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Donofry v. Autotote Systems

September 27, 2001


On appeal from Superior Court of New Jersey, Law Division, Atlantic County, ATL-L-3914-95.

Before Judges Skillman, Wecker and Lesemann.

The opinion of the court was delivered by: Wecker, J.A.D.


Argued November 14, 2000

This is defendant's appeal from a verdict entered after a bench trial on a whistleblower claim brought under the Conscientious Employees' Protection Act (CEPA), N.J.S.A. 34:19-1 to -8. Plaintiff cross-appeals the dismissal of his punitive damages claim as well as his tort claim against the individual defendant. The primary issues raised by this appeal are the proper burden of proof and the sufficiency of the judge's findings to support the verdict.

Plaintiff, Donald Donofry,*fn1 was employed by defendant Autotote Systems, Inc. (defendant or Autotote) as General Manager at its facility at the Atlantic City Race Track, known as the Hub. Defendant, which operates simulcasting facilities from racetracks around the country, sent simulcast signals to several Atlantic City casinos from this location. The Casino Simulcasting Act, N.J.S.A. 5:12-194(b), and its implementing regulation, N.J.A.C. 19:55-6.3, required the technicians operating the equipment in the Hub to be licensed by the Casino Control Commission. Plaintiff was discharged shortly after he informed Autotote's senior management, through their local counsel, that unlicensed technicians were working at the Hub facility, thus necessitating admissions to the Commission that prompted disciplinary action and threatened Autotote's casino license.

Plaintiff was awarded compensatory damages, attorneys' fees and costs against Autotote. However, the judge denied plaintiff's demand for punitive damages and dismissed his claim against defendant Sital Singh Dhanoa, Autotote's district manager and plaintiff's immediate supervisor, for tortious interference with prospective economic advantage.*fn2

On appeal Autotote contends that the judge erred in finding retaliation under CEPA because plaintiff would have been fired anyway for several reasons, and because plaintiff was himself a "transgressor" who cannot succeed under CEPA. Defendant contests the amount of the compensatory damage award on the ground that the judge should not have assumed that plaintiff would have worked until age seventy. Finally, defendant contends that the award of attorneys' fees was excessive. On his cross appeal, plaintiff contends that the judge should not have dismissed his claim against Dhanoa, should have awarded punitive damages, and improperly reduced his requested attorneys' fees and costs. Based upon our review of the record, the briefs, and the arguments of counsel, all under applicable law, we affirm.

A brief summary of the facts surrounding plaintiff's employment and his termination will suffice to place this appeal in context.

Plaintiff was first hired by defendant in 1993 to fill an administrative position as general manager of defendant's Atlantic City Hub. The technical work of the Hub is performed on totalisator ("tote") equipment that is essential to the simulcasting operation. The equipment is maintained in a secure room, known as the tote room. The tote room manager was Brian Rogers, who supervised the technical work of the operators.

The tote room equipment is operated only by specially trained persons, who are required by law to be licensed by the Casino Control Commission. The operators, other than the manager of the tote room, were members of the International Brotherhood of Electrical Workers (IBEW), which was threatening to strike in the spring and summer of 1994. As a result, the company began to develop a strike contingency plan, including training plaintiff to operate the equipment and hiring additional tote operators. In June, the company applied to the Commission for a temporary waiver of the licensing requirements for tote room operators in the event of a strike; however, the waiver was denied.

On the defendant's organizational chart, filed with the Casino Control Commission, Rogers answered to plaintiff. However, because plaintiff's job and his background was on the administrative and not the technical side of the operation, Rogers responded directly to Dhanoa with respect to the operation. It was Rogers, with Dhanoa's approval, who made the decisions to hire new or replacement personnel for the tote room. Dhanoa reported to Brooks Pierce, who was then the Vice-President and General Manager of Autotote. By 1998, when Pierce testified at this trial, he had become President of the company.

Autotote had retained local counsel, Mark Sandson, to facilitate its regulatory affairs involving the Casino Control Commission. Sandson handled a variety of legal matters for defendant in Atlantic City, including the waiver application, and plaintiff frequently had occasion to consult him. Sandson or his office staff oversaw the process of obtaining the required licenses for defendant's tote room personnel, and plaintiff was involved in transmitting the applications between the employees and Sandson.

In August, the tote room operators did go out on strike at Autotote's facilities across the country, and it became a major priority of the company to keep the operations running with substitute personnel. At various times during the summer and fall of 1994, three persons who were employed in the tote room at the Hub were not licensed as required. Those persons were hired by Rogers, but plaintiff became aware of their status and made some attempts to discourage the practice as he became more and more "uncomfortable" with the situation. He reported the situation to Dhanoa, and instructed Rogers to get the unlicensed people out of the tote room, but Rogers saw no way to keep the operation going without them, and they remained. Plaintiff tolerated the situation until mid-October.

At some point in October, plaintiff learned that one of the three unlicensed tote room employees had been sent to work on the simulcasting equipment at the Taj Mahal and had been turned away by the casino because he was unlicensed. At the time, Autotote's own application for a plenary casino service industry license was before the Commission, and plaintiff became more disturbed about the potential for repercussions with the Commission. On October 18, 1994, plaintiff went to Sandson, and knowing Sandson would have to report the matter to upper management and to the Commission, told him about the several individuals who were operating the tote room equipment without the proper casino licenses.*fn3 Sandson recognized the threat to Autotote's application if the violations became known. In a telephone conference with Pierce the same day, plaintiff and Sandson reported the situation to him. It was determined that it was in Autotote's interest to disclose the matter to the Commission itself, rather than risk its discovery.

As a result, the plenary license application was postponed, and administrative charges were lodged by the Commission against Autotote and against plaintiff, Dhanoa, Rogers, and one of the unlicensed employees. Each was represented by separate counsel provided by Autotote, and the charges against each were resolved by settlement based upon written stipulations entered on or before December 14, 1994. Each entered a guilty plea to a violation, and Donofry paid a $1,100 fine. Autotote was also fined $25,400. In his written stipulation of settlement, plaintiff as well as Dhanoa and Rogers admitted some responsibility for the unlicensed operators. Autotote also admitted its responsibility for the violations. On that same date, the Commission granted Autotote's plenary license. Both Sandson and separate counsel engaged to handle the plenary license application testified at this trial that having reported its own violations to the Commission was helpful in securing the plenary license.

According to plaintiff, on December 13, 1994, he called Pierce "to find out what my disposition was after the hearing," and Pierce "told me that I was terminated." When plaintiff asked why, Pierce "told me because I cost the company a lot of money and that I jeopardized their license that they were going for the next day, their permanent license, and also that they were in the process of negotiating the New Jersey Lottery."

Pierce did not deny giving plaintiff those reasons, but added that he terminated plaintiff because he thought that as general manager of the facility, plaintiff "was responsible for what was going on at the HUB." Pierce "felt that [plaintiff] basically allowed unlicensed people to work under his watch and I felt that he was personally responsible for it." Pierce denied that plaintiff's disclosure played "any part" in his decision. "I fired him because he knew what was going on right from the beginning. He allowed it to happen and the fact that . . . he confessed to that a month and a half later, to me was not justification . . . ." Plaintiff "knowingly and willingly let this happen".

Pierce asserted that he initially decided to terminate plaintiff on October 18 when he talked to Sandson and to plaintiff by telephone. He did not discuss it with his subordinates because "it was a plain as day decision." He did ask Sandson whether his decision was "off base." He also asked Autotote's general counsel to verify that. He made no other investigation of the circumstances, except a call to ...

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