On certification to the Superior Court, Appellate Division.
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
In this appeal, the Court must determine: 1) whether an employee's complaint for retaliation under the Law Against Discrimination (LAD) must be made in good faith and on a reasonable basis; and 2) whether an investigative report prepared by an employer, which the employer claims provided an independent basis for the employee's discharge, should have been admitted into evidence.
Plaintiff Reinaldo Carmona was hired as a front desk clerk by defendant Resorts International Hotel Inc. On November 9, 2001, Carmona was fired. The reason for his termination gave rise to this lawsuit.
According to Carmona, he was a recovering cocaine user prone to relapses. Because of the relapses, he missed work on several occasions. Under Resorts' progressive discipline, the absences accumulated as "points" against Carmona. By August 2001, Carmona had accumulated enough points so that another unexplained absence would render him liable for termination. While Carmona could have explored seeking an approved medical leave to treat his cocaine dependency, he focused instead on other Resorts employees who had received approved medical leave absences, claiming that Resorts applied its absenteeism/termination policy unevenly due to racism. On November 6, 2001, Carmona went to Resorts' internal equal employment opportunity (EEO) office to complain. Resorts' EEO director informed Carmona that she would conduct an investigation of his allegations.
On November 5, 2001, the day before Carmona complained to Resorts' EEO office, he and William Santiago were observed improperly upgrading rooms in exchange for tips. Twice before, Carmona had been reprimanded for upgrading rooms without authorization. Santiago was interviewed, during which he admitted that he had upgraded rooms for gratuities. Santiago also implicated Carmona. On November 8, 2001, Resorts conducted an audit that showed that Carmona had improperly and without authorization upgraded twenty-seven rooms in October 2001. When questioned on November 9, 2001, Carmona admitted to upgrading rooms without authorization, although he denied receiving gratuities. He was fired that day. Resorts investigators collected their investigative material and compiled a report concerning the incident.
In April 2002, Carmona sued Resorts. The issues at trial, according to Carmona, were whether Resorts retaliated against him when it terminated him three days after he filed his discrimination complaint against Resorts and whether Resorts' investigation into the room upgrades was a pretext to justify that retaliation. At trial, Resorts sought to introduce the investigative report into evidence. Carmona objected, and the trial court ruled that the report was not admissible because it was hearsay and unreliable. The trial court refused to instruct the jury that in addition to making a complaint of discrimination, Carmona had to have a reasonable good faith basis for the complaint. Instead, the trial court instructed the jury that to satisfy his burden of proof, Carmona must prove that he made a complaint of discrimination and that he was retaliated against because of that filing. The jury found that Carmona proved that the reason Resorts gave for Carmona's termination was a pretext and the real reason was retaliation for his complaint of discrimination. The jury awarded Carmona compensatory damages and lost wages.
On appeal, the Appellate Division affirmed. This Court granted Resorts' petition for certification.
HELD: In a case alleging retaliation under the LAD, plaintiff bears the burden of proving that his complaint was made reasonably and in good faith. When an employer defends against a claim that an employee's discharge was the product of retaliation, an investigative report prepared by the employer that purports to demonstrate a non-retaliatory purpose for the employee's termination is not hearsay and is admissible.
1. The LAD is one of New Jersey's leading legislative pronouncements, which sets forth the clear public policy of this State to eradicate invidious discrimination from the workplace. In the development of this State's anti-discrimination jurisprudence, the Court has frequently looked to case law under the federal Title VII of the Civil Rights Act for guidance in developing standards to govern the resolution of LAD claims. The Court's continuing examination of the LAD has led it also to look to subsequent legislative enactments for guidance on LAD's scope, including the later-adopted New Jersey Conscientious Employee Protection Act (CEPA). A CEPA plaintiff must show that he reasonably believed that his employer's conduct was violating either a law, rule, or regulation promulgated pursuant to law or a clear mandate of public policy. (pp. 17-20)
2. A requirement that a LAD-retaliation plaintiff demonstrate that his underlying complaint was reasonable and in good faith is entirely consonant with the purpose of the LAD. The Court follows parallel federal precedents, under which a plaintiff must show that he had a reasonable, good-faith belief that discrimination occurred to prevail on a retaliation claim, a tenet universally observed by every United States Court of Appeals that has considered the question. (pp. 20-21)
3. This requirement that the underlying complaint be reasonable and made in good faith is recognized because its absence may well lead to abuse. The LAD was and is intended as a shield to protect employees from the wrongful acts of their employers, and not as a sword to be wielded by a savvy employee against his employer. (pp. 21-22)
4. Here, Resorts was denied an instruction to the jury to the effect that, as part of his case-in-chief, Carmona was required to prove that he had a reasonable, good-faith belief for his underlying discrimination complaint as the basis for his later retaliation complaint. Carmona did not complain about discrimination in the application of Resorts' absenteeism policy until November 6, 2001, the day after an investigation into allegations of theft by Carmona was started. The trial court charged the jury that the bare fact that Carmona filed a complaint alleging discrimination, without more, was sufficient to satisfy his burden in respect of the first element of his LAD-retaliation claim, a charge that the Court holds to be legally insufficient and incorrect. The jury could have come to a different result had it been correctly instructed. (pp. 23-25)
5. An investigative report concerning an employee is admissible as non-hearsay evidence whenever the employer's motivations are directly at issue. Moreover, in the context of a LAD retaliation claim, a personnel file was admissible because the information in the file bears on the reasonableness and good faith of defendant's conduct. There is no appreciable difference between a personnel file -- which is created and maintained exclusively by the employer -- and an investigative report. Further support is found in federal cases that parallel the LAD. Other states also follow this rule. (pp. 25-30)
6. Resorts' investigative report would be admissible to show that Resorts terminated Carmona's employment for non-pretextual reasons, provided Resorts also demonstrates (1) that one of its decision makers knew of the report's contents and acted in reliance thereon, and (2) that all portions of the report were separately admissible or properly and intelligibly redacted. (pp. 30-31)
The judgment of the Appellate Division is REVERSED and REMANDED for proceedings consistent with this opinion.
JUSTICE WALLACE has filed a separate, DISSENTING, opinion, concluding that the Court should not impose a new standard that requires an employee to establish that the complaint for retaliation was made in good faith and on a reasonable basis.
JUSTICES LONG, LaVECCHIA, ZAZZALI and ALBIN join in JUSTICE RIVERA-SOTO's opinion. JUSTICE WALLACE filed a separate, DISSENTING opinion.
The opinion of the court was delivered by: Justice Rivera-soto
Argued September 11, 2006
This appeal arises in the context of an employee who alleged that, after he complained about claimed unfair treatment, he was retaliated against in violation of the Law Against Discrimination (LAD), N.J.S.A. 10:5-12d. Specifically, this appeal requires that we address two separate issues: whether the employee's complaint that allegedly triggers a retaliation claim must be made in good faith and on a reasonable basis, and whether an investigative report prepared by an employer, which the employer claims provided an independent basis for the employee's discharge, should have been admitted into evidence. Both the trial court and the Appellate Division held that the LAD contains no independent requirement that a plaintiff in a LAD-retaliation case also prove that the complaint predicate to a retaliation claim must have a reasonable, good-faith basis, and that it was not an abuse of discretion to exclude from evidence the investigative report prepared by the employer. We do not agree.
We hold that, in a case alleging retaliation under the LAD, the plaintiff bears the burden of proving that his or her original complaint was made reasonably and in good faith. Stated conversely, an unreasonable, frivolous, bad-faith or unfounded complaint cannot satisfy the statutory prerequisite necessary to establish liability for retaliation under the LAD. We also hold that, when an employer defends against a claim that an employee's discharge was the product of retaliation, an investigative report prepared by the employer that purports to demonstrate a non-retaliatory reason for the employee's termination is a non-hearsay statement. Finally, we hold that the admissibility of an investigative report in these circumstances is subject not only to all other relevant evidentiary limitations, but also to proof that a decision maker relied on that report in deciding to discharge the employee from employment.
In 1999, plaintiff Reinaldo Carmona was hired as a front desk agent or clerk by defendant Resorts International Hotel, Inc., d/b/a Resorts Atlantic City (Resorts). As a front desk agent, plaintiff was responsible for checking guests into and out of Resorts. Plaintiff was employed by Resorts until November 9, 2001, when he was fired. The disputed reason for that termination -- plaintiff's claim of retaliation for an internal claim of discriminatory or disparate treatment, or Resorts' claim that plaintiff was terminated for stealing -- is what gives rise to this lawsuit.
According to plaintiff, he was a recovering cocaine user prone to relapses. Because of the relapses, plaintiff missed work on several occasions. Under Resorts' progressive discipline policy for absenteeism, a policy that did not apply in instances of serious misconduct, including theft, the absences accumulated as "points" against plaintiff. By August 2001, plaintiff had accumulated sufficient "points" so that another unexplained or unauthorized absence would render him liable to termination. His supervisor explained to plaintiff that absences pursuant to an approved medical leave would not be counted against him. Yet, plaintiff did not explore seeking an approved medical leave to treat his cocaine dependency. Instead, he focused on other Resorts employees who had applied for and received approved medical leaves of absence. He later claimed that Resorts applied its absenteeism/termination policy unevenly.
In particular, plaintiff noted the case of co-plaintiff William Santiago, who also was employed as a front desk agent at Resorts. In November 2001, Santiago reported to work although he was suffering from problems with his face. His supervisor sent Santiago to the hospital, where he was diagnosed with Bell's Palsy. Santiago returned to work that same day. He did so because he was concerned that he had reached the limit on "points" he could accumulate as a result of absenteeism, which placed him at risk of termination from employment. In this instance, Santiago's supervisor elected not to discipline him, choosing instead to make an "exception."
Plaintiff also focused on Robin Hewitt, another front desk agent who had excessive absences. He was informed by a supervisor that Hewitt had applied for and received a medical leave and, thus, her absences were not counted for disciplinary purposes. Plaintiff confirmed this information by looking at Hewitt's attendance sheet, which contained entries for "leave of absence" or "FMLA"*fn1 but did not accumulate any "points" based on her absences.
Resorts had adopted an anti-discrimination policy, and employees who complain of discrimination are encouraged to bring those complaints to Resorts' internal equal employment opportunity (EEO) office. Accordingly, three months after having this information in hand, on Tuesday, November 6, 2001, plaintiff went to Resorts' EEO office to complain. He met with the director of EEO at Resorts, noted that Hewitt was receiving medical leave without the accumulation of any points, and claimed that it wasn't fair that [Hewitt] was out and she was only employed at Resorts for like no more than three months and she was placed on the family leave, and I have been there two years and I wasn't placed on one, and I couldn't go to a hospital [for drug rehabilitation] because of being afraid of getting points, which I brought a doctor's note for that and I got points anyway.
Plaintiff attributed the difference in treatment between Hewitt, who was on medical leave, and plaintiff and Santiago, who had not been placed on medical leave, to racism: Hewitt is Caucasian, while Santiago and plaintiff are Hispanics. Resorts' EEO director informed plaintiff that she would conduct an investigation of his allegations. However, shortly after she started her inquiry, she was informed that both plaintiff and Santiago were being terminated for stealing. Resorts' EEO director then ended her investigation of plaintiff's allegations.
On Monday, November 5, 2001 -- the day before plaintiff complained to Resorts' EEO office -- plaintiff and Santiago were observed improperly upgrading rooms in exchange for tips. That is, plaintiff and Santiago would dole out room accommodations that were better, larger, or more luxurious than what the guest was being charged for, and the guests would then "tip" plaintiff and Santiago for the upgraded accommodations. Plaintiff was not a stranger to those allegations: he had twice before been reprimanded -- in October 1999 and July 2000 -- for upgrading rooms without authorization. Those observations made their way to Resorts' labor relations counselor, who asked that the hotel reservations data for that day be produced. That data showed that both plaintiff and Santiago, without authorization, had upgraded a number of hotel rooms for guests; Santiago alone upgraded twenty of twenty-six hotel rooms. The information was then transmitted to Resorts' investigations department.
On Wednesday, November 7, 2001, two Resorts investigators interviewed Santiago. According to one of the investigators, "[d]uring the interview Mr. Santiago admitted that he had done upgrades for gratuities[,] to receive gratuities. He also implicated other employees [including plaintiff]. He also informed [Resorts] that [plaintiff] had a password of one of the supervisors to access the computer to do this." Based on those allegations, on November 8, 2001, the Resorts investigators asked that the front desk supervisors audit plaintiff's work for the prior month. That audit showed that plaintiff had improperly and without authorization upgraded twenty-seven rooms.
Plaintiff was not scheduled to work on either November 7 or 8, 2001. When he returned to work on November 9, 2001, he too was interviewed by Resorts' investigators. An investigator testified that
[w]hen I was interviewing [plaintiff] he admitted that he did make upgrades of patrons. He was questioned as to knowing that he didn't have the authority to, and he admitted that he didn't have the authority to do so. He was questioned as to his motive for doing that, and I asked him specifically . . . was the motive for the upgrades to receive gratuities, and he said no. He denied receiving any gratuities for doing it. I asked him then why, why did you do it? And he had no answer.
Shortly afterwards he said he only had one thing left to say, and that was that he believed it was time for him to change careers. And that was about the substance of our conversation.
Plaintiff's version of this interview differs in tone from the investigator's testimony. Significantly, even though plaintiff denies receiving any gratuities in exchange for unauthorized room upgrades, he does not deny upgrading rooms without authorization. Further, although plaintiff led the investigator to believe that plaintiff was resigning from employment, he in fact was fired that day. During the investigation, the ...