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Martinez v. Excellent Education for Everyone

October 20, 2008


On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-3626-04.

Per curiam.


Submitted September 24, 2008

Before Judges Parrillo, Lihotz and Messano.

Plaintiff Dianthe Martinez appeals from the summary judgment dismissal of her employment discrimination complaint against defendants Excellent Education for Everyone (E3), Peter Denton and Dan Gaby, and from the subsequent order denying her motion for reconsideration. We affirm.

We view the facts in a light most favorable to plaintiff. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Plaintiff, an African-American female, began working at E3, a start-up non-profit entity*fn1 involved in public education reform, in late 2000. The goal of E3's founder, Peter Denton, was to "build an organization capable of changing the law in New Jersey" by "build[ing] a grassroots understanding of school choice and grassroots support for it." To that end, E3's Executive Director, Dan Gaby, assumed full personnel responsibility with hiring and firing authority and determined employee compensation. Gaby also "had sole authority over the budgeting process and was responsible for determining the feasibility of opening and closing E3 offices."

Plaintiff was recruited by E3's outside consultant, Donald Bernard, for her "high energy," "relationship with the democratic party" and community-based organizations, access to minority communities, and a track record working in public education. Originally offered the position of Director of Field Operations, plaintiff asked to assume the additional responsibility of Director of Administration since it was not yet filled. Although highly unusual for one person to hold these dual positions, Denton and Gaby reluctantly agreed on a trial basis, to "see how it worked out." Plaintiff received a letter confirming this offer at an annual salary of $60,000 on December 19, 2000,*fn2 and she accepted.

When plaintiff began working at E3, it was still in its start-up phase and the only full-time consultants/employees were plaintiff and Gaby, housed in a Trenton office. Plaintiff's primary responsibility initially was to "help them start up the organization and get more grounded in the community[,]" and to establish a Newark headquarters.

The Newark headquarters opened around June 2001, and after moving there, plaintiff's primary duties focused on administration of the office and control over the direction of field operations. At the time, she received a raise to $66,000. Throughout that year, plaintiff's office administration duties remained consistent and included: overseeing day-to-day finances; preparing purchase orders; writing checks for daily expenses; bank reconciliation; reviewing employee benefits such as health plans; and collecting information from the consultants for reimbursement for their expenses and submitting same for payment. Meanwhile, Denton's office oversaw the overall budget, as well as approval for larger expenditures.

By the end of 2001, E3 had grown dramatically. Due to E3's growth and status as a non-profit, in December 2001, E3 hired an outside accountant, Moore Stephens, to perform an audit. This happened to coincide with an Executive Committee meeting in late 2001, convened to strategize, draft a budget, and identify problem areas in the organization. As part of their findings, the outside auditors recommended a reorganization of staff financial responsibilities to better comply with accounting standards. Specifically, in a January 15, 2002 memo memorializing the initial audit findings, Kathy Clayton of Moore Stephens noted that there was "no segregation of duties within the accounting functions"; recommended the hiring of a second employee to handle duties of cash disbursements and receipts; and advised that "[a] manager would provide oversight by approving bills to be paid and reconciling the bank account." In early January 2002, a reorganization meeting was held to address the audit's initial findings, further examine reorganizing the company's structure, and explore the need to hire more people. As a result, an Organizational Committee was formed, comprised of Denton, Gaby, plaintiff, and four others.

Based on the audit, several positions were proposed for bifurcation in the 2002 budget, including plaintiff's; specifically, it was recommended that her dual positions as Director of Field Operations and of Administration be separated, budgeted at a salary of $72,000 per position. When plaintiff first learned of the proposed reorganization, she advised Gaby in a January 2, 2002 memo that any attempt to separate her positions would "force [her] resignation," believing the division tantamount to a demotion. Two days later, on January 4, 2002, plaintiff sent a memo to Denton accusing him of "unfair employment practices" and suggesting racism in the decision in that Gaby and Henry Levari, another member of the Organizational Committee, were white males and the only ones scheduled for raises in the proposed 2002 budget. She requested a raise to $100,000. That same day, she sent another memo to Denton, retracting her previous statement about Levari's raise, attributing it to the stress over splitting her job, which provoked "guarded outrage."

Denton responded in a January 7, 2002 memo reminding plaintiff that hers was the only budgeted pay increase, which she later acknowledged, and further explaining the need for bifurcating her job:

When you were hired you asked to be responsible for both field operations and administration. Dan and I had significant concerns about combining these two jobs, as they are substantially different in responsibilities and activities. I am not familiar with any organization that has its administrative responsibilities coupled with a line management position (other than the organization's chief executive). You asked for both responsibilities and we felt that since E3 was a new organization we would try that approach and see how it worked out. E3 has grown dramatically over the last 12 months. Dan and I would be remiss if we did not review existing reporting relationships, staff responsibilities and insure they are appropriate given past and expected future growth of the organization. We will of course continue that evaluation.

That same day, Gaby requested of plaintiff, by memo, certain financial records in response to the auditor's concerns and asked her to stop writing checks. Plaintiff refused to comply, responding by memo of same date that she would turn over certain documentation for the 2001 audit, but would retain the unused checks and continue to use them to do Newark office business. During the ensuing discussions, Gaby repeatedly told plaintiff he did not want her to resign; that no one in the organization considered the reorganization of her duties a demotion; and that such a decision was motivated by accounting principles alone. Indeed, plaintiff herself acknowledged Gaby "was trying hard to resolve this." In fact, Gaby asked Bernard to act as an intermediary and try to reach a solution.

Attempts to negotiate a compromise failed, however. During negotiations, Gaby suggested a middle ground: that plaintiff remain as Director of Administration and Field Operations, but hand over financial responsibilities to E3's outside accountant, who would act as controller. Plaintiff refused to compromise and "made it clear that she would not accept any changes in her job duties." On March 12, 2002, she wrote to Gaby:

As I stated in my previous memos I am unwilling to accept any changes in my job duties and titles that essentially represent a demotion.

I respectfully and lovingly submit that I have to stand by my principles and therefore will not accept any changes. Furthermore, I understand your position and I say to you that you have to do what you have to and we will see what happens.

On March 25, 2002, Moore Stevens issued its final audit findings to the E3 Board of Directors. Among the "reportable conditions" believed to be a "material weakness" were deficiencies in the operation of internal controls:

There is absolutely no segregation of duties in the financial process. Under no circumstances should the approval, expenditure, disbursement, receipt and reporting of transactions be handled by the same individual. A proper internal control system provides for checks and balances through the segregation of these functions to several individuals and for timely reporting to management and the governing body.

Shortly thereafter, on March 27, 2002, Gaby once again requested plaintiff turn over all blank checks and bank statements for the checking account, directing her not to write checks on the account with the exception of checks for expenses for a particular business trip. Plaintiff responded that same day by memo, claiming that Gaby's memo and conversation the day before "were the first time [he] indicated these instructions to [her]" and again labeled the directives "unfair practices." Gaby responded by memo of April 1, 2002, in which he reiterated an explanation of the audit's findings and the need to have more oversight of the company's checking account, noting that generally accepted accounting practices prohibit the same person from making such financial decisions.

Plaintiff brought a claim of discrimination before the Board of Directors. At the April 10, 2002 meeting, which plaintiff attended, the Board unanimously voted, with one abstention, to hire Moore Stevens as consultant to E3 to handle E3's financial matters. Shortly thereafter, Gaby asked plaintiff once more to accept the reorganization. When she refused, Gaby told her that she was terminated, which was confirmed in a letter dated April 17, 2002.

On April 16, 2004, plaintiff filed a nine-count complaint against defendants, alleging gender discrimination in violation of the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49, breach of contract, and wrongful termination, among other claims, arising out of her employment with E3. After defendants answered, discovery endured for over two years, with multiple extensions and rescheduled trial dates.*fn3 After August 2006, no additional requests were made to extend discovery until November 2006 when counsel for both parties executed a consent order purporting to extend discovery to February 24, 2007. However, plaintiff failed to file the order until after she received defendant's December 28, 2006 summary judgment motion, returnable January 19, 2007. In the interim, on January 2, 2007, the trial court entered its own consent order setting February 16, 2007 as the discovery end date, but vacated that order two days later, carrying the request to extend discovery to the summary judgment motion return date of January 19, 2007. Claiming some confusion, plaintiff did not submit opposition to the summary judgment motion and, by agreement of the parties, the motion was carried to February 16, 2007, to allow plaintiff an opportunity to oppose the application.

No written opposition was ever submitted by plaintiff, whose counsel simply stated at the February 16, 2007 oral argument that he had "prepared something for the court." Counsel's excuse this time was that a transcript of Bernard's deposition, finally taken on February 2, 2007, after being adjourned twice since August 7, 2006, was not yet ready. Although then given the opportunity to explain what the Bernard deposition transcript might contribute to plaintiff's prima facie case of discrimination, counsel failed to identify any specific evidence. Following argument, the judge, considering the motion unopposed, granted summary judgment dismissing plaintiff's complaint and denied the request for yet another discovery extension for want of good cause. Plaintiff's subsequent motion for reconsideration was also denied.*fn4

On appeal, plaintiff raises the following issues:


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