I. EMPLOYMENT LITIGATION

The Third Circuit Rejects the Argument that the Supreme Court's "But-For" Analysis Set Forth in Gross V. FBL Financial Supercedes the Burden-Shifting Process Adopted In McDonnell Douglas Corp. V. Green in All Age Discrimination Cases

In Smith v. City of Allentown, --- F.3d ----, 2009 WL 4912120 (3d Cir. (Pa.) December 22, 2009), plaintiff filed suit against the City of Allentown and its mayor claiming discrimination based upon his age and political affiliation after he was discharged as a city superintendent (he had been appointed by a former Republican mayor). The trial court granted summary judgment in favor of the defendants holding plaintiff failed to produce evidence that his allegedly inadequate job performance was a pretext for unlawful discrimination of any kind. Plaintiff appealed.

The District Court disposed of Smith's age discrimination claim under the burden-shifting framework of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). The parties had stipulated that Smith possessed sufficient evidence to establish a prima facie case and that Smith's allegedly substandard job performance provided defendants with a legitimate, nondiscriminatory rationale for his termination. Therefore, the District Court addressed only whether Smith had adduced evidence from which a reasonable jury could conclude that defendants relied upon his job performance as a pretext for age discrimination. Smith based his allegations of age discrimination upon several things: first, reference to Smith's birthday and anniversary date during a meeting at which his termination was discussed; second, the recommendations of the City Solicitor, and the Assistant Solicitor that Smith not be discharged; and, third, the City's progressive discipline policy, which defendants allegedly failed to utilize prior to discharging him. The Court concluded that this evidence did not cast doubt upon the performance-related reasons that defendants proffered for Smith's discharge. The Court therefore granted summary judgment to defendants on Smith's age discrimination claim.

After the District Court rendered its ruling, the Supreme Court decided Gross v. FBL Financial Services, --- U.S. ----, 129 S.Ct. 2343, 174 L.Ed.2d 119 (2009), which considered whether the burden-shifting framework established by Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989), is available to plaintiffs in age discrimination cases. Gross refused to apply Price Waterhouse to ADEA claims for two reasons. First, the Court found that shifting the burden of persuasion to an age discrimination defendant is improper because the plain language of the ADEA requires the plaintiff to prove that the defendant took the adverse employment action "because of [the plaintiff's] age." The Court construed this language as requiring that the plaintiff prove but-for causation from the outset of an ADEA case. Second, the Court expressed ambivalence about the utility of burden-shifting in age discrimination claims.

Defendants argued that Gross rendered McDonnell Douglas's burden-shifting inapplicable to ADEA cases and that plaintiff's appeal should be disposed of solely by inquiring whether Smith would have retained his job but for the alleged age discrimination. However, the court held that "it may not depart from our prior decisions applying McDonnell Douglas to age discrimination cases unless those decisions are irreconcilable with Gross." The court cited Mennen Co. v. Atl. Mut. Ins. Co., 147 F.3d 287, 294 n. 9 (3d Cir.1998) which provided that a panel of the court may not overrule the decisions of a prior panel unless the earlier disposition "is in conflict with Supreme Court precedent." The court noted that "[w]hile we recognize that Gross expressed significant doubt about any burden-shifting under the ADEA, we conclude that the but-for causation standard required by Gross does not conflict with our continued application of the McDonnell Douglas paradigm in age discrimination cases."

As such, the court evaluated Smith's age discrimination claim pursuant to McDonnell Douglas to see whether he produced sufficient evidence to establish that defendants' proffered rationale for terminating him was a pretext for age-based discrimination and the court concluded that Smith failed to carry that burden.

New Jersey's Law Against Discrimination Prohibits Sexual Harassment and Discrimination in Business Owners and Client Relationships

In J.T.'s Tire Service, Inc. v. United Rentals North America, Inc., --- A.2d ---, 2010 WL 26495 (January 6, 2010), Plaintiffs, J.T.'s Tire Service, Inc. (J.T.) and its sole owner Eileen Totorello, filed a complaint alleging discriminatory refusal to do business, under the Law Against Discrimination (LAD), against Defendant, United Rentals North America, Inc. (United). Specifically, plaintiffs alleged that a branch manager at United tried to extort sexual favors from Totorello as a condition of allowing her company to continue doing business with United. Plaintiffs allege that because she refused the manager's advances, United ceased contracting with J.T.

Plaintiffs' complaint accused United of unlawful sex discrimination and retaliation in violation of the LAD. Before filing an answer or engaging in any discovery, United filed a motion to dismiss the complaint for failure to state a claim on which relief could be granted. The trial court held that there was no evidence to suggest that Defendant United discriminated against Plaintiff based on her sex and that United had not unlawfully retaliated against plaintiffs as contemplated by the statute. The court dismissed count one of Plaintiff's Complaint as to Defendant United. Plaintiffs appealed.

The appeals court acknowledged that the LAD prohibits discriminatory refusals to do business on the basis of sex. Specifically, subsection (l) prohibits:

For any person to refuse to buy from, sell to, lease from or to, license, contract with, or trade with, provide goods, services or information to, or otherwise do business with any other person on the basis of the race, creed, color, national origin, ancestry, age, sex,. . . .

The court noted that although the LAD does not specifically mention sexual harassment as a prohibited form of discrimination, it is well-established that sexual harassment is a form of sex discrimination that violates both Title VII and the LAD. The court provided that "[w]here, as here, the harassment consists of sexual overtures and unwelcome touching or groping, it is presumed that the conduct was committed because of the victim's sex." The court considered this case to involve "quid pro quo sexual harassment" which occurs when an employer attempts to make an employee's submission to sexual demands a condition of his or her employment. The court held:

The quid pro quo sexual harassment alleged in the complaint, if legally permitted, would stand as a barrier to women's ability to do business on an equal footing with men. Construing N.J.S.A. 10:5-12(l) to prohibit such opprobrious conduct is consistent with the Legislature's intent to eliminate sex discrimination in contracting.

As such, the court reversed the trials court's dismissal of plaintiff's action against defendant.

II. GENERAL LITIGATION

Court Dismissed Plaintiff's Complaint With Prejudice for Failure to Provide Expert Report

In Choi v. River Terrace Gardens Associate, 2010 WL 26495 (N.J.Super. January 6, 2010), Plaintiffs appealed from an order dismissing their complaint with prejudice pursuant to Rule 4:23-5(a)(2) and denying their motion to reinstate the complaint. Among the discovery deficiencies alleged was plaintiffs' failure to provide any expert reports, a failure that was not cured prior to the date the motion to dismiss with prejudice was argued.

Plaintiffs' claims arose from their contention that the negligence of defendant, their landlord, resulted in a mold condition that caused them to suffer severe and permanent injury. Their complaint, filed on November 26, 2007, alleged negligence; an unconscionable commercial practice in violation of the Consumer Fraud Act; a breach of the warranty of habitability; and that the landlord failed to return the security deposit. The case was assigned to Track 2, with an original discovery end date of December 2, 2008.

Defendant promptly served its first discovery demands: a demand for answers to Uniform Interrogatories Form A served with its answer on February 6, 2008; a similar demand with its amended answer on February 15, 2008; and a first demand for production of documents on February 14, 2008.

Eventually, SFC was forced into bankruptcy. In April 2004, Pepper Hamilton was advised that valid claims and causes of action could be brought against Pepper Hamilton “on behalf of the estate and/or creditors of” SFC. Pepper Hamilton immediately contacted its primary insurer Westport and excess insurers Executive Risk, Twin City and Continental Casualty and informed them of the potential claims. Lawsuits were filed against the firm in early 2005 and the firm’s primary insurer, Westport, defended the claims. However, the excess insurers denied coverage.

Plaintiffs did not provide answers to interrogatories by their March 7, 2008 due date. Defendant sent letters on March 11 and April 7, 2008, advising plaintiffs' counsel of their failure and asking that answers be provided. Receiving no response, defendant sent a third letter on April 23, 2008, advising that unless answers were received by May 1, 2008, a motion would be filed without further effort to resolve the discovery issue.

By letter dated July 10, 2008, defense counsel advised plaintiffs' counsel of deficiencies in the answers including the request for expert discovery. Plaintiffs did not provide the requested expert discovery and were repeatedly informed of this deficiency throughout the litigation and failed to cure it. During the period from May 2008 through February 2009, defendant filed two motions to compel discovery, one motion to dismiss without prejudice and, finally, a motion to dismiss with prejudice, all of which were based in part on the failure to provide expert reports. Yet, this failure persisted despite a court order directing production of outstanding discovery that included expert reports by November 15, 2008, the expiration of the discovery period on January 31, 2009, and even on March 20, 2009, the date that the motions were argued. On March 20, 2009, the trial court granted the motion to dismiss the complaint with prejudice and denied the motion to reinstate the complaint.

On appeal, plaintiffs argue that the trial court was precluded from dismissing the complaint with prejudice pursuant to Rule 4:23-5(a)(2) because they provided fully responsive answers to interrogatories before the return date for the motion. To support this argument, plaintiffs cited St. James AME Dev. Corp. v. City of Jersey City, 403 N.J.Super. 480, 485 (App.Div.2008) which held that "the production of fully responsive answers by the time of the return date, even without exceptional circumstances, precludes dismissing the complaint with prejudice." The court found plaintiffs' reliance on St. James misplaced. The court provided:

Although plaintiffs have attempted to characterize the issue here as a bona fide dispute over the sufficiency of the answers provided, the fact remains that plaintiffs never provided any expert reports to defendant. As a result, their contention that they provided fully responsive answers by the return date is simply false and we need not consider the sufficiency of plaintiffs' other answers to interrogatories.

The court found that plaintiffs failure to provide an expert report could not be minimized as a mere dispute over the sufficiency of interrogatory responses because even if there had been no order compelling plaintiffs to provide this information by November 15, 2008, they were required to provide expert reports before the expiration of the discovery period. Plaintiffs' failure to provide expert reports thwarted defendant's ability to complete discovery by deposing plaintiffs' experts and obtaining defense experts to counter their claims.

Because a motion to vacate the dismissal requires that outstanding discovery "has been fully and responsively provided," R. 4:23-5(a)(1), plaintiffs' failure to provide expert reports precluded the granting of their motion to restore the complaint. Therefore, the court held that the motion to dismiss the complaint with prejudice was properly granted.