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DADINO v. DELAWARE RIVER PORT AUTH.

August 22, 1988

LORETTA DADINO, Plaintiff,
v.
DELAWARE RIVER PORT AUTHORITY, Defendant



The opinion of the court was delivered by: BROTMAN

 I. INTRODUCTION

 Plaintiff Loretta Dadino instituted this action in January of 1985, alleging that her former employer, the Delaware River Port Authority ("DRPA") discriminated against her because of her sex. Plaintiff's original complaint alleged causes of action under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, and 42 U.S.C. § 1983, as well as various state law claims. The seven-day trial of this matter commenced on April 11, 1988 before a jury. The jury, however, was dismissed on April 14, 1988, after four days of testimony, when plaintiff withdrew her § 1983 and state law claims. *fn1" Consequently, to determine the rights and liabilities of the parties to this lawsuit, the court must serve as both the trier of fact and the arbiter of the applicable law, pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

 Loretta Dadino was fired from her job at the DRPA in 1982, after admitting that she had falsified her expense account records. It is undisputed that plaintiff knowingly misstated information on expense account vouchers in order to obtain reimbursements to which she was not entitled. There is also no serious doubt that strong evidence existed, before, during and after the time of plaintiff's termination, which implicated certain male employees of the DRPA in expense account fraud similar to that perpetrated by plaintiff. None of these men, however, were fired.

 The DRPA contends that it had valid, non-discriminatory reasons for firing plaintiff and not firing the men. Plaintiff argues that these proffered reasons are mere pretext, and that the DRPA treated her more harshly than her male counterparts, simply because she is a woman.

 The court now makes the following findings of fact and conclusions of law.

 II. FINDINGS OF FACT

 1. The DRPA is a bi-state agency, created by the states of New Jersey and Pennsylvania, with the approval of the federal government. TT, 4/14/88 at 114. *fn2" The mandate of the DRPA is to perform three separate functions: (1) to build and maintain river crossings spanning the Delaware River; (2) to create high-speed interstate transportation between Pennsylvania and New Jersey; and (3) to promote commerce on the Delaware River. Id.

 3. All of the foregoing operations are funded through the issuance of revenue bonds and the collection of tolls and fares from the bridges and PATCO line.

 4. DRPA policy is set by a Board of Commissioners, which is composed of eight persons from New Jersey and eight persons from Pennsylvania. All eight New Jersey commissioners are appointed by the Governor of that State and confirmed by the New Jersey Senate. Six of the Pennsylvania commissioners are appointed by the Governor of that state without confirmation by the senate. The remaining members are the Treasurer and the Auditor General of Pennsylvania. Id. at 124.

 5. Loretta Dadino was hired by the DRPA as a secretary in 1954. She continued to work in that position until 1956, at which time she married and left her job. TT, 4/13/88 at 133.

 6. Thereafter, in February of 1961, plaintiff returned to the DRPA and resumed work as a secretary for the WTD. Id. Approximately six months after her return, plaintiff became the secretary for James R. Kelly. Id. Plaintiff worked for Kelly for nineteen years, until he became the President of the DRPA. Id.

 7. In 1980, plaintiff became the Manager of Port Promotion for the WTD. TT, 4/13/88 at 136; TT 4/14/88 at 117. This new position was specifically created for plaintiff, TT, 4/13/88 at 136, and made her the first female ever to obtain a managerial position with the DRPA. Id. at 137.

 8. As part of her new position, plaintiff was given an expense account, TT, 4/13/88 at 138; TT, 4/14/88 at 117, to be used, in accordance with DRPA rules and regulations, for certain business-related activities. P-4. *fn3"

 9. Although this was the first time she had ever had an expense account at the DRPA, plaintiff had become familiar with the procedures by which expense account records were submitted. TT, 4/13/88 at 139. Plaintiff also was familiar, at the time of her promotion, with the DRPA rules regarding what constituted reimbursable and non-reimbursable expenses. TT, 4/13/88 at 189, 191; J-II. *fn4"

 10. Despite her awareness of accepted DRPA procedure and policies related to the use of expense accounts, plaintiff, within one week of receiving authorization to use an expense account, falsified receipts and records in an effort to obtain reimbursement for non-reimbursable expenses which she had incurred. TT, 4/13/88 at 203.

 11. In February of 1982, Kelly called plaintiff into his office to question her regarding her expense account records for the period from September 1, 1980 through December 31, 1981. TT, 4/14/88 at 118. Kelly, at that time, was the President of the DRPA. TT, 4/13/88 at 152.

 12. Kelly asked plaintiff to verify all of the expenses that she had submitted for the aforementioned period. TT, 4/14/88 at 119-120. Plaintiff agreed to do so. This concluded plaintiff's initial meeting with Kelly regarding her expense accounts, which lasted approximately ten minutes. Id. at 120.

 13. Plaintiff then returned to Kelly within forty-eight hours of the initial meeting, and admitted that she had falsified her expense account records. Id.; 4/13/88 at 154; J-II.

 14. Thereafter, Kelly and plaintiff drafted a letter dated February 4, 1988, which was addressed to Kelly from Ms. Dadino, in which plaintiff confessed making false statements on her expense account ("February 4 Letter"). J-III; TT, 4/18/88 at 29; TT, 4/13/88 at 154. Attached to the February 4 Letter was a list of specific instances in which plaintiff submitted a falsified voucher for an unjustifiable expense. J-III. This list was developed during a meeting between plaintiff and Ray Heinzelman, who was at that time the Director of the WTD. 4/13/88 at 163.

 15. The method used by plaintiff to falsify or "pad" her expense account was to seek reimbursement for nonreimbursable items by misstating the nature of those items on the records she submitted. For instance, plaintiff, after spending money on something for which DRPA policy did not provide reimbursement, would turn in a voucher wrongly indicating that she had incurred the expense while taking a prospective business client out to lunch. J-III. The costs of such business lunches are reimbursable pursuant to DRPA policy.

 16. Some of the expenses which were not properly includible in plaintiff's expense account, but for which she nonetheless sought reimbursement, were (1) the annual renewal fee for her American Express and Diners Club cards; (2) the cost of taking other DRPA personnel out to lunch; (3) the cost of replacing the windshield on her car, which was damaged while plaintiff attended a port harbor festival; and (4) the cost of purchasing a gift for a retired WTD employee who was ill. J-III.

 17. Although plaintiff, in the February 4 Letter, confessed that she had lied on her expense account submissions, she maintained that the actual costs for which she sought reimbursement were "reasonable business expenses" which were incurred while she was conducting DRPA business. J-III. Nonetheless, regardless of plaintiff's own judgment as to the propriety of using DRPA funds to pay for the above-listed expenses, it is indisputable that these expenses were not reimbursable pursuant to the policies of the DRPA, and that plaintiff knew this at the time she falsified her records to obtain repayment for these items.

 18. Shortly after his meeting with plaintiff, Kelly met with plaintiff's supervisor, Jack Gaffigan, and questioned him regarding the misrepresentations appearing in plaintiff's expense account records. TT, 4/14/88 at 143.

 19. At this meeting, Kelly reprimanded Gaffigan for poor supervision of plaintiff, and asked for his resignation. Id. at 144. However, Gaffigan did not tender his resignation at that time. Id.

 20. In February of 1982, Kelly presented to the Board of Commissioners of the DRPA a recommendation pertaining to disciplinary action against Loretta Dadino. The recommendation was that plaintiff be suspended for a two-week period and be required to refund to the DRPA all of the money which she had received as reimbursement for unjustifiable expenses. 4/14/88 at 128.

 21. This recommendation was rejected by the Board of Commissioners, and the matter was referred to the Audit Committee. TT, 4/14/88 at 132.

 22. The DRPA Audit Committee is comprised of four members of the Board of Commissioners. The Committee does not convene regularly, but only when financial problems present themselves. Id. at 133. Rick Robb was the Chairman of the Committee at the time of plaintiff's termination.

 23. Though Kelly would normally have the responsibility of disciplining employees, the Board, which has the ultimate authority over personnel, TT, 4/14/88 at 123, expressed a desire to dismiss plaintiff. TT, 4/19/88 at 11.

 24. After Kelly's recommendation was turned down by the Board, he was removed from the decision-making process involved in disciplinary actions arising from the expense account investigation. TT, 4/14/88 at 136; TT, 4/18/88 at 54-55.

 25. On February 8, 1982, plaintiff again met with Kelly in the latter's office, at which time plaintiff was told that the Board had decided to suspend her indefinitely without pay. TT, 4/13/88 at 156.

 26. Thereafter, Edward P. Scullin, the Vice President and Secretary of the DRPA, sent to plaintiff, by certified letter dated March 8, 1982, a copy of charges filed by Kelly, as President of the DRPA, against plaintiff, seeking her discharge ("March 8 Letter"). J-VIIA. This letter informed plaintiff that charges against her would be heard "at a meeting of the Delaware River Port Authority." Id. The letter also notified plaintiff of her right to appear at her discliplinary hearing with legal counsel of her choosing. Id.

 27. The March 8 letter was sent to plaintiff at the direction of James Kelly. J-VIIB.

 28. Plaintiff retained counsel, Charles Nugent, Esquire, who requested that his client be given a hearing before the Board of Commissioners. TT, 4/13/88 at 164. This request was denied in a letter sent to Nugent from John Yeomans, General Counsel to the DRPA. TT, 4/13/88 at

 29. Thereafter, a hearing on the charges against plaintiff was held before an independent hearing examiner, The Honorable Edward V. Martino, a retired Superior Court Judge from New Jersey. TT, 4/13/88 at 165. The hearing dates were April 28, 1982 and May 20, 1982.

 30. At this hearing, several witnesses testified under oath, including plaintiff, Kelly and Thomas Auchter, the DRPA Treasurer. TT, 4/13/88 at 170. Yeomans was also present at the hearing.

 31. During her testimony, plaintiff said that she had been told by her supervisor, Gaffigan, that she should overstate on her expense account the round-trip mileage from the DRPA offices in Camden to a local restaurant named Kenny's. TT, 4/13/88 at 166. According to plaintiff, she was told to do this because Gaffigan had previously overstated the mileage on his expense account, and he wanted both his and plaintiff's records to be consistent. Id. at 150.

 32. Plaintiff also testified that Gaffigan's longtime secretary, Barbara Cambell Curry, was aware of several instances where Gaffigan had falsified expense account records. According to plaintiff, both she and Curry had been taken out to lunch several times by Gaffigan, who would then seek reimbursement for the cost of these lunches by submitting vouchers which erroneously stated that he had gone to lunch with a prospective business client. Id. at 148, 149, and 166.

 33. Curry testified at trial, and largely corroborated Dadino's testimony regarding the expense account abuses committed by Gaffigan and others.

 34. Curry was never questioned by Kelly, Auchter, Yeomans, or any other employee or commissioner of the DRPA.

 35. Plaintiff further testified at her hearing that Arthur F. Diehl, a DRPA operations manager who worked in the Philadelphia Office, had told her that "there was a draw (sic) full of blank receipts if I ever needed them." Id. at 166.

 36. Following plaintiff's testimony, Gaffigan was called to testify before Judge Martino, but refused on Fifth Amendment grounds. TT, 4/19/88 at 13.

 37. The DRPA's lawyers investigated whether they could either compel Gaffigan to testify or discipline him for refusing to do so. TT, 4/19/88 at 13.

 38. On June 2, 1982, Judge Martino submitted his findings of fact and a recommendation to the Board of Commissioners suggesting that Dadino be suspended for six months and required to repay the funds which she had misappropriated. J-IX.

 39. Judge Martino's recommendation was rejected by the Board, which also voted to terminate plaintiff during a June 16, 1982 meeting. TT, 4/18/88 at 93; J-IX. Upon her termination, plaintiff was required to repay $ 1,248.00 to the DRPA, which she had admitted misappropriating through the falsification of expense account records.

 40. During the same period of time that the foregoing disciplinary actions were proceeding against plaintiff, several other investigative activities commenced into the expense account practices of other DRPA personnel.

 41. In January of 1982, Auchter, Vice-President and Treasurer of the DRPA, was directed to conduct an internal audit. Plaintiff Dadino's records initially formed the focus of this audit. TT, 4/12/88 at 106. However, the scope of the investigation was later expanded to include others. Id. at 109.

 43. Finally, at the end of June or beginning of July, 1982, the Audit Committee hired the accounting firm of Touche Ross to conduct an independent audit of the various expense accounts at the DRPA, with particular attention to be paid to those accounts being used in the WTD. TT, 4/18/88 at 96. This audit was to be performed for the two years ended December 31, 1981. J-XA.

 44. Touche Ross submitted a Draft Report dated July 29, 1982, P-37, which was received by Auchter, and seen by other persons assisting Auchter in the internal audit. TT, 4/12/88 at 23, 33. Attached to the Draft Report was a four-page document captioned Schedule B. This document, in part, noted that in several instances, male employees had submitted receipts which were issued from the same establishment and which followed a numerical pattern. The dates of these, receipts, however, did not coincide with the numerical patterns that were evident. Some higher-numbered receipts were dated earlier than some lower-numbered ones, and several consecutively-numbered receipts bore dates that were months apart. P-37. 45. For example, Schedule B showed that Diehl had submitted the following consecutively-numbered receipts from Neil's Restaurant for the following dates: 7344 2/12/80 7345 3/25/80 7346 11/06/80 7347 2/10/81 7348 3/16/81

 Id. 46. Schedule B also indicates that William Brawley, a manager in the New York City office, submitted receipts which were numbered and dated as follows: 42515 5-11-81 42519 3-24-81 42538 4-23-81 42539 6-01-81 42545 12-09-80 42546 12-30-80 53985 8-11-81 53988 8-26-81 58462 10-10-81 58463 7-14-81

 Id.

 47. The same types of numerical patterns were recognized for, inter alia, Richard Craddock, a manager in the DRPA's Chicago office, and Carlo Fortuna, a Maintenance Department employee in New Jersey. Id.

 48. Furthermore, Schedule B stated that Diehl had submitted many receipts for expenses incurred at Spats Restaurant in Philadelphia, which were not accompanied by explanations of how the expenses were incurred. Id. Similarly, Touche Ross reported that the DRPA had paid amounts which were listed in monthly invoices from Spats directly to the restaurant, without receiving a corresponding explanation of the business purposes of the disbursements. Id.

 49. The information contained in Schedule B, as well as in the rest of the Touche Ross Draft Report, was communicated to Robb, the Chairman of the Audit Committee, during numerous conversations between Robb and a Touche Ross partner. TT, 4/18/88 at 100.

 50. Touche Ross also submitted a Final Report to the Audit Committee which differed from the Draft Report in two major respects. First, the Final Report did not contain Schedule B or any reference thereto. Second, the Final Report contained a section not appearing within the Draft, which noted that certain improved procedures for the documentation of travel and entertainment expenses had been implemented by the DRPA. J-XA; TT, 4/12/88 at 26.

 51. It remains unclear, following the testimony at trial, how it happened that the obviously important information contained in Schedule B of the Draft Report was excised from the Touche Ross Final Report. It is also uncertain why the Audit Committee, which authorized the payment to Touche Ross of $ 12,000.00 in DRPA monies for the Final Report, and which apparently was aware of the information contained in Schedule B, did not insist that the Schedule B information be included in the Final Report.

 52. The internal audit conducted by Auchter found that Carlo Fortuna had submitted falsified receipts. Auchter concluded that Fortuna had incurred meal expenses while working in the field for the DRPA, but had not obtained receipts upon paying for each meal. These expenses individually did not exceed $ 25.00, and were properly reimbursable, pursuant to DRPA policy. Furthermore, DRPA policy did not require that receipts be submitted for expenses under $ 25.00. Auchter also concluded that Fortuna was under the mistaken belief that he was required to submit receipts to ...


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