Employment Law Issues

To Successfully Assert the “Business Necessity Defense” Employers Must Show That a Discriminatory Hiring Policy Accurately Ascertains an Applicant's Ability to Perform Successfully the Job In Question.

In El v. Southeastern Pennsylvania Transp. Authority, 2007 WL 799492 (3d Cir. March 19, 2007), Plaintiff Douglas El filed a Title VII action alleging employment discrimination based on race claiming that the Southeastern Pennsylvania Transportation Authority (“SEPTA”) unnecessarily disqualifies applicants because of prior criminal convictions-a policy that plaintiff argued had a disparate impact on minority applicants because they are more likely than white applicants to have convictions on their records.

Defendant filed a motion for summary judgment which was granted by the District Court. The District Court concluded that Defendant had borne the burden of proving that its policy is consistent with business necessity. Plaintiff appealed, and the Third Circuit affirmed the District Court.

In January 2000, King Paratransit Services, Inc. (“King”), which had a subcontract with SEPTA to provide paratransit services on SEPTA's behalf, conditionally hired El to drive paratransit buses. King's subcontract with SEPTA disallowed hiring anyone with, among other things, a violent criminal conviction. Accordingly, among the conditions stipulated in El's offer was successful completion of a criminal background check. Within the first few weeks of El's employment, King discovered that El had a 40-year-old conviction for second-degree murder and terminated his employment. According to King personnel, the murder conviction was their sole reason.

According to the contract in place between King and SEPTA in 2000, King was required to ensure that anyone in SEPTA service as a driver or attendant have:

[I]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.

The New Jersey Supreme Court further held that:

e. no record of driving under [the] influence (DUI) of alcohol or drugs, and no record of any felony or misdemeanor conviction for any crime of moral turpitude or of violence against any person(s);

f. have no record of any conviction within the last seven (7) years for any other felony or any other misdemeanor in any category referenced below (see section F.2.10.C) [listing specific offenses], and not be on probation or parole for any such crime, no matter how long ago the conviction for such crime may be.

After his employment was terminated, El filed a complaint with the Equal Employment Opportunity Commission (“EEOC”) alleging that SEPTA's hiring policy violated Title VII of the Civil Rights Act of 1964 by discriminating on the basis of race. Specifically, he argued that the policy has a disparate impact: because African Americans and Hispanics are more likely to have a criminal record, they are more likely to run afoul of the policy. After investigating his complaint, the EEOC found in El's favor. The agency was, however, unable to resolve the dispute, and the Civil Rights Division of the Department of Justice declined to pursue the matter.

El elected to pursue this claim himself in District Court as a class action. SEPTA sought summary judgment on its affirmative defense of business necessity.

The Supreme Court first recognized that Title VII plaintiffs can make out a viable employment discrimination claim without alleging or proving discriminatory intent in Griggs v. Duke Power, 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). The Court held that plaintiffs can succeed by showing that the challenged employment policy has a discriminatory effect that is not justified by the needs of the defendant's business. The Court announced that these “disparate impact” cases should proceed in two steps: (1) the plaintiff must prove that the challenged policy discriminates against members of a protected class, and then (2) the defendant can overcome the showing of disparate impact by proving a “manifest relationship” between the policy and job performance. This second step came to be known as the “business necessity” defense, and it serves as an employer's only means of defeating a Title VII claim when its employment policy has a discriminatory effect.

The Supreme Court further developed the business necessity defense over a series of cases. The Court in this matter found two aspects of these cases noteworthy. First, the Supreme Court refused to accept bare or “common-sense”-based assertions of business necessity and instead required some level of empirical proof that challenged hiring criteria accurately predicted job performance. Second, the Supreme Court did not allow employers to rely on “more is better”-style reasoning to justify their policies, in other words, the employer must present real evidence that the challenged criteria “measure[s] the person for the job and not the person in the abstract.”

Putting the standards addressed by the Supreme Court together, the Court found that there is a requirement that employers show that a discriminatory hiring policy accurately-but not perfectly-ascertains an applicant's ability to perform successfully the job in question. However, the Court noted that in this matter, the hiring policy of SEPTA had nothing to do with the applicant’s ability to drive a paratransit bus rather, “it seeks to exclude applicants who, while able to drive a bus, pose too much of a risk of potential harm to the passengers to be trusted with the job. Thus, the standard of ‘minimum qualifications necessary for successful performance of the job’ is worded to address ability, not risk.

The Court provided that in this case it is impossible to measure the risk; however, Title VII would necessarily require “that the policy under review accurately distinguish between applicants that pose an unacceptable level of risk and those that do not.”

In arguing that its policy is consistent with business necessity, SEPTA claimed that it presented evidence such that a reasonable juror must find that: (1) the job of a paratransit driver requires that the driver be in very close contact with passengers, (2) the job requires that the driver often be alone with passengers, (3) paratransit passengers are vulnerable because they typically have physical and/or mental disabilities, (4) disabled people are disproportionately targeted by sexual and violent criminals, (5) violent criminals recidivate at a high rate, (6) it is impossible to predict with a reasonable degree of accuracy which criminals will recidivate, (7) someone with a conviction for a violent crime is more likely than someone without one to commit a future violent crime irrespective of how remote in time the conviction is, and (8) SEPTA's policy is the most accurate way to screen out applicants who present an unacceptable risk.

In support of its summary judgment motion, SEPTA submitted the reports of three experts. All three relied heavily on data from the Department of Justice that tracked recidivism of prisoners within three years of their release from prison. The data showed relatively high rates of recidivism in those first three years. Plaintiff did not produce any evidence rebutting SEPTA’s expert.

As such, the Court held that “[t]aking all of the record evidence into account, there is no substantive evidence on which a reasonable juror could find that SEPTA's policy is inconsistent with business necessity.”

Municipal Liability Issues

Under the Tort Claims Act, Plaintiff Must Show Both an Objective Permanent Injury and a Permanent Loss of Bodily Function that is “Substantial” for Pain and Suffering Damages

In the unpublished opinion, Bevilacqua v. Township of Verona, 2007 WL 622166 (N.J. Super. March 2, 2007), Plaintiff Richard Bevilacqua appealed from an order granting summary judgment and dismissing his complaint with prejudice under the Tort Claims Act, N.J.S.A. 59:1-1 to 12-3 (“TCA”). The following is a summary of the facts of this case:

On March 2, 2002, plaintiff was walking to his home after attending a church service. While crossing the street, plaintiff stepped into a large pothole and fell. He was taken to the emergency room where it was determined that he fractured his left ankle.

On April 19, 2002, plaintiff consulted with Dr. Burgess L. Berlin, an orthopedic surgeon. Dr. Berlin's physical examination of plaintiff disclosed evidence of torn ligaments in the left ankle, a sprain of the left foot, synovitis involving the left ankle, and an antalgic gait favoring his left extremity. Examination by x-ray revealed a distal fibula fracture which had not completely healed.

Serial x-rays taken a month later revealed progressive healing of the fractured fibula. However, plaintiff's symptoms persisted, and he returned on July 9, 2002. Dr. Berlin noted persistent tenderness in the area as well as persistent evidence of right foot fasciitis and strain. X-rays were taken which showed further progression and consolidation of the distal fibula fracture.

Dr. Berlin's report of December 22, 2002, concluded that “[t]o a reasonable degree of medical probability based upon all the objective findings, as a result of this accident, the patient has sustained a permanent injury to his left foot, left ankle and right foot which have not healed to function normally and will not heal to function normally even with further medical treatment. . . .”

On February 22, 2005, plaintiff was examined in connection with this action by Dr. Irwin Jay Cohen. In a report of the same date, Dr. Cohen concluded that plaintiff suffered a fracture of the tip of the lateral malleolus, left ankle, which healed in an anatomic position. He found no permanency or disability and stated that the prognosis was good.

Dr. Cohen submitted a supplemental report in which he referred to x-rays taken in his office on February 23, 2005 indicating the fracture at the tip of the lateral malleolus of the left ankle was well healed. Therefore, his conclusion of a lack of permanency or disability was reaffirmed.

The defendant moved for summary judgment, arguing that plaintiff's claim was insufficient under the Tort Claims Act because (1) plaintiff failed to show actual or constructive notice by the municipality of the alleged dangerous and hazardous condition and (2) the plaintiff's claim for pain and suffering was barred for failure to meet the requirements of N.J.S.A. 59:9-2. The Court held that plaintiff's claim failed under the TCA because he did not demonstrate a permanent injury and a disabling effect.

The Plaintiff appealed arguing the trial court erred in granting the defendant’s motion for summary judgment on the grounds that the plaintiffs did not satisfy the requirements of the tort claims act, N.J.S.A. 59:9-1 et seq. and misinterpreted the medical reports and erroneously found that the plaintiff did not suffer a substantial and permanent loss of a bodily function. The Plaintiffs further argued that the trial court erred in determining that no genuine issue of material fact existed in this matter.

The Appeals Court analyzed N.J.S.A. 59:9-2(d) which reads as follows:

No damages shall be awarded against a public entity or public employee for pain and suffering resulting from any injury; provided, however, that this limitation on recovery of damages for pain and suffering shall not apply in cases of permanent loss of a bodily function, permanent disfigurement or dismemberment where the medical treatment expenses are in excessive of $3,600.

The Court noted that New Jersey case law has established a two-pronged test for pain and suffering damages under the TCA: plaintiff must show both an objective permanent injury and a permanent loss of bodily function that is “substantial.” The Court held that in this matter the only injury for which there was objective evidence was a fracture of the distal fibula which “healed to normal anatomic position and is therefore not a permanent injury.” Further, the Court noted that the plaintiff “showed only lingering pain and a restriction as to some but hardly all of his activities, which does not equate to a permanent serious impact on his life.” Therefore, the Court affirmed the trial court’s decision holding that plaintiff failed to satisfy the TCA requirement for recovery of damages for pain and suffering.

New Jersey Products Liability Issues

Plaintiff’s Claim for Breach of Warranty and Consumer Fraud Fail when Claim Brought Over Three Years After Expiration of Warranty

In Duffy v. Samsung Electronics America, Inc., 2007 WL 703197 (D.N.J. March 2, 2007), Plaintiff John Duffy III filed a class action complaint alleging the following counts against defendant, Samsung Electronics America, Inc. : (1) Breach of Warranty; (2) Consumer Fraud; and (3) Fraudulent Concealment. Defendant moved for dismissal of all counts pursuant to Fed.R.Civ.P. 12(b)(6).

Plaintiff alleged that at the end of 2002, he received a microwave oven, manufactured and/or imported by Samsung, as a gift. Plaintiff claimed that he received a written limited warranty from Samsung in which Samsung undertook to repair or replace the product if found to be defective during the limited warranty period, which was one year. Plaintiff claimed that the warranty “is an express warranty under the Uniform Commercial Code and a written warranty within the Magnuson Moss Consumer Warranty Act, 15 U.S.C. § 2301 et seq.”

On or about October 8, 2003, Samsung announced the recall of nearly 184,000 microwave ovens that were installed in recreational vehicles (“RVs”) sold in the U .S. during the previous three years. The Recall was the result of a determination by Samsung that “some of these microwave ovens may present a safety hazard due to a defective part that may cause them to begin operation unassisted and result in smoke or fire.”

Plaintiff alleged that numerous Samsung microwaves that were not installed in RVs, including the one he owned, also contained the defective part. Plaintiff alleged that in September 2006, he discovered that his Samsung microwave had turned itself on while Plaintiff was away on a trip. Plaintiff alleged that by letter dated September 20, 2006, he formally notified Samsung of the defect and requested a replacement of the microwave. Plaintiff claimed Defendant has failed and refused to replace the microwave.

Plaintiff alleged that Defendant violated its written limited warranty, in that the model of microwave oven owned by plaintiff was found to be defective within the warranty period, but defendant refused to repair or replace either the defective membrane panel or the entire oven. Plaintiff claimed that “[t]he durational limitation of the warranty was satisfied by Samsung's determination that its membrane panels were defective.” Alternatively, Plaintiff contended that the durational limitation is unreasonable, unconscionable and ineffective under 15 U.S.C. § 2308 and UCC §§ 2-316 and 2-719, because defendant knew the product was seriously defective and a fire hazard, and allowed the public to continue using it.

Defendant argued that Plaintiff's breach of warranty claim, which arises from Samsung's alleged violation of its express written limited warranty, is precluded by the one-year warranty period. The Court agreed that under the express terms of the Warranty, Plaintiff's claim of breach of the express warranty falls outside the applicable warranty period. “It is undisputed that the one-year express warranty expired, at the very latest, on December 31, 2003, as Plaintiff alleges he received the microwave as a gift at the end of 2002 and alleges it malfunctioned in September 2006.”

The Court further held that Plaintiff's alternative argument that “the durational limitation is unreasonable, unconscionable and ineffective under 15 U.S.C. § 2308 and UCC §§ 2-316 and 2-719, because defendant knew the product was seriously defective and a fire hazard, and allowed the public to continue using it” also fails. The Court provided that “unconscionability is measured at the time the contract was formed. See N.J.S.A. 12A:2-302; U.C.C. § 2-302. The Court held,

Here, there is no claim by Plaintiff that Samsung knew of any alleged defective part in the microwave that he received as a gift at the time it was sold. In fact, the allegation is that Samsung was required to recall microwave ovens in the fall of 2003, well after the “end of 2002” date that Plaintiff alleges he received the microwave. Thus, Plaintiff's claim that the durational limitation on the implied warranty is “unreasonable, unconscionable and ineffective” fails as a matter of law. As Plaintiff's claims concerning both the express warranty and implied warranty fail to state a claim upon which relief can be granted, Count I will be dismissed.

Plaintiff also alleged consumer fraud in that Defendant “engaged in deceptive or unconscionable practices by failing to disclose to all owners of the affected microwaves the fact that they contained defective membrane panels and were fire hazards, and by failing to pay for replacement.” Plaintiff claimed that he “was injured by such nondisclosure and nonreplacement.” The Court held that because Plaintiff's microwave continued to perform beyond the period in which Samsung was contractually bound to repair or replace any defective part, Plaintiff cannot maintain a CFA claim. “To recognize Plaintiff's claim would essentially extend the warranty period beyond that to which the parties agreed. Thus, Count II will be dismissed.”

Finally, Plaintiff alleged that “Defendant engaged in fraudulent concealment by failing to disclose to all owners of the affected microwaves the fact that they contained defective membrane panels and were fire hazards.” Plaintiff alleges that he was injured by such nondisclosure. The Court held that in the Complaint, there is no allegation that: (1) Defendant knowingly made a material omission; (2) Defendant intended Plaintiff to rely on this omission; or (3) Plaintiff relied on this omission to his detriment. Therefore, Count III failed to state a claim upon which relief can be granted, and was dismissed.