Court Opinion

ID: 4150356
Source: CourtListenerOpinion
Date Created: 2017-03-06 15:08:31.544417+00
Date Added: 2024-06-11T14:23:21.858191
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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