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Catalane v. Gilian Instrument Corp.

Decided: March 9, 1994.


On appeal from the Superior Court of New Jersey, Law Division, Passaic County.

Shebell, Long and Landau. The opinion of the court was delivered by Shebell, P.J.A.D.


[271 NJSuper Page 480] This appeal arises out of an unlawful termination of employment claim, in which the plaintiff-employee, Bartholomew Catalane (plaintiff), and his wife, Grace Catalane, brought an action for

damages against Mr. Catalane's employer, Gilian Instrument Corporation (Gilian). The nine count complaint alleged several distinct but related causes of action: count one: defendant wrongfully terminated plaintiff because of his advanced age in violation of the New Jersey Law Against Discrimination (LAD); count two: defendant wrongfully terminated plaintiff in violation of N.J.S.A. 34:19-1 to -8 (Conscientious Employee Protection Act (CEPA) or the "whistleblower" statute) because plaintiff threatened to report illegal activity to a governmental authority; count three: defendant wrongfully terminated plaintiff for reasons that were contrary to public policy; count four: defendant's agents told plaintiff that he would be employed for as long as he did a good job and thereby created an "express contract" which prevented defendant from terminating him; count five: plaintiff's termination was in violation of an "implied contract;" count six: plaintiff's termination was in violation of an implied covenant of good faith and fair dealing; count seven: defendant, through its agents, intentionally inflicted emotional distress on plaintiff; count eight: defendant, through its agents, negligently inflicted emotional distress on plaintiff; and count nine: plaintiff's wife was caused to suffer the loss of service of her husband as a direct result of the tortious actions of defendant.

The jury found in favor of plaintiffs on all of the grounds alleged except the assertion of malice. It awarded the following damages: $310,000 for plaintiff's loss of wages for termination of employment; $14,250 for the cost of replacing health insurance; $73,000 for a reduction in pension benefits; $250,000 for emotional stress, anxiety caused by lack of information, uncertainty, planning difficulty, career, family, and social disruption, and adjustment problems for plaintiff; and $200,000 in damages for plaintiff's wife on her per quod claim. The initial jury award totalled $847,250. After the return of its verdict for compensation damages, the jury further deliberated, and returned a verdict for punitive damages of $50,000, on the violation of the LAD. The awards, inclusive of pre-judgment interest, totalled $1,146,932.04.

On defendant's motion for a new trial, the trial Judge entered an order granting a new trial limited to the awards for emotional distress and per quod damages. Defendant's motion directed to the remaining awards was denied. The court denied plaintiff's motion for an additur as to the loss of pension benefits and punitive damages. Partial judgment was entered in the amount of $397,250, plus prejudgment interest of $90,168.41 and $50,000 in punitive damages, for a total of $537,418.41, plus costs.

Defendant moved for leave to appeal the remaining judgment, and plaintiff cross-moved to appeal the order for a new trial. We granted both motions.

Gilian manufactures and sells pumps and related products that are used to perform air sampling for safety products. The company was founded in 1977 by Hill Lalin, who is and always has been the president, chief executive officer, and sole stockholder of the company. Initially, Gilian had only a few employees. Lalin performed the duties of administrator and director of sales and Joan Ohlhoff, the first full-time employee, handled accounting and personnel matters. By 1981, Gilian had a total of six or seven employees, with five full-time workers. Lalin spent one day per week on the road visiting companies to promote the sales of his products. During these years, Gilian's sales had grown to approximately two million dollars annually.

In mid-1982, plaintiff, who was seventy-one years old and working for a rival distributor, initiated a meeting with Lalin, after he became aware of Gilian's products. Plaintiff met with Lalin and Joan Ohlhoff. After viewing the pump, he stated that he could "sell the living hell out of it." On January 5, 1983, plaintiff began working for Gilian as a full-time salesperson. Lalin testified that during plaintiff's first years working for Gilian, he was a "model salesman" and did a "wonderful job." Initially, plaintiff spent most of his time on the road selling Gilian's products and setting up distributorships. Plaintiff performed other services at Gilian. He hired and trained sales persons, two of whom eventually served as national and international sales managers for Gilian.

He advised Gilian as to what products to develop, as well as which products to avoid. He helped Gilian become a marketing source for filters. He located international sources of suppliers for Gilian.

Plaintiff testified that during his first six years with Gilian, he had accomplished a great deal for the company. While testifying, he read the following from a memo that he had written to Hill Lalin on January 9, 1989, in which he had requested a raise:

I am with Gilian exactly six years as of January 8th. And in that period I've taken the sales volume from 100,000 at the end of '82 to 13,000,000 at the end of '88. From 100,000 to 13,000,000.

I have built both a national and international sales force through a chain of distributors which is unmatched. The rapport and loyalty of these distributors has been built and strengthened by me on a continuing basis.

The company continued to grow during the years that plaintiff was there. From 1983 to 1989, Gilian grew from four employees to over 100 employees. According to Lalin, in 1988, when plaintiff left the company, the total sales were approximately eight and one-half million dollars. With its growth, Gilian did not want to lose the accessibility of Lalin, the company president. Therefore, in its policy manual, Gilian promoted this accessibility in a section titled "Access to the President." It declared:

I welcome any employee to discuss any problems concerning employment working conditions, or personnel problems with me so I may be of assistance to you . . . feel free to seek my help if you have not received immediate satisfaction after having gone to your immediate supervisor . . . . My concern for our employees at Gilian is paramount since the employees are responsible for the success or failure of the company. I will endeavor to help every employee to the best of my ability to keep the spirit of cooperation that has made Gilian unique.

Plaintiff testified that despite the amount of business he brought in, Lalin asked him several times, "Do you know how much you're costing me?" Plaintiff claimed that he was referring to the pension contributions made in plaintiff's behalf. Plaintiff claimed that such comments about the cost of plaintiff's pension were also made by Lalin to other Gilian employees.

Lalin testified that plaintiff's attitude began to change. He dated this change as beginning one year before plaintiff left the

company, or about January 1988. Lalin claimed that he got "more troublesome." Specifically, Lalin stated that "if things didn't go [plaintiff]'s way, he was -- got very upset and everybody knew about it."

Both plaintiff and defendant testified to a personnel problem, regarding a sales manager named Cathy Demauex, as the time when the relationship between plaintiff and Gilian started to deteriorate. In October 1988, the senior personnel at Gilian wanted "to let her go." Plaintiff testified that he was called to a meeting with Lalin, Joan Ohlhoff, Honora Browne, and Wilson Rodriquez, the international sales manager, to discuss Cathy Demauex. Plaintiff claimed that Lalin, Ohlhoff, and Browne had already made their minds up to let Demauex go, but he tried to talk them out of it, as he had hand-picked her and highly regarded her sales ability. Plaintiff testified that he was angry and walked out of this meeting along with Wilson Rodriquez.

Demauex was told that December 9, 1988, would be her last day with Gilian. Plaintiff was informed about this by Lalin, who described plaintiff as "very, very, very upset." According to Lalin, because of this action regarding Ms. Demauex, plaintiff and the entire sales department did not attend the company Christmas party which was held the next day. Demauex did, however, stay on beyond the initial date given for her termination.

Plaintiff went on a business trip and when he returned, Ohlhoff and Browne had selected two candidates, a male and a female, for him to interview. Plaintiff hired the female candidate, after Lalin, Ohlhoff, and Browne also agreed. Plaintiff claimed that for the first time in his history with the company, Lalin then asked him to leave the meeting while the new employee's salary was discussed.

Another area of contention involved the company's issuance of job descriptions at about this same time. Defendant asserts that the incidents surrounding the job descriptions were the "peak" of plaintiff's disregard for authority. Plaintiff counters that he only brought the other employees' dissatisfaction with these job descriptions

to Lalin's attention per the directions in the policy manual titled "Access to the President."

Lalin claimed that plaintiff "paraded the whole sales department into [his] office" and "threw the job descriptions on [his] desk." Lalin testified that after plaintiff threw the job descriptions, all the sales personnel "demanded to be fired." Lalin also claimed the plaintiff threatened to report Lalin and the company to some federal agency. Lalin stated that plaintiff was "screaming at the top of his lungs," demanding that Lalin fix these problems or he was going to pull the whole sales department out. According to Lalin, everyone in the whole plant knew what was going on because of the yelling and screaming.

Plaintiff claimed that on January 5, 1989, he called the sales staff consisting of Cathy Demauex, Wilson Rodriquez, and Brian Howles, into his office in order for them to review the job descriptions as he had been instructed to do. The three employees wrote various things on them because they didn't agree with their job descriptions. Plaintiff also wrote his comments on the job descriptions. Plaintiff claimed that he requested that the sales staff have a meeting with Lalin to go over the problems 0 with the job descriptions.

When the meeting began, plaintiff informed Lalin that the sales department did not agree with the job descriptions. Plaintiff testified that he had brought an article from a trade journal about firing at-will employees because of what had gone on with Cathy Demauex. Plaintiff also claimed that he said, "If we can't get it straightened out, then I'm going to take this to whatever federal source or whoever it can be that will do it." Plaintiff felt that it was "his obligation to take care of the people here if they're not being treated properly." Plaintiff claimed that when he left the meeting, he thought the problems would be solved.

Lalin testified that at the end of the meeting, he wanted an apology from everybody in the sales department. Lalin testified that subsequently he had meetings with the "steering committee" made up of the company's legal counsel, his brother, Charles, who

was Gilian's financial advisor, Joan Ohlhoff, Honora Browne, and the company accountant. The committee reached the Conclusion that plaintiff should be asked to step down and resign and accept a consulting position.

On the Saturday following the "confrontational" meeting, Lalin 1 called plaintiff at home and asked if he could see plaintiff. The following day, Lalin drove from his home in Wayne to plaintiff's house and they went to a diner in Brielle. Lalin taped this conversation without plaintiff's knowledge. Plaintiff apologized several times about his behavior in the meeting. Plaintiff testified that when he left the diner, Lalin and he shook hands and he thought "everything was on a wonderful basis."

After a business trip, plaintiff returned to the office on January 13, 1989. Lalin asked plaintiff to meet with him in his office. Lalin told plaintiff: "I want you to resign." Plaintiff testified that he told Lalin he would not resign; whereupon, Lalin said, "Well, then if you won't resign, I'm terminating you effective as of today."

Lalin's account of what happened differed. He claimed that he made the decision to ask plaintiff to resign when he recognized a short time after their meetings of January 5th and 8th, that the "sales department's allegiance was to [plaintiff] and since the allegiance was to [plaintiff], there would be no way in which I could ensure that [plaintiff] would not repeat this same thing at another time when we had a disagreement." Lalin 2 testified that he asked plaintiff to step down and take a consulting position. The consulting package offered to plaintiff consisted of a $25,000 annual retainer, an hourly stipend that would cover the actual consulting work, a car, and a fax machine. Lalin testified that plaintiff was asked to come back and discuss the consulting arrangements, which Lalin considered negotiable. When plaintiff did not show up as originally scheduled, Lalin faxed plaintiff a new date for a meeting. Plaintiff did come to this meeting.

According to Lalin, when plaintiff came to this meeting, he just kept repeating three questions: "Tell me why I was fired; Tell me

what my pension is; and Tell me what my severance is." Mr. Lalin claimed that plaintiff would not discuss a new position until he was given the reasons for his "termination." Plaintiff then walked out the door and Lalin did not hear from him again until the lawsuit was initiated. Plaintiff claimed he would have worked until he was eighty years old, which would have been another year and one-half. It was his understanding that he would have received his company pension at age eighty.

On plaintiff's behalf, Rodriquez and Demauex testified concerning 3 the meeting of January 5th. They claimed that this meeting was no different than previous meetings between Lalin and the staff. They also stated that even though others at the meeting raised their voices, no one else was fired or disciplined except plaintiff. Rodriquez claimed he did not attend the Christmas party because his mother had just been diagnosed as having cancer and his non-attendance had nothing to do with plaintiff. Apparently, Demauex did not go because the party was held on the same night that her employment was to end.

Henry Reider, an independent distributor for Gilian products, testified on plaintiff's behalf regarding a conversation that he had with Lalin. Reider claimed that he telephoned Lalin when he heard about plaintiff's termination. When Reider asked Lalin what was going on, Lalin replied, "[plaintiff] was 78 years old and it was time for him to step down." Reider described plaintiff's reputation in the business community as "legendary." According to Lalin, Reider's services were terminated on April 24, 1990. However, Reider testified that he was fired by Gilian in June 1990, three days after defendant received a copy of Reider's letter that he had sent to 4 plaintiff's counsel detailing the comments made by Lalin about plaintiff's age.

The depositions of Charles Lalin, Hill Lalin's brother, revealed that he had conversations with Hill in which plaintiff's employment and age were discussed. In the deposition, Charles Lalin ...

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