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Maiorino v. Schering-Plough Corp.

June 25, 1997

FERDINAND C. MAIORINO, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
SCHERING-PLOUGH CORPORATION, JAMES REED, RONALD MARTINO, AND JEROME A. SHERMAN, DEFENDANTS-APPELLANTS AND CROSS-RESPONDENTS.



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

Approved for Publication June 27, 1997.

Before Judges Michels, Muir, Jr., and Coburn.

The opinion of the court was delivered by: Michels

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Defendants Schering-Plough Corporation (Schering), James Reed (Reed), Ronald Martino (Martino), and Jerome A. Sherman (Sherman) appeal (1) from a judgment of the Law Division entered on a jury verdict that awarded plaintiff Ferdinand C. Maiorino (Maiorino) (a) compensatory damages in the total amount of $435,000, consisting of $180,000 for back pay, $200,000 for front pay, and $55,000 for pain, suffering, and humiliation, and (b) punitive damages in the amount of $8,000,000 against Schering; (2) from an award of attorneys' fees and costs totalling $396,989.35; and (3) from a post-judgment order that denied their motions for judgment notwithstanding the verdict, a new trial, or a remittitur in this age discrimination suit brought pursuant to the provisions of the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1, et seq. Maiorino cross-appeals from that portion of the judgment that awarded him attorneys' fees and costs totalling $396,989.35, contending that the trial court should have applied a contingency fee enhancer to the lodestar to increase his award of attorneys' fees.

The proofs at trial established that Schering is a manufacturer of pharmaceutical products with a net worth of approximately $1,820,800,000 and an annualized 1994 net income of $987,800,000. Reed was Schering's District Sales Manager of the South Jersey District from 1987 through July 1991, and supervised Maiorino. Martino was Schering's Mid-Atlantic Regional Director from 1987 through December 1990, and was Reed's supervisor. Sherman replaced Martino as Schering's Mid-Atlantic Regional Director in January 1991.

Maiorino, who was born on February 18, 1928, began working for Schering in March 1956. Although he had various titles, Maiorino was essentially always a sales representative, which required him to sell Schering's products to physicians, pharmacists, and hospitals. In his performance reviews from 1956 through 1987, Maiorino was rated between satisfactory and very good. During that period he was never warned about his attendance, placed on probation, or suspended.

In September 1987, Reed evaluated Maiorino's performance for 1985 and 1986. Schering's performance evaluation had seven possible rankings: O - Outstanding; V - Very Good; G - Good; I Improvement Needed; U - Unsatisfactory; and N - Not Rated. An "Outstanding" rating indicated that "performance is exceptional in all areas and is easily recognizable as being far superior to others." "Very Good" meant that "results clearly exceed most position requirements. Performance is of a high quality and is achieved on a consistent basis." "Good" denoted a "competent and dependable level of performance. Meets all performance standards of the job." "Improvement Needed" indicated that the "incumbent meets minimal job standards, however, some improvement is desirable." "Unsatisfactory" demonstrated that "results are generally unacceptable and require immediate improvement. No salary increase should be granted to individuals with this rating, and a written action plan must be prepared by the unit manager and forwarded to personnel." "Not Rated" signified that the particular criteria was "not applicable or too soon to rate."

Based on sales performance and standard subjective sales skills, Reed rated Maiorino's 1985 and 1986 performance "Good." For the period, Maiorino ranked ninth in the district in the sale of prescription drugs and fifth in the district in the sale of over-the-counter medicines. His composite rank was tenth. The record, however, does not reflect the total number of salespersons against whom Maiorino was compared. In eight of the subjective criteria, Maiorino was ranked "Good," while in two he was rated "Very Good." Reed testified, however, that just comparing the number of ratings, for example the number of "Very Goods" to the number of "Goods," did not play a large role in his evaluation process. Reed gave Maiorino an overall rating of "Good" for the period. In the comments section of the evaluation, Reed noted that "Mr. Maiorino is a true professional sales representative."

In August 1988, Reed evaluated Maiorino's performance for the period between June and December 1987. The evaluation was based on three different aspects: market share information, quota attainment, and subjective evaluations of various sales skills. In the evaluation, Reed attained a 124.74% figure in quota attainment which meant that he had exceeded his quota by 24.74%. As a result, he was ranked first of nine in his district and twelfth of over one-hundred in his region. He also achieved a composite ranking of first in his district and eighth in the region. In addition, Reed rated Maiorino "Very Good" in six of the sales skills categories and "Good" in the remaining four.

For his achievement, Maiorino was named most valuable representative in the district for 1987. He also received a "Diamond 110 Club" award, which was given to sales representatives who attained at least 110% of their quota assignment. For earning the award, Maiorino received letters of congratulations from Reed and a Schering executive as well as a weekend trip to a local resort. Nonetheless, Maiorino only received an overall rating of "Good" for the period. His ranking was the lowest that Reed distributed for that period. Three employees who were younger than the fifty-nine year old Maiorino and who also had lower numerical standings nevertheless received higher overall ratings: Michael Geiger, who was forty, was rated "Very Good"; Barry Brader, who was also forty, was rated "Outstanding"; and Howard Abramson, who was twenty-eight, was rated "Very Good."

At trial, Reed attempted to describe how he evaluated employee performances. First, Reed admitted that numbers play a "considerable" role; however, he also said that he did not just consider the numbers, but also considered the salesperson's success with "major" products, i.e., products that Schering was trying to push. He noted that on two major products Maiorino was ranked seventh and eighth in the district, but conceded that on two other major products Maiorino was ranked first and second. Reed also stated that he took into account extenuating circumstances in doing the evaluations. For instance, he noted that Abramson covered an "unsavory" neighborhood and also had to handle adversity when a large chain store switched products. In addition, Reed testified that the sales skill portion of the evaluation was subjective and that where such evaluations were permitted by the Schering's policy handbooks, they were to be limited.

The record is somewhat ambiguous as to the effect that the overall evaluation of "Good" had on Maiorino financially. Richard Happel, Schering's Vice-President of Human Resources, testified that employees who received a rank of "Very Good" or better were eligible for an equity increase, while those who received a rank of "Good" were only entitled to a merit increase. Schering claims that as a result of Maiorino's 1986 "Good" rating, he received only a merit increase, while Maiorino contends that he received the merit increase as a result of his 1987 rating. At trial, Happel asserted that it was Maiorino's 1986 product data, rather than his sales skill ratings, which formed the basis of his merit increase in 1988.

In 1988, Schering dropped the quota attainment criteria from its performance evaluation. From that point forward, performance evaluations were to be based on market share and market share change as well as sales skills. Under market share, a sales representative's performance would be compared to Schering's competitor's performance in the same area. Each representative's market share change//--the difference in the market share from one period to another//--was then compared to other Schering representative's in the same district and region.

In April of 1989, Reed evaluated Maiorino for his 1988 sales performance. Pursuant to the market share change criteria, Maiorino ranked above the district average on three products, below it on two, and suffered a very low ranking on one other product. According to a letter from Reed, Maiorino's incentives in 1988 earned him a ranking of eighth in a district of nine. In his sales review, Maiorino earned five marks of "Very Good," one of "Good Plus," and five of "Good," and his overall rating was "Good."

In May 1989, Schering offered the first of two voluntary early retirement programs. The early retirement program was offered to all sales employees over the age of fifty-five who had given Schering at least ten years of service. Schering had instituted the program in response to a number of requests by its sales employees who wanted to retire, but who felt that the pension plan was financially inadequate. Schering did not offer the program for its own financial reasons or because it wanted to downsize. When offering the program, Schering informed all eligible employees that if they felt pressured by another Schering employee to accept the offer, they should contact Schering's director of personnel. Schering's director of personnel, however, never received any complaints.

When it instituted the retirement program, Schering also hired more employees in the sales area than it normally would have hired since it had anticipated that a large number of employees eligible for the early retirement program would accept it. Schering acknowledged that if fewer employees had accepted the retirement program than it had anticipated, then it would have created new territories for the extra employees that it had hired. This action was not necessary, however, since Schering hired fewer new employees than those who left under the early retirement plan.

Maiorino, who was eligible for the early retirement program, declined to accept the offer since he had upcoming expenses. Maiorino testified that Reed told him that the retirement program was a good offer and that he (Maiorino) was "foolish" if he did not accept it. At trial, Reed said that although he could not recall, he did not think that he ever called Maiorino foolish for not taking the early retirement.

In October 1989, Reed evaluated Maiorino's performance for January through June 1989. The evaluation took place one or two months after the early retirement program had ended. Maiorino's overall rating was "Good," but Reed noted that in relation to his abilities, Maiorino "did not have a very good sales period," and needed to "devote more time to preparation prior to making physician calls." During the period, Maiorino's market share change improved in five products while it declined in two; nevertheless, he was ranked eighth of nine in the district in incentive earnings. Interestingly, Maiorino's sales skills were rated "Good" overall even though he had received ten "Very Goods," six "Good Pluses," and only one "Good" in the field visits on which his rank was based. The field visits had occurred before the end of the early retirement program.

Reed testified that after Maiorino's 1988 evaluation, he met with Maiorino to discuss how Maiorino could improve, but that Maiorino rejected Reed's thoughts and ideas. For instance, Reed suggested that Maiorino use reprints and literature in his presentations; Maiorino, however, did not follow this advice. Reed also requested that Maiorino submit sales goals for each quarter of 1989, but Maiorino declined, responding that he "opted not to [set goals] at this time."

In 1989, Maiorino lived in Hamilton Square, New Jersey, which was within his territory, while Reed lived approximately seventy miles away in Landenberg, Pennsylvania. The drive from Reed's home to Maiorino's home took between one hour and thirty minutes and one hour and forty-five minutes. On October 10, 1989, Reed travelled approximately seventy-five miles to interview a job applicant near Maiorino's house. Reed admitted that there were no job openings at the time, but noted that he wanted to keep his interviewing skills sharp and that the interview was a favor to an important client. After the interview, Reed drove by Maiorino's home.

Schering had a policy which permitted sales managers who believed that their employees were not working full days to go to the employee's residence and observe whether they were at work. Besides Maiorino, however, Reed had checked on only one other employee, David Shelley, at his residence, and he had only checked on Shelley once. Reed stated that he went by Maiorino's house because he was frustrated with Maiorino's performance. Nevertheless, three days earlier, Reed had given Maiorino an overall performance evaluation of "Good."

When Reed went by Maiorino's house, he noticed that Maiorino's car was still in the driveway at 10:30 a.m., although Maiorino had not called in late. Maiorino admitted that he knew he was supposed to call his supervisor if he was going to be late for work. Schering's Sales Policy and Procedure Manual noted that the standard work hours were 8:30 a.m. to 5:00 p.m. Yet, in April of 1989, Schering had also distributed a bulletin in which it informed all sales representatives that they had complete freedom to plan their own schedules as long as they "put in a full day's work each day."

Although Reed's job included counseling employees with problems, he did not confront Maiorino concerning his (Maiorino's) being at home at 10:30 a.m. Instead, he apprised the Regional Director, Martino, of the situation. Martino directed Reed to keep driving by Maiorino's home to check to see if his car was there past 8:30 a.m. Martino also reported the incident to Schering's home office which in turn instructed Martino to tell Reed not to confront Maiorino over the situation. Pursuant to Martino's instruction, Reed continued the surveillance of Maiorino's home and found him to be late on six other occasions: November 6, 1989; November 7, 1989; November 28, 1989; December 5, 1989; January 8, 1990; and January 29, 1990. Following the home office's directive, Reed never confronted Maiorino concerning the incidents, although he met with Maiorino and sent Maiorino memos between October 10, 1989, and January 29, 1990. In fact, no one discussed the incidents with Maiorino or issued him a written warning.

At the end of each work week, Maiorino was expected to fill out a time sheet recording the number of hours he had worked. Except for January 29, 1990, Maiorino filled in a full day's work for each of the days he had been observed by Reed. In addition, Maiorino conceded that he had reflected a three-quarter work day on January 29th after Reed had told him of the surveillance on that date. Reed acknowledged that he did not know how many hours Maiorino actually worked on the days he had observed Maiorino's car at Maiorino's home and did not know whether Maiorino had made the calls he reported on those days. Maiorino noted that he sometimes worked late.

Schering had an absentee policy in which three "latenesses" were defined as an "absence occurrence." Upon five occurrences, or fifteen latenesses, an employee was to receive a verbal warning. Upon six occurrences, or eighteen latenesses, an employee was to receive a written warning. Upon seven occurrences, or twenty-one latenesses, an employee was to receive a one-day suspension. Upon nine occurrences, or twenty-seven latenesses, an employee was to be discharged. Schering also had a policy which permitted termination if records were falsified.

On February 1, 1990, Reed had Maiorino meet him at Mastoris's Diner near Maiorino's home. Reed noted that he usually went to the diner when he met with Maiorino to discuss business matters because Schering did not have an office in Maiorino's territory. Schering had a sales office in Kenilworth, which was approximately fifty minutes from Maiorino's home. During the meeting, Reed informed Maiorino that he would be suspended for two days without pay. The suspension was Maiorino's first since he had been with Schering. Martino testified that he had originally wanted to give Maiorino only a warning, but that the home office had required a suspension instead, and that "somewhere above" him in Schering the dates of the suspension had been set.

Reed handed Maiorino a memo that indicated that on January 29, 1990, he had seen Maiorino's car in the driveway for the seventh time when he should have been in the territory. The memo, however, did not give the other six dates on which Reed viewed Maiorino's car at the latter's home. The memo also reflected that Maiorino had reported a full day's work on the first six occasions. Reed testified that he suspected that Maiorino would become upset when he informed him of the suspension. Indeed, when Maiorino was told of the suspension, he became "very, very, very upset[,] very angry," which resulted in an "ugly scene."

On February 5, 1990, before the suspension took effect, Maiorino wrote Reed and explained that he had been late on January 29th because he was attending to a family medical emergency. He also explained that he could not respond to the other alleged dates since he did not know when they occurred. On March 7, 1990, after Maiorino had already served his suspension in mid-February, Reed wrote to Maiorino and gave him the other six dates. Maiorino responded on March 15, 1990, stating that on those other dates he was possibly at home refurbishing his supplies, dealing with an illness, helping sick family members, or aiding family members with their vehicles. He never denied that his car was home during the hours Reed allegedly observed it, and he never stated that he had worked later hours on those days, although he testified that he sometimes worked until 7:00 p.m.

On June 22, 1990, Reed put Maiorino on probation through December 1990, citing poor performance from 1988 through February 1990. Reed had given Maiorino a performance evaluation of "Improvement Needed" for the period of July 1989 through June 1990. Nevertheless, just prior to the probation, Maiorino had received high rankings in the sale of two products//--Vanceril and Prevental Solution. Reed informed Maiorino that if he did not meet the terms of his probation, he faced possible termination. Reed stated that he continued to counsel and offer assistance to Maiorino throughout his (Maiorino's) probationary period. In addition, Reed continued his regular field visits with Maiorino.

The terms of Maiorino's probation were not entirely clear. In the probation letter, Reed stated that he measured performance by the overall amount of incentive monies earned. Yet, at trial, Reed said he considered other factors besides just incentive monies in measuring performance. Reed declared that to complete probation successfully, Maiorino had to achieve the same average market share change for each of the seven products he was selling for the cycle ending December 31, 1990, as had been achieved by the entire district for the preceding cycle which ended October 31, 1990.

According to the probation letter, Maiorino's performance was to be measured in terms of market share change or, possibly, incentive monies earned. Nevertheless, at the end of Maiorino's probationary period, Reed wrote that he considered the "most current barometer" of success to be based on a formula he described as "CQTY minus MATTY." Sherman testified that the formula "CQTY minus MATTY" was the equivalent of market share change. Reed, however, stated that this formula did not reflect market share change. In any case, prior to his probation, Maiorino had a higher "CQTY minus MATTY" rank than three younger employees in his district.

In July 1990, eight days after Maiorino was put on probation, Schering offered another voluntary early retirement program. This program was instituted because employees in the home office complained that it was not fair to offer the program only to sales employees. Eligibility for the second program was the same as the first: employees had to be at least fifty-five with ten years experience at Schering. Again, the program was voluntary and Schering set up procedures to report any coercive action. Happel noted that no employee ever contacted him about being coerced. Maiorino again rejected the early retirement program. Of the eight employees in Schering's mid-atlantic region who were eligible but rejected the early retirement program in 1989 and 1990, only Maiorino was ultimately fired. In fact, a few of the other employees were promoted.

The only other person put on probation at the same time as Maiorino was David Shelley, who was put on probation in May 1990. Shelley was approximately twenty years younger than Maiorino. Shelley was surprised to find that he was on probation and accused Reed of intentionally spilling coffee on his (Shelley's) performance review so that Reed could replace it with a less favorable review which could be used as a precursor to probation. Shelley's terms of probation were originally to attain the average market share change for certain "incentivised" products. Shelly was told the incentivised products "may include the Proventil Family and Theo-Durf[.]" Later, however, Shelley's probation was changed to include the average market share change for all products, just as in Maiorino's ...


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