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Kancherla v. Lincoln Technical Institute, Inc.

United States District Court, D. New Jersey

February 15, 2018

SANDEEP KANCHERLA, Plaintiff,
v.
LINCOLN TECHNICAL INSTITUTE, INC., JOHN DOES 1-5, JANE DOES 1-3, and ABC CORPS. 1-10 (fictitious names representing one or more unknown defendants) Defendants.

          OPINION

          HON. KEVIN MCNULTY, UNITED STATES DISTRICT JUDGE

         TABLE OF CONTENTS

         I. Background..........................................................................................4

         A. Procedural History.........................................................................4

         B. Relevant Facts...............................................................................5

         1. Kancherla's Employment with Lincoln..................................5

         2. Relationship between Lincoln and CUnet..............................5

         i. Purchase Orders: "Billing to Budget"........................6

         ii. Monthly Invoices and the Client Services Agreement..............................................................7

         3. Kancherla's Internal Complaints..........................................7

         4. Lincoln's Audit of CUnet......................................................7

         5. Kancherla's FMLA leave.......................................................8

         6. Lincoln's Internal Investigation.............................................9

         7. Lincoln's Decision to Terminate Kancherla..........................11

         C. Disputed Facts..........................................................................12

         1. Violation of Lincoln's Policies...............................................12

         i. Marketing Department Internal Control Review Summary...............................................................13

         ii. Lincoln's Integrity Assurance Program- Code of Business Ethics and Conduct.................................14

         iii. Lincoln's General Conduct Guidelines.....................14

         2. Other disputed issues.........................................................14

         II. Legal Standard..................................................................................14

         III. Discussion...........................................................................................16

         A. FMLA Interference and Retaliation Claims (Count 1).....................16

         1. FMLA Interference Claim...................................................17

         2. FMLA Retaliation Claim.....................................................18

         i. Ability to Return to Work.......................................18

         ii. McDonnell Douglas Burden-Shifting Framework......20

         a) Kancherla's prima facie case of retaliation........21

         b) Lincoln's legitimate non-discriminatory reason for dismissal and Kancherla's proof of pretext...........................................................25

         B. NJLAD Disability Discrimination and Retaliation Claims (Count 2)..............................................................................................27

         1. NJLAD Discriminatory Discharge Claim...............................28

         i. Kancherla's prima facie case of discriminatory discharge..............................................................30

         ii. Lincoln's legitimate non-discriminatory reason for dismissal and Kancherla's proof of pretext..............30

         2. NJLAD Retaliation Claim.....................................................31

         C. Compensatory Damages and the After-Acquired Evidence Doctrine....................................................................................32

         D. Punitive Damages.......................................................................34

         E. Backpay.....................................................................................35

         IV. Conclusion.......................................................................................36

         The plaintiff, Sandeep Kancherla, is a former employee of defendant Lincoln Technical Institute, Inc. ("Lincoln"). Kancherla contends that Lincoln should be liable under the Family Medical Leave Act ("FMLA") for retaliation and interference, 29 U.S.C. § 2615(a)(1), (2), and liable under the New Jersey Law Against Discrimination ("NJLAD") for discrimination and retaliation, N.J.S.A. 10;5-12(a), (d).

         Now before the Court is Lincoln's motion for summary judgment as to all claims under both counts. For the reasons discussed below, Lincoln's motion is for the most part denied. It is granted as to Count 1, to the extent Count 1 asserts an interference claim under the FMLA. I also grant Lincoln's request to strike Kancherla's demand for punitive damages under the FMLA.

         I. Background[1]

         A. Procedural History

         On December 15, 2014, Kancherla filed his original Complaint (Compl., ECF no. 1). On February 1, 2017, Kancherla filed an Amended Complaint against Lincoln Technical Institute, Inc. ("Lincoln") and fictitious defendants.[2] (AC, ECF no. 46). The Amended Complaint asserts claims of interference and retaliation under FMLA, 29 U.S.C. § 26l5(a)(1), (2); discrimination and retaliation under NJLAD, N.J.S.A. 10:5-12(a), (d); and for hostile work environment under NJLAD, N.J.S.A. 10:5-12(a). On March 28, 2017, Kancherla and Lincoln filed a stipulation of dismissal with prejudice of the third, hostile work environment count (ECF no. 51).

         On June 20, 2017, Lincoln filed a motion for summary judgment. (ECF no. 55). On August 14, 2017, Kancherla filed papers in in opposition. (ECF no. 61). On August 21, 2017, Lincoln filed papers in reply. (ECF no. 62)[3]

         B. Relevant Facts[4]

         1. Kancherla's Employment with Lincoln

         On June 15, 2009, Plaintiff Kancherla began at-will employment as an Internet Marketing Manager for defendant Lincoln at its West Orange, New Jersey location. (DSMF ¶¶ 5, 7). Lincoln is a subsidiary of Lincoln Educational Services, which is "an educational institution with a network of 20 campuses in 14 states offering diploma, degree, and certificate programs in various skill trades." (Id. at ¶ 4). Kancherla's job responsibilities included managing the Internet budget, engaging in web media buying, setting up campaigns for web banner display advertising, overseeing current web vendors, and managing activities and communication of status and results. (Id. at ¶ 19). During most of his tenure at Lincoln, Kancherla reported to Mark Enea ("Enea"), the Director of Digital Marketing. (Id. at ¶ 18). However, in May and June 2013, Kancherla reported to Don Alava (B Alava"), Vice President of Digital Marketing. (Id.)

         As for Enea, he reported to Alava. (Id.)(citing ECF no. 55-3, Exh. I at 14:24 to 15:10, 20:7 to:11). Alava, in turn, reported to Piper Jameson ("Jameson"), the Chief Marketing Officer. (Id.)

         2. Relationship between Lincoln and CUnet

         In 2003, CUnet, LLC ("CUnet") was retained by Lincoln as a third-party vendor who would "provide internet lead management services, generat[e] internet traffic and leads with the intent to increase student acquisition at Lincoln's campuses nationwide." (Id. ¶¶ 21, 23). See also (PSSMF ¶ 1); (ECF no. 61-2, Exh. C at 19:1 to:3). In particular, CUnet managed affiliates or pay per lead vendors who would "host and manage internet sites that capture[d] leads or potential students for Lincoln." (PSSMF ¶ 2). CUnet delivered those captured leads to Lincoln, and also had its own internet sites which captured leads for Lincoln. (Id.)

         In the beginning of the Lincoln-CUnet relationship, Enea was responsible "for writing monthly purchase orders on Lincoln's behalf to be sent to CUnet and for approving monthly invoices received from CUnet for payment." (Id. at ¶ 3)(citing ECF no. 61-2, Exh. C at 23:4 to:23, 24:14 to 25:7, 125:7 to 126:10; ECF no. 61-2, Exh. D at 11:13 to 14:24). Subsequently, Egbavwe (known as "Jeff) Pela assumed that responsibility. (Id.) In 2012, Kancherla took over Pela's role and became responsible for managing Lincoln's account with CUnet, while Kimberly Kelly ("Kelly"), the Senior Vice President of Client Services for CUnet, and Joanne Malek ("Malek"), the Senior Account Executive for CUnet, were responsible for managing the account on behalf of CUnet. (DSMF at ¶¶ 20, 27, 29).

         i. Purchase Orders: "Billing to Budget"

         The Lincoln Marketing Department had an internal procedure for allocating funding for "obtain[ing] lead generation services from third-party vendors, " like CUnet. (Id. at ¶ 31). Kancherla would prepare monthly purchase orders based on Lincoln's annual budget for "services to be provided by CUnet in the following month." (PSSMF ¶ 14). See also (DSMF ¶ 36). The purpose of the purchase order was "'to provide a budget for the spend for a particular vendor for that month across different brands, schools, toward different initiatives that [Lincoln] ha[d] running with other vendors.'” (DSMF ¶ 35)(quoting ECF no. 59-5, Exh. B at 192:7 to:15).

         Specifically for CUnet, the purchase order identified a dollar amount which "served as CUnet's budget to. . . spend for each campus for that particular month to deliver leads." (PSSMF at ¶ 15). Kancherla would sign the purchase orders; however, depending on the amount of the purchase order, other Lincoln employees, like Enea and Jameson, would also sign off on the purchase order. (Id. at ¶ 14).

         Once the purchase order was signed, Kancherla would e-mail it to Malek, thereby providing her with an allocated budget which was separated into categories for different campuses. (DSMF at ¶ 36). CUnet would then "'place the buys in order to get the lead flow set up. They would place money in their system, by vendor, and they would use that amount of money by campus as their guide.™ (Id.)(quoting ECF no. 61-2, Exh. C at 30:5 to:12).

         This process- CUnet billing Lincoln for the entire amount of money in the allocated budget-is referred to as "billing to budget." It is to be distinguished from CUnet's billing Lincoln for leads actually delivered, which is referred to as "billing to actual." (ECF no. 55-4, Exh. L at 22:3 to:7, 30:16 to 31:16).

         ii. Monthly Invoices and the Client Services Agreement

         Under the Client Services Agreement between Lincoln and CUnet, CUnet was required to "invoice Lincoln on a monthly basis for management fees based on the actual spend paid to 3rd party internet vendors" under the Agreement. (ECF no. 59-6, Exh. C). Accordingly, Malek issued monthly invoices to Lincoln for services rendered to Lincoln by CUnet. (DSMF 30).

         3. Kancherla's Internal Complaints

         Kancherla called Lincoln's Employee Assistance Program hotline on two occasions: in the fall of 2012 and on or about May 17, 2013.[5] (Id. at ¶ 131; ECF no. 55-6, Exh. U.)

         4. Lincoln's Audit of CUnet

         Internal audits of vendors are conducted on a quarterly basis. (DSMF ¶ 53). Jameson would select a single vendor in each quarter to audit for compliance. (Id.) In early May 2013, Jameson notified Lincoln's Marketing Department that she would be conducting an internal audit of CUnet that quarter. (Id. at ¶ 52).

         On May 29, 2013, Kancherla sent Malek an e-mail with the subject line "Ninja." (Id. at ¶ 54 (citing ECF no. 55-6, Exh. S)) The e-mail chain discussed CUnet's balance. (Id.)

         5. Kancherla's FMLA Leave

         Lincoln has a FMLA policy which allows eligible employees up to twelve weeks of unpaid family leave in a twelve-month period. (Id. at ¶ 44)(citing ECF no. 55-3, Exh. C at 31-33). Leave may be granted for "a serious health condition[6] that makes the employee unable to perform his/her job."[7] (Id.)(citing ECF no. 55-3, Exh. C at 31-33). On or about June 6, 2013, Kancherla contacted Lincoln's Benefits Department and requested FMLA leave due to his anxiety and depression.[8] (Id. at ¶ 47). Lincoln granted Kancherla's FMLA request, and sent him a letter asking him to complete and return a "Certification of Health Care Provider for Employee's Serious Health Condition" form. See (ECF no. 55-5, Exh. R).

         Five days later, on June 11, 2013, Alava e-mailed Lincoln's Human Resources Department, asking how long Kancherla would be absent. (PSSMF ¶ 35)(citing ECF no. 61-3, Exh. M). Lincoln's Human Resources replied that "[p]er the Attending Physician's Statement", Kancherla's doctor estimated that Kancherla would be able to return to work on July 30, 2013. (Id.) Alava forwarded that e-mail to Jameson and Peter Tahinos. (Id.) The next day, Enea e-mailed Lincoln's Internet Marketing Team and the vendors who worked with Kancherla, informing them that Kancherla "'will be on short term, approved leave of absence from Lincoln until 7/30/13."' (Id. at ¶ 36)(citing ECF no. 61-3, Exh. G).

         6. Lincoln's Internal Investigation

         After Kancherla took his FMLA leave, Enea notified Malek from CUnet that he would be the main point of contact while Kancherla was out. (DSMF ¶ 56)(citing ECF no. 55-4, Exh. L at 47:19 to 48:6). On or about June 21, 2013, Malek forwarded an e-mail chain to Enea which included e-mails between Malek and ...


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