The jury awarded defendant back pay of about $83,000, but awarded nothing for pain and suffering, apparently rejecting plaintiff's testimony that he was emotionally devastated by the loss of his job. The trial judge rеduced the back pay award by about $14,000, representing fifty percent of the unemployment compensation plaintiff had received. A second judge heard the counsel fee motions and awarded plaintiff's trial counsel about $275,000 in fees and costs, and awarded about $104,500 in fees and costs to the law firm that represented plaintiff prior to trial.
Plaintiff appeals, contending that the trial judge erred in offsetting his back pay award by fifty percent of his unemployment compensation, dismissing his punitive damages claim at the clоse of the trial evidence, dismissing his separate claim against defendant for failure to accommodate his disability, dismissing the individual defendants, and declining to recuse herself from post-trial motions other than the counsel fee applications.
Defendant crоss-appeals, arguing that the judge should have offset the back pay award by the entire amount of plaintiff's unemployment compensation, plaintiff failed to prove a prima facie case of discrimination, and the verdict was against the weight of the еvidence. Defendant further contends that the trial judge erred in excluding evidence of plaintiff's prior lawsuits and in recusing herself from hearing the fee motions, and that the second judge awarded an excessive amount of fees.
We hold that the collateral source statute, N.J.S.A. 2A:15-97, does not apply to LAD cases, and we find no other basis on which to deduct unemployment compensation from back pay awarded
[At the direction of the court, Parts I and III, which are not deemed to warrant publication, seeR. 1:36-2(d), have been omitted from the published version.]
II
Next, we address whether plaintiff's back pay award should be offset by the amounts of unemployment compensation he received. After his termination from Flightsafety, plaintiff was unemployed for eleven months, during which he received unemployment benefits. He then оbtained a position as a pilot instructor with another company, at a higher salary than he was earning at Flightsafety.
Defendant argues that the entire amount of unemployment benefits plaintiff received should have been deducted from the back pay award; plaintiff contends that none of it should have been deducted. Amicus curiae National Employment Lawyers Association of New Jersey, Inc. supports plaintiff's position that unemployment benefits should not be deducted from back pay awarded under the LAD.
The trial court reduced plaintiff's back pay award by one-half of the unemployment benefits he received, reasoning that this result was equitable because both the employer and the employee had contributed to the State unemployment fund. We review a trial сourt's legal interpretations de novo. Manalapan Realty v. Manalapan Twp. Comm.,
On this appeal, defendant initially relied on N.J.S.A. 2A:15-97, which provides as follows:
In any civil action brought for personal injury or death, except actions brought pursuant to the provisions of [N.J.S.A. 39:6A-1 ] et seq., if a plaintiff receives or isentitled to receive benefits for the injuries allegedly incurred from any other source other than a joint tortfeasor, the benefits, other than workers' compensation benefits or the proceeds from a life insurance policy, shall be disclosed to the court and the amount thereof which duplicates any benefit contained in the award shall be deducted from any award recovered by the plaintiff, less any premium paid to an insurer directly by the plaintiff or by any member of the plaintiff's family on behalf of the plaintiff for the policy period during which the benefits are payable. Any party to the action shall be permitted to introduce evidence regarding any of the matters described in this act.
[Ibid. ]
It is clear from its language and legislative history that this statute was intended to reduce automobile insurance premiums by abrogating the common-law collateral source rule in personal injury cаses.
The Legislature's purpose in enacting N.J.S.A. 2A:15-97 was to do away with the common-law collateral-source rule. That rule permits a tort victim to retain collateral benefits-that is, benefits that do not come from a defendant-in addition to any amount that the victim might recover from that defendant. The effеct of the rule is to deny a wrongdoer the benefit of any rights that the victim might have against other entities based on contract, employment, or some other relation. Patusco v. Prince Macaroni, Inc.,50 N.J. 365 , 368,235 A .2d 465 (1967). The premise of the rule is that "[i]t should not concern the tortfeasor that someone else is obligated to aid his victim because of a duty assumed by contract or imposed by law,"ibid. , and that "an injured party may recover fully from a tortfeasor for personal injuries notwithstanding that much of his loss was covered by contractual arrangements, such as for example an accident or life insurance policy."
[Kiss v. Jacob , 138 N.J. 278 , 281,650 A .2d 336 (1994) (quoting Theobald v. Angelos ,44 N.J. 228 , 239,208 A .2d 129 (1965) ).]
In Kiss , the Court recognized that the Legislature enacted the statute "in an effort to control spiralling automobile-insurance costs[.]" Id. at 282,
Neither the plain language nor the history and purpose of N.J.S.A. 2A:15-97 supports its application to LAD cases. Implicitly acknowledging the weakness of its statutory argument, defendant subsequently modified its position, contending that unemployment benefits should be deducted from LAD back pay awards as a matter of policy, on a discretionary basis, to avoid giving a LAD plaintiff a double recovery. We cannot agreе.
We also note that the model jury charge applicable to damages in LAD cases specifically provides that unemployment benefits are not deducted from back pay awards. Model Jury Charge (Civil) , § 2.33A(8) "General Mitigation Principles" (2014). The charge contains a footnote to two cases, discussed below, which specifically address the collateral source rule in the employment context. See Sporn v. Celebrity, Inc. ,
In Sporn , the court applied the common-law rule to a case involving an employer's breach of an employment contract. The court reasoned:
Reducing recovery by the amount of the [unemрloyment] benefits received by plaintiff would be granting a windfall to defendant by allowing him an undeserved credit on his own wrongdoingfrom a source never so intended. In balancing these conflicting principles New Jersey courts have tended to permit what might appear as a form of double recovery by a plaintiff under such circumstances rather than allow reduction of the damages to be paid by the defendant wrongdoer.
[Sporn , supra ,129 N.J.Super. at 459-60 ,324 A .2d 71 .]
The Supreme Court cited Sporn with approval in a landlord-tenant case involving a similar underlying principle. N.J. Indus. Props. v. Y.C. & V.L. ,
In other areas of the law, courts in this state have not allowed a wrongdoer to benefit from his wrongful actions. Sporn v. Celebrity,Inc. ,129 N.J.Super. 449 ,324 A .2d 71 (Law Div. 1974), was a suit for wrongful discharge of employment in violation of an alleged оral employment contract. There the court held that the defendant was not entitled to a mitigation of damages by the amount of unemployment compensation received by the plaintiff. Although the court recognized that mitigation is "always a matter to be considered where contract damages are in issue," the court held that the employer should not have a benefit conferred upon him when he is the wrongdoer. Id. at 456, 459,324 A .2d 71 . In concluding that the reasons for denying mitigation were more persuasive than those favoring it, the cоurt noted that
New Jersey courts have tended to permit what might appear as a form of double recovery by a plaintiff under such circumstances rather than allow reduction of the damages to be paid by the defendant wrongdoer.
[Id. at 447-48, 495 A .2d 1320 (quoting Sporn , supra ,129 N.J. Super. at 459 ,324 A .2d 71 ).]
Defendant has not citеd any New Jersey precedent indicating that our Court has departed, or would depart, from that rationale with respect to employment discrimination cases under the LAD.
We also find persuasive the relevant federal cases plaintiff cites. More than fifty yеars ago, the United States Supreme Court construed the National Labor Relations Act (NLRA) as providing that unemployment compensation is not to be deducted from back pay awards in unfair labor cases. NLRB v. Gullett Gin Co. ,
Payments of unemployment compensation were not made to the employees by respondent but by the state out of state funds derived from taxation. True, these taxes were paid by employers, and thus to some extent respоndent helped to create the fund. However, the payments to the employees were not made to discharge any liability or obligation of respondent, but to carry out a policy of social betterment for the benefit of the entire state. We think thesе facts plainly show the benefits to be collateral. It is thus apparent from what we have already said that failure to take them into account in ordering back pay does not make the employees more than "whole" as that phrase has been undеrstood and applied.
[Id. at 364, 71 S.Ct. at 340 ,95 L.Ed. at 342 .]
In construing Title VII, which was based on the NLRA, the Third Circuit Court of Appeals held that unemployment benefits may not be deducted from back pay awards under Title VII. Craig , supra ,
The rationale for a rule that at first glance may appear to provide an inequitable double recovery is that a wrоngdoer should not get the benefit of payments that come to the plaintiff from a source collateral to the defendant. There is no reason why the benefit should be shifted to the defendant, thereby depriving the plaintiff of the advantage it confers. This policy also may have somewhat punitive undertones, as it focuses on what the defendant should pay rather than on what the plaintiff should receive.
[Ibid. (citations omitted).]
Accordingly, we hold that unemployment compensation benefits may not be deducted from back pay awarded under the LAD. We thus modify the back pay award, and remand for entry of an amended judgment reflecting this opinion.
Notes
Defendant also sued several corporate employees for aiding and abetting, N.J.S.A. 10:5-12(e), but the trial court dismissed those claims on summary judgment. We refer to Flightsafety as "defendant."
Defendant's brief suggests that employers sometimes purchase insurance to cover against the risk of discrimination lawsuits. However, defendant does not cite to any expression of legislative concern about the affordability of that type of insurance, as opposed to auto insurance and other types of insurance covering personal injury claims.