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Erickson v. Marsh & McLennan Co.

Decided: August 3, 1988.


On appeal from Superior Court, Law Division, Essex County.

Pressler, Muir, Jr., and Skillman. The opinion of the Court was delivered by Muir, Jr., J.A.D.


Plaintiff, a former employee of defendant, brought this action alleging wrongful discharge, sex discrimination under N.J.S.A. 10:5-12 and libel. He sought compensatory and punitive damages. Following a nine-day trial, a jury awarded him $250,000 in compensatory and $750,000 in punitive damages. Defendant appeals.

The consequential issues raised by the appeal are (1) whether the New Jersey Law Against Discrimination (NJLAD), N.J.S.A.

10:5-1 et seq., precludes common law redress for wrongful discharge based on sex-discrimination and (2) whether plaintiff failed to prove that defendant's conduct constituted actionable sex-discrimination and libel.

Defendant, a casualty insurance brokerage firm, hired plaintiff in November 1981 as an account representative for the major accounts casualty department in its Morristown office. In May 1982, plaintiff was transferred to an account executive position in the commercial accounts department. The transfer occurred, according to James Bonica, plaintiff's original supervisor, due to plaintiff's inability to perform his job requirements as an account representative. Bonica and other executives of defendant testified the transfer was not a promotion since no raise was involved and since plaintiff left defendant's largest and most prestigious department. Plaintiff, nevertheless, testified the transfer was a promotion, basing his opinion on the fact that his job description category was a higher ranking.

In the commercial accounts department, plaintiff headed a group consisting of an account representative, Karen Neidhammer, and an insurance assistant, Stuart Torbert. Plaintiff's immediate supervisor was Angela Kyte while Frank Hayes was her supervisor.

On February 8, 1983, Neidhammer, in the presence of a fellow employee, Kelly Lennan, told Kyte she had been sexually harassed by plaintiff on three separate occasions. Kyte reduced Neidhammer's accusations to writing. Kyte took no immediate action although she believed Neidhammer. Three days later, a heavy snowstorm caused the closing of defendant's Morristown office around 3 p.m. Several of defendant's employees, including Hayes, Lennan and Neidhammer, went to a local restaurant for drinks. Sometime after 8 p.m., Neidhammer and Lennan, who was staying with Neidhammer while Neidhammer's husband was out of town, left the restaurant. Lennan could not extricate her car from the snow so Hayes drove the women home. Due to bad road conditions, Hayes

stayed overnight at Neidhammer's home. The three slept in separate rooms.

On February 14, Hayes informed Kyte that Neidhammer had reluctantly told him about the sexual harassment. Hayes contacted the managing director of defendant's New Jersey division, Roger Egan, who referred Hayes to the New York Personnel Office for advice. A personnel officer told Hayes "to do something fast and either fire or give a threat of firing if actions continue." The officer also directed Hayes to have Kyte conduct a personnel survey concerning any other inappropriate conduct. Kyte spoke to other women in the department without mentioning any names. Two women said plaintiff had made either improper gestures or comments to them.

On February 15, 1983, Kyte held a meeting with plaintiff to discuss Neidhammer's charges. Kyte testified plaintiff admitted the incidents but indicated they had been meant as jokes. Kyte gave plaintiff a cease and desist admonition. She embodied a resume of the meeting and her instructions in a handwritten memo to the plaintiff noting "whether joking or not," "I have expressly instructed you to stop."

In March, plaintiff, who claimed he denied the sexual harassment charges from the inception, retained an attorney. The attorney sought a meeting with Kyte and a confrontation with Neidhammer. Frank Cooper, manager of defendant's employer relations department, wrote counsel and advised him the matter was closed so long as plaintiff abided by Kyte's instructions. Cooper refused counsel's request to confront Neidhammer on grounds it "would be disruptive to the working environment."

In May 1983, plaintiff came up for evaluation in accord with company policy. Kyte's extensive formal evaluation criticized plaintiff's work performance but did not recommend discharge. Kyte testified she discussed her evaluation with plaintiff, but he refused to accept her "constructive criticism." Plaintiff countered Kyte's evaluation with a letter in which he contended the alleged deficiencies were never brought to his attention. In

the letter, he also contended he was being treated unfairly because he had contacted an attorney to respond to the sexual harassment allegation. Kyte testified that prior to the written evaluation, she had discussed with plaintiff some of the deficiencies covered by the evaluation. Egan testified that a report prepared by plaintiff for a client had been so inferior that it was thrown in the basket and done anew by Kyte. Egan concluded plaintiff knew of the incident either through Kyte or from the fact that plaintiff would have seen the new report when later dealing with the client.

Plaintiff's reaction to Kyte's evaluation led her to recommend to Hayes that plaintiff be fired. Based on Kyte's recommendation, comments by Egan and Bonica and his own observations of plaintiff's work performance, Hayes fired plaintiff on May 20, 1983.

Plaintiff testified he began looking for employment right after he was fired. Two potential employers contacted Kyte for references. Both written responses by Kyte stated "[plaintiff] left our operation because his level of expertise and areas of interest in insurance did not match the depth required for the proper service of Marsh & McLennan clients." The letters also contained positive information about plaintiff. He did not secure a job with either of the prospective employers. However, in August 1983, he accepted employment with an insurance agency where he was employed at time of trial.

Shortly after gaining employment, he filed the complaint in this case. The theory underlying his claim of sex discrimination was that his supervisors conspired together to trump up sexual harassment charges so he could be fired and Neidhammer promoted to take his place. He contended Hayes had amorous relations with Neidhammer and other women in the commercial accounts department and that Hayes' consequent motivation was to replace him with Neidhammer. He pointed to the ...

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