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Gallo v. Salesian Soc.

May 17, 1996


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

Approved for Publication May 17, 1996.

Before Judges King, Landau and Humphreys. The opinion of the court was delivered by King, P.j.a.d

The opinion of the court was delivered by: King

The opinion of the court was delivered by KING, P.J.A.D.


Plaintiff Eileen Gallo was employed by defendant Salesian Society, Inc. to teach English and history at Don Bosco High School, a private, all-boys parochial school in Ramsey, owned and operated by the defendant Society since 1915. Defendant James M. Scanlon was the school's principal. After plaintiff's employment was terminated in 1991 she sued for damages for age and sex discrimination. The jury found in her favor and awarded $24,000 in stipulated economic damages but nothing for emotional distress.

Plaintiff appeals from the amount of her attorney's fee award, $48,750, claiming that the Judge arbitrarily reduced the hours expended, improperly considered the low verdict, and erred in refusing to increase the fee to compensate for its contingent nature. Plaintiff also claims error in denial of costs and prejudgment interest.

Defendants cross-appeal from the denial of their motions to dismiss the claim on First Amendment grounds. They claim that enforcement of the Law Against Discrimination against them violates their First Amendment rights under the Establishment and Free Exercise Clauses of the United States Constitution. Defendants also argue that N.J.S.A. 18A:6-6, allowing single-sex schools to have single-sex faculties, permits a gender preference, and that plaintiff's failure to pursue her contractual grievance procedure requires dismissal of her claim.

We find no error and affirm on the appeal and cross-appeal, except on the plaintiff's claim for costs and prejudgment interest. On those points plaintiff is correct and we reverse.


Plaintiff filed this complaint on October 29, 1991 alleging that she was employed by defendant as a teacher from 1983 until her termination in June 1991 and that she performed her duties in a professional and competent manner. She claimed defendants' explanation that her position was eliminated due to budgetary constraints was a pretext for discrimination because of her age (53) and sex in violation of N.J.S.A. 10:5-12. Plaintiff asserted that defendants hired a young man to perform substantially the same teaching duties. Plaintiff also unsuccessfully claimed that defendant violated an implied contract of continued employment, based on personnel policies and oral representations, and made other claims not pertinent to this appeal.

On July 24, 1992 defendants moved for summary judgment on all of plaintiff's claims, arguing, in part, that the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -42, as applied to religious schools, violates the Establishment Clause of U.S. Const. amend. I, "in that it fosters excessive entanglement between religion and government." In support of their motion, defendants submitted an affidavit and a certification of Scanlon; an affidavit of Father Timothy Ploch, a Roman Catholic priest and a leader of defendant Salesian Society, involved with the school's management; the school's statement of philosophy; its personnel policies; and its 1990-91 contract with plaintiff.

Scanlon, a teacher at Don Bosco since 1966 and its principal since 1986, explained that the principal "has the final decision-making authority in the hiring and firing of teachers." In the 1990-91 school year, there were forty-one faculty members, including nine Salesian "priests/brothers," sixteen lay men, and eight lay women. Scanlon described a declining enrollment of 800 students in 1982 but only 692 in 1992. He explained that the school paid its own operating expenses from tuition and provided only the living expenses of the priests and brothers who lived on campus.

On April 15, 1991 Scanlon wrote to plaintiff advising her that, because of budget problems, he could not offer her a contract for the 1991-92 school year "at this time." "It is my hope that budgeting and scheduling matters for school year 1991-92 will be resolved in early May. Meanwhile, I ask for your patience and understanding."

Father Ploch, who held the position of Provincial, the highest post in this area's Province of the Salesian Society, explained that Reverend Kenneth McAlice, a teacher at Don Bosco, had requested and was granted a sabbatical in June 1991. Scanlon requested a replacement "from among the Salesian community so that there would not be an adverse impact on the budget for teacher salaries for the upcoming school year." Father Ploch said that he tried but could not find a Salesian replacement for Father McAlice and in late August 1991 advised Scanlon that "he would have to hire a lay person for that purpose." The facts pertinent to the hiring of the lay person were not described in the summary judgment affidavits but Scanlon testified at trial that he advertised for the position, interviewed candidates, and finally hired Brian Plunkett to teach English and history.

The statement entitled "The philosophy of Don Bosco Preparatory High School," distributed to parents of prospective students, provided in part:

A primary purpose of the educational program at Don Bosco lies in our dedication to the education of the total person through a Catholic philosophy of life. This philosophy endorses man's origin from God and his return to God through a sincere endeavor to cooperate with God's divine plan of individual salvation.

From the inception, Don Bosco Preparatory High School has been profoundly influenced by the system of education proposed and developed by the renowned 19th century educator, St. John Bosco. The system is called the PREVENTIVE SYSTEM, and it emphasizes REASON, RELIGION, and KINDNESS as the fundamental elements essential to the process of educating youth. The faculty of Don Bosco is committed to the implementation of his approach to education. . . .

Thus, it is the intention of Don Bosco Preparatory High School to provide the students with an education which promotes and fosters interest in an understanding of the Catholic Church and their personal role therein, which ignites a lifelong commitment to intellectual pursuits, and which acknowledges and understands the concept of individual differences. . . .

The guide to hiring teachers, "Characteristics of Teachers in Catholic Schools," provided in part:

1. The teacher understands and accepts the fact that the schools are operated in accordance with the philosophy of Catholic education.

2. The teacher accepts and supports the ongoing building and living of a Faith Community, not simply as a concept to be taught but as a reality to be lived in worship, service, and interpersonal relationships.

4. The teacher reflects in his personal and professional life a commitment to Gospel values and the Christian tradition.

5. The teacher acknowledges that faith commitment is a free gift of God that is both relational and intellectual.

6. The teacher accepts the responsibility for providing an atmosphere for fostering the development of a faith commitment by the students.

14. The teacher relates to the students in an adult Christian manner and contributes to the student's sense of self-worth as a Christian person.

17. The teacher fosters the apostolic consciousness of students by encouraging them to join in experiential learning activities that give witness to Christian Justice and love.

18. The teacher motivates and guides the students in acquiring skills, virtues and habits of heart and mind required to address with Christian insight the multiple problems of inJustice which face individuals and our pluralistic society.

Father Ploch testified at trial that Don Bosco Prep had teachers who were not Catholic. He said that profession and practice of the Catholic faith was not a qualification for employment.

In her "teacher contract" plaintiff agreed to "exemplify Christian principles and ideals in . . . her teaching and in performance of all duties assigned to the Teacher by the School." Scanlon also explained that each teacher "is expected to begin each class with a prayer." The "teacher contract" further required plaintiff to "comply with and fully abide by . . . [the] Policies on Personnel adopted by the School, which are hereby made part of this contract." Defendants' "Policies on Personnel" set forth a grievance procedure:

a. Any grievance a teacher has with the school should be expedited as soon as possible.

b. The normal order of appeal is as follows:

1) the Department Chairman, Dean, etc., as applicable;

2) the Principal

3) the Director

4) a fact-finding board made up of two faculty members of the teacher's choice and two other faculty members selected by the Director;

5) the School Board;

6) the Provincial Director of Education.

The defendants' policy also prohibited reprisals, provided for a separate grievance file for all documents, and required that grievance proceedings be conducted in private.

Judge Stark heard oral argument on October 16, 1992 and denied defendants' motion to dismiss plaintiff's sex and age discrimination claims and her implied contract claim but dismissed other claims not here relevant. Judge Stark rejected defendants' constitutional argument, citing Welter v. Seton Hall Univ., 128 N.J. 279, 608 A.2d 206 (1992), because plaintiff's teaching was "a [non]ministerial duty performed by a lay person with no overtones of . . . religious precepts."

On March 2, 1993 plaintiff moved for summary judgment dismissing all of defendants' affirmative defenses and on March 15, 1993 plaintiff moved to compel production of documents, including other faculty members' evaluations, and letters of reprimand. On March 22, 1993 defendants cross-moved for summary judgment on plaintiff's sex discrimination and contract claims, arguing that N.J.S.A. 18A:6-6 barred the former, and plaintiff's failure to pursue internal grievance procedures barred the latter. On April 2, 1993 defendants opposed plaintiff's request for discovery and moved for a protective order, requiring plaintiff and her attorney "to keep information provided to them in discovery concerning the confidential files of defendants' employees in the strictest confidence."

To establish that Don Bosco was supported in part by public funds and covered by N.J.S.A. 18A:6-6, defendants submitted an affidavit of the current principal, Father John Connolly, explaining that the Ramsey Board of Education assisted in the purchase of educational materials and funding in-service teacher training. In addition, many students were transported at public expense, and the County of Bergen provided nursing services and equipment.

Judge Stark heard oral argument on the motions and cross-motions on April 16, 1993. She rejected the N.J.S.A. 18A:6-6 defense because subsequent case law "either directly overrules it or certainly undermines its [efficacy]." Noting that "gender is now a protected class on the Federal level as well as on the state level," the Judge also concluded that there was "no compelling interest" in having a men-only faculty at any school.

The Judge denied both the motion and cross-motion as to the grievance procedure, holding that plaintiff was not required to follow it when pursuing a "constitutional" claim. On the contract claim, regarding the grievance procedure, the Judge found existing fact issues on "how . . . the parties operated" and "how the school operated with regard to others in similar situations." The Judge granted plaintiff's discovery motion, limiting discovery to the eight years plaintiff was employed by defendant, excluded personnel records of nuns and priests from the scope of discovery, and granted the defendants' request for a protective order against dissemination of materials.

Defendants moved for leave to appeal from these rulings, arguing that (1) N.J.S.A. 18A:6-6 barred plaintiff's sex discrimination claim; (2) all communications between a religious school and its lay religion teachers were protected by the First Amendment and were not discoverable; and (3) plaintiff's failure to follow the grievance procedure barred her contract claim. We denied the motion. Defendants' motion for leave to appeal to the New Jersey Supreme Court was denied on September 23, 1993.

The matter was tried before Judge Lucchi and a jury from February 14 to March 7, 1994. The jury found that plaintiff "proved by a preponderance of the evidence that she was performing her job at a level which satisfied the employer's reasonable expectations." They also found that "defendants' reasons for not offering her a renewal contract at the end of the school year 1990-91 were a pretext for unlawful discrimination against her" because of both age and sex. The jury awarded plaintiff $24,000, the stipulated economic damages for her lost earnings, after mitigation. The jury denied any award for non-economic damages.

On March 24, 1994 plaintiff moved for an order requiring defendants to pay her counsel fees. Her attorney certified that plaintiff had not paid him any fee; that his fee was contingent on a favorable verdict; and that he had agreed to accept the amount awarded by the court as payment in full. Counsel explained that he had been practicing law for thirty-six years and had extensive experience in litigation. He had spent over 335 hours on this case over two years and annexed detailed time records. He asserted that the issues raised were novel and difficult, involving the liability of the Roman Catholic Church and required the skill of an experienced attorney. He also asserted that success could not be measured in dollars alone, and that the finding of liability of a religious organization was "a landmark in the discrimination law." He stressed the public interest in eradicating discrimination; the developing area of law in discrimination cases; and the difficulty in proving that defendants' decision was based on plaintiff's age and sex. With $275 per hour as his customary fee, for 335 hours he requested $92,125. Counsel also submitted time records for his associate, Kenneth T. Gallo, totalling over 100 hours. He requested $125 per hour for his associate, totaling $12,500.

Defendants opposed the application for counsel fees and moved for a judgment notwithstanding the verdict, arguing that the LAD, as applied to defendant, violated the Establishment Clause of the First Amendment, since it "fosters excessive entanglement between religion and government." Defendants also renewed their argument under N.J.S.A. 18A:6-6. Judge Lucchi declined to consider defendants' arguments under the First Amendment and N.J.S.A. 18A:6-6, since Judge Stark's pretrial rulings on these issues were the "law of the case" and could not be disturbed.

Regarding plaintiff's application for attorney's fees, the Judge found that plaintiff was the prevailing party and entitled to an award of a reasonable fee under N.J.S.A. 10:5-27.1. The Judge "characterized" plaintiff's "overall success" as "good," noting that although she proved her discrimination claims, she did not obtain the substantial damages for emotional distress which she sought. The Judge determined that the attorney's time spent pursuing the emotional distress claim, as well as other claims dismissed before trial, was not subject to a fee award. "Distinguishing the number of hours expended on Plaintiff's substantive age and sex discrimination case, on which she actually succeeded, from time expended in pursuit of non-economic damages is hampered by a lack of specificity in the attorney's time keeping practices." The Judge thus determined the amount of the attorney's time "reasonably attributable to those claims on which plaintiff prevailed."

Acknowledging that the fee award need not "be proportionate to the amount of damages that the plaintiff has recovered," the Judge found counsel's claim excessive. He lowered the hourly rates to $200 per hour for Louis Gallo and $100 per hour for his associate, Kenneth Gallo. He allowed Louis Gallo 207.25 hours, and Kenneth 73 hours, "based upon a careful review of the certifications" and their "lack of specificity. " He awarded $41,450 for Louis Gallo and $7,300 for Kenneth Gallo, totaling $48,750 as the lodestar amount. He declined to reduce the amount further due to "limited success" because he had already excluded hours not reasonably expended. He also declined to enhance the award because of contingency, although "authorized by relevant law," stating that this decision "lies solely at the discretion of the Judge." He refused to award prejudgment interest. Finally, he declined to award costs, because of plaintiff's "incomplete success." Plaintiff's appeal and defendants' cross-appeal ensued.


We first consider defendants' claim on the cross-appeal that because Don Bosco is a religious school, application of the LAD violates the Free Exercise and Establishment of Religion Clauses of the First Amendment of the United States Constitution. The First Amendment provides: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof . . . ." N.J.S.A. 10:5-12 provides: "It shall be . . . an unlawful discrimination: (a) For an employer, because of . . . age [or] . . . sex . . . of any individual . . . to discharge . . . from employment such individual . . . ."

Defendants contend that Judge Stark erred in denying their motion for summary judgment. R. 4:46-2. Our Supreme Court has recently clarified the summary judgment rule, requiring "the motion Judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational fact finder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life, 142 N.J. 520, 540, 666 A.2d 146 (1995). This standard is applicable to all pending cases. Id. at 545-46.

Defendants argue that plaintiff's function as a teacher at Don Bosco was ministerial and that the Free Exercise Clause prohibits any judicial involvement in this church-ministerial employment relationship. Defendants urge that even if plaintiff's job was non-ministerial, the judicial inquiry into the employment relationship ...

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