NJ Appellate Narrows the Road in Auto Dealership’s Sexual Harassment Case

On May 18, 2021, in McBride v. Atlantic Chrysler Jeep, the New Jersey Appellate Division revived a Sales Consultant’s hostile work environment case against a car dealership after the Law Division previously dismissed it in the dealership’s favor. The employee claimed that she was terminated for rejecting her supervisor’s sexual advances and alleged the dealership was vicariously liable for the supervisor’s conduct. The trial court granted the dealership’s motion for summary judgment. On appeal, the Appellate Division overturned the trial court’s decision and sent the case back to the Law Division to proceed to trial.

Facts

Ramona McBride (McBride) began working at the Atlantic Jeep Chrysler Fiat dealership (the Dealership) as a sales trainee – a paid position designed to train sales staff – on March 6, 2017. She reported to two Sales Managers, one of whom was Jack Dellafave (Dellafave). McBride was quickly met with unwanted sexual advances from Dellafave, most of which were communicated via text messages. In those messages, Dellafave conveyed his attraction to her, and invited her to come to his hotel room. McBride rejected his advances.

On March 30, 2017, mere weeks into her employment, Dellafave asked McBride during work hours why she declined his advances.

McBride again declined Dellafave’s sexual overtures. Irritated by the rejection, Dellafave stated “clock out, and leave and don’t come back.” McBride complied.

As Dellafave was her supervisor, McBride understood Dellafave’s statement to mark her termination. As a result, she left the Dealership. Later that day, McBride contacted the Dealership’s General Manager, Michael McErlean (McErlean), to inform him of what had transpired. McErlean attempted to meet with McBride and investigate the matter pursuant to the Dealership’s harassment policy. However, McBride did not return to the Dealership for over a week. When she did, and she provided proof of the text messages from Dellafave, she was assured she could continue working at the Dealership if she wished, and that Dellafave was terminated. McBride declined to return, and eventually filed a discrimination claim against the Dealership – alleging that the Dealership should be held vicariously liable for Dellafave’s sexual harassment and retaliation under the New Jersey Law Against Discrimination (NJLAD). The NJLAD prohibits an employer from taking an adverse employment action based upon a characteristic such as gender. The NJLAD further provides that employers may be held liable for discriminatory conduct even if, as alleged here, it was committed by a supervisor.

In 2015, in the seminal case of Aguas v. State of New Jersey, the New Jersey Supreme Court outlined a scenario where vicarious liability did not apply. Specifically, the Court held that if the employer could prove that: (1) the employer exercised reasonable care to prevent, or promptly correct, sexually harassing behavior; and (2) the plaintiff unreasonably failed to take advantage of these preventive or corrective opportunities, then the employer could not be held vicariously liable. That defense, however, is only available if the employee was not subject to a “tangible employment action.” Otherwise put, if the employee was demoted, transferred, suspended, terminated, etc., for discriminatory reasons, the employer cannot invoke the Aguas defense.

The Dealership filed a motion for summary judgment attempting to avail itself of the Aguas defense as there were policies put in place to address Dellafave’s conduct, and McBride failed to take advantage of them. The Law Division agreed and granted summary judgment in the Dealership’s favor and McBride appealed.

Appellate Division Decision

After reviewing the record, the Appellate Panel held that summary judgment was premature. The crux of the decision turned upon whether Dellafave made a “tangible employment decision” when he told McBride to leave and not come back. To the panel, it was unclear whether that comment marked McBride’s termination. Furthermore, it is not the Court’s place to make factual determinations – that responsibility lies almost exclusively within the purview of the jury. Thus, summary judgment was inappropriate.

In support of its decision, the Appellate Division explained that the Aguas defense is inapplicable when a supervisor makes a “tangible employment action” precisely because there are no consequences to the employee based upon that action absent the agency relationship. Put another way, an employee’s employment status can only be harmed or negatively impacted by a supervisor if that supervisor has the authority, whether express or implied, to act on the company’s behalf.

Bottom Line

Navigating the realm of employment discrimination law is a complicated endeavor. This case demonstrates that much. Even a harassment reporting policy was not enough to fend off a claim for vicarious liability for a supervisor’s conduct.

Amidst the Appellate Division’s opinion, however, is an admonition employers should heed: your supervisors are extensions of your company in addition to being employees. When they act, they often do so with either the express or implied authority from the company itself. Because of that, it is imperative to invest in training so that they have the knowledge and tools to avoid discriminatory conduct. Albeit time-consuming and costly, the investment is worth every penny if it prevents harassment and discrimination cases like the case described above.

For more information regarding this decision and best practices to implement effective policies and training for your workforce, please contact John C. Petrella, Chair of the firm’s Employment Law & Litigation Practice Group via email here or Dina M. Mastellone, Chair of the Human Resources, Counseling & Compliance Practice Group via email here or 973-533-0777.