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Employment Law

Reinaldo Carmona v. Resorts International Hotel, Inc. (A-83-05)

- Decided February 21, 2007

RIVERA-SOTO, J., writing for the majority of the Court.

In this appeal, the Court must determine: 1) whether an employee’s complaint for retaliation under the Law Against Discrimination (LAD) must be made in good faith and on a reasonable basis; and 2) whether an investigative report prepared by an employer, which the employer claims provided an independent basis for the employee’s discharge, should have been admitted into evidence.

Plaintiff Reinaldo Carmona was hired as a front desk clerk by defendant Resorts International Hotel Inc. On November 9, 2001, Carmona was fired. The reason for his termination gave rise to this lawsuit.

According to Carmona, he was a recovering cocaine user prone to relapses. Because of the relapses, he missed work on several occasions. Under Resorts’ progressive discipline, the absences accumulated as “points” against Carmona. By August 2001, Carmona had accumulated enough points so that another unexplained absence would render him liable for termination. While Carmona could have explored seeking an approved medical leave to treat his cocaine dependency, he focused instead on other Resorts employees who had received approved medical leave absences, claiming that Resorts applied its absenteeism/termination policy unevenly due to racism. On November 6, 2001, Carmona went to Resorts’ internal equal employment opportunity (EEO) office to complain. Resorts’ EEO director informed Carmona that she would conduct an investigation of his allegations.

On November 5, 2001, the day before Carmona complained to Resorts’ EEO office, he and William Santiago were observed improperly upgrading rooms in exchange for tips. Twice before, Carmona had been reprimanded for upgrading rooms without authorization. Santiago was interviewed, during which he admitted that he had upgraded rooms for gratuities. Santiago also implicated Carmona. On November 8, 2001, Resorts conducted an audit that showed that Carmona had improperly and without authorization upgraded twenty-seven rooms in October 2001. When questioned on November 9, 2001, Carmona admitted to upgrading rooms without authorization, although he denied receiving gratuities. He was fired that day. Resorts investigators collected their investigative material and compiled a report concerning the incident.

In April 2002, Carmona sued Resorts. The issues at trial, according to Carmona, were whether Resorts retaliated against him when it terminated him three days after he filed his discrimination complaint against Resorts and whether Resorts’ investigation into the room upgrades was a pretext to justify that retaliation. At trial, Resorts sought to introduce the investigative report into evidence. Carmona objected, and the trial court ruled that the report was not admissible because it was hearsay and unreliable. The trial court refused to instruct the jury that in addition to making a complaint of discrimination, Carmona had to have a reasonable good faith basis for the complaint. Instead, the trial court instructed the jury that to satisfy his burden of proof, Carmona must prove that he made a complaint of discrimination and that he was retaliated against because of that filing. The jury found that Carmona proved that the reason Resorts gave for Carmona’s termination was a pretext and the real reason was retaliation for his complaint of discrimination. The jury awarded Carmona compensatory damages and lost wages.

On appeal, the Appellate Division affirmed. This Court granted Resorts’ petition for certification.

HELD: In a case alleging retaliation under the LAD, plaintiff bears the burden of proving that his complaint was made reasonably and in good faith. When an employer defends against a claim that an employee’s discharge was the product of retaliation, an investigative report prepared by the employer that purports to demonstrate a non-retaliatory purpose for the employee’s termination is not hearsay and is admissible.

The LAD is one of New Jersey’s leading legislative pronouncements, which sets forth the clear public policy of this State to eradicate invidious discrimination from the workplace. In the development of this State’s anti-discrimination jurisprudence, the Court has frequently looked to case law under the federal Title VII of the Civil Rights Act for guidance in developing standards to govern the resolution of LAD claims. The Court’s continuing examination of the LAD has led it also to look to subsequent legislative enactments for guidance on LAD’s scope, including the later-adopted New Jersey Conscientious Employee Protection Act (CEPA). A CEPA plaintiff must show that he reasonably believed that his employer’s conduct was violating either a law, rule, or regulation promulgated pursuant to law or a clear mandate of public policy. (pp. 17-20)

A requirement that a LAD-retaliation plaintiff demonstrate that his underlying complaint was reasonable and in good faith is entirely consonant with the purpose of the LAD. The Court follows parallel federal precedents, under which a plaintiff must show that he had a reasonable, good-faith belief that discrimination occurred to prevail on a retaliation claim, a tenet universally observed by every United States Court of Appeals that has considered the question. (pp. 20-21)

This requirement that the underlying complaint be reasonable and made in good faith is recognized because its absence may well lead to abuse. The LAD was and is intended as a shield to protect employees from the wrongful acts of their employers, and not as a sword to be wielded by a savvy employee against his employer.
(pp. 21-22)

Here, Resorts was denied an instruction to the jury to the effect that, as part of his case-in-chief, Carmona was required to prove that he had a reasonable, good-faith belief for his underlying discrimination complaint as the basis for his later retaliation complaint. Carmona did not complain about discrimination in the application of Resorts’ absenteeism policy until November 6, 2001, the day after an investigation into allegations of theft by Carmona was started. The trial court charged the jury that the bare fact that Carmona filed a complaint alleging discrimination, without more, was sufficient to satisfy his burden in respect of the first element of his LAD-retaliation claim, a charge that the Court holds to be legally insufficient and incorrect. The jury could have come to a different result had it been correctly instructed. (pp. 23-25)

An investigative report concerning an employee is admissible as non-hearsay evidence whenever the employer’s motivations are directly at issue. Moreover, in the context of a LAD retaliation claim, a personnel file was admissible because the information in the file bears on the reasonableness and good faith of defendant’s conduct. There is no appreciable difference between a personnel file -- which is created and maintained exclusively by the employer -- and an investigative report. Further support is found in federal cases that parallel the LAD. Other states also follow this rule. (pp. 25-30)

Resorts’ investigative report would be admissible to show that Resorts terminated Carmona’s employment for non-pretextual reasons, provided Resorts also demonstrates (1) that one of its decision makers knew of the report’s contents and acted in reliance thereon, and (2) that all portions of the report were separately admissible or properly and intelligibly redacted. (pp. 30-31)

The judgment of the Appellate Division is REVERSED and REMANDED for proceedings consistent with this opinion.

JUSTICE WALLACE has filed a separate, DISSENTING, opinion, concluding that the Court should not impose a new standard that requires an employee to establish that the complaint for retaliation was made in good faith and on a reasonable basis.



A- 83









Decided February 21, 2007

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