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rubics-cube-2108030__340-300x200President Trump recently issued an “Executive Order Promoting Free Speech and Religious Liberty.” We have been asked what this will mean for New Jersey employers or employees. For private sector, and New Jersey state and local public sector employers and employees, the answer is probably not much, if anything. Let’s break it down by some of declarative provisions.

Section 1. Policy. It shall be the policy of the executive branch to vigorously enforce Federal law’s robust protections for religious freedom. ….Umm, well, that’s been the policy of the government for decades now, so nothing much should change there.

Sec. 2. Respecting Religious and Political Speech. All executive departments and agencies (agencies) shall, to the greatest extent practicable and to the extent permitted by law, respect and protect the freedom of persons and organizations to engage in religious and political speech. In particular, the Secretary of the Treasury shall ensure, to the extent permitted by law, that the Department of the Treasury does not take any adverse action against any individual, house of worship, or other religious organization on the basis that such individual or organization speaks or has spoken about moral or political issues from a religious perspective, where speech of similar character has, consistent with law, not ordinarily been treated as participation or intervention in a political campaign on behalf of (or in opposition to) a candidate for public office by the Department of the Treasury. As used in this section, the term “adverse action” means the imposition of any tax or tax penalty; the delay or denial of tax-exempt status; the disallowance of tax deductions for contributions made to entities exempted from taxation under section 501(c)(3) of title 26, United States Code; or any other action that makes unavailable or denies any tax deduction, exemption, credit, or benefit. First, again, protecting free speech and free exercise of religion are already the federal government’s policy. Discrimination by employers against employees is already prohibited by federal law, and both federal and New Jersey employment law require employers to provide “reasonable accommodation” so employees can exercise their religion, so no change there. And if you’re in the private sector – too bad; the First Amendment only protects you from the government, not your private sector employer. Further, those protections already exist in the public sector.

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wheelchair-1365410__340-300x300Our employment lawyers represent employers and employees in New Jersey labor and employment litigation.  Each employment case has two parts.  The first is liability – did the employer commit the wrongful act of which it is accused by the employee?  If the answer is no, the case is over; if the answer is yes, then the employee must prove damages.  One question which has bedeviled courts is whether unemployment compensation received by an employee should reduce the damages she can receive for lost pay resulting from an allegedly discriminatory firing.  The Appellate Division of the Superior Court of New Jersey has now answered this question with a resounding “no.”

New Jersey provides a wide range of employment protections to employees.  These laws provide for a range of remedies if employees are the victim of unlawful conduct by their employer.  Some laws provide for recovery of damages for emotional distress.  Sometimes, in especially egregious cases, punitive damages may be available.  If the particular statutes provide for it, such as New Jersey’s Law Against Discrimination (known as the “LAD”) and the Conscientious Employee Protection Act (known as “CEPA”), if the employee is successful at trial the court may even order the employer to pay the employee’s attorneys fees.

The basic element of damages in employment cases, however, is lost pay.  All other elements of damages flow from lost pay.  If an employee is unemployed for a year, the pay she would have made during that time is recoverable as damages if she wins her suit.  If after a year she then gets a job earning $10,000 per year less, the difference is recoverable as well.  If after a year she gets a job making the same or more money, her damages end when she gets the new job.

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police-1714956__340-300x200New Jersey’s Conscientious Employee Protection Act (“CEPA”) provides a remedy for employees who are wrongfully terminated in retaliation for objecting to conduct which is believed to be illegal.  This Act is often referred to as the New Jersey “whistleblower law.”  In fact, it is one of the most liberally interpreted and expansive whistleblower laws in the country.  CEPA is a relatively new law, enacted n 1986, and thus has been the subject of much debate, misunderstanding, and misapplication.

CEPA provides wrongfully terminated or retaliated against employees with an avenue to seek redress.  An employee is protected under CEPA if she disclosed, objected to, or refused to participate in an act, policy, or practice of the employer which the employee reasonably believed violated a law, regulation, or public policy.  If the employee is then fired, harassed, or otherwise retaliated against as a direct result of the disclosure, objection, or refusal, that employee may have a claim under CEPA.

In the recent case of Fraternal Order of Police, Lodge 1 v. City of Camden, police officers brought an action against the City claiming (among other things) retaliation in violation of CEPA for the officers’ objections to the City’s policies regarding police-civilian interactions, based upon the belief that the policy violated the anti-quota law.

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pencil-1385100__340-300x200Here at the New Jersey Lawyers Blog we usually stick to New Jersey law (the name is probably a giveaway).  However, a federal decision this week in the United States Court of Appeals for the Seventh Circuit (with jurisdiction over appeals from the federal courts in Illinois, Indiana and Wisconsin) deserves mention.  In the case of Hively vs. Ivy Tech Community College of Indiana, the Seventh Circuit held that firing an employee because of her sexual orientation is illegal sex discrimination in violation of Title VII of the Civil Rights Act of 1964.  It became the first Federal appeals court to so hold.  It broke with many of its sister circuits.  The United States Supreme Court has never decided the issue.

Kimberly Hively was a part-time adjunct professor at Ivy Tech.  She applied for at least six full time teaching positions but was rejected each time.  Finally, her part-time contract was not renewed.  Hively was only lesbian.  She filed a complaint with the U.S. Equal Employment Opportunity Commission (the “EEOC”) alleging sex discrimination in violation of Title VII because she claimed that had been terminated because of her orientation.  The EEOC issued a right to sue letter, and she filed suit in the United States District Court for the Northern District of Indiana pro se (on her own without a lawyer).  The District Court dismissed her suit, ruling that discrimination because of sexual orientation was not protected by Title VII.  She appealed to the Seventh Circuit.  Initially a three judge panel of the Seventh Circuit agreed with the District Court and ruled against her.  However, the entire court then voted to hear her appeal en banc (by the whole court), and reversed its prior decision.

The Seventh Circuit had several reasons for its holding.  First, in 1989 the Supreme Court held that the practice of gender stereotyping was illegal sex discrimination.  Then in 1998 it held that it made no difference whether or not the harasser was of the same or a different gender as the victim provided that the harassment was because of the victim’s gender.  It then reasoned that if the stereotype is that a woman should marry a man Hively would not have been fired if she had married a person of the other sex, then she was discriminated against because of her gender because she married a woman, a person of the same sex.

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thumbs-up-1198238__340-300x300Our attorneys represents businesses and the people who own and run them.  One source of significant conflict in New Jersey business law are the fiduciary duties of the directors, officers and owners of businesses.

New Jersey business law imposes fiduciary duties on a company’s directors and officers.  This also applies to joint owners, including shareholders in corporations, partners in partnerships and members  in limited liability companies (also known as “LLCs”).  Essentially, under New Jersey law directors, officers and joint owners act as trustees to all of the business’s owners.  They owe a duty of loyalty to the owners, including both the majority and minority owners.  As effective trustees, they must place the interests of the owners ahead of their own.  They also owe a fiduciary duty of care – they must exercise reasonable care in carrying out their duties.

Breach of these fiduciary duties open directors, officers and owners up to personal liability.  They may be sued for violation of these duties if any of the owners allege that they suffered harm, financial or otherwise, because of a breach of these fiduciary duties.

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american-963191__340-300x200New Jersey’s Uniform Fraudulent Transfer Act, often referred to as the “UFTA,” is designed to protect creditors from debtors who transfer assets to avoid paying their debts.  New Jersey’s Supreme Court recently issued a landmark decision on the UFTA.

In the case of Motorword, Inc. vs. William Benkendorf, et al., the New Jersey Supreme Court overturned an Appellate Division decision which had approved of the cancellation of a loan in a very fact-sensitive decision.  Carol and Morton Salkind owned multiple companies, including Motorworld, Inc., Fox Development, Inc., and Giant Associates, Inc.  Benk did landscaping work for Fox and Giant; Fox and Giant paid approximately $4,000,000 to Benk, but still owed about $1,000,000.  Morton Salkind and Benk’s owner, William Benkendorf, were longtime friends and business associates, but Benkendorf did not expect to collect the last $1,000,000.

Benkendorf ran into trouble with the IRS and needed to resolve some payroll tax issues.  He asked Morton for a loan.  Morton agreed, but required that it go through Motorworld, and that the debts of Giant and Fox could not be used to offset the loan obligation.  They signed the note for the loan, and Carol loaned $500,000 to Motorworld to fund the loan.  Benkendorf did not pay, despite extensions and amendments, and incurred significant interest and penalties which increased the amount due to more than $1,000,000.  Eventually, because of Benkendorf’s financial difficulties, Morton agreed to forgive the loan from Motorworld in exchange for Berkendorf forgiving the amounts due from Fox and Giant.  So essentially the debts owed between the Salkinds’ companies and Benkendorf and his companies were mutually extinguished, which would be fine and fair – and legal – if the story ended there.  (Of course, if it did the courts would have never become involved….)

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imagesNew Jersey’s Law Against Discrimination (the “LAD”) makes it unlawful to discriminate against someone on the basis of race, age, nationality, gender, religion, sexual orientation and several other specifically protected groups.  While this covers an array of relationship scenarios, it is often applied in the context of an employment relationship.

Any person who has been subjected to unlawful discrimination in employment may file a lawsuit under the LAD. The LAD specifically provides for remedies to include all those that are available in typical tort actions.  A tort action is generally a civil action in which one person or entity sues another for some wrongful conduct which the actor committed in breach of some actual or implied duty to the other person or entity (other than by way of a breach of contract).  These damages may involve a number of categories such as back (past lost) pay, front (future) pay, emotional distress, lost benefits, etc.  The act also provides for punitive damages – meaning damages in addition to actual losses which are imposed to punish the wrongdoer for egregious and/or intentional acts, and deter future wrongful acts.

In virtually every employment discrimination case, the plaintiff is required to mitigate her losses.  This means that an employee who has, for example, been fired because of a discriminatory purpose or motivation, must make reasonable efforts to find another job to reduce her damages.

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document-428335__340-300x200In a business dispute, a prevailing party is awarding damages awarded damages it can prove, typically awarded lost profits.  The New Business Rule,” however, has traditionally including recovery of lost profits for “new” businesses, because their lack of a track record makes estimating lost profits too speculative.  The is a longstanding rule in New Jersey commercial litigation.  However, several newer cases indicate that it may be on the way out and indeed may already be dead, and in any event courts strain to avoid its application.  This is logical, because another guiding principal of New Jersey business law is that equity requires that courts try to prevent a wrongdoer from profiting from its misdeeds at the expense of an innocent party.  The new cases lead to the conclusion that that it is questionable whether the New Business Rule remains valid at all.

Lost Profits as a Measure of Damages.

When one party to a contract breaches a contract the other party may recover compensatory damages, which are the natural, probable and foreseeable consequences of that breach.  As New Jersey’s Supreme Court explained “[T]he goal is to put the injured party in as good a position as if performance had been rendered.”  Lost profits are one of main elements which businesses can recover as compensatory damages in a breach of contract lawsuit

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courthouse-303370__340-300x192The General Equity Part of the Chancery Division of the Superior Court of New Jersey has the ability to grant “equitable” relief in addition to money damages, making it a desirable venue for business dispute.

Where a New Jersey lawsuit is heard is determined by New Jersey’s Rules of Court.  Civil actions are heard in the various divisions of the Superior Court.  Civil cases with disputes of up to $3000 are heard in the Small Claims Division of the Superior Court.  Civil cases with disputes of up to $15,000 are heard in the Special Civil Division of the Superior Court.  All other cases are heard in either the Law Division or Chancery Division, General Equity Part.  The Law Division hears lawsuits which seek primarily “legal” damages – ie., suits which are primarily for money.  The General Equity Part of the Chancery Division  hears “actions in which the plaintiff’s primary right or the principal relief sought is equitable in nature.”  Thus, in order to understand what is heard in the Chancery Division, we need to take a brief trip back to Merry Olde England and talk about the split between courts of “law” and “equity.”

The law courts in England gave “legal” relief, but developed a complex system of writs.  If a suit did not fit precisely within the requirements of one of the writs, relief was denied.  The office of the chancellor developed even prior to the Norman Conquest in 1066 as the “king’s conscience,” and could grant relief when remedies at law were inadequate.  The chancery, or equity, court eventually carved out its own sphere, creating a rigid and artificial barrier between law and equity, creating a situation in which litigants sometimes could not find relief in either.  Charles Dickens described the effects well in his classic novel Bleak House:

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courthouse-1223280__340-300x200“Legal” and “Equitable” Remedies in New Jersey Courts                                                

Business litigation involves a claim that one party caused business harm to another, and sometimes counterclaims that each side caused the other harm.  At the end of the case, if a court (whether a judge or jury depending on the facts and procedural status of the case) finds that one side did, in fact, harm the other, it will award a remedy.  Through ancient legal doctrine stretching back to Merry Olde England, the law recognizes two types of relief, legal remedies and equitable remedies.

Legal relief is at is essence money damages.  A civil action for legal relief involves a claim that a party has been wronged in violation of the law, and the harm can be compensated with an award of money damages.  For example, a contract was breached by party B, and as a result party A suffered $1000 in lost damages; when the court awards the party A $1000 in damages, that is a “legal” remedy, and the damages are “compensatory” damages.  Let’s say instead that Party B defrauded Party A, and that Party A suffered $1000 in damages.  The $1000 party A lost are still compensatory damages.  However, in fraud punitive damages are available if the fraud was especially egregious.  So let’s say the court awarded another $2500 in addition to the $1000 compensatory damages to deter Party B from ever defrauding anyone again.  The $2500 are punitive damages.