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Calabotta v. Phibro Animal Health Corp.

Superior Court of New Jersey, Appellate Division

June 27, 2019

DAVID F. CALABOTTA, Plaintiff-Appellant,

          Argued May 13, 2019

          On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1979-17.

          Kathryn Kristine Mc Clure and Mary Anne Sedey (Sedey Harper Westhoff, PC) of the State of Missouri bar, admitted pro hac vice, argued the cause for appellant (Smith Eibeler, LLC, and Mary Anne Sedey, attorneys; Kathryn K. Mc Clure and Mary Anne Sedey, of counsel and on the briefs; John D. Lynn (Sedey Harper Westhoff, PC) of the State of Missouri bar, admitted pro hac vice, of counsel and on the briefs).

          Martin Warren Aron argued the cause for respondents (Jackson Lewis PC, attorneys; Martin Warren Aron, of counsel and on the briefs; Mary L. Moore and Katerina Rose Mantell, on the briefs).

          James Edward Burden argued the cause for amicus curiae NELA-NJ (Smith Mullin, PC, attorneys; James Edward Burden, on the brief).

          James Patrick Flynn argued the cause for amicus curiae ANJMA (Epstein Becker & Green PC, attorneys; James Patrick Flynn, of counsel and on the brief; David Wayne Garland, on the brief).

          James R. Michael, Deputy Attorney General, argued the cause for amicus curiae the Attorney General of New Jersey (Gurbir S. Grewal, Attorney General, attorney; Jason Wade Rockwell, Assistant Attorney General, of counsel; James R. Michael, on the brief).

          Before Judges Sabatino, Sumners and Mitterhoff.


          SABATINO, P.J.A.D.

         This lawsuit is brought by an Illinois resident against his New Jersey-based former employer. Plaintiff alleges the company wrongfully denied him a promotion to a position in New Jersey and thereafter wrongfully terminated him from his job with its subsidiary in Illinois.

         Plaintiff claims the company engaged in "associational" discrimination against him, in violation of the New Jersey Law Against Discrimination ("NJLAD"), based on the fact that his wife was then terminally ill with cancer. The company maintains it treated plaintiff fairly, that he never applied for the promotion, and that it justifiably discharged him for engaging in inappropriate conduct at a trade show.

         The appeal raises two important and novel questions of law.

         First, under principles of statutory construction, can the NJLAD protect nonresident workers and job applicants, despite the fact that the statute's preamble refers to "inhabitants" of this state?

         Second, even if the NJLAD can extend to certain out-of-state plaintiffs, do choice-of-law principles weigh in favor of applying the law of Illinois instead to plaintiff's respective failure-to-promote and wrongful discharge claims?

         The trial court concluded that Illinois law, rather than the NJLAD, must apply to plaintiff's claims of discrimination because he lived in Illinois and worked for defendants' subsidiary in Illinois. Given that Illinois law has yet to recognize a cause of action for associational discrimination, the court granted defendants' motion to dismiss plaintiff's claims with prejudice.

         For the reasons that follow, we conclude that the NJLAD, notwithstanding the solitary reference to "inhabitants" in its preamble, can extend in appropriate circumstances to plaintiffs who reside or work outside of this state. However, whether the NJLAD applies to a particular nonresident's claims turns upon a weighing of the multiple choice-of-law factors set forth in the Restatement (Second) of Conflicts of Laws (Am. Law Inst. 1971) (the "Second Restatement"), as adopted and construed by the New Jersey Supreme Court.

         We hold that New Jersey law, and specifically the NJLAD's ban against associational discrimination, applies to defendants' alleged failure to give plaintiff fair consideration for a promotion to a position in New Jersey. The Second Restatement factors strongly weigh in favor of applying New Jersey law, not Illinois law, to this failure-to-promote claim. We therefore reverse the trial court's dismissal of that discrete claim.

         As to plaintiff's wrongful discharge claim, we vacate its dismissal and remand the choice-of-law issue pertaining to that claim to the trial court for further analysis. We do so to enable the further development of critical facts bearing on the Second Restatement factors. Among other things, the record needs to be developed more fully and definitively concerning such things as: the location(s) of the person(s) within the company who took part in the decision to terminate plaintiff; the sole or dominant place, if any, that the decision was made; and the location(s) of plaintiff's conduct that precipitated his discharge. After those and other facts pertinent to the choice-of-law analysis are more fully developed, the trial court shall reassess which state has the "most significant relationship" overall to plaintiff's wrongful discharge claim.


         We glean the following facts and allegations from plaintiff's complaint and related pleadings, mindful that discovery has not yet been conducted and credibility determinations have not been made.


         Plaintiff's Work in Illinois for Phibro's Subsidiary

         Defendant Phibro Animal Health Corporation ("Phibro"), a company headquartered in Teaneck, New Jersey, develops and sells animal food additives. Prince Agri Products Incorporated ("Prince Agri"), a subsidiary of Phibro, handles marketing, product management, research, development, and technical support. Prince Agri's office is located in Quincy, Illinois, where plaintiff resided at all times relevant to this case.

         In 2008, Phibro hired plaintiff to serve as a Vice President of Marketing and Technology Deployment at Prince Agri's office. He worked in that position at Prince Agri in Illinois until his termination in 2016.

         When plaintiff was hired, he signed three employment-related form agreements: a Noncompetition and Nonsolicitation Agreement, an Employee Invention Agreement, and a Confidentiality and Nondisclosure Agreement. All three agreements contained the following provision:

[(Emphasis added).]

         Each agreement further stated: "This Agreement does not alter the status of my employment as an at-will employee of [Phibro]."

         Defendant Dean J. Warras, the President of Prince Agri, was plaintiff's direct supervisor. Defendant Daniel A. Welch worked as Phibro's Senior Vice President of Human Resources.

         Plaintiff maintains that Warras's and Welch's offices were located at Phibro's headquarters in Teaneck. However, in connection with defendants' motion to dismiss the complaint, Warras certified that his own employment was based out of Prince Agri's office in Illinois, the state where Warras maintained a primary residence until approximately August 2016.

         While at Prince Agri, plaintiff supervised a team of approximately forty employees who managed existing product portfolios, identified new products, conducted research on product use and development, and provided customer and technical support. According to plaintiff, he consistently received excellent annual performance reviews. Among other accolades, the reviews reportedly stated that plaintiff worked "extremely hard," did an "excellent job," "significantly strengthened" his team over the years, and generated "new credibility and cache in the industry and academic community" for Phibro's products. According to plaintiff, Phibro never placed him on any type of "Performance Management Plan" or "formally counseled [him] for performance or conduct issues."


         Disabling Health Issues of Plaintiff's Wife

         Plaintiff's wife, Beth Calabotta, was diagnosed with breast cancer in 2008. Following a period of remission, Beth's breast cancer recurred in 2014 and spread to other parts of her body.

         Plaintiff contends he openly discussed Beth's health issues and prognosis with his co-workers and supervisors. According to plaintiff, between 2014 and 2016 Warras periodically asked him questions about Beth's medical condition. Plaintiff believed that Warras shared the information about his wife's condition with Welch. Additionally, in May and June 2016, the Quincy Herald-Whig and the Wall Street Journal featured Beth in prominent news stories that discussed her terminal illness.[1]


         Company Reorganization and the New Jersey Position

         In June 2016, Warras informed plaintiff that Phibro was reorganizing its operations and his responsibilities would be reduced significantly. Under the reorganization, plaintiff would no longer be responsible for marketing and project management, and ten to fifteen people would be cut from his staff. Moreover, plaintiff's title would change to Vice President, Research and Technical Support.

         Warras told plaintiff that Phibro had created a new position based at Phibro's headquarters in New Jersey for a Senior Vice President of Marketing and Product Management. According to plaintiff, he inquired about who would be considered for the new position, and Warras responded that an independent recruiting firm would begin interviewing candidates "in the very near future." When plaintiff asked whether he would be considered for the new position, Warras allegedly replied, "I did not think that you would be interested. The job is in New Jersey and with Beth's situation and all . . . ."

         Plaintiff claims he informed Warras and Welch on multiple occasions between June and July 2016 that he "should get serious consideration" for the new Senior Vice President position, given his marketing and product management experience at Prince Agri. At one point, Welch allegedly responded, "I don't know if that is going to happen." Plaintiff requested from Warras the job description for the new position. According to plaintiff, Warras assured him that he would get a copy of it. Warras also allegedly promised to talk to Phibro's senior managers about plaintiff's interest in the post.

         Despite these alleged assurances, plaintiff was not interviewed for the new position and was not provided with the job description. In early July 2016, plaintiff learned that the recruiting firm had interviewed other candidates for the position. Plaintiff did not receive the promotion.


         The July 2016 National Meeting and Plaintiff's Subsequent Discharge

         Between July 19 and July 23, 2016, plaintiff and several members of his team attended a national meeting of the American Dairy Science Association ("ADSA").[2]

         On July 22, 2016, Welch called plaintiff to discuss a "serious problem" that had arisen at the ADSA meeting during a presentation made by a member of plaintiff's staff and how plaintiff had handled the situation. The details of this incident are not fully explained in the complaint. At the end of their phone conversation, Welch suspended plaintiff with pay, "pending further investigation." Plaintiff claims that, despite his request for details, Welch never told him what accusations were being investigated.

         On or about August 19, 2016, plaintiff met with Warras and Welch. They told him that they had "corroborated the allegations" against him. The complaint does not state where this meeting took place. Plaintiff again asked what the allegations were, but he claims he was not given an answer. He asserts he told Warras and Welch that, "he still believed he handled the situation [at the ADSA meeting] appropriately." They disagreed. Ultimately, Welch handed plaintiff a draft Separation Agreement and terminated his employment.

         Plaintiff did not sign the Separation Agreement, which proposed that he give up his right to sue for claims "arising from or in any way connected with" his employment and termination, in exchange for $117, 000 in severance pay. Paragraph 10 of the unsigned Separation Agreement stated that it "shall be interpreted for all purposes consistent with the laws of the State of New Jersey."

         Plaintiff maintains that the deliberations among Warras, Welch, and other senior executives culminating in their decision not to consider him for the promotional position, and their subsequent decision to terminate him, all occurred at Phibro's headquarters in New Jersey. Defendants, however, have not acknowledged that these decisions and communications were made in or confined to New Jersey.

         According to the representations of counsel at the appellate oral argument, plaintiff applied for and obtained unemployment compensation from Illinois state authorities following his discharge. The present record does not reveal whether plaintiff's unemployment benefits application mentioned his contention that he was fired for discriminatory reasons.



         Plaintiff's Complaint

         In March 2017, plaintiff filed a complaint in the Law Division against Phibro, Warras, and Welch. Count one alleges that defendants discriminated against him in violation of the NJLAD "on account of his association with a person with a disability" on two separate occasions: (1) when they refused to consider him for a promotion in New Jersey, and (2) when they subsequently terminated his employment. Counts two and three allege that defendants Warras and Welch aided and abetted Phibro in violating the NJLAD. Plaintiff seeks compensatory damages, punitive damages, and statutory attorney fees.[3]


         The Dismissal of the Complaint and Denial of Reconsideration

         Defendants moved to dismiss the complaint under Rule 4:6-2(e). They argued that, even accepting plaintiff's factual allegations as true, plaintiff has no viable cause of action under the NJLAD as an Illinois resident who worked for the company's subsidiary in Illinois.

         On September 1, 2017, the trial court dismissed the complaint with prejudice, holding that "[t]he NJLAD does not apply to employees whose employment is based outside of New Jersey." The motion judge relied largely on this court's opinion in Buccilli v. Timby, Brown & Timby, 283 N.J.Super. 6 (App. Div. 1995), in which we found that Pennsylvania law, rather than the NJLAD, governed a New Jersey resident's claims of discrimination by her Pennsylvania employer for whom she had worked in Pennsylvania.

         Plaintiff moved for reconsideration. He presented to the court, for the first time, the three employment agreements he signed in 2008 and the unsigned Separation Agreement, all of which stated that any lawsuits arising out of those documents would be governed by New Jersey law. Defendants argued these employment agreements pertained only to discrete subjects and were not applicable to plaintiff's present discrimination claims.

         On October 27, 2017, the trial court denied plaintiff's motion for reconsideration, concluding that the proffered agreements did not require the ...

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