State, 221 N.J. Super. 547, 552 (App. Div. 1987) ("The court may not consider anything other than whether the complaint states a cognizable cause of action.").

In our review, we "'search[] the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary.'" Printing Mart-Morristown, supra, 116 N.J. at 746 (quoting Di Cristofaro v. Laurel Grove Mem'l Park, 43 N.J. Super. 244, 252 (App. Div. 1957)). Furthermore, the facts alleged in the complaint must be accepted as true and we must recognize all reasonable inferences of fact therefrom. Malik, supra, 398 N.J. Super. at 494. Although "[a] complaint should not be dismissed under [Rule 4:6-2(e)] where a cause of action is suggested by the facts and a theory of actionability may be articulated by way of amendment," dismissal is required "where the factual allegations are palpably insufficient to support a claim upon which relief can be granted." Rieder, supra, 221 N.J. Super. at 552.

Applying these principles here, we easily dispose of the RICO claim. In dismissing this claim, the motion judge said:

While certain crimes of theft would qualify as a predicate offense to RICO violations, the facts alleged in the complaint alleged a failure to reimburse travel expenses, a failure to pay overtime. These do not support the violation of theft of services, nor do they support a violation of theft by unlawful taking or theft by deception. Plaintiff would need to allege an unlawful taking or a deception. . . . The complaint includes allegations that the plaintiff was not reimbursed, not paid for overtime. These are disorderly offenses. See N.J.S.A. 34:11-4.10. . . . [T]hey do not qualify as racketeering activity under [N.J.S.A.] 2C:41-1. The count must be dismissed.

On appeal, plaintiff argues that although the Wage Act designates the withholding of a portion of an employee's wages as a disorderly persons offense, N.J.S.A. 34:11-4.4 and -4.10, this classification does not foreclose a complaint alleging that the withholding constituted theft, a racketeering activity. Defendants reply that failure to pay overtime and reimburse travel expenses does not constitute racketeering under RICO.

N.J.S.A. 2C:41-1(a) defines racketeering activity as offenses "which are crimes under the laws of New Jersey[.]" Included in that list of offenses is "theft and all crimes defined in chapter 20 of Title 2C of [N.J.S.A.]," which includes theft and related offenses. N.J.S.A. 2C:41-1(a)(1)(n).

However, as noted by the motion judge, withholding employee wages in violation of N.J.S.A. 34:11-4.4 is a disorderly persons offense. N.J.S.A. 34:11-4.10. Disorderly persons offenses are not crimes. N.J.S.A. 2C:1-4. Failure to pay overtime, a disorderly persons offense, is not a crime and cannot constitute racketeering activity.

The RICO count alleged that "Ross repeatedly failed to reimburse plaintiff's travel expenses" and "to pay plaintiff time-and-a-half for her overtime work[.]" Accepting these alleged facts as true, Malik, supra, 398 N.J. Super. at 494, they are nonetheless "palpably insufficient to support a claim upon which relief can be granted." Rieder, supra, 221 N.J. Super. at 552. These facts support a disorderly persons offense, not a crime of theft constituting "racketeering activity" in violation of RICO. The judge correctly dismissed that claim.

We reach a different result regarding the Wage Act claim. In dismissing this claim, the motion judge stated:

Count 2, the plaintiff['s] amended complaint alleges violation of the Wage Payment Act. The count is based upon facts alleged in Count 1, namely defendant failed to pay overtime and travel expenses. . . . Even after assuming the plaintiff may have incurred overtime or travel expenses, there exists no factual allegation indicating that the defendant failed to pay plaintiff her earned wages. Plaintiff has not stated a cause of action for violation of the Wage Payment Act.

On appeal, plaintiff maintains that she was entitled to receive time-and-a-half for overtime hours she worked at Ross PAG, pursuant to N.J.S.A. 34:11-56a4,2 and that Ross withheld her overtime compensation in violation of N.J.S.A. 34:11-4.4. Defendant argues that the amended complaint failed to state a claim for unlawful withholding or diversion of wages, and that the claim is time-barred.

As to the merits of the claim, N.J.S.A. 34:11-4.4 prohibits employers from withholding or diverting any portion of an employee's wages unless the employer is "required or empowered to do so by [state or federal] law," or the employer withholds or diverts an amount for an authorized contribution under subsection (b). "Wages" as used in the Wage Payment Act are defined as "direct monetary compensation for labor or services rendered by an employee, where the amount is determined on a time, task, piece, or commission basis excluding any form of supplementary incentives and bonuses which are calculated independently of regular wages and paid in addition thereto." N.J.S.A. 34:11-4.1(c).

In her amended complaint, plaintiff claimed that Ross PAG violated N.J.S.A. 34:11-4.4 by failing to pay "earned wages," namely overtime and travel expenses. Plaintiff did not address the alleged withholding of travel expenses as a violation of the Wage Act in her appellate brief.3 In her Wage Act claim, plaintiff relied on the factual allegations set forth in the RICO count: that she was required to travel and work overtime while employed with Ross PAG; she was entitled to reimbursement of travel expenses and overtime compensation; and Ross refused to reimburse her travel expenses or pay overtime.

The facts alleged by plaintiff support a claim for violation of N.J.S.A. 34:11-56a4, requiring payment of overtime, and N.J.S.A. 34:11-4.2, requiring payment of the full amount of wages due on regular pay days, not a claim for withholding or diverting wages under N.J.S.A. 34:11-4.4 as alleged by plaintiff in the amended complaint. See N.J. Dep't of Labor v. Pepsi-Cola Co., 336 N.J. Super. 532, 535 (App. Div.), aff'd, 170 N.J. 59 (2001). However, the test is "whether a cause of action is suggested by the facts," and on review we search the complaint with liberality to determine whether a cause of action is suggested by the facts. Printing Mart-Morristown, supra, 116 N.J. at 746 (internal quotation marks and citation omitted). "At this preliminary stage of the litigation the [c]ourt is not concerned with the ability of plaintiffs to prove the allegation contained in the complaint." Ibid.

Accepting as true the facts alleged in the complaint and recognizing all reasonable inferences of fact, Malik, supra, 398 N.J. Super. at 494, plaintiff's factual allegations support a claim for violation N.J.S.A. 34:11-56a4 and N.J.S.A. 34:11-4.2. Because the amended complaint suggested a "theory of actionability" under the Wage Act, the complaint should not have been dismissed under Rule 4:6-2(e). Rieder, supra, 221 N.J. Super. at 552.

We find no merit to defendant's argument that this claim is time barred. In his decision, the motion judge found:

The New Jersey Wage Payment Act is governed by a two-year statute of limitations. [N.J.S.A. 34:11-56 A. 25.1] states "No claim for unpaid minimum wages, unpaid overtime compensation, or other damages under this act shall be valid with respect to any such claim which has arisen more than two years prior to the commencement of the action."

Plaintiff's employment was terminated December the 5th, '07. She did not plead [the] claim for violation-of-wage payment until she filed her amended complaint December the 14th, 2009. That is more than two years after a cause of action. In certain instances a filing of an amended pleading relates back to the date of the original complaint. The key to relation back of added claims is whether or not they are germane, that is whether they arose out of the same occurrence or transaction, or series of transactions. . . . Here there is no cognizable argument that the plaintiff's claim of lost wage relates back to the filing of [the] original complaint alleging racketeering, discrimination, reprisal. It is not germane and the defendant has not timely put it on notice. The . . . statute of limitations is violated, the Court strikes the second count with prejudice.

Although plaintiff did not brief the issue, we are satisfied that the claim is not time barred.

A claim for failure to pay wages or overtime compensation is time-barred if the claim "has arisen more than 2 years prior to the commencement of an action" for recovery. N.J.S.A. 34:11-56 A. 25.1. That statute provides that an action is considered commenced

on the date when a complaint is filed with the Commissioner of the Department of Labor and Industry or the Director of the Wage and Hour Bureau, and notice of such complaint is served upon the employer; . . . or where a cause of action is commenced in a court of appropriate jurisdiction.

[N.J.S.A. 34:11-56 A. 25.1.]

Plaintiff was employed at Ross PAG until December 5, 2007. On November 30, 2009, plaintiff filed her original complaint pleading three counts: 1) racketeering; 2) unlawful sex discrimination; and 3) unlawful reprisal. On December 17, 2009, plaintiff filed an amended complaint which included a violation of the Wage Act. That claim was alleged two years and twelve days after plaintiff's cause of action accrued on December 5, 2007.

The filing of an amended complaint relates back to the date of the original complaint when the claim asserted in the amended complaint "arose out of the conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading[.]" Rule 4:9-3. This rule is to be "liberally construed." Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 499 (2006) (internal quotation marks and citation omitted). Where an amended complaint adds a new claim based on the same facts, the amended complaint will relate back to the original complaint. Ibid.

Here, the new claim set forth in the amended complaint, violations of the Wage Act, was based on the same facts originally pled on the RICO claim, specifically, Ross PAG's failure to pay overtime and travel expenses. The Wage Act claim relates back to the original complaint, which was filed on November 30, 2009, within the two-year statute of limitations.

We conclude that the Wage Act claim was properly pled and was not time barred. As to that claim, we reverse and remand for further proceedings.

Finally, we address the LAD claims alleging sexual discrimination and unlawful reprisal. In dismissing the claims without prejudice, the motion judge commented:

Allegations of violation of [the LAD] are made pursuant to [N.J.S.A.] 10:5-12. . . . The Act has a two-year statute of limitations.

Plaintiff's complaint fails to indicate when the alleged rape occurred, but instead urges the two-year statute of limitations should be equitably tolled because the rape caused plaintiff to suffer post-traumatic stress disorder, which . . . interfered with [plaintiff's] ability to timely bring her claim. Plaintiff requests discovery in order to substantiate her PTSD claim. Defendant argues the statute of limitations should not be tolled because the plaintiff has unclean hands, referring to the felony conviction as to the plaintiff related to criminal matters involving the defendant. Much of the defendant's argument is based on facts outside the scope of the motion. Therefore, the court will not rule on the statute of limitations issue at this time. However, the court is of the opinion that the plaintiff's complaint fails to adequately put the defendant on notice of its allegations when it doesn't even specify the time frame as to when these events occurred. Accordingly, [the LAD claims are dismissed] without prejudice, to allow plaintiff to specify and re-file.

Plaintiff argues on appeal that the judge erred by refusing to decide the statute of limitations issue, and maintains equitable estoppel or tolling applied to the two-year statute of limitations. In response, defendants assert that the judge properly declined to reach the statute of limitations issue and was correct in dismissing the counts without prejudice so that plaintiff could amend the complaint.

The sexual discrimination claim alleged that Ross created a hostile work environment for plaintiff based on her gender in violation of N.J.S.A. 10:5-12(a). Plaintiff also alleged that Ross raped her, causing her to suffer PTSD. As to reprisal, plaintiff alleged that Wallace verbally and physically assaulted her in violation of N.J.S.A. 10:5-12(d) and (e). The complaint was vague and failed to specify the dates on which the alleged conduct occurred, stating only that the conduct occurred at some point while plaintiff was employed with Ross PAG.

Pleadings must "fairly apprise the adverse party of the claims and issues to be raised at trial[.]" Teilhaber v. Greene, 320 N.J. Super. 453, 464 (App. Div. 1999) (internal quotation marks and citation omitted); Jardine Estates, Inc. v. Koppel, 24 N.J. 536, 542 (1957). A complaint must allege sufficient facts to give rise to a cause of action, and "mere conclusions without facts and reliance on subsequent discovery" are inadequate. Glass v. Suburban Restoration Co., 317 N.J. Super. 574, 582 (App. Div. 1998); Lederman v. Prudential Life Ins. Co. of Am., 385 N.J. Super. 324, 349 (App. Div.), certif. denied, 188 N.J. 353 (2006); R. 4:5-2. Nonetheless, where a cause of action is suggested by the facts of the complaint, plaintiff should ordinarily be permitted to amend the pleading in order to properly state a claim even where the complaint contains "nonparticularized allegations." Lederman, supra, 385 N.J. Super. at 349.

The judge's dismissal without prejudice was discretionary. The judge did not commit error by dismissing without prejudice to permit plaintiff to amend the complaint. The issue of the applicability of the statute of limitations would abide such an amended filing and would allow the court to determine that issue as well as any claim for equitable tolling with all relevant facts available.

We will not disturb the judge's decision absent an abuse of discretion. See Crispin v. Volkswagenwerk, A.G., 96 N.J. 336, 342 (1984). There was no abuse here.

Instead of adhering to the judge's reasonable order to amend the complaint, plaintiff chose otherwise and voluntarily dismissed the claims with prejudice. Having chosen that voluntary course of action, we fail to perceive how plaintiff can now complain that she is precluded from pursuing her claims. If the voluntary dismissal with prejudice was a bit of gamesmanship to generate an appealable issue, we decline to sanction such conduct.

The issue before us is whether the judge properly dismissed without prejudice to require plaintiff to plead her LAD causes of action more specifically. We conclude that he did act properly. Further, we conclude that he did not err by refusing to determine the limitations issue on a crabbed factual record as dictated by plaintiff. Accordingly, we affirm the dismissal.

We reverse the dismissal of count two of the amended complaint alleging a violation of the Wage Act. In all other respects, we affirm the dismissal of the remaining counts of plaintiff's complaint.

1 The record indicates that plaintiff stated on the petition that she was raped in October 2007.

2 N.J.S.A. 34:11-56a4 provides that employees must be paid one-and-a-half times their "regular hourly rate for each hour of working time in excess of 40 hours in any week[.]"

3 N.J.A.C. 12:56-6.6 was established to effectuate N.J.S.A. 34:11-56a, which provides for minimum wage and overtime rates. N.J.A.C. 12:56-1.1(a). N.J.A.C. 12:56-6.6(a)(3) lists certain items that are to be excluded from "regular hourly wage[s]," including "payments for traveling or other expenses incurred by an employee in the furtherance of his or her employer's interests and properly reimbursable by the employer."