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Tartaglia v. UBS Painewebber Inc.

December 16, 2008

MARIA TARTAGLIA, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
UBS PAINEWEBBER INCORPORATED AND HERBERT JANICK, DEFENDANTS-APPELLANTS AND CROSS-RESPONDENTS.



On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(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).

HOENS, J., writing for a unanimous Court.

The Supreme Court addresses four issues relating to the appeal of this employment discrimination case: 1) whether the appellate panel erred in concluding that plaintiff, Maria Tartaglia, should have been given the benefit of an adverse inference charge relating to allegedly spoliated evidence in light of the fact that she had also been permitted to assert and preserve separate, substantive spoliation claims; 2) whether the panel erred in overturning the trial court's determination that certain evidence offered by Tartaglia could not be used by the jury to demonstrate that Tartaglia had engaged in protected activity; 3) whether the appellate panel erred in its evaluation of the propriety of two comments made by defense counsel in summation; and 4) the propriety of the pre-trial order granting summary judgment to defendants, UBS PaineWebber, Inc. (PW), on the common law wrongful termination claim.

In August 1992, Tartaglia was hired to work as a Staff Attorney in PW's Regulatory Group. She had about five years of experience working in the securities field. During the course of her previous employment, Tartaglia had experienced severe depression, and was terminated after being criticized both for her work and for failing to keep up her personal appearance. About a year after Tartaglia started working at PW, a new general manager was hired, and the entire Legal Department was reorganized. As part of that reorganization, PW hired Herbert Janick to be its Senior Associate General Counsel. Janick was responsible for developing, building, and overseeing the PW Regulatory Group. About six months after Janick started with PW, Eric Seltzer joined the company as an Associate General Counsel and became Tartaglia's supervisor.

In July 1994, Seltzer gave Tartaglia a positive performance evaluation but noted that she needed to improve her skills in dealing with "difficult" regulators and in timely completing her assignments. Seltzer eventually chose Tartaglia to be the manager of the newly-created Preliminary Inquiry Unit, where she managed paralegals to ensure that they met document production deadlines on more routine matters. Seltzer's year end evaluation of Tartaglia was not as positive; he criticized her judgment, her temperament and her work habits. After that evaluation, Tartaglia sought and received a transfer from the Regulatory Group to the Counseling Group. In the Counseling Group, she served as Backup Division Counsel, supervising work related to subpoenas, garnishments, and levies.

Tartaglia's sexual discrimination and retaliation claims are based on two incidents involving Seltzer. The first of these, referred to as the "wedding remark," occurred shortly after she was transferred to the Counseling Group. In June 1995, Tartaglia and her boyfriend attended the wedding reception of a co-worker. According to Tartaglia, when she introduced her boyfriend to her co-workers, Seltzer said to him, "Everyone at the table with a cock used to have Maria reporting to him." Tartaglia did not immediately complain to anyone at PW about Seltzer's comment. She did seek out medical assistance and obtained medication for anxiousness and an inability to sleep. She was eventually diagnosed with bipolar disorder.

The second statement, referred to as the "wet my pants" comment, occurred three months later at a Legal Department function when Tartaglia mistakenly introduced herself as still working in the Regulatory Group. According to Tartaglia, when she and another employee were at a meeting with Janick a few days later, Seltzer walked into the office and "quite loudly" stated that he nearly "wet [his] pants" when he heard Tartaglia identify herself as being part of the Regulatory Group. Tartaglia testified that Janick laughed at Seltzer's comment and that she felt "humiliated and helpless." Immediately following this incident, Tartaglia complained about Seltzer's behavior and the offensive remarks and Janick's response to Donna Yanez, a PW Human Resources Department (HR) employee. Tartaglia expressed concern that Seltzer's attitude toward her might have affected his evaluation of her work. She claimed she was dealing with these issues through medication but that she feared she was going to have a nervous breakdown. The HR Department quickly investigated Tartaglia's complaints.

Tartaglia's wrongful termination claim was based on a different series of events that occurred beginning in late 1996, when Gary Stegeland became Tartaglia's supervisor in the Counseling Group. Stegeland directed Tartaglia to devote the majority of her time to the Municipality Group, where she was assigned the Municipality Project and was eventually made supervisor of the group. Sometime later, Stegeland told Tartaglia that the Municipality Project should be brought to an end in late 1997 or early 1998. He also told her when the project ended she would have to look for another position either within or outside of PW. Eventually, Stegeland told her that he did not think there would be another position for her at PW.

Tartaglia, through the requested intervention of Janick, ended up working in the Early Dispute Resolution (EDR) Unit, despite the misgivings of the manager (Franklin) and overall supervisor (Calder) of that unit. In her new role in the EDR Unit, Tartaglia was responsible for investigating customer complaints involving PW's Financial Advisors (FAs). Tartaglia believed that it might be a conflict of interest in violation of the Rules of Professional Conduct (RPCs) for her to represent both PW and the individual FAs in response to a customer complaint. She mentioned this to her supervisors, contending that the department should be giving the FAs written, rather than oral, notification about the potential conflict of interest. Calder did not agree with Tartaglia's opinion but gave her permission to research it on her own time. Rather than doing that, Tartaglia sought the advice of another attorney. Thereafter, Janick determined that oral communication was sufficient.

Separate and apart from the conflict of interest debate, an issue arose regarding Tartaglia's work schedule. She sought an accommodation on her start time due to medication she was taking to treat her bipolar disorder. While the conflicts debate and the accommodation discussion were pending, Calder and Franklin were meeting regularly with Tartaglia to discuss her performance. On March 25 and April 9, 1998, Tartaglia's supervisors continued to express their concerns over her failure to move her cases fast enough. The April 9 meeting became argumentative. Calder immediately spoke with Janick and both agreed that Tartaglia should be fired for poor work performance. Janick decided he would not tell Tartaglia until Monday, April 13. Tartaglia contacted her doctor to ask about disability leave and did not return to work on Monday, April 13, instead calling and advising she was seeking disability leave pursuant to her doctor's recommendation. HR called Tartaglia to advise her about the forms she would need to submit in respect of her disability request. Termination was not mentioned, yet on the same day, Franklin sent Tartaglia a termination letter. Tartaglia's disability application was eventually denied because the claim arose after her termination.

In June 1998, two months after her termination, Tartaglia found new employment but left that position after one year, claiming that she was suffering from panic attacks related to her experience at PW that made it difficult for her to function. Tartaglia filed a four count complaint in 1999, naming PW and Janick as defendants (hereinafter collectively referred to as PW), claiming common law wrongful discharge, discrimination based on sex and medical condition, and retaliation. She also asserted a breach of contract claimed based on PW's failure to approve her application for disability benefits. Tartaglia later added two other counts to her complaint, seeking relief based on theories of negligent destruction of evidence and fraudulent concealment of evidence, which were bifurcated.

Tartaglia voluntarily dismissed her breach of contract claim. In 2003, the trial court granted summary judgment in favor of PW on Tartaglia's common law retaliatory discharge claim. The trial court agreed that in order to prevail on a Pierce claim, an employee must demonstrate that he or she actually notified an outside agency about the allegedly wrongful conduct of the employer. Because Tartaglia conceded that she did not voice her complaint about PW's refusal to utilize a written conflicts letter to an entity or person other than PW itself, the trial court concluded that she could not prevail on that claim.

On March 1, 2004, following a lengthy trial, the jury found in favor of PW on Tartaglia's remaining substantive claims for relief. Specifically, the jury found that Tartaglia had not proven by a preponderance of the evidence that PW terminated her either because of her asserted medical condition or in retaliation for participating in protected activity. After the jury returned its verdict, the parties presented brief summations to the same jury on the bifurcated spoliation claims. While the jury was deliberating, the parties reached a settlement on those counts, specifically preserving Tartaglia's rights to seek appellate review of all other issues

On appeal, the Appellate Division affirmed the pre-trial order granting partial summary judgment in favor of PW on the Pierce claim, but reversed the judgment based on the jury verdict and ordered the other substantive claims to be tried anew. On the Pierce claim, the Appellate Division agreed with the trial court that Tartaglia's failure to notify an outside authority about her complaint that the company was violating conflict of interest rules was fatal to her common law retaliatory discharge claim. The panel found three significant errors requiring a retrial on the other substantive claims; 1) it was error to refuse Tartaglia's request for an adverse inference charge based on missing documents relating to her disability and retaliation claims that were also the subject of the bifurcated spoliation claims; 2) it was error to limit the evidence that the jury could consider in evaluating the retaliation claim, specifically in relation to the "wet my pants" remark; and 3) two aspects of the closing arguments offered on behalf of PW were unduly prejudicial and were worthy of correction in light of the other grounds for reversal. The Supreme Court granted both the petition and cross-petition for certification.

HELD: Tartaglia should have been given the benefit of an adverse inference charge relating to her spoliation of evidence claim; the trial court erred in determining that certain evidence could not be considered by the jury in relation to Tartaglia's claim that she had engaged in protected activity; the complained of comments by defense counsel in summation were improper; and summary judgment on Tartaglia's common law wrongful termination claim was improperly granted.

1. Under Pierce, an employee has a cause of action for wrongful discharge when the discharge is contrary to a clear mandate of public policy. The question here is whether Tartaglia's purely internal complaint about the asserted violation of the RPCs relating to conflicts of interest is sufficient to support her claim and, if so, whether the RPC complained of qualifies as a "clear mandate of public policy" for Pierce purposes. The focus is on the existence of a clear mandate of public policy and not on the manner in which the employee voiced her objection to what the employer was doing. Nothing in Pierce requires an actual or even threatened external complaint as an element of the cause of action. The remedy requires a sufficient expression of that disagreement to support the conclusion that the resulting discharge violates the mandate of public policy and is wrongful. (Pp. 20-31)

2. RPC 1.7(b), relating to conflicts of interest, encompasses a sufficiently clear expression of a public policy mandate to support a Pierce cause of action. The appellate panel erred in requiring proof of an external complaint as a prerequisite to recovery on the Pierce claim. Because Tartaglia's claim was dismissed prior to the conclusion of discovery and trial, the Court cannot determine whether her proofs would suffice. Simple good faith disagreements about the meaning of the RPC will not alone support relief. In order to prevail on this claim, Tartaglia must demonstrate that PW's behavior about which she complained actually violated RPC 1.7. Because of the sparse record, the judgment on that claim must be reversed and remanded for further proceedings, which shall include a determination about whether Tartaglia's Pierce claim should proceed to trial. (Pp. 31-36)

3. Tartaglia's spoliation claims relate to a series of documents the she believed had been created by PW, its HR department, or Janick, contemporaneously with the events that gave rise to her substantive claims for discrimination. A party's access to the various remedies for spoliation often depends on when the destruction of evidence is discovered. If the spoliation is discovered while the underlying litigation is ongoing, the adverse inference charge may be invoked and the party is permitted to amend the complaint to allow a count for fraudulent concealment, but the counts must be bifurcated. The same jury would try the underlying claim and then, after returning a verdict, would hear the fraudulent concealment claim. However, if the spoliation is not discovered until after the underlying action, the plaintiff may file a separate tort action. An aggrieved party could be entitled to the benefit of both an adverse inference charge and a separate cause of action. There is a distinction to be drawn based on the identity of the alleged spoliator. If a party is the spoliator, the two remedies are possible. If the spoliator is a third-party, the remedy will generally be addressed in a separate proceeding only. Tartaglia should have had the benefit of the adverse inference charge and should be afforded one on retrial. It will be left to the trial judge to determine if a molded recovery is required to avoid any duplicative relief. (Pp. 36-52)

4. A plaintiff must bear the burden of proving that he or she had a good faith, reasonable basis for complaining about workplace behavior in order to proceed on a retaliatory discharge claim. The issue here is not whether the "wet my pants" comment and Janick's laughter occurred, it is whether Tartaglia had a good faith belief that these events occurred because of her sex. The trial court's charge that the jury should not consider the wet my pants complaint was error and Tartaglia was entitled to an instruction to the jury that her complaint constituted protected activity. In addition, the Appellate Division correctly concluded that the complained of statements made in summation by defense counsel were inappropriate. (Pp. 52-61)

Judgment of the Appellate Division is REVERSED to the extent that it affirmed the dismissal of Tartaglia's Pierce claim; is AFFIRMED AS MODIFIED to the extent that it reversed the jury verdict in PW's favor on Tartaglia's claims for wrongful discharge and for retaliation; is AFFIRMED to the extent that it concluded that the closing arguments were inappropriate; and the matter is REMANDED to the Law Division for further proceedings.

CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE and RIVERA-SOTO join in JUSTICE HOENS' opinion.

The opinion of the court was delivered by: Justice Hoens

Argued October 10, 2007

These cross-petitions for certification call upon this Court to address four issues relating to the trial and verdict on plaintiff Maria Tartaglia's wrongful termination and sexual harassment complaint. Defendants, UBS PaineWebber Inc. (PW) and Herbert Janick, ask us to overturn the Appellate Division's judgment granting a new trial, arguing that the Appellate Division made three different errors in reaching its decision. First, defendants argue that the panel erred in concluding that plaintiff should have been given the benefit of an adverse inference charge relating to allegedly spoliated evidence in light of the fact that she had also been permitted to assert and preserve separate, substantive spoliation claims. Second, defendants assert that the Appellate Division erred in overturning the trial court's determination that certain evidence offered by plaintiff could not be used by the jury to demonstrate that plaintiff had engaged in protected activity. Third, defendants argue that the appellate panel erred in its evaluation of the propriety of two comments made by defense counsel in summation. Plaintiff, in her cross-petition, asks us to overturn the pre-trial order, affirmed by the Appellate Division, that granted summary judgment to defendants on her common law wrongful termination claim. We affirm in part, reverse in part, and remand.

I.

As is frequently true in employment discrimination claims, our evaluation of the issues can only be understood in the context of the specific facts in dispute. Plaintiff is an attorney. In August 1992, when plaintiff was hired to work as a Staff Attorney in PW's Regulatory Group, she had about five years of experience working in the securities field, both at the New York Stock Exchange and in the legal department at Prudential-Bache (Prudential). During the course of her employment at Prudential, plaintiff experienced severe depression, and she was criticized both for her work and for failing to keep up her personal appearance. Prudential had terminated plaintiff from that job.

Approximately a year after plaintiff started working at PW, a new general counsel was hired, and the entire Legal Department was reorganized. As a part of that reorganization, in November 1993, PW hired Janick, a former employee of the Securities and Exchange Commission (SEC), to be its Senior Associate General Counsel. In that position, Janick's responsibilities included developing, building, and overseeing the PW Regulatory Group. About six months after Janick arrived, Eric Seltzer, who was also a former SEC employee, joined PW as an Associate General Counsel and became plaintiff's supervisor. Seltzer was responsible for supervising regulatory requests and managing the attorneys' and paralegals' responses to requests that were made to the Regulatory Group.

In July 1994, Seltzer evaluated plaintiff's performance. He rated plaintiff's legal skills, problem solving, and judgment as "excellent," and her business knowledge, productivity, and client relation skills as "outstanding." His written evaluation also included positive comments about plaintiff's management of the paralegals in the department. Seltzer found, however, that plaintiff needed improvement in two areas. Specifically, he noted that she needed to improve her skills in dealing with "difficult" regulators so as to avoid exacerbating problems and that the completion of her assignments was not always "as timely as [it] could have been."

Because of Seltzer's concern about the adverse effect that plaintiff's contentious interactions with regulators could have on PW and its clients, he stopped assigning her to the cases that were likely to lead to such confrontations. Instead, Seltzer assigned plaintiff to be the manager of the newly-created Preliminary Inquiry Unit, where she managed paralegals to ensure that they met document production deadlines on more routine matters.

Seltzer's 1994 year-end performance evaluation of plaintiff was less favorable than the earlier one. Most of plaintiff's performance rankings indicated either that she met the applicable standards or that her performance was "above normal" according to those standards. Seltzer observed that "[o]n the whole her written submissions are acceptable, although in a few instances they have lacked needed analysis." He also included positive comments, noting that plaintiff was well versed with the way in which PW operated and its many regulatory responsibilities, and that "[h]er contacts within the firm have been of great benefit to the group." However, Seltzer criticized plaintiff's judgment, reporting that she "has, at times, lost her temper and objectivity which has resulted in her being unable to communicate with regulators." He also continued to criticize plaintiff's work habits, noting that "[g]enerally, her timeliness has not been good as she arrives late to work often."

After that evaluation, plaintiff asked to be moved from the Regulatory Group into the Counseling Group. Although she made no complaint of any kind about Seltzer as a basis for her request, at trial plaintiff testified that she asked to be transferred because Seltzer was beginning to "act oddly toward [her]" and she was starting to feel uncomfortable. Plaintiff's request was granted, and she began to serve as Backup Division Counsel in the Counseling Group, supervising work related to subpoenas, garnishments, and levies.

A.

Plaintiff's sexual discrimination and retaliation claim rests on two incidents involving Seltzer. The first of these, which the parties refer to as the "wedding remark," occurred shortly after plaintiff was transferred to the Counseling Group. In June 1995, plaintiff, accompanied by her boyfriend, attended a co-worker's wedding reception. According to plaintiff, when she introduced her boyfriend to her co-workers, Seltzer said to him, "Everyone at the table with a cock used to have Maria reporting to him." At trial, plaintiff and her boyfriend both testified as to the substance of the remark and that they were shocked by it.

Plaintiff did not complain immediately to anyone at PW about Seltzer's comment. She did, however, meet with Dr. Robert McMullen, a psycho-pharmacologist, because she was feeling anxious and upset and was having trouble sleeping. She asked Dr. McMullen for medication so that she would be able to work. He eventually diagnosed plaintiff as suffering from bipolar disorder.

The second statement on which plaintiff based this claim has been referred to by the parties as the "wet my pants" comment. This incident occurred three months later at a Legal Department function when, by mistake, plaintiff introduced herself as still working in the Regulatory Group. According to plaintiff, a couple of days later, when she and another employee were at a meeting with Janick, Seltzer walked into the office and "quite loudly" stated that he nearly "wet [his] pants" when he heard plaintiff identify herself as being part of the Regulatory Group. Plaintiff testified that Janick laughed at Seltzer's comment and that she felt "humiliated and helpless."

In September 1995, immediately following the incident in Janick's office, plaintiff complained to Donna Yanez, who worked in PW's Human Resources Department (HR), about Seltzer. In her verbal complaint, plaintiff told Yanez about the "wedding remark" and the "wet my pants" comment and said that Seltzer was subjecting her to daily verbal harassment. Plaintiff expressed concern that Seltzer's attitude toward her might have affected his evaluations of her or his description of her work to Janick. She also complained about Janick because he had laughed in response to the "wet my pants" remark. Finally, plaintiff told Yanez that she was trying to deal with these issues through medication and that she felt that she was going to have a nervous breakdown.

The HR Department, through Yanez, quickly investigated. Seltzer was called to Janick's office, where Yanez informed him about plaintiff's complaint. Seltzer denied making the "wedding remark," calling that allegation "an outrageous lie," and saying he was shocked to hear it. Seltzer did, however, acknowledge that he had made a comment in Janick's office. Although Seltzer offered to tell plaintiff that he was sorry that she was upset, he was directed not to do so. Yanez continued her investigation, but when she spoke to other employees who were at the wedding table, she learned that none of them had heard the remark plaintiff attributed to Seltzer. Yanez and Janick therefore concluded that plaintiff had misheard whatever had been said.

According to plaintiff, a few days after she made her complaint, Yanez informed her that it had been investigated and that Seltzer had admitted to being upset that plaintiff had transferred out of his group, leaving him with work that she had not completed. When Yanez told plaintiff that both Seltzer and Janick had offered to apologize to her, plaintiff said that she just "want[ed] to be left alone." Plaintiff concedes that after Yanez intervened, Seltzer immediately stopped all of the behaviors that she had complained about.

B.

Plaintiff's wrongful termination count was based on a different series of events that occurred beginning in late 1996, when Garry Stegeland became plaintiff's supervisor in the Counseling Group. Shortly after Stegeland's arrival, plaintiff was directed to devote the majority of her time to the Municipality Group, where she was assigned to the Municipality Project. After plaintiff was assigned, PW increased the scope of that project and hired more attorneys for the group, in part because of a memo written by plaintiff. With Janick's approval, Stegeland made plaintiff the supervisor of the Municipality Group, giving her responsibility over all of the attorneys assigned to it. In June 1997, Stegeland gave plaintiff a favorable mid-year performance review. According to Stegeland, however, plaintiff's performance immediately began to decline, and he spoke to her several times because the work was not moving along quickly enough.

A few months later, Stegeland told plaintiff that the Municipality Project should be brought to an end by late 1997 or early 1998. He also informed her that when the project ended, she would have to look for another position either within or outside of PW. Plaintiff testified that although she had not been told previously that she would have to search for other work when the project ended, she was not concerned because positions in the Legal Department opened up regularly. Eventually, however, Stegeland told her that he did not think that there would be another position for her at PW.

Plaintiff contends that she was astonished to learn this and that she met with Janick to tell him that she wanted to be reassigned to another project or position. Janick, in turn, told plaintiff that he did not consider her to be one of the most talented attorneys in the department. According to plaintiff, this news caused her to resume taking medication, which she had stopped using several months earlier.

In early 1998, plaintiff contacted Francine Franklin, the manager of the Early Dispute Resolution (EDR) Unit, to inquire about a position that had opened up in that section. Franklin told plaintiff that she did not think it would be a position that plaintiff would want because plaintiff was more senior than the other attorneys and would find it boring. Franklin also told plaintiff that she did not have the appropriate temperament for the position. In spite of these misgivings, Franklin agreed to speak to her supervisor, Tracy Calder. When she did so, Calder expressed similar concerns about plaintiff's suitability for the position.

Plaintiff, however, asked Janick to intervene, and Janick spoke with Calder about moving plaintiff into the EDR Unit. When Calder expressed her concern about plaintiff's temperament, Janick told her to give plaintiff a chance anyway. Because of the concerns that had been expressed, however, Janick told plaintiff that she would be transferred to the EDR Unit for a ninety-day probationary period and that she would have to meet ...


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