Delli Santi v. CNA Insuarance Companies

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
6-20-1996
Delli Santi v. CNA Insurance Co
Precedential or Non-Precedential:
Docket 94-5331,94-5347
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1996
Recommended Citation
"Delli Santi v. CNA Insurance Co" (1996). 1996 Decisions. Paper 155.
http://digitalcommons.law.villanova.edu/thirdcircuit_1996/155
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 1996 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
Nos. 94-5331 and 94-5347
___________
EVELYN DELLI SANTI
Appellant in No. 94-5331
vs.
CNA INSURANCE COMPANIES;
CONTINENTAL CASUALTY COMPANY;
RICHARD FARAH
EVELYN DELLI SANTI
vs.
CNA INSURANCE COMPANIES;
CONTINENTAL CASUALTY COMPANY;
RICHARD FARAH
CNA Insurance Companies;
Continental Casualty Company
Appellants in No. 94-5347
__________
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civ. No. 88-cv-05137)
___________
Argued
March 7, 1996
Before: MANSMANN* and ALITO, Circuit Judges, and
RESTANI, Judge, Court of International Trade.**
(Filed June 20, 1996)
___________
* The Honorable William D. Hutchinson was a member of the
original panel which heard argument in this appeal on March 6,
1995. He died on October 8, 1995 before the appeal was resolved;
Judge Mansmann was designated to serve in his place on the
reconstituted panel.
** Honorable Jane A. Restani, Judge, United States Court
of International Trade, sitting by designation.
William C. Slattery, Esquire (ARGUED)
Norris, McLaughlin & Marcus
721 Route 202-206
P.O. Box 1018
Somerville, NJ 08876
Neil M. Mullin, Esquire
Jon W. Green, Esquire
Smith Mullin, P.C.
200 Executive Drive
Suite 155
West Orange, NJ 07052
Counsel for Evelyn Delli Santi
Jeffrey S. Goldman, Esquire
Allison C. Blakely, Esquire (ARGUED)
Fox & Grove
311 South Wacker Drive
Suite 6200
Chicago, IL 60606
Counsel for CNA Insurance Companies
and Continental Casualty Company
___________
OPINION OF THE COURT
__________
MANSMANN, Circuit Judge.
In this discrimination case tried pursuant to the New
Jersey Law Against Discrimination, the jury found that Evelyn
Delli Santi proved by a preponderance of the evidence that CNA
Insurance Company discharged her in retaliation for her
complaints of age and sex discrimination. The jury specifically
rejected CNA's assertion that it discharged Delli Santi because
she allegedly inflated her gasoline expense records.
Nonetheless, the district court granted CNA's motion for judgment
as a matter of law and conditionally granted its motion for a new
trial, holding that CNA proved as an affirmative defense that,
despite retaliatory intent, it would have discharged Delli Santi
in any event.
We find that, under these specific circumstances of the
jury's rejection of the non-discriminatory reason proffered by
the defense, the court could not utilize this evidence against
the plaintiff. Therefore, since there was legally sufficient
evidence to support the jury's verdict, we will vacate the
district court's judgment as a matter of law on the affirmative
defense for CNA. We will also vacate the district court's
conditional grant of a new trial because, based upon our review
of the record, the verdict was not against the clear weight of
the evidence.
We will, however, affirm the district court's order
granting CNA a new trial unless Delli Santi agrees to accept a
remittitur of the jury's excessive pain and suffering award.
Therefore, we will return this case to the district court for
entry of judgment on the jury verdict, including the jury's front
pay award of $152,266 representing Delli Santi's future economic
losses.
I.
In 1951, Evelyn Delli Santi began her employment as a
typist clerk with The American Casualty Insurance Company, which
eventually merged with CNA. By the mid-1960s, she was a first-
party claims handler. CNA continued to promote Delli Santi and,
ultimately, she became a claims representative. Although CNA's
home office is located in Chicago, Illinois, Delli Santi reported
to the Cedar Knolls, New Jersey branch office, part of CNA's
eastern region.
Delli Santi first complained about discrimination
during an employee communication session ("ECS") with Richard
Farah, a New Jersey branch claims manager, in October 1986.
According to Delli Santi, she told Farah that her supervisors in
the past informed her that the company would not promote her
above grade level 34 until she came in from her field position.
When Farah told her this was untrue and there were two men in
field positions at grade level 36 (a higher level), Delli Santi
stated: "[T]hat's pretty good. I said, that's discrimination, I
says, sex and age. . . . And I told him, I didn't think the
company really cared about promoting women because I had a
problem once before, as you heard early on, when we merged, and I
didn't think it was right."
In April 1987, Delli Santi complained of discrimination
to Dennis McCarthy, her immediate supervisor, at her annual
performance review. Dissatisfied with CNA's failure to promote
her along with male counterparts in the field, she said, "[T]here
you go, there it is, discrimination. I said, this is not fair,
and I'm not happy at all with this situation." According to
Delli Santi, McCarthy told her that she should talk to Farah
about her complaints.
The third discrimination complaint arose one week later
in another ECS meeting with Farah. There Delli Santi voiced her
disapproval about the refusal to promote her to grade level 36,
stating "[A]s far as I'm concerned it's more discrimination,
harassment, age and sex discrimination, and its not right, and
I'm not happy with it at all."
After making these complaints, Delli Santi's expense
reports were called into question. Delli Santi's gas mileage
and the number of handwritten receipts for her May expense report
were substantially the same as they were in three previous
expense submissions that McCarthy and Farah had reviewed and
approved for the last half of March and all of April 1987. When
Delli Santi submitted her expense reports for May 1987, however,
McCarthy took exception to the amount reported for gas purchases
because "the numbers were a little bit off." Delli Santi's May
1987 expense reports reflected fifteen gasoline purchases during
a thirty-one day period in which she drove less than 800 miles.
Only four of the gasoline purchases were documented by
identifiable service station receipts. The remaining eleven
purchases were documented by Delli Santi's own "in lieu of"
vouchers, which had handwritten dollar amounts and dates, an
acceptable alternative to service station receipts.
Subsequently, CNA conducted an internal investigation
into Delli Santi's expense accounts. Based upon the results of
this investigation, CNA concluded that Delli Santi had inflated
her expense accounts. On September 16, 1987, CNA terminated
Delli Santi after thirty-six years of employment ostensibly
because she misrepresented her gas expenses for her company car.
At the time Delli Santi was 59 years old.
In October 1988, Delli Santi filed a multi-count
complaint in a New Jersey state court against CNA and Farah.
Delli Santi's original complaint included claims pursuant to both
the federal Age Discrimination in Employment Act ("ADEA"), 29
U.S.C. 621-634 (1994) and the New Jersey Law Against
Discrimination ("LAD"), N.J. Stat. Ann. 10:5-12d (West Supp.
1994). CNA removed the case to the U.S. District Court for the
District of New Jersey. Prior to trial, however, Delli Santi
abandoned her ADEA claim. Consequently, after the district court
disposed of all pre-trial motions, the sole issue for the jury to
decide was whether the evidence supported Delli Santi's LAD
retaliation claim. This claim was tried to a jury from January
20 to February 10, 1994.
At trial, Delli Santi argued that CNA singled her out
for termination, not because she falsified her expense accounts,
but because she had complained about discrimination. In support,
Delli Santi relied, inter alia, upon the following stipulation,
which was read to the jury:
According to the CNA fleet reports, from
January 1985 through March 1988, 215 persons
achieved a mileage of less than 10 miles per
gallon in one of the 13 quarters reported.
Of those persons, 31 had a reported mileage
of less than 10 miles per gallon in more than
one reporting quarter.
App. at 1090.
In addition to the above stipulation, Delli Santi
pointed to the following October 27, 1987 internal CNA memo,
which was issued to all fleet services managers:
We have discovered situations such as
vehicles consistently averaging less than 10
miles per gallon (our fleet averages 23+
m.p.g.) . . . . In some instances, these
conditions have existed for several quarters
which is an indication that drivers are not
being counseled.
App. at 326. Although the memo advised managers to "counsel"
these drivers, there was no directive to investigate, discipline
or terminate any of them.
The memo referring to widespread instances of arguably
suspicious low mileage similar to Delli Santi's was also
distributed to David Koester, senior vice president of
administration, who testified at trial that no action whatsoever
was taken against these drivers. Indeed, Koester and Kent
Crassweller, an investigation manager, conceded that they were
not aware of anyone -- except Delli Santi -- who was
investigated, disciplined or terminated for reporting low gas
mileage. Koester's testimony, however, is at odds with his
statement that any fleet driver reporting under ten miles per
gallon should have been investigated because "it's an indicator
of some issue."
At trial, CNA introduced the following evidence.
Larry Schroeder, the Chicago corporate security manager, reviewed
Delli Santi's May expense report and decided to open an
investigation. Schroeder stated that he opened the Delli Santi
investigation because the handwritten vouchers, coupled with the
low mileage, were "strange." Accordingly, in June 1987
Crassweller, an investigation manager, and Kathy Foster, a
regional personnel manager, interviewed Delli Santi, asking her
to explain the handwritten receipts. Delli Santi stated that she
wrote them herself on receipt pads from her brother's business.
When questioned about her gas mileage, Delli Santi stated that
the car "gets what it gets" and explained that (1) she sometimes
would allow her car to idle (running the air conditioner or
heater depending on the season); (2) children might be stealing
gas from her car; and (3) the car "ran rough." Following the
interview, Crassweller reported this conversation to Schroeder
and Robert Keith, corporate security manager.
Crassweller then returned to Chicago and supervised a
review of several of Delli Santi's past expense reports, which
revealed the following: if Delli Santi's handwritten generic
receipts were totally discounted and her gasoline calculated
solely on the basis of verifiable service station receipts, the
gasoline mileage for her 1984 Dodge Aries K would have been
eighteen miles per gallon for the first quarter of 1986; twenty-
four miles per gallon for the third quarter of 1986; seventeen
miles per gallon for the fourth quarter of 1986; and sixteen
miles per gallon for the first quarter of 1987. These averages
were consistent with the estimated mileage of twenty-three miles
per gallon for her vehicle and the company's fleet-wide average
of approximately twenty-three-and-a-half miles per gallon.
The investigation into Delli Santi's expense reports,
over a period of more than three years, revealed an inverse
relationship between the average number of handwritten receipts
submitted per expense period and gasoline mileage. In 1984,
Delli Santi averaged eleven to thirteen miles per gallon, with an
average of two to three handwritten receipts per expense period;
in 1985, she averaged about ten miles per gallon, with an average
of three to four handwritten receipts; in 1986, she was getting
about seven miles per gallon, with an average of four handwritten
receipts per expense period; and, finally, in 1987, Delli Santi
got only six miles per gallon, with an average of five
handwritten receipts per expense period.
CNA's corporate security manager, Robert Keith, stated
that he was "highly suspicious" and believed Delli Santi was
stealing, but he was reluctant to terminate Delli Santi without
first affording her the benefit of the doubt. Because Delli
Santi had stated at the outset of the investigation that the car
"ran rough," Keith decided to have her car test driven.
Accordingly, Farah directed Leonard Polizzi, a manager in another
CNA office, to test drive the car and keep a record of the gas
mileage. Polizzi drove Delli Santi's car back and forth to his
office, a round trip of eighty miles per day, and reported that
the car had given him twenty-four to twenty-seven miles per
gallon with no mechanical problems. Because Polizzi performed
the test drive generally under highway conditions, the test drive
may not have duplicated Delli Santi's exact driving conditions.
Keith testified nonetheless that the test drive results
confirmed his belief that Delli Santi used inflated expense
accounts to steal. He immediately reported this belief to his
superior David Koester, senior vice president of administration,
and Carolyn Murphy, senior vice president of field operations.
Koester and Murphy, who are both located in Chicago, agreed with
Keith.
After reviewing the recommendations, Meyer and Keith
discussed the matter. Keith told Meyer that he had already
discussed the matter with Koester and Murphy and had informed
Meyer that the penalty for employee theft at CNA was uniform and
unyielding: mandatory termination. Specifically, Keith
testified:
[W]e do not make exceptions to our policy and
practice of terminating people who either lie
to us, or who steal from us. We don't make
an exception. We never have, we can't make
an exception for the reason of, there has to
be fairness and consistency, and people need
to understand the rules, and that's what
we've done in the past, and that's what we'll
continue to do in the future. It's the only
way we can run a company.
App. at 1375.
At the close of this evidence, on February 10, 1994,
the jury returned a verdict in favor of Delli Santi. Answering
specific interrogatories, the jury found: that Delli Santi
proved by a preponderance of the evidence that CNA discharged her
in retaliation for her complaints about discrimination; and that
CNA failed to prove that, even though it terminated Delli Santi
in retaliation for her complaints about discrimination, CNA would
have discharged her in any event for stealing. The jury returned
a $627,866 award for compensatory damages, assessing $300,000 for
pain and suffering. The district court declined to submit the
issue of punitive damages to the jury. On February 22, the
district court entered judgment on the jury verdict.
Subsequently the district court entered a post-judgment
order granting judgment as a matter of law in CNA's favor because
the court agreed with CNA's claim that it would have discharged
Delli Santi, regardless of retaliatory intent, due to CNA's
discovery that CNA had allegedly falsified her expense accounts.
In addition to granting judgment as a matter of law on this
claim, the district court conditionally granted a new trial.
Further, the district court conditionally granted a new trial
based upon damages unless Delli Santi accepted a remittitur of
the pain and suffering award from $300,000 to $5,000. The
district court granted CNA's motion for a remittitur on the basis
of future earnings totaling $152,266 because it found that Delli
Santi was ineligible for reinstatement with CNA. Finally, the
district court denied, without prejudice, Delli Santi's
application for pre-judgment interest and request for counsel
fees and expenses. Both parties filed timely notices of appeal.
II.
The New Jersey Law Against Discrimination "makes
retaliatory discrimination an unlawful employment practice."
Jamison v. Rockaway Township. Bd. of Educ., 577 A.2d 177, 182
(N.J. Super. Ct. App. Div. 1990). An unlawful employment
practice occurs when a person, whether an employer or employee,
takes "reprisals against any person because that person has
opposed any practices or acts forbidden under this act or because
that person has filed a complaint, testified or assisted in any
proceeding under this act." N.J. Stat. Ann. 10:5-12d.
To establish a prima facie case of retaliation, an
employee must show by a preponderance of the evidence that (1) he
or she "engaged in a protected activity known to the employer;"
(2) he or she thereafter was "subjected to [an] adverse
employment decision by the employer;" and (3) there was a "causal
link" between the protected activity and adverse employment
decision. Jamison, 577 A.2d at 182 (citing Wrighten v.
Metropolitan Hosps., Inc., 726 F.2d 1346, 1354 (9th Cir. 1984)
and Velantzas v. Colgate-Palmolive Co., Inc., 536 A.2d 237, 238
n.1 (N.J. 1988)); accord Craig v. Suburban Cablevision, Inc., 660
A.2d 505, 508 (N.J. 1995) (citing Jamison, 577 A.2d 177 and
Wrighten, 726 F.2d at 1354); Wachstein v. Slocum, 625 A.2d 527,
534 (N.J. Super. App. Div.), certif. denied, 636 A.2d 521 (N.J.
1993); see also Robinson v. Southeastern Pa. Transp. Auth., 982
F.2d 892, 895 n.1 (3d Cir. 1993); Quiroga v. Hasbro, Inc., 934
F.2d 497, 501 (3d Cir.), cert. denied, 502 U.S. 940 (1991); Jalil
v. Avdel Corp., 873 F.2d 701, 708 (3d Cir. 1988), cert. denied,
493 U.S. 1023 (1990).
Once an employee succeeds in showing these facts, he or
she establishes a prima facie case of retaliation and the burden
of production (although not the burden of persuasion) "shifts to
the employer to articulate some legitimate non-retaliatory reason
for the adverse action." Jamison, 577 A.2d at 182 (citing
Wrighten, 726 F.2d at 1354). If the employer comes forward with
evidence showing some legitimate non-retaliatory reason, the
employee still has the opportunity to produce evidence sufficient
to persuade the factfinder by a preponderance of the evidence
that the employer nevertheless harbored a discriminatory intent.
Id. An employee can make this showing by producing evidence and
proving to the factfinder's satisfaction that "the articulated
reason is a pretext for the retaliation or that a discriminatory
reason more likely motivated the employer." Id. (citing
Wrighten, 726 F.2d at 1354 (citing Texas Dep't. of Community
Affairs v. Burdine, 450 U.S. 248, 256 (1981)).
Assuming the employee meets this burden, a presumption
arises under New Jersey law "that the adverse employment action
was the product of improper retaliatory intent." Id. (citing
Wrighten 726 F.2d at 1354). Then "the employer must prove by the
preponderance of the evidence that the adverse action would have
been taken regardless of retaliatory intent." Id. (citing
Wrighten, 726 F.2d at 1354). But see Jalil, 873 F.2d at 706
(ultimate burden of persuasion always remains with the employee
who seeks to prove a retaliation claim).
A.
At trial, CNA moved for judgment as a matter of law at
the close of Delli Santi's case and again at the close of all the
evidence, arguing that Delli Santi had not adduced sufficient
evidence to meet either her prima facie burden or her burden of
proving pretext. On cross-appeal, CNA asks us to review the
district court's denial of its motion which sought judgment that
CNA had not discharged Delli Santi out of retaliation for her
complaints of discrimination.
We exercise plenary review over the district court's
order granting a Rule 50(b) motion for judgment as a matter of
law. Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d
Cir. 1993) (citing Wittekamp v. Gulf & Western, Inc., 991 F.2d
1137, 1141 (3d Cir.), cert. denied, 114 S. Ct. 309 (1993)). Our
role is to determine "whether the evidence and justifiable
inferences most favorable to the [non-moving] party afford any
rational basis for the verdict." Anastasio v. Schering Corp.,
838 F.2d 701, 705 (3d Cir. 1988) (citing Bhaya v. Westinghouse
Electric Corp., 832 F.2d 258, 259 (3d Cir. 1987), cert. denied,
488 U.S. 1004 (1989)); Blum v. Witco Chem. Corp., 829 F.2d 367,
372 (3d Cir. 1987).
In our view, Delli Santi presented sufficient evidence
to allow a rational jury to find that her supervisors (who were
aware of her discrimination complaints) possessed a retaliatory
intent and, thus, tainted the ultimate decision. For years
Delli Santi submitted expense reports indicating low gas mileage
without incident. In fact, in February 1986, Farah (who at the
time was substituting for Powell) approved Delli Santi's expense
report even though she reported less than five miles per gallon.
He and McCarthy thereafter approved Delli Santi's gas
expenditures on three separate occasions (the last half of March
and all of April 1987) when she reported gas mileage well under
ten miles per gallon. So, too, Franceschini approved Delli
Santi's expense reports in December 1986 and January 1987 even
though she reported less than ten miles per gallon. The reports
approved by McCarthy, Farah and Franceschini did not differ
significantly from her May 1987 expense report. It was only
after Delli Santi voiced concerns about discrimination that CNA
decided to investigate her gas expense reports because the
numbers, which were the same for years, were now "a little bit
off."
We also find that there was sufficient evidence to
support the jury's finding that CNA's proffered reason for Delli
Santi's termination was pretextual. Despite Koester's statement
that CNA had a policy of investigating drivers reporting less
than ten miles per gallon, "there was uncontested evidence of
CNA's inertia in the face of its knowledge that some 215
employees had achieved mileage of less than 10 miles per gallon.
Of these, 31 had reported mileage of less than 10 miles per
gallon in more than one reporting period." See Delli Santi, No.
88-5137, slip op. at 15-16. A CNA internal memorandum reported
that CNA was aware of drivers "consistently averaging less than
10 miles per gallon" and, "[i]n some instances, these conditions
have existed for several quarters"; yet, Koester "was unaware of
any driver who reported less than ten miles per gallon ever being
investigated by Corporate Security or ever being terminated for
misrepresentation of his gas expenses." Id. at 16.
Thus, there was ample evidence from which the jury
could infer that CNA singled out Delli Santi given that it did
not investigate, discipline or terminate any other employee who
reported low gas mileage. Accordingly, the district court did
not err in denying CNA's motion for judgment as a matter of law
based on its retaliation claim.
B.
On the basis of this evidence, however, the district
court conditionally granted CNA a new trial on Delli Santi's
retaliation claim. In reviewing the district court's decision to
set aside the verdict as against the clear weight of the
evidence, we "exercise a closer degree of scrutiny and
supervision" because this case deals with "material which is
familiar and simple, . . . lying well within the comprehension of
[the] jurors. . . ." Klein v. Hollings, 992 F.2d 1285, 1290 (3d
Cir. 1993) (internal quotes omitted) (ellipses and alteration in
original). Because the subject matter of this case "is simple
and within a layman's understanding," we give the district court
"less freedom to scrutinize the jury's verdict than in a case
that deals with complex factual determinations." Id. (internal
quote omitted).
With respect to the court's ruling that the verdict was
against the clear weight of the evidence, we caution that the
district court ought only to grant a new trial on this basis
where "a miscarriage of justice would result if the verdict were
to stand." Fineman v. Armstrong World Indus., Inc., 980 F.2d
171, 211 (3d Cir. 1992) (quoting Williamson v. Consolidated Rail
Corp., 926 F.2d 1344, 1352 (3d Cir. 1991)). We have observed
that "[t]his limit upon the district court's power to grant a new
trial seeks to ensure that a district court does not substitute
its ``judgment of the facts and the credibility of the witnesses
for that of the jury'." Id. (quoting Lind v. Schenley Indus.,
Inc., 278 F.2d 79, 90 (3d Cir.) (in banc), cert. denied, 364 U.S.
835 (1960)). "Such an action effects a denigration of the jury
system and to the extent that new trials are granted the judge
takes over, if he does not usurp, the prime function of the jury
as the trier of facts." Id. With this standard of review in
mind, we turn to the merits of the new trial motion.
In considering CNA's motion for a new trial, the
district court decided that Delli Santi presented sufficient
evidence to establish a prima facie case of retaliation.
Nevertheless, without repudiating its earlier determination (on
CNA's motion for judgment as a matter of law) that Delli Santi
"generated enough speculation in the eyes of the jury to allow
them to dismiss CNA's explanation as pretext," Delli Santi, No.
88-5137, slip op. at 17, the district court concluded that the
jury's finding of pretext was against the weight of the
evidence.
We believe that the jury could have rationally inferred
that the Chicago decision-makers -- Koester, Keith, and Murphy --
were not the effective decision-makers, but rather their decision
to fire Delli Santi was influenced by her managers in New Jersey.
Though CNA terminated Delli Santi on September 16, 1987, after
McCarthy, Farah, Franceschini, Foster, Meyer, and Ottinger had
signed Delli Santi's termination notice, neither Koester nor
Murphy signed the internal termination document until about one
week later. Koester's own testimony buttressed this post-
termination approval when he admitted that he did not sign the
internal termination document until September 22, 1987. Keith
conceded on cross-examination that no relevant documents
suggested that Koester and Murphy took part in the decision-
making process before September 22, 1987, six days after Delli
Santi's termination. Ottinger, moreover, testified that once
Meyer announced his decision to approve Delli Santi's termination
at a late August 1987 meeting, which Koester, Keith, and Murphy
did not attend, the firing would have occurred by the next day
except for the fact that Delli Santi was on vacation. Thus, the
jury had an entirely rational basis for concluding that the
Chicago decision-makers did not base their decision "completely
on the basis of the investigation by Corporate Security" and
their "overwhelming reasonable belief that Delli Santi was
stealing from the company through the submission of fraudulent
expense reports," see Delli Santi, No. 88-5137, slip op. at 30,
but instead that her termination was the product of a retaliatory
animus on the part of her New Jersey branch office supervisors.
In addition, the memorandum and the stipulation
indicating CNA's failure to investigate, terminate or otherwise
discipline any other employee who appeared to inflate gas
purchases support the jury's finding that the articulated reason
for discharging Delli Santi was a pretext. Although the district
court recognized that Delli Santi could defeat CNA's motion for a
conditional grant of a new trial if she "prove[d] that she was
singled out; that others had submitted the same or substantially
similar expense reports and had not been disciplined in a like
manner," the court failed to consider other substantial evidence;
namely, that for almost fourteen years Delli Santi had submitted
similar reports without anyone questioning her gas expenditures,
that Farah and McCarthy initiated the so-called "investigation"
into Delli Santi's expense reports only after she had complained
to them about sex and age discrimination, that over two hundred
other drivers similarly reported under ten miles per gallon of
gas, and over thirty fleet drivers did so in more than one
reporting period. CNA, however, never disciplined, investigated,
or terminated a single employee for the same reason it terminated
Delli Santi.
The district court should not have required Delli Santi
to prove "selective enforcement of CNA's policy against employee
theft." Instead, Delli Santi met her burden of showing that the
company did not enforce such a policy by the evidence that other
employees were claiming excessive gasoline expenses without any
fear of investigation or repercussion, nor especially,
termination. The jury, by drawing reasonable inferences from the
evidence adduced at trial, could rationally conclude that the
legitimate non-retaliatory reason offered by CNA was a pretext
for discharging Delli Santi. We, therefore, conclude that the
grant of a new trial was not consistent with a sound exercise of
discretion since the jury's finding of pretext was supported by
the clear weight of the evidence.
C.
Although the district court found that Delli Santi met
her burden of proving retaliatory discharge, the district court
held that CNA was nonetheless entitled, after the jury verdict
and as an "affirmative defense", to argue to the court that
although there may have been retaliatory intent in her
termination, Delli Santi would still have been dismissed in any
event due to her fraudulent expense submissions.
A district court should enter judgment for an employer
as a matter of law on its "affirmative defense" "only if the
record shows that [the employer] established the defense so
clearly that no rational jury could have found to the contrary."
E.E.O.C. v. State of Del. Dept. of Health and Social Servs., 865
F.2d 1408, 1414 (3d Cir. 1989) (citing Fireman's Fund Ins. Co. v.
Videfreeze Corp., 540 F.2d 1171, 1177 (3d Cir. 1976), cert.
denied, 429 U.S. 1053 (1977), and Arkwright Mut. Ins. Co. v.
Philadelphia Elec. Co., 427 F.2d 1273, 1275 (3d Cir. 1970))
(footnote omitted). Here, too, "we must view the evidence most
favorably to [the employee] and accord [her] the benefit of all
justifiable inferences." Id. (citing Bhaya, 832 F.2d at 259 and
Aloe Coal Co. v. Clark Equip. Co., 816 F.2d 110, 113 (3d Cir.),
cert. denied, 484 U.S. 853 (1987)).
In granting CNA's motion for a judgment as a matter of
law on its "affirmative defense," the court reasoned that the
ultimate decision-makers (Koester, Keith, and Murphy) were
unaware of any retaliatory intent and, given the "overwhelming
evidence of Delli Santi's theft," coupled with CNA's policy to
terminate those employees who it believed were stealing, there
was no evidence "from which a jury could have rationally inferred
that CNA would not terminate an employee who the company believed
was engaging in expense account misrepresentation." Delli Santi,
No. 88-5137, slip op. at 25-26.
We cannot agree with the district court's statement
that "[t]here was no evidence from which a jury could have
rationally inferred that CNA would not terminate an employee who
the company believed was engaging in expense account
misrepresentation." Delli Santi, No. 88-5137, slip op. at 25-26.
In so concluding, we are drawn again to the stipulation that over
200 CNA employees were reporting mileage of less than ten miles
per gallon and CNA's awareness of this fact as evidenced by the
October 27, 1987, internal memorandum conceding that these
drivers were not being counseled. See supra pp. 7-8.
With this evidence, a jury could have rationally
inferred that CNA was singling out Delli Santi based upon her
discrimination claims because it failed to investigate,
discipline or terminate any other employee (over 200 of them) for
unexplainably low gas mileage, which, as stated by Koester, "is
an indicator of some issue." Because Koester and Crassweller
admitted during trial that they were not aware of CNA
investigating, disciplining, or terminating persons other than
Delli Santi for reporting excessively low gas mileage, the jury
could conclude both that low gas mileage was "an indicator of
some issue" only because Delli Santi voiced discrimination claims
and that CNA's policy against company theft did not dictate Delli
Santi's (or anyone else's) termination for inflating gas
expenditures.
Our conclusion is further supported by the evidence
that, to the time of trial, CNA had failed to enforce its policy
against expense account fraud. A CNA employee, Harold Ronin,
stated that even though CNA fleet records accurately reflected
drivers reporting under ten miles per gallon, he had no intention
whatsoever of sending their names to corporate security for
possible investigation. Thus, despite Keith's admonition that
CNA does not "make exceptions to [its] policy and practice of
terminating people who either lie to us, or who steal from us," a
reasonable factfinder could conclude that the evidence of
fraudulent gas expense reports would not have led to Delli
Santi's termination on legitimate grounds.
Finally, we consider whether the district court erred
when it conditionally granted CNA a new trial on its "affirmative
defense." Our reasoning here follows that which we have
already stated in reversing the district court's order granting
CNA's motion for judgment as a matter of law on this "affirmative
defense." Briefly, we hold that CNA failed to meet its burden of
persuasion on this issue because the jury rejected outright CNA's
assertion that Delli Santi was discharged for theft. Indeed,
once the jury found that CNA's proffered reason for Delli Santi's
discharge (employee theft) was a pretext, the district court
could not later rely on this reason, raised as an affirmative
defense in a post-verdict motion. Once again, on the basis of
this record, we cannot say that the verdict was against the clear
weight of the evidence.
III.
After the jury's verdict for Delli Santi, the district
court also entered judgment for CNA as a matter of law on the
issue of whether Delli Santi was ineligible for future employment
or front pay because of her alleged theft. The district court
relied upon Massey v. Trump's Castle Hotel and Casino, 828 F.
Supp. 314 (D.N.J. 1993), where the court held that an employer
who unlawfully discharges an employee could use after-acquired
evidence (which would have led to the employee's termination on
lawful and legitimate grounds) "to bar the specific remedies of
reinstatement and front-pay if the employer demonstrates that,
based solely on that misconduct, it would have made the same
employment decision regarding that employee." Id. at 328. The
court in Massey reasoned that "to require employers to reinstate
or provide front-pay to an employee today that they can now fire
legitimately tomorrow would be nonsensical." Id. at 323. SeeMcKennon v.
Nashville Banner Publ. Co., 115 S. Ct. 879, 886
(1995) (where employer discovers after termination, that employee
engaged in wrongdoing, generally "neither reinstatement nor front
pay is an appropriate remedy").
We find that the district court erred by allowing CNA
to assert as an "affirmative defense" its claim that Delli Santi
was ineligible for front pay because this case does not involve
after-acquired evidence. In Mardell v. Harleysville Life Ins.
Co., 31 F.3d 1221, 1228 (3d Cir. 1994), abrogated by McKennon,
115 S. Ct. 879 (1995), we distinguished an after-acquired
evidence case by stating:
What sets an after-acquired evidence case far
apart from a mixed-motives case like Price
Waterhouse or a pretext case like McDonnell
Douglas is that the articulated "legitimate"
reason, which was non-existent at the time of
the adverse decision, could not possibly have
motivated the employer to the slightest
degree. After-acquired evidence, simply put,
is not relevant in establishing liability
under Title VII or ADEA because the sole
question to be answered at that stage is
whether the employer discriminated against
the employee on the basis of an impermissible
factor at the instant of the adverse
employment action.
Mardell, 31 F.3d at 1228. Here, CNA's articulated reason (that
Delli Santi allegedly inflated her gas receipts) was known to CNA
at the time of the adverse action; indeed, CNA claims that it was
the very reason for the discharge. Delli Santi's alleged
wrongdoing did not arise after the fact but, instead, allegedly
motivated CNA to discharge her in the first instance.
This case is unlike the case where a different and
legitimate reason for discharge is discovered by the employer
after its adverse employment action for another reason as well.
Here, CNA's stated reason for Delli Santi's discharge, theft, was
specifically rejected by the jury. By its own findings, the jury
expressed its disbelief that in the absence of a retaliatory
motive CNA would have made the same decision to discharge Delli
Santi. Instead, the jury drew the opposite inference (based upon
the evidence that CNA did not investigate, discipline or
terminate any other employee who was reporting low gas mileage
and CNA's internal memorandum stating that these drivers should
be counseled) that Delli Santi would not have been discharged for
stealing. Accordingly, we will reinstate the jury's award of
$152,266 representing Delli Santi's front pay.
IV.
Under the LAD, an employee can recover damages for pain
and suffering. N.J. Stat. Ann. 10:5-3; Catalane v. Gilian
Instrument Corp., 638 A.2d 1341, 1353 (N.J. Super. Ct. App.
Div.), certif. denied, 642 A.2d 1006 (N.J. 1994). To recover
these damages, an employee does not need to present either expert
testimony or objective corroboration. See Rendine v. Pantzer,
648 A.2d at 245; see also Bolden v. Septa, 21 F.3d 29, 34 (3d
Cir. 1994) (expert medical testimony is not required to prove
damages for emotional distress in a case brought under 1983).
We hasten to add, however, that "New Jersey courts have been
careful to award such damages only in cases where the record
demonstrates a ``substantial basis for compensation.'" Abrams v.
Lightolier, Inc., 841 F. Supp. 584, 593 (D.N.J. 1994) (quoting
Castellano v. Linden Bd. of Educ., 400 A.2d 1182, 1184 (N.J.
1979)), aff'd, 50 F.3d 1204 (3d Cir. 1995).
Here, the jury awarded Delli Santi $300,000 for pain
and suffering. The district court, however, conditionally
granted CNA a new trial on damages if Delli Santi refused to
accept a remittitur of the pain and suffering award from $300,000
to $5,000, reasoning that although "Delli Santi's testimony
supported an award for pain and suffering it did not support one
so large." Delli Santi, No. 88-5137, slip op. at 40-41.
Delli Santi argues that the district court overlooked
substantial evidence when it concluded that her testimony did not
support an emotional damage award "so large," id. at 41, namely,
the humiliation and emotional damages flowing from the loss of
her reputation. At trial Delli Santi testified that she was
"terrified" to interview with prospective employers, "afraid" to
network with people in the industry, and her social life nearly
ceased to exist -- all because people might "find out" the
alleged reason for her firing.
We stress our "severely limited" role in reviewing the
question of whether the district court abused its discretion in
remitting the pain and suffering award. We "may disturb the
district court's determination with respect to a remittitur only
for abuse of discretion, and reverse and grant a new trial only
if the verdict is so grossly excessive as to shock the judicial
conscience." Gumbs v. Pueblo Int'l., Inc., 823 F.2d 768, 771 (3d
Cir. 1987) (internal quotes omitted); see also Williams v. Martin
Marietta Alumina, Inc., 817 F.2d 1030, 1038 (3d Cir. 1987) (court
must "review a damage award to determine if it is rationally
based"); Walters v. Mintec/Int'l., 758 F.2d 73, 82 (3d Cir. 1985)
("a district court should be alert to its responsibility to see
that jury awards do not extend beyond all reasonable bounds").
Our role is even more limited than the district court's; we must
give "additional deference" where the district court has already
granted a remittitur. Gumbs, 823 F.2d at 771. In undertaking
our circumscribed role, here, we find that a review of jury
verdicts in other cases may prove helpful, though not mandatory.
Id. at 773.
In Abrams, for instance, the jury awarded an employee
$100,000 in damages for emotional distress under the LAD based
upon his testimony that
it had been a very upsetting thing to be
accused in secret of bribery, to a company
that you've worked for, without even the
courtesy of being told about it.
It has been very unnerving, unpleasant and
distressing to have somebody tell you that
you can't have a job because you are not up
to it physically. . . . [a]nd I have really
been very, very, very upset by the whole
thing.
841 F. Supp. at 593 (alteration in original). The district
court, however, ordered a remittitur, reasoning that, "[g]iven
the paucity of evidence regarding plaintiff's actual mental
distress," the award was grossly excessive to the extent it
exceeded $2,500. Id. at 594. See Jackson v. Consolidated Rail
Corp., 538 A.2d 1310, 1317 (N.J. Super. Ct. App. Div. 1988) ("the
severity of the distress from the testimony of the plaintiff
himself was not of such a degree to warrant the judgment of over
half a million dollars" in damages for emotional distress under
the LAD); Catalane, 638 A.2d at 1353 (court upheld trial court's
decision to grant new trial on damages under the LAD because
$250,000 award for emotional distress "shocked the conscience" of
the trial judge) (internal quote omitted).
Against this backdrop, we conclude that the district
court acted within the confines of its discretion in ordering a
new trial unless Delli Santi accepted a remittitur of $295,000.
Although Delli Santi testified about her distress, the district
court determined that Delli Santi's evidence of pain and
suffering did not support an award of $300,000. Because we must
give deference to the judgment of the trial court who was "in the
best position to evaluate the evidence and assess whether the
jury's verdict [was] rationally based", Gumbs, 823 F.2d at 772(quoting Murray v. Fairbanks Morse, 610 F.2d 149, 153 (3d Cir.
1979)), we cannot say that the district court exceeded the bounds
of its discretion in remitting the pain and suffering award from
$300,000 to $5,000.
V.
Finally, Delli Santi argues that the district court
should have submitted the issue of punitive damages to the
jury. We exercise plenary review over the district court's
decision to deny Delli Santi's request to send the issue of
punitive damages to the jury. Bonjorno v. Kaiser Aluminum &
Chem. Corp., 752 F.2d 802, 814-15 (3d Cir. 1984), cert. denied,
477 U.S. 908 (1986); Lightning Lube, 4 F.3d at 1167.
"The New Jersey Supreme Court has made clear that ``[t]o
warrant a punitive award, the defendant's conduct must have been
wantonly reckless or malicious. There must be an intentional
wrongdoing in the sense of an ``evil minded act' or an act
accompanied by a wanton and willful disregard for the rights of
another.'" Lightning Lube, 4 F.3d at 1192 (quoting Nappe v.
Anschelewitz, Barr, Ansell & Bonello, 477 A.2d 1224, 1230 (N.J.
1984)) (alteration in original); accord Jackson, 538 A.2d at
1319-20. As we noted in Levinson, 868 F.2d at 563, however, "we
do not suggest that in every employment discrimination case in
which there is a basis for compensatory damages it follows that
punitive damages are also available." See Catalane, 638 A.2d at
1354 ("punitive damages are only to be awarded in exceptional
cases even where the LAD has been violated"); Maczik v. Gifford
Park Yacht Club, 638 A.2d 1322, 1326 (N.J. Super. Ct. App. Div.)
("Punitive damages . . . are distinct from compensatory damages,
require a greater threshold basis, and are assessed only when the
wrongdoer's conduct is ``especially egregious.'"); Weiss v. Parker
Hannifan Corp., 747 F. Supp. 1118, 1136 (D.N.J. 1990) ("plaintiff
must show more than the minimum conduct necessary to prove the
underlying [LAD claim] before an award of punitive damages
becomes appropriate"); Lehmann v. Toys ``R' Us, Inc., 626 A.2d
445, 464 (N.J. 1993) (punitive damages are to be awarded "when
the wrongdoers conduct is especially egregious") (citing
Leigruber v. Claridge Assocs., 375 A.2d 652 (N.J. 1977)). Butsee Johnson
v. Ryder Truck Rentals Inc., 624 A.2d 632, 635 (N.J.
Super. Ct. Law Div. 1993) ("no proofs other than a violation of
the [LAD] are required to warrant the imposition of punitive
damages"). Although we conclude there is sufficient evidence to
support the jury's verdict for compensatory damages, we do not
perceive any basis to interfere with the district court's
reasoning that there was a lack of evidence to submit the issue
of punitive damages to the jury.
VI.
For the foregoing reasons, we will reverse the district
court's grant of judgment as a matter of law in favor of CNA and,
in addition, reverse the district court's conditional grant of a
new trial on liability issues. We will affirm the district
court's decision to grant a new trial on the issue of damages
unless Delli Santi accepts the remittitur, but we will reinstate
the jury's award of $152,266 representing damages for loss of
future earnings. On remand the district court should consider
Delli Santi's motions for prejudgment interest and costs and
attorney's fees.
Delli Santi v. CNA Insurance
Nos. 94-5331 and 94-5347
ALITO, Circuit Judge, concurring and dissenting.
I concur in the judgment except insofar as it
reinstates the jury's award of front pay. I agree with the
majority that a reasonable jury could have found that CNA would
not have launched its investigation of the plaintiff's gasoline
vouchers were it not for her complaints of discrimination. Both
the timing of the investigation and CNA's failure to investigate
other employees who reported low gasoline mileage give rise to an
inference of retaliation. I recognize that, of the low-mileage
employees, the plaintiff's record was apparently one of, if not
the very, worst, and this is certainly a fact that I would have
taken into account if I had been the trier of fact.
Nevertheless, I think that, even assuming that the plaintiff bore
the burden of persuasion with respect to the question whether
retaliation was a determinative factor in the discharge decision
(a question I discuss below), a reasonable jury could have found
that it was.
A reasonable jury could not have found, however, that
the plaintiff did not falsify her vouchers. Driving a compact
car with an EPA-estimated gas mileage of 23 miles per gallon, she
reported gas mileage, over a five-year period, that was far, far
lower, reaching a nadir of three miles per gallon for one
reporting period. She offered a host of excuses for her low
mileage, but these were either inherently dubious or were
discredited by CNA's investigation. For example, although the
plaintiff suggested that her low mileage might be attributable to
mechanical problems with her car (she said that the car "ran
rough"), when the car was test driven it achieved 24 to 27 miles
per gallon. Most damning was the plaintiff's submission of
"receipts" for gas purchases that she herself wrote up. The
mileage that she reported for particular periods was inversely
proportional to the number of these suspicious "receipts" that
she submitted. In 1984, when she submitted an average of two to
three such "receipts" per expense period, her reported mileage
was 11 to 13 miles per gallon. In 1985, she submitted an average
of three to four such "receipts" per period, and her mileage sank
to 10 miles per gallon. In 1986, when she averaged four such
"receipts" per period, her mileage fell further to 7 miles per
gallon. And finally, in 1987, when she reached an average of
five such "receipts" per period, her mileage plummeted to 6 miles
per gallon. As the district court observed, the proof of the
plaintiff's pilfering was "overwhelming."
A reasonable jury likewise could not have found that
CNA did not have a policy of firing employees who were proven to
have stolen from the company. Employers do not routinely
tolerate employees who are proven to have stolen from them; CNA
offered evidence that it had a blanket policy of firing such
employees; and I am aware of no direct evidence to the contrary.
The majority suggests, however, that the absence of such a policy
can be inferred from the fact that CNA approved the plaintiff's
expense reports for some time without launching an investigation
and the fact that CNA did not investigate other employees who
reported very low mileage. This reasoning overlooks the
important difference between the failure to investigate
suspicious conduct, which may result from lax administrative
controls, and the toleration of proven theft. Once the plaintiff
was investigated, CNA was confronted with what the district court
aptly described as "overwhelming" proof of her theft. In my
judgment, a reasonable jury could not have inferred from CNA's
failure to investigate suspicious conduct that it was CNA's
policy to tolerate proven theft.
Because it is CNA's policy to fire employees, such as
the plaintiff, who are caught stealing from the company, the
plaintiff is not entitled to reinstatement or front pay. In
McKennon v. Nashville Banner Publishing Co., 115 S.Ct. 879(1995), the Supreme Court held that an employer who discharges an
employee for a discriminatory reason is liable under the federal
Age Discrimination in Employment Act even though the employer
discovers after the action is taken that it has a different,
legitimate reason for the same action. The Court observed,
however, that in such a case "as a general rule . . . neither
reinstatement nor front pay is appropriate." Id. at 886. The
Court explained: "It would be both inequitable and pointless to
order the reinstatement of someone the employer would have
terminated, and will terminate, in any event and upon lawful
grounds." Id. I think that this teaching would be controlling
here if this case rested on federal rather than state law.
The majority, however, facilely dismisses the teaching
of McKennon as applicable only in "after-acquired" evidence
cases, that is, cases in which the evidence of the legitimate
reason for discharge is acquired after the adverse employment
decision is taken. This reasoning does not seem to me to make
any sense. Consider the following two cases. In Case A, which
is analogous to McKennon, the employer discharges an employee for
a discriminatory reason and then, when sued or threatened with
suit, launches an investigation of the employee and discovers a
legitimate reason for discharge. In Case B, which is comparable
to this case, the same employer, acting with the same
discriminatory motive, targets the same employee for
investigation before firing him and then discovers, as a result
of the investigation, the same legitimate ground for termination.
In Case A, the employee, under McKennon, would not be entitled to
reinstatement or front pay, and I cannot think of any good reason
for treating the employee in Case B more favorably than the
employee in Case A.
While McKennon is not directly controlling here because
this case is based on the New Jersey Law Against Discrimination
("LAD") rather than federal anti-discrimination law, I think that
the New Jersey Supreme Court would follow McKennon, see Miller v.
Beneficial Management Corp., 855 F. Supp. 691, 715-17 (D.N.J.
1994); Massey v. Trump's Castle Hotel and Casino, 828 F. Supp.
314, 324 (D.N.J. 1993), or would adopt some related rule limiting
a plaintiff's entitlement to reinstatement or front pay in cases
where a legitimate reason for discharge is discovered after the
employee is wrongfully terminated or targeted for investigation.
(In an extreme case -- say, the investigation uncovers, not petty
chiselling on expense vouchers, but massive embezzlement --
ordering reinstatement or front pay would be preposterous.)
One other aspect of the majority opinion bears comment.
The majority appears to hold that the standards set out in
Jamison v. Rockaway Township Bd. of Educ., 242 N.J. Super. 436,
445, 577 A.2d 177, 182 (App. Div. 1990), apply in all LAD
retaliation cases. Jamison itself, however, takes pains to limit
its holding to cases involving the failure to promote, see
N.J. Super. at 446-47, 577 A.2d at 182-83 and the plaintiff
argues strenuously that it does not apply here. While it may be
that the New Jersey Supreme Court will ultimately hold that
Jamison governs all LAD retaliation cases, it has not done so
yet, and I see no need for us to venture a prediction on this
question, because I think that the result here would be the same
whether Jamison applies or not.
Under Jamison, as I understand it, once the employer
satisfies its burden of production under the second step of the
McDonnell Douglas scheme, the plaintiff must then show that
retaliation was a motivating factor in the challenged action, not
that it was the sole or a determinative cause. Then, the
burden of persuasion switches to the employer to prove by a
preponderance of the evidence that retaliation was not a
determinative cause.
Under the federal scheme, which I take it would apply
if Jamison does not, see McKenna v. Pacific Rail Service, 32 F.3d
820 (3rd Cir. 1994), once the employer satisfies its burden of
production under the second step of McDonnell Douglas, and
assuming the case does not call for special treatment under Price
Waterhouse v. Hopkins, 490 U.S. 228 (1989), it would then be up
to the plaintiff to prove by a preponderance of the evidence,
using direct or indirect proof, that retaliation was a
determinative cause of the challenged action. See Miller v.
CIGNA Corp., 47 F.3d 586, 598 (3rd Cir. 1995) (in banc). Thus,
the difference between the two schemes concerns the allocation of
the risk of non-persuasion on the question whether retaliation
was a determinative cause. In this case, I think that whoever
had that burden, the evidence was sufficient to prove that the
investigation was begun for a retaliatory reason and was thus a
determinative cause of the plaintiff's termination. Accordingly,
it seems to me to be both unnecessary and imprudent for this
panel to make a prediction on this point.