BUSINESS FORMATION & SALES BLOG

In Liberty Sales Associates, Inc. v. Dow Corning Corporation, 816 F. Supp. 1004 (D.N.J. 1993), the court reconsidered its previous decision dismissing Liberty Sales Associates, Inc.’s (“Liberty”) claim for wrongful termination under the New Jersey Franchise Practices Act, N.J.S.A. 56:10-1 to 20 (the “Act”) in light of the New Jersey Supreme Court’s ruling in Instructional Systems, Inc. v. Computer Curriculum Corp., 130 N.J. 324 (1992).

The underlying facts were straightforward. In 1986, Liberty entered into an exclusive distribution contract with Dow Corning Corporation (“Dow”) to sell fire stop products bearing Dow’s trademark in Pennsylvania, Delaware and parts of New Jersey and New York.  Liberty asserted that Dow later allowed Hilti, Inc. to sell Dow-created unbranded fire stop products in the same restricted territory, which eventually led to the end of the relationship between Liberty and Dow.

In large part, the lawsuit concerned whether the relationship was wrongfully terminated. In order to determine that, the court first had to determine whether Liberty and Dow were a “franchise” as defined by the Act.   To be a franchise, (a) the relationship must have had  a “community interest,” (b) the franchisor must have granted a “license” to the franchisee to use its trademark or servicemark and (c) the agreement must have contemplated that the franchisee would have a “place of business” in New Jersey.

In Instructional Systems, Inc. v. Computer Curriculum Corp., 130 N.J. 324 (1992), the court determined that the Act overrides any contractual provision in which the parties agree to submit to a particular state’s governing law.  As such, even though the agreement in Liberty Sales Associates v. Dow Corning Corporation listed Michigan as the governing law, the New Jersey Act still applied.

The court next considered the “place of business” requirement. It determined that Liberty did not operate a place of business in New Jersey.  The Act provides that it applies to a franchise that “contemplates or requires the franchisee to establish or maintain a place of business within the State of New Jersey.”  N.J.S.A. 56:10-4.  Further, a “place of business” is defined as a “fixed geographical location at which the franchisee displays for sale and sells the franchisor’s goods or offers for sale and sells the franchisor’s services.  Place of business shall not mean an office, a warehouse, a place of storage, a residence or vehicle.”   N.J.S.A. 56:10-3(f).

Liberty opened an office in New Jersey in 1976.  Therefore, Liberty had a New Jersey office at the time the contract was signed with Dow. The court thus inferred that Dow contemplated that Liberty would always have a New Jersey office. Nevertheless, the court was concerned that Liberty’s “place of business” was the Liberty president’s house.  The President would make sales calls from his home office and would store the Dow products in his garage.  Clients would pick up the products from the President’s house with most of the product demonstrations occurring at the client’s facilities. Therefore, the court determined that Liberty’s “place of business” was not a store or place used to sell Dow’s products.  Instead, it found that Liberty’s “place of business” was an office, warehouse, place of storage or residence.  Therefore, it did not come within the Act’s definition of a franchise.

The court also determined that Dow had not granted Liberty a license in the original agreement.  Under the Act, a franchisee must be granted a “license to use a trade name, trade mark, service mark or related characteristics.” N.J.S.A. 56:10-3. 

Admittedly, the court in Neptune T.V. & Appliance Serv., Inc. v. Litton Sys., Inc., 190 N.J. Super 153 (App. Div. 1983) found that a license could be found even when the franchisee merely relies on the franchisors goodwill to establish its business.  The goodwill must not only help the franchisee sell products but must attach to the entire business.  However, in this case, Dow sought to capitalize on the Liberty president’s reputation as a “foam man.”  Liberty’s customers bought Dow’s products not just because of the goodwill behind Dow’s trademark, but also because of the expertise of Liberty’s president.  Further, Liberty did not just sell Dow products.  It also sold Dow’s competitors’ products.

Under the Act, the franchisee must not merely utilize the franchisor’s trademarks, but also promote the franchisor’s trademarks.    In this instance, Liberty merely used Dow’s trademark to sell the products.  It did not use the mark to further promote Dow’s business or to create more goodwill for Dow. Since Liberty failed to meet either the “place of business” or “license” requirements of the Act, the court did not find it necessary to analyze the “community of interest” requirement.

In view of this, the court found that a franchise did not exist between Dow and Liberty, and thus reaffirmed its decision to grant summary judgment in favor of Dow.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

Under the New Jersey Franchise Practices Act (“Act”), N.J.S.A. 56:10-1 et seq., a franchisor cannot terminate a franchise without good cause.   Specifically, the Act states “it shall be a violation of this act for a franchisor to terminate, cancel or fail to renew a franchise without good cause.”

When a franchisee believes that a franchisor is terminating without “good cause” the franchisee may seek an injunction, which is precisely what happened in Atlantic City Coin & Slot Service Company, Inc. v. IGT 14 F.Supp.2d 644 (D.N.J. 1998). 

In that case, IGT signed an initial agreement with Atlantic City Coin & Slot Service Company, Inc.  (“AC Coin”) in 1983 to distribute and promote electronic gaming devices.  Sales flourished, and in 1993, IGT and AC Coin entered into a new agreement.  However, in 1998 IGT sought to terminate its relationship with AC Coin for economic or business reasons.  Since a franchisor may not terminate the agreement without a good cause, AC Coin filed an action for a preliminary injunction under the Act to prevent IGT from terminating the 1993 agreement.

 In the Third Circuit, the standard for a preliminary injunction is as follows:

(1)   A reasonable probability of ultimate success on the merits;
(2)   That the movant will be irreparably injured if relief is not granted;
(3)   That the relative harm which will be visited up the movant by the denial of the injunction relief is greater than that which will be sustained by the party against who, relief is sought; AND
(4)   The public interest in the grant or denial of the requested relief, if relevant. 

Atlantic City Coin & Slot Service Company, Inc. v. IGT 14 F.Supp.2d 644 at 657 (1998).

Under the first prong, the court sought to determine whether a franchise relationship existed between the parties and whether the agreement was terminated for “good cause.”    After reviewing IGT and AC Coin’s relationship, the court determined there was reasonable probability that a franchise likely existed between the parties and that the agreement was not terminated for good cause.

The court next turned to the second prong, which was to determine whether AC Coin would be harmed if injunctive relief was withheld.  To prove it would be irreparably harmed, AC Coin had to prove that the harm caused could not be compensated by money.  It had to be some type of harm that once done could not be righted.

The Third Circuit has held that the termination of a longstanding business relationship can result in irreparable harm.   The court in Carlo C. Gelardi Corp. v. Miller Brewing Co., 421 F.Supp. 233, 236 (D.N.J. 1976), found that “the loss of business and good will, and the threatened loss of the enterprise itself, constitutes irreparable injury to the plaintiff sufficient to justify the issuance of preliminary injunction.”

The court found that if the relationship between AC Coin and IGT was severed, AC Coin would lose revenue because it would not have a supply of machines to sell, lease or license nor would it have machines to service.  Additionally, the termination of the relationship could potentially harm AC Coin’s goodwill in Atlantic City.  AC Coin had promoted and built IGT’s reputation to the point that casinos would not simply buy another manufacturer’s products.  The casinos believed that the IGT’s products were the superior.  If the relationship was terminated, AC Coin would have to fight that perception to sell its new product, even though, ironically, it was the one that created the goodwill.  For these reasons, the court found that AC Coin would suffer irreparable harm if the relationship was terminated.

The court then looked at the third prong to determine if the franchisor would be harmed by the injunction.  An injunction should not be granted if it will have a significant detrimental effect on the franchisor.  The court found that IGT did not assert how it would be harmed by an injunction other than the fact that it would lose the additional profits it would gain from dealing directly with the casinos.  Therefore, the court found that the loss of the additional profits was insufficient for the court to prevent the issuance an injunction.

Finally, the court analyzed the fourth prong or the public policy implications of granting or denying an injunction.  The court looked at the underlying public policy reasons for the Act to determine whether an injunction was appropriate.  As stated in Westfield Centre Serv., Inc. v. Cities Serv., Oil Co., 86 N.J. 453, 461 (1981), the public policy behind the Act is that “[w]hen enacted, the drafters of the Act recognized that although both parties to a franchise relationship may reap economic benefits therefrom, the disparity in their respective bargaining power may lead to unconscionable provisions in the franchise agreements… Franchisors are apt to draw contracts permitting them to terminate or refuse to renew franchise at will or for a wide variety of reasons including failure to comply with unreasonable conditions… The unfortunate result was that some franchisors terminated or refused to renew viable franchises, leaving franchisees with nothing in return for their investment,”

Further, Justice Sullivan in Shell Oil Co., v. Marinello, 63 N.J. 402 (1973), found that provisions of franchise agreements that allowed for termination without good cause were void as against public policy.  The court therefore found that the Act was meant to protect against the harm AC Coin would incur if an injunction was not granted.

As such, the court granted AC Coin’s request for a preliminary injunction to prevent IGT from terminating the agreement.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

In 2009, Judge Shafer of the Supreme Court, New York County ruled in favor of the non-profit corporation, Stray from the Heart, Inc. (“Stray”), in its Article 78 application – an action brought to challenge the activities of an administrative agency in court – to compel the City of New York to comply with the statutory requirement that it provide full service animal shelters in all five boroughs of New York City.  Matter of Stray from the Heart, Inc. v. Department of Health & Mental Hygiene of the City of New York, 2009 N.Y. Slip Op. 52092(U), 25 Misc.3d 1214(A).

In 2000, New York City’s Committee on Health determined that the overpopulation of stray dogs posed a serious threat to the public’s health, safety and welfare.  As a result, the City passed Local Law 26 of 2000, the Animal Shelters and Sterilization Act (the “Act”) and incorporated it into New York City’s Administrative Code at §§17-801 through 17-809.  The Act required the City to ensure that a “full-service animal shelter” be maintained in each of the five New York City boroughs, twenty-four hours per day, seven days per week.  The Act defined “full-service animal shelter” as “a facility … that houses lost, stray or homeless animals and (1) accepts dogs and cats [24 hours per day, 7 days per week]; (2) has an adoption program open [24 hours a day, 7 days per week]; and (3) provides sterilization services for dogs and cats.”  See §§17-802(c); 17-809.  The Act also required that all animals be sterilized before leaving the shelter, except in certain specified situations.

The City was required to be in full compliance with the Act by January, 2005.  When the statutory deadline passed, the City still had no shelters that were open twenty-four hours per day and there were no shelters at all within the Bronx or Queens.

Stray is a non-profit volunteer organization that rescues, rehabilitates and places homeless dogs.  Stray, as the Petitioner, sued the City of New York alleging that the City’s failure to comply with the Act “created a dangerous public health threat and overburdens citizens and private rescue organizations, such as the petitioner, which are forced to bear costs of rescuing, sheltering, treating and sterilizing unwanted animals.  Petitioner seeks restitution to recover its expenses.”  Id. at *1.

The court held that Stray had standing to bring the action to compel the City to comply with the Act.  An Article 78 proceeding was the appropriate means for Stray to seek to compel the City to perform a statutory duty that is ministerial in nature and does not require the exercise of judgment or discretion by a City officer.  Stray’s standing was based upon the ground that it provided services to homeless animals which the City failed to provide as required by the Act.

The court held that the City, “blatantly failed to comply with the mandatory requirements of the Act, which unambiguously requires shelters in each borough, not in 3 out of 5, open 24 hours per day, not 12 or ‘as needed.’  While it is true that the creation of a shelter involves discretionary decision-making, the process by which an imposed duty is implemented is irrelevant.”  Id. at *2.

The court continued, “[C]ompliance with almost any statutory directive will involve some measure of discretion exercised by those implementing its terms, but this will not render nonjusticiable a claim which asks the courts to compel compliance with a statute that is otherwise mandatory on its face.”  Id.  In other words, courts may “compel acts that officials are duty-bound to perform, regardless of whether they may exercise their discretion in doing so.”  Id.

The court granted Stray’s Petition and directed the City of New York to “submit a plan for the immediate implementation of their compliance with the statutory directives of the Animal Shelters and Sterilization Act, Local Law 26 of 2000 within 60 days.”  Id. at *3.  The court also awarded Stray its costs for providing the services the City failed to provide as incidental damages – reasonable expenses incurred by one party as a result of another party’s failure to do what they were supposed to do – and referred the case to a Special Referee for calculation of those incidental damages.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

On April 11, 2011, the United States Court of Appeals for the Third Circuit affirmed the decision of the District Court dismissing a consumer’s claims against his debtors.  Huertas v. Galaxy Asset Management, LLC, No. 10-2532, CITATION.

Consumer Hector Huertas sued credit card companies, Asset Management Professionals (“AMP”) and Applied Card Bank (“ACB”), for violations of the Fair Debt Collection Practices Act (“FDCPA”) and New Jersey Consumer Fraud Act (“NJCFA”).  Huertas alleged that ACB transferred a “false debt” – a debt upon which New Jersey’s six-year statute of limitations had run – in violation of NJCFA and that AMP was seeking to collect that “false debt” in violation of the FDCPA and improperly obtained his credit report in violation of the Fair Credit Reporting Act (“FCRA”) which imposes civil liability upon a person that willfully obtains a consumer credit report for any purpose not authorized by the FRCA.

AMP and ACB moved to dismiss Huertas’ complaint on the ground that he failed to state claims against AMP and ACB.  The United States District Court for the District of New Jersey granted the motions of AMP and ACB and dismissed Huertas’ complaint against each entity.  The District Court reasoned that while the expiration of the statute of limitations made the debt unenforceable, the debt was not extinguished.  As a result, neither ACB’s assignment of the debt nor AMP’s efforts to collect the debt violated the law.

Huertas appealed the dismissal of his complaint to the United States Court of Appeals for the Third Circuit.  On appeal, Huertas claimed that the District Court erred in concluding that the expiration of the statute of limitations did not extinguish the debt.  The Court of Appeals agreed with the District Court and held that Huertas still owed the debt as it was not extinguished as a matter of law.  Thus, Huertas failed to state claims against ACB or AMP regarding the validity of the debt.

According to the Court of Appeals, Huertas’ FDCPA claim against AMP “turns on whether a debt collector may attempt to collect upon a timebarred debt without violating the statute.”  Id.  The court acknowledged that the issue was one of first impression for it, but noted that the majority of courts faced with a similar situation have held that “when the expiration of the statute of limitations does not invalidate a debt, but merely renders it unenforceable, the FDCPA permits a debt collector to seek voluntary repayment of the time-barred debt so long as the debt collector does not initiate or threaten legal action in connection with its debt collection efforts.”  Id.; see also Freyermuth v. Credit Bureau Servs., Inc., 248 F.3d 767, 771 (8^th Cir. 2001); Wallace v. Capital One Bank, 168 F.Supp.2d 526, 527-29 (D.Md. 2001); Shorty v. Capital One Bank, 90 F.Supp.2d 1330, 1331-33 (D.N.M. 2000).  It is the “threatening of a lawsuit which the debt collector knows or should know is unavailable or unwinnable by reason of a legal bar such as the statute of limitations is the kind of abusive practice the FDCPA was intended to eliminate.”  Id. citing Beattie v. D.M. Collections, Inc., 754 F.Supp. 383, 393 (D.Del. 1991).  Thus, whether AMP violated the FDCPA turned on whether its letter to Huertas of February 11, 2009 “threatened litigation.”  Id.

AMP’s letter to Huertas advised that the account was reassigned; requested Huertas call to “resolve this issue”; included a privacy notice; and advised Huertas that unless the debt alleged was disputed within thirty days, AMP would assume that the debt was valid.  Finally, the letter contained the following language at the bottom, in bold capital letters, “THIS IS AN ATTEMPT TO COLLECT A DEBT.”  The court held that, “even the least sophisticated consumer would not understand AMP’s letter to explicitly or implicitly threaten litigation … Since it is appropriate for a debt collector to request voluntary repayment of a time-barred debt, it would be unfair if debt collectors were found to violate the FDCPA both if they include the mandated language (because inclusion would threaten suit) and if they do not (because failure to include a mandatory notice violates the statute).”  Id.  Thus, the court held that Huertas failed to state claim against AMP for violation of the FDCPA based upon AMP’s letter and affirmed the dismissal of Huertas’ complaint against AMP on the ground that it violated the FDCPA.

The court also held that AMP did not violative the FRCA when it obtained Huertas’ credit report.  The FRCA expressly permits distribution of a consumer report to an entity that “intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer.”  Id.; see also 15 U.S.C. §1681(a)(3)(A).  Since Huertas sought and received credit from ACB and accumulated credit card debt, AMP was permitted to access Huertas’ credit report for the purposes of collecting on his delinquent accounts.  Such access is permitted under 15 U.S.C. §1681(a)(3)(A).

The court similarly dismissed Huertas’ claims against AMP and ACB based upon the NJCFA and Racketeering Influenced and Corrupt Organization (“RICO”).  The court held that Huertas failed to state a NJCFA claim because “the reach of the [NJCFA] is intended to encompass only consumer transactions involving the marketing and sale of merchandise or services.”  Id.  Huertas seeks to recover for ACB’s transfer of his debt to a third party and AMP’s attempts to collect on the account – actions not covered by the NJCFA.  The court similarly reasoned that Huertas failed to allege facts sufficient to state a claim under RICO as there was no evidence “that [Huertas] was deprived of the benefit of his bargain under that contract.”  Id.  In summary, the Court of Appeals affirmed the decision of the District Court that dismissed all of Huertas’ claims against AMP and ACB.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

In Kasten v. Saint-Gobain Performance Plastics Corp. the United States Supreme Court was asked to decide whether an employee’s oral complaints triggered the anti-retaliation protections of the Fair Labor Standards Act (the “Act”), which sets forth employment rules concerning minimum wages, maximum hours, and overtime pay.  563 U.S. ______ (2011).

The anti-retaliation provision of the Act makes it unlawful

“to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to [the Act], or has testified or is about to testify in such proceeding, or has served or is about to serve on an industry committee.”

29 U.S.C. §215(a)(3).

The Court had to decide whether the statutory term “filed any complaint” included oral as well as written complaints.  Kevin Kasten sued his former employer, Saint-Gobain Performance Plastics Corporation (“Saint-Gobain”), following his termination for allegedly failing to record his comings and goings on the timeclock.  Kasten argued that he was really terminated in retaliation for making repeated oral complaints about the location of the timeclock.  Saint-Gobain’s timeclock was located between the area where Kasten and other workers put on and took off their work-related protective gear and the area where they performed their assigned tasks.  As a result, Kasten and the other workers did not receive credit for the time it took them to put on and take off their work clothes, which is contrary to the Act’s requirements.  In fact, in a separate lawsuit a District Court in Wisconsin held that Saint-Gobain’s failure to compensate its employees for the time it took to put on and take off work clothes violated the Act.  Kasten v. Saint-Gobain Performance Plastics Corp., 556 F.Supp.2d 941, 954 (W.D.Wis. 2008).

Kasten repeatedly told Saint-Gobain about the timeclock’s unlawful location via Saint-Gobain’s internal grievance-resolution procedure and raised the issue with his shift supervisor.  Kasten told Saint-Gobain’s human resources manager that the timeclock’s location was illegal, that he was thinking about starting a lawsuit about the timeclock’s placement and that company would lose in court.  Kasten claimed in his lawsuit that it was this activity, and not his failure to use the timeclock, that caused Saint-Gobain to discipline and ultimately terminate him in December, 2006.

The District Court granted Saint-Gobain’s motion for summary judgment and dismissed Kasten’s lawsuit on the ground that the Act did not protect oral complaints.  On appeal, the United States Court of Appeals for the Seventh Circuit agreed that the Act did not apply to oral complaints and affirmed the District Court’s dismissal of Kasten’s lawsuit.  The United States Supreme Court agreed to hear Kasten’s appeal to determine whether “an oral complaint of a violation of the Fair Labor Standards Act is protected conduct under the [Act’s] anti-retaliation provision.”  Kasten, 563 U.S. at p.4.

In analyzing the statutory text, the Court considered some dictionary definitions of “file”, which used of the word “file” in connection with oral material, and common usage of the word by legislators, administrators, and judges, which sometimes use the word when referring to oral statements.  The Court noted that regulations promulgated by federal agencies sometimes permit complaints to be filed orally and that oral filings were a known phenomenon when the Act was passed.  The Court, however, determined that review of the statutory text alone was insufficient to provide a conclusive answer.

The Court next analyzed the Act’s objectives, which are to prohibit labor conditions that are detrimental to the minimum standard of living necessary for health, efficiency, and the general well-being of workers.  The Act relies upon information and complaints by employees that seek to enforce their rights under the Act.  The Act’s anti-retaliation provision serves to prevent employees from being fearful of economic retaliation and quietly accepting substandard working conditions.

The Court found no evidence in the Act’s legislative history supporting the position that Congress intended to limit the effectiveness of the Act by preventing those employees who cannot read or write from making complaints under the Act.  Limiting complaints under the Act to those made in writing would also prevent governmental agencies from using hotlines, interviews and other oral methods to take employee complaints.  Thus, the Court held, “to fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.  This standard can be met, however, by oral complaints, as well as by written ones.”  Id. at p.12.

Moreover, the Court noted that the Department of Labor has consistently held that the phrase “filed any complaint” covers oral, as well as written, complaints.  See e.g. Goldberg v. Zenger, 43 CCH LC ¶31,155, pp. 40,985, 40,986 (D.Utah 1961).  More recently, the Department of Labor set up a hotline for the purposes of receiving oral complaints.  The Equal Employment Opportunity Commission has set forth a similar view with regard to oral complaints in its Compliance Manual, Vol. 2, §8-II(B)(1), p. 8-3, and n. 12 (1998).

The Court concluded that the Court of Appeals erred in holding that oral complaints cannot fall within the phrase “filed any complaint” in the Act’s anti-retaliation provision.  As a result, the Court vacated the judgment in favor of Saint-Gobain, reinstated Kasten’s complaint and remanded the case to the District Court for trial.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

On March 31, 2011, the New York Court of Appeals upheld a jury’s verdict in favor of two New York City police officers that claimed they were subject to retaliation for opposing discrimination against a third officer on the basis of that third officer’s perceived sexual orientation.  Albunio v. City of New York, 2011 WL 1157706 (2011).

In 2002, Captain Lori Albunio was the commanding officer of the Youth Services section of the New York City Police Department.  Lieutenant Thomas Connors was operations coordinator of the section and reported to Albunio.  Sergeant Robert Sorrenti applied for a transfer into the Youth Services section, was interviewed by Albunio and seemed poised to become the Youth Services section DARE officer, responsible for educating New York City school children about the dangers of drugs.  Albunio recommended Sorrenti for the DARE position to her supervisor, Inspector James Hall.  Hall decided to interview Sorrenti himself and did so with Albunio present.

According to Albunio, during that interview Hall aggressively questioned Sorrenti about his marital status; whether he had children; and about his relationship with another male officer to whom he had allegedly loaned money, suggesting that the relationship was more than a friendship.  After the interview, Hall told Albunio that Sorrenti didn’t seem quite right.  Hall later chose another officer for the DARE position and told Albunio that he would not trust Sorrenti working around children.

Several months later, Hall told Lieutenant Connors that there had to be something more to Sorrenti’s relationship with the officer to whom he loaned money and that Hall would not have been able to sleep at night if he knew Sorrenti was working with children.  Connors responded that he believed Sorrenti was more than qualified to work with children and showed Hall a favorable performance evaluation that Sorrenti recently received.  Following that conversation, Connors formed the opinion that Hall “believed that Sergeant Sorrenti was a child molester and homosexual.”  Id. at *2.

Later in 2002, Albunio learned that she was to be removed as the commanding officer of the Youth Services section for utilizing poor judgment when requesting personnel.  Hall cited her recommendation of Sorrenti as the prime example.  Albunio told Hall that Sorrenti was the better candidate for the DARE position and that she would recommend Sorrenti again if she had the chance to do it over.  Albunio was told it would be in her best interest to find another assignment.  She did, but it was a much less desirable assignment.

After Albunio told Connors that she was directed to find another assignment, Connors filed a complaint with the police department’s Office of Equal Employment Opportunity alleging that Hall discriminated against Sorrenti based upon Sorrenti’s sexual orientation.  After Hall learned of the complaint, Connors decided it was time to leave the Youth Services section.  However, while Connors remained with that section he was subject to several adverse employment actions.  For example, his geographical assignments and working hours were changed in unfavorable ways; and he was shunned and excluded from meetings with Hall and Hall’s subordinates.  When he was finally transferred, he received a less desirable assignment than he expected.

Albunio and Connors filed a lawsuit against the City of New York claiming they were victims of retaliation in violation of the New York City Human Rights Law, Administrative Code §8-107(7).  That section states,

“Retaliation. It shall be an unlawful discriminatory practice for any person engaged in any activity to which this chapter applies to retaliate or discriminate in any manner against any person because such person has (i) opposed any practice forbidden under this chapter, (ii) filed a complaint, testified or assisted in any proceeding under this chapter, (iii) commenced a civil action alleging the commission of an act which would be an unlawful discriminatory practice under this chapter, (iv) assisted the commission or the corporation counsel in an investigation commenced pursuant to this title, or (v) provided any information to the commission pursuant to the terms of a conciliation agreement made pursuant to section 8-115 of this chapter. The retaliation or discrimination complained of under this subdivision need not result in an ultimate action with respect to employment, housing or a public accommodation or in a materially adverse change in the terms and conditions of employment, housing, or a public accommodation, provided, however, that the retaliatory or discriminatory act or acts complained of must be reasonably likely to deter a person from engaging in protected activity.”

New York City Administrative Code §8-107(7).

A trial was held and the jury found that the City retaliated against both Albunio and Connors and awarded each monetary damages.  The City appealed the jury’s verdict to the Appellate Division, which upheld the verdict in favor of Albunio and Connors.  The City appealed that decision to the New York Court of Appeals, the state’s highest appellate court.

The Court of Appeals noted that the issue was whether the record supported the jury’s finding that Albunio and Connors “opposed” the discrimination against Sorrenti based upon his sexual orientation.  The court was guided by New York’s Local Civil Rights Restoration Act of 2005 (“LCRRA”), which requires that “the provisions of this title [i.e., the New York City Human Rights Law] shall be construed liberally for the accomplishment of the uniquely broad and remedial purposes thereof, regardless of whether federal or New York State civil and human rights laws, including those laws with provisions comparably-worded to provisions of this title, have been so construed.”  Id. at *4.  In other words, the court was required to construe Administrative Code §8-107(7) “broadly in favor of discrimination plaintiffs, to the extent that such a construction is reasonably possible.  We interpret the word ‘opposed’ according to this principle, and conclude that the evidence supports a finding that both Albunio and Connors opposed discrimination against Sorrenti.”  Id. at *4.

According to the court, Connors clearly opposed the discrimination since he filed a discrimination complaint on Sorrenti’s behalf; there was evidence Hall knew of the complaint; and after filing the complaint Connors was subjected to a series of adverse employment actions.  The court similarly found that Albunio “opposed” the discrimination although she did not file a formal complaint.  Albunio “opposed” the discrimination against Sorrenti when she stated that Sorrenti was the better candidate and that she would choose him again if given another chance.  In essence, the court held that the jury could have found that Albunio made her disapproval of Hall’s action clear and voiced her opinion that it was wrong when she made those statements to Hall.

The Court of Appeals affirmed the decision of the Appellate Division and reinstated the jury’s verdict in favor of Albunio and Connors.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC