July 29, 2013

Is actual discrimination against an identifiable victim needed for a retaliation claim?

Posted in Employment Law by Gene Killian |

I mediate a lot of employment cases.  Very few settle early in the litigation process.  Apart from my failings as a mediator, I think that there are a lot of reasons for this.  One is that valuing the “soft” damages in discrimination or whistleblowing cases can be very difficult.  Defense counsel, for example, often treat “emotional distress” as a joke.  Plaintiffs’ counsel, meanwhile, often think that “emotional distress” is a concept that can start only in the six-figure range.  So, the sides don’t reach agreement at mediation, beat each other up for a year or two, and then usually (but not always) settle in a range that many times could’ve been predicted early on.

Of course, despite the body of employment law decisions that has developed over the past few years, some cases defy valuation.  The New Jersey Supreme Court’s recent decision in Battaglia v. United Parcel Service seems to have been such a case.  But it did shed some light on a few questions, including:

  1. Can a plaintiff sue for sexual harassment even when the target of the harassing comments doesn’t actually hear them?
  2. What constitutes the proper “investigation” of an employment claim?
  3. How are a plaintiff’s future damages for emotional distress to be calculated?  

Facts:  Battaglia was a supervisor for UPS in New Jersey.  He became upset when one of his subordinates, DeCraine, started making sexual comments in the office about women, even though there were no women present, and no women heard the comments.    He reprimanded DeCraine and, at one point, “wrote him up.”

Later, UPS offered an out-of-state promotion to Battaglia, to make him a division manager in Baltimore.  Unfortunately, after only a few days of working in Baltimore, Battaglia became ill with Lyme Disease and his doctor ordered him to take three weeks off.  He then declined the Baltimore position and returned to New Jersey, where, since his old position had been filled, he accepted a demotion.  Guess who became his supervisor?  His old friend DeCraine.   

According to Battaglia, DeCraine returned to his old, bad habits of sexual commentary, and there were rumors that DeCraine was having an affair with another UPS employee.  Battaglia says he again confronted DeCraine about what he considered to be inappropriate behavior.  Battaglia says he also reported to DeCraine a rumor about other UPS employees using company credit cards for alcohol-fueled lunches.  When no corrective action was taken, Battaglia sent an anonymous note to Human Resources complaining about poor language in the office and also about “unacceptable, unethical behavior.”  The anonymous note did not specifically mention sexual harassment or credit card abuse.  The Human Resources Director figured out that the Battaglia had written the note.

Meanwhile, Battaglia developed into what some people would consider to be a “pain in the posterior” employee.  Instead of focusing on his own job, he harassed DeCraine about ways to improve the division’s financial results.  He tried to discipline a UPS driver for failing to report an accident in which she had been involved, and ended up screaming at her, which led to the driver filing a grievance.  He apparently leaked information to a union shop steward that the shop steward was under surveillance by management while in the field, which made the shop steward quite unhappy.

UPS Human Resources Manager Regina Hartley eventually called Battaglia into a meeting with several managers, and told Battaglia that the managers all wanted to fire him, but that he was being placed on paid leave pending a determination.  (A lesson here:  Never tell an employee that management “wants” to fire him. That just makes things worse.  If he’s a problem, fire him.  In the long run, it’ll be cheaper.)  UPS then demoted Battaglia, which led to a complaint, a month-long jury trial (ugh), and a million dollar verdict, half of which was for “emotional distress.”

The case eventually made it to the Supremes, who answered the questions posed above as follows:

First, LAD-related retaliation claims do not require actual discrimination against a discernible victim.  After reciting the usual stuff about how the LAD must be broadly construed to eliminate the cancer of discrimination, the Court wrote:  “When an employee voices a complaint about behavior in the workplace that he or she thinks is discriminatory, we do not demand that he or she accurately understand the nuances of the LAD or that he or she be able to prove that there was an identifiable discriminatory impact upon someone of the requisite protected class.  On the contrary, as long as the complaint is made in a good faith belief that the conduct complained of violates the LAD, it suffices for purposes of pursuing a cause of action.” 

As to UPS’s investigation of the matter, the Court wrote that it was inadequate:  “Rather than undertaking an investigation into the allegations and attempting to determine whether DeCraine or anyone else was engaging in behavior that might violate either our strong statutory workplace protections or the company’s own code of ethics, [HR Manager] Hartley conducted only a limited investigation and relied on her pre-existing beliefs to discount the complaints.  In short, as the jury concluded, the corporate response was to take action against the individual who complained.”  We do a lot of insurance coverage work at my firm, and this comment reminded me of a statement in an old Travelers claims manual I have:  “[There is] a requirement to meet the duty of good faith to the insured.  The most positive way to do that is to look for coverage in our policies, and not to look for ways to deny coverage.”  In other words, give the claimant the benefit of the doubt and conduct an honest and fair investigation, without preconceived notions.

Finally, juries aren’t allowed to “guess” at proper compensation for future emotional distress.  Hence, the Battaglia jury’s award of $500,000 for emotional distress (remitted by the trial court to $205,000) was remanded to the trial court, because it may have been based partly on a speculative award for future emotional distress.  The Court wrote:  “We are required to consider whether a plaintiff can recover a verdict that includes an award for future emotional distress in the absence of evidence of permanency in the form of an expert opinion…Although plaintiffs in LAD claims may be awarded damages for humiliation, embarrassment and indignity, which is by definition to suffer emotional distress…a future award must be supported by evidence of permanency.”

For all the lessons this case contained, I don’t want to lose sight of the main one: Settlements, even bad ones, solve problems.  Litigation, on the other hand, tends to create problems, especially to the bottom line.  Here, UPS (or its insurance company) paid a lot of money to defend a month-long trial and then engage in proceedings before the Appellate Division and the Supreme Court.  Battaglia, who thought he had a handsome $500,000 emotional distress award in his pocket (or, rather, two-thirds of that) has, for the time being at least, lost it.

If the sides had engaged in more searching and objective risk analysis, could they have put this case to bed early on, and saved themselves a lot of money and aggravation?  It’s a question worth asking.

You can read the entire UPS v. Battaglia decision by clicking here.

-- Gene Killian