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LYNCH v. NEW DEAL DELIVERY SERV.

August 12, 1997

FRAN J. LYNCH, Plaintiff,
v.
NEW DEAL DELIVERY SERVICE INC., STEVEN SACHAROFF and BERNARD GEIK, individually and in their capacities as principals of NEW DEAL DELIVERY SERVICE INC., Defendants.



The opinion of the court was delivered by: WALLS

 Walls, District Judge

 Plaintiff Fran J. Lynch brings this suit against defendants New Deal Delivery Service, Inc., Steven Sacharoff and Bernard Geik, alleging that they discriminated against her and terminated her employment on the basis of her sex, created a hostile work environment, subjected her to quid pro quo sexual harassment, and fired her in retaliation for resisting the alleged sexual harassment and hostile environment. She also charges defendants with intentional infliction of emotional distress, violation of the public policy of the State of New Jersey, breach of contract, and breach of the implied covenant of good faith and fair dealing.

 Defendants now move for summary judgment on all counts of the Complaint. Pursuant to Rule 78 of the Federal Rules of Civil Procedure, the Court decides this matter on the basis of the written submissions of the parties. For the reasons stated below, the motion is granted in part and denied in part.

 Plaintiff Fran J. Lynch ("Lynch") was employed by defendant New Deal Delivery Service, Inc. ("New Deal") as its chief financial officer from November 8, 1993 until she was fired on July 18, 1994. Defendants Steven Sacharoff ("Steven Sacharoff") and Bernard Geik ("Geik") respectively serve as chief operating officer and president, and are also part owners of New Deal. For most of Lynch's time at New Deal, and until his death in May 1994, the organization was run by Bernard Sacharoff ("Bernard Sacharoff"), the principal owner of New Deal and the father of Steven Sacharoff.

 Defendants assert that at the time that Lynch was hired, New Deal was in a precarious financial position. It was hoped that Lynch, with her experience and financial expertise, would "turn the company around." Certification of Steven Sacharoff ("Sacharoff Certif.") at P 4. When she was hired, Lynch sent a letter to Steven Sacharoff outlining the terms of the employment agreement they had reached over the telephone. The relevant portions of the letter, dated November 1, 1993, read as follows:

 
This letter will serve the purpose of outlining the terms of my employment with New Deal Delivery Service, Inc. It is not to be construed as a contract of employment, obligating either the employer, New Deal Delivery Service, Inc. or the employee, Fran J. Lynch, to a specified contract period. . . . Commencing November 8, 1993, the following compensation agreement will be in effect:
 
a) A base annual salary of $ 135,000
 
b) A bonus incentive plan payable at the end of 12 months of employment, or upon an earlier termination of our relationship as follows:
 
Employee will utilize a "best efforts" approach to reduce both fixed and variable expenses of New Deal Delivery Service, Inc. Employee will quantify savings to Employer in an agreed upon fashion. The first $ 750,000 of savings will flow to Employer, with an incentive to be paid to Employee of 10% of all savings in excess of the initial $ 750,000. This incentive bonus shall be payable at the end of the twelve months of employment or upon an earlier termination of our relationship, and shall be subject to the respective employment taxes in effect at the time.
 
* * *
 
This document represents the complete agreement between the parties, and there are no written or oral understandings, promises or agreements that are not incorporated herein in full.

 Sacharoff Certif., Exh. B. The letter is signed by Lynch and Steven Sacharoff, on behalf of New Deal, and there was no other writing between the parties. Defendants and Lynch agree that Lynch was hired as an "at-will" employee.

 On December 15, 1993, Lynch's birthday, Stephen Pirrone ("Pirrone"), New Deal's executive vice president, told Lynch that there was a vendor in the office who needed to see her. *fn1" Lynch asked if she could set an appointment with the vendor for a later date, but Pirrone insisted that she come with him. Lynch walked with Pirrone into an area where a male stripper began to perform. She later testified that there were sixty to seventy employees in the room; however, Pirrone recalls only about fifteen people present. Lynch protested when the stripper lifted her into the air and she requested that he put her down, after which she returned to her office. Pirrone came to see Lynch after the performance and she told him that she thought what had happened was inappropriate. Pirrone apologized, but also explained, "You have to learn to lighten up a bit. We are all family here. Women need this to blow off steam. We do it all the time." Deposition Testimony of Fran J. Lynch ("Lynch Dep.") at 184:21-24, 185:5. Lynch saw Steven Sacharoff later in the day and when she asked if he knew what had happened, he smiled in response. Pirrone testified that female employees in the office sought his permission to bring in the stripper and asked him to pay for the performance, which he did out of his own pocket. He did not arrange for the stripper. Lynch never discussed the incident with anyone else until she filed this lawsuit.

 During Lynch's time at New Deal, defendant Geik called her at her apartment several times at night. He would begin the conversations by asking Lynch, "Hi, babe, what are you doing?" Id. at 210:12-13. Geik would then ask her a business question that she had already answered during the day and would always end the conversation by asking Lynch not to tell anyone that he had called her. Lynch admits that Geik never proposed anything improper, and she never let him know that she found the phone calls to her home offensive.

 In late April or early May 1994, Geik told Lynch, "You look really great. I can't help noticing since you have been working out, you must have lost a lot of weight. It's not that I stare at your body all the time, but you can't help noticing." Id. at 213:19-23. On several other occasions, Geik suggested that he and Lynch work out together at his gym and that they have dinner afterwards. Lynch declined the invitations, and states that Geik did not appear hostile or try to force or pressure her to change her mind.

 During a meeting with Steven Sacharoff and Pirrone, Geik asked Lynch for the key to the apartment that New Deal was renting for her. Lynch refused to give it to him. Geik then asked her, "What do you do on week nights? You got something on the side? Are you playing around?" Id. at 215:15-18. He had made similar comments on other occasions in the presence of Lynch's co-workers. In the spring of 1994, Geik discussed his marital problems with Lynch during a car ride to a meeting. He explained to Lynch that he was trying to decide whether or not he should stay married. Lynch never complained to anyone regarding Geik's conduct.

 While Lynch was employed at New Deal, several incidents occurred involving other female employees. One involved a receptionist named Annie who Pirrone told Lynch to fire. When Lynch asked why, Pirrone replied, "Sachs [defendant Steven Sacharoff] is on the loose again. He found a new toy. We are going to have a problem. She is too pretty." Id. at 193:10-12. Pirrone said that Steven Sacharoff had a habit of "hanging around the attractive girls" and "putting his hands on them." Id. at 194:13-18. Lynch observed Steven Sacharoff hanging around Annie and once saw him sitting next to her with his hand on her knee. According to Lynch, Annie was replaced with another "pretty" receptionist with whom Steven Sacharoff also spent a lot of time. Id. at 198:19-25.

 Another episode involved Linda Lefebre ("Lefebre"), who was a collections manager at New Deal. Lefebre approached Lynch and asked her to "do something" about Steven Sacharoff because he was "hanging around [her] desk" and "putting his hands on [her]." Id. at 200:18-201:2. When Lynch related this incident to Pirrone, he explained that this type of behavior had occurred before and that Bernard Sacharoff, Steven's father, knew of his son's problem. Pirrone told her that Steven Sacharoff had also bothered a secretary named Heather to the point where she intended to quit.

 During the second quarter of 1994, Lynch was asked to comfort Lori Gancarz ("Gancarz"), one of the secretaries at New Deal. Gancarz was upset after Steven Sacharoff lifted her into the air, causing her dress to go over her head. After Pirrone and Gancarz spoke to Bernard Sacharoff about this incident, Bernard Sacharoff warned his son in front of Pirrone that if this ever occurred again, he would be thrown out of the business. Lynch never spoke to anyone at New Deal regarding these events.

 The final occurrence before Lynch's termination involved Scott Roberts ("Roberts"), personnel director for Unimark and S & R, two affiliated companies with which New Deal shares common ownership. Roberts had apparently been arrested at Unimark for exposing himself to a female job applicant. Lynch learned of the incident during a meeting when Steven Sacharoff, Geik, and another man were laughing and joking about it. Concerned by their cavalier attitude, she advised them to "sober up," call counsel to determine a corporate response, and find out whether they had employment practices liability insurance. Id. at 224:2-15.

 Steven Sacharoff contends that he had told Lynch of his concerns regarding New Deal's accounts receivable. He admits, however, that he never expressed any dissatisfaction with her performance in writing nor did he warn her that her job was in danger. Defendants replaced Lynch with a man whom they paid $ 50,000 less than they had paid her. Approximately six weeks before Lynch's discharge, Pirrone received a $ 20,000 raise in salary.

 According to Lynch, during her tenure at New Deal she saved the company $ 407,487.50 on its insurance premiums, $ 364,573.37 on a workers compensation audit, $ 59,417 on a cargo renewal, $ 78,926.40 on a health insurance renewal, and $ 95,251.55 in miscellaneous savings. Lynch claims that Steven Sacharoff told her after she had saved the organization $ 407,487.50 on an insurance renewal, "That's one for your column." Certification of Fran J. Lynch at P 8. She understood his remark to refer to the bonus discussed in the letter outlining the terms of her employment. However, defendants contend that the parties never established a method for quantifying savings for the proposed bonus, and Lynch herself acknowledges that there was "something more" to be agreed upon regarding the savings to which the letter referred. Lynch Dep. at 135:8-11.

 In October 1994, after Lynch was fired, Gancarz complained once more about Steven Sacharoff's behavior. Pirrone and Geik agreed to negotiate a settlement with her. Accordingly, Gancarz and her husband, who also worked for New Deal, received $ 50,000 plus medical benefits for a year to leave the company. Gancarz was making $ 30,000 a year at the time and her husband was earning between $ 30,000 and $ 35,000 a year. Also in October 1994, Geik settled with another employee named Karen McElroy ("McElroy") who had complained about inappropriate remarks made by Steven Sacharoff. McElroy received $ 30,000 in-exchange for her resignation. She had been earning $ 325 per week, or approximately $ 17,000 per year. Finally, a female employee named Marianne Guthrie also complained in October about Steven Sacharoff's offensive comments. She did not seek a financial settlement, but wanted his conduct stopped. The record contains three letters from Geik to counsel for New Deal regarding these claims. The letters state that Gancarz, McElroy and Guthrie had accused Steven Sacharoff of sexual misconduct and sexual harassment.

 On October 14, 1994, Pirrone wrote to advise counsel of the Lori Gancarz incident. According to this letter, Pirrone directed Steven Sacharoff to take a leave of absence, seek professional help, and undergo sensitivity training. Pirrone also requested in the letter that Steven Sacharoff not be permitted to return to the New Deal facility "until he has completed evaluation by a professional indicating that he is fully rehabilitated and assuring New Deal Delivery Service, Inc. and its partnership that such behavior is unlikely to manifest itself again in the future." See Certification of Jane B. Jacobs, Exh. A-16. Steven Sacharoff signed the letter.

 II. PROCEDURAL HISTORY

 On December 15, 1995, seventeen months after her termination from New Deal, Lynch filed this lawsuit in the United States District Court for the District of New Jersey. *fn2" In her Complaint, she alleges New Jersey state-law claims of hostile work environment and quid pro quo sexual harassment (Count One); retaliatory discharge (Count Two); gender motivated termination and denial of termination related benefits (Count Three); intentional infliction of emotional distress (Count Four); breach of the implied covenant of good faith and fair dealing in contract (Count Five); violation of the public policy of the State of New Jersey (Count Six); and breach of contract (Count Seven). Jurisdiction is based upon diversity of citizenship and an amount in controversy exceeding $ 50,000. See 28 U.S.C. § 1332 (amended Oct. 19, 1996). *fn3"

 Lynch contends that she has lost earnings and employment benefits and has suffered and continues to suffer severe anxiety, stress, humiliation and other damage to her emotional well-being. She asserts that she is entitled to compensatory and punitive damages, costs, and attorney's fees. Defendants now move for summary judgment against Lynch on all counts.

 III. STANDARD FOR SUMMARY JUDGMENT

 Summary judgment is appropriate when the moving party establishes that "there is no genuine issue of material fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56 (c). The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the non-moving party to carry its burden of proof. Celotex v. Catrett, 477 U.S. 317, 327, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts in question." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The opposing party must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. Sound Ship Building Co. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir.), cert. denied, 429 U.S. 860, 50 L. Ed. 2d 137, 97 S. Ct. 161 (1976). The material fact or facts become genuine when a reasonable trier of fact could render a verdict for the non-moving party. Healy v. New York Life Ins. Co., 860 F.2d 1209, 1219 n.3 (3d Cir. 1988), cert. denied, 490 U.S. 1098, 104 L. Ed. 2d 1004, 109 S. Ct. 2449 (1989).

 At the summary judgment stage the court's function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In doing so, the court must construe the facts and inferences in the light most favorable to the non-moving party. Meyer v. Riegel Prod. Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983), cert. dismissed, 465 U.S. 1091, 104 S. Ct. 2144, 79 L. Ed. 2d 910 (1984).

 IV. ANALYSIS

 Lynch alleges that she was subjected to a hostile work environment and quid pro quo sexual harassment in violation of the New Jersey Law Against Discrimination ("NJLAD"), N.J.S.A. 10:5 et seq. (West 1993 & Supp. 1997). She also claims that in terminating her employment, defendants unlawfully retaliated against her for resisting the alleged sexual harassment and hostile work environment, in violation of the New Jersey Conscientious Employee Protection Act ("CEPA"), N.J.S.A. 34:19 et seq. (West 1988 & Supp. 1997). She alleges that she was discharged and denied termination related benefits on account of her sex, in violation of the NJLAD. Lynch also contends that defendants' conduct toward her constituted a breach of contract and a breach of the implied covenant of good faith and fair dealing. Furthermore, Lynch alleges that defendants maliciously engaged in a course of extreme and outrageous conduct which caused her severe emotional distress. Finally, Lynch claims that during the time she was harassed at New Deal, defendants, in violation of the public policy of the State of New Jersey, wilfully failed to institute appropriate measures to ensure an atmosphere free of gender-based bias and/or discrimination.

 A. Whether Lynch Has Adduced Evidence Sufficient To Establish A Claim Of Hostile Work Environment.

 To establish a hostile work environment claim, plaintiff must show that the conduct complained of (1) would not have occurred but for the employee's gender; and it was (2) severe and pervasive enough to make a (3) reasonable woman believe that (4) the conditions of employment were altered and the working environment was hostile or abusive. Lehmann v. Toys ' R' Us. Inc., 132 N.J. 587, 603-04, 626 A.2d 445 (1993). The second, third and fourth prongs of this test are to some degree inseparable and must be viewed as interdependent. Id.

 1. Whether the alleged harassing conduct occurred because of Lynch's gender.

 Under the NJLAD, the alleged harassing conduct need not be intentional in order to violate the statute. Lehmann, 132 N.J. at 604. The plaintiff need only establish that the conduct would not have occurred but for her sex. Id. at 604-05. If the harassing conduct is sexual by nature, this element is automatically satisfied. Id. at 605. When the conduct is not clearly sexual or sexist in nature, a plaintiff must establish a prima facie case by showing that the conduct more likely than not occurred because of her sex. Id. This may be achieved by showing that the harassing conduct was accompanied by other harassment that was obviously sex-based or by showing that only women suffered ...


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