On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-892-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Wefing, Payne and Koblitz.
Plaintiff, Doreen Longo, brought an action pursuant to the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8, after being terminated from her four-year employment as a sales representative for East Coast News Corp. (ECN), a wholesaler of adult sexually-oriented merchandise. Longo claimed her termination was in retaliation for her complaints about fellow-salesman, Marc Kercheval, whose conduct, she asserted, created a hostile work environment and constituted sexual harassment and intimidation. Specifically, she claimed that he had thrown a chair across the room; engaged in angry outbursts; held a fork to her face while threatening to gouge out the eyes of their boss, David "Bo" Pezzullo; called her a cunt; expressed the desire to clear her desk and then ravish her on it; stated that she would give oral sex to anyone for an order; and suggested that she engage in oral sex with an Ohio customer as a means of obtaining lucrative business for the company.
Longo complained orally and by e-mails sent on January 8 and February 1, 2006 to Pezzullo, the company's sales manager. Pezzullo claimed that he investigated plaintiff's complaints and found them not believable. However, any investigation that he conducted was cursory at best. No notes of the investigation were produced. Moreover, Kercheval testified at trial that he was never contacted regarding plaintiff's complaints by either Pezzullo or his boss, Michael Savage. Additionally, Human Resources was not informed of the complaints, despite the fact that, if true, the conduct described would have violated the company's anti-harassment policy.
On February 1, plaintiff also contacted Savage, the company's general manager, and she forwarded to him the e-mails that she had sent to Pezzullo. Determining that it was "not [his] job to dive into this type of craziness," Savage took the communications from plaintiff to company president and co-owner, Frank Koretsky, who similarly conducted no investigation.
On February 8, 2006, plaintiff and Kercheval were brought, together, into Koretsky's office, where both were disciplined, allegedly in an obscenity-laced tirade, for non-collegiality and poor sales performance. According to plaintiff, Koretsky said "I don't need to put up with this bull shit from either one of you'se." He told them he was tired of the e-mails and that, with their sales numbers, plaintiff and Kercheval should be more concerned about doing business than yelling at each other. If their numbers did not improve, they would be fired. Additionally, both received written disciplinary notices, prepared at Koretsky's direction by a human resources employee a day earlier, that threatened termination if the conduct continued.
In March 2006, Pezzullo, with the approval of Savage, terminated Kercheval's employment for poor sales performance. Longo was fired shortly thereafter on April 12, 2006 by Savage in the presence of the company's lawyer, Christopher Curylo. According to plaintiff, Savage told her: "Doreen, we really like you. You're a great sales rep, and I hate to do this, but I got to let you go." Plaintiff responded: "After my complaints?" And Savage replied: "Your complaints about Marc caused a commotion and we like a nice, laid back environment here." Savage testified at trial that his decision to terminate plaintiff was based on her poor sales, and that he, alone, made the termination decision. However, other evidence suggested Koretsky's involvement or at least knowledge of and acquiescence in the termination.
In his opening statement, counsel for the defense argued that plaintiff had been aware for more than one year that she was to be terminated for poor sales performance, and that she manufactured the claim that her termination resulted from her allegedly unaddressed complaints about Kercheval's sexual and physically threatening comments and behavior. Counsel pointed out that, in fact, plaintiff was comfortable with ECN's sexually charged atmosphere. Counsel stated:
She's going to say that a lot of sexual innuendoes and such were directed at her in statements and such. You're going to hear though that she - not only is she very comfortable with this, she herself engaged in this on a regular basis.
You're going to hear from her co-workers. They're going to say, yeah, she used to tell customers those kinds of things. She'd make comments like that. Sometimes, she was joking, sometimes who knows. But, she would make statements like that on a regular basis. So, for her to be suddenly offended by that, you're going to have to - you're going to be thinking, wait a minute, why is she suddenly offended here by this or saying she's suddenly offended by this?
Again, it's because she realizes she's losing ground. She knows she's going to get fired. You're going to hear testimony from people saying, yes, she knew she was going to get fired for bad sales. And what she does is she sets the company up a little bit to get around this because she's going to have to leave.
In fact, considerable testimony was adduced by the defense and by plaintiff's counsel, without objection by the defense, regarding sexual conduct in the workplace and at gatherings sponsored by ECN by company employees, including such conduct by hired prostitutes and stars of pornographic films, and by plaintiff herself. Evidence included two photographs taken by plaintiff that allegedly depicted Pezzullo receiving oral seX while seated at a table at an annual buyers' banquet and various photographs of plaintiff in sexually provocative poses with prostitutes or porn stars. Additionally, considerable testimony centered on warehouse shows conducted by ECN that featured porn stars performing sexual acts with each other and by use of devices and mechanical equipment. Plaintiff testified that she was not offended by this conduct, and that until the arrival of Kercheval in 2005, she enjoyed the workplace environment.
A complaint was filed by Longo against defendants Pleasure Productions, Inc., ECN, International Video Distributors,
L.L.C., Koretsky, Curylo, Savage, Pezzullo, and Kercheval. Before the case was sent to the jury, claims against Pleasure Productions and International Video, associated companies involved in pornographic films; Curylo, ECN's in-house counsel; and Kercheval were dismissed. The case went to the jury against ECN, Koretsky, Savage, and Pezzullo. The jury found no liability on the part of Savage and Pezzullo. A verdict of $120,000 in economic loss and $30,000 in emotional distress damages was entered against ECN and Koretsky. Following a punitive damage trial, a verdict of $500,000 was entered against ECN, but not Koretsky. At the conclusion of defendants' case, the judge dismissed a counterclaim by ECN against Longo for violation of a non-competition agreement as the result of the absence of proof of damages. Defendants have appealed.
On appeal, defendants make the following arguments:
POINT I THE TRIAL COURT DEPRIVED DEFENDANTS OF A FAIR TRIAL BY ADMITTING EXTREMELY INFLAMMATORY HOSTILE WORK ENVIRONMENT-TYPE EVIDENCE THAT WAS ENTIRELY UNRELATED TO PLAINTIFF'S SOLE CEPA CAUSE OF ACTION AND SERVED ONLY TO CONFUSE THE MATERIAL LEGAL ISSUES AND PREJUDICE THE JURY AGAINST DEFENDANTS.
A. THE COURT ERRED IN ADMITTING "STATE OF MIND" AND "OTHER SEXUAL HARASSMENT" EVIDENCE WHEN PLAINTIFF DID NOT BRING A SEXUAL HARASSMENT CAUSE OF ACTION.
i. CEPA Does Not Prohibit Sexual Harassment.
ii. Evidence That Defendants Were of the "State of Mind" to Tolerate Purported Sexual Harassment was Irrelevant to Plaintiff's CEPA Cause of Action and Should Have Been Excluded.
B. THE COURT ERRED IN ADMITTING APRIL DEMAREST'S TESTIMONY BECAUSE ITS MINIMAL PROBATIVE VALUE WAS SUBSTANTIALLY OUTWEIGHED BY ITS POTENTIAL TO PREJUDICE THE JURY AGAINST DEFENDANTS.
i. "Me Too" Evidence of Retaliation is Unduly Prejudicial Unless it is "Sufficiently Similar" to Plaintiff's Experience.
ii. Demarest's Experience at ECN Was Not Sufficiently Similar to that of Plaintiff to Warrant the
Admission of her Otherwise Inflammatory and Prejudicial Testimony.
C. THE COURT COMMITTED REVERSIBLE ERROR IN ADMITTING VULGAR AND EXPLICIT TESTIMONY REGARDING USED SEX TOYS AND LIVE SEX SHOWS AND PENETRATING MACHINES, AND INFLAMMATORY PHOTOGRAPHS OF PEZZULLO ALLEGEDLY RECEIVING ORAL SEX.
THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY IMPROPERLY CHARGING THE JURY ON THE ISSUE OF PUNITIVE DAMAGES THEREBY ENABLING THE JURY TO AWARD PUNITIVE DAMAGES WITHOUT FINDING "ACTIVE PARTICIPATION OR WILLFUL INDIFFERENCE" BY "UPPER MANAGEMENT" AS REQUIRED BY LAW.
A. PUNITIVE DAMAGES MAY ONLY BE AWARDED IN A CEPA ACTION WHERE UPPER MANAGEMENT ACTUALLY PARTICIPATED IN OR WAS WILLFULLY INDIFFERENT TO THE RETALIATORY CONDUCT.
B. THE COURT COMMITTED REVERSIBLE ERROR BY CHARGING THE JURY WITHOUT MENTIONING OR REFERENCING THE UPPER MANAGEMENT REQUIREMENTS.
C. THE COURT ERRED IN UPHOLDING THE PUNITIVE DAMAGES AWARD WHERE THERE WAS NO EVIDENCE THAT DEFENDANTS' ...