(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of
the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity,
portions of any opinion may not have been summarized).
Argued November 30, 1999 -- Decided February 16, 2000
GARIBALDI, J., writing for a unanimous Court.
This appeal presents the issue whether jury instructions, jury interrogatories, and a verdict sheet regarding a
defendant employer's burden of production in a sex discrimination case under the New Jersey Law Against Discrimination
(“LAD”) so confused the jury that a reversal of plaintiff's verdict was required.
Martha Mogull worked in the Hackensack office of CB Commercial Real Estate Group, Inc. (“CB”) for more than
a decade. After a number of disputes about commissions allegedly owing to her, CB discharged her. Mogull subsequently
filed suit alleging that CB and a number of its employees had discriminated against her in her employment and in the
termination of her employment on the basis of her sex, in violation of the LAD. In its answer, CB denied the material
allegations of Mogull's complaint and alleged that she was terminated for legitimate business reasons.
The matter was tried before a jury over approximately seven weeks. At the close of all evidence, and after giving
its jury instructions, the trial court submitted specific interrogatories to the jury to be used in reaching its determination. CB
did not object to the instructions or to the interrogatories at any point before the jury retired to consider its verdict. In
response to the interrogatories, the jury found that Appel (the only remaining individual defendant) was liable to Mogull for
breach of contract and awarded her over $87,000 on that claim. In addition, the jury determined that Mogull had been
denied benefits (commissions) relating to three separate transactions, and awarded her $500,000 on those claims. Finally,
the jury found that Mogull was performing her job at a satisfactory level when she was terminated; that male employees with
comparable work records were retained; and that CB had failed to articulate any legitimate, non-discriminatory reason for
its termination decision. The jury awarded $1,000,000 on that claim.
CB moved to dismiss the claim for punitive damages, arguing that there was no evidence of any ill will or evil
intent on its part. The court denied that motion, reasoning that it was up to the jury to make that determination. After a
separate proceeding, the jury awarded Mogull $5,000,000 in punitive damages.
CB moved for a new trial, for judgment notwithstanding the verdict, and for remittitur (reduction in the amount of
the jury award), arguing that the interrogatory asking whether CB had articulated legitimate nondiscriminatory reasons for
its actions should not have been submitted to the jury, and that the charge on that point was confusing in that it led the jury
to believe that CB was obligated to prove its articulated nondiscriminatory reasons by a preponderance of the evidence. CB
also argued that punitive damages should not have been awarded, there having been no egregious conduct. The trial court
denied the motion, concluding that the evidence supported the jury's verdict. The court further upheld the award of punitive
damages, finding that there was evidence of egregious conduct in which CB's upper management participated.
CB raised several issues on appeal, including the accuracy of the jury instructions and the propriety of the special
interrogatories or verdict form submitted to the jury. The Appellate Division held that the jury instructions together with the
interrogatories and verdict sheet regarding CB's burden of going forward with nondiscriminatory legitimate reasons for the
challenged employment actions contained such fundamental error that reversal of the entire verdict was required. The court
reversed and remanded for a new trial only against CB, instructing that if CB presented the same evidence at the new trial,
the LAD liability portion of the jury charge and the corresponding jury interrogatories as to denial of employment benfits
and discharge based on sex, should focus solely on the pretext and intent analysis.
The Supreme Court granted Mogull's petition for certification.
HELD: Although the trial court erred in submitting interrogatories to the jury that essentially required CB to prove its
reason for discharging Mogull, that error did not produce an unjust result inasmuch as the jury instructions conveyed the
clear message that Mogull bore the ultimate burden of proof, thus curing whatever defect the interrogatories may have
introduced.
1. Under the McDonnell Douglas/Peper test for indirectly proved cases of unlawful discrimination under the LAD, once a
prima facie case is established by the employee, then the burden of going forward shifts to the employer to rebut the
resulting presemuption of undue discrimination by articulating some legitimate, nondiscriminatroy reason for the
employee's rejection. The employee then must prove by a preponderance of the evidence that the legitimate
nondiscriminatory reason advanced by the employer was merely a pretext for discrimination. (pp. 16-18)
2. Because CB made no objection to the jury instructions or to the verdict sheet incorporating the description of its burden
of production at any time before the jury retired for its consideration, to justify reversal, any error on the part of the trial
court in that respect must constitute plain error. (p. 20)
3. There is no reversible error where the jury charge, considered as a whole, adequately conveys the law and is unlikely to
confuse or mislead the jury, even though part of the charge, standing alone, might be incorrect. (p. 20)
4. Although the trial court's charge in respect of CB's responsibility to go forward and articulate a nondiscriminatory
reason for the employee's discharge could have been more artfully drafted, the charge, which closely tracked the Model
Charge, conveyed the clear message that Mogull and not CB bore the ultimate burden of proof. Therefore, any error on the
part of the trial court in that respect did not constitute plain error. (pp. 21-23)
5. Interrogatories, like any other instructions to a jury, are not grounds for reversal unless they are misleading, confusing or
ambiguous. Because CB did not object to the interrogatories at any relevant time, they must be evaluated in terms of
whether they produced an unjust result. (pp. 23-26)
6. Although the trial court errred in requiring CB to prove, instead of produce, its reason for the employee's discharge, for
the result to be unjust, there must be a determination that the jury would have found that Mogull failed to prove her case by
a preponderance of the credible evidence, a finding not compelled by this record. (pp. 26-29)
7. The jury's responses on the verdict sheet fairly reflect its conclusion, consistent with the court's charge, that Mogull
sustained her burden of proving intentional discrimination based on her gender. (pp. 29-31)
8. Given the confusion that often results when the first and second stages of the McDonnell Douglas test goes to the jury
(that is, the establishment of a prima facie case and the burden of producing or articulating a legitimate, nondiscriminatory
reason for discharge), it is recommended that the court should decide both those issues. (pp. 31-34)
9. To sustain an award of punitive damages, it must be established that upper management participated in or was wilfully
indifferent to the wrongful conduct and that the the offending conduct is especially egregious. (p. 34)
10. In examining the size of punitive awards, courts must consider the degree of reprehensibility of the conduct involved;
the disparity between the harm or potential harm suffered by the injured party and the punitive damages award; and the
difference between the remedy of punitive damages and the civil penalties authorized or imposed in comparable cases. (pp.
34-36)
11. Because the trial court did not give the upper management charge, on remand, the Appellate Division will have to
determine whether omission of that charge was clearly capable of producing an unjust result and whether the substantive
standards in respect of punitive damages were fully and completely addressed by the trial court. (pp. 36-37)
12. The trial court's dismissal of the discrimination claims against the individual defendants did not constitute an abuse of
discretion. (pp. 37-38)
Judgement of the APPELLATE DIVISION reversing Mogull's award of compensatory damages is REVERSED,
and the trial court's verdict of compensatory damages is REINSTATED. The case is REMANDED to the Appellate
Division for further proceedings in accordance with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES O'HERN, STEIN, COLEMAN, LONG, and VERNIERO join in
JUSTICE GARIBALDI's opinion.
SUPREME COURT OF NEW JERSEY
A-
107 September Term 1998
MARTHA MOGULL,
Plaintiff-Appellant,
v.
CB COMMERCIAL REAL ESTATE GROUP,
INC., GARY BEBAN, FRED SCHMIDT,
JOHN FOSTER, JAMES J. DIDION, BOYD
VAN NESS and STEVEN FLEMING,
Defendants-Respondents,
and
HAROLD APPEL, EDWARD HIGHERS and
JOHN DOES 1-5, (said names being
fictitious and unknown),
Defendants.
___________________________________
Argued November 30, 1999 -- Decided February 16,
2000
On certification to the Superior Court, Appellate
Division, whose opinion is reported at
319 N.J.
Super. 53 (1999).
Bruce L. Atkins argued the cause for appellant
(Contant, Scherby & Atkins, attorneys; Andrew T.
Fede, on the briefs).
Donald P. Jacobs argued the cause for respondents
(Budd Larner Gross Rosenbaum Greenberg & Sade,
attorneys; Carl Greenberg, of counsel).
The opinion of the Court was delivered by
GARIBALDI, J.
This appeal presents the issue whether jury instructions, jury
interrogatories, and a verdict sheet regarding a defendant
employer's burden of production in a sex discrimination case under
the New Jersey Law Against Discrimination (“LAD”), N.J.S.A. 10:5-1
to -42, so confused the jury that a reversal of plaintiff's verdict
was required. Plaintiff Martha Mogull worked in the Hackensack
office of defendant CB Commercial Real Estate Group, Inc. (“CB”)
for more than a decade. After a number of disputes about
commissions owing to her, CB discharged her. In her suit, Mogull
alleged that CB and a number of its employeesSee footnote 11 had discriminated
against her in her employment and in the termination of her
employment, in violation of the LAD. After a seven-week trial, the
jury awarded Mogull $1.5 million in compensatory damages and $5
million in punitive damages. The Appellate Division reversed the
verdict and remanded for a new trial.
319 N.J. Super. 53 (1999).
Martha Mogull was the first woman ever to be named an associate vice president in the commercial division of CB.
Mogull's career in commercial real estate began in the firm of Brunell Kramer. At the recommendation of a client, she left that firm and took a job at Sutton & Towne in Paramus under the managing partner, Harold Appel.
Appel trained Mogull. She worked on some of his transactions, doing leg work and asking him for help when she needed it. On those transactions, they shared the salesperson's portion of the commission equally. Each worked independently on other transactions as well. Appel and Mogull had a brief affair in 1977 and 1978, but they were able to continue working together after it ended amicably.
When CB purchased Sutton & Towne in 1980, both Mogull and Appel worked in CB's Hackensack office. Appel became a vice president for CB, and Mogull worked under a “Broker-Salesman Contract” that provided that “Broker agrees to provide to Salesman all current listings in the office except such as Broker may find expedient to handle itself or to place solely with another salesman or salesmen.” Mogull was named associate vice president in 1986, in recognition of having had sales of more than $100,000 for five of the previous six years. She was one of the top ten salespeople in CB's Hackensack office from 1981 to 1990, and was five times in the top five. Nevertheless, in her twelve years at CB, Mogull received only two leads from CB's management, one in exchange for agreeing not to pursue a complaint.
Mogull's claim of denial of employment benefits centers on real estate transactions with three clients: a) Edwards & Kelcey; b) CBS; and c) Allstate.
1. Edwards & Kelcey In 1978 when Edwards & Kelcey (“E&K”) entered into a long-term lease, both Appel and plaintiff shared equally in that commission. E&K had been looking unsuccessfully for new space for several years, until Mogull arranged for a developer (a neighbor of hers) to build E&K a building in Livingston. Appel, who had an exclusive representation agreement with E&K, decided to split the commission equally with Mogull because she was energetic and bright and he “wanted to help her along and . . . promote the company.” E&K occupied half of the building and gave Mogull an exclusive to lease the rest of the space, which she and Appel did, sharing those commissions. When Mogull later found E&K a warehouse, she also split the commission with Appel. In 1983 or 1984, Appel, without Mogull, did some out-of-state deals with E&K. At about the same time, E&K expanded its office space in Livingston, and Mogull, who should have split her commission on that transaction with Appel, did not.
In 1991, Mogull learned that Appel was working with E&K and immediately complained to Arleigh Williams, her regional manager, that she was entitled to work on any E&K deal. Appel, in turn, sought his share of the 1984 expansion commission. Nearly a year later, Williams responded in a memorandum, explaining that, in 1991, E&K had been “out in the marketplace with other brokers,” and that Appel, by making a presentation with CB's resident manager, had “regained control” and won E&K back. Appel explained that the person in charge of real estate matters at E&K was retiring, and after meeting with the new vice president he had secured a new exclusive. Appel did not tell Mogull, because it was a new deal and they were no longer working together. Fred Schmidt, then resident manager of CB's Hackensack office, corroborated Appel's account.
Williams resolved the dispute by telling Mogull that she had the option to choose either (a) thirty percent of the commission if the client renewed its lease, but none of the commission if the client relocated, or (b) twenty percent of the commission, regardless of whether the client renegotiated or relocated. Mogull responded that both options were unacceptable, that E&K was her account, and that she was “a fifty percent partner whether they renegotiate or relocate.” On further review, Williams decided that Mogull and Appel would split the commission equally if E&K renewed, but that she would receive only twenty percent of the total commission if they relocated. Williams also reversed a previous decision and awarded Appel a commission of $2429 on the 1984 expansion. When E&K eventually relocated, Mogull received a commission of $67,000, twenty percent of the total commission of $334,800. She claimed that CB therefore owed her $100,000.
2. CBS
In 1990, Mogull learned that in 1987 Appel had improperly excluded her from a deal with CBS, on which she should have received a $75,000 commission. Several years earlier, she had leased space to CBS in Secaucus. The landlord, Hartz Mountain, had agreed that Mogull would get a commission if CBS took more space at that location. In April 1990, Mogull discovered that there was a second deal between CBS and Hartz Mountain, and in a memo to John Anderson, her resident manager, she asked for her share of that commission. Anderson's replacement wrote to Mogull advising her that no commission was due her because the two transactions were distant in time, and that Hartz Mountain was not the landlord in the second lease.
Appel stressed that CBS had been his client before plaintiff joined the firm. He explained that the landlord in the second transaction was Meadowlands Parkway Association, not Hartz Mountain, but admitted that correspondence to the new landlord was addressed care of Hartz Mountain, and that the lease involved space in the same development.
2. Allstate
During the 1980s, Allstate was a substantial client for Mogull, who procured four offices of approximately 20,000 square feet, and a 40,000 square foot office for Allstate. The Allstate manager appreciated Mogull's work and regularly employed her services as she was willing to meet his smaller requirements. Mogull even did one emergency deal for Allstate without a fee, in order to build her relationship with the company. When Allstate was planning a major relocation in New Jersey, Mogull prepared a summary of her deals for another CB salesman to submit in connection with the relocation. A meeting with Allstate's management, plaintiff, and other CB agents was arranged.
CB's policy was to assign a salesperson with a previous relationship with a national client to that client's projects in the salesperson's area so long as the assignment met the client's needs. Mogull expected that she would choose the team to work on the major relocation project but, one or two days before the meeting, she received a message telling her not to come to the first meeting with Allstate on that project. Mogull later learned that Appel, who had not worked with Allstate previously, had been selected for the team.
Jack Weber, CB's national account manager for Allstate, explained that two senior Allstate real estate people had called him regarding the New Jersey relocation. Weber understood that they were interviewing three different firms for the relocation and they told him that they wanted a high-profile broker for the deal. Local managers decided that Steve Fleming, then manager at CB's Piscataway office, would pick the sales team. Weber made no investigation into other transactions in the area involving Allstate, but Fleming discovered that Mogull had worked with Allstate in the past. Fleming asked Weber to ask Allstate whether they wanted Mogull on the team, but no one at Allstate's national office knew who she was. Fleming then concerned himself with putting the “strongest players on the team.” His brokers who had relationships with Allstate had done small deals with them, so he looked to Hackensack for salespeople with stronger resumes. Appel was the top salesperson in CB's Hackensack office for every year but one from 1983 to 1992, and was among the top three percent of CB salespeople nationwide for nine straight years. Fleming could recall no other situation in which a salesperson with a local relationship had been left off the team. Mogull complained to Fleming about being left off the team, and Fleming reported that it was Weber's decision. Mogull asked whether Van Ness, then CB's Eastern Division Manager, was Weber's boss, and Fleming responded that Gary Beban, CB's President, was as well. Mogull complained of discrimination to Anderson and Williams, and Williams told her that Allstate had asked for Appel, which he later admitted was incorrect. Mogull called Williams again and said “if I weren't a woman, this wouldn't happen to me,” and Williams answered, “if that's the way you feel then we have nothing to talk about.”
In 1990, Mogull met with Williams in an effort to resolve her difficulties with the firm. Williams described a December 1990 meeting as a “litany . . . of wrongs,” in which Mogull displayed an “almost obsessive” animus towards Appel. Williams arranged a meeting between Mogull and Van Ness the following February. During that meeting, which lasted more than two hours, Van Ness denied knowing that Allstate was Mogull's account. Van Ness described the meeting as “about the most unpleasant experience that I've ever had,” and Mogull admitted that she had insulted and degraded him. Eventually, Beban was assigned to carry out an investigation of Mogull's discrimination claims and determined them to be unfounded. Beban, however, only reviewed Mogull's claim regarding the Allstate transaction, and concluded that her dislike of Appel was at the core of all of her complaints. Beban later sent Mogull a memorandum informing her that her “personal disposition toward [Appel] is at the heart of this problem [and] this disruption must end.” Mogull denied Beban's allegations, but acknowledged that her commissions fell from $98,000 in 1989 to $31,000 in 1990 and $54,000 in 1991. Those totals were among the lowest in the Hackensack office, as were her earnings of $46,000 in 1988 and $26,000 in 1992.
In early 1992, Mogull also met with Schmidt, her resident manager from 1990 through mid-1992, and Williams. Schmidt advised her to stop thinking about lost clients and relationships and to canvass or cold-call for clients, as those procedures provided the bulk of the office's business. Schmidt also advised Mogull that she was disrupting the office. John Foster succeeded Schmidt as resident manager in July 1992, with the mission of shaking up the struggling Hackensack office. Foster sought to meet with Mogull, and after she canceled a number of appointments with him, they met on October 9, 1992. After the meeting, Foster wrote a memo to Mogull's file stating that Mogull was “out of touch with reality” and had said that she was burned out and would not canvass.
On October 15, 1992, Foster fired Mogull. In a memorandum to plaintiff's file dated October 26, 1992, Foster stated that her firing resulted from her mental attitude, her statement that she was burned out, her statements that CB took business away from her, her dependence on leads and her refusal to canvass. Van Ness denied taking part in the firing.
Mogull filed suit in the Law Division, Bergen County, on August 20, 1993, alleging that she had been discriminated against on the basis of sex in violation of the LAD. She complained that CB removed her from transactions in favor of male salespeople after she had developed business relationships with clients, deprived her of leads that were given instead to junior male salespeople, and violated agreements to split fees with her, causing damage to her income and reputation. Mogull also alleged that she was wrongfully discharged on October 15, 1992. Additionally, Mogull accused Appel of participating in the discriminatory actions and, separately, of breaching an agreement to allow Mogull to work with a specific client. She demanded compensatory and punitive damages, attorneys' fees, and costs. Other claims were dismissed on summary judgment, as were complaints against defendants Edward Highers and James J. Didion. CB denied the material allegations of the complaint and alleged in its answer that Mogull was terminated for legitimate business reasons. CB also counter-claimed, alleging breach of the duty of loyalty, breach of contract, and interference with prospective economic advantage. Mogull denied the allegations of the counter-claim. Before trial, the trial court summarily dismissed a number of Mogull's claims as time-barred, but denied summary judgment on the question whether incidents underlying the time-barred complaints constituted continuing violations.
The matter was tried for approximately seven weeks before a jury. At the close of all the evidence, defendants moved to dismiss the discrimination claims against the remaining individual defendants, arguing that there was no evidence of discrimination by them. The court granted the motion (except as to Appel) because the individuals were acting within the scope of their employment; they were not seeking personal gain; and punitive damages could be assessed against the company without the individuals. The court also granted Mogull's motion to dismiss the breach of loyalty claim because CB had not proved any damages.
In response to interrogatories, the jury found that Appel was liable to plaintiff for breach of contract, and awarded plaintiff $87,201.07 on that claim. The jury determined that “plaintiff was denied benefits relating to” three separate transactions, CBS, Allstate and Edwards & Kelcey, and awarded plaintiff $500,000 on those claims. Finally, the jury found that plaintiff was performing her job at a satisfactory level when she was terminated; male employees with comparable work records were retained; and defendant failed to articulate any legitimate, non-discriminatory reason for its termination decision. Plaintiff was awarded $1,000,000 on that claim.
Defendant moved to dismiss the claim for punitive damages, arguing that there was no evidence of any ill will or evil intent on its part. The court denied the motion, reasoning that it was up to the jury to make that determination. After a separate proceeding, the jury awarded plaintiff $5,000,000 in punitive damages.
On December 2, 1996, an order was entered in favor of plaintiff and against defendant in the amount of $6,711,460, including prejudgment interest on the compensatory damages. In addition, $99,494, including prejudgment interest, was awarded against Appel. The trial court added $211,460.13 in prejudgment interest, $14,249.10 in taxed costs, and $624,150.20 in counsel fees.
CB moved for a new trial, judgment notwithstanding the verdict, and remittitur, arguing that the interrogatory asking whether CB had articulated legitimate nondiscriminatory reasons for its actions should not have been submitted to the jury, and that the charge on that point was confusing. CB also objected to the admission of statistical evidence of gender discrimination in its hiring and compensation to prove Mogull's claim, and argued that punitive damages should not have been awarded, there having been no egregious conduct. The court denied the motion, citing numerous federal cases from outside New Jersey for the admission of statistical evidence in proving discrimination and concluding that the evidence supported the jury's findings. On the question of punitive damages, the court found that there was evidence of egregious conduct in which CB's upper management participated. The order denying the motion was entered March 27, 1997. Defendants appealed from the December 2, 1996, and March 27, 1997 orders, and Mogull cross-appealed.
CB contended in its appeal that (1) the jury instructions and verdict form improperly shifted the burden of proof to it; (2) the jury's finding that defendant failed to articulate legitimate reasons for its actions was against the weight of the evidence; (3) and (4) statistical evidence and evidence of a continuing course of disparate treatment should have been excluded; (5) defendant was entitled to judgment notwithstanding the verdict on the question of plaintiff's termination because plaintiff's performance was not satisfactory and she was not replaced by a male; (6) evidence of plaintiff's future damages should have been excluded; (7) defendant's counterclaim for breach of loyalty was erroneously dismissed; (8) the award of punitive damages was improper because there was no participation by upper management and there was no egregious conduct, and the award was excessive as well; and (9) the award of attorney's fees incorrectly included time spent on other claims and the twenty percent fee enhancement was excessive.
Mogull contended in her cross-appeal that the court erred in (1) excluding her evidence of back pay; (2) dismissing the individual defendants; (3) declining to award costs for expert witnesses; and (4) failing to award more than the twenty percent enhancement of attorney's fees. The Appellate Division held that the jury instructions together with the interrogatories and verdict sheet regarding CB's burden of going forward with nondiscriminatory legitimate reasons for challenged employment actions contained such fundamental errors that reversal of the entire verdict was required. Mogull, supra, 319 N.J. Super. 53. The panel affirmed the dismissal of the complaints against all the individual plaintiffs, except Appel, and reversed and remanded for a new trial only against CB. The court instructed that if CB presented the same evidence at the new trial, “the LAD liability portion of the jury charge and the corresponding jury interrogatories as to denial of employment benefits and discharge based on sex, should focus solely on the pretext and intent analysis.” Id. at 72.
We granted Mogull's petition for certification, 161 N.J. 150 (1999).
This case is one of gender discrimination established by indirect proof. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed.2d 668 (1973), outlined the procedure for indirectly proved cases of unlawful discrimination under Title VII of the Civil Rights Act of 1964, 42 U.S.C.A. §2000e-2 (Title VII). This Court has applied the same test to claims brought under LAD since Peper v. Princeton Univ. Bd. of Trustees, 77 N.J. 55 (1978). In two cases applying the McDonnell Douglas/Peper test, we stated that
the prima facie case is established as follows: the employee must prove "[1] that he was in the protected * * * group, [2] that he was performing his job at a level that met his employer's legitimate expectations, [3] that he nevertheless was fired, and [4] that [the employer] sought someone to perform the same work after he left." Once the prima facie case has been established, the McDonnell Douglas analysis is followed in all other respects.
[Clowes v. Terminix Intern., Inc., 109 N.J 575, 597 (1988).]
Establishment of the prima facie case gives rise to a presumption that the employer unlawfully discriminated against the applicant. The burden of going forward then shifts to the employer to rebut the presumption of undue discrimination by articulating some legitimate, nondiscriminatory reason for the employee's rejection. The plaintiff then has the opportunity to prove by a preponderance of the evidence that the legitimate nondiscriminatory reason articulated by the defendant was not the true reason for the employment decision but was merely a pretext for discrimination.
[Andersen v. Exxon, 89 N.J. 483, 492-93 (1982).]
Defendant asserts, and the Appellate Division agreed, that the jury made that finding because the charge and special interrogatories and verdict sheet were so confusing that the jury was led to believe that CB had to prove its articulated nondiscriminatory reasons by a preponderance of evidence. Essentially, defendant alleges that those faulty charges and interrogatories so confused the jury that it could not properly determine whether defendant had met its burden of production. Defendant also argues as a matter of law that the burden required was met and that the question of articulating reasons sufficient to overcome Mogull's presumption should not have been submitted to the jury. Plaintiff responds that the jury charge, in its entirety, was proper and cured any defect in the interrogatories. We agree.
Specifically, the court charged the jury on what Mogull would have to prove as follows:
In order to state an initial case in discrimination, the plaintiff must have proven each of the elements listed. Failure to prove even one of those elements means the plaintiff has failed to state an initial case as to any particular claim. If you find that the plaintiff has not met all of these elements, you must find that the plaintiff has failed to state a particular claim for discrimination and return a verdict for the defendant on that particular issue of discrimination.
If on the other hand you find that the plaintiff has met all of the elements of the initial case, you must then proceed to consider the next component of a discrimination case. If plaintiff proves by a preponderance of the credible evidence that she has stated an initial case by proving the necessary components as stated, the defendant then has the burden of going forward with evidence of legitimate non- discriminatory reasons for its action, that action being such as denial of benefits, such as position or compensation.
If you do not find that the plaintiff has proven an initial case in support of any such claim, then you must return a verdict for the defendant on any such claim. If you find that the plaintiff has proven an initial case, you must determine whether the plaintiff also has satisfied her ultimate burden of proving intentional discrimination by defendant. Defendant maintains that it resolved the CBS and Edwards and Kelcey disputes and declined to place the plaintiff on the Allstate team and discharged the plaintiff because of legitimate articulated reasons.
I charge you that if true, such articulated reasons constitute a legitimate non discriminatory basis for defendant's action. Nevertheless, plaintiff may prevail on her claim or any particular claim if she has proven that such articulated reason or reasons are not _ strike that _ are merely a pretext for discrimination on any such claim. To prove pretext, plaintiff must show by a preponderance of the credible evidence that defendant's reason or reasons stated are not worthy of belief or that more likely than not, the reason or reasons given are not a true reason or the only true reasons for defendant's action and that plaintiff's sex, that is being a female, was a determinative motivating factor for defendant's action. In other words in order to prevail on any one of her claims, plaintiff must prove by a preponderance of the evidence that her sex was a determinative factor in the challenged treatment.
Rule 1:7-2 provides that “no party may urge as error any
portion of the charge to the jury or omissions therefrom unless
objections are made thereto before the jury retires to consider its
verdict.” CB made no objection during the charge conference or at
any other time before the jury retired either to the jury
instructions or the verdict sheet incorporating the description of
its burden of production. Accordingly, we must determine whether
the trial court's decision was plain error, error “of such a nature
as to have been clearly capable of producing an unjust result.” R.
2:10-2.
The jury charge “should set forth an understandable and clear
exposition of the issues.” Campos v. Firestone Tire and Rubber
Co.,
98 N.J. 198, 210 (1984). There is no reversible error “where
the charge, considered as a whole, adequately conveys the law and
is unlikely to confuse or mislead the jury, even though part of the
charge, standing alone, might be incorrect.” Fischer v. Canario,
143 N.J. 235, 254 (1996). The court repeatedly instructed the jury
that Mogull, to prevail, had to prove all her allegations and so
adequately conveyed the law of the ultimate issue to the jury. The
court's charge tracks the language of the Model Jury Charge with
near exactitude. See Model Jury Charge (Civil), §§2.21-2.23. That
model, like the court's charge, repeatedly assigns the ultimate
burden of proof to the plaintiff, and leaves no doubt that a
plaintiff who fails to prove discrimination by a preponderance of
the evidence loses.
In concluding that the jury might have been misled into
believing that CB had to prove that its reasons were true, the
Appellate Division quotes, for example, the trial court's statement
that “all parties in this case have the burden of proving their
allegations at trial.” Mogull, supra, 319 N.J. Super. at 68. The
Appellate Division also found fault with the trial court's
direction that CB's articulated reasons for its actions with
respect to the three transactions “if true [would] constitute a
legitimate, nondiscriminatory basis for defendant's actions.” Id.
at 69.See footnote 22 Those statements did not manifestly overcome the court's
insistence that Mogull bore the burden of persuasion.
Specifically, on the burden of persuasion, the court said:
the burden is on the plaintiff in a civil
action such as this to prove every essential
element of her claim or claims by a
preponderance of the credible evidence. . . .
If the proof should fail to establish any
essential element of the plaintiff's claim by a
preponderance of the credible evidence, the
jury should find for any particular defendant
as to such claim.
In this case, the plaintiff must prove by a
preponderance of the evidence that her gender
was a motivating factor in the defendant's
adverse employment decision concerning her or
decisions concerning her.
The court also charged the jury that defendant had no burden
of persuasion, but was required only to articulate legitimate
reasons for its actions: “If plaintiff proves by a preponderance of
the credible evidence that she has stated an initial case by
proving the necessary components as stated, the defendant then has
the burden of going forward with evidence of legitimate
non[-]discriminatory reasons for its action.” The charge did not
directly state or imply that defendant had any burden of proof; to
the contrary, the court made it clear that the entire burden of
proof was plaintiff's.
Contrary to defendant's assertion, the court also made it
clear to the jury that defendant's reasons for its actions could be
legitimate and non-discriminatory even if the jury disagreed with
them or found them “unpalatable”:
Simply because you, were you in the position of
the defendant, might have acted differently
with respect to Martha Mogull, does not mean
that you must find in favor of the plaintiff.
It is not your job to substitute your judgment
for that of CB [defendant], rather if you are
to find for the plaintiff you must determine
that the reasons CB has given for its actions
are not the true reasons but that they are only
offered so as to cover up or justify
defendant's discrimination.
[Anti-discrimination laws] do not, however,
alter the traditional managerial prerogative to
hire and fire employees.
We find no error in the charge. The Appellate Division failed
to consider the charge as a whole, but instead criticized small
parts of the charge. It is difficult to find that a charge that
follows the Model Charge so closely constitutes plain error.
Although the charge could have been more artfully drafted, it
conveyed the clear message that Mogull bore the burden of proof.
Defendant objects to jury interrogatories 2(c) and 3(c).
Interrogatory 2 states:
2. Do you find by a preponderance of the credible evidence:
2.(a) That plaintiff was denied benefits relating to the Allstate transaction and/or by the resolution of the CBS dispute and/or the resolution of the Edwards & Kel[c]ey dispute?
yes __X__ no _____
If “no,” proceed to #3.
If “yes,” place a checkmark in the appropriate space or spaces in #2(b).
2.(b) The Allstate transaction ( X )
The CBS dispute ( X )
The Edwards & Kel[c]ey dispute ( X )
Proceed to #2(c).
2.(c) Do you find that defendant C.B. has articulated or advanced one or more legitimate, non discriminatory reasons for its decision(s) relating to the event(s) checked off in #2(b) above?
yes _____ no __X__
If “yes,” proceed to #2(d).
If “ no,” proceed to #2(e).
2.(d) Do you find by a preponderance of the
evidence that plaintiff, Martha Mogull, has
proved by a preponderance of the evidence that
defendant's legitimate, non-discriminatory
reasons were a pretext or “cover-up” for sex
discrimination relating to the event(s) checked
off in #2(b) above?
If “no,” proceed to #3.
If “yes,” proceed to #2(e).
2.(e) What amount of money would fairly and
reasonably compensate the plaintiff for damages
proximately caused by denial of benefits
relating to the event(s) checked off in #2(b)
above which may include emotional distress?
$ 500,000
Interrogatory 3(c) is identical to 2(c), referring to
defendant's alleged retaliatory discharge of defendant.
This Court considered the application of the Fischer standard
that a charge, to be reversible error, must inadequately state the
law and tend to confuse or mislead the jury, see supra at ___ (slip
op. at ___), to interrogatories in Sons of Thunder, Inc. v. Borden,
Inc.,
148 N.J. 396 (1997), and found that interrogatories, like any
other instructions to a jury, were “not grounds for a reversal
unless they were misleading, confusing or ambiguous.” Id. at 418.
The interrogatories that CB urges as error here were presented to
both parties' counsel the day before they were given to the jury.
The court went over the interrogatories word by word in a charge
conference that appears from the record to have lasted an entire
afternoon. Both parties objected to other material in the
interrogatories, but, despite having had the interrogatories for
their consideration overnight, CB's lawyers never objected to them
until the post-trial motions for new trial and judgment
notwithstanding the verdict. Accordingly, we may only reverse the
verdict if the trial court's actions in phrasing the
interrogatories the way it did constituted plain error. R. 1:7-2.
Thus, we must determine whether the interrogatories were so
misleading, confusing, or ambiguous that they produced an unjust
result.
In asking the jury whether CB had “articulated or advanced
one or more legitimate, non-discriminatory reasons for its
decision(s)” after the standard “[d]o you find by a preponderance
of the credible evidence,” the court led the jury to consider CB's
submissions under the standard of preponderance of the evidence.
Because a LAD defendant, like a Title VII defendant, does not have
to prove stage two of the McDonnell Douglas test by a preponderance
of error, the special interrogatories were erroneous. Mogull
admitted as much in her brief to the Appellate Division.
In McDonnell Douglas, the Supreme Court described the burden
the employer faces after the plaintiff has established a prima
facie case as that of “articulat[ing] some legitimate,
nondiscriminatory reason” for the employment action. 411 U.S. at
802, 93 S. Ct. at 1824, 36 L. Ed.
2d at 678. Further cases have
amplified the Supreme Court's holding. In Furnco Constr. Corp. v
Waters,
438 U.S. 567, 578,
98 S. Ct. 2943, 2950,
57 L. Ed.2d 957,
968 (1978), the Court held that “[t]o dispel the adverse inference
from a prima facie showing under McDonnell Douglas, the employer
need only 'articulate some legitimate, nondiscriminatory reason.'”
(emphasis added).
Three years later, in Texas Dep't of Community Affairs v.
Burdine,
450 U.S. 248,
101 S. Ct 1089,
67 L. Ed.2d 207 (1981), the
Supreme Court stated that the defendant met its burden if its
“evidence raises a genuine issue of fact as to whether it
discriminated against the plaintiff.” Id. at 254, 101 S. Ct. at
1094, 67 L. Ed.
2d at 216. According to the Court, the deciding
factor in the analysis of the defendant's proffered reasons was
whether they were “legally sufficient to justify a judgment for the
defendant.” Id. at 255, 101 S. Ct. at 1094, 67 L. Ed.
2d at 216
(emphasis added).
The Supreme Court clarified this position in Saint Mary's
Honor Center v. Hicks,
509 U.S. 502,
113 S. Ct. 2742,
125 L.Ed.2d 407 (1993), saying that the defendant must set forth “reasons for
its actions which, if believed by the trier of fact, would support
a finding that unlawful discrimination was not the cause of the
employment action.” Id. at 507, 113 S. Ct. at 2747, 125 L. Ed.
2d
at 416. The Hicks Court held that defendants met their burden
“[b]y producing evidence (whether ultimately persuasive or not) of
non-discriminatory reasons.” Id. at 509, 113 S. Ct. at 2748, 125
L. Ed.
2d at 417. The resulting burden has been described as so
light as to be “little more than a mechanical formality; a
defendant, unless silent, will almost always prevail.”
Developments in the Law--Employment Discrimination: Shifting
Burdens of Proof in Employment Discrimination Litigation,
109 Harv.
L. Rev. 1579, 1590 (1996). The court thus erred in requiring CB to
prove, instead of produce, its reasons.
For CB to prevail on appeal, however, it must demonstrate that
the error was plain error that produced an unjust result. The
unjust result alleged by CB to have occurred was the jury's verdict
in favor of Mogull. We must consider what would have happened had
the jury properly found that CB had met its burden of production.
The jury, then in stage three of the McDonnell Douglas procedure,
would have been free to consider the credibility of CB's evidence
in determining whether its asserted reasons were pretextual excuses
for intentional discrimination. For the result to be unjust,
then, we must find that in the third stage, the jury would have
found that Mogull failed to prove her case by a preponderance of
the credible evidence. This record does not compel such a finding.
We agree with CB's contention, quoting Hicks, that “[i]n the
nature of things, the determination that a defendant has met its
burden of production . . . can involve no credibility assessment,”
509 U.S. at 509, 113 S. Ct. at 2748, 125 L. Ed.
2d at 417, and
therefore in most circumstances, a finding that a defendant had
failed to meet its burden of production would not equate to a
plaintiff's proving that the defendant had discriminated. In this
case, however, the interrogatories invited the jury to consider
credibility and, therefore, pretext, at the second stage.
This was a long trial. It lasted from September 30 to
November 20, 1996. The jury heard twenty-eight days of argument
and testimony. In response to the questions on the jury verdict
sheet concerning whether defendant articulated non-discriminatory
reasons for its decisions, the jury answered no. In accordance
with the verdict sheet instructions, the jurors omitted to answer
the question whether plaintiff sustained the burden of proving that
defendant's reasons were a “cover-up” for gender discrimination,
and proceeded instead to determine the amount of damages that would
fairly compensate plaintiff. We are persuaded that the jury's
recorded determinations on the verdict sheet, including the
ultimate award of damages, necessary reflected the jury's
conclusion not only that defendant's proffered reasons were
pretextual, but also that plaintiff sustained her burden of proving
intentional discrimination based on her gender.
We note that the trial court repeatedly instructed the jury
that in order to return a verdict in plaintiff's favor the
plaintiff must prove “by a preponderance of the credible evidence
that the stated reason or reasons was not the true reason but is
only a pretext or excuse for discriminating against the plaintiff
because of her gender.” Instructions communicating that burden of
proof permeated the trial court's charge to the jury. In our view,
the jury clearly understood that plaintiff could not prevail in
this litigation unless she proved intentional discrimination
because of gender, notwithstanding defendant's asserted reasons for
its action. In that context, the jury's responses on the verdict
sheet - specifically, its responses to questions 2(c) and 2(e), and
to questions 3(c) and 3(e) - fairly reflect its conclusion,
consistent with the court's instructions, that plaintiff sustained
her burden of proving intentional discrimination based on her
gender.
In Sons of Thunder, supra, the Court determined that a correct
jury charge can cure an ambiguity in a jury interrogatory. 148
N.J. at 415-20. The interrogatory there asked whether defendant
“breached its obligation of good faith and fair dealing . . . in
terminating the Contract.” Id. at 412. In view of the pre-charge
conference and the instructions to the jury, the Court was
satisfied that the jury understood that this question referred to a
breach of the “covenant of good faith and fair dealing in
performing the contract.” Id. at 420. Similarly here, the correct
and thorough charge prevented any misunderstanding regarding
plaintiff's burden to prove intentional discrimination.
The trial court had repeatedly (more than twenty times)
instructed the jury that the burden of proof lay with Mogull. That
insistence in the court's instructions cured whatever defect the
interrogatories may have introduced. Moreover, the jury's decision
and the verdict in favor of plaintiff were supported by the
evidence and did not constitute a miscarriage of justice.
Defendant's motion for a new trial was thus properly denied.
The difficulty faced by the trial court in this case is common in employment discrimination actions. The prima facie case and the shifting burdens confuse lawyers and judges, much less juries, who do not have the benefit of extensive study of the law on the subject. Many courts and commentators have observed that the first two stages of the action essentially serve a gatekeeping function, framing for the jury the ultimate issue of discrimination vel non.
At the close of the defendant's case, the court is asked to decide whether an issue of fact remains for the trier of fact to determine. None does if, on the evidence presented, (1) any rational person would have to find the existence of facts constituting a prima facie case, and (2) the defendant has failed to meet its burden of production--i.e., has failed to introduce evidence which, taken as true, would permit the conclusion that there was a nondiscriminatory reason for the adverse action. . . . If the defendant has failed to sustain its burden but reasonable minds could differ as to whether a preponderance of the evidence establishes the facts of a prima facie case, then a question of fact does remain, which the trier of fact will be called upon to answer.
[Hicks, supra, 509 U.S. at 509-10, 113 S. Ct at 2748, 125 L. Ed. 2d at 417-18]
There is continuing confusion over whether a plaintiff who has established a prima facie case wins if the defendant's articulated reasons are insufficient as a matter of law. Moreover, many discrimination claims are disposed of on summary judgment. See Developments in the Law--Employment Discrimination, supra, 109 Harv. L. Rev. 1579 (resolving that first two phases of McDonnell Douglas/Goodman case are akin to summary judgment at trial). Because the first two stages of a McDonnell Douglas test seem to require findings of law, and since McDonnell Douglas itself arose in the context of a summary judgment, the Appellate Division has stated that many courts that “have considered the issue have determined that, in an employment discrimination case, it is either unnecessary or incorrect to charge the jury on the elements and burden-shifting.” Baker v. National State Bank, 312 N.J. Super. 268 (App. Div. 1998) (citing cases), aff'd on other grounds, 161 N.J. 220 (1999).
The Eighth Circuit has said “McDonnell Douglas was not a jury case and its ritual is not well suited as a detailed instruction to the jury.” Grebin v. Sioux Falls Indep. Sch. Dist. No. 49-5, 779 F.2d 18 (8th Cir. 1985) (denying claim that instruction should have incorporated three-part analysis), abrogation on other grounds recognized, Foster v. University of Arkansas, 938 F.2d 111 (8th Cir. 1991).
The First Circuit, in Loeb v. Textron, Inc., 600 F.2d 1003 (1st Cir. 1979), went further. In discussing the then-open question whether McDonnell Douglas was appropriate to jury cases at all, the court said “McDonnell Douglas was not written as a prospective jury charge; to read its technical aspects to a jury . . . will add little to the juror's understanding of the case.” Id. at 1017. The First Circuit also anticipated the situation presently facing the Court: “In the unlikely event that there is a dispute over whether the employer has met his burden of production, it will be for the judge to decide whether defendant has stated a legitimate reason with such specificity as to require plaintiff to prove it to be a pretext.” Id. n.16. The Seventh Circuit has even gone so far as to say that the “burden-shifting model applies to pretrial proceedings, not to the jury's evaluation of evidence at trial.” Gehring v. Case Corp., 43 F.3d 340, 343 (7th Cir. 1994) (Easterbrook, J.). Given the confusion that often results when the first and second stages of the McDonnell Douglas test goes to the jury, we recommend that the court should decide both those issues.
In Cavuoti v. New Jersey Transit Corp., 161 N.J. 107 (1999) and Baker v. National State Bank, 161 N.J. 220 (1999), we recently reviewed the relevant principles courts should follow in reviewing awards of punitive damages. Those cases were decided after the trial and Appellate Division opinion in this case. In Lehmann v. Toys 'R' Us, Inc., 132 N.J. 587 (1993), we “established two distinct conditions that must be met as prerequisites to the award of punitive damages in a discrimination suit under the [the New Jersey Law Against Discrimination].” Rendine v. Pantzer, 141 N.J. 292, 313 (1995). Those two requirements are (1) “actual participation in or willful indifference to the wrongful conduct on the part of upper management” and (2) “proof that the offending conduct [is] 'especially egregious.'” Id. at 314.
In Baker, supra, 161 N.J. at 229 we further found that
[i]n addition, there are substantive constitutional limits on the amount of punitive damages that a jury may award. Prior to the 1990s, the United States Supreme Court had not ruled on the limits on the award of punitive damages in civil cases. The Supreme Court has since held that states are bound by the Due Process Clause of the Fourteenth Amendment to adopt procedures to ensure that punitive damages awards are made through a fair process that includes judicial review of awards.
In BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L.Ed.2d 809 (1996), (on remand, 701 So.2d 507 (Ala.) (per curiam), reh'g denied (1997)), the Supreme Court, for the first time, employed substantive due process principles to invalidate a state court award of punitive damages. Although the Court did not establish a clear-cut rule, the majority concluded that courts must consider three factors when examining the size of a punitive damages award:
the degree of reprehensibility of the conduct that formed the basis of the civil suit; the disparity between the harm or potential harm suffered by the injured party who was the plaintiff in the civil case and the plaintiff's punitive damages award; and the difference between this remedy and the civil penalties authorized or imposed in comparable cases.
[Id. At 575, 116 S. Ct. at 1598-99, 134 L. Ed. 2d at 826].
Therefore, we said in Baker that
[i]n future LAD cases, courts reviewing
punitive damages awards should apply both the
requirements of the PDA (with the exception of
the statutory cap) and the substantive
standards of BMW v. Gore in order to ensure
that any award of punitive damages bears “some
reasonable relation” to the injury inflicted.
In this case the jury awarded substantial punitive damages to
Mogull. Without objection, the trial court submitted the case to
the jury without a specific instruction that jurors were required
to find that upper management had actually participated in, or
been willfully indifferent to, the wrongful conduct. Such a
charge is particularly important when the wrongful conduct, as
here, was committed allegedly by many different employees, with
varying titles in CB, a large commercial real estate corporation,
where there are brokers, agents, and many supervisory personnel.
See Re/Max of New Jersey v. Wausau Ins. Co., etc. (discussing
whether licensed real estate salespersons should be considered
employees or independent contractors for purposes of computing
workers' compensation insurance premiums). Because the Appellate
Division found that the entire case had to be retried, it did not
decide defendant's punitive damage claim, but specifically
observed “that on retrial, we assume the punitive damage jury
charge will reflect our decision in Maiorino v. Schering-Plough
Corp.”, 319 N.J. Super. at 57. In that case punitive damages
could not be assessed against the employer because the jury had
not been given an upper management charge. Maiorino v. Schering
Plough Corp.,
302 N.J. Super. 323, 355 (App. Div.), certif.
denied,
152 N.J. 189 (1957).
Because the trial court did not give the upper management
charge, that issue arises as plain error under Rule 2:10-2.
Therefore, the Appellate Division on remand will have to determine
whether the omission of the Lehmann upper-management charge was
clearly capable of producing an unjust result. The Appellate
Division also will have to determine whether the substantive
standards of BMV v. Gore were fully and completely addressed by
the trial court.
In her cross-appeal, Mogull asserts that the trial court should not have dismissed the discrimination claims against the remaining individual defend