Diana Acevedo and Rex Fornaro v. Flightsafety International, Inc. ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1295-14T2
DIANA ACEVEDO,
Plaintiff, APPROVED FOR PUBLICATION
AS REDACTED
and March 6, 2017
APPELLATE DIVISION
REX FORNARO,
Plaintiff-Appellant/
Cross-Respondent,
v.
FLIGHTSAFETY INTERNATIONAL,
INC.,
Defendant-Respondent/
Cross-Appellant,
and
GREG WEDDING, DANNY ROBAYO,
and LISA ESPOSITO,
Defendants.
Argued October 5, 20161 - Decided March 6, 2017
Before Judges Reisner, Koblitz and Sumners.
On appeal from the Superior Court of New
Jersey, Law Division, Essex County, Docket No.
L-8474-10.
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.
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
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."
2 A-1295-14T2
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
3 A-1295-14T2
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.
[At the direction of the court, Parts I and
III, which are not deemed to warrant
publication, see R. 1:36-2(d), have been
omitted from the published version.]
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
4 A-1295-14T2
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
5 A-1295-14T2
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
6 A-1295-14T2
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
7 A-1295-14T2
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,
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.
8 A-1295-14T2
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.
9 A-1295-14T2
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
10 A-1295-14T2
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,
11 A-1295-14T2
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.
12 A-1295-14T2
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.
13 A-1295-14T2